The sanctions imposed by the United States on the General Directorate of Energy and Mines of Nicaragua could lead to “organized criminal groups” as well as “corrupt officials” taking over the gold trade and ensuring that this precious metal enters international markets, they say experts to the VOA.
Cynthia J. Arnson, a fellow and former director of the Latin American Program at the Wilson Center, a Washington DC think tank, says that in the short term, the gold sanctions will have a severe impact. In the long term, however, “sanctions are likely to deepen the corruption and criminality associated with the gold sector.”
Arnson elaborated that “because the sanctions prohibit US banks from participating in financial transactions related to Nicaraguan gold, the sector will be tied down. However, as the Venezuelan case shows, there is no shortage of organized criminal groups “that can take over the gold trade,” she notes.
According to the expert on Latin American issues, “unlike diamonds, gold is impossible to trace.”
This was also stated by Ryan Berg, director of the Americas program at the Center for Strategic and International Studies, for whom US sanctions “will be difficult to comply with.” This, according to what he said, because gold is an easily concealable item.
“(Gold) can be melted down and hide its origins, or it can be laundered based on trade when a mine reports that it extracted more gold than it actually did. These practices allow sanctioned gold mining companies to circumvent sanctions under the cover of another company or corrupt customs agents willing to falsify import and export documents,” Berg told VOA.
“Cutting it off and making sure (gold) doesn’t finance repression will be very difficult,” the political scientist concluded.
Mining companies recorded losses
Gold exports in Nicaragua have been increasing in recent years and is one of the main items in the Central American country.
And the main market for Nicaraguan gold is the United States, according to official data. In 2021 this item was exported almost 80% to Washington, representing almost 1,000 million dollars.
The sanctions, according to analysts, are a severe blow to Managua, which has reacted by assuring that they are “an attempt to suffocate” the government of Daniel Ortega, who has been in power for more than 15 consecutive years, economically.
Following Washington’s measures, at least four major mining companies with foreign capital and operating in Managua recorded losses in the value of their shares.
The company of Canadian origin, with a presence in Managua and the United States, Mining Gauge, was the hardest hit with a 36% drop in its shares; likewise Mako Mining, Hemco, and Condor Gold.
The Nicaraguan newspaper La Prensa reported that after noon on Wednesday – two days after the sanctions were announced – the share prices of these companies began to recover, except for Condor Gold.
Mining Gauge it was the only company to speak out after the sanctions, saying it had contacted the Treasury Department to find out the scope of the sanctions.
The VOA sent queries to the miner hemco but they declined to comment.
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