Just two weeks ago, President Santiago Peña was boasting about how Paraguay had “the best numbers” in Latin America as he prepared to deliver the keynote address at a fancy gala in Washington.

Now, Peña has not only tendered his resignation following the dramatic collapse of local fintech Ueno Bank SA, with which he had ties, but also faces a criminal investigation into his role in what has become the country’s biggest financial scandal in years.

For the US, the spectacular and sudden downfall of one of the Trump administration’s staunchest allies in South America is a sharp blow at an awkward time. It comes not only on the heels of other unexpected setbacks to the so-called Donroe Doctrine, but just as Secretary of State Marco Rubio, that strategy’s architect and executor, is reportedly weighing whether to resign in the wake of the seismic Republican losses in the US midterm elections.

According to Bloomberg News, Rubio has spoken to officials at the White House about stepping down, and has been asked to stay; Rubio dismissed the report and said that his plan was to remain in office until the end of Trump’s term. Even if Rubio stays, however, the uncertainty created by the prospect of a diminished lame duck president will loom large for the region’s policymakers.

Of course, the idea that Washington can successfully micromanage Latin America to serve its strategic interests has always been exaggerated and misguided. All the White House support and special treatment in the world couldn’t save Peña from the consequences of failing to pursue what should have been his overriding priority: navigating the treacherous waters of domestic politics, particularly his feud with Horacio Cartes, the controversial tobacco tycoon who is his former mentor, predecessor and the mastermind behind the ruling Colorado Party.

It took just one request by Cartes-aligned senators for information from the central bank about Ueno’s activities back in September to set off a chain of events that culminated in Peña’s downfall less than two months later. He was summarily finished, and Rubio, his World Cup buddy, couldn’t do much about it. Ouch.

Indeed, no matter how much military, financial or diplomatic support Washington provides, or how enthusiastic its ideological allies may be, local politics — not international alliances — will ultimately determine the fate of the region’s governments. That was true for Peña, and it will be true for another key US ally, Argentine President Javier Milei, who faces a complicated reelection campaign next year. It will be also true of Venezuela’s transition or Cuba’s eventual overhaul, where Washington has a paramount role to play but where political forces on the ground will still determine the eventual outcome.

There is a tendency among experts and policymakers to overstate the power of broad regional movements and geopolitical alignments. For all the pomp surrounding initiatives such as the “Shield of the Americas” or grand labels such as the Donroe Doctrine, every government is largely left to fight its own battles, confronting domestic opponents and delivering results for its people. You can be the most business-friendly leader in the region, hold degrees from top US universities and spend days charming Wall Street bankers and New York business councils, as Peña did. That may earn you prestige, access, probably some financial backing and even a timely asylum. But none of it is a substitute for political support at home.

Washington doesn’t get to decide how voters in, say, Belo Horizonte cast their ballots, as we’ve learned recently in Brazil’s presidential election. There is a reason why two old wolves in this business, Luiz Inácio Lula da Silva and Mexico’s Andrés Manuel López Obrador, have always been careful not to appear too cozy with Uncle Sam.

Moreover, the region will never be an ideological and political monolith. As Rubio is finding out the hard way, moments of total regional alignment are rare; a bit like eclipses, they are fleeting, a coincidence in time. Peña’s demise comes as Latinos in the US have spoken loud and clear against Trump’s policies in this week’s midterms, and just days after the leftist Lula pulled off one of the most spectacular political comebacks in the region’s history.

That doesn’t mean Latin America’s rightward shift isn’t a real thing. The ascendance of conservative leaders across the region since late 2023 reflects homegrown, widespread frustration with the weak performance of recent governments. Yet sooner or later, we will see a countermove toward the left, not simply because politics is a pendulum, as some argue. These swings have less to do with ideology than with whether governments deliver concrete answers to people’s demands. That’s why direct contacts and dialogue across political divides will always be a superior strategy to pursuing an impossible degree of regional alignment.

So what now? For Paraguay, the shocks of the past few days mark a painful setback. The country has built a credible macroeconomic framework and achieve investment-grade status, having issued its first international sovereign bond only in 2013. Ueno’s sudden demise raises tough questions about the nation’s market regulation, financial oversight, auditing standards and the extent of corruption in the intersection of business and politics. Its institutional reputation has been tainted.

At the same time, this crisis could be an opportunity to address some of the underlying problems facing one of the region’s fastest-growing economies, including the dangers of embracing the economic “miracle” label way too quickly.

It will be the authorities’ job to provide answers and clean up house. At the end of the day, all politics is local — even for Washington.