Turning Memes to Money in El Salvador — CEPR

On June 5, President Nayib Bukele announced his plans to make El Salvador the world’s first country to accept Bitcoin, a popular digital cryptocurrency, as a form of legal tender. The nation’s legislative assembly, under the majority control of Bukele’s New Ideas party, passed the bill just three days later. Under the new legislation, Bitcoin must be accepted as payment by all private firms and by the nation’s tax authorities. The move puts El Salvador into uncharted territory, posing serious risks that likely outweigh any potential benefits. However, prudent economic policy does not seem to be the purpose of the decision. Instead, Bitcoinization has in part been a successful publicity stunt, expanding the massive online following that President Bukele himself acknowledges is vital to his political power.

Elected in 2019, Bukele frames himself as an opponent of the traditional Salvadoran elite. He maintains an approval rating of roughly 90 percent, in large part by attributing a recent drop in the homicide rate (which began before he took office) to his harsh anti-crime policies. Another key to his popularity is his highly active presence on Twitter. Bukele, who previously worked at his father’s public relations firm, uses his Twitter profile to share news, memes, and posts supportive of his leadership with his 2.7 million followers — one of the largest Twitter followings of any national head of state when weighted by population.

Bukele’s carefully crafted public image, bolstered by paid trolls and lobbyists defending him, allows him to obscure the ways in which his rule has been similar to the corrupt Salvadoran elites he claims to oppose. In 2020, when the legislature objected to his proposal for a loan that would fund further police militarization, he sent soldiers to Congress to intimidate the lawmakers. This May, immediately after his party won a supermajority of the legislature’s seats, he replaced the attorney general and five judges on the Supreme Court in a move that the court itself declared unconstitutional. Most have recognized the move as a power grab; Bukele has termed it a “house cleaning.” While he claims these moves are necessary for fighting entrenched corruption, the US State Department has accused a number of Bukele’s close associates of being corrupt.

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Originally published at https://cepr.net on June 25, 2021.