Marvin Recinos via Creative Commons
A Bitcoin ATM in San Salvador, El Salvador.
El Salvador’s young president, Nayib Bukele, continues to receive popular support, with a recent poll finding that 94 percent of the population views the president’s handling of the pandemic favorably.
The recent Gallup poll questioned residents of Central American countries on how well they think their leaders are managing the pandemic. Guatemala’s president Alejandro Giammattei fared the worst, with 73 percent of participants viewing his administration unfavorably. But, despite coming out on top in the polls, discontent with Bukele from opposition sectors is growing in El Salvador.
Protests against Bukele have steadily increased since early September, with the opposition decrying his increasingly authoritarian actions and the country’s adoption of the cryptocurrency Bitcoin.
It has become the world’s first country to adopt Bitcoin cryptocurrency as legal tender. But in many regards it places the population in further risk.
“There has been an increase of protests throughout the month,” an activist in San Salvador who requested anonymity due to a fear of reprisal, tells The Progressive. “This is a critical moment with the centralization of power. This has been carried out in an abusive manner. This could consolidate into a dictatorship.”
On September 4, the Salvadoran Supreme Court ruled that Bukele could run for a second term in 2024, despite the country’s constitution prohibiting two terms for presidents.
The court’s decision follows a trend in Central America, where presidents in nearly all countries are seeking to expand their powers. In neighboring Honduras, Juan Orlando Hernández ran and controversially won a second term in 2016. In Nicaragua, former Sandinista revolutionary leader Daniel Ortega has utilized the courts to maintain his power since 2007.
Countries across the region too have also taken actions against anti-corruption efforts. In September 2019, the government of Guatemala forced the popular United Nations backed anti-corruption body, The International Commission Against Impunity in Guatemala, to close. El Salvador too closed the Organization of American States-backed body, the international Commission against Impunity in El Salvador (CICIES). President Bukele had limited the ability of the body to investigate cases.
Days after the protests, the Salvadoran congress, using measures instituted to control the coronavirus pandemic, approved a temporary ban on mass gatherings. Now, the only legal protests in the country are those approved by the Health Ministry.
In September, Bukele changed his Twitter bio to read “Central America’s Coolest Dictator.” He later changed his profile to read “no-longer dictator, ” then “Greatest of All Time,” and most recently “Emperor of El Salvador.” While the change is more than likely a tongue-in-cheek joke, his recent actions have caused alarm in El Salvador and in the international community.
What’s more, Bukele’s “joke” follows a series of actions his administration has taken to consolidate his power, including firing the previous justices of the country’s Supreme and replacing them with more sympathetic members. Prior to this, Bukele had deployed the country’s armed forces to intimidate the congress to approve a security bill that he wanted to pass.
The protests also follow the problematic roll out of the cryptocurrency Bitcoin as a nationally recognized legal tender.
El Salvador adopted Bitcoin on September 7, with officials promising that it would help revitalize the country’s economy and lower the cost of transaction fees for remittances from Salvadorans living abroad, primarily in the United States. Remittances make up 21 percent of El Salvador’s GDP.
While supporters of cryptocurrencies have praised the move, El Salvador’s embrace of Bitcoin has been marked by confusion, broken promises, and political disputes that could lead to larger problems in the future.
Two months after Bitcoin was adopted, the number of users rose to 2.1 million, according to Bukele. But users have complained of high fees and cases of identity theft. Reuters also reports that the Salvadoran business community has been slow to adopt the currency.
“There has been a very poor reception from the majority of the population,” Jonathan Menkos, the director of the Guatemala based Central American Institute of Fiscal Studies, tells The Progressive. “People lack confidence in this type of crypto activity. There have also been confrontations and a lack of information about Bitcoin.”
Analysts including Menkos have further concerns with the adoption of Bitcoin. Specifically, they worry that El Salvador could become an island for criminal activity and corruption. “I really do not see any benefits,” Menkos says. “The only thing that could be a benefit is the simplification that Salvadorans in any part of the world can transfer money.”
Though El Salvador is the first country in the world to adopt a cryptocurrency as legal tender, similar efforts to legitimize cryptocurrencies occurred in Puerto Rico in the wake of Hurricane Maria. Following the storm, dozens of wealthy investors and entrepreneurs flocked to the Carribean island in hopes of transforming it into a crypto-utopia.
Approving Bitcoin marks the second time El Salvador has adopted a new currency. In 2001, El Salvador replaced the country’s currency, the Colon, with the U.S. dollar. The rollout of the Dollar also caused confusion.
It has become the world’s first country to adopt Bitcoin cryptocurrency as legal tender. But in many regards it places the population in further risk.
Cryptocurrencies are also notoriously volatile, and—for remittance transactions—a crash would most certainly affect family members back in El Salvador.
“For the common people it is a further risk,” Menkos says. “They confront unemployment, precarity, and poverty, and now they have to confront a cryptocurrency that is volatile.”
“President Bukele is trying to take ‘cool’ measures,” he adds, “but his measures could end in asphyxiating and debilitating the economy, and affecting the wellbeing of Salvadorans.”