Introduction

This memo offers insight into the current situation in Nicaragua in 2025, its political and economic activities, and their effects on US foreign policy.

The memo analyzes a pattern of political purges that are narrowing the regime’s circle of power. It also points to indicators of an economic slowdown, as well as a strong, growing dependence on China that further affects Nicaraguan society and the US national interest. 

Ultimately, this article proposes inputs for a proactive foreign policy that would benefit the US national interest and Nicaraguans and be consistent with the recent Office of the US Trade Representative (USTR)’s proposed policy responses to counter Nicaragua’s transgressions. This includes penalties for trade violations and corruption, as well as addressing ties with China and the weaponization of migration.

Trends of Political Repression in Nicaragua

Since 2018, the political situation in Nicaragua has devolved beyond democratic backsliding into an environment of severe repression, which can go so far as to be likened to a tropical Taliban. Mafia-like police officers have extorted businesses, Catholic leaders have been persecuted for supporting democracy, citizens (even US citizens) have been detained and unfairly sentenced to long jail terms, and civil society organizations have been shut down.

The regime is defined by a family dynasty of Nicaraguan President José Daniel Ortega Saavedra and his wife Rosario Murillo, who together (now officially as co-presidents) have criminalized democracy and ensured the legal suppression of freedom of expression, political participation, movement, and belief.

Since 2023, the Ortega regime has deepened the practice of confiscation, expropriation, extortion, and the use of the territory as a migration vehicle for other nationalities, strengthening security ties with Russia, and subordinating its economy to the People’s Republic of China (PRC). While 2023 began with the release of more than 200 political prisoners, the regime has continued to proactively and systematically detain and incarcerate individuals suspected of protesting repression.

The pattern is widespread and systematic:

• Persecution includes censorship, police patrols in neighborhoods, and accusations by militants against citizens and religious authorities.
• Exile of citizens: from 2019 to 2024, more than 475,000 people have migrated from Nicaragua to the US alone, including more than 200 spiritual leaders.
• As of 2025, there are many citizens, including religious leaders and youth, detained for political reasons.
• Political purges of people within the regime.
• Property expropriation such as seizure of homes, attacks on business owners, and confiscations of property, including the Central American University and the Central American School of Business (INCAE).
• International cooperation through media propaganda (cultural events, visits abroad, commercial relations with China); the strengthening of military ties with Russia.
• Weaponizing migration by facilitating direct flights to Managua from at least three countries (Haiti, Cuba, and Turks and Caicos) of more than 100,000 passengers.
• Constitutional reforms declaring that the country is now run by two presidents—Mr. Ortega and his wife.
• State capture, establishing a kleptocratic regime to financially benefit the family of Ortega-Murillo.
• Selective persecution through international entry/exit in the form of (a) withdrawing passports of Nicaraguan citizens, preventing them from exiting the country; (b) forbidding entry into the country upon temporary traveling; (c) detention or refusal of entry to relatives of citizens who have been subject to persecution, and (d) assassination attempts across borders.
• Use of sophisticated technology that cross-references Nicaraguan citizens’ social media accounts with airport entry and exit in order to prevent them from returning to their homeland.

 

A few pillars support the authoritarian radicalization in Nicaragua.  First, the regime is isolating Nicaragua from the international community to minimize scrutiny, while establishing entangling alliances with non-democratic actors and provoking the United States.

Second, it continues to weaken civic activism, engagement, and Nicaraguan hopes for change through fear and detention, using tools including the judiciary, military, and the Constitution. The system relies on a judiciary that acts more like a political commissariat—a police force that gathers intelligence, instructs the judiciary, and exercises force, including deepening an internal purge within the system—and a military institution that places its loyalty to the regime above the Constitution. It has also used the Constitution itself to repress, intimidate, and expel. The regime, which has concentrated all power, has reformed the Constitution and subordinated it through the Law of Sovereignty, making it, like a Supreme Law of the Land, a mere instrument of presidential succession without due process of law. The regime has authorized the police, through their intelligence units, to identify individuals who violate vague laws intentionally designed to undermine constitutional rights. People can be detained based solely on an allegation or on hearsay from informants, police, or Ortega-Murillo officials. 

Third, the dictators are reshaping an economic elite through a state-capture model within the Ortega-Murillo circle by forcing confiscations and tax extortion, as well as expelling people who, through remittances, contribute to 33 percent of the country’s national income. In turn, this political tool contributes to limited macroeconomic stability, accompanied by rising inequality, lower incomes, a larger informal economy, and a lack of judicial security, along with continued external borrowing to finance public projects.

Fourth, the regime builds its control over Nicaraguan society on a propaganda machine that instills fear and social control, working side by side with the repressive apparatus that persecutes and detains civilians, particularly religious authorities, youth leaders and people in the private sector.

These pillars are maintained by a discrete circle of power that retains political control and serves as the basis for repression, guided by a hierarchical structure of no more than 200 individuals. This structure comprises the regime’s closest allies and loyalists, followed by military officers, technocrats, and bureaucrats who coordinate social control and political repression. These loyalists are commonly retired military officers working in the Police, other government agencies, or within the Army.

Signs of Regime Weakening?

Despite this framework of political control, the system’s durability is questionable.

Threats to the regime’s strength include dissent within its internal ranks, indicating anxiety about their future after a pattern of political purges by the dictatorship; a low likelihood that the economy can sustain itself in the long term; citizen discontent with increasing Chinese presence; and the increasing threat of the regime to the US national interest.

 

 

The following sections analyze some of these patterns in 2025.

1. Regime Purges and Persecution Since the 2021 Electoral Farse

Central to the dictatorship’s pillars of power [1] is political and physical or violent repression. Purging, or removing, clients and loyalists within their own circle of power has been a critical component of control.

However, while the use of repression through purges of clients and loyalists of the regime has been an essential part of the dictator’s roadmap, it has forced Rosario Murillo to consider the erosion and attrition caused by “friendly fire” within the regime’s own support bases.

A Roadmap for Repression

The regime’s repressive methods have included political intimidation through arrests and extortion of citizens and people part of the circle of power. This includes purges of those loyal to or clients of the government.

This removal practice allows the regime to correct and adjust the administration of power over the entire population and its elite. It is also implemented to prevent discontent within middle management, reward emerging loyalists (with political and economic favors), and maintain a culture of fear in society.

Following the legal framework for the criminalization of democracy that took place between 2020 and 2021, the regime established a periodic practice of intimidation, purges, and rewards that operated within a cycle of persecution and “rectification” by the beginning of 2022.

The procedure is methodical, beginning with investigating suspects as enemies or candidates for intimidation or rewards. Subsequently, orders for investigation, arrest, or capture are issued, leading to trial and formal imprisonment, followed by the appointment of those found to be in the regime’s favor to new positions accompanied by material rewards from assets confiscated from those purged and punished.

In some cases, those purged and believed to be untouchable are kidnapped or permanently isolated without official publicity, but under visible police activity, so that people can see and be aware of it. A few months later, the cycle begins again.

The process is authorized and controlled by Rosario Murillo, who aims to anticipate and contain dissent within the ranks by gradually eliminating individuals close to her husband and replacing them with people of her choice.[2] Murillo’s logic stems from her weak ties to the pro-Ortega base and her inability to have built her own circle of loyalists during her time with Ortega. Now that Ortega plays a symbolic rather than a functional role, she has stepped up measures to contain dissent—she has fewer than five trustworthy individuals, including her son, Laureano Ortega.

Since Horacio Rocha’s[3] return to the government in November 2022, there have been several rounds of house-shaking exercises and persecution of former loyalists that make up the middle ranks of the circle of power. In January 2023, Adolfo Marenco, the head of political police espionage was among the first victims of the purge, followed by the dismissal of Carlos Salazar Sánchez from the Civil Aeronautics agency.

After the release and exile of 222 political prisoners in February 2023, between March and July 2023 the regime gradually carried out denationalizations and confiscations of hundreds of people identified as “traitors to the homeland.”

These acts were continued through a new, well-organized period of repression, during which the regime mounted operations that culminated in the restructuring of the judicial system. The process began with the departure of Alba Luz Ramos (former Supreme Court magistrate) in October 2023. It continued until November 2023, resulting in the removal of hundreds of officials from the judiciary and the introduction of new faces.

The arrest of Humberto Ortega in May 2024 (Daniel Ortega’s brother) after complaining against the indefensibility of the regime coincides with other actions occurring between June and July 2024. The regime unleashed its persecution of journalists, intensifying or culminating in the dismissal of mayors and deputy mayors, and the closure of other NGOs. Over 5,000 NGOs had been closed while Humberto Ortega died at the hands of the regime on September 30^th, 2024.

This period includes the purge of Finance Minister Iván Acosta, whose assets were later confiscated in October 2025. At the Foreign Ministry, among the senior officials dismissed were Vice Foreign Minister Arlette Marenco and her husband, Reynaldo Martínez. Also purged were Police Commissioner General Marcos Alberto Acuña, Daniel Ortega’s chief security guard, the Minister of the Family Economy, Justa Pérez, and several senior officials from that Ministry.

By November 2024, political capital was invested to introduce legal changes to the Constitution to formalize the dynastic structure. The restructuring included the dismissal of Horacio Rocha in January 2025 and the temporary “reinstating” of Francisco Díaz (former police chief and disgraced loyalist), beginning a new cycle of repression. This wave culminated in the dismissal of Judge Marvin Aguilar, along with several other judges, and the swearing-in of the hooded paramilitaries known as the “Voluntary Police.”

In May 2025, Murillo resumed the cycle of purges with the dismissal of key figures in higher education, such as Ramona Rodríguez, president of the National Council of Universities (CNU) and rector of the National Autonomous University of Nicaragua (UNAN-Managua); Jaime López Lowery, executive director of the CNU; and Jilma Romero Arechavala, general director of knowledge management at the CNU, and wife of the vice-rector of UNAN-Managua, Luis Lobato Blandon. These individuals were Ortega loyalists and played an instrumental role in ensuring the confiscation of 29 Universities in 2023, but once the replacement took place, they were no longer needed.

In May 2025, high-profile detainees included retired general Álvaro Baltodano, who many believe was punished for speaking with alleged “traitors” about Murillo’s growing political influence and control. By contrast, others think it was to strip him of his property to reward allies of Laureano Ortega Murillo–or a combination of both. Later this year, other former loyalists and long-time Ortega allies such as Bayardo Arce and Lenin Cerna followed Baltodano in being detained and on house arrest pending legal accusations.

The common thread among these “technical” adjustments is to get rid of suspects, make room for new faces, and temporarily revive worn-out figures. Many other young officials have been shuffled and reshuffled into different positions with limited durability in their posts.

This is a method that, according to journalist Wilfredo Navarro, helps “reconfigure the state to suit” dictators. The goal remains the same: to ensure that their continued power faces no dissident or external opposition (in the country or in exile). The purges have no real roadmap except for eliminating potential dissent. There’s no connection among all those purged, except that most of those terminated got inside the circle of power through patronage or lineage to someone close to the family and to Daniel Ortega.

From Rosario Murillo’s perspective, the entire country is against her. Therefore, she resorts to repressive control, which has yielded short-term results, allowing her to reduce threats by temporarily eliminating or shrinking those she considers her enemies.

In summary, the establishment’s support of the regime’s machine has declined.

Loyalists, accomplices, and opportunists have been penalized. More than 3,000 public employees have been intimidated, fired, silenced, disappeared, and imprisoned. This includes senior state employees, business partners, and political associates at the mid-level of the circle of power.

The purges have created space for the military to increase its control over more than 10 state entities, including ministries and autonomous entities. The adjustments and promotion of loyal members have facilitated temporary control of the state workforce—125,000 employees—and municipal employees, and even control of free trade zone employees—another 120,000.

Outside the purges of loyalists is a typical repressive apparatus aimed at weakening the citizenry, primarily through incarceration and confiscation of assets. One group of interest is the religious sphere, more than 500 people have been affected, including 143 priests expelled, another more intimidated by police visits, and a hierarchy that feels confused and monitored by its clergy and external actors, unsure how to act or interact with the regime and the people.

In the private sector, hundreds of companies are under siege through tax extortion, and at least 100 business owners have suffered expropriations, not including confiscations of 29 private universities and other vocational training centers, media outlets, cultural centers, and cultural businesses owned by artists.

The transfer of confiscated properties to loyalists has been instrumental in maintaining support from various political clients, and this occurs in parallel to the commercial partners allied to Laureano Ortega (closest confidant and son of Rosario Murillo), with revenues ranging from US$200,000 to US$10 million generated through markets, rentals, and taking advantage of the customs regime.

Rosario Murillo maintains control and secrecy over the security forces, including 18,000 police officers, 9,000 soldiers, and 500 officers who are relatively well paid to enforce repression. Of these, 50 are close lieutenants who live off the dictatorship and operate as middle managers, but few are close to her. Many of them are aware that a purge against them is possible and consider their best-case scenario is being quietly removed. 

In short, the country is held hostage by intimidation and purges within these pillars of authoritarian power. The fear is real, so intense that people fail to recognize the regularity of the persecution, and every time a purge or an arrest occurs, they wonder, “How much longer will this go on?”

Durability of Political Regime

Maintaining political power invariably wears leaders down, whether democratic or autocratic. But the crucial issue in measuring the success of managing power (not governance) is the durability of their popularity and the stability of their government. Even if political control is functional, what matters is that it lasts.

Hannah Arendt wrote, “To say that something lasts means that there is something at the end that is the same as it was at the beginning.” This criterion determines success. It is why, as time passes and the regime’s wear and tear is felt, they tighten their levers even more to prove they are still in control. 

In mid-2025, Murillo introduced 2025 a two-person leadership team (co-coordinators) in key positions of state authority. Her goal is to ensure that by November 2027, there will be a smooth electoral process with no protest or internal dissent to secure her election as president, consolidating a presidential succession that started in mid-2023. This governing structure set up after the imprisonment of civic leaders is not durable.

The intensification of purges has diminished the pool of candidates loyal to the circle of power. The circle itself is smaller; even Lenin Cerna and Bayardo Arce (longtime allies of the regime) who kept to themselves, knew they were in the waiting line for purges.

Soon, at the end of 2025, a new wave of purges will likely target other loyalists considered unnecessary to the new Murillo political infrastructure.

From a political perspective, what has changed in this post-COVID-19 dictatorial era is not the purging and intimidation but the methodical way they operate. This highlights the importance of improving political resilience to anticipate the next wave of repression, prepare to prevent it, and thus weaken and demoralize the co-dictators by increasing the costs of repression.

 

2. An Economic Contraction in the Making

Political tensions aside, Nicaragua is also experiencing a slight but steady economic slowdown, marked by lower growth in private consumption, a sharp increase in consumer credit, no export growth, and a 1 percent increase in unemployment among formal workers.

The second half of 2025 is pointing to the beginning of an economic contraction that could take shape in 2026, for which the Ortega-Murillo regime has no viable policy solutions. The Nicaragua of Ortega-Murillo revolves around a primarily agrarian, consumerist, and informal economy. This is a country without much industrial or technological transformation, or knowledge generation, operating parallel to a government hijacked by corruption and kleptocracy. The economic pace has further been mediocre because the government does not create incentives to increase economic complexity; instead, it has deepened a rent-seeking state approach.

The economic growth the country experienced after the 2018 political and economic crisis and the recovery from COVID-19 since 2021 is supported by two pillars: external debt, which fuels the capture of the state by the Ortega-Murillo clan; and remittances, which fuel private consumption in half or more of households nationwide.

Macroeconomically, the country’s strengths are not derived from export growth or national productivity, but rather from remittance transfers from migrants since 2018. No other economic sector has seen a change in its impact as significant as remittances, which rose from 10 percent of GDP in 2017 to 33 percent by 2025. An analysis of the pace of growth in the first half of 2025 shows lower performance compared to 2024 (see Figure 1). There is also a qualitative change in economic activity: credit is increasingly geared toward consumption rather than productivity.

Signs of an Economic Slowdown

The first sign of an underperforming economy is that remittance receipts relative to national income reached their highest level in history in 2025. In fact, remittances rose 27 percent during this period due to Nicaraguan migrants’ fear of deportation from the US, leading them to increase their amounts as a precautionary measure.

This remittance contribution to private consumption has increased by 4 percent over the past six months (from 33 percent to 37 percent). That increment does not align with the low 7 percent six-month growth in national consumption, which is half of what it was in 2024).

In other words, there is an underlying element on the street: the economy is not as active as the anecdotes and the hustle and bustle would lead us to believe. If remittances had grown by half (13 percent), private consumption would have grown less than 2 percent. Something is not working so well.

 

 

 

The second sign is that when comparing the country’s national accounts for the first half of the year, export growth is only 1 percent and primarily due to higher gold prices. Other sectors (or markets where exports are strong, such as the United States) are not growing at the same rate, and the share of exports relative to GDP (43 percent) remains unchanged from previous years.

The growth in public investment shows a typical pattern, linked to the external debt that finances it—mainly from China. These investments, however, do not have a multiplier effect on the economy, because they respond to a centrifugal accumulation model: toward the elite, which is small and composed of fewer than 100 companies, mostly in construction, imports, and communications.

Therefore, economic activity is moving more slowly despite the flow of remittances, which will grow by 20 percent throughout 2025 and exceed US$6.2 billion. If the economy were more active for other reasons, consumption growth would have been above 10 percent.

In summary, if there is no dynamism in private consumption or in the export sector, and state capture does not trickle down into the economy, the economy will likely not fare well.

A Qualitative Changes in Growth

In addition to the symptoms just raised for the first half of 2025, although private investment growth was the highest, it occurs alongside a declining credit supply compared to previous periods.

 

Source: BCN

 

At the same time, in this first half of the year, more than 60 percent of credit went to consumption, rather than loans for productivity. In this sense, if private consumption declines due to a decrease in remittance income, credit will also be reduced, but debt levels may not.

Savings liquidity in the country has not grown enough to cover potential over-indebtedness, especially among those who depend on remittances and have taken on debt for car purchases and credit cards with high interest rates. If savings capacity does not cover this debt, the drop in remittances will hit those consumers who have taken out loans harder.

 

 

These changes also occur amid a decline in hiring. By the end of 2025, there will be 10,000 fewer employees in the free trade zone and the state, representing 1.1 percent of the formal workforce. 

The government shows no signs of being prepared for these changes. The government may try to address part of the economic contraction in 2026 by increasing subsidies and public investment in construction. However, their economic philosophy is not likely to improve Nicaraguans’ quality of life. It will deepen the social inequality they have created through state capture: investment in construction, which is over US$1 billion, has benefited select groups, not the nation, and has affected investment in citizens’ human capital, which is less than US$600 million and particularly affects the more than 30 percent of the population who are of school or university age.

The most likely outcomes are a greater increase in the labor force working in the informal economy and economic deprivation, and with a positive statistical correlation between being in the external debt that finances–migrating.

 

3. The Impact of Malign Forces on Nicaragua and the US: The Role of China

With Nicaragua’s growing reliance on China, the likelihood that this economic contraction may be reversed is further lowered. The PRC has been an integral tool for the Ortega-Murillo regime’s consolidation of power amidst social protest and international pressure. The relationship is positive for China, as the regime is increasing its dependence on China and other so-called malign forces for its own survival.

The regime has become dependent on Russia for internal and external security needs by integrating the Russian police into Nicaragua’s, obtaining Russian military equipment, and even seeking commercial contracts with that country.

On the diplomatic, commercial, and financial front, Nicaragua has become one of the Latin American players with the most significant relative dependence on the PRC. Faced with a reduction in loans from the Central American Bank of Economic Integration (CABEI) due to external pressure, Nicaragua turned almost entirely to China, gradually increasing its commercial dependence on that country.

Nicaraguan society resents these decisions because their taxes pay for these debts that benefit a select few, and they consider trade generated by Chinese businesses unfair and disloyal. Could China, designated a malign force by the Trump administration, be moving from having just a footprint to taking root in Central America?

A Shift in Debt Dependence

As part of the economic strategy to finance state capture, Ortega-Murillo had increased its debt through clientelism with the Central American Bank of Economic Integration, supported by its former president, Dante Mossi. Nicaragua borrowed more than US$2 billion over the six years from 2019 to 2023. Then, international and domestic pressure over CABEI’s support for the dictatorship eventually led to a near-complete halt to borrowing from the bank, especially after Mossi’s removal.

In fact, Nicaragua did not obtain any new loans from CABEI from the first quarter of 2023 to the first quarter of 2025. Alternatively, the co-presidents diversified their external dependence, borrowing from Belarus, Russia, China, and Saudi Arabia for a total of US$1.385 billion in less than two years.

Of these deals, US$1,078 million was with China. The contracts not only replace what they could have negotiated with CABEI but also expand their public investment in infrastructure projects, which tend to benefit small segments of society while social development continues to lag.

Education is one sector that displays this lack of social investment. Nicaraguan public schools are indoctrinated with changes to the educational curriculum, including a political pedagogy, and in confiscated universities, more than thirty scientific research centers have been abandoned. Meanwhile, students in countries like Costa Rica have full access to Wi-Fi, tablets, and teachers trained to manage new knowledge, including advances in artificial intelligence.

In Nicaragua, the government is focusing on strengthening construction projects by contracting few companies close to the family clan.

Furthermore, the contractual clauses in these agreements on commitments to social development are replaced with advanced payments under these contracts. China hasn’t disbursed more than 20 percent of these loans. Yet, the country is agreeing to repay them under unfavorable terms, such as 20 percent of the loan value upfront and without oversight of workers’ working conditions.

Overall, the dictatorship’s economic intelligence focuses on both the short-term sustainability of its clientele and the regime’s durability in the face of adversities, such as an economic contraction stemming from a near-term decline in remittances. These contracts protect its financial interests while increasing its external dependence by investing in international tourism and Chinese mining. Apart from the CABEI, the other creditors are non-democratic countries.

 

 

Accelerating a Trade Dependence on China

The family clan has also aggressively increased its trade dependence on China. By the end of 2025, Nicaragua will have imported US$1.6 billion in Chinese merchandise, representing 20 percent ​​of total imports.

This has been an accelerated and accompanied process, with Chinese traders partnering with Nicaraguan “entrepreneurs” sponsored by friends of Laureano Ortega and others in the family clan.

While Nicaragua imports oil from the United States and other inputs for productivity, and exports in-demand goods to that country’s economy, China sells lower-quality, lower-yielding materials to Nicaragua while displacing local merchants.

Gradually, China has become the leading import partner. Since the beginning of the Dominican Republic – Central America Free Trade Agreement (CAFTA-DR), the United States has held a 20 percent share of total imports, while China’s share is expected to grow from 7 percent to 19 percent by 2025—tripling its exports to Nicaragua. This growth is magnified by the dictatorial decision to consolidate power and ally with China and Russia: annual imports from China grew by 15 percent, compared to 6 percent for the United States.

They diversified their dependence by increasing their relationships with other non-democratic regimes: Nicaragua is importing more from Russia than from South Korea; it’s not just a question of China. Furthermore, those who form alliances with these businesses are friends of the dynastic family.

 

 

Public Opinion on China Matters

Many people in Nicaragua complain about a difficult economic situation in which, if they do not receive remittances, their businesses or jobs will not yield much. They recognize a Chinese trade boom, but it does not open opportunities for them. What began as jokes and gossip about the Chinese invasion of stores, markets, and towns has become anger and discontent.

More than four years later, the effect is felt in the streets. For a small country like Nicaragua, with fewer than 150,000 formal businesses and scarce access to credit (which will have further decreased by 2025), the arrival of Chinese companies and enterprises has become a threat to national companies that struggle to sell their goods. People worry about declining sales and unfair competition from Chinese businesses. At this point, more than 100 companies are importing these goods, passing them on to more than 10,000 businesses.

On the one hand, people notice the displacement of businesses; on the other, they observe the mistreatment of workers. In fact, merchants comment that “we do see some investment on the street, and it’s the investments the Chinese have created.” But many “merchants have had to sell their properties to the Chinese… Merchants say that if they don’t agree to sell their properties to them, the Chinese will have their businesses burned.”[4]

Another worker commented that “people who don’t have capital to work are unemployed, because the only option we had here [in this area] is the free trade zone, and most of them have closed; and the only other place to work is the Chinese companies… but, no, it’s not pleasant to work for them because of the pay, and secondly, they treat you horribly, so you prefer to stay without work.” This illustrates the popular sentiment that Nicaraguans are not happy with the Chinese presence in Nicaragua.

Are Malign Forces Conspiring in Nicaragua?

The concept of malign forces (or influences) was introduced partly in reference to the PRC’s efforts to decimate democratic institutions and values, including freedom of expression and free enterprise. It is no coincidence that China is the leading trading partner of dictatorships worldwide, not just Nicaragua.

The Ortega-Murillo dictatorship’s relationship with China is not only opportunistic but also ideologically attractive, as it allows them to maintain an unquestionable ally in a country where abuses of civil and political rights are the norm.

 

4. A US Foreign Policy to Nicaragua for the Good of National Interest

This briefing has identified and analyzed the effects of several pillars of political control that the regime uses to remain in power. The instances above underscore the extent to which Nicaragua’s radicalization has been detrimental to the citizens and the region. 

However, Nicaragua’s radicalization is also detrimental to the US

Nicaragua is one of the leading countries in the Western Hemisphere, if not the country, that goes against every foreign policy and national security priority established by the Trump administration, along with Venezuela.

It is a country that exports migration, allies with malign forces, holds a contagious model of corruption, and is an economically opportunistic player in the United States’ wealth as it takes advantage of an underpaid and defenseless workforce to maintain a trade surplus with the US. As if that weren’t enough, it is a state that insults and mocks the US national interest.

A foreign policy that curbs these dictatorial transgressions can mitigate the damage to the United States and inevitably channel it into the democratic movement that can foster a transition out of repression. Towards the US’s interests, a democratic Nicaragua would have less migration, less codependency with China, and greater cooperation with the United States.

For the Trump administration, moral hazard (decisions based on assumptions about harms to third parties) is not a reliable variable in policymaking or in responding to perceived threats to the national interest.  At the same time, what Ortega-Murillo is doing in Nicaragua against the United States and Nicaraguans requires pressure and blows that leave no room for moral hazard.

Projected Return of Nicaraguan Migration

The impact of repression on the United States includes the likelihood of a new wave of migration in the near future. In 2026, an economic and political deterioration will be taking shape, pushing people out. As illustrated earlier in this article, macroeconomic data already show a slowdown in the second quarter of this year. The likelihood of an emerging resurgence of migration is high, unless the dictatorship returns to the 1980s practice of denying people exit.

Since late 2023, migration to the United States began to decline, partly due to humanitarian parole and demographic factors, which influenced the decline in both the intention to migrate and the number of people who left. The number of adults who left Nicaragua between 2018 and 2024 amounts to more than 700,000 people, of whom more than 500,000 arrived in the United States. Practically one in three Nicaraguan households lost a family member, reducing the size of the labor force; and those who stayed found it difficult to emigrate because they must stay to take care of their families.

Furthermore, those who fled Nicaragua essentially took charge of the economy by sending remittances, and they are the current factor of stability that influenced the decline in the intention to migrate.[5]

By the end of 2025, migration to the United States will fall by no more than 2,000 people. However, between deportation and the return of those under expired humanitarian relief, the net result is that 3,000 households may no longer receive remittances. The growth in 2025 will not be repeated over the next two years, a situation that will lead to an economic contraction.

Likewise, this contraction will coincide with an increase in repression throughout the year to mount an electoral scheme masterminded by Rosario Murillo to bring “normalcy” to the 2027 presidential elections. She has been clearing the political landscape by imprisoning suspects and anyone she believes could affect her chances. By 2027, amid economic hardship and fear, these two factors will renew the intention to migrate in similar or higher percentages than before 2024—the average percent with an intention to migrate since 2018 was 25 percent, where one in five ended up migrating.

There is a strong correlation between the intention to migrate and a country’s economic deterioration (already in 2025, formal unemployment grew with declines in the free trade zone and in the government) and with the intensification of repression by a police state. In 2021 and 2022, the main driver of emigration was political repression, while in 2023, economic repression prevailed. As a result of the impact of remittances, the intention to migrate had dropped to 15 percent by 2024. In this sense, there is a high probability that by 2027, more people will want to leave than they do now. Statistically, when political repression is at its greatest, the number of people intending to migrate who end up emigrating also increases.

 

 

A Disloyal Trading Partner Allied with Malign Forces

The Nicaragua that existed before 2018 is very different than the country now in 2025, and its resemblance will continue to diminish throughout the near future.

The dictatorship’s isolation from the democratic world to reconfigure its alliances with the world’s most anti-democratic forces, such as Iran, Russia, and China in particular, is entirely intentional and anti-American.

By 2026, China will become Nicaragua’s leading trading partner in terms of imports. Furthermore, it is the country that has provided 90 percent of loans (billions of dollars) acquired by the regime in recent years. Within China’s strategic context of establishing roots in countries where it can advance its economic and geopolitical interests, China has obtained several mining concessions to exploit and produce gold. In three years, the size of these concessions amounts to nearly 1,100 km2, or one-fifth of Calibre Mining’s concessions, which have been in the country for more than 15 years. Within ten years with the regime’s support, China will become Nicaragua’s leading gold exporter.

The dictatorship has the express intention of displacing the United States and increasing its ties with China. In fact, if it weren’t for the remittances coming from that country, Chinese economic interference would already be enormous. Moreover, it is essential to add that Russian police operations in the country and the strong loyalty of Ortega y Murillo, Laureano, and General Avilés to Putin are essential to the regime.

Meanwhile, Nicaragua maintains a trade surplus with the United States, built on using workers’ low incomes in the free trade zone, exporting more than it buys from the United States. In fact, the recent USTR Section 301 investigation determined that “Nicaragua’s acts, policies, and practices related to abuses of labor rights, abuses of human rights and fundamental freedoms, and dismantling of the rule of law are unreasonable and burden or restrict US commerce.” 

State Capture as a Replicable Model

Daniel Ortega and Rosario Murillo have adopted an autocratic model of state capture that has allowed them to enrich themselves alongside clientelist accomplices, especially retired or retired military personnel, and businessmen who negotiate loyalty for business deals, contracts, or permits in their favor, while non-accomplice companies are confiscated, extorted, or intimidated.

The pillars of the dictatorial system have become replicable models for leaders in other countries. Both Honduras and El Salvador increased their financial dependence on CABEI, their relations with the People’s Republic of China, their attacks on the media, and imposed laws such as the Foreign Agents Act to control civil society and gradually close some organizations, right after Nicaragua did. The dictatorship has demonstrated the range of possibilities for abusing power and not being subject to the rule of law—its most recent action has been to carry out political crimes transnationally with impunity. It is naive to think that Xiomara Castro and Nayib Bukele do not notice what Daniel Ortega has done.

Is it Better to Let the Regime Continue its Course or to Contain the Dictatorship?

The arrival of President Trump has changed the global terms of reference, introducing a punitive, oppositional approach that distances itself from international norms that had been adopted in many areas—many that don’t fit with the administration’s vision (such as environmental issues) or that aren’t a priority outside of its key areas.

In fact, it is tough to say that the Trump administration has a concrete foreign policy toward Latin America and the Caribbean; instead, there are clear orientations toward containing migration, drug trafficking, and malign forces, which include aligning the region’s neighbors to cooperate with this country.

Recent US policy pressures on Nicaragua have been significant, yet incomplete.  For example, not all the components of the Nicaragua Act and RENACER Act were not fully implemented (except with respect to sanctions and international financial institutions).

What must be acknowledged is that the status quo has not favored the United States, as the radicalization of the dictatorship has caused harm to Nicaraguans, its neighbors, and the United States itself.

There is a menu of options, or a “Policy Toolbox”, at hand to address Nicaragua’s problems and opportunities.

A response consistent within the Trump Doctrine is to apply a heavy hand, moving from diplomatic protest, policy a la tweet, to implementing proportional measures appropriate of a rogue state. These set of actions include

• trade penalties for abusing labor rights to increase its trade surplus,
• sanctions against trading partners who import Chinese goods and compete adversely with local entrepreneurs,
• restrictions on officials complicit in the regime who have enriched themselves through external borrowing,
• fostered repression through Russian espionage and training of the National police, or
• facilitated the movement of hundreds of thousands of foreigners on charter flights to reach the US-Mexico border (it bears noticing that in September 2025 Panama suspended Sunrise Airlines flights carrying Haitians on suspicion of heading to Nicaragua).

 

Options are available, from graduated and sustained pressure to immediate and stern pressure on laws that protect those sanctioned, which have turned Nicaragua into a haven for criminals, fostering financial risk, or isolating Nicaragua within the framework of the current review of CAFTA-DR for its violations of the treaty.

The USTR set of four responsive actions to the proportional harm caused by Nicaragua to the US and Nicaraguans are to be implemented “immediately or phased in over a period of time up to 12 months.” These are an opportunity for the Ortega-Murillo to remedy the damage caused.

There are four steps to take to remedy what may be a significant impact on the regime’s modus operandi:

• Immediately restore and ensure respect for the human rights of Nicaraguans: release political prisoners, return property confiscated, eliminate the illegal denationalization of Nicaraguan citizens, and the false accusations against thousands of expatriates, and facilitate the arrival of Nicaraguans who wish to return without fear of reprisals.
• Repeal the repressive laws imposed since 2019 (such as the Foreign Agents Act, the Sovereignty Act, the nullification of political parties, and many others), including reforming or returning the constitution to its original status in 1987;
• Reorganize the police force, reducing its size and reforming the justice system, removing the Attorney General’s Office from performing criminal functions, and separate active and retired military officers from any function in government;[6]
• Call for a national dialogue meeting to forward free and fair elections, following the suspension of the police state.

 

These are not options for overthrowing the regime, but rather for shifting the balance of power so that civic groups can leverage their mobilization through these pressures.

Although Nicaragua, due to its economic and political size, does not pose a military threat, Ortega-Murillo has posed a heavy burden against the United States. Not only the insults, but the actions of the dictatorship are provocative and aggressive acts motivated by hatred toward that country. A heavy hand toward Nicaragua is not a matter of moral hazard.

 

Endnotes

[1] State capture, criminalization of democracy, censorship and propaganda, international isolation, and police surveillance with physical repression.

[2] Although Murillo has worked with Ortega for years within the circle of power, loyalty to her has been minimal. Most pro-regime allies are individuals close to Daniel Ortega. Therefore, she has a small, loyal group of individuals in the hierarchy of power. These include Fidel Moreno (political officer within the Sandinista party), Ovidio Reyes (head of the Central Bank), Julio Aviles (General of the Nicaraguan Army) and legislator Gustavo Porras.

[3]  Key advisor to Daniel Ortega, was former head of the president’s personal security.  He was deputy director of the national police until 2014.  In 2022 was reinstated to take care of the police carrying out the purges at the Police and the Justice System, as well as ordering detention to individuals suspected of being activists or potential activists. He is the most trusted advisor of the regime.

[4] References based on interviews with Nicaraguan entrepreneurs and workers between July and September 2025.

[5] Increases in remittances reduce the intention to migrate, specially among those who formalize their savings.

[6] Notice that of the more than 1,000 purges, not a single individual belongs to the Military.  The military is the most conspicuous ally of the dictatorship.