US ratchets up its pressure on the Ortega regime through another round of sanctions. At the end of October US President Joe Biden signed an executive order targeting Nicaragua’s gold industry, allowing Washington to bar certain US investments, imports and exports. But what impact will this have?
Immersed in socio-economic and political chaos, with President Daniel Ortega repressing political dissidents and facing increasing international sanctions, Nicaragua’s economy has few lifelines but gold is certainly one. Exports reached USD 561 million from January to July 2022, and producers are aiming to reach USD 1 billion by the end of the year, exceeding last year’s USD 877 million.
A former economic adviser to the Nicaraguan government urged caution around these numbers, “Since Ortega’s one-man regime has been in power, it is very difficult to trust official figures on any product or economic activity. However, the truth peeks through in approximations since gold demand and prices are high and activity in the sector is growing. For the time being, the inflow of foreign currency is more than a lifeline for Nicaragua, where traditional sectors such as cattle and bananas have been overtaken by the metal.”
“Since Ortega’s one-man regime has been in power, it is very difficult to trust official figures on any product or economic activity.”
Former economic adviser to the Nicaraguan government
Gold has become Nicaragua’s second largest export behind coffee, according to the Central Bank of Nicaragua exports are expected to reach 500,000 ounces in 2023, which would mark a significant increase form the 348,532 ounces exported in 2021.
The US has been the main importer of Nicaraguan gold, approximately 80% of the country’s exports, but times are changing. “The US was traditionally the main destination for Nicaragua gold,” explained a former official at Nicaragua’s Ministry of Mines, “but now Ortega has new friends: Russia, China, various countries in the Middle East and even South Korea are all happy to buy Nicaraguan gold.”
“The US was traditionally the main destination for Nicaragua gold but now Ortega has new friends: Russia, China, various countries in the Middle East and even South Korea are all happy to buy Nicaraguan gold.”
Former official, Ministry of Mines, Nicaragua
In July, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”) designated the state-owned Empresa Nicaragüense de Minas (“Eniminas”) as a sanctioned entity for its links to Russia in the context of the war in Ukraine. More recently, at the end of October, President Joe Biden signed an executive order which paves the way for a future US ban on doing business in Nicaragua’s gold industry as it has been proven that the profits from the industry are supporting Ortega’s client politics.
A former adviser to Nicaragua’s Ministry of Economy didn’t believe the sanctions would serve their purpose, “In all honesty, Washington’s strategy of international sanctions is outdated, and in the long run they end up benefiting the supposedly punished party. The world has changed and the US is no longer the “ruler” of Latin America; it abandoned the region decades ago and the market has diversified. China and even Middle Eastern countries are eager for more Nicaraguan gold. Both have sent delegations of experts to Nicaragua to assess partnerships for the extraction of the metal.”
“In all honesty, Washington’s strategy of international sanctions is outdated, and in the long run they end up benefiting the supposedly punished party.”
Former adviser, Ministry of Economy, Nicaragua
Canadian and British mining companies are already immersed in the exploitation of Nicaraguan gold and they do not see the sanctions as an immediate threat. Three days after the US sanctions were announced, Canada’s Calibre Corp. issued a press statement reporting, “the Sanctions do not have a material impact on its Nicaraguan operations”. Similarly, the view of Condor Gold’s board, chaired by British billionaire Jim Mellon, is that “the Sanctions are unlikely to have any impact on its current Nicaraguan operations.” Condor’s CEO, Mark Child, was greeted by Ortega last September in a move seen as the regime being supportive of the company’s new projects.