The World Bank has poured cold water on El Salvador’s adoption of bitcoin as legal tender, saying it cannot support the move due to “environmental and transparency” concerns.
But the developmental body may soon be forced to accept bitcoin payments from countries that have embraced the cryptocurrency.
Its founding document, the 1944 Articles of Agreement, outlines the procedures and principles by which the World Bank pledges to engage with sovereign governments. A central theme in the document is its commitment to accept payments from member states in local currencies.
Section 12 of Article V defines acceptable “forms of holdings of currency” as follows:
- The Bank shall accept from any member, in place of any part of the member’s currency, paid in to the Bank under Article II, Section 7 (i), or to meet amortization payments on loans made with such currency, and not needed by the Bank in its operations, notes or similar obligations issued by the Government of the member or the depository designated by such member, which shall be non-negotiable, non-interest-bearing and payable at their par value on demand by credit to the account of the Bank in the designated depository.
So, as well as allowing payments in “the member’s currency”, the charter allows central banks to pay with “notes or similar obligations” backed by their reserves.
These are effectively IOUs from governments. They can be backed by dollars. They can be backed by precious metals (the US Federal Reserve guaranteed its notes with gold until 1934, and with silver until the 1960s). Or they can be backed by bitcoin; perhaps, in El Salvador’s case, the $150m bitcoin fund being established by Banco de Desarrollo de El Salvador, the national development bank.
Things gets more awkward. Section 9 of Article II states that holdings paid into the bank by members should be continually re-valued (presumably against a “real” benchmark like USD). If the local currency has appreciated, it says, the World Bank should do the decent thing and hands the gains back:
- Whenever the par value of a member’s currency is increased, the Bank shall return to such member within a reasonable time an amount of that member’s currency equal to the increase in the value of the amount of such currency
Conversely, if the local currency has depreciated, the member gets margin called and has to “pay to the Bank within a reasonable time an additional amount of its own currency sufficient to maintain the value”. Or, put another way: when bitcoin starts tanking, the World Bank starts stacking. Nice.
All of this depends, of course, on whether or not the body will respect El Salvador’s sovereign right to choose its own currency.
That’s not a foregone conclusion. Reuters asked them about that yesterday and got a decidedly arsey response. “We are committed to helping El Salvador in numerous ways, including for currency transparency and regulatory processes,” a spokesperson waffled. “While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”
The World Bank, by the way, has invested more than $12bn in fossil fuel projects over the past six years, representing at least 6% of its total investment portfolio. It also accepts gold payments from members, despite gold mines emitting on average 0.8 tonnes of CO2 for every ounce of gold produced.
Still, they’re worried about bitcoin’s carbon footprint. So they’ll be happy to know that, by some estimates, 76% of bitcoin miners are already using renewable energy.
Oh yes, and every transaction ever made on the bitcoin network is recorded on an immutable digital ledger that is fully visible to all market participants. That makes it, by far, the most transparent monetary network that has ever existed. No funny business allowed.Follow me on Twitter.
bitFeaturing Bitcoin Beach’s Mike Peterson.
This episode is sponsored by Nexo.io.
On today’s episode, NLW is joined by Mike Peterson, director of Bitcoin Beach. Bitcoin Beach is a community project in El Salvador that has spent the last two years helping individuals and companies integrate bitcoin into their daily lives and long-term habits. President Nayib Bukele cited Bitcoin Beach in inspiring El Salvador’s bitcoin legal tender law.
In this interview, NLW and Mike discuss:
- How he came to reside in El Salvador
- How the bitcoin community project started
- What drove community adoption at the beginning
- How remittances and COVID-19 solidified the value of BTC to the community
- How bitcoin has changed how people think about investing
- How international bitcoiners such as Miles Suter and Jack Mallers got to know the project
- Where the project stands today (complete with 22 different community initiatives)
- How bitcoiners can get involved
Image credit: Mike Peterson/Bitcoin Beach
What’s going on guys? It is Friday, June 11. And today, I am so excited to bring you a conversation with Bitcoin Beach’s Michael Peterson. If you were on Nick Carter’s Twitter space on Tuesday night, where El Salvador’s President Nayib Bukele popped in to answer questions for about an hour, you heard Mike Peterson talk. You see, Bitcoin Beach is a project in El Salvador that has been running for a couple of years now. And they set out to show that for one, bitcoin could be used day-to-day as well as it could be used as a long term investing and saving technology; and two, that bitcoin wasn’t just for rich people: in fact, the poorest of the poor could often find even more empowerment in it than the rich that we normally associated with.
Their website states: “we believe that if a local economy is created with the support of bitcoin, new opportunities will open up for the community members. The project Bitcoin Beach is creating a sustainable bitcoin economic ecosystem on the coast of El Salvador, where the majority of people do not have access to bank accounts, and the local businesses could never qualify for merchant accounts needed to accept credit cards.”
From the early days, bitcoin promised to allow us to bank the unbanked and return power from governments and financial institutions to the individual. However, until recently, this promise has remained elusive. Bitcoin Beach is a movement to make sure that the true potential of bitcoin is realized, and that those who have been excluded from the banking system are the primary beneficiaries.
On that call on Nick Carter’s Twitter spaces, President Bukele went out of his way to say that it was the inspiration of Bitcoin Beach, showing that bitcoin wasn’t just for rich people, that it could improve the outcomes of individuals and a community as a whole that inspired them to start looking into bitcoin in the first place. So with that, I’m incredibly excited to bring you this interview about how Bitcoin Beach came to be, what it’s doing, where it’s headed, and how you can get involved.
I’m so excited for this conversation. Obviously, it comes at a really awesome time. But you and I’ve been talking about doing this for a while. So perfect, that it’s all coming together right now.
Well, I’m glad the president of El Salvador could finally get me on your show.
He did it as a favor. Nah man, I mean, obviously, anyone who’s listening to The Breakdown frequently has context around, you know, a little bit of context around what’s been going on. But I think that one of the things that’s so important is that this didn’t come out of nowhere. And a lot of the place that it came out of is the work that you guys have been doing down in El Zonte and in El Salvador just more broadly, for the last couple years.
But let’s go back even before that, like, how did you end up getting involved in this? How did you end up spending time down there in the first place? I mean, what is your story that got you there?
Originally, I wound up in El Salvador on a surf trip. I mean, they have wonderful waves and warm water. And so, about 17 years ago, I went down and just really fell in love with the country. I’ve traveled all my life, I’ve probably been to like 45 different countries. And it was the first time that I wanted to buy a house. And so I called my wife and said, “Hey, we’re buying a house in El Salvador.” And three weeks later, we flew back down, and we bought a house in El Salvador. So that’s kind of how it started. And initially, we just spent a few months of the year there. But about seven years ago, we made the decision to basically split our time between there and the US and kind of be more full time there.
And that was kind of where it was all born. Once we were there, we saw you know, the needs, we got to know a lot of our neighbors and kind of better understand their experience. And so we became involved in some different educational campaigns, economic development initiatives. And you know, that was kind of parallel to me going down the deep rabbit hole with bitcoin. And then two years ago, in conjunction with a donation to the project we were doing that was done in bitcoin that wanted to see it be used in real ways. We basically bitcoin-ized everything we were doing. And it’s just kind of blown up from there.
I think a lot of things that are interesting about this is one, having a long duration and relationship and experience with the place that you’re interacting with before you decide to do a bunch of programs. That’s something that I think is a little bit too rare in terms of a lot of the kind of global development, global philanthropy work that happens. So it’s really interesting that you came there because of the thing that you loved, which was surfing, fell in love with the place, got to know the community, and then it kind of grew organically from there.
And it feels like a lot of the the bitcoin side of the whole project was also similarly organic, where it sort of started to present itself, you were exploring it, and it just kind of made sense to keep going deeper and deeper. I mean, what were the early pieces of that like? Let’s talk about the point where you guys have a bitcoin donation that comes in, probably trying to figure out how to actually use that, what was that kind of actual turning point, I guess, and what were some of the first steps to bring bitcoin into the work that you were doing?
I definitely don’t think we would have been able to do any of it had we not had that kind of long term relationship already with the community and hadn’t built that trust. Even the guys that I worked with on a daily basis, when I told them, “hey, we’re gonna start using this magic internet money, and we’re gonna give stores to accept it, we’re gonna get people to start taking their salaries in it,” they just kind of looked at me like, “okay, Mike.” So that was kind of the initial response.
But we do a lot of work with the youth, especially in gang prevention. And a lot of these youth didn’t have other job opportunities. So they were actually kind of forced to take bitcoin because they didn’t have any other job options. And so we were paying them in bitcoin, to clean trash out of the rivers, or clean the beach. And once they started using it, I mean, it only took a couple days for it to really click for them that, wow, this is so much better than using dollars. I can send it to my friend across town, I don’t have to worry about putting it in the bank, it’s always with me, because I always have my phone.
And so it really started with the youth. And then from there, you know, once the youth had it, and were looking to spend it, we got our first store on board, we kind of cajoled them into accepting it. And they did it kind of reluctantly. But you know, at this point, more than half their sales are in bitcoin. So it’s kind of in that same pathway with everybody. And initially, they’re a little bit hesitant, they’re a little bit skeptical, which is healthy, people should be skeptical, because we don’t want them falling for, you know, scams or other scam coins. And so it was good for them to be skeptical.
But once they start interacting with bitcoin, and once they start doing their own research and realizing there’s this global market, there are people all around the world that want bitcoin that are willing to exchange it for value. There’s doctors and lawyers from the capital city of San Salvador that started driving down to El Zonte to buy bitcoin from people from the youth that they realize, “Wow, we really have something here.”
So I guess let’s talk about like, what the financial profile of folks in these communities, was or is going into this, what percentage of them are actually incorporated in the traditional financial system have bank accounts, how much of it is just totally cash based before that, and then maybe just as another dimension of this, what is mobile or internet penetration, kind of to correspond with that?
I’d say those who do pretty much everything in cash is probably 90%, maybe an additional 10% have bank accounts, but they don’t really use them, but probably 80%, there’s no bank accounts at all. But the internet and mobile penetration is, you know, probably the reverse of that, there’s probably only 20% of the population that doesn’t have at least somebody in their family that has a smartphone that’s capable of having a mobile wallet on it.
And so when you guys were kind of introduced to it, how much was the initial value proposition that was exciting to people, about the comparative convenience of the digital money ecosystem versus kind of a cash ecosystem, versus an interest in the bitcoin assets? Specifically, I think, you know, part of the motivation for the question, too, is, I think people are now really trying to understand how this community that you guys have down there can model other places. Obviously, we’re about to see a much wider experiment across El Salvador, but I’m interested in what clicked for people that got them excited.
Initially, it was just the convenience. I mean, most of them weren’t that interested in bitcoin, if they would have had the option to have the same convenience in dollars, they probably would have chosen that initially. But over time, they started to realize that their bitcoin assets were appreciating and that they would much rather have their money being held in bitcoin rather than holding in dollars. I think that’s important for people to realize, they don’t have to understand everything about bitcoin, they don’t have to sell them on all the aspects of it, what you really need to do is get them using it, once they start using it, they have that “aha” moment.
And then once they start holding it for longer periods, and seeing how much they put in versus what they can buy with it a year later, like, that’s how they flip switches. And that’s how they actually start wanting to put the effort into learning how to hold their own keys, how to custody it safely, the different options for non-custodial versus custodial wallets, and all those things. First, you get them using it, then they’ll do the work.
It sounds to me almost like there’s sort of a twin value proposition that clicked for people. The first part of it being, “this is just easier and more convenient to use, it’s time saving,” all the things that come with any form of digital money in some ways. But then there’s the second piece around actually empowering people to feel like investors and like they have some agency and an ability to design their future a little bit more. I mean, is that a fair characterization?
Oh, 100%. Because these are people who have never had access to financial markets, they’ve never even thought about having access to financial markets. So when they got money, they would just spend it right away. Because why not, it was just going to go down in value over time. So even saving seemed kind of pointless.
And we’ve seen that I mean, it literally changes people’s outlook on life. And always not just about money, like once they start thinking, hey, if I don’t spend this today, it’s gonna buy me more next year, there’s corollaries with education with everything else. Now, they’re starting to think, “Well, yeah, I have to forego, you know, earning a wage this year to go on to university, but longer term that’s going to be in my best interest.”
And so we’re seeing a whole generation that’s just looking at life very differently. And I mean, honestly, you see hope on their face. I mean, I know it sounds kind of corny, but for a lot of these people, this is the first time they felt like hope that they can build a future in El Salvador that they’re not going to have to follow the path of their parents to sneak into the US illegally and work in some dead end job. They can build a business based on bitcoin, they can work for an American company being paid in bitcoin, but still be able to live in the country they were born in. And so it really opens up the world to them.
I think that one of the things that I’ve long felt is that our sense of the possible is shaped by what we see around us. And one of the things that we do extremely poorly, even in the US, is actually treat people of all kinds of economic classes like they should or care, they have the capacity to think about investing in their future in a meaningful way.
And some of that’s the language that we use, some of that’s financial media, which I think is kind of designed to be exclusionary and in-group, but I think one of the things that makes bitcoin pretty unique in that is just the divisibility of it, that you can see your stats going up, even if it’s a tiny amount. It feels different than, you know, owning a single stock and a single stock might be out of reach in most contexts, you know?
Yeah, they’ve literally never had that opportunity. I mean, before investing used to mean like, they would buy a bunch of cement blocks, because they knew cement blocks went up over time. So if they had money and needed to build something in the future, they might as well buy those blocks now, so they at least don’t lose value. But for them to be able to buy something that’s going to go up in value over time? Like that really just shifts everything in their mind.
And it’s, I mean, these are just super intelligent, hardworking people that haven’t had these opportunities before. That’s the thing I always want to make sure people realize when they hear about the Bitcoin Beach project, or they hear about what’s going on in El Salvador. It’s not that, you know, I, myself, or anybody else brought Bitcoin down to El Salvador. The Salvadorans proved the use case for Bitcoin. They’re the ones that proved that Bitcoin can be used in the ways that we always talk about that we’ve never seen before, they figured out a way to make it work. And they’re literally upending the world’s financial system. So I just want to make sure that people realize, these are these young people that a lot of people, you know, look at as having no future, but they are literally changing the future.
Yeah, I’d love to hear more about who actually works on this down there, like who’s kind of driving it and what are the different aspects of the project? And then I guess simultaneously, maybe more or first just to kind of a follow up question from from the last question is, have you guys gone through a sustained period of Bitcoin going down? And, you know, have you seen that change people’s perceptions or, you know, how did you help people kind of think through how to think about that experience?
Yes, we have a team of probably about 15 people. Most of them are, you know, ages kind of, 16 to 30, is the majority of them. Jorge Valenzuela is the community leader that heads it all up. He’s one of those guys that, I don’t think he ever needs to sleep. He just runs circles around me. And he has this huge heart and he’s always looking for ways to improve the community.
And so, right now we have 22 different programs that are going on: everything from the lifeguard program, where for the whole region, he launched this professional lifeguard program where we have 62 lifeguards being paid in Bitcoin. We have English classes where people are learning English, but the teachers are being paid in Bitcoin. We have a trash collection service for the whole community where the people collecting the trash are being paid in Bitcoin. So it’s not people being given Bitcoin, like they are earning Bitcoin and they prefer to earn Bitcoin and they’re spending Bitcoin at the local stores and it’s Bitcoin that’s kind of sustaining the local economy.
So it’s, I mean, it sounds like more than anything, it’s a kind of pretty end-to-end community-driven, bottoms-up economic development initiative that happens to have this new asset that serves to kind of facilitate the ease with which the the kind of resources flow through the system and also creates kind of a different mentality and incentive around it.
No, 100% it is, this is very bottom-up and it’s funny because when bitcoiners, you know, when when expat bitcoiners come down, and they see people wearing bitcoin t-shirts or bitcoin hats, they kind of freak out because they’re so used to being you know, ultra secretive, and you don’t want anybody to know you’re in Bitcoin, because they’re gonna rob you because they’re gonna think you’re rich.
I tell them no, in El Zonte if you have Bitcoin stuff, they think you’re poor, because it’s mostly the poor that are using Bitcoin and it’s the wealthy who are kind of the last to adopt it. And so it really is the money of the people. And I think that’s what makes our project different than anything I’ve seen anywhere else in the world is it really is, you know, the people that only have a second grade education, the people that are living in shacks with dirt floors that are interacting and doing most of their life in bitcoin.
You started in 2019. What was the sequence, I guess where did different things come online? What was first, what was next? And where did you guys start to connect with some of these international bitcoiners obviously, Jack Mallers came down Miles Suter from Square came down, how did that connection happen?
Initially, when we started we started with the youth. We have a real focus on the youth because in El Salvador, there’s a huge gang issue. So a lot of the youth from age 10 to 14 are recruited into the local gangs. And so we wanted to provide a more positive pathway forward. And so that was our initial focus, we were paying these young men and women to pick up trash to do other kinds of community benefit jobs, and they’re being paid in bitcoin. And so initially, it was this really kind of small thing.
And we wanted to go down to the LABITCONF, the Latin American Bitcoin conference, which in 2019 was in Uruguay. And so I took Jorge Valenzuela, who I mentioned earlier, and I took another gentleman, who was from another town that we have a project in, a gentleman named Juan. We took them to this conference.
It was the first time they’ve been out of El Salvador, first time they’ve been on a plane, and definitely the first time they’ve been around a bunch of crazy bitcoiners because we were in this big convention hall, and I think Max Kaiser was the first person that came on. And, you know, he did his whole shtick and was totally obscene. And they’re looking at me, like, “What in the world have you brought us to?” Fortunately, it got a little more in depth after that.
And, you know, they came out of there dyed in the wool, you know, bitcoiners. I was able to bring them back with that experience, with that view that this is an international thing. And then they started kind of spreading that in the community.
And also, during that time, I ran into Peter McCormick. And I told him, “Hey, we have this little project, we’d love to have you come check it out.” And you know, I was thinking, like, in a year, maybe he’d come by. And so he looked at me and said, “Okay, well, I’m going to Bolivia tomorrow, so I can be there on Thursday.” I was like, oh, okay, yeah, let’s do this.
So, Peter McCormick actually was the first one that kind of put us on the map. We did a podcast with him and he put some videos out, I think he quadrupled my Twitter account with one video that he sent out from my, you know, 30 Twitter followers at that time to 120. He put us on the map there.
And then, you know, it was growing, we were instigating some new programs and kind of methodical way. And then COVID hit. And when COVID hit it was a combination of there was a huge needs. But also it gave us an opportunity to use Bitcoin in a way that otherwise would have been irresponsible.
I’m really a big believer that when you do any type of development work, or any type of aid work, you have to be very careful to not cause more damage than good. You have to be very careful not to distort the local economy, you have to be careful not to dentists, dissent, disincentivize work. And so generally, for us to just give bitcoin out is something that we, you know, we try to avoid. But during the COVID lockdown, nobody was allowed to leave their house, they weren’t allowed to work. And nobody had any money for food. And so we kind of switched at that time.
We started doing basically like a universal basic income, to all of the town, there were like 500 families, and we were sending out about $40 worth of Bitcoin every three weeks. And that kept the stores in business because there was money flowing through, they could buy their basic food goods, it gave them enough to buy at least the basics of food. And they got all of them using Bitcoin and seeing how easy it was to use, not just in person, but they could also you know, send the payment to the store, and then have the store come deliver food to them, which was a huge issue during the COVID lockdown. So that supercharged it.
And then coming out of that we had Miles Suter was kind of the second person that came down. And he was originally only planning to come down for a couple weeks and he stayed for six months. And obviously huge help somebody with his experience, his network. And then Jack Mallers kind of followed, and to bring Strike with him, and just, I mean, what a huge asset to have that system for people to be able to send remittances, because remittances is kind of the Holy Grail. It’s the thing where bitcoin really shines.
And so, you know, that’s kind of all these things have been happening. And at the same time, our local programs have just been turbocharged also. So now we have 22 different community programs where we’re doing all this. And we also have probably a few 100 people that are actually getting their salaries in bitcoin now. Some of them that work with us, but a lot of them that work for other companies, both local and international.
How much has this been able to be funded from that kind of initial donation? Or have you guys had more donations? I mean, it sounds like, obviously a ton of work that’s gone into this.
Yeah, a lot of that was from that initial donation, but then there’s been a lot of subsequent donations from a lot of different bitcoiners you know, something as small as you know, a couple of 100, a couple 1000 SATs to you know, people sending large chunks of a bitcoin. And so it’s enabled us to sustain it.
But what our goal is, is to really make it so that we’re not having to raise funds. We want individuals earning bitcoin, we want people that have jobs with bitcoin companies. So the fact that now we have a number of people that are employed by Strike, Strike’s actually paying rent on the office building of ours that they’re using. And so that’s, you know, helping fund the project.
And then we have a number of other companies that have started hiring people from El Zonte to help them with everything from ongoing or onboarding new customers, to doing marketing. We even have another bitcoin related company that’s having an architect student down here helping them put together construction bids.
Super interesting. I mean, this obviously gets into I think some of the stuff that’s happening now. So maybe just to kind of transition into that, let’s actually talk about your perception of Salvadoran politics and how that’s changed. You’ve obviously been going down there for a seriously long amount of time. You saw the transition to the New Ideas party. Holding aside everything that we know now in bitcoin, like, how would you describe the shift in political sentiment over the last, I don’t know, 5, 10, years?
Well, the shift really happened a few years ago with the New Ideas Party and the rise of Nayib Bukele. Before that, everybody was very cynical about politics, you know, kind of go back and forth between the right and the left there, you know, reminds me a lot of the US system. So I was really surprised when Nayib Bukele rose to power because, you know, we’ve seen third party candidates in the US, but we’ve never seen them be able to get that type of traction.
And he really shook things up. I mean, he didn’t, he didn’t do any of the traditional debates. He didn’t use the traditional media, he used Facebook, he used TikTok, and I was shocked to see how much support he was able to rally through that. So you know, in El Salvador, I’m very apolitical. I’m not a Salvadoran, and I stay out of the politics. But I just as an observer, I have never seen people more excited. And I’ve never seen people more hopeful of the future.
And so I in general, I’ve liked most of the stuff that he’s been doing. You know, there’s always a concern when somebody has that much popular appeal that it could go sideways. But so far, I’ve been very pleased. And even over the last six months, we’ve met with his Minister of the Economy, Minister of Tourism, the Minister of Education, and I’ve never met with bureaucrats before that were so forward looking, and who really wanted to help the people, and weren’t just kind of stuck in the past.
So I know he’s getting a lot of flack from certain quarters. But so far, from what I’ve seen, it’s been all positive. And especially in light of the history in El Salvador, where the three previous presidents blatantly robbed the country. One died under house arrest, one’s in jail now and one, you know, fled the Nicaragua for asylum. So that tells you, you know, the bar wasn’t very high. But he definitely has the people behind him.
So do you have a sense of when the things that you guys were doing, when they get on his radar or his administration’s radar? Was there someone who was kind of paying attention? Who was sort of beneath him? Or what was that process?
Actually, on that Twitter space call last night, I got some new information. I think a lot of it was when there was a Forbes article that was done last summer. And I think that caught the government’s attention. They’re not used to getting positive articles, you know, from publications like Forbes. So I think that got them starting to take a look at what we were doing. And there’s been a lot of subsequent good press.
They’ve also been very open to allow us to meet with them. I mean, we’ve had several meetings where not just with the ministers, they would bring in all their aides, they were really looking and considering what we were talking about. Miles Suter from Square went to the meeting with us when we met with the economic minister. And, you know, he was telling from their perspective of what El Salvador would need to do to attract companies, for companies wanting to headquarter here. And they took it seriously. So I’ve never really run into that before with the government.
I think that obviously, there’s a huge element of this that’s attracting bitcoin businesses. And that’s something that, you know, has been a constant refrain and question, I mean, really, ever since COVID hit, especially this kind of global competition for talent for tax revenue in the form of companies. But do you know when the legal tender idea got on their radar?
I’m not sure. I mean, I’d like to think that we had some part of that, you know, anytime we had a chance with, to do an interview or meet with any of the government ministers, we kept pushing that, that they could be that, that party, the politicians that go down in history for putting the world on a bitcoin standard. They’re already on the US dollar, so they don’t have to worry about it competing with their currency. So they really had nothing to lose, but so much to gain. I don’t know when they started taking that seriously or what kind of got them to go in that direction. But of course, we’re thrilled they did.
Well, one of the things that I think is remarkable in that is a lot of people are noticing is, I think that if you had polled the average, super engaged, enfranchised bitcoiner on Twitter, you know, at the beginning of 2021, about whether a country would adopt bitcoin as a legal tender as a currency first or bitcoin as kind of a reserve, right, I think almost everyone would have said reserve. And instead, it’s very clear that the example that you guys set of a fully functioning, you know, economy, that includes using it for some people as a long term investment for others as a medium of exchange that really kind of obliterates the lines between these things, was influential. I mean, you know, President Bukele made that clear, even on last night’s call.
Well, I think the bitcoin community has become a little too just locked into the “digital gold” narrative. I’m not against that narrative, obviously, I think that’s where everybody should be doing their savings. But bitcoin’s also money.
And especially with the second layer protocols, like Lightning, like it works, it’s easy, it’s easier for me to buy something online, and scan a Lightning QR code than the point my, you know, physical credit card, and give them my name and address and my credit card number and who knows where that’s going to go. So it works for transactions, it works in El Salvador, we’ve seen that and these are people in kind of the hardest of environments, you know, they’re living in places, some of them have electricity, but they can still get online, they still have smartphones, and they’re still transacting. So I think people need to realize it doesn’t have to be money or digital gold, like it is both.
So I mean, on this front, I actually forgot to ask this question, and then we got talking about something else. The question around what happens when bitcoin goes down? Like, have you seen people be stressed out? How does it impact it as a medium of exchange? I mean, this is the critique that we’re constantly from people who don’t think that bitcoin is viable for this type of setting is, it’s way too volatile. What is your experience with that?
That’s been a real big concern of ours from the beginning, but it’s actually been much less of an issue than we anticipated. We’ve seen like, even in this last big drawdown, the people that just recently got into bitcoin, they’re kind of freaking out. But the people who, you know, have only been at it for six months, they’re like, “No, we understand this is how bitcoin works. This is kind of the history of it, we think longer term, it’s going to go back up.”
I actually like it when we have these big drawdowns, because it it kind of squashes the speculative fever, when we’re having that big run up, then I was starting to get concerned because then people were, you know, thinking about borrowing money to buy bitcoin, or selling their family land to buy bitcoin. And we’ve always really discouraged that we want people to dollar cost average in, or for the stores that are accepting bitcoin, like set aside a part of that as their savings. But we don’t encourage people to be overly leveraged.
And we also encourage them to make sure they understand the ups and downs before they go into it deeper. And we do see a little bit of shifts, like most recently, when we saw this big pullback, we did see less people spending their bitcoin at that time. They weren’t, you know, selling it, but they were just holding on to it and not spending it and waiting for it to go back up. So you see slight shifts, but most of them have been pretty adept at, you know, kind of riding the waves and knowing how to manage the volatility.
When it sounds like that’s like, that’s a natural, mature tension that people have to make decisions on for themselves, right? Like, you’re not getting, it sounds like there’s no denying you guys aren’t trying to obfuscate the fact that bitcoin is this asset that’s likely to appreciate over time based on its particular dynamics and global adoption. But at the same time, the whole point is like people get to make their decisions day in, day out about how much they can use, how much they can save. And that’s just kind of an individual process that everyone in every family has to go through.
Exactly, what I will say is it has really, really switched the mentality about savings. El Salvador is a very spending culture. It’s not a savings culture. And we’re seeing people for the first time in their life, like they’re really focused on savings, because they have this sense that well, “what I’m spending today is probably gonna be worth double in the future. So I’m going to spend as little as possible.”
I think one of the things that I always think about is, I don’t know, if we never talked about this, but I spent the first I don’t know 5, 10 years of my early career thinking that I was going to be focused on global development and global social change. And it’s unbelievable how frequently our kind of good-intentioned thoughts towards other people lead us to infantilizing them, and not giving them decisions. So, something like “people can’t deal with the volatility of bitcoin or they can’t make the decisions for themselves about how much to save versus spend,” like, “we shouldn’t give them the availability to spend it because you know, everyone’s going to want to save it.” Well, that’s just patronizing. Right? You’re not assuming that people have the ability to make decisions for themselves about how to strike those balances. And it’s not something that people do intentionally. Often, it’s just something that kind of happens.
I’ve seen that when people come down, they’re kind of shocked at how sophisticated these users are. Especially for a lot of them, they’re living in poverty. And I tell them, hey, these people have made 10 times as many bitcoin transactions as you have, like in real world settings, they know what they’re doing. Even when Strike came down, they were wondering, “why do people keep sending money back and forth between the Strike wallet and the Bitcoin Beach wallet?” Well, they’ve used it as their bootstrap trading engine. When they want to go into bitcoin, they send it out of Strike into the Bitcoin Beach wallet, when they want to go to dollars, they send it out of the Bitcoin Beach wallet into Strike. And they were kind of blown away, like, “wow, we never thought people would use it like that.” So I think it’s really been a showcase for just how much intelligence there is in the region, and that they have just been held back by, you know, bad circumstances. But how much this can change in a short period.
How, what has the mood or sentiment been like, since the announcement a couple days ago, about this bill, in the places, you know, in the communities that you work?
I think it’s been well, obviously, within our team and our community, people have been ecstatic. I think, in the broader country, there is some confusion, you know, there is going to be a learning curve. I was actually at the conference in Miami for the announcement. So I wasn’t in El Salvador, and I’m in San Diego now. So I haven’t been back in the country since the announcement. But I’ve been talking with my team. And overall, they, especially in El Zonte, everybody’s just thrilled because, you know, this this little podunk, you know, beach town, that’s never been that important, you know, in the greater scheme of things in El Salvador, and now it’s the focus of the whole country. And there’s real good paying jobs that are moving in and people that want to be there. And so it’s a real dynamic time for the people in El Zonte.
How do you guys think about this transition, like, you guys are likely to be looked at as a model, people are going to want to have information from you, you’re going to see more companies that want to come in. I mean, you’ve been very deliberate, intentional, it sounds like and how you’ve rolled these things out, how you’ve helped people figure them out, you know, how you’ve let the programs grow, how you’ve let people take charge of how these different programs are going to evolve. How do you think about this mass new force, both domestically, you know, but also internationally, that could be coming your way?
We definitely want to be careful for how that rolls out. We don’t want to disrupt the community, we want to see growth happen in ways that’s good for the environment, that’s good for the quality of life for people. But we really view good paying jobs coming in is really life changing for the people there. A lot of them, you know, five years ago, their only plan or their only thought of how they can make it in life was to sneak into the US and work in some dead end job, and hopefully, eventually come back and retire in the country that they love, you know, having their kids grow up with them, hardly seeing them. Now they feel like “I can become an engineer and get a good paying job here, I can start a company that maybe it’s not directly bitcoin, but it’ll provide services to these bitcoin companies that are coming in.” And we’re seeing people kind of move their way up the food chain. And so for the first time, they’re really dreaming and thinking about how they can help lead the world.
Has anything particularly surprised you about what you’ve seen from President Bukele and his team over the last couple days?
To be quite honest, I’ve been kind of blown away by how aggressive and full-throated their plan has been. I mean, I think even if I had put together a proposal, it might have been a little more timid. And so I’m glad I wasn’t the one putting the proposal together. I mean, they, they really went for it, they’ve really swung for the fences. And I think that’s going to be what it takes for them to win in this. I think there’s going to be a lot of governmental and non-governmental forces that are going to come out and try to thwart this, I think there’s a lot of vested interests that are not going to want to see this work. And so I think they really did have to swing for the fences. And I think if they are successful, it’s gonna just be the first in many countries to go that route. If the forces that be can stop them, I think it’s going to be really hard for the next country to make that decision.
What’s the best way for bitcoiners who are now interested in investing in this experiment who want to be helpful? What should people be doing other than just paying attention to it?
We’d love for people to come down. I mean, El Salvador is a beautiful place to come on vacation, to come work remotely. Especially if you’re stuck in an environment where it’s cold for half the year, you know, why not spend that half here in El Salvador, surfing and doing yoga in the evenings, and, you know, living with other bitcoiners. So, we encourage people to get out there. But also to, to really reflect on what the promise of bitcoin is, for people in the developing world.
A lot of Americans think, “Wow, bitcoin, you know, is good as a store of value, but we have PayPal, we have Venmo, we have all these other things, the banks are fine, you know, I don’t see why you need to use it for payments.” That’s only the case for like 5, 10 percent of the people in the world, the majority of people in the world have horrible banking systems, if anything at all. And so I think Americans are really going to underestimate how quickly bitcoin is going to take over the world. And I think if we’re not careful, we’re gonna be kind of the last one on the boat.
Mike, this has been an awesome conversation. I love hearing about this project and how it’s evolved. And obviously, your work has not only not gone unnoticed, it’s now been a catalyst for one of the most significant events in bitcoins history. Anything else that we should talk about before I let you go and get back to everything you’re working on?
Just let me know when you’re planning on coming down. Because I know you’d like the international scene. And I can’t believe you haven’t been down to visit us yet. Because it is right up your alley. So in so many ways, you need to come down and spend a couple of months there in El Zonte. at Bitcoin Beach. We actually just built out a podcast studio for people like you that want to come down and work from there, so just let me know when you’re coming.
Michael, thank you so much for your time. And I’m really excited to see what happens next. One really quick thought to wrap up this conversation. There’s obviously so much inspiring about the Bitcoin Beach story. And it’s a story that’s still being written right now. I just want to highlight how significant it is, how much it is a testament to the power of people to create ripples that change the world, just by doing things that make sense to them, and then telling the world the story of those actions. To reinforce this point, let’s just listen to the clip of President Bukele, discussing how Bitcoin Beach was influential in this whole movement.
Clip from President Bukele
You guys demonstrated that this is not something for rich people only. I mean, this is for everybody. And you guys demonstrated that a community can actually benefit from bitcoin. And now we’re going to demonstrate it in a country-wide scale. But of course, you’re the pioneers here. And hats off to you guys, because you had the courage to be the first here and you have done great. And actually, you have provided us with arguments, and with pictures, and with stories, and with everything that we need to have this bill passed.
More than El Salvador, what I’d love for you to take away from this is that if you have some idea, some way to change the world, some way to impact your life or the lives of people around you, just go for it. Figure out how to get the people who agree with the way that you see things to join forces and do something great, and then talk about it, because you never know where it’s going to lead. I don’t think that in 2019 when they started to do community projects funded by bitcoin, Mike and the folks at Bitcoin Beach thought that it would lead not only to helping a community survive COVID but then to a nation becoming the first nation to implement the bitcoin standard in the world in less than three years. But here we are. Anyways guys, I hope you’re headed into a great weekend. I appreciate you listening. Until tomorrow. Be safe, take care of each other, peace!
Elliott Abrams was once an innocent child. And then he decided to spend the rest of his life covering up brutal atrocities and defending right-wing dictatorships.
Elliott Abrams once said the animating force behind his and Ronald Reagan’s foreign policy was that the world is “an exceedingly dangerous place.” And this is true, largely because men like Elliott Abrams exist in it.Last month, Abrams was tapped by Trump to serve as his special envoy to Venezuela, to essentially help steer the Trump administration’s slow-burn effort to topple that country’s government — or as Mike Pompeo put it, “restore democracy” in the country.
It should go without saying that the idea the Trump administration is pursuing regime change in Venezuela for the sake of democracy and human rights is as laughable as calling Jamal Khashoggi’s murder a surprise party gone wrong. But in case you need to explain this to politically confused friends and relatives, here are eight good reasons why the appointment of Abrams, in particular, makes a mockery of any such high-minded rhetoric.
1. He was knee-deep in human rights atrocities
Let’s start with the most obvious point, which is that Abrams’ chief claim to fame is his role in Ronald Reagan’s blood-soaked foreign policy in Central America in the 1980s, for which he earned the nickname, “contra commander-in-chief.” The contras were the brutal right-wing paramilitary groups in Nicaragua who terrorized civilians throughout the decade, cutting a swath of torture, rape, and murder aimed at everyone from the elderly to children. Their methods were similar to those of right-wing paramilitaries in the other countries of the region, including El Salvador and Guatemala, all of which were supported by the Reagan administration. If you have the stomach to read about them, there’s no shortage of sources that outline their barbarity.
To Abrams, however, they were “freedom fighters,” their work in El Salvador was a “fabulous achievement,” and he mocked critics of Reagan as people forced to “run the risk” of arguing that such groups were “doing something wrong and ought to stop it.” He himself had no illusions about what it is that the contras were doing. “The purpose of our aid is to permit people who are fighting on our side to use more violence,” he said in 1985.
This “micromanagement” at one point also involved Abrams secretly delivering military equipment to the contras under the guise of humanitarian aid. As commentators have noted, this is particularly relevant now, when the Trump administration attacks Maduro for refusing to let humanitarian aid from the US into Venezuela.
2. He covered up brutal acts of terror
Key to Abrams’ role under Reagan was playing down and denying the copious human rights abuses being committed by the forces and governments he and the administration supported.
As Minnesota Rep. Ilhan Omar pointed out in her grilling of Abrams earlier this week, part of the Reagan administration’s “fabulous achievement” in El Salvador was the horrific El Mozote massacre, which took place shortly before Abrams took up his post. In his attempt to convince the Senate to certify that El Salvador’s government was improving its human rights record — a precondition for receiving US aid — Abrams testified that the massacre had been “publicized when the certification comes forward to the committee,” and was “being significantly misused, at the very best, by the guerrillas.” He claimed he had sent military officers to investigate the reports, and that the massacre couldn’t be confirmed.
Another incident was the 1980 assassination of Archbishop Oscar Romero, killed on the orders of Major Roberto D’Aubuisson, one of the administration’s partners in the country. “Anybody who thinks you’re going to find a cable that says that Roberto d’Aubuisson murdered the archbishop is a fool,” said Abrams. In fact, two such cables existed. Abrams would later insist that any criticism of the Reagan administration’s activities in El Salvador were simply “a post-Cold War effort to rewrite history.”
Meanwhile, as Guatemalan dictator Ríos Montt embarked on a campaign of genocide in the country, Abrams said he had “brought considerable progress” on human rights. He defended Reagan’s lifting of a military aid embargo on Montt’s government, claiming the slaughter of civilians was “being reduced step by step” and that it was “progress” that had to be “rewarded and encouraged.”
3. He’s an unrepentant liar
Abrams told Omar that it is “always the position of the United States” to protect human rights, including in Venezuela, and he stressed the US didn’t want to arm anti-Maduro forces. Besides his well-documented record of doing exactly the opposite, Abrams’ words are even less relevant when you consider his history of outright lying.
We’ve already seen how Abrams regularly lied to cover up or play down abuses by the right-wing forces he supported. This practice would ultimately land him in trouble when he misled Congress about the Iran-Contra affair with statements that ranged from outright lies (“we’re not in the fund-raising business”), to lawyerly parsing of the truth (“I said no foreign government was helping the contras, because we had not yet received a dime from Brunei,” he would write later).
Abrams would forever maintain he did nothing wrong, later writing a sanctimonious book that painted himself as the victim of an unjust, vindictive system that had criminalized “political differences.” “This kind of prosecution is something new in America, and it is wrong,” he wrote, before bleating about the “bloodsuckers” and “filthy bastards” who wanted to do him in.
Abrams rained ire upon Lawrence Walsh, the special prosecutor tasked with investigating the Iran-Contra scandal: “You, Walsh, eighty years old, and nothing else to do but stay in this job till the grim reaper gets you. Is this your idea of America?” Abrams insisted the independent counsel law under which Walsh (along with Watergate prosecutor Archibold Cox) served was unconstitutional, despite the fact that the Supreme Court had upheld it 7-1, with even the conservative chief justice Rehnquist affirming (Scalia dissented). It didn’t matter anyway, because the late George H. W. Bush pardoned him.
Abrams managed the trifecta of showing contempt for the truth, the constitution’s separation of powers, and the concept of checks and balances, all in one fell swoop. There’s no reason to believe any of his assurances now.
4. He hates democracy
Abrams has also shown a lifelong contempt for the very thing he’s now meant to be advancing: democracy.
When the Uruguayan military government imprisoned Wilson Ferreira, the country’s most popular politician and a fierce liberal opponent of its rule, Abrams defended the Reagan administration’s meek response, which the New York Times had called “stunning.” Abrams explained that “the transition [to elected government] itself is more important than the immediate situation of any individual politician.” Abrams had earlier insisted there was no evidence the Uruguyan military was stifling political freedom, even as it
- closed newspapers,
- arrested its opposition, and
- continued to ban political leaders, among other things.
Around this same time, Abrams was one of a number of Reagan officials who supported Oliver North’s call to pardon Honduran general Jose Bueso Rosa, despite his having received a relatively lenient sentence. Rosa had been convicted after being caught in Florida plotting to overthrow the Honduran government.
In 2002, Abrams reportedly “gave a nod” to the military coup that attempted, ultimately unsuccessfully, to remove the democratically elected Hugo Chavez from power. The Observer, which broke the story, called Abrams “the crucial figure around the coup.” Abrams has had his eye on toppling Venezuela’s government for some time.
When Hamas defeated Fatah in the 2006 Palestinian election, Abrams, then the point man for George W. Bush’s Middle East policy, helped implement a scheme to nullify the results by fomenting a Palestinian civil war which, they hoped, would remove Hamas from power. When the plan backfired, with Hamas emerging victorious and in full control of Gaza, Abrams accused Hamas of staging a “coup.”
5. His only political principle was anticommunism
Abrams’ disregard for democracy is part and parcel of his general philosophy, which views left-wing governments uniformly as threats to be stamped out.
Abrams, who once told a reporter that he’s “been a counterrevolutionary for a long time,” cut his teeth opposing student protesters at Harvard in the 1960s. He believes the idea that human rights extend past the political and into the economic realm to be “nonsense” and “old Soviet bromides.” As such, he viewed defeating the Soviet Union as the greatest US priority, telling one interviewer that “the greatest threat to human rights is the Soviet Union, not Guatemala or the Philippines.”
In 1984, Abrams quite candidly explained to Policy Review that his human rights policy was one of double standards: fierce opposition to communist rights abusers, and coddling of oppressors friendly to the US.
“Liberalization for purposes of letting out steam always involves line drawing,” he said. “How much steam should you let out? At what point do you risk anarchy and destabilizing the regime?” He went on to explain that “the line drawn varies from country to country,” and that “even a highly imperfect regime may well give a much better prospect of democratization than would the Communist regime that might follow.”
In other words, no matter how brutal or outright fascist a government, it was by default preferable to a communist one, a philosophy he applied in obvious ways to his work in the Americas. It was also evident in his treatment of Cuba, whose prisons he denounced in 1984 as “barbaric” and whose leader, Fidel Castro, he labeled “oppressive” and accused of “betrayal.” He attacked human rights groups, politicians, reporters, and church groups who praised Cuba as “apologists” who “will never take off their rose-colored glasses” and had spent “years defending tyrants” and “years obfuscating the truth.”
At literally the same time he was doing this, Abrams publicly defended Turkey, a key regional ally, from criticism of its human rights record. Abrams praised Turkey, which had recently been pilloried in an Amnesty International report for widespread torture of its people, for “extraordinary progress,” charging that “some who criticize Turkey’s human rights situation have no interest in human rights in Turkey or anywhere else,” but “simply use this issue as a weapon with which to attack a vital member of the Western alliance.” He dismissed Amnesty’s claims as “false history,” criticized human rights groups for “an appalling shallowness of analysis” that ignored social, political, and historical context, and charged that the Turkish people “resent the activists’ shrill and uninformed criticisms of their country.”
As Abrams had earlier said, “the line drawn varies from country to country.” If you played nice with the Reagan administration, your human rights record was tempered by nuance and context, and it was getting better anyway. And if you didn’t, you were beyond redemption.
6. He dislikes journalists and accountability
Abrams no doubt sympathized with Turkey’s rulers because he himself had first-hand experience dealing with pesky journalists and human rights groups.
He said critics of Reagan’s support of the contras would have “blood on their hands,” and accused human rights groups of having communist sympathies. He hopped aboard the Reagan administration’s McCarthyite attempt to shame congressional critics into giving him a blank check in Latin America, claiming that there was an “elaborate and skillful” campaign by Nicaragua’s Sandinista government to “manipulate Congress and the press.” When the GAO released a report alleging contra corruption that was inconvenient for the administration’s attempts to secure aid, Abrams dismissed it as a “smear campaign” cooked up by Democrats.
While Abrams didn’t have a police state at his disposal, that didn’t prevent him from lobbing heavy-handed broadsides against reporters he didn’t like. He refused to be questioned by or debate certain journalists he perceived as critical. Most infamously, from 1986 to 1987, Abrams accused left-wing Colombian journalist Patricia Lara of being a “Cuban agent” and “an active liaison” between Colombian terrorist organization M-19 and “the Cuban secret police.” In October 1986, Lara was stopped by New York immigration officials and imprisoned, before being sent back home, without explanation.
Abrams claimed to have “concrete evidence” that Lara was “heavily engaged” with M-19, but when challenged to reveal evidence, claimed it was based on “intelligence information” that he couldn’t reveal. The Colombian Defense Ministry, then battling M-19, categorically denied they had any such information, and assigned her a bodyguard because Abrams’ accusation had put her in danger. The country’s foreign minister said “we don’t know where the US government obtained” such information.
Abrams also granted a “meritorious honor” award on the Office of Public Diplomacy, a government body responsible for waging an illegal domestic propaganda campaign, in which Iran-Contra architect Oliver North was closely involved, that disseminated Abrams’ preferred narrative about the region. Abrams praised it for “setting out the parameters and defining the terms of the public discussion on Central America policy” and countering the “formidable and well established Soviet/Cuban/Nicaraguan propaganda apparatus.”
7. He’s a fan of regime change
Like any neoconservative worth his salt, Abrams has an abiding faith in the US government’s ability to simply remove world leaders it dislikes at will. (He’s also continued the neocon tradition of never personally fighting in any war, avoiding Vietnam thanks to a hurt back that happened to clear up once the war was over.)
When Abrams wanted to remove former ally Manuel Noriega from power in Panama, the former chairman of the Joint Chiefs of Staff under Reagan wrote, he threatened sanctions, then actually imposed sanctions, then established a Panamanian government-in-exile on a US military base. Abrams finally called outright for the US military to topple Noriega, in an op-ed titled “Noriega Respects Power. Use It,” which is what George H. W. Bush ultimately did. It was a chilling preview of where US policy on Venezuela may now be heading if Maduro stays in power.
Reflecting on the mistakes of Reagan’s Latin American policy in 1989, Abrams’ regret was that it hadn’t been more forceful. “You can make a very good argument that after the successful rescue mission in Grenada the president should simply have said, ‘Look, we have to enforce the Monroe Doctrine, we cannot have a Communist government in Nicaragua,’ and done whatever we needed to do to get rid of it, including a naval blockade or possibly even an invasion,” he said.
In 2007, Abrams blessed Bush’s plan to launch a covert operation to destabilize Iran’s government. Two years later, he mused about what should happen if Iran develops a nuclear weapon. “Responsible leadership cannot allow this to happen,” he said. “Preventing it through military action perhaps is the second worst decision we could make. The only worse one being to say it’s all right now, it’s acceptable, we will not act.” But this wouldn’t involve regime change or the killing of civilians, he stressed; just a strike on nuclear facilities. Iran, Abrams warned, was one to three years away from developing a nuclear weapon.
In 2013, Abrams told a House Armed Services Committee hearing that the US had to get militarily involved in Syria. Why? Because “a display of American lack of will power in Syria will persuade many Iranian officials that while we may say ‘all options are on the table,’ in reality they are not — so Iran can proceed happily and safely toward a nuclear weapon.” Two years later, he said at a Council of Foreign Relations event that Netanyahu had two options: either strike Iran right then, or wait two years and see if an administration willing to take a tougher line, or sanction an Israeli strike, would be elected. Abrams, it seems, got his wish.
8. He’s beloved by the Right
In case anyone still believes the fiction that “anti-Trump” conservatives actually oppose Trump, Abrams is a living reminder that there’s no daylight between Trump and the establishment Right that pretends to dislike him.
Abrams was once an “anti-Trump” Republican who signed a letter opposing his candidacy in 2016. He tutored Paul Ryan in foreign policy when he was Mitt Romney’s 2012 running mate, and served on Marco Rubio’s so-called National Security Advisory Council in 2016. It’s no surprise the Florida senator, long viewed as an establishment-friendly, “sensible” conservative alternative to Trump, is now all but directing Trump’s Latin American policy, sounding virtually indistinguishable from Abrams.
Abrams has now served in every Republican administration since he first entered government bar one. In between, he’s worked at the Heritage Foundation (whose head of Latin American policy just called him “a patriot and dedicated voice for repressed communities”), helped found “anti-Trump” Bill Kristol’s Project for the New American Century, was a fellow for the Council on Foreign Relations, and was a board member of the National Endowment for Democracy, the US government’s arm for foreign political meddling.
Meanwhile, just look at who came to Abrams’ defense after his grilling by Rep. Omar. The National Review — which not long ago put out a much-celebrated “Against Trump” issue whose purpose, according to its editor, was to say, “He’s not one of us. He’s not a conservative, and he’s not what conservatism is” — just published an editorial calling Abrams “one of the wisest, most experienced foreign-policy heads in this country,” and “a steadfast advocate of freedom, democracy, and human rights.”
A former Bush administration official and current Harvard professor defended Abrams as “a devoted public servant who has contributed much of his professional life to our country.” The newly rebranded neocon Max Boot, who very publicly proclaims he’s seen the error of his ways and broken with the ugliness he now sees in the GOP, deemed him “a leading advocate of human rights and democracy.” Unfortunately, it’s not just the Right; the Center for American Progress’ vice president of National Security and International Policy called him “a fierce advocate for human rights and democracy” who simply “made serious professional mistakes.”
That someone like Abrams, who’s now leading Trump’s regime change efforts in Venezuela, is warmly embraced by the coterie of establishment and “never-Trump” conservatives should tell you everything you need to know about these groups.
In a tense exchange at a hearing on Wednesday, one of the newest members of Congress, Representative Ilhan Omar, confronted Elliott Abrams, a Trump administration official, over his role in foreign policy scandals decades ago, including the Iran-contra affair and the United States’ support of brutal leaders abroad.
Mr. Abrams, who served in top State Department positions under President Ronald Reagan and has remained part of the Washington foreign policy establishment, was appointed last month to be the Trump administration’s envoy to Venezuela, where a dispute is raging over control of the nation’s presidency. Last month, the United States weighed in, recognizing the opposition leader Juan Guaidó as part of a campaign by the Trump administration to oust President Nicolás Maduro.
What happened at Wednesday’s hearing?
Mr. Abrams was one of three people asked to appear before the House Foreign Affairs Committee for a hearing on Venezuela, an area of the world he knows well. Under Reagan, Mr. Abrams was an assistant secretary of state who fiercely advocated interventionism, including the covert arming of Nicaraguan rebels in the mid-1980s, a scandal that became known as the Iran-contra affair.
In the hearing on Wednesday, Ms. Omar, Democrat of Minnesota, confronted Mr. Abrams over his role in that scandal and his support for brutal Central American governments. In one tense exchange, Ms. Omar recalled testimony from Mr. Abrams about a massacre in which units of El Salvador’s military, trained and equipped by the United States, killed nearly 1,000 civilians in 1981 in the village of El Mozote.In 1982, Mr. Abrams dismissed news reports about the massacre as not credible and as leftist propaganda, and he later described the Reagan administration’s record in El Salvador as a “fabulous achievement.”
“Do you think that massacre was a ‘fabulous achievement’ that happened under our watch?” Ms. Omar asked him at Wednesday’s hearing.
“That is a ridiculous question, and I will not respond to it,” Mr. Abrams said. “I am not going to respond to that kind of personal attack, which is not a question.”
What is the Iran-contra affair?
The Iran-contra affair was a political scandal that dogged the second half of the Reagan presidency.It centered on two controversial, and linked, actions undertaken by his administration. One was the sale of weapons to Iran, despite an embargo, purportedly to secure the release of American hostages held in Lebanon. The second was the use of proceeds from those weapon sales to support the right-wing contra rebels in Nicaragua in their fight against the leftist Sandinista government.When first revealed publicly by a Lebanese magazine in 1986, the weapons sales were criticized for violating both the embargo and the United States’ refusal to negotiate with terrorists. The use of money from the sales to support the rebels in Nicaragua was also controversial because it violated a congressional ban restricting military aid to the group.
Reagan emerged largely unscathed by the scandal, leaving office with the highest approval rating of any president in decades. But more than a dozen others were charged with criminal offenses, primarily for withholding information from Congress. They included some who remain active in American politics to this day, such as Oliver L. North, now the president of the National Rifle Association, and Mr. Abrams.
While serving in the State Department under Reagan, Mr. Abrams was a fierce advocate of arming the rebels and, in 1991, he pleaded guilty to two misdemeanor counts of withholding information from Congress about those secret efforts. He was pardoned the next year by President George Bush.
What were Ms. Omar’s criticisms?
Ms. Omar devoted most of her time during the hearing to detailing Mr. Abrams’s role in events abroad during the Reagan administration, often cutting off his responses by telling him she had not asked a question.
She did, however, ask one question: whether Mr. Abrams would “support an armed faction within Venezuela that engages in war crimes, crimes against humanity or genocide if you believed they were serving U.S. interests, as you did in Guatemala, El Salvador and Nicaragua?”
The United States’ involvement in Guatemala is not as well known as the Iran-contra affair, but the country was crucial to the Reagan administration’s strategy in Central America, with Washington often looking the other way when presented with evidence of atrocities. In 1982, the Reagan administration started to cultivate Gen. Efraín Ríos Montt, who seized power that year in Guatemala, as an ally in the region in its fight against the Sandinista government and Salvadoran guerrillas.
Reagan praised General Ríos Montt even though American officials privately knew the Guatemalan military had killed its own people. The general was convicted of genocide in 2013.
El Salvador officially apologized for the El Mozote massacre in 2011.
What has Mr. Abrams been doing since the Reagan years?
Despite his role in the Iran-contra affair, Mr. Abrams has remained active in politics.
In the 1990s, he led a think tank dedicated to applying Judeo-Christian values to public policy. He later joined the administration of President George W. Bush as an adviser on Middle East affairs.
In 2017, President Trump blocked Mr. Abrams from serving as a deputy to Rex W. Tillerson, then the secretary of state. But last month, Secretary of State Mike Pompeo was able to appoint Mr. Abrams as a special envoy to lead the department’s efforts on Venezuela.
Looking for help on immigration, the Trump administration is silent in the face of Guatemala’s effort to seal its dirty war archive.
With the quiet acquiescence of the Trump administration, the Guatemalan government is threatening to bar access to a collection of national archives that have been at the core of various attempts to prosecute Guatemalan politicians and officers responsible for some of Latin America’s most heinous atrocities.
The move to suppress the archives is part of a larger campaign by Guatemalan President Jimmy Morales, who faces allegations of receiving illicit campaign funds, to undercut the rule of law through the purge of judges, police officials, and archivists who have been at the forefront of Guatemala’s effort to investigate corruption, narcotrafficking, and war crimes, according to foreign diplomats and independent experts.
But senior U.S. officials in Washington and Guatemala City have rebuffed appeals from working-level staffers and foreign diplomats to publicly challenge Guatemala’s action. And U.S. President Donald Trump’s administration, which is seeking Guatemala’s help in stemming the flow of asylum-seekers and refugees into the United States, has remained largely silent over these developments.
One U.S. official said that America’s reluctance to confront Guatemala is part of a crude unwritten bargain between Morales’s government and the Trump administration: “They promise not to let brown people into the country, and we let them get away with everything else,” the official said.
The “assault on the police archive [is part of a] broader attack against human rights, justice, and anti-corruption efforts,” said Kate Doyle, a researcher at the National Security Archive and an expert on the Guatemalan archives. “The U.S. is saying nothing. The U.S. Embassy has been incredibly absent on these issues. They are not doing anything.”
In the latest sign of U.S. reluctance to challenge Guatemala on human rights, Kimberly Breier, the U.S. assistant secretary of state for Western Hemisphere affairs, blocked the release of a public statement in early June that would have urged Guatemala to back down on its effort to restrict access to the archives.
“These archives are an essential source of information to clarify and understand critical historical truths from Guatemala’s history,” reads the statement obtained by Foreign Policy, which was suppressed in June. “Access to the archives by historians, victims of abuse recorded in these archives and their families, the public, and the international community, has furthered Guatemala’s progress towards accountability, justice, truth and reconciliation.”
Foreign Policy sought a response from the Trump administration last Wednesday. The State Department did not respond until nearly an hour and half after this article was published Tuesday.
“The United States strongly supports continued public access to the Historical Archive of the National Police,” according to a statement from a spokesperson from the State Department’s Bureau of Western Hemispheric Affairs. The Tuesday statement included the two sentence cited by Foreign Policy in the suppressed statement.
The initial decision to block the statement—which had been approved by the State Department press office, the U.S. Embassy in Guatemala, and several other key bureaus—came as the United States was engaged in sensitive negotiations on a so-called safe third country agreement, which would commit Guatemala to process political asylum claims from foreigners, particularly from El Salvador and Honduras, who cross its border in transit to the United States. “My understanding is Kim Breier killed this because she didn’t want to do anything that would piss off the Guatemalans,” said one congressional aide.
During the past two decades, the United States has invested in efforts to strengthen the rule of law in Guatemala,
- funding a United Nations commission that investigates corruption and illicit activities by armed groups,
- strengthening the judiciary, and
- training and equipping police units with expertise in counternarcotics and corruption.
- The United States has spent millions of dollars over the years to preserve the police archives, including through the provision of document scanners and the funding of a digitized archive maintained by scholars at the University of Texas at Austin.
Guatemala’s bloody 36-year-long civil war resulted in the deaths of about 200,000 people, mostly at the hands of the Guatemalan security forces. A 1996 U.N.-brokered peace agreement paved the way for the return of exiled rebels, established a new national police force, and pried open the door to the prospect of public reckoning for crimes committed during the war. The Guatemalan military and police resisted, denying that they had preserved detailed records of their activities during the conflict. But in 2005, more than 80 million documents and records, dating from 1882 to 1997, were discovered in seven rat-infested rooms at an unused hospital building in Guatemala City owned by Guatemala’s now-defunct National Police.
Since then, the Guatemalan National Police Historical Archive has helped convict more than 30 military officers, soldiers and paramilitaries, including a former presidential chief of staff, Manuel Callejas y Callejas, convicted of crimes against humanity, and Guatemala’s late dictator, Gen. Rios Montt—who was found guilty in 2013 of genocide for overseeing mass atrocities in the early 1980s — though his conviction was later overturned by Guatemala’s constitutional court.
The archive has proved a valuable resource for U.S. law enforcement. The Department of Justice and Immigration and Customs Enforcement have used the archive to identify Guatemalan rights abusers living in the United States.
But the management of the archives has long infuriated some of those in Guatemala’s most powerful business and security sectors, who believed that it has been used as a tool of the left to gain revenge against their former enemies. They have cited the role of the archive’s former director, Gustavo Meoño Brenner, a former guerrilla leader who has recruited staff from the country’s left wing to run the archives. In August 2018, the U.N. Development Program, which has helped administer the archive program since 2008, abruptly dismissed Meoño Brenner. He has since fled the country, following death threats.
The move to restrict archive access is only one element of a wider effort to defang justice institutions in Guatemala. In September, a landmark U.N. International Commission Against Impunity in Guatemala—known by its Spanish acronym, CICIG—whose corruption investigations landed a Guatemalan president and vice president in jail will shutter its office.
The demise of the commission, which had also exposed alleged illegal campaign contributions in Morales’s 2015 presidential campaign, came after a two-year-long effort by the president and his allies, including sympathetic Republican lawmakers and Trump administration officials in Washington, to undermine it. Pro-military lawmakers in the Guatemalan Congress, meanwhile, have been pressing to pass an amnesty law that would result in the release of dozens of military officers and death squad leaders from jail. That effort has been stalled by Guatemala’s Constitutional Court.
The effort to suppress the archives is being spearheaded by Guatemalan Interior Minister Enrique Degenhart, a popular figure in Washington, who has represented Guatemala in the safe third country negotiations.
In a May 27 press conference, Degenhart announced that his office and Guatemala’s National Civil Police would seek greater control of the archive. He also threatened to limit access to the archives by foreign institutions, an apparent reference to the University of Texas at Austin, which has assembled a massive digitized version of a large portion of the police archive. “You can’t allow foreign institutions to have the complete archives,” Degenhart told reporters.
In response, the U.N. and other foreign envoys invited the U.S. ambassador to Guatemala, Luis Arreaga, to join ambassadors from several other countries, including Canada, Germany, Switzerland, Sweden, and the United Kingdom, on a visit to the archive to voice opposition to granting police greater control over the archives. Arreaga declined. The spokesperson from the State Department Bureau of Western Hemispheric Affairs declined to comment on whether Arreaga declined the invitation.
In Washington, State Department officials sought support within the administration for a public statement that would place the United States squarely on the side of those seeking to preserve broad public access to the archives.
“The message [Guatemalan authorities] are getting is we don’t care what you do as long as you do everything in your power to prevent” foreigners from reaching the U.S. border, said Rep. Norma Torres, a California Democrat who was born in Guatemala. If that requires “supporting a corrupt government, that is what [the Trump administration] is going to do.”
Public messaging and statements from U.S. envoys and the State Department can have an outsized political impact in Central America, former diplomats say. “It’s astonishing how important the U.S. voice is in terms of journalists, human rights defenders, civil society … in this region,” said Roberta Jacobson, a former U.S. ambassador to Mexico and assistant secretary of state for Western Hemisphere affairs. “There are clearly things that governments would do, actions it would take, but for the U.S. watching and speaking out,” she said.
The lack of response, according to diplomats, emboldened Guatemala to ratchet up its campaign against the archives.
In early July, the Guatemalan Ministry of Culture and Sports informed the U.N. Development Program, which administers the archive budget on behalf of foreign donors, that it would take over full management of the archives, raising questions about its financial viability. The U.N., which pays staff salaries, was forced to lay off the archives researchers and archivists.
On July 10, Guatemala fired its chief national archivist, Anna Carla Ericastilla, on the grounds that she provided access to foreign institutions, including the University of Texas, and improperly raised funds from donors to pay salaries to archivists.
Degenhart, meanwhile, has overseen a massive purge of Guatemala’s reformed police force after being named interior minister in January 2018. The following month, he fired the director of the National Civil Police, Nery Ramos, along with three other top cops. All told, Degenhart fired some 25 ranking officers and more than 100 agents, including 20 of the 45 police agents assigned to work with the U.N. anti-corruption office.
Guatemalans “have observed a systematic process of dismantling the National Civil Police, ordered by the interior minister himself, who seems determined to destroy 20 years of progress,” according to an August 2018 study by the Forum of Civil Society Organizations Specializing in Security, or FOSS.
The fate of the archive has become inextricably linked to the White House immigration policy.
The threat to curtail access to the archives came on the same day that Degenhart had signed an agreement with Kevin McAleenan, the acting U.S. secretary of homeland security, for the deployment of 89 agents from U.S. Immigration and Customs Enforcement and Customs and Border Protection in Guatemala to help stem the flow of refugees through the country. It also coincided with the Trump administration’s negotiation of a safe third party agreement with Degenhart.
Trump in March ordered all U.S. aid to Guatemala, El Salvador, and Honduras to be cut until they drastically reduced the number of migrants traveling north through Mexico to attempt to enter the United States. Critics, including both Democratic and Republican lawmakers, said the move would only exacerbate the migration crisis, as U.S. assistance helped address root causes of instability that caused people to flee north.
In June, the State Department announced it would release $432 million of the $615 million in aid to Central America, but it warned that new funding would not be released until the Northern Triangle governments took more steps to address migration.
Last week, the Trump administration announced that it had reached agreement on the safe third country pact, which would commit Guatemala to processing political asylum claims from migrants who cross its border in transit to the United States. The U.S. has yet to publish a copy of the pact, leading to speculation about what the deal actually entails.
Still, the move has raised concern about the constitutionality of the agreement. Guatemala’s constitutional court has already asserted that such an agreement would require approval by the Guatemalan Congress. Democratic lawmakers and other activists have criticized the move and vowed to fight it in courts. Democratic Rep. Eliot Engel, the chairman of the House Foreign Affairs Committee, said it is “cruel and immoral. It is also illegal.”
“Simply put, Guatemala is not a safe country for refugees and asylum seekers, as the law requires,” Engel said in a statement released on July 26, after the Trump administration and Guatemalan government signed the agreement.
Why else would he pursue so many policies in Latin America that do not serve the national interest?
Americans can be forgiven if they struggle to find any coherence in the Trump administration’s foreign policy. It zigs and zags, with senior administration officials saying one thing and President Trump contradicting them without warning the next day. It punishes our allies and coddles our adversaries; it privileges demagogy over democracy. Mr. Trump’s approach appears impulsive, improvisational and inchoate — devoid of clear purpose, values or even ideology.
Yet, upon closer examination, there is indeed a consistent logic staring us in the face. The unifying theme of Mr. Trump’s foreign policy is simply to service his domestic politics.
Mr. Trump welcomes and encourages Russia, a hostile adversary, to interfere in our elections so long as the manipulations benefit him. He discards decades of bipartisan policy on the Israeli-Palestinian conflict to curry favor with Prime Minister Benjamin Netanyahu of Israel, and thus right-wing political support. The president follows a basic, if unorthodox, playbook: He and his party over our country.
Nowhere is this pattern more consistently apparent than in the administration’s dealings with Latin America. In recent weeks, Mr. Trump has taken a series of actions that are not tied to coherent strategies and will not deliver the desired results — if those results are to be measured in terms of achieving American foreign policy objectives. Rather, they may succeed only to the extent that they help Mr. Trump gain re-election by dishing up red meat to energize the Republican base.
Take Cuba. Last month, the Trump administration turned the clock back to the Cold War, imposing the harshest forms of sanctions against Cuba allowable under United States law. Mr. Trump reversed the policy of his Republican and Democratic predecessors by permitting Americans to sue foreign companies that use property confiscated without compensation by the Castro regime.
The administration also canceled a deal to allow Cuban baseball players to play in the United States, sharply constrained remittances and promised to end most forms of nonfamily travel, actions that will directly harm Cuba’s people and nascent private sector. In triumphantly announcing this policy shift before veterans of the Bay of Pigs invasion, the national security adviser, John Bolton, repeatedly stressed the contrast with President Obama’s approach and pledged relentless pursuit of regime change.
Anyone familiar with the 60-plus years of failed United States policy toward Cuba before Mr. Obama’s opening in 2014 knows that the embargo only strengthened the Castro regime’s grip on its long-suffering people. Instead of causing the collapse of the Cuban government or the abandonment of its ally Venezuela, Mr. Trump’s approach will again bolster hard-liners in Havana, entrench policies we oppose, drive Cuba closer to Russia and China, further isolate and impoverish the Cuban people and punish our European and Canadian allies, whose companies will now be sued.
Yet, this policy reversal surely pleases the old guard among Cuban émigrés, as it did the Bay of Pigs celebrants who cheered Bolton. Given the changing attitudes among younger Cuban-Americans who largely supported Mr. Obama’s engagement, it remains to be seen how much political sway the hard-liners still have in the crucial battleground state of Florida. Still, Mr. Trump is betting on firing up that faction.
Not content to bank only on the Cuban community in Florida, Mr. Trump is also courting the state’s many Venezuelan immigrants, who justifiably detest the government of President Nicolas Maduro in Caracas. To hasten Mr. Maduro’s exit, the Trump administration has rightly joined with regional and international partners to impose sanctions against Mr. Maduro, his government and cronies, and to recognize the opposition leader, Juan Guaidó, as interim president.
Republicans who spoke up this time should be asking themselves why a president of their party felt he was enforcing its principles by breaking apart families and caging children.
.. But many, many other party leaders have been venturing ever deeper into the dank jungles of nativist populism for quite some time, exploiting the politics of fear and resentment. Mr. Trump did not invent Republican demonization of “the other” — it came about in two ways: gradually, and then all at once.
.. From the early 1990s to 2000, the conservative firebrand Pat Buchanan kept the Republican Party on its toes, running for president three times with an explicitly isolationist message.
.. But it was during the George W. Bush years that anti-immigrant sentiment started to become more central to the party’s identity.
.. Mr. Bush made comprehensive immigration reform a priority of his second term.
.. Conservative talk radio took up the cause, smacking Mr. Bush as squishy on immigration. The very concept of comprehensive reform became anathema to many on the right.
.. The Great Recession that Mr. Obama inherited did nothing to quell nativist resentment among working-class whites, and the rise of the Tea Party pulled the Republican Party further to the right
.. Just ask Senator Marco Rubio, the Florida Republican, who saw his fledgling political career almost snuffed out by his flirtation with comprehensive reform
.. in the wake of Mitt Romney’s presidential loss in 2012, after which the Republican Party briefly decided that one of its principal goals was to improve its image with Hispanic voters.
.. The resulting plan would have done everything from beefing up border security to overhauling visa categories to promoting a merit-based immigration system.
It also provided for the legalization of undocumented immigrants, which meant conservatives hated it.
.. the bill cleared the Senate by an impressive 68-to-32 vote. But John Boehner, then the House speaker, refused to bring it up for a vote in the Republican-controlled lower chamber.
.. Mr. Rubio became a pariah to the Tea Party voters who had propelled him to office three years earlier. Soon, he was denying that he had ever really supported the bill.
.. Party leaders fanned those flames, accusing Mr. Obama of being imperious and “lawless.” In one bit of twisted logic, Mr. Boehner argued that the House couldn’t possibly take up reform legislation because it couldn’t trust Mr. Obama to carry out said legislation.
.. Along the way, Republican candidates continued to play to their base’s darker impulses. On the whole, the rhetoric was subtler than that of the current president
.. Steve King, Republican of Iowa, painting Dreamers as drug mules with “calves the size of cantaloupes because they’re hauling 75 pounds of marijuana across the desert.”
.. Mo Brooks, Republican of Alabama: “I’ll do anything short of shooting them”
.. Nor was Mr. Trump the first Republican to promote the idea that within every immigrant lurks a murderer or terrorist.
.. Louie Gohmert, Republican of Texas, ran around warning of what came to be mocked as the great “terror baby” plot. As Mr. Gohmert told it, radical Islamists were plotting to impregnate droves of young women, who would infiltrate the United States to give birth here. The babies would be shipped back home for terrorist training, then return as adults to wreak havoc on an unsuspecting America.
.. Time and again, given the choice between soothing and stoking nativist animus, Republican lawmakers chose the low road.
.. And he has even less interest in addressing the root causes of migrant families flocking to the border.
.. In 2016, the Department of Homeland Security reported, “More individuals sought affirmative asylum from the Northern Triangle Countries (El Salvador, Guatemala and Honduras) in the last three years than in the prior 15 years combined.”
.. Helping these nations stabilize themselves is key to reducing the flow of asylum seekers. But Mr.
Trump does not like complexity or long-term strategizing.
He prefers casting blame and making threats.
.. In the administration’s budget proposals, it has sought deep cuts in aid to these countries — something Congress has wisely ignored. Removing a financial lifeline from nations already in chaos is hardly a recipe for progress.
.. Mr. Trump’s move to kick out as many people who are from these countries as possible threatens to overwhelm nations ill equipped for such an influx. And without the money that many of the immigrants living here regularly send back to their families, the economies of these countries would further crumble.
.. In 2016, 17 percent of El Salvador’s gross domestic product came from remittances from abroad.
.. America’s immigration mess is not going to be cleaned up anytime soon.
.. conservatives are terrified that the base will punish them if they concede even an inch. Speaker Paul Ryan, with one foot out the door, has no juice. And pretty much everyone assumes that nothing will move through the Senate anyway.
.. Trump is planning fresh crackdowns in the run-up to the midterms, to reassure his base that he has not lost his resolve. If anything, given the fragility of his ego, last week’s flip-flop will make him all the more desperate to prove his strength.
.. Mr. Trump is more a breaker than a fixer.
.. The question now is whether the conference will learn anything useful from this episode.
.. There is also his
- politicization of law enforcement, his
- attempts to undermine public faith in the democratic process, his
- attacks on the press, his
- family’s suspect business dealings and his
- habitual lying
.. this is unlikely to be the last time the president puts members of his party in an uncomfortable, and perhaps untenable, position.
.. The weight of this moment should be recognized. Mr. Trump’s capitulation was not a given. With a little less media scrutiny, fewer heartbreaking photos and fewer calls from angry voters, tent cities could have kept on filling with traumatized children.
.. Having done so much to pave the way for Mr. Trump and his immigration policies, they now owe it to the American people to help keep him in check.