Analysis

The Nvidia affair: Are markets about to fall out of love with AI?

Jensen Huang’s departure from Nvidia exposes the vulnerabilities behind the AI boom. As equities reel in response to his resignation following extramarital affairs, alleged Chinese espionage and a summons to testify before US lawmakers, questions mount over who is really in charge of tech and whether the immense capital riding on it can survive the turmoil.


Issued on: 14/11/2026 
FRANCE24
By: Ella ARWYN JONES

Nvidia boss Jensen Huang at the Consumer Electronics Show (CES) in Las Vegas, Nevada, on January 6, 2025. © Patrick T. Fallon, AFP


Nvidia is a name that has been projected front and centre in the minds of tech enthusiasts and returns-chasing investors alike since its surge to dominate the tech sector in the S&P 500, where it typically accounts for 6 to 7 percent of the value of the index that tracks the performance of 500 leading large-cap, publicly traded companies. But in the space of just a couple of weeks, the $4.2 trillion semiconductor group – whose chips underpin much of the world’s artificial intelligence build-out – has been plunged into the most serious governance crisis since its 1993 inception, sparking geopolitical friction and renewed nervousness amid an ongoing artificial intelligence (AI) boom.

Caught in the crossfire is founder and now defunct CEO Jensen Huang, who for more than three decades was the driving force behind Nvidia (somewhat ironically, attributed to coming from the Latin for "envy" or "greed"), transforming it from a computer graphics company into the world's most valuable semiconductor business supplying the components that power smart tech. Following reports of love affairs – the most recent being an in-house revelation with a direct report and company vice president of healthcare, Kimberly Powell – and suspicions of espionage, Jensen Huang’s abrupt departure as chief executive is sending shockwaves through an industry built in part on his leadership.

The bamboo curtain

At the centre of the controversy is Megaspeed, a Singapore-based computing company that reportedly purchased billions of dollars' worth of Nvidia hardware. On November 8, the former CEO confessed to an affair with the firm’s executive, Alice Huang, who joined the company in 2023 and turned the once-gaming business into a tech-driven data centre enterprise that helps China-based customers access chips. Reported to have established industry legitimacy with both Nvidia by frequently touting her commercial relationship with Chinese e-commerce and tech giant Alibaba – for whom she is speculated to have purchased Nvidia chips on behalf of – intelligence officials believe she was working for China’s spy agency, the Ministry of State Security (MSS). US authorities are investigating whether Megaspeed helped advanced processors reach Chinese customers in breach of American export restrictions, and late on Thursday, ex-CEO Jensen Huang was summoned to testify before US lawmakers.

The allegations involving Alice Huang add a geopolitical, national security dimension to an already sensitive commercial relationship. Washington has spent years restricting China's access to the most powerful AI chips, arguing the technology could strengthen its military, intelligence and surveillance capabilities. Meanwhile, for Beijing, technological prowess remains central to its ambition to compete with the United States in artificial intelligence.

“Megaspeed came under scrutiny long before anyone linked it to this love story,” said Rayna Stamboliyska, CEO at RS Strategy, a company specialising in digital diplomacy, and a practitioner-in-residence at the Centre Internet and Society (CIS) at the National Centre for Scientific Research (CNRS).

“US authorities have reportedly been investigating Megaspeed since 2024,” she said, alluding to reports that the firm imported billions of dollars’ worth of Nvidia chips into Malaysia on behalf of Chinese clients.

Current export controls restrict the circulation of sophisticated American semiconductor and advanced technologies in certain jurisdictions such as China and limit the power of those accessed via special licence. Introduced under the Biden administration in 2018, the limitations initially sent shockwaves through the semiconductor industry, as chip manufacturers such as Nvidia and AMD had to immediately create less powerful “China-versions” of their top AI chips to stay compliant.

However, it’s possible to circumvent access restrictions to the US’s top tech if no physical item is transferred. This would be stopped if US lawmakers pass the US Chip Security Act, which seeks to enforce “location verification”.

The bill passed the House Foreign Affairs Committee by unanimous vote in March 2026, but it still needs to navigate several legislative hurdles in the US Congress before being enacted. But a Democratic majority could support a next round of security restrictions.

“There have been rumours that Nvidia is the biggest opponent of both the Chip Security Act and the AI Overwatch Act,” Stamboliyska noted. “The CEO stepping down means that Nvidia loses let's say it's most effective lobbyists.”

US President Donald Trump has repeatedly fought attempts to regulate AI and, in October, awarded Jensen Huang the National Medal of Science during the "Science: A New Golden Age" summit hosted at the US Institute of Peace in Washington, DC. Stamboliyska pointed to how concerns around AI – as well as proposals for more data centres – played a key role in the recent US midterm elections.

Screenshot of post by Donald J. Trump on Truth Social. © Donald J. Trump via Truth Social

Indeed, these proved pivotal in a number of specific House and Senate races – including in Texas, where Democrat governor-elect Gina Hinojosa campaigned against the influence of the likes of Musk, who spent roughly $225 million supporting Republicans in the state, noted the Financial Times.

No confirmaijing or that Jensen Huang knowingly assisted an intelligence operation.

tion has yet been shared indicating that sensitive tech information was passed to Be

A company bigger than its CEO?

Jensen Huang is not an ordinary departing chief executive. Since co-founding Nvidia with Chris Malachowsky and Curtis Priem in 1993, he presided over its transformation to become the dominant international supplier of advanced processors used to train and operate AI systems. And his influence extended well beyond the company's products: Nvidia is an essential partner to Microsoft, Amazon, Google, OpenAI and other businesses in the race to develop increasingly powerful AI models, while its graphics processing units (GPUs) – or “chips”– software and wider computing infrastructure have become the foundation of an economic ecosystem involving cloud providers, data-centre operators, start-ups and governments.

“AI is definitely losing a leader,” said Leïla Mörch, tech investor and founder of tech advisory firm Shael.

While company execs search for Jensen Huang’s permanent successor, Nvidia has appointed longtime Chief Financial Officer Colette Kress as interim CEO. Kress inherits a role in a firm with formidable resources and a strong market position, but also one that faces unprecedented scrutiny. The challenge will be to demonstrate that Nvidia's success rests on institutional strength rather than dependence on one individual.

“I find it interesting that such a private affair is now unveiling the big geopolitical, capitalist and economic questions behind the AI industry,” noted Mörch. “It shows that the market is so much more than just business and numbers.”

US President Donald Trump presents the National Medal of Technology and Innovation to US' CEO Of nvidia Jensen Huang during the "Golden Age of American Innovation Summit" in October. © Kent Nishimura, AFP

Anthropic anticipation

Nvidia has become a bellwether for the international AI economy. Its performance influences investor expectations for the businesses buying its processors, building data centres and developing AI applications. The extraordinary sums being invested in the sector are based on the relatively simple assumption that demand for tech will continue to grow.

Across the industry, Jensen Huang was considered a voice of reason, often stabilising shareholder reactions amid market-wide sell-offs and allaying wider emerging tech fears. “He was quite vocal in his criticism of (now OpenAI CEO) Sam Altman when he claimed back in 2019 essentially ‘we’re all gonna die’ as a result of AI,” said Stamboliyska. OpenAI initially withheld GPT-2 on the grounds that it was too dangerous to release.

“He was very business and industry oriented. He would acknowledge that yes, investors are spending a lot of money on this emerging industry – billions of dollars – but actually, we are still very far from the trillions of dollars that are actually needed,” said Mörch, of his ability to offer a grounding presence amid a fast-changing industry. “He made people feel like it’s going to be ok.”

Amazon, Microsoft, Alphabet and Meta continue to commit hundreds of billions of dollars to AI infrastructure, as start-ups raise significant capital to compete amid the development of increasingly sophisticated models.

But there has been a recent downward – albeit possibly temporary – trend in AI stocks, prompted by US political shifts, nervousness around potential interest-rate hikes, and ongoing US-China trade tensions. Nvidia shares have lost 13 percent of their value since Monday and are down more than 26 percent over the past month. The firm is scheduled to present its third-quarter results next week on November 17.

How close was Nvidia ex-CEO, to Trump?

Cover image: © France 24

04:09

The timing of the Nvidia reverberations is particularly pertinent for behemoths such as Anthropic – the company behind Claude AI – and other developers seeking to attract investment. Their valuations depend on expectations of sustained growth, continued access to computing resources and businesses' willingness to keep spending on AI.

Backed by seven cornerstone investors whose rolodex boasts names including Alphabet, Nvidia and Microsoft – Anthropic is scheduled to price its initial public offering via New York’s Nasdaq on November 18 and hopes to raise shares amounting to around $64.4 billion. In doing so, the company would achieve a valuation of between $1.26 trillion and $1.41 trillion – a hefty sum, albeit down on the more than $2 trillion valuation it had hoped for months prior. Goldman Sachs is underwriting the transaction and projects the firm to achieve an annual revenue of roughly $685 billion by 2030. But if confidence continues to weaken, the consequences could spread throughout the investment chain, with Anthropic’s ambitions falling flat.

“If Anthropic’s IPO goes well, it would be a strong signal to the market that everything that's happening in terms of intelligence is ‘morality based’, but otherwise the business is still here.”

Photos of Nvidia CEO Jensen Huang during a previous visit are displayed at a preserved fruit shop in Taipei on November 13, 2026. Jensen Huang, chief executive of US-firm Nvidia, was born in Taiwan. © I-Hwa Cheng

Europe’s call for greater sovereignty

The crisis raises a familiar but increasingly urgent question: How can European markets avoid becoming dependent on just a handful of American tech companies for the infrastructure underpinning the digital future? Just last month, Nvidia invested in French healthtech firm – and household name – Doctolib.

European governments have repeatedly called for greater technological sovereignty, investment in domestic computing capacity and the development of home-grown AI champions. Yet Nvidia's dominance illustrates how difficult that ambition might be to achieve in terms of resources, investment, energy and expertise.

Mörch pointed to the UK government agency AI Security Institute, which she explained is one of – if not the only – government entities to invest actively in auditing the technology and language learning models before they are made accessible to the public, which she said builds an inherent sense of accountability.

“We do have some kind of solution and watching what these people are doing should be a source of inspiration and action for the rest of the world.”

“The industry is now realising and unveiling some weaknesses … perhaps over personalisation and a lack of decentralisation of power,” she said, adding that current developments are prompting big players to reconsider their succession plans and take appropriate steps to ensure board independence.

The Nvidia affair could strengthen European arguments for diversifying supply chains and applying a tougher regulatory stance on strategic tech bros. It may also encourage governments to look more closely at ownership and control of data centres, the provenance of computing hardware and the risks associated with international technology partnerships.

But leaning into Altman’s fears that AI may eventually signal the end of humanity, Mörch remains philosophical on who might fill the Jensen Huang gap at Nvidia’s helm. “You know we say in French, ‘les cimetières sont pleins de gens irremplacables’… cemeteries are full of irreplaceable people. You might be irreplaceable. It doesn't mean that you will never be replaced.”

Nvidia's disgraced ex-CEO Jensen Huang to testify before US Congress

Jensen Huang, who resigned as Nvidia's chief executive on Thursday following allegations he had an affair with a Chinese spy, has been summoned to testify before US lawmakers, Republican Senator Tim Scott said. Commerce Secretary Howard Lutnick was also called to answer questions from lawmakers concerning US national security and "the protection of sensitive US technology".


Modified: 13/11/2026 
FRANCE 24

Co-founder, president and CEO of US technology company Nvidia Jensen Huang was ousted after allegations he had an affair with a Chinese spy. © John Macdougall, AFP

US lawmakers have called Jensen Huang, an architect of the artificial intelligence boom, to face their questions in December after the Nvidia ex-CEO quit over extramarital affairs, including one with a suspected Chinese spy.

The scandal has wiped almost half a trillion dollars off Nvidia's market valuation, as it raises national security fears and leaves the AI industry in uncharted waters.

"Recent reports raise serious concerns about our national security and the protection of sensitive US technology," Republican Senator Tim Scott wrote Thursday on X.

Scott said he was requesting Huang and Commerce Secretary Howard Lutnick to testify in December before the Senate Banking Committee, which he chairs.

It joins a call for a closed-door interview with the leather-jacketed, 63-year-old Huang on December 1 by three House of Representatives committees, on threat of subpoena.

Huang, who has been married to his wife Lori for over 40 years, admitted Sunday to an affair, reportedly with Alice Huang, a former senior executive at Singapore-based data center company Megaspeed. The two are not related.

US intelligence reportedly circulated a memo this spring alleging she was an asset of China's Ministry of State Security. Beijing has rejected the allegations.

On Wednesday, The New York Times reported a second affair, citing video of Huang being affectionate with Nvidia's vice president of health care, Kimberly Powell.

While Nvidia's board searches for a permanent successor to Huang, who spent 33 years at the helm of the firm he co-founded, chief Financial Officer Colette Kress will serve as interim CEO.

Nvidia hit gold when the launch of OpenAI's ChatGPT in 2022 sparked a global rush to develop AI, with its processors – once designed for video game graphics – becoming a crucial ingredient to train and run the technology.

Informal Trump adviser

Nvidia did not give a reason for Huang's departure, who also gave up his board seat.

Huang is Nvidia's largest individual shareholder, with a stake of about 3.6 percent, according to the company.

The Taiwanese-born businessman was a close informal adviser to President Donald Trump on AI, and had spent years lobbying against curbs on sales of advanced AI chips to China for national security reasons.

Dan Ives of investment bank Yorkville Ives called it "a dark day for Nvidia and the US tech industry".

But he said the board had done what it needed: "rip off the band-aid and take Nvidia into its next chapter without him".

Alice Huang, a former Megaspeed executive, has been outted as an alleged spy for China. File photo via AFP

The board named Harvey Jones, a former chief executive of chip design software firm Synopsys, as chair, and said it expected the company's operations and product roadmap "to continue without interruption".

Interim CEO Kress joined Nvidia in 2013 after nearly 25 years at companies including Cisco and Microsoft.

Trump, who had stood by Huang throughout the scandal, said former Apple boss Tim Cook should take over.

"A Legend replaces a Legend!" Trump said on his Truth Social network, adding that Cook had made Apple "one of the great companies of the world at a fairly short range".
'Going through hell'

Singapore said Thursday it had barred Alice Huang, a Chinese national, from re-entering the country in February for giving investigators inaccurate information about her role at Megaspeed, though she was not investigated for espionage.

Nvidia's board opened a probe on Sunday into reporting that Huang had been the target of a "foreign intelligence effort", while saying it retained confidence in him.

When asked Thursday if Jensen should have stepped down, Trump said it would depend.

"If the woman was a spy, yes. If the woman was not a spy, perhaps it would be different," Trump said in an interview.

But Trump said he was confident that Huang will "end up on his feet", adding: "I spoke to him yesterday. He's going through hell. What he feels most badly about is his wife and family."

At the heart of the spy allegations is the race between the United States and China for supremacy in an industry widely seen as the next industrial revolution.

© Taryn NG, AFP

Key US lawmakers, including Senate Democratic leader Chuck Schumer, called Thursday for answers on what the Trump administration knew about Huang's ties to a suspected Chinese spy, days before Trump travels to China for a summit.

Reports allege the Commerce Department under Secretary Howard Lutnick may have failed to act on suspicions that Megaspeed was helping reroute restricted Nvidia technology to China.

Singapore's home ministry said it had repeatedly sought information from the US Justice Department and FBI on a US server supplier during its Megaspeed probe, but "received limited information or assistance".

On Thursday, Malaysia also said Friday it was investigating a subsidiary of Megaspeed International over the possible diversion of advanced AI chips to other countries.

(FRANCE 24 with AFP)

Taiwan chip suppliers shrug off Nvidia CEO departure

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By IntelliNews - New Taipei Bureau November 13, 2026

Taiwan's semiconductor suppliers face little risk of serious disruption after Jensen Huang stepped down from Nvidia (NASDAQ: NVDA), though his exit may speed up a shift in AI chip orders towards rival products, industry executives and investment advisers said, Focus Taiwan reported on November 13.

Huang, who co-founded the US chip designer, quit on November 12 as president, chief executive and board member. He left after reports emerged of extramarital relationships with two women. US intelligence officials suspect one of them, a businesswoman, of links to Chinese intelligence. Nvidia has named Chief Financial Officer Colette Kress as interim CEO while the board looks for a permanent replacement.

Taishin Securities Investment Advisory said in a report that the resignation could hasten the spread of AI chip orders beyond Nvidia. According to the report, competitors AMD and Broadcom stand to gain, as do Amazon and Google. Both are building their own application-specific integrated circuits (ASICs), which are chips tailored to particular tasks.

Senior chip industry executives who spoke to Taiwan's Central News Agency agreed that ASIC work could pick up pace. They did not expect it to upset the balance with graphics processing units (GPUs), the core of Nvidia's AI business. One executive in the substrate sector said Nvidia's GPUs would be difficult to displace because many AI developers depend on CUDA, the company's software platform built to run on its chips.

Taishin said close ties between chipmakers and their Taiwanese partners should shield local suppliers even if demand moves from GPUs to ASICs. Alex Huang, an analyst at Mega International Investment Services, also expected little impact. He noted that Taiwanese firms remain central to the AI supply chain as demand grows and buyers try to cut their dependence on China. Individual suppliers would keep adapting to changes in product demand and technology, he added.

An executive at a packaging and testing firm said the company might move part of its 2027 budget to manage short-term risk. Over the longer run, the executive saw good prospects for both GPUs and ASICs and said the firm would keep developing both in line with customer needs.

A second executive said Nvidia's orders from Taiwan would not change. Increasingly complex GPU technology and lengthy supplier qualification make it hard for the company to switch vendors, the executive explained.

Taishin said US export policy towards China remained a key issue for Taiwanese suppliers, including any revisions to rules on Nvidia's H200 shipments. Washington currently requires licences for H200 AI chips sold to approved Chinese buyers, and every application undergoes a security review.

French students demonstrate solidarity in the fight for better schools

It began as a protest over crumbling classrooms and missing teachers, but France's student movement is now challenging the political establishment to give young people more of a say in decisions about their future.


Issued on: 10/11/2026 - RFI

Cover image: Students at the Hélène Boucher high school in Paris blockaded the entrance for more than three weeks before riot police were sent it to end the blockade. AP Photo/Nicolas Garriga - Nicolas Garriga
02:11

By:  Alison Hird


“There’s a massive hole in our classroom," says Marianne Gerbet, 19, who is in her second year of a literary classe préparatoire – intensive programmes to prepare students for the entrance exams for France's most prestigious universities – at Hélène Boucher high school in Paris.

With winter approaching, she fears it will become increasingly difficult to study. "How are you supposed to sit a mock exam when water is falling on your paper?” she asks.

The situation in poorer working-class neighbourhoods is far worse, she says, with “ceilings collapsing, rain coming through the roofs... rats running round your feet”.

As at hundreds of high schools across France in recent weeks, Marianne and her fellow students have been blockading entrances in protest at run-down schools and a shortage of teachers, and over the Parcoursup online university admissions platform, which they say is unfair and overly selective.

"It's a movement of solidarity," Marianne said, standing by a banner reading “Gen Z, Generation Revolution”, as riot police – sent in on Tuesday to break the blockade – allowed a handful of students to enter the school.

“It’s not normal to have police in front of a school,” says Maya, 16, who claims she was tear gassed and chased by police at 7am that morning, after trying to build barricades out of green rubbish bins.


'Collective exhaustion'

Despite the police presence, and missing out on lessons, protesting students say they won't back down.

“It’s a sacrifice,” Gerbet says. “We’re being told to go back to class, but how on earth are we supposed to study properly when we’re not in the right conditions?”

Pupils will have to catch up, she admits, but returning to school without proper facilities is not the solution.

There is “a contradiction” at the heart of the protests, acknowledges Alice de Brito, a 22-year-old representative of the National Union of Students of France (Unef).

“They’re losing weeks of education because they want to have the right to study, it’s really crazy,” she notes, while underlining that without the blockades it wouldn’t have become obvious that teacher shortages were so bad.

For 17-year-old Aissata Ba, the whole education system needs overhauling.

“These blockades are the result of collective exhaustion,” she says. “We don’t have time to do anything. We’re at school from 8am to 6pm, we see our teachers more than our parents.”

Spotlight on France, episode 152 © RFI
Listen to a report and interviews on the student protests in the 

Spotlight on France podcast

Too young to vote

The younger generation as a whole doesn't have much to look forward to, says Rebecca Lyon-Caen, 16, who describes herself as a good student from a well-off family.

“There’s a shortage of housing, jobs, the threat of AI and the international situation is worrying,” she says. “We don’t have the right to strike, and we can’t vote. We really feel that our voice is constantly being suppressed. It’s frustrating, because we have things to say.”

This frustration is shared by de Brito, who has been taking part in discussions with government ministers in her role as a union representative.

“We’re really tired of not being taken seriously because of our age,” she says. “We want the government to take young people seriously and to start seeing us for what we are: young adults, not children any more.”

'They think we're idiots'

Initially, the government response largely focused on the rioting and looting that broke out on the margins of the demonstrations of 17 October that were otherwise largely peaceful.

But on 26 October, following another weekend of protests involving teachers and unions, the government announced a series of concessions.

These measures include up to €4 billion in low-interest loans to renovate schools, some 3,000 fully qualified replacement teachers to fill staffing gaps, 15,000 additional places in higher education and a proposed limit of 28 pupils per class. The education ministry also pledged to phase out Parcoursup by 2028.

“None of the decisions we make are empty promises,” Education Minister Edouard Geffray said. “Everything we say will be done and respected within specific time frames and with figures.”

But with presidential elections coming up in April and May next year, Ba is not convinced the government will make good on its pledges.

“Who can tell us that they will be maintained and put in place?” she asks, questioning whether the announcements are intended to bring lasting change or simply “calm the revolt”.

“We haven’t been heard,” she says, arguing that the 15,000 extra university places promised by the government fall far short of the 250,000 they are asking for.

“We’re not satisfied with these crumbs,” said 16-year-old Marguerite, adding that a few weeks of missed lessons was a “relatively small price" to pay in their fight for better school conditions.

As for Parcoursup, which student unions have contested since its inception in 2018, de Brito says the government’s proposed changes amount to smoke and mirrors.

“They’ve agreed to stop it but they’re going to put in another website that does the same thing, with another name,” she says. “They think we’re idiots.”

Years of underinvestment

A spike in births in 2010 has led to a rise in the number of 16-year-olds now attending schools that have been underfunded for years, and where teacher numbers have not kept up with the number of students.

The anger currently being expressed by students and teachers alike reflects years of neglect in the education system, says sociologist Fabien Truong.

“It’s the underinvestment of the past 15 or 20 years that we are paying for today,” he told RFI. The consequences have become so serious, he argues, that the system is struggling simply to function.

These protests should not be seen as those of a generation preoccupied only with its future, he noted.

“It’s a feeling of anxiety about the present, even more than the future,” he said. “Pupils are fighting for schools that work now – with functioning buildings, teachers in classrooms and enough places in higher education.”

The government insists it has heard the students’ concerns, but the dire state of France’s public finances means it cannot come up with the €10bn the student unions are demanding.

However de Brito says the government "finds adjustments when it wants to".

She cites the example of a July 2025 Senate commission enquiry which claimed up to €211bn had been handed to big French companies in reduced tax and social contributions.

She also points to a voluntary military service plan announced by President Emmanuel Macron this year for the sum of €2.3bn – although the financing is spread out over the next four years.

Sense of solidarity

While the stand-off between the government and students is ongoing, de Brito says there are positives. The concessions obtained so far show that “if they continue [protesting and blockading], they can obtain more”. And they've been part of the dialogue, which she says “hadn’t happened for a long time”.

The biggest source of satisfaction for her is the way high-school and university students of all backgrounds have come together.

Pupils at Henri-IV, one of the capital’s most prestigious secondary schools, told de Brito they were protesting because they did not understand why students in poorer areas should be left behind

“When you talk to high school students in the suburbs they talk about overseas territories, when you talk to overseas territories they’re talking about rurality... everyone is looking after each other,” she says.

At the University of Créteil, where de Brito studies, students have organised tutoring for high school pupils who have missed lessons because of blockades.

She has seen students from prestigious schools in Paris bringing their notes, giving them to other high schoolers so they can keep up.

“That solidarity is the best thing I’ve seen come out of these protests,” she says, hoping it continues long after the protests end. “It’s great that we’ve built this collectively."

Listen to more on the student protests in the Spotlight on France podcast, episode 152.

 

The role of social relationships in scaling agricultural innovations: A dimension that remains underreported in research

The Alliance of Bioversity International and the International Center for Tropical Agriculture

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A new study looks at how social relationships are underreported in scaling agricultural Innovations.

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Credit: Daniela Arce, CIAT

A study published in Frontiers in Sustainable Food Systems reveals that, although partnerships and institutional collaboration feature prominently in climate-oriented agricultural research, their relationship with the scaling of innovations is rarely explicitly documented. The findings highlight the need to better understand the role of social relationships to strengthen the design, monitoring, and evaluation of scaling processes. 

Ensuring that agricultural innovations reach more farmers, influence public policies, and contribute to lasting transformations remains one of the main challenges facing Agricultural Research for Development. However, expanding their reach depends not only on technical solutions but also on relationships of trust, partnerships, and collaboration among the actors involved in these processes. 

Against this backdrop, the study Social capital and scaling in climate-oriented Agricultural Research for Development examines how the role of social capital, understood as relationships of trust, closeness, and support among actors, is documented in the scaling of agricultural innovations. The research seeks to understand the extent to which these dimensions are recognized together in reported outcomes and what opportunities exist to better integrate them into scaling strategies. 

To this end, Deissy Martínez-Barón, a researcher at the International Center for Tropical Agriculture (CIAT) currently part of the Alliance of Bioversity International and CIAT, and the University of Copenhagen; Anne Gravsholt Busck, from the University of Copenhagen; and Steven Dean Prager, from the Gates Foundation, analyzed 273 results reports covering 261 projects across 12 CGIAR research programs, reported between 2018 and 2021 under the former CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). 

Beyond outcomes: Understanding how social relationships support scaling 

One of the study's main contributions is identifying a gap between reported scaling outcomes and how the social and institutional conditions that may contribute to achieving them are documented. 

The study recognizes three complementary scaling pathways: scaling out, when innovations reach more people and places; scaling up, when they influence policies and institutions; and scaling deep, when relationships, practices, and social norms are transformed. 

Although the reports provide examples of these pathways, particularly scaling out and scaling up, scaling is generally documented as an achieved outcome, without systematically explaining how partnerships, trust, and institutional collaboration contribute to these processes. The scaling deep dimension is less developed in the documents analyzed. 

To identify these patterns, the researchers used a model known as Latent Dirichlet Allocation (LDA), which identified 17 topics grouped into four areas: agricultural systems, climate change adaptation, climate change mitigation, and enabling environments. The central finding is that the reports document collaborative relationships and scaling outcomes but rarely make their potential connections explicit. According to the authors, recognizing these connections could strengthen learning across projects and improve scaling strategies. 

What does the research reveal? 

• Scaling has limited visibility as an explicit topic. The topic most directly associated with scaling had a significant presence in only 1.8% of the 273 reports. This does not mean that projects did not undertake scaling activities, but rather that these activities had limited visibility as a process in the documentation analyzed. 

• Dimensions of social capital feature prominently in enabling environments. Topics associated with these environments, including collaborative research, institutional partnerships, and stakeholder participation, had a significant presence in 45.4% of the reports. These topics reflect dimensions related to social capital, although they do not constitute a direct measurement of trust among actors. 

• The relationship between social capital and scaling is rarely documented jointly. Only 2 of the 273 reports analyzed (0.7%) showed a significant and simultaneous presence of topics associated with both social capital and scaling. This finding shows that the two dimensions are rarely documented together, even when they feature in research outcomes. 

• Social dimensions vary across research areas. Topics related to climate change adaptation include capacity strengthening and climate information services, while those associated with mitigation primarily emphasize technical practices and policy instruments. 

Taken together, these findings show that social capital is reflected in research experiences, but its relationship with scaling pathways is not systematically documented, making it more difficult to compare experiences and support institutional learning. 

What does this mean for farmers and decision-makers? 

Although the findings reveal a documentation gap, the study also presents concrete examples illustrating how relationships of trust and collaboration among actors can play a role in different scaling pathways. One example documents the dissemination of drought-tolerant bean varieties to more than 10,000 farmers across three countries through sustained partnerships among national agricultural research organizations, seed companies, and farmer associations. 

Another example describes how collaboration between researchers and governments contributed to the inclusion of agroclimatic information in the Nationally Determined Contributions (NDCs) of several countries under the Paris Agreement. In Colombia, the Local Technical Agroclimatic Committees (Mesas Técnicas Agroclimáticas, MTA in Spanish) illustrate how sustained interaction among farmers, extension agents, and local authorities can strengthen relationships of trust and support the use of climate information. These examples are illustrative and do not constitute evidence of a causal relationship between social capital and scaling outcomes. 

For governments, development organizations, and research programs, the authors recommend explicitly integrating social capital into theories of change, planning, and the monitoring of scaling strategies. This includes identifying relevant actors and relationships and incorporating indicators of trust, collaboration, network diversity, and participation. They also caution that networks can generate inequalities or exclude certain actors, making it important to understand these dynamics to promote responsible and inclusive scaling. 

The findings highlight the need to explicitly recognize and document the role of social capital in scaling pathways, from project design through to the monitoring of results. According to the authors, integrating these dimensions into theories of change and monitoring systems could improve understanding of the social and institutional conditions associated with the expansion of agricultural innovations, strengthen learning across projects, and guide more inclusive and responsible scaling strategies. 

---

Journal

Frontiers

DOI

10.3389/fsufs.2026.1802627

Article Title

Social capital and scaling in climate-oriented Agricultural Research for Development

Paraguayan protesters are back on the streets despite the removal of President


Issued on: 10/11/2026 - FRANCE24

A banking crisis that saw the president of Paraguay impeached Friday, November 6, continues to rock the country with protesters back on the streets. The Ueno Bank started as a digital first bank, attracting many low income customers, quickly growing to become a major bank in charge of state pensions and holding the accounts of several government institutions before having its accounts frozen by the central bank due to solvency concerns.

LONG READ

Paraguay’s Banking Crisis And The Politics Of Impunity – Analysis

November 11, 2026

By Steven E. Hendrix


Key Takeaways:

Paraguay’s President Santiago Peña was impeached on November 6 after the collapse of Ueno Bank, which held $800–850 million in public funds and left millions unable to access deposits; he faces criminal charges.

The crisis echoes 1990s banking failures involving weak supervision, insider lending and public pension losses, raising questions about political influence over regulators and the Colorado Party’s enduring control of state institutions.

Accountability requires an independent probe into deposits, related-party lending and regulatory delays, not merely a change of president, if Paraguay is to restore confidence and prevent recurrence.

The collapse of Ueno Bank has brought down a president. Paraguay’s history suggests that removing one political leader will not be enough to address the institutions that allowed the crisis to develop.

Paraguay has removed its president, placed senior financial officials under arrest, and watched millions of people struggle to recover their savings from a failed bank. Santiago Peña, elected in 2023 with the backing of former President Horacio Cartes, was impeached on November 6 after losing the support of his own Colorado Party. His vice president, Pedro Alliana, assumed office, while Peña was subsequently charged with offenses arising from the collapse of Ueno Bank and ordered detained at a military facility. The events unfolded with extraordinary speed, even for a region accustomed to political upheaval.

The immediate scandal concerns a financial institution that expanded rapidly, attracted hundreds of millions of dollars in public deposits, and developed close relationships with senior government officials. The larger story concerns the political system that allowed those relationships to develop, the regulators responsible for supervising them, and the governing party that ultimately abandoned the president it had helped elect. Paraguay has experienced banking failures, political corruption scandals, and contested presidential impeachments before. The present crisis brings elements of all three together.

A banking success story unravels

Ueno Bank represented a genuine advance in Paraguayan financial services. Its digital platforms, convenient payment systems, and aggressive expansion attracted customers who had often been underserved by traditional banks. The institution became a familiar presence in everyday commercial life, sponsoring sporting events and making its brand visible throughout the country. By November 2026, Ueno reported approximately three million customers, representing roughly 60 percent of Paraguay’s adult population.

Its growth also brought it into a close relationship with the public sector. According to the Associated Press, Ueno held between $800 million and $850 million in public funds, including substantial deposits from Paraguay’s state pension and health fund. These were public resources entrusted to a rapidly expanding private institution. Their concentration raised questions about how deposit decisions were made, whether financial risks were adequately evaluated, and what influence political relationships may have exercised over those decisions.


The Central Bank had identified problems before the institution collapsed. Supervisors had warned Ueno about excessive lending to companies associated with its owners. By early November, adjustments to the bank’s financial statements revealed that its solvency ratio had fallen below half the legally required minimum. Regulators placed Ueno into resolution proceedings, seeking to protect depositors and transfer viable assets and liabilities to other institutions. The intervention left millions of customers temporarily unable to withdraw or transfer their money.

The consequences reached well beyond Ueno’s shareholders and executives. Ordinary depositors could not access savings needed for household expenses and commercial transactions. Pensioners worried about the security of public retirement funds. Businesses faced disruptions to payments and payroll. The government began arrangements for deposit reimbursements, but the immediate damage to public confidence was substantial. For many Paraguayans, the crisis revived a question that had troubled the country during earlier banking failures: why had regulators allowed a financial institution entrusted with so much public money to reach this condition?

Peña’s financial connections made the crisis politically explosive. He had held shares in Grupo Vázquez, the business group associated with Ueno, until March 2025, after becoming president. His appointment of Carlos Carvallo, who had previously headed Ueno’s predecessor, to lead the Central Bank raised additional questions about the independence of financial supervision. The Central Bank maintained that Carvallo recused himself from decisions involving Ueno, but the overlapping relationships became increasingly difficult to defend as the institution’s financial problems emerged.


Peña’s political position deteriorated rapidly as the banking emergency unfolded. On November 5, he offered his resignation, describing his decision as an effort to preserve national stability and democratic institutions. Congress nevertheless continued impeachment proceedings. Peña’s departure through resignation rather than removal carried potentially important implications for his future political status and the protections available to former presidents. As the Associated Press explained, lawmakers were concerned that accepting his resignation could preserve his eligibility for a lifetime Senate seat and associated legal protections.

The Senate completed the impeachment on November 6. All 44 senators present voted to remove Peña, whose support within the Colorado Party had collapsed. Vice President Pedro Alliana was sworn in to complete the presidential term through August 2028. The unanimity of the vote among those present reflected the extent of Peña’s political isolation, but it did not settle the separate questions of criminal responsibility or the fairness of the proceedings.


Peña was initially placed under house arrest. On November 7, prosecutors filed criminal charges arising from the Ueno investigation, and a judge ordered him detained at a military facility pending further proceedings. Reuters reported on November 8 that Peña had been charged with breach of trust and using his office for personal gain. Former Central Bank chief Carvallo was also charged. Peña denies wrongdoing and has pleaded not guilty. The allegations remain subject to judicial determination.

The speed of the proceedings has raised legitimate procedural questions. Peña requested additional time to prepare his defense during the impeachment, but the Senate proceeded without granting the requested extension. Those concerns deserve examination regardless of the seriousness of the allegations against him. Paraguay’s institutions must be capable of investigating corruption and removing officials when constitutionally justified, while respecting the procedural protections that give such decisions legitimacy.

Paraguay has been here before

During the banking crises of 1995 through 1998, Paraguay experienced repeated failures involving weak supervision, insider lending, inadequate capitalization, and political resistance to closing insolvent institutions. The International Monetary Fund’s examination of Paraguay’s financial sector documented the extensive damage caused by the collapse of locally owned banks and the government’s costly efforts to contain the crisis.

The problems were not confined to a handful of troubled institutions. According to the IMF’s historical analysis, fifteen of Paraguay’s nineteen locally owned banks were closed or absorbed by stronger institutions between 1995 and 1999. The failures followed years of undercapitalization, inadequate supervision, and lending to companies associated with bank owners. Public intervention prevented an even broader collapse but transferred substantial financial losses to the state.


The treatment of social security funds was especially disturbing. Rather than allowing troubled banks to fail promptly, authorities encouraged the Instituto de Previsión Social, Paraguay’s public social security institution, to increase its deposits in financially weak banks. In January 1997, IPS was persuaded to convert 26 billion guaraníes in deposits at Banco de Desarrollo into equity in an effort to prevent the institution’s failure. The strategy did not resolve the underlying problems.

The IMF estimated that IPS lost more than 620 billion guaraníes, equivalent at the time to approximately $265 million, in banks liquidated during 1997 and 1998. The government subsequently agreed to absorb 525 billion guaraníes through a long-term bond. Public retirement resources had been exposed to institutions whose financial condition should have prompted more decisive regulatory action. Political reluctance to close troubled banks allowed losses to accumulate, while the eventual costs were transferred to the public sector.

The resemblance to the present Ueno scandal warrants careful examination. In both periods, substantial public resources were exposed to private financial institutions, questions arose about the adequacy of banking supervision, and political relationships complicated the effort to establish responsibility. Paraguay’s financial system has changed considerably since the 1990s, however, and the failure of one institution does not establish that the entire system is unsound. The current investigation must determine whether the problems arose from inadequate regulation, improper political influence, failures of management, or some combination of these factors.

The earlier banking crisis also produced a prolonged struggle over accountability. Former President Juan Carlos Wasmosy, who governed from 1993 to 1998, faced criminal proceedings concerning government assistance to Banco de Desarrollo, one of the troubled institutions of the period. He was initially convicted, but that conviction was overturned on appeal. On June 21, 2007, Paraguay’s Supreme Court confirmed his acquittal. The proceedings continued for years after the immediate financial emergency had passed. They also demonstrate why allegations, initial judgments, and final judicial outcomes must be treated separately.

Paraguay adopted important reforms after the earlier banking crises, including measures to strengthen banking supervision and financial regulation. Those changes should not be dismissed. The country’s financial system has demonstrated greater stability in subsequent decades, and its monetary authorities have often been credited with maintaining a degree of macroeconomic discipline that distinguishes Paraguay from several of its neighbors. Nevertheless, the Ueno scandal raises the possibility that improvements in regulation were not accompanied by sufficient protection against political interference.

The World Bank’s earlier warning

The international financial institutions were already confronting Paraguay’s governance problems during the banking crisis of the 1990s. The timing was significant because the World Bank itself was undergoing a major change in how it approached corruption.

When James D. Wolfensohn became president of the World Bank in 1995, corruption remained a subject that many officials approached cautiously. The institution’s charter prohibited political interference in member countries, and corruption had long been treated as the “C word,” a subject considered politically sensitive and therefore difficult to address directly. Wolfensohn challenged that reluctance. In October 1996, he publicly described corruption as a cancer undermining development, arguing that international assistance could not achieve its objectives without greater transparency and accountability. The World Bank adopted a formal anticorruption strategy the following year, expanding its willingness to examine the governance conditions affecting the effectiveness of its lending.

Paraguay soon experienced a serious deterioration in its relationship with the Bank. In December 1998, the institution informed the government that it would stop preparing new loans until implementation of existing projects improved and outstanding obligations involving the Yacyretá hydroelectric project were addressed. The Bank’s September 2001 Country Assistance Evaluation found that Paraguay had one of its ten worst-performing project portfolios in August 1999. No new World Bank loans had been approved since 1997, despite a country assistance strategy that had contemplated continued lending.

The difficulties extended across several sectors. A $29 million Land Use Rationalization Project, approved in 1992 to help modernize Paraguay’s rural property cadastre, had suffered extensive implementation delays and achieved only a fraction of its original objectives. The project initially contemplated cadastral work covering more than 24 million hectares. Its scope was eventually reduced to a pilot covering approximately 2.3 million hectares, which remained incomplete despite extensions. The Bank’s evaluation identified procurement problems, inadequate management, weak technical supervision, and poor-quality deliverables. Other projects experienced similar difficulties, reflecting broader weaknesses in public administration and the capacity to implement development programs.

Land administration was particularly important in Paraguay, where the concentration of rural property, uncertain land titles, and longstanding disputes over ownership complicated economic development and social equity. A functioning cadastre was essential for protecting property rights, improving taxation, reducing disputes, and establishing a reliable basis for agricultural investment. Failure to complete the project therefore had consequences extending beyond the Bank’s financial portfolio. It represented a missed opportunity to strengthen an institution central to Paraguay’s economic and political development.

The Bank’s decision to curtail new lending was not formally described as the first application of Wolfensohn’s anticorruption policy, nor do the available records establish that Paraguay was the first country to have a loan cancelled under that initiative. The documented episode is nevertheless significant. At the same time that Paraguay was struggling with banking failures and the political management of public financial resources, one of its principal development partners was concluding that serious governance and implementation problems had undermined the effectiveness of its assistance.


The Bank’s 2001 evaluation was particularly critical of the country’s limited commitment to reform. It found that projects approved during the 1990s had encountered serious difficulties, many attributable to governance conditions, and that political and institutional obstacles had prevented reforms needed to sustain economic development. The problems were not confined to the financial sector. They extended into land administration, infrastructure, public-sector management, and programs intended to improve the lives of ordinary Paraguayans.

The IMF’s 2001 assessment also documented the lingering consequences of the banking crisis and weaknesses in financial supervision. The World Bank, meanwhile, maintained a policy dialogue with Paraguay despite the deterioration in its lending portfolio. Its approach included technical assistance and efforts to support public-sector reform. The Bank had not abandoned Paraguay. It was attempting to maintain an institutional relationship while insisting that the country address weaknesses that undermined the effectiveness of development assistance.

International institutions can provide financing, technical assistance, and advice, but they cannot substitute for domestic political commitment to effective administration and independent oversight. The difficulties confronting Paraguay in the 1990s were not simply a shortage of resources or technical expertise. They also involved the political arrangements through which public institutions made decisions and allocated economic opportunities. Those arrangements deserve renewed scrutiny as Paraguay examines how substantial public deposits came to be concentrated in Ueno Bank.
The Colorado Party and the distribution of power

The Colorado Party’s relationship with the Paraguayan state provides essential context for understanding these recurring problems. Under Alfredo Stroessner, who ruled from 1954 until 1989, the party became deeply integrated into the government, military, civil service, and judiciary. Political loyalty influenced public employment, government contracts, and access to economic opportunity. The dictatorship ended, but the networks connecting party organization to state resources proved more durable.

A study of Paraguay’s political institutions by José Molinas, Aníbal Pérez-Liñán, Sebastián Saiegh, and Marcela Montero, published through the Inter-American Development Bank, examined how these relationships shaped policymaking across the dictatorship and the subsequent democratic transition. The authors found that competitive elections changed the mechanisms through which political authority was exercised but did not immediately dismantle the patronage networks developed over decades. Their analysis describes a political system comparatively effective at distributing benefits to particular constituencies while struggling to adopt broader regulatory and redistributive reforms.


The Colorado Party has governed Paraguay for most of the period since 1947, interrupted most notably by Fernando Lugo’s election in 2008. Its electoral success reflects genuine popular support as well as organizational strength and longstanding access to state resources. Internal competition can be intense, sometimes more consequential than competition with opposition parties. Factions disagree over leadership, appointments, economic opportunities, and political strategy, even while sharing an interest in preserving the party’s position.

The party’s longevity has also shaped the institutions responsible for holding government officials accountable. Political appointments, access to public employment, and the distribution of government benefits have remained important instruments of party organization. These practices are not exclusive to the Colorado Party, nor does party membership establish involvement in corruption. But the party’s extraordinary endurance has given it particular influence over institutions responsible for distributing public resources and enforcing the rules governing their use.

Financial regulation does not operate in isolation from these political institutions. Decisions about public deposits, regulatory appointments, supervisory priorities, and the enforcement of banking rules are made within a broader political environment. Even technically sound regulations can be undermined if the officials responsible for enforcing them lack independence or face pressure from powerful political and economic interests.

Paraguay must now examine whether its institutions have developed sufficient independence to resist such pressures. The failure of one bank cannot answer that question by itself. Investigators need to examine the specific decisions that allowed Ueno to expand, attract public resources, and continue operating despite emerging concerns about its financial condition. Their work must include the conduct of officials who remain politically influential, not merely those who have already lost office.
Horacio Cartes and the American sanctions reversal

Horacio Cartes’s rise demonstrates how political and economic influence can reinforce one another within this system. A successful businessman before becoming president in 2013, Cartes subsequently consolidated substantial influence over the Colorado Party. His support was instrumental in Peña’s election, and his position as party leader gave him considerable influence over legislators and the political fortunes of the administration.

Cartes also has a significant history with American anticorruption sanctions. In January 2023, the U.S. Treasury Department sanctioned him under the Global Magnitsky framework, alleging extensive corruption before, during, and after his presidency. Treasury accused Cartes of making payments to legislators to secure their loyalty and influence political decisions, describing monthly payments ranging from $5,000 to $50,000. The allegations portrayed political support as something that could be maintained through financial incentives and withdrawn when legislators failed to comply.


Treasury’s allegations went beyond isolated payments. The department described efforts to influence decisions within the Colorado Party, obstruct investigations, and protect business interests through political relationships. The sanctions represented an unusually direct American intervention against a former president who continued to exercise considerable influence in Paraguay’s governing party.

Cartes denied wrongdoing. On October 6, 2025, the Trump administration lifted the financial sanctions, removing Cartes and associated companies from the Treasury sanctions list. The decision was politically significant, particularly given the detailed allegations accompanying the original designation. American officials explained the reversal in terms of foreign policy interests and the continued utility of the sanctions, rather than announcing that the earlier corruption allegations had been disproved.

The State Department explained that the restrictions were no longer required to encourage changes in behavior and therefore no longer served American foreign policy and national security interests. That explanation left unanswered whether the underlying concerns about corruption had changed. Paraguay’s continued recognition of Taiwan and its cooperation with Washington on international issues provided the Trump administration with reasons to value the bilateral relationship. Whether those considerations determined the sanctions decision has not been established.

The reversal also prompted criticism in Washington. Democratic senators Jeanne Shaheen, Elizabeth Warren, and Tim Kaine publicly questioned the decision, arguing that the administration was undermining the credibility of the Global Magnitsky sanctions system by allowing political considerations to influence anticorruption enforcement. The criticism deserves consideration, but it does not establish that an improper bargain occurred.

Sanctions are instruments of foreign policy, not criminal verdicts. Their imposition does not establish guilt beyond a reasonable doubt, and their removal does not establish innocence. Administrations have authority to reassess whether particular sanctions continue to advance American interests. That discretion also creates the possibility that foreign policy considerations will influence decisions originally justified on anticorruption grounds.

Cartes regarded the reversal as a vindication. Others saw a political decision that said little about the substance of the original allegations. The available evidence does not establish that an improper transaction occurred between Washington and Cartes. Nor does the reversal erase the history that led to his designation.

That history makes Cartes’s role in Peña’s downfall particularly revealing. As the banking scandal intensified, Cartes withdrew his support from the president he had helped elect. Colorado Party legislators joined the impeachment effort, and Peña’s political position collapsed. Cartes may have concluded that protecting Peña would inflict lasting damage on the party. He may also have recognized an opportunity to preserve his own influence while distancing himself from the scandal. The evidence does not establish that Cartes engineered the bank’s collapse or organized the demonstrations that followed, but his influence over the president’s political survival demonstrates the importance of party leadership in determining how Paraguay’s institutions respond to a crisis.


The Colorado Party’s ability to remove a president while retaining control of the executive branch is a significant feature of the present crisis. Alliana’s succession preserves the governing party’s position through the remainder of the presidential term, scheduled to end in August 2028. The party has changed its leadership in government without necessarily changing the political relationships that shaped the previous administration.
A familiar constitutional dilemma

I have seen Paraguay confront a contested presidential removal before. I was serving simultaneously as acting USAID Mission Director and acting Deputy Chief of Mission at the U.S. Embassy in Asunción when Congress impeached President Fernando Lugo in June 2012. The international community was struggling with a question that was anything but academic: had Paraguay experienced a legitimate constitutional transfer of power or a parliamentary coup? Governments across the region were debating how to respond, and we had to be careful that our actions at the Embassy did not prejudge decisions properly belonging to Washington.

The timing created an unusual diplomatic dilemma. Our annual Fourth of July reception was approaching, and we had to decide whom to invite. Extending an invitation to one side while excluding the other could easily have been interpreted as an American decision about the legitimacy of the new government. That was not a decision we intended to make through a guest list. We invited everyone. After all, the occasion was America’s Independence Day, not an opportunity for the U.S. Embassy to determine who should govern Paraguay.

The uncertainty was not confined to our Embassy. The Organization of American States was still examining the political and legal consequences of Lugo’s removal in early July. Its secretary general, José Miguel Insulza, subsequently acknowledged that the speed of the proceedings had created serious questions about the legitimacy of the process. Neighboring governments reacted more sharply, and Paraguay was suspended from Mercosur. The circumstances of Peña’s removal are different, particularly the financial scandal and criminal allegations involved, but the earlier experience shows how constitutional procedures can produce outcomes whose legitimacy remains contested.

Lugo’s impeachment was completed in less than two days following a deadly confrontation over a land dispute at Curuguaty. The proceedings were formally grounded in Paraguay’s constitution, which gives Congress authority to remove a president for poor performance of official duties and certain other grounds. But the extraordinary speed of the process and the limited opportunity for Lugo to prepare a defense prompted criticism from governments across Latin America. The dispute concerned not only whether Congress possessed the constitutional authority to act, but whether its exercise of that authority satisfied broader expectations of democratic legitimacy.


The present controversy raises related questions. Peña’s lawyers have complained that he was not given adequate time to prepare his defense. His removal followed the rapid collapse of political support within the governing party, and the impeachment proceeded amid intense public anger over the banking emergency. Those circumstances do not establish that the process was illegitimate. They do, however, warrant examination of whether the procedures used were sufficiently fair and independent of the political interests involved.

Washington’s response this time has been notably more direct. On November 8, Secretary of State Marco Rubio telephoned President Alliana to congratulate him on assuming office. In a readout issued the following day, the State Department reaffirmed America’s commitment to a strong and enduring partnership with the Paraguayan people. Alliana subsequently described discussions about security, technology, trade, investment, and development, and said Rubio had invited him to a future meeting.

The contrast with 2012 is striking to someone who experienced that earlier uncertainty firsthand. Fourteen years ago, even the guest list for an Independence Day reception required diplomatic care. This time, the American secretary of state has publicly congratulated the successor president within days of the impeachment. The call signals Washington’s willingness to work with the new government. It does not establish that the United States has endorsed the impeachment procedures or reached conclusions about Peña’s criminal responsibility. Those are separate matters, and the brief official readout did not address them.

Presidents should not be protected from accountability. But the institutions responsible for enforcing accountability must act independently, provide fair procedures, and resist pressure from the political factions that control them. Paraguay’s history offers reasons to examine those obligations carefully.
Esperanza Martínez and the lessons of 2012

Esperanza Martínez remembers the Lugo impeachment from a different vantage point. She was Lugo’s minister of health, and I worked closely with her during that period, when USAID supported Paraguay’s public health sector. Fourteen years later, she is again confronting a presidential impeachment, this time as a senator. Her participation in the present controversy provides a connection to the political upheaval of 2012, although the circumstances surrounding the two impeachments are substantially different.

Martínez was raising concerns about Ueno before the bank collapsed. In October 2026, she publicly questioned the placement of IPS pension funds at Ueno, criticized the role of central bank officials in facilitating the institution’s rapid expansion, and urged Colorado Party legislators to protect retirement savings. Her accusations were political allegations, not established findings of misconduct, but they were made before the November intervention. The chronology raises questions about what regulators and legislators knew, how they responded, and whether earlier scrutiny might have reduced the damage.


Following Peña’s removal, Martínez published a Facebook statement recalling that fourteen years earlier, after Lugo’s impeachment, she had stood in the same public square sharing a painful sense of powerlessness with other Paraguayans. The mood this time, she wrote, was one of celebration and renewed determination to build a better country. Yet she also warned that the political struggle was far from over, describing a mafia-like network that quickly reorganizes itself within the structures of power.

Her language reflects her political position and should be understood as such. But the concern she raises extends beyond the opposition. Paraguay has changed presidents while leaving the Colorado Party in control of the executive branch. Alliana, a longtime party leader and ally of Cartes, represents continuity within the governing establishment. Whether the new administration will pursue a genuinely independent investigation of the financial and political relationships surrounding Ueno remains to be seen.

Martínez’s experience also illustrates the changing political circumstances surrounding Paraguay’s impeachment processes. In 2012, she was a member of an administration removed by a Congress dominated by political opponents. In 2026, she has participated in the political response to the removal of a Colorado Party president whose own allies withdrew their support. The two episodes differ in their causes, political alignments, and legal allegations, but both demonstrate how congressional authority can become decisive when a president loses the political support necessary to remain in office.
The demonstrations and the struggle over the narrative

The collapse of Ueno produced genuine public anger. Depositors, pensioners, workers, and students took to the streets demanding access to their money and accountability from the government. Some protesters called for the removal of both Peña and Alliana, reflecting dissatisfaction with the political establishment more broadly. The disruption of ordinary financial transactions gave the demonstrations a direct connection to the daily lives of thousands of Paraguayans.

The political interests involved need not have been identical. Depositors wanted their savings restored. Workers feared losing their jobs. Opposition politicians saw evidence of government misconduct, while factions within the Colorado Party faced decisions about their own political futures. These interests could converge in demanding Peña’s removal without sharing a common explanation for the crisis or a common vision of what should follow.

The protests have continued after the change of government. On November 9, public schoolteachers went on strike, demanding protection and repayment of approximately $60 million in pension funds deposited at Ueno. Their action underscores the distance between a political transition and the resolution of the underlying financial emergency. The resignation or removal of senior officials does not restore pension assets, settle outstanding obligations, or answer questions about why those resources were exposed to a troubled institution.


The press has played an important role in exposing Ueno’s financial problems and the relationships among its owners, government officials, and regulators. Individual reports deserve scrutiny for accuracy, sourcing, and fairness. But allegations that journalists collectively manufactured the crisis or coordinated a campaign to remove Peña require evidence that has not been established. The bank’s financial condition, regulatory intervention, and criminal investigation cannot be dismissed merely because their reporting also served the interests of particular political actors.

Journalists must distinguish the financial facts from the political struggle surrounding them. Evidence of improper lending or regulatory failures should be reported regardless of whether it benefits the opposition or a faction of the governing party. Allegations about the motives of politicians, journalists, and demonstrators deserve the same scrutiny. Paraguay’s citizens need accurate information about the management of their savings and public resources, not another contest in which competing political interests determine which facts receive attention.
The regional experience

Paraguay is not the first Latin American country to discover that a banking scandal can become a crisis of political legitimacy. Ecuador’s financial collapse in the late 1990s exposed serious weaknesses in banking supervision and contributed to the political upheaval that removed President Jamil Mahuad in January 2000. The circumstances were more severe than Paraguay’s present difficulties, involving a systemic banking crisis, currency collapse, and military intervention. The IMF’s September 2000 assessment of Ecuador attributed the crisis partly to failures to address emerging weaknesses in the banking system, alongside external shocks and broader economic policy problems.

Ecuador’s experience demonstrated how quickly public confidence in a government can deteriorate when citizens lose access to savings and believe powerful financial interests have received preferential treatment. The country’s banking emergency was followed by a dramatic deterioration in economic conditions, the adoption of the U.S. dollar, and a political transition that took place amid widespread public anger. The relationship between financial collapse and political instability was not simply a matter of economic indicators. It reflected a broader loss of confidence in the institutions responsible for protecting citizens and managing public resources.

The Dominican Republic experienced another instructive crisis in 2003, when the collapse of Banco Intercontinental, or Baninter, revealed extensive accounting irregularities and concealed liabilities. The resulting government intervention imposed enormous costs on public finances and contributed to currency depreciation and inflation. The IMF’s October 2003 assessment documented accounting malpractice, fraud, and unregistered liabilities amounting to several times the bank’s recorded deposits. The Central Bank intervened in April 2003 and provided substantial liquidity assistance to contain the damage.


The consequences extended beyond Baninter itself. Problems emerged at other financial institutions, while the costs of intervention contributed to rising public debt and pressure on the currency. The IMF called for stronger bank supervision, improved governance, and more effective mechanisms for resolving troubled financial institutions. The episode demonstrated how failures of oversight at a politically influential bank could impose costs far beyond its shareholders and depositors.

Argentina’s financial collapse in 2001 provides a further example of how restrictions on access to bank deposits can transform an economic emergency into a political crisis. The government’s corralito, which restricted withdrawals and transfers, became a powerful symbol of the failure of public institutions to protect ordinary citizens. Mass demonstrations followed, and President Fernando de la Rúa resigned in December 2001. The IMF’s Independent Evaluation Office examined the deposit runs, withdrawal restrictions, and collapse of confidence that preceded the political upheaval.

Argentina’s crisis was much broader than Paraguay’s present banking emergency. It involved the collapse of a currency arrangement, a sovereign debt default, and a prolonged economic contraction. But the experience shows why access to savings can become an immediate question of political legitimacy. When citizens cannot withdraw money needed for ordinary transactions, confidence in financial institutions and confidence in political leadership can deteriorate together.

These comparisons have limits. Paraguay has not experienced Ecuador’s systemic economic collapse or Argentina’s sovereign debt and currency crisis, and allegations concerning Ueno remain subject to investigation. The Dominican Republic’s Baninter failure offers a closer institutional comparison because of the allegations of accounting irregularities and the consequences of inadequate banking supervision. In each case, however, the eventual political and economic costs were shaped by the credibility of the institutions responsible for managing the emergency.

Paraguay’s own banking history provides the more immediate warning. The country has already experienced the consequences of using public resources to sustain weak financial institutions, allowing regulatory problems to accumulate, and delaying intervention when politically influential interests are involved. Those failures were documented extensively, and reforms followed. The current investigation must establish whether the safeguards developed over subsequent decades were insufficient, poorly enforced, or compromised by political relationships.
What accountability would require

Pedro Alliana inherits a government facing an immediate financial emergency and a serious credibility problem. As a longtime Colorado Party leader and political ally of Cartes, he represents continuity within the governing establishment. His administration cannot plausibly claim to have resolved the underlying institutional questions simply because Peña has been removed.


The recovery of depositors’ money must remain the first priority. By November 8, the Central Bank reported that approximately $160 million had been paid to nearly 1.2 million customers through the deposit guarantee system. That progress matters, particularly for families and small businesses unable to withstand prolonged disruption. But restoring access to deposits will not establish why the bank failed or whether public institutions acted properly in placing substantial resources there.

Alliana has begun changing the leadership of the institutions responsible for financial oversight. On November 9, he nominated economist Jorge Schreiner to head the Central Bank, and Congress approved the appointment. Schreiner previously served on the Bank’s board and headed the securities commission. The government also appointed Fernando Rivarola, a former banking regulator, to the Central Bank’s board. According to Reuters, Rivarola had warned about Ueno’s condition in a July report that became public in October.

These appointments may help restore confidence, but their significance will depend on what follows. The reported July warning raises an obvious question: if serious concerns about Ueno’s condition were already documented, why did the institution continue operating until November? The answer requires examination of the powers available to supervisors, the information presented to the Central Bank’s leadership, and the decisions made after those warnings. Replacing officials will have limited value unless the reasons for earlier regulatory failures are established.

A credible investigation should examine the bank’s lending practices, its relationships with related companies, the decisions governing public-sector deposits, and the conduct of financial regulators. It should establish when concerns about Ueno’s condition first emerged, how those concerns were communicated, and why corrective action was not taken sooner. Public institutions, including IPS, should explain the criteria used to select financial institutions for their deposits and the safeguards intended to protect public resources.

The investigation must also extend beyond individuals who have already lost political power. If evidence implicates officials who remain influential, prosecutors and regulators should be able to pursue it without interference. Conversely, allegations against Peña and other defendants must be tested through fair legal procedures. Accountability loses much of its meaning when criminal investigations become instruments of political rivalry.

The earlier banking crises offer a practical agenda for reform. Paraguay should examine whether the rules governing public deposits provide adequate protection against concentration risk, whether financial regulators have sufficient independence from political appointments, and whether existing mechanisms for identifying related-party lending are being enforced. The country should also consider how information about the placement of public pension funds can be made more transparent without compromising legitimate financial confidentiality.


These questions extend beyond Ueno. A financial institution can satisfy formal reporting requirements while still presenting risks that require closer supervision. Public agencies may comply with procurement or deposit rules while making decisions that expose taxpayers and pensioners to unnecessary losses. Regulators may possess the legal authority to intervene but hesitate when an institution has powerful political connections. Determining whether any of these failures occurred at Ueno requires a detailed examination of the documentary record.

The investigation should also establish the responsibilities of the various public institutions involved. The presidency, the Central Bank, the banking superintendency, public pension authorities, and state-owned enterprises do not exercise identical powers. Their decisions must be examined separately, with attention to the legal duties of each official and the evidence of any improper intervention. Political responsibility may extend beyond conduct that satisfies the elements of a criminal offense, but that broader responsibility should not be used to bypass the protections afforded to defendants.

Paraguay’s experience with the World Bank in the 1990s also suggests that international partners can contribute to institutional reform without substituting for domestic accountability. Technical assistance can strengthen financial supervision, improve public financial management, and support transparent systems for administering public resources. Yet those improvements will have limited effect unless Paraguayan institutions are willing and able to apply the rules consistently, including when politically influential individuals or organizations are involved.
Paraguay’s capacity for reform

Paraguay has considerable strengths. Its entrepreneurs have demonstrated remarkable ingenuity, its civil society organizations have produced innovations recognized internationally, and successive governments have maintained a degree of macroeconomic stability that distinguishes the country from several of its neighbors. I have seen those strengths firsthand through my work in Paraguay, including with organizations pursuing practical solutions to poverty, health care, and economic opportunity. The country’s achievements deserve recognition, and the present crisis should not obscure them.

Organizations such as Fundación Paraguaya and CEPEP have demonstrated that Paraguayan institutions can produce meaningful results, often with limited resources and in difficult political circumstances. Their experiences illustrate the country’s capacity for innovation and sustained institutional development. Paraguay’s private sector has shown similar ingenuity, while its economic management has often avoided some of the more severe instability experienced elsewhere in the region.


These achievements make the present crisis particularly damaging. Paraguay has spent years building confidence among international investors and development partners. Its fiscal discipline, relatively stable currency, and expanding financial sector have helped attract capital and strengthen its economic reputation. But a country can maintain sound macroeconomic indicators while allowing political relationships to distort decisions about public resources. Financial supervision depends on regulators who can act without interference, public institutions that can explain where they place their money, and a judiciary capable of examining misconduct without regard to political affiliation.

Economic modernization requires more than new technology, expanding financial services, or favorable investment indicators. It also depends on institutions capable of applying rules consistently, protecting public resources, and resisting improper political influence. Ueno’s expansion showed what financial innovation could accomplish. Its collapse has raised questions about the institutions responsible for ensuring that innovation remained financially sound.

The Colorado Party has survived dictatorships, democratic transitions, banking crises, corruption scandals, and contested changes of government. Its ability to adapt has been an important part of Paraguay’s political history. Whether the present crisis produces institutional reform or simply another rearrangement of power within the governing establishment remains uncertain.

Peña’s removal may prove to be an important act of political accountability. The criminal proceedings may establish responsibility for serious financial misconduct. But neither outcome, standing alone, will explain why Paraguay once again found itself confronting questions about public pension funds, politically connected banks, and the independence of financial regulators.


Nearly thirty years after its earlier banking crises, Paraguay has another opportunity to examine the relationship between political power and public money. Its citizens have already paid a substantial price for failures of financial supervision. They deserve an investigation that follows the evidence wherever it leads, including into the political arrangements that may have allowed those failures to develop. The real measure of Paraguay’s response will be whether the institutions responsible for protecting public resources emerge more independent, transparent, and capable of enforcing the law, including against those who remain in power.


About Steven E. Hendrix
Steven E. Hendrix is a former senior U.S. foreign assistance official who served in leadership roles with the U.S. Agency for International Development and the U.S. Department of State. He worked extensively in Latin America, Africa, and Asia, including collaboration with European development partners.
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