On January 10, 2022, Nicaraguan President Daniel Ortega was sworn into office for his fourth consecutive term, despite the United States and European Union allegations that the election was a “sham.”  On the same day, the U.S. imposed sanctions on Nicaraguan officials accused of undermining democracy.

Over the past years, the Office of Foreign Assets Control of the United States Treasury Department (“OFAC”) has designated a substantial number of current and former officials of the Government of Nicaragua as Specially Designated Nationals (“SDN”). As a result this designation, all property and interests in property of the SDNs that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.

Below, we discuss the sanctions the U.S. government has imposed with respect to the ongoing conflict in Nicaragua.

Background

Daniel Ortega emerged as a leader of Nicaragua’s left-wing Sandinista revolution in the 1980s, when he fought the dictatorship of Anastasio Somoza. After governing Nicaragua between 1984 and 1990, he was defeated in the 1990 election, but was elected President of Nicaragua in 2006 and re-elected in 2011 and 2016. In 2021, he ran for office again and received almost 76% of the vote, having first ordered the detention of his political rivals under a controversial treason law passed in December 2020 by Nicaragua’s National Assembly.

The 2021 presidential elections were strongly questioned by the international community, given Ortega’s actions in barring opposition candidates from running under the rubric of “treason” charges.

On December 8, 2021, the Permanent Council of the Organization of American States (“OAS”) regional body issued a resolution, “urg[ing] the Government of Nicaragua to urgently … release all political prisoners and accept a high-level good offices mission . . . [for] the implementation of comprehensive electoral reforms . . . ”

Sanctions imposed by the U.S.

  1. Executive Order 13851

On November 27, 2018, then-President Trump issued Executive Order (“E.O.”) 13851, Blocking Property of Certain Persons Contributing to the Situation in Nicaragua. In sum, E.O. 13851 authorizes the Treasury Secretary (in consultation with the Secretary of State) to block the property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of U.S. persons, of persons determined to:

  • Have directly or indirectly engaged or attempted to engage in, inter alia, serious human rights abuse in Nicaragua, actions or policies that undermine democratic processes or institutions in Nicaragua, or transactions involving deceptive practices or corruption by, on behalf of, or otherwise related to, current or former officials of the Government of Nicaragua;
  • Be a leader or official of an entity that has, or whose members have, engaged in any activity described above;
  • Be an official of the Government of Nicaragua, at any time on or after January 10, 2007;
  • Have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of any activities described above, or any person whose property and interests in property are blocked pursuant to E.O. 13851; or
  • Be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to E.O. 13851.
  1. The November 2021 Sanctions

On November 15, 2021, OFAC designated the Public Ministry of Nicaragua and other nine individuals as SDNs, pursuant to E.O. 13851, “for having served as an official of the Government of Nicaragua at any time on or after January 10, 2007.”  The Public Ministry of Nicaragua. According to OFAC, the Public Ministry of Nicaragua, “[r]elying on Nicaraguan law, including Law 1055, . . . ha[d] unjustly arrested and investigated presidential candidates and prevented them from running for office, thereby undermining democracy in Nicaragua.”

One same day, the U.S. Department of State (“State Department”) issued a press release, stating, “[w]ith these new sanctions, the United States, joined by our international partners, continues to take concrete actions to respond to the Ortega-Murillo government’s attacks on civil liberties and free and fair elections. We welcome that Canada and the United Kingdom also imposed targeted measures today. . . We stand with the region in calling for a return to democracy in Nicaragua and the immediate and unconditional release of political prisoners.”

In particular, the U.K. imposed sanctions on eight Nicaraguan officials, including Vice President Rosario Murillo, Ortega’s wife, while Canada imposed sanctions on eleven Nicaraguan officials.

The next day, on November 16, 2021, President Biden issued a notice, which “continu[ed] for 1 year the national emergency declared in Executive Order 13851 with respect to the situation in Nicaragua,” pursuant to § 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)). President Biden also issued a “Message to the Congress,” which explained that, “[t]he situation in Nicaragua, including the violent response by the Government of Nicaragua to the protests that began on April 18, 2018, and the Ortega regime’s systematic dismantling and undermining of democratic institutions and the rule of law, its use of indiscriminate violence and repressive tactics against civilians, as well as its corruption leading to the destabilization of Nicaragua’s economy, continues to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.”

Finally, on the same day, President Biden issued a “Proclamation on Suspension of Entry as Immigrants and Nonimmigrants of Persons Responsible for Policies or Actions That Threaten Democracy in Nicaragua,” which, inter alia, suspended the entry into the United States, as immigrants or nonimmigrants, of certain individuals associated with the Government of Nicaragua, including elected officials, non-government persons who serve as their agents, and certain family member of such individuals.

  1. The January 10, 2022 Sanctions

On January 10, 2022, OFAC designated certain officials of the Nicaraguan military, the Nicaraguan minister of defense, the Nicaraguan Institute of Telecommunications and Mail (“TELCOR”), and the state-owned Nicaraguan Mining Company (“ENIMINAS”) as SDNs, pursuant to E.O. 13851.

According to OFAC, the Nicaraguan Army “not only refused to order the disarming and dismantling of paramilitary or ‘parapolice’ forces during and after the political uprisings but the military also provided weapons to the parapolice who carried out acts of violence against Nicaraguans.”

In addition, according to OFAC, TELCOR “is an autonomous entity under the guidance of the Nicaraguan Presidency that implements regulations and monitors compliance over telecommunications and postal services.” In addition, “[s]ince 2007, the regime has targeted media in an effort to silence them, often using TELCOR as a tool of repression.” In particular, “[b]eginning in April 2018, [TELCOR] attempted to discredit pro-democracy protestors and amplify pro-government content” and “suspended the operating license of television Channel 21 after former presidential candidate, and director of Channel 21, Reverend Guillermo Osorno of the Nicaraguan Christian Way party publicly denounced anomalies in the electoral process.”

Finally, according to OFAC, “[t]he Government of Nicaragua’s 2017 creation of state-owned ENIMINAS increased state involvement in the mining sector, especially gold mining, through joint ventures with private firms.” In addition, “[t]he value of Nicaragua’s gold exports has increased dramatically in recent years, driving profits to its allies in the private sector and increasing ENIMINAS revenues, which senior figures in the ruling party manage.”

OFAC also designated six individuals “for being officials of the Government of Nicaragua or for having served as officials of the Government of Nicaragua at any time on or after January 10, 2007,” as a result of their association with the entities described above.

On the same day, the State Department took steps to impose visa restrictions on “116 individuals complicit in undermining democracy in Nicaragua, including mayors, prosecutors, university administrators, as well as police, prison, and military officials.”

Conclusion

In general, the U.S. government has increasingly used sanctions as a tool in U.S. efforts to create political change abroad. In this regard, OFAC has stated that, “[t]he sanctions . . . are not intended to be permanent but are issued to encourage a positive change of behavior by the identified persons and the authoritarian regime they support. The United States has made clear that the removal of sanctions may be available for individuals and entities . . . who take concrete and meaningful actions to promote democracy and the rule of law in Nicaragua.”

We will continue to monitor developments in this area, and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or your usual Herbert Smith Freehills contacts for more information.

Jonathan Cross
Jonathan Cross
Counsel, New York
+1 917 542 7824
Daniela Paez
Daniela Paez
Associate, New York
+1 917 542 7829
Brittany Crosby-Banyai
Brittany Crosby-Banyai
Associate, New York
+1 917 542 7837