The Spanish Senate proposed the possibility of suspending Nicaragua from the Association Agreement (AdA) between the European Union and Central America, as part of a new sanction against the regime of Daniel Ortega and Rosario Murillo, accused of Crimes against humanityand multiple human rights violations and civil liberties.
The AdA was signed in 2012 by Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama on the one hand, and the European Union on the other. The text regulates trade, investment, or how to open a company in Central America, in addition to establishing “a privileged political association based mainly on respect and promoting democracy, peace, human rights, rule of law, good governance and sustainable development”.
A sanction of this level would mean that Nicaragua would no longer have privileged access to European community markets, in addition to becoming a disincentive for investment from the Old Continent, and one more stain on the deteriorated image of the country, according to an economist, a producer and an exporter consulted by CONFIDENTIALwho agreed to talk with this medium, on condition of anonymity.
The economist and the producer explain that the commercial impact would affect exports from Nicaragua to Europe for USD 331.1 million dollars, mainly in gold coffee, peanuts, gold and cane sugar, according to the Center for Export Procedures (Cetrex).
“Trade with Europe is quite modest: 330 million dollars, out of a total of 8 billion dollars, after England left,” explained the economist, while the producer argued that “the impact would be small”, measuring it only from the export point of view.
However, the exporter warns that if this measure were to be applied, it would cause a “strong impact”, especially among the sectors that sell part of their production in Europe, such as coffee. Although most of the coffee goes to the United States — and the rest to Europe, Taiwan, and other markets — whatever is not sold there would decrease foreign exchange earnings, and export tax revenue.
Although he acknowledges that there is always the option of seeking new customers for products that lose their access preferences to European markets, he also admits that “this is not always easy”, and that, although there is great demand for gold and sugar, it might take up to six months to find new buyers for the coffee and peanuts.
“These (government officials) They are looking for how to place products in Chinabut I don’t think the Chinese buy large quantities from them”, he asserted.
Greater country risk
The economist doubts that Nicaragua’s suspension of the AdA will come to fruition, partly because it is just a proposal that has yet to be passed to the heart of the EU, but also because “European sanctions have as a principle to avoid massive damage to the economy of the country, adopting a more selective approach”, but if they decided to apply it “it would be a very strong blow to the image of the country, especially for investment”.
His analysis leads him to conclude that “for each sanction, there is an internal response that costs us dearly”, in reference to the banished and the confiscated“so it becomes a double-edged sword, that for now, nothing has changed, although perhaps, what they are waiting for is to cause an implosion.
The exporter envisions that excluding us from the Association Agreement would make it difficult to negotiate with any potential customer, in addition to “deteriorating the ‘face’ of the country”, because it says “nobody wants this anymore”. The producer agrees that “where we should be concerned is the deterioration of the country’s image, which becomes less attractive to foreign investment,” without ruling out that it could affect the cost at which increasingly difficult loans are obtained. and international donations.
Strong support in the Spanish parliament
In the past, both the United States and Canada; The European Union as a whole, in addition to nations such as Switzerland and the United Kingdom, have imposed sanctions on various members of the ruling family, as well as their accomplices in the Government, which generally implies a ban on entering their territory, freezing goods, and threat of sanctions for the banks of its jurisdiction that have dealings with those sanctioned.
The initiative of the Ibero-American Affairs Commission of the Spanish Upper House is based on the majority support for a motion of the Popular Party (PP, Conservatives), which urges the Government to lead from the European Union, all the measures that allow to end to the violation of human rights in Nicaragua.
Among the additional measures that the senators supported in relation to the situation in Nicaragua, there is also an intensification of individual sanctions, which includes the impediment of entry into European territory, and the freezing of assets of certain people.
Along with the initial proposal of the PP, at the request of the Basque nationalists (PNV), a mention was added to the recent release of political prisoners, critical of Ortega’s decision to strip those released of their nationality, and to seize all their assets.
