Updated April 5, 2023
Nicaragua
Nicaragua, a Central American country bordering Honduras
prisoner release, the Nicaraguan government stripped 94
and Costa Rica, is experiencing significant political
political opponents of their citizenship and described them
repression under the authoritarian rule of President Daniel
as “traitors to their homeland.” As of April 2023, 37
Ortega, and his wife, Vice President Rosario Murillo. The
political prisoners remained in Nicaragua, including Bishop
erosion of democracy under the Ortega-Murillo government
Rolando Álvarez, who is serving an internationally
has strained relations with the United States and raised
condemned prison sentence of more than 26 years.
congressional concerns.
Nicaragua at a Glance
Political Situation
Population: 6.7 mil ion (2023, IMF est.)
Daniel Ortega first rose to prominence as a leader of the
Area: 46,883 square miles, slightly smaller than Mississippi
leftist Sandinista National Liberation Front (FSLN), which
Gross Domestic Product (GDP)/Per Capita GDP:
toppled the U.S.-aligned Somoza family dictatorship that
$15.7 bil ion/$2,380 (2022, current prices, IMF est.)
ruled Nicaragua from 1936 to 1979. Ortega was elected
Key Trading Partners: Exports: United States (52.3%),
president in 1984 but was defeated in 1990 after more than a
Mexico (12.9%), Honduras (7.3%) (2022, TDM) Imports: United
decade of armed conflict between the FSLN government and
States (26.9%), China (12.3%), Honduras (9.1%) (2022, TDM
U.S-backed Contra insurgents. From 1990 to 2001,
Sources: International Monetary Fund (IMF); Trade Data
Nicaragua held three relatively free and fair elections in
Monitor (TDM).
which power changed hands peacefully between non-
Sandinista presidents. Ortega returned to power in 2006 in
elections that many observers also judged to be free and fair. Economic Environment
Nicaragua has the second-lowest per capita income in the
In the ensuing years, Ortega’s FSLN government
Western Hemisphere, according to the World Bank. The
increasingly manipulated democratic processes. Subsequent
Ortega administration generally has maintained market-
elections won by Ortega in 2011 and 2016 were widely
oriented economic policies, and economic growth averaged
judged to be seriously flawed. In 2021, the Organization of
4.2% from 2007 to 2017, according to the IMF. However,
American States (OAS) adopted a resolution asserting that
Nicaragua’s GDP contracted by 1.8% in 2020.
Ortega’s most recent election (his fifth overall and fourth
Unemployment nearly doubled, from 6.2% in 2019 to an
consecutive term), had “no democratic legitimacy,” given
estimated 11% in 2021. Economists have attributed this
that all viable opposition candidates and parties were barred
economic downturn to the effects of the country’s political
from participation. In the past, the Ortega government’s
crisis, the Coronavirus Disease 2019 (COVID-19)
social welfare programs helped improve Nicaraguans’
pandemic, and two major hurricanes.
standard of living and maintained a strong support base for
the FSLN, which Ortega used to consolidate power. In 2018, The Nicaraguan economy began to recover in 2021 with
however, government-approved tax reforms that included
10.3% growth and 4.0% growth in 2022. The IMF projects
tax increases and a reduction of social security benefits
that growth will slow further to 3.0% in 2023. High inflation
sparked mass protests. The Ortega administration’s
and weaker global demand for the country’s textile and
repressive response—which resulted in over 300 dead,
coffee exports have taken a toll on Nicaragua’s small, open
thousands injured, and hundreds detained and tortured—
economy. Economic growth could slow further due to U.S.
generated global condemnation.
sanctions on Nicaragua’s gold sector, announced in October
2022. According to the Nicaraguan Central Bank, gold is
Despite domestic and international calls for Nicaragua to
Nicaragua’s top export and accounted for $927.4 million
reform its electoral laws and hold free and fair elections, the
worth of exports in 2022, including $893.5 million in exports
Ortega administration’s antidemocratic practices have
to the United States.
continued. Between 2007 and 2022, the Ortega government
closed more than 3,100 nongovernmental organizations
U.S. Policy
focused on issues such as human rights, medical care and
U.S. policy toward Nicaragua aims to promote the
resources, education, and civil and social matters. More than reestablishment of democratic practices, including free and
200,000 Nicaraguans have fled the country for political and
fair elections, support for human rights, and attention to
economic reasons since 2018. A majority of those displaced
humanitarian needs. The Biden Administration, with support
have sought asylum in neighboring Costa Rica, and some
from Congress, has enhanced U.S. sanctions against
have sought entry into the United States.
Nicaragua in a stated effort to advance those policy goals
and hold the Ortega government accountable for its
In February 2023, the Ortega administration released 222
antidemocratic practices and attacks on civil society.
political prisoners to the United States. A week after the
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Nicaragua
The Ortega government has pushed back against pressure
Nicaraguan economy. To date, the Biden Administration has
from the United States and other international actors. Since
not imposed any sanctions pursuant to E.O. 14088.
2022, for example, Nicaragua has announced its intention to
withdraw from the OAS, rejected a U.S. envoy, declared the
Congressional Action. In November 2021, Congress
head of the European Union delegation persona non grata,
enacted the Reinforcing Nicaragua’s Adherence to
and closed the Vatican embassy in Managua. Nicaragua also Conditions for Electoral Reform (RENACER) Act of 2021
has taken steps to forge closer ties with other global powers
(P.L. 117-54). The act requires the Administration to align
by deepening its relationship with Russia and establishing
U.S. diplomacy and use targeted sanctions to advance free,
diplomatic relations with China.
fair, and transparent elections in Nicaragua, among other
provisions. The act also requires the State Department to
U.S. Assistance. In FY2022, Congress appropriated $15
monitor, report on, and address corruption and human rights
million in assistance to support democracy, human rights,
abuses in Nicaragua.
and governance programs in Nicaragua and the State
Department allocated an additional $2 million of health
The RENACER Act amended the Nicaragua Human Rights
assistance to the country. The Consolidated Appropriations
and Anticorruption Act of 2018 (NHRAA; P.L. 115-335) to
Act, FY2023 (P.L. 117-328, Division K), provides “not less
read as the Nicaragua Investment Conditionality Act of 2018
than” $15 million for democracy programs for Nicaragua,
(NICA Act). The NHRAA directs the U.S. Treasury
including support to civil society. The U.S. Agency for
Secretary to instruct U.S. Executive Directors at
International Development (USAID) is using those funds to
international financial institutions to use the voice, vote, and
support civil society organizations, independent media, and
influence of the United States to oppose the extension of
other prodemocratic actors, seeking to strengthen their
financial and technical assistance to the Nicaraguan
capacities to build coalitions, document government abuses,
government, except for basic human needs and democracy
and advocate for change while protecting themselves. For
promotion. The NHRAA also directs the President to
FY2024, the Biden Administration is again requesting $15
impose sanctions on foreign persons who engage in conduct
million in democracy assistance for Nicaragua. In addition
that constitutes a serious abuse or violation of human rights
to democracy aid, USAID provided roughly $16.5 million in against persons associated with the protests in Nicaragua
humanitarian assistance to support Nicaraguans contending
that began in April 2018. The RENACER Act also amended
with the effects of the COVID-19 pandemic, Hurricanes Eta
the United States-Northern Triangle Enhanced Engagement
and Iota, and food insecurity in FY2021 and FY2022.
Act (P.L. 116-260, Division FF, Section 353(b)), to include
Nicaragua and direct the President to impose sanctions on
U.S. Sanctions. The United States has imposed numerous
those who undermine democratic practices and obstruct
targeted sanctions, including asset blocking sanctions and
investigations related to corruption.
visa restrictions, on members of the Nicaraguan
government, legislature, and judiciary, along with others
The NHRAA’s restrictions, sanctions, reporting
determined to be responsible for undermining democracy
requirements, and certification provisions, and the sanctions
and threatening stability in Nicaragua. As of March 2023,
provisions of the United States Northern Triangle Enhanced
the Department of the Treasury had imposed asset blocking
Engagement Act, are set to expire on December 31, 2023.
sanctions on 43 individuals and 11 entities. Additionally, the Congress may consider extending those provisions or
U.S. State Department had imposed visa restrictions on
introducing an updated version of the NHRAA to reflect the
more than 800 Nicaraguan individuals and their family
latest developments in Nicaragua. The No Relief for Allies
members.
of Dictators Act of 2023 (S. 1129), introduced in the Senate
in March 2023, would revoke current visas and restrict the
Individuals who have been sanctioned include Vice
issuance of new visas for individuals associated with certain
President Rosario Murillo; four of the Ortega-Murillo
Latin American governments, including the Ortega
children; and numerous government officials, including the
government in Nicaragua.
national security adviser and the commander-in-chief of the
Nicaraguan army. Entities designated for economic
Congress also could consider broader economic sanctions.
restrictions include the Government of Nicaragua, the
For example, the Nicaragua Free Trade Review Act of 2021
Nicaraguan Petroleum Distributor, the state-owned mining
(H.R. 3964), introduced in the 117th Congress, would have
company Empresa Nicaraguense de Minas, and the General
required the U.S. Trade Representative to report to Congress
Directorate of Mines.
on the extent to which Nicaragua is complying with the
Dominican Republic-Central America-United States Free
In October 2022, the Biden Administration announced
Trade Agreement (DR-CAFTA). Some observers have
further action to hold the Nicaraguan government
called for the United States to expel Nicaragua from DR-
accountable for its anti-democratic actions. The
CAFTA in response to Ortega’s increasing authoritarianism.
Administration amended E.O. 13851, “Blocking Property of
Others have suggested alternative means of limiting the
Certain Persons Contributing to the Situation in Nicaragua,”
Ortega government’s resources. For example, during a
with E.O. 14088, “Taking Additional Steps to Address the
March 2023 House Foreign Affairs joint subcommittee
National Emergency with Respect to the Situation in
hearing on human rights in Nicaragua, some Members and
Nicaragua.” E.O. 14088 expands the authorities available to witnesses called on the Central American Bank for
increase pressure on the Ortega government, including
Economic Integration, which has lent nearly $3.5 billion to
sectoral sanctions, further restrictions on trade, and
the Ortega administration in the last five years, to restrict
restrictions on new investment in certain sectors of the
such financing.
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Nicaragua

IF12247
Karla I. Rios, Analyst in Latin American Affairs


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https://crsreports.congress.gov | IF12247 · VERSION 4 · UPDATED

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