I found an article yesterday about how El Salvador allegedly misused loaned money for their Bitcoin initiatives. At first glance it sounds bad for El Salvador, but I've seen enough stories with questionable sources to know I should always analyze news stories before taking them as truth.
This particular news story was written by three new graduates from Columbia (‘22 M.S.) who partnered with the Organized Crime and Corruption Reporting Project (OCCRP). The OCCRP is an organization that aims to uncover crime and corruption. They have been nominated for a Nobel Peace Prize in the past, and they count a few government agencies among their sponsors. I mention this for context that might explain any potential leanings or biased language.
For the rest of this post I'll point out parts of the story I find suspect and refer to other articles related to the OCCRP story. I may seem biased in favor of El Salvador, but I try to make as objective an analysis as I can to show (what I think) is low-quality reporting. If you disagree with my assessments or have information that's not in the article but supports an assertion I laid doubt on, I encourage you to post in the comments below.
My first issue with the article is the framing of El Salvador. See how they refer to them in the snippet below:
This particular news story was written by three new graduates from Columbia (‘22 M.S.) who partnered with the Organized Crime and Corruption Reporting Project (OCCRP). The OCCRP is an organization that aims to uncover crime and corruption. They have been nominated for a Nobel Peace Prize in the past, and they count a few government agencies among their sponsors. I mention this for context that might explain any potential leanings or biased language.
For the rest of this post I'll point out parts of the story I find suspect and refer to other articles related to the OCCRP story. I may seem biased in favor of El Salvador, but I try to make as objective an analysis as I can to show (what I think) is low-quality reporting. If you disagree with my assessments or have information that's not in the article but supports an assertion I laid doubt on, I encourage you to post in the comments below.
My first issue with the article is the framing of El Salvador. See how they refer to them in the snippet below:
That July, CABEI gave the $600 million directly to El Salvador’s government, which was supposed to give it to local banks to lend to micro, small, and medium-sized companies. But only a fraction of the money— around $20 million — ended up being used as Mossi had described.
Instead, budget documents show the government diverted most of the cash to fund its own needs, allocating $425 million for “general state obligations.” Of that, over $200 million was earmarked for a pet project of El Salvador’s authoritarian leader, Bukele: making Bitcoin a national currency.
Using words like "pet project" and calling Bukele an "authoritarian" leader is clearly using condescending and biased language to try to paint the country and its movement in the worst light imaginable.
The article then invokes the authority of institutions traditionally viewed as reputable to imply that El Salvador's decision is misguided:
The article then invokes the authority of institutions traditionally viewed as reputable to imply that El Salvador's decision is misguided:
Others were less convinced, however, with Moody’s rating agency citing the plan as part of the reason it downgraded El Salvador’s sovereign bonds that year. Though the IMF also advised against the idea and the World Bank turned down the project over environmental and transparency concerns, CABEI supported Bukele’s plan.
As we know, the reliability of these institutions is not absolute; for instance, Moody's incorrectly predicted El Salvador would default on its bonds.
This part is particularly questionable to me:
This part is particularly questionable to me:
“Basically it says there’s a covenant in El Salvador, that no money from CABEI could be used to fund any Bitcoin activity. So we don’t, we don’t fund that,” Mossi said. When pressed on whether El Salvador had broken the terms of the loan, he agreed, but added, “Money is fungible.”
What are the broken terms of the loan? And how did Mossi, the president of the Central American Bank for Economic Integration (CABEI) "agree" with the accusation that El Salvador broke the terms of their loan? Why add his quote "money is fungible" and not provide more context for the statement?
In another section, they fail to paint the entire picture of an assembly Bukele held on Feb 9th 2023:
In another section, they fail to paint the entire picture of an assembly Bukele held on Feb 9th 2023:
It was a scene that one civil rights group compared to the darkest days of El Salvador’s civil war: Soldiers in full battle fatigues occupied the floor of parliament in a bid to pressure lawmakers to back the president’s new security plan. [...] Though the loan was not approved that day, it was ratified the following year.
The soldiers weren't there to pressure the lawmakers present but to make a threat to those not in attendance. Specifically he wanted to enact Article 87, which calls for insurrections to correct unconstitutional actions, after the poor attendance (28 of 84) of an Article 167 session that the legislators had to attend. I will add that I'm personally conflicted about the morality of the action, but I'm not giving it the black and white surface-level npr treatment either.
All this comes off the heels of yesterday's (Nov 2nd 2023) announcement regarding Bukele's accepted bid for reelection. Although it's clear that the complexity of El Salvador's situation is not always captured by mainstream media narratives, I don't believe this is a reason to dismiss all negative narratives surrounding the country.
The situation where he replaced the magistrates who then "re-interpreted" the law for him to be eligible for reelection sets off a lot of red flags. Constitutional adherence is essential to a healthy democracy and with the ambiguous reshaping of the law he's making, if true, is clouding presidential power limits and setting bad precedents for those who succeed him. The limit still seems to be capped at two terms under the re-interpretation of the law, but the way in which it was done has concerned many.
It's hard determining what's real with all the biased news sources out there but everything I could find surrounding the judge dismissals and reelection seem to be negative:
All this comes off the heels of yesterday's (Nov 2nd 2023) announcement regarding Bukele's accepted bid for reelection. Although it's clear that the complexity of El Salvador's situation is not always captured by mainstream media narratives, I don't believe this is a reason to dismiss all negative narratives surrounding the country.
The situation where he replaced the magistrates who then "re-interpreted" the law for him to be eligible for reelection sets off a lot of red flags. Constitutional adherence is essential to a healthy democracy and with the ambiguous reshaping of the law he's making, if true, is clouding presidential power limits and setting bad precedents for those who succeed him. The limit still seems to be capped at two terms under the re-interpretation of the law, but the way in which it was done has concerned many.
It's hard determining what's real with all the biased news sources out there but everything I could find surrounding the judge dismissals and reelection seem to be negative:
https://noticias.uca.edu.sv/pronunciamientos/en-esta-hora-oscura
I want to believe in El Salvador as the first country to support Bitcoin as legal tender, and have seen first-hand the way the media has misinformed the public about their recent policies, but I also understand the points made by the opposition and don't know what to make of his recent rules. Hopefully we in the Bitcoin community can strive to uncover the truth as these events play out, and periodically reassess our support based on the decisions being made.
I want to believe in El Salvador as the first country to support Bitcoin as legal tender, and have seen first-hand the way the media has misinformed the public about their recent policies, but I also understand the points made by the opposition and don't know what to make of his recent rules. Hopefully we in the Bitcoin community can strive to uncover the truth as these events play out, and periodically reassess our support based on the decisions being made.