Petro’s FARC Scandal

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• Colombia enters its most dangerous phase yet—thanks to Petro

• An underdeveloped, yet aging continent

• Sovereignty in Satoshis: El Salvador’s hedge against Fed rates

• What We’re Watching

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Best,

The GCaM Team

Colombia is entering one of the most volatile moments of Gustavo Petro’s presidency, and potentially of its democratic history. 

In perspective. What began as quiet reporting on leaked documents has exploded into a full-blown state-infiltration scandal involving FARC dissidents, senior government officials, and, potentially, the financing of Petro’s own 2022 presidential campaign. And unlike previous political storms, this one comes with concrete evidence: chats, files, and the imprint of a government losing control of its intelligence architecture.

• The revelations originated in computer files seized from alias Calarca, a senior figure within the Estado Mayor Central (EMC), the most powerful wing of the FARC dissidents. 

• Calarca had been detained in 2024, and then released by Petro to keep peace talks alive. 

• His laptop paints the picture of a dissident commander in regular contact with General Juan Miguel Huertas, head of the Army Personnel Command, and with William Mejías, a senior director inside Colombia’s National Intelligence Directorate. 

Why it matters. Both are Petro appointees and appear to have shared classified operational information—including troop movements—with a designated terrorist actor. The files describe discussions about creating private security firms to launder money, pathways to move weapons, and the involvement of a Chinese businessman facilitating deals in illegal gold, arms procurement, and front-company investments linking EMC interests to Asia. 

• Most explosive of all are the exchanges between Calarca and rival commander Iván Mordisco, which suggest the dissidents possess evidence of illegal financing tied to Petro’s campaign. 

• Mordisco, according to the chats, threatens to release documents implicating both Petro and Vice President Francia Márquez.

• This indicates state contamination, and the political implications are staggering.

Between the lines. The Attorney General’s Office has reportedly held this information for more than a year without opening an investigation. Meanwhile, Petro’s government appears trapped between negotiating with one FARC faction while simultaneously bombing another, all while officials inside his administration blur the line between peace policy and collaboration.

• Petro is already under U.S. sanctions for alleged ties to narcotrafficking networks. Washington has cut his visa, frozen assets, and suspended cooperation. 

• Now, in the middle of an escalating U.S. military campaign across the Caribbean, the evidence landing in Colombia reinforces every suspicion raised in Washington over the past year.

Crucial timing. The U.S. is looking for clarity in a region where criminal networks, political actors, and foreign powers overlap. The Administration has sharpened its doctrine for the hemisphere. And, suddenly, Trump’s offhand threat to strike cocaine labs in Colombia sounds far more plausible within the logic of a White House claiming to confront a hybrid criminal–terrorist ecosystem operating across Colombia, Venezuela, and the Caribbean.

• Petro’s instinct will be to blame the U.S., the opposition, or the press rather than acknowledge the depth of the institutional breach. But the scandal is too extensive, well-documented, and the geopolitical context is too charged. 

• Petro’s former defense minister, Iván Velásquez, now faces questions about how deeply the dissidents penetrated the very institutions he oversees. 

• The contradiction is unsustainable. The architect of “anti-corruption” also presided over an intelligence apparatus caught feeding information to terrorist groups.

High stakes. While Venezuela captures the headlines, Colombia may be approaching its inflection point. The country long considered Washington’s most reliable partner in the hemisphere is showing signs of the same hybridization of state institutions that destroyed Venezuela’s political order a decade ago. And unlike Venezuela, Colombia’s collapse would reverberate instantly through the hemisphere’s security architecture.

• Petro’s presidency is now exposed to the integrity of his intelligence services, the loyalty of his armed forces, and the legitimacy of his electoral financing. Washington knows this. Caracas knows this. And the EMC—according to their chats—knows it better than anyone.

• The question now is whether Colombia’s institutions are resilient enough to absorb the shock. 

• If they are not, the hemisphere’s most important security partnership may be entering a definitive rupture, with consequences far beyond Bogotá.

Latin America is running out of time, literally. The region is entering a demographic decline long before achieving the levels of economic development that typically cushion aging societies. 

In perspective. This 2024 fertility map tells a clear and dangerous story. Every country except Bolivia now sits below replacement rate, and all—even Bolivia—have seen declines since 2019. 

• At the same time, Latin America remains a massive exporter of migrants, with weak immigration flows, low productivity, and a welfare architecture too fragile to sustain an elderly population.

• This is the worst possible demographic sequence. Historically, rich societies aged after building robust economies: Europe, Japan, South Korea, and now China. Latin America is aging before it becomes rich.

Between the lines. A shrinking workforce means fewer taxpayers, fewer producers, and fewer innovators. Countries like Chile (1.14 births per woman—the lowest in the hemisphere and 7th lowest globally), Brazil (1.61), Colombia (1.63), and even Mexico (1.89) are now at levels associated with structural stagnation.

• But unlike Germany or Japan, these countries lack large capital markets, vast high-productivity industries, technologically sophisticated firms, and mature social-security systems.

• Guatemala, Honduras, and Bolivia, the region’s traditional demographic engines, are also falling fast. Guatemala dropped from 2.59 to 2.28 in just five years, a collapse that historically took decades in other regions.

  
  

• If Latin America couldn’t finance its development with a young population, it certainly won’t be able to do so with an aging one.

Cultural shift, no response. Fertility decline also implicate cultural trends like urbanization, delayed marriage, women’s higher educational attainment, and the widespread perception that raising children is an unaffordable luxury. Yet Latin America offers none of the policy responses used in other regions to mitigate decline. 

• Childcare is not broadly affordable childcare, housing policies don´t rewards family formation, pension schemes are defficient, and there are no immigration systems designed to attract talent.

  
  

• Instead, the region has produced expensive cities, stagnant wages, informal labor markets, and low social trust.

  
  

• A combination that accelerates demographic collapse.

The bottom line. A rapidly aging electorate means rising pressures on governments already struggling with fiscal deficits. Pension obligations will balloon just as working-age populations shrink. Countries like Brazil and Argentina are already fighting to prevent insolvency, and an older demographic profile will make that battle unwinnable.

• At the same time, aging societies tend to become more risk-averse, less entrepreneurial, and more politically polarized.

  
  

• In fragile democracies, that is a recipe for instability.

What lies ahead. Africa is the only continent with rising fertility, and will be home to one-third of the global population by 2100. The engines of future economic dynamism are shifting there, while Latin America risks becoming a demographically stagnant periphery.

• If the region fails to reverse this trajectory, it will face a future defined by slower growth, higher dependency, and political volatility.

  
  

• Aging before developing, and declining before modernizing. The clock is already ticking.

El Salvador has been buying Bitcoin since 2021, turning what began as a legal-tender experiment into an ongoing accumulation strategy under President Nayib Bukele.

In perspective. The move has puzzled and alarmed multilateral lenders like the IMF, as well as governments and market analysts who expected the project to quietly fade. Instead, Bukele has doubled down, treating BTC less as a gimmick and more as a state-level position. Behind that decision lies a clear idea: building a monetary hedge against the foreign power that ultimately dominates El Salvador’s interest rates and liquidity. Bukele’s Bitcoin story reads less like a one-off stunt and more like a deliberate, staged buildup of a state-level crypto position.

• In early September 2021, El Salvador disclosed its first Bitcoin purchase of 200 coins—later raised to 400—at a spot price a little above USD 51 000 per Bitcoin, just as the legal-tender law came into force.

• The move immediately provoked criticism: multilateral institutions such as the International Monetary Fund and other regional bodies flagged the transaction as a fiscal and transparency risk for a heavily dollarized economy.

• Bukele’s administration has continued buying BTC—at an average of one per day. Its latest move was the acquisition of about 1090 BTC for roughly USD 100M while the spot price dipped below USD 90 000—bringing total holdings to approximately 7474 BTC, or roughly USD 600M at USD 90 000.

Regional echoes. El Salvador’s Bitcoin bet only makes sense when read against its total dependence on U.S. monetary policy. In a fully dollarized economy with no autonomous central bank, El Salvador imports whatever rates, liquidity conditions, and risk appetite the Fed sets—from the cost of rolling sovereign debt to the flow of remittances and bank credit.

• Trump is openly pressuring the Fed to cut rates faster, which would result in a deliberate weakening of the dollar cycle.

• This will ease U.S. financial conditions and boost capital markets at home while exporting more volatility to small dollarized economies on the periphery.

• In that scenario, Bukele’s BTC hoard operates as a hedge against a more politicized, cheaper dollar: a parallel reserve asset whose value is not directly capped by Fed decisions and which can, in the best case, reprice upward precisely when conventional dollar assets are being eroded.

Between the lines. Bukele’s accumulation strategy begins to look less like speculation and more like a calculated financial hedge built alongside the country’s monetary framework. By treating Bitcoin as a parallel sovereign wealth reserve, El Salvador positions itself to benefit if BTC revisits its previous all-time highs above USD 120 000. At that level, the country’s 7474 BTC would be valued near USD 896M, giving San Salvador a meaningful buffer in an otherwise liquidity-strained system.

• A rising BTC valuation provides indirect support for fiscal liquidity, especially as the reformed pension system pushes more long-term obligations onto the state. A stronger reserve asset gives the government added space when managing payments, refinancing needs, and short-term cash-flow pressures.

• In a scenario where Fed policy becomes more politicized and the dollar is deliberately weakened, Bitcoin operates as a de-correlated asset that can appreciate precisely when traditional dollar reserves lose value.

• This could turn Bukele’s bet into a geoeconomic hedge against U.S. monetary dominance rather than a purely ideological gamble.

In conclusion. El Salvador’s Bitcoin position now functions as a hedge against an international environment where monetary anchors are shifting. Trump’s increasingly explicit pressure to change the Federal Reserve’s leadership injects political volatility into the very institution that defines Salvadoran liquidity.

• At the same time, BRICS countries are accelerating efforts to settle trade in non-dollar currencies, deepening global uncertainty around the dollar’s future strength.

• In that landscape, Bukele is betting that holding BTC during bursts of crypto volatility offers a strategic haven against a more contested monetary order.

What We’re Watching 🔎 . . .

Trump backs conservative Asfura in Honduras' tight presidential race [link]

Reuters

Donald Trump openly endorsed Honduras’s National Party candidate Nasry “Tito” Asfura, saying he “hopes Honduras elects a conservative”—a rare, direct intervention that signals Washington’s impatience with President Xiomara Castro’s left-wing experiment. Castro’s government, already battered by scandals, collapsing public services, and intensifying gang violence, now faces pressure from a U.S. administration that has little tolerance for regional instability or flirtations with authoritarian allies.

Honduras’s economic deterioration, investor flight and rising migration have turned the ruling Libre party toxic with voters. Asfura, a traditional conservative backed by business elites and welcomed in Washington, now becomes the natural vehicle for a political correction. If polls continue shifting rightward, Honduras may join the regional trend: left-wing projects that rise on hope and fall on governance.

Tarcísio: Will He or Won’t He? [link]

Thomas Traumann, Americas Quarterly

Brazil’s political class is holding its breath as São Paulo Governor Tarcísio de Freitas flirts with a 2026 presidential bid while refusing to clarify the question everyone is asking: is he Bolsonaro 2.0, or Bolsonaro’s escape hatch? Tarcísio remains Bolsonaro’s most viable heir, yet carefully distancing himself from the former president’s legal chaos and anti-institutional rhetoric. His balancing act has produced a rare political paradox: a right-wing candidate acceptable to markets, palatable to moderates and still embraced by Bolsonaristas who see him as their ticket back to power.

But ambiguity has an expiration date. As Bolsonaro faces mounting judicial bans and his movement grows more radicalized, Tarcísio risks being forced into a binary choice: inherit Bolsonaro’s base and his liabilities, or break away and gamble on building a new conservative coalition. The stakes go beyond Brazil. A Tarcísio candidacy would signal whether Latin America’s right is evolving toward institutional conservatism—or doubling down on its most disruptive instincts.