Nayib Bukele’s Landslide Win In Bitcoin Country Fraught With New And Old Challenges

Having solidified his political legacy by effectively addressing the issue of gang violence in El Salvador, Nayib Bukele has not only secured an extraordinary second presidential mandate but has also propelled his New Idea Party to a resounding victory in the legislative realm. Bukele’s historic triumph in the presidential race saw him clinch an impressive 83% of the vote, a margin widely considered unprecedented, reaching as high as 76% in the context of open and free elections within modern democracies. During his campaign, Bukele had to temporarily step away from the presidency, having obtained a special permit to run as a candidate.

The elections, observed by various international organizations, have been universally acknowledged as free, fair, and open, with no significant irregularities reported. Governments worldwide, including the United States, have recognized the results and congratulated Bukele on his resounding victory.

The Supreme Electoral Tribunal of El Salvador, responsible for overseeing the election, has confirmed that, with over 70% of the votes already counted, Bukele’s victory is assured and renders any competitive outcome by his closest opponent insurmountable. This electoral success extends beyond the presidential sphere, as Bukele’s New Idea Party has also secured at least 54 out of the 60 seats in the Legislative Assembly, further consolidating his political influence.

As Bukele embarks on this new chapter, he faces the hard challenge of steering El Salvador toward economic prosperity, a task intricately tied to the significant agenda of Bitcoin adoption within his government. However, it is crucial to recognize the intricate difficulties he will encounter in navigating the complexities of leadership following such a resounding electoral triumph. With a clear mandate from the people and a dominant position in the legislative landscape, Bukele is poised to enact ambitious policies and reforms, yet the expectations and challenges accompanying such a mandate are equally tough.

Economic Stagnation and Priorities

Despite the resounding electoral victory, President-elect Nayib Bukele has been tasked by his electorate to lift El Salvador from its relative economic stagnation. While Bitcoin adoption may play a role in the solution, it is unlikely to be his top priority at this juncture. The immediate focus is on addressing economic challenges and providing Salvadorans with upward mobility, creating an environment that discourages criminality as a viable option.

It was impossible to tackle economic problems while the looming threat of gang violence and insecurity persisted. Bukele recognized that sustainable economic progress required addressing the root causes of crime and insecurity, laying the foundation for broader prosperity.

However, it is crucial to acknowledge that El Salvador has already progressed. Notably, the country’s favorable digital laws have attracted significant players like Google, signaling a positive environment for digital operations. Companies like Strike, Bitfinex, and Volcano Energy operate within El Salvador’s bitcoin-friendly landscape, contributing to the country’s economic diversification.

Beyond the business landscape, visible improvements are evident in various public works initiatives. Projects like the subterranean electrical cable initiatives, new roads, bypasses, and the construction of a new national library, showcase the government’s commitment to infrastructural development. The surge in tourism, with El Salvador ranking as the 5th best-performing tourist destination globally in 2023, reflects the positive momentum.

However, the challenge lies in ensuring that this prosperity extends to and significantly improves the quality of life for most Salvadorans. While progress is evident, the emphasis must now shift towards ensuring that most Salvadorans have the opportunity to uplift their communities and address socio-economic disparities, ensuring that the benefits of El Salvador’s economic transformation reach every corner of the nation.

Security Concerns and Lasting Solutions

Bukele’s second term will be marked by the need to consolidate and make permanent the strides achieved in addressing security concerns during his first term. His resounding electoral victory can be seen as a public endorsement, a referendum on the effectiveness of his government’s efforts in tackling the pervasive issue of insecurity. The challenge now lies in sustaining these improvements and delving deeper into the root causes of criminality.

Central to Bukele’s approach is not just punitive measures but a comprehensive strategy that includes rehabilitation and addressing the socio-economic factors contributing to crime. His “Zero Idleness” program within the incarceration system is a notable initiative. This program focuses on rehabilitating inmates who have demonstrated trustworthiness and good behavior, preparing them for reintegration into society. However, sustaining this progress requires ongoing support systems and opportunities to ensure these individuals can maintain law-abiding behavior post-incarceration.

While Bukele has acknowledged the link between poverty and crime, the challenge is problematic. His winning speech and previous press conferences highlighted the importance of addressing poverty and recognizing its role in incentivizing criminal activities. However, translating this acknowledgment into tangible changes within a five-year term requires strategic planning and implementation.

One aspect to consider is providing alternatives to the high-time preference for easy money through crime. Bukele’s government may need to focus on creating opportunities for economic growth, job creation, and skill development, particularly in areas heavily affected by poverty and crime. By offering viable alternatives, the government can shift the incentive structure, making it more attractive for individuals to pursue legitimate means of earning a livelihood.

Demonstrating Gains from Bitcoin Adoption

While the successes in addressing security concerns and investing in infrastructure have undoubtedly benefited El Salvador, the challenge now extends to showcasing the tangible gains from Bitcoin adoption. Despite the positive impact on security and public works, El Salvador currently grapples with the lowest-performing GDP in the Central American region. Bukele has candidly acknowledged the economic constraints faced by the country in his winning speech, emphasizing the limited natural resources, dependence on food imports, and vulnerabilities exposed during last year’s transportation blockade from unions and indigenous groups in Guatemala and Panama respectively.

In the face of these challenges, demonstrating macroeconomic gains becomes intricate, requiring a nuanced approach to gauge the success of Bitcoin adoption. El Salvador, a small country with limited resources, must strategically leverage its strengths to create economic opportunities. Bukele’s recognition of the significance of the tech and Bitcoin industry as a cornerstone of the nation’s economic growth aligns with this strategy.

While GDP is not the sole metric for economic success, it remains a key indicator, and addressing its shortcomings is imperative. To alleviate concerns, Bukele’s government must focus on attracting and facilitating strategic partnerships with global corporations, as seen with Nestle and Unilever. After decades of hiatus, Nestle’s renewed commitment to purchasing specialty coffee from El Salvador and Unilever’s expanded operations exemplify the potential for such collaborations to stabilize and boost key industries.

The ambitious Bitcoin City project is a pivotal aspect of El Salvador’s economic transformation. Bitcoiners, who are closely monitoring the country’s efforts, anticipate the development of Bitcoin City and how Bukele navigates potential controversies. Here, challenges may emerge, especially concerning libertarian and Bitcoin maximalist expectations, as the government may need to exert its authority in acquiring land and ensuring private property rights are aligned with the project’s objectives.

As El Salvador positions itself as a hub for the tech and Bitcoin industry, the government’s commitment to balancing progress with respect for individual rights becomes paramount. Success in this venture hinges on attracting foreign investments, fostering a conducive business environment, and managing the expectations of stakeholders and Bitcoiners. El Salvador’s economic fate is undeniably tied to the success of innovative initiatives, and Bukele’s government must tread carefully to ensure the project’s success benefits Salvadorans while navigating the complexities of both domestic and international economic landscapes.

Foreign Investment and Property Ownership

Another tricky area to navigate as part of Bukele’s economic strategy will be balancing the delicate balance between attracting foreign investment and empowering local Salvadorans. Bukele will need to recognize the importance of ensuring that Salvadorans have access to opportunities for property ownership, especially as Bitcoin immigrants seek to make El Salvador their new or second home. Depending on how Bukele addresses this reality, the solutions to ensuring Salvadoran property rights may not entirely align with the principles of the particular perceived Bitcoin ethos. Striking this balance becomes even more complex when considering potential concerns for libertarians and proponents of small government, who will resent government intervention in setting property market rules and regulations.

To truly leverage foreign investment for the benefit of the local population, Bukele’s government acknowledges the need to invest in training programs that equip Salvadorans to capitalize on the potential of new companies in the country. Accelerated education frameworks, particularly in English, become crucial, as proficiency in this language significantly enhances employment and income prospects. Recognizing this, the government must move to implement initiatives that foster English language skills among the local workforce.

However, it’s essential to tread carefully in this endeavor. While the advantages of English proficiency are clear, El Salvador’s official language is Spanish. Bitcoiners and expats eyeing the country for residency and business opportunities must respect and adapt to El Salvador’s linguistic sovereignty. Moreover, Spanish is already an asset to individuals, as Latin America, with its growing popularity in the Bitcoin landscape and Argentina’s Bitcoin-friendly approach, presents a significant growth opportunity.

The integration of expats into Salvadoran society adds an interesting social dimension to the economic strategy. Unlike the experience in Costa Rica, where expats often create separate communities, Bukele must aim to foster a more integrated approach. To address potential challenges, such as local population resentment or gentrification, Bukele may opt for solutions that differ from the expectations of Bitcoin libertarians.

One potential strategy involves the development of social and affordable housing initiatives. By providing dignified homes for local Salvadorans adjacent to Bitcoin expat communities, Bukele must mitigate the impact of rising property prices and access to property for locals. This approach may differ from the expat enclaves seen elsewhere, as the focus remains on shared communities that benefit locals and newcomers.

Ending the State of Exception

The decision to end the state of exception, temporarily suspending certain freedoms, must hinge on permanently addressing security issues. Salvadorans approve of this measure because this tool has prevented a catch-and-release approach with violent criminals and allows the authorities to properly process them. The challenge for Bukele lies in balancing the imperative of national security with the preservation of individual freedoms, which demands careful navigation to avoid compromising the hard-won progress in security.

Addressing the backlog of cases within the judiciary is imperative before the State of Exception can end. The timely investigation, proper charging, fair trials, and appropriate sentencing of perpetrators are essential in any independent justice system. This back-log and the catch-and-release policies were a legacy of the previous administration, which had made the problem of gangs worse, not better for the country. While it is important to ensure that those who are innocent are swiftly acquitted and set free, underscoring the principles of justice and due process, this principle was abused and used as a tool for criminality and the harming of innocent victims rather than ensuring the rights of the wrongly arrested.

Bukele has emphasized the inherent fallibility of any system, including El Salvador’s. His leadership in implementing bold measures to combat crime, albeit controversial, has yielded tangible results, transforming the nation from the “murder capital of the world” to one of the safest countries in the Western Hemisphere. Despite criticism from various quarters, including mainstream media, NGOs, and foreign governments, Bukele remains steadfast in his commitment to safeguarding the safety and security of Salvadorans.

In this context, the importance of maintaining the gains achieved cannot be overstated. Bukele’s government must resist external pressures and adhere to its strategic course, recognizing that freedom and property rights are meaningless without the assurance of safety within the nation’s borders. El Salvador’s journey towards sustained security and prosperity requires resolute leadership and a steadfast commitment to preserving the hard-won gains of recent years.

Managing Expectations

In the pursuit of economic revitalization and Bitcoin adoption, Bukele may not be able to satisfy every ideal on the Bitcoiner’s wishlist. It is essential to recognize that El Salvador’s government is focused on rescuing the nation from centuries of dysfunction rather than adhering strictly to a set of preferred laws and policies.

With such a strong mandate and an essential hegemony in both the executive and legislative branches, Bukele, his government, and his team of Legislative Assembly Deputies will also need to fight off the temptation of corruption, lack of transparency, and complacency. Without effective opposition, being self-critical and humble will be crucial to maintaining good governance and ensuring continued progress.

As El Salvador embarks on this historic journey, President Bukele faces multifaceted challenges. While Bitcoin adoption is a key component, addressing economic issues and security concerns and striking a balance between local empowerment and foreign investment is critical. Bukele’s success will not only be measured by the fulfillment of Bitcoiners’ expectations but also by the tangible improvements in the lives of Salvadorans and the nation’s overall prosperity. The absence of a robust opposition demands heightened vigilance and introspection within the government, reinforcing the importance of ethical leadership, transparency, and a commitment to the well-being of the people.

This is a guest post by Jaime Garcia. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.