During this week three years ago, the South American nation of Paraguay made a move that still puzzles Israel: On Sept. 5, 2018, Paraguay moved its embassy in Israel out of Jerusalem and back to Tel Aviv. The move took place only several months after former President Horacio Cartes had moved the embassy to Jerusalem on May 21 – one week after the historic opening of the US Embassy in Israel's capital.
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Israel responded by shuttering its embassy in Paraguay.
"Israel views very seriously Paraguay's exceptional decision which will strain the relations between the countries," then-Prime Minister Benjamin Netanyahu's office said at the time.
Cartes, touted as a "lover of Israel" in media reports following the May 2018 Jerusalem embassy opening, was succeeded by Paraguay's current President Mario Abdo Benítez on August 15, 2018 – only three weeks before the closure of the embassy in Jerusalem.
So what happened?
Peter M. Tase, an expert on Paraguay's politics and government, noted the influence of Federico Alberto Gonzalez Franco, a senior adviser to Abdo Benítez on international affairs.
"President Abdo Benítez, guided by Gonzalez Franco, a corrupt former Minister of Foreign Affairs whose candidacy for Ambassador of Paraguay to the US was rejected by the State Department, has taken Paraguay's foreign policy into the darkest days of regional diplomatic history," Tase told me. "Abdo Benítez's abominable diplomatic move against the long-suffering Jewish nation brings him closer to his father's Lebanese roots, instead of defending the national interests and foreign policy strategy of Paraguay."
Gonzalez Franco spent 100 days as Paraguay's foreign minister starting in October 2020, and was also the country's ambassador to the UN in 2015-2016 and deputy minister of foreign affairs under Cartes in 2013-2014.
Why does this matter for Israel at this time?
Although he has been out of the presidency for more than three years, Cartes, a tobacco magnate, remains the head of Honor Colorado, a faction in Abdo Benítez's ruling Colorado Party. (Abdo Benítez heads a different faction, Colorado Añeteté.) Cartes is also allegedly connected to criminal activity and was imprisoned during a currency fraud investigation in 1986 and again on currency fraud charges in 1989.
At one time, Brazil's Attorney General's Office actually sought the extradition of Cartes, over alleged money laundering connected to an investigation into Dario Messer, a Brazilian businessman and financial operator who, in August 2020, signed a plea bargain with Brazilian authorities, which sentenced him to 18 years in prison for money laundering and embezzlement.
Money laundering is a persistent issue in Paraguay and particularly in the country's second-largest city, Ciudad del Este. Most recently, on Aug. 25, the US Treasury Department sanctioned a Ciudad del Este-based money laundering network operating in the tri-border area of Argentina, Brazil, and Paraguay. The Iranian-funded, Lebanese-based terrorist group Hezbollah is often engaged in such activity.
"Paraguay hosts a significant and growing money laundering operation connected to Hezbollah in the Triple Frontier, where Paraguay intersects with Argentina and Brazil. Increasingly, Hezbollah's local operatives are involved in the local boom of cocaine trafficking – and there is evidence that Hezbollah is sending senior officials to the Triple Frontier to coordinate these activities," Emanuele Ottolenghi, a senior fellow at the Foundation for Defense of Democracies, has written for Foreign Policy.
This past April, Paraguay sentenced Hezbollah financier Assad Ahmad Barakat to two years and six months for passport forgery and immigration fraud. Ottolenghi explained in The National Interest, "For a country that for decades hosted Hezbollah's terror finance networks with impunity, sentencing Barakat, whom the United States Department of Treasury sanctioned in 2004, looks like a welcome change. It is not."
"Barakat's expulsion changes nothing. The Hezbollah networks in the area are unaffected and his supporters are already hailing his return home as a victory," Ottolenghi wrote, adding that the US "should recognize that Paraguay remains a haven for organized crime and terror finance thanks to its corrupt political elites. Unless Washington keeps its attention and pressure on Paraguayan leaders, Asunción (Paraguay's capital) will only put up a show, much like the expulsion of Barakat, but do little else to address the systemic corruption abetting crime within its own borders."
Also this year, the US State Department sanctioned Ulises Quintana, a member of Paraguay's National Assembly and the frontrunner to become the next mayor of Ciudad del Este, for corruption and aiding transnational organized crime. Quintana is a member of the Cartes-led Honor Colorado faction within Abdo Benítez's ruling party.
At the same time, Paraguay and Israel have taken steps that support a stronger bilateral relationship since the September 2018 embassy controversy – with Paraguay designating Hamas and Hezbollah as terrorist groups in August 2019, and Israel during the same month appointing an ambassador to Paraguay. Yet the envoy, Ambassador Yoed Magen, is also Israel's ambassador to Uruguay and is based in that country's capital of Montevideo – meaning that Israel still does not have a resident ambassador in Asunción.
There are also independent agents of change, such as public relations expert Dario Lezcano Mendoza, who are working to strengthen the ties between Israel and Paraguay. Lezcano Mendoza has visited Jerusalem and has been working for various companies from Tel Aviv that are interested in participating in large public works projects in Paraguay. Yet under the Abdo Benítez government, these potential Paraguay-Israel partnerships have yet to get off the ground.
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For Israel and Paraguay to make further progress toward warmer and more substantive relations, Israeli leaders must ask themselves: Who are our real friends in Asuncion? Do we engage with a businessman with dubious reputations, especially amid the persistence of money laundering in Paraguay that is associated with Hezbollah, an archenemy of Israel? Do we trust President Benítez given that he shuttered the embassy in Jerusalem less than a month after assuming office? Or do we instead work with new and emerging allies who are more likely to have Israel's best interests at heart?
The answer should be no mystery.
