Key Takeaways:
- U.S. augments current sanctions on Nicaragua by imposing additional sanctions on the Nicaraguan mining authority and the former Nicaraguan head of state security, and expanding sanctions authorities allowing the U.S. to prohibit new U.S. investment in certain specified sectors of the Nicaragua economy, as well as the importation and/or exportation of certain products to or from Nicaragua
- EU extends current Nicaragua sanctions regime for another year
- Broader restrictions on trade with Nicaragua are likely forthcoming
On October 24, 2022, President Biden signed Executive Order (E.O.) 14088 "Taking
Additional Steps To Address the National Emergency With Respect to
the Situation in Nicaragua," expanding the authorities
available to the U.S. government to impose sanctions on Nicaragua.
E.O. 14088 amends prior E.O. 13581 "Blocking Property of
Certain Persons Contributing to the Situation in Nicaragua,"
and provides the U.S. Department of the Treasury's Office of
Foreign Assets Control (OFAC) the authority to sanction entities
and individuals that operate or have operated in the gold sector of
the Nicaraguan economy, and any other sector identified in the
future by the Secretary of the Treasury in consultation with the
Secretary of State.
The new E.O. also provides expanded sanctions authorities that
allow the U.S. government to prohibit new U.S. investment in
certain specified sectors in Nicaragua, the importation of certain
products of Nicaraguan origin into the United States, or the
exportation from the United States, or by a United States person,
wherever located, of certain items to Nicaragua. Even though the
specific sectors and products that may become the target of these
sanctions authorities have not yet been identified, the expanded
authorities signal that further sanctions on Nicaragua are likely
forthcoming.
On the same day that E.O. 14088 was issued, OFAC also added the Nicaraguan mining authority General
Directorate of Mines (DGM), as well as the former Nicaraguan head
of state security and close confidante of Nicaraguan President
Daniel Ortega to the Specially Designated and Blocked Nationals
(SDN) List. DGM is a subordinate office within the Nicaraguan
Ministry of Energy and Mines, and has managed most mining
operations in Nicaragua on behalf of the Nicaraguan government
since OFAC sanctioned state-owned mining company Empresas
Nicaraguenses de Minas (ENIMINAS) in June 2022. In connection with
the sanctions on DGM, OFAC has issued Nicaragua General License 4,
which allows U.S. persons to wind down transactions involving DGM
until November 23, 2022.
As a result of the SDN List designations, almost all transactions
by U.S. persons with the SDNs are prohibited, and all U.S. assets
of the SDNs are "blocked" and must be reported to OFAC.
Designated natural persons are also subject to a travel ban, and
all entities owned 50 percent or more by an SDN are generally
treated as if they were also on the SDN List (known as the "50
Percent Rule"), even if they are not expressly listed. In
addition, any person, including a non-U.S. person, may themselves
be designated as an SDN for materially assisting, sponsoring, or
providing financial, material, or technological support for, or
goods or services to or in support of, these SDNs.
The sanctions were imposed by the U.S. in response to
Nicaragua's increased human rights violations, continued
dismantling of democratic institutions, attacks on civil society,
and increasing security cooperation with Russia. Nicaragua is
currently one of only four countries, and the only country in Latin
America, to have voted with Russia against an October 2022 United
Nations General Assembly resolution condemning Russia's
attempted annexation of parts of Ukraine.
The new U.S. sanctions follow on the heels of the EU Council's
decision to extend the EU sanctions regime
against Nicaragua for another year until October 15, 2023. The
current EU sanctions place asset freezes on 21 individuals and 3
entities, including the Nicaraguan National Police, the Nicaraguan
Supreme Electoral Council and the regulator overseeing
telecommunications and postal services in Nicaragua. EU citizens
and EU companies are generally prohibited from making funds
available to the sanctioned entities and individuals.
The EU sanctions were extended following the expulsion of the Head
of the EU Delegation from Nicaragua, and Nicaragua's decision
to cut diplomatic ties with the Netherlands.
The new U.S. sanctions, as well as the extension of the EU
sanctions regime against Nicaragua, signal a considerable
augmentation in sanctions against Nicaragua by Western allies.
While U.S. sanctions on Nicaragua have thus far targeted specific
entities and individuals, the expanded U.S. sanctions authorities
signal that broader restrictions on trade with Nicaragua may be
forthcoming, including prohibitions on the export and import of
certain products, and investments in certain sectors of the
Nicaraguan economy. Both U.S. and non-U.S. companies that engage in
business in Nicaragua should ensure that they are complying with
all applicable sanctions on Nicaragua.
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