Four years after the passage of the Investment Conditionality Act, known as the NICA Act, Daniel Ortega and Rosario Murillo’s regime remains firmly in power. The economic and diplomatic sanctions imposed by the United States and other countries have not led to greater democratic openness. Now, a new bill has been introduced in the U.S. Congress to reactivate and expand these measures. Could it have a different effect this time?
Economist Juan Sebastián Chamorro, who was one of seven presidential candidates imprisoned prior to the 2021 elections, believes this proposal is important given the “political moment” Nicaragua is currently experiencing.
Following Ortega’s threats to eliminate competitive elections, the Trump Administration has called for meetings at the Organization of American States (OAS) to bring together foreign ministers (a vote took place this Wednesday, August 19), has nominated a new ambassador to Managua, and has called for a shift from mere statements to “taking real action.”
“It’s important given the current political climate. Congress is sending the message that they are doing everything in their power: passing a law to sanction the Ortega-Murillo regime,” Chamorro said.
The politician said that “obviously, dictators will try to evade these sanctions,” as they have done for years, but “the current situation is completely different.”
What Does This New Bill Entail?
The proposal by U.S. Senators Ted Cruz (Republican) and Tim Kaine (Democrat), titled “Restoring Electoral Fairness and Opposition Rights through Mandates for Accountability Act of 2026,” includes the imposition of sanctions on the gold trade and on officials of the Nicaraguan Army’s Military Social Security Institute (or IPSM, its initials in Spanish), two key financial pillars of the Sandinista regime.
In addition, the bill provides for sanctions against any other sector of the Nicaraguan economy identified by the Secretary of State, in consultation with the Secretary of the Treasury.
Unlike the previous NICA Act, which lasted five years (2018–2023), the new legislation extends the period through December 31, 2035, or 90 days after the U.S. president certifies that a resolution to the political crisis in Nicaragua has been reached that includes:
- A commitment by the Nicaraguan government to hold competitive, free, and fair elections that meet democratic standards and allow for credible international observation.
- An end to the violence perpetrated against civilians by the Sandinista police and by armed groups supported by the Nicaraguan government.
- Independent investigations into the killings of protesters in Nicaragua.
Under this new bill, activities subject to sanctions include the arrest or prosecution of members, volunteers, or employees of Catholic and Protestant churches; the conviction and sentencing of a political figure or a member of a civil society organization; and the provision of goods, services, or technology that assist Russia or Iran.
Political analyst Manuel Orozco, from the Inter-American Dialogue think tank, explained that passing this law requires the approval of the draft bills in both chambers and the reconciliation of their contents into a single bill. “This is just the beginning,” he said.
Orozco noted that for a law to be effective, the executive branch’s compliance with it must be accompanied by accountability. Accountability involves submitting periodic reports on progress in implementing the law, but the House of Representatives does not yet have a defined procedure for doing so.
In Orozco’s view, it is a fairly comprehensive draft bill that “could be very effective” if it receives support in the implementation of enforcement measures. “The problem is, who within the State Department would be assigned to coordinate the implementation efforts?” the analyst asked.
Did the First NICA Act Have any Effect?
The NICA Act was passed by the U.S. Congress on December 20, 2018. The Act sought to halt loans to the dictatorship from multilateral institutions, such as the World Bank (WB), the Inter-American Development Bank (IDB), and the International Monetary Fund (IMF), until the regime took steps to hold free, fair, and transparent elections.
In addition to restricting loans from international financial institutions, the law also authorized the imposition of visa restrictions and the freezing of any assets held in the United States by individuals or institutions responsible for violence against protesters and involved in corruption. Those subject to sanctions are prohibited from conducting financial transactions with U.S. individuals or companies.
The Trump and Biden administrations, along with other U.S. authorities, invoked the NICA Act to impose a series of sanctions on individuals and entities during the five years it was in effect (it expired in December 2023).
According to the IMF’s 2025 report, as of the end of November of last year, the U.S. government had imposed asset freeze sanctions on 47 individuals and 15 state-owned entities (including the Public Prosecutor’s Office, some small financial institutions, and state-owned mining companies) and visa restrictions on more than 2,200 Nicaraguan officials. Among those sanctioned are First Lady Rosario Murillo and four of her children with Ortega; the National Police; and the Nicaraguan Petroleum Distribution Company (or DNP, its initials in Spanish).
The IMF notes that the sanctions imposed by the United States and other countries since 2018 have not directly targeted the country’s main sources of foreign exchange: exports and remittances. However, it highlights that multilateral loans on favorable terms (which the NICA Act sought to promote) have declined, and bilateral loans (for example, from China and Saudi Arabia) have not yet replaced them.
Loans From Multilateral Institutions Have Decreased, but They Have Not Stopped
In turn, the measures taken by the regime to circumvent sanctions, such as the Law on the Protection of Nicaraguans Against Sanctions and External Aggression (Law No. 1224): “The cost of doing business has increased, as it requires Nicaraguan banks to submit more reports to regulators and their correspondent banks to comply with their own legal requirements,” states the report by the multilateral financial institution.
A 2023 report by Expediente Abierto, titled “NICA and RENACER Acts: Analysis of U.S. Sanctions in Response to Human Rights Abuses in Nicaragua,” argues that, although U.S. representatives have voted against loans or technical assistance and disbursements have declined, multilateral institutions continue to provide some financial assistance to the regime.
The World Bank and the IDB provided loans to address the pandemic and natural disasters, as well as technical assistance grants, totaling up to $500 million through 2023. Meanwhile, during that same period, the IMF provided loans ranging from $180 million to $540 million.
Although the NICA Act provided an exemption for loans intended to meet basic human needs, the IDB granted disbursements to the Ortega-Murillo regime that “were not merely humanitarian in nature, and were often framed in terms of support for vulnerable populations, poverty reduction, and resilient living,” according to the Expediente Abierto report, prepared by political analyst Vicky Gass.
The report notes that visa sanctions have affected some individuals who own property, have family members, or conduct business in the United States, but “have not had as significant impact as had been hoped”: the military remains loyal, and business leaders do not confront the regime for fear of arrest. The regime has cushioned the economic blows with political and financial support from China and Russia, and has obtained loans from the Central American Bank for Economic Integration (or CABEI, its acronym in Spanish), in which the United States does not participate.
“The limited effectiveness of the sanctions to date (2023) recalls the experience of U.S. sanctions on Cuba, which has endured despite one of the world’s most comprehensive sanctions regimes,” the report notes.
The RENACER Act and Executive Order
During the first year of Joe Biden’s administration, on November 10, 2021, Congress passed the Reinforcing Nicaragua’s Adherence to Conditions for Electoral Reform Act of 2021, known as the RENACER Act. This Act was intended to reinforce the NICA Act and review Nicaragua’s participation in the CAFTA-DR trade agreement.
It also authorized the Biden administration to impose visa sanctions on individuals who obstructed free elections, undermined democratic processes, or engaged in acts of corruption, including the Ortega-Murillo family. Furthermore, it called for coordination with other countries to impose sanctions and mandated reports on Russian activities in Nicaragua, as well as on purchases and agreements made by the regime on behalf of its military or intelligence sectors.
One year later, on October 24, 2022, the Biden administration issued Executive Order 14088, which paved the way for the Treasury Department to impose sectoral sanctions, further restrictions on trade, and restrictions on new investments in certain sectors of the Nicaraguan economy. Previously, Biden had cut Nicaragua’s sugar quota and imposed sanctions on the Nicaraguan gold sector.
Initiative Focused on Democratic Transition
Analysts view the passage of laws targeting the Nicaraguan regime—such as the NICA Act and RENACER—as positive. According to Juan Sebastián Chamorro, the first piece of legislation “did have a positive effect because, in a way, it signaled a decision by the (U.S.) legislature to take action on the matter.”
The laws passed by Congress have drawn greater attention from the Trump and Biden administrations and the State Department to Nicaraguan politics. Bipartisan support has sent a message that both Democrats and Republicans are concerned about human rights and democracy in Nicaragua.
Chamorro described it as “important” that the bill emphasizes the democratic transition. “The law itself establishes that one of the policy’s objectives is to move toward democracy, and the sanctions will be suspended once democracy is restored in Nicaragua,” Chamorro added.
The initiative is just beginning its legislative process. If it moves forward, it would mark a new phase in U.S. policy toward Nicaragua: a longer duration, new sectors subject to sanctions, and an emphasis on the democratic transition—all while Ortega insists on closing off the electoral path.