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US Congress Seeks to Expose Corruption in Nicaragua

On September 21, the House of Representatives approved passage H.R. 5708, the Nicaraguan Investment Conditionality Act (NICA) of 2017 that, if it becomes law, will prohibit loans by international financial institutions (“IFIs”) to the government of Nicaragua unless Nicaragua takes steps to ensure free, fair, and transparent elections as well as strengthen the rule of law.

The left-wing Sandinista government is economic and political disaster. Nicaraguan autocrat, Daniel Ortega, and his power-obsessed wife Rosario Murillo, are running for president and vice president in the upcoming November elections. Unless the opposition unites, quickly, the power hungry Ortegas may pull it off. The road to this point is paved with enough human rights abuses and corruption to keep tribunals and courts busy for years.

Various civil society leaders and lawyers have described to me, with well-documented cases, how the Nicaraguan legal system is no more. Judges do the bidding of the Ortegas, or they lose their jobs, or worse. The courts have become a favorite tool of repression, used to silence political opposition leaders, and their family members, by charging political and business leaders with crimes to exact political docility or silence.

The Nicaraguan people seem to be reaching their limit. When Ortegas sacked the opposition party leadership a few months ago in the mostly puppet Congress, it seems to have lit a spark within the opposition as well as within his own Sandinista party. There have also been a series of high profile acts of political repression against civil society leaders, some have turned violent. For a few years now I’ve met with civil society leaders and lawyers who have warned Washington policymakers that trouble was brewing in Managua. Maybe that day of political reckoning is near.

When the U.S. House approved the NICA act last week, it set off a war of words between Ortega and the sponsor of the bill, Rep. Ileana Ros-Lehtinen (R-Fla.). Why has Ortega bristled? Is he taking order from his minders in Havana? The matter has been front page news for days and no end is in sight. A companion measure was introduced in the Senate earlier this month, S.3284 by Senator Ted Cruz (R-Tex.), expected to see legislative action during the lame duck session at the end of this year. And it could not come soon enough and will make for many more headlines in the days and weeks ahead leading up to the November Nicaraguan elections.

Ortega meets with Iranian Foreign Minister Mohammad Javad Zarif last Tuesday in Nicaragua. Iran uses Nicaragua to launder money as well as its base of cultural operations in Central America
Ortega meets with Iranian Foreign Minister Mohammad Javad Zarif last Tuesday in Nicaragua. Iran uses Nicaragua to launder money as well as a base for Iranian regime cultural and other operations in Central America.

In addition to the domestic problems, Nicaragua, a staunch ally of Communist Cuba and Venezuela, is causing regional tensions to rise. Ortega has allowed the Russians free rein in Nicaragua, including allowing Russia to pre-position at least 50 T-27 tanks and other armaments throughout the nation. Nicaragua, the second poorest nation in Central America, cannot afford to service its foreign debt, much less buy billions of dollars worth of Russian weapons. What is Russia up to and why? Has Russia been advising Ortega how to engage in Magnitsky-like tactics against opponents?

Nicaragua has also been a long-time ally of the Iranian regime, affording the radical clerics and other characters such as Hezbollah a unique outpost this overwhelmingly Catholic Central American nation. Iran’s interest in Nicaragua make a whole lot of sense: they can burrow right in the U.S. underbelly and engage in whatever mischief it wants while the host government just looks the other way.

For decades, the United States and Nicaragua have had a politically neurotic relationship, on that has bordered, at times, on curious ambivalence. It must end. The business community seems to be ok with it all, but at what price over the long haul? On the one hand, while there appears to be U.S./Nica anti-drug and anti-gang cooperation,  with no rule of law, how reliable is this arrangement? Not much in my book. Nicaragua has even taken to using INTERPOL to intimidate business and political opposition leaders, threatening regional cooperation in combating cyber crime, illegal drugs, money laundering, and much more.

The NICA act is a good first-step that will help refocus U.S. policy toward Nicaragua. While a great deal more could be done, today, using executive powers, the law takes aim at something that the Ortegas really need: IFI loans. It also starts to put international focus on Nicaragua’s endemic corruption problem. As I told the Nicaragua’s La Prensa newspaper last week, the NICA law could also serve as a catalyst for the imposition of robust economic sanctions on Nicaraguan officials who violate the rule of law, abuse human rights, or engage in otherwise corrupt or criminal behavior. The entire La Prensa article is available at their website.

Corrupt officials, for example, should be denied U.S. visas to visit the United States, something that should extend to immediate family members. In addition, they should also lose access to the U.S. financial system and, in extreme cases, corrupt officials should be added to U.S. watch lists that prohibit transactions between them and U.S. persons such as companies that do business in Nicaragua. These and other steps should be taken to remind our friends in Nicaragua, and elsewhere in Latin America, that access to the United States is a privilege, not a right.

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