Bitcoin President Bukele is reaching for total power in El Salvador

El Salvador's President Nayib Bukele

Mexico City President Nayib Bukele completes his grip on total power in El Salvador. The autocratic head of state, who has governed since 2019, announced a new candidacy in the presidential election for 2024, although this is explicitly forbidden by the constitution of the Central American country. With this, the 41-year-old confirms his contempt for law and democracy.

In the event of another election victory, Bukele would rule until 2029. He gained worldwide attention for himself and his state, which is about the size of Hesse, when he was a good year ago made the virtual currency Bitcoin the state currencyin order to become independent of the international financial markets.

At a reception at the presidential palace at the end of last week's celebration of independence, Bukele said he made the decision "after talking" with his wife. The invited guests and the cabinet present celebrated the announcement with thumbs up and shouts of “re-election, re-election”.

The Salvadorian constitution, which was written in 1983 and amended in 1992 after the end of the civil war, is designed specifically to prevent the emergence of dictatorships and authoritarian regimes. It therefore prohibits immediate re-election in three different articles. Article 154 states: “The term of office of the President shall be five years, without the person who holds the office being able to remain in office one more day.”

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Bukele feels restricted in his thirst for power by this regulation. "Why can't we copy the countries that are doing well," he asked, referring to at least 39 countries in the western world where re-election is allowed.

But especially in Latin America, which has had sad experiences with autocrats and corrupt presidents, the ban on re-election is like insurance against abuse of power. "Absolutely predictable. That was always the original plan," former Human Rights Watch America chief José Miguel Vivanco commented on Twitter. "A new Hugo Chávez is emerging."

In his three years in office so far, Bukele, who runs his country like a company and likes to refer to himself as "CEO", El Salvador was politically aligned and economically completely turned inside out. The press is suppressed, many judges, prosecutors and human rights activists are in exile after being threatened and persecuted. Parliament is disempowered, the judiciary is in line. Bukele prefers to govern by decree and via his main means of communication, Twitter.

The political opposition has no well-known figure who could oppose the authoritarian ruler. At the same time – and this is crucial for him – eight out of ten Salvadorans like him and his work. Quotas that other presidents in Latin America can only dream of.

Bukele's promises remain unfulfilled

Using the state currency Bitcoin, Bukele is taking an entire country and its population hostage for a risky financial project that could ultimately lead to state bankruptcy. One year after the coin monopoly was introduced, the balance sheet is sobering. The promised investments have not come on a large scale, nor has there been more prosperity. It should cryptocurrency help fight inequality.

None of this happened, criticizes Ricardo Castaneda from ICEFI (Central American Institute for Fiscal Studies). "Bitcoin is not the cause of the country's financial problems, but it is a crucial part of it," says the financial expert. “The dismantling of institutions and the Bitcoin experiment have increased the risk profile and made possible the failure of an agreement with the International Monetary Fund.”

Rating agencies Moody's and Fitch recently downgraded El Salvador's credit rating after bonds traded at a deep discount following the collapse of the cryptocurrency market. Moody's estimates the country's unrealized Bitcoin losses at $57 million.

Meanwhile, the government announced it would buy back $360 billion worth of bonds maturing in 2023 and 2025 to save its economy. The rating agency Fitch nevertheless believes that a default in the coming year is possible.

More: Central African Republic declares Bitcoin official tender

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