Is Nicaragua facing an American embargo? An embargo that would hit the Nicaraguan cigar industry tremendously. And change the cigar industry on a never seen before level. Last week, President Trump removed the exemptions that his predecessor President Obama made on the Cuban embargo. The import from Cuban cigars, rum, and other products for personal use is prohibited again. In December 2014, President Obama exempted Cuban cigars and rum from the embargo. But only for personal consumption and hand-carried into the United States. Ordering online from abroad remained prohibited. But not even hand-carrying them in is illegal again.

 Other countries to follow?

But it could be just a prelude to more. As early as November 2018, the Trump administration promised a more aggressive approach to three countries. Three countries that John Bolton called the troika of tyranny during a speech in Miami. With troika, he means Cuba, Venezuela, and Nicaragua. John Bolton was President Trumps’ national security advisor at the time. “Many of you in the audience today have personally suffered unspeakable horrors at the hands of the regimes in Cuba, Venezuela, and Nicaragua. Only to survive, fight back, conquer, and overcome. The troika of tyranny in this hemisphere – Cuba, Venezuela, and Nicaragua – has finally met its match.” he said.

In April last year, the Trump administration announced to target the finances of Nicaraguan President Daniel Ortega’s regime and the Nicaraguan bank, Banco Corporativo SA (Bancorp). Bancorp is labeled ‘The Ortega slush fund’. John Bolton called out Laureano Ortega Murillo, who he said: “has been groomed as the successor by the regime and is engaged in vast corruption under the guise of leading Nicaragua’s investment agency.”

Heightened diplomatic activity

Sources in Nicaragua are telling us that in the last two to three weeks, there is an unusual amount of diplomatic activity. The United States diplomats are asking a lot of information. Everything is pointing towards some sort of action or sanctions by the American government. But what is about to happen is yet unclear. 

Speculation

Considering the current situation, and the heightened diplomatic activity, we expect some sanctions. Yet not a full embargo as in the President Reagan era. In 1985, President Ronald Reagan prohibited all trade between Nicaragua and the United States to undermine the Sandinista regime. President Bush lifted the embargo in 1990. From 1990 to 2006, the Sandinistas were in the opposition. In 2006, they won the election and Daniel Ortega became president. A position he held from 1979 to 1990 as well. A full-on embargo will hurt too many American businesses, in an economy that’s already under pressure from the covid-19 pandemic. Therefore we think that a full embargo is not a realistic scenario. It would also create further instability at America’s backdoor, fueling illegal immigration towards the United States.

We do expect some sanctions though. Maybe against Nicaraguan government officials, or Nicaraguan companies. Against financial institutions perhaps. It’s not a coincidence that the sanctions against Cuba are announced 6 weeks before the Presidential elections. Florida is a swing state with many immigrants from the troika of tyranny as they call it. By attacking the regimes that mistreated many of the immigrants, the Trump campaign hopes to get their support and vote. And as long as the sanctions don’t hurt Americans, he won’t lose support. And targeting a corrupt leader is always a good thing, so sanctions against Daniel Ortega are justified.