What impact would a possible brake on exports to the US have on the Nicaraguan economy?

What impact would a possible brake on exports to the US have on the Nicaraguan economy?

If the United States stopped importing products from Nicaragua, such as would be consideringcould deal a severe blow to the economy of the Central American country, according to analysts consulted by the Voice of America.

days ago the VOA reported citing sources from the Joe Biden government that Washington plans to block some of the most important items that Nicaragua exports to the US through the CAFTA-DR Free Trade Agreement, in force since 2006, with the intention of pressuring the government of Daniel Ortega, to who points out for human rights violations, including the imprisonment of his political opponents.

Ryan C. Berg, of the Americas Program, based in Washington, points out that Nicaragua is the least diversified country in Central America in terms of its export markets, so a brake on exports to the US would be “a devastating blow.” for your economy.

Among the main products that Nicaragua exports to the US are textiles, gold, coffee, meat and beans, among others.

Nicaraguan textile exports to the US, which in 2006 barely reached 879 million, represented 1,996 million in 2021, according to data compiled by the US Embassy in Managua. Gold exports in 2021 totaled some 942 million dollars, while coffee exports reached 235 million dollars.

About 60% of total Nicaraguan exports go to the US, according to data from the embassy.

From January to July 2022, Nicaraguan exports in total reached 2,529 million dollars, reflecting a year-on-year growth of 16.35% compared to the same period in 2021, according to data from the Center for Export Procedures (Cetrex).

According to former Nicaraguan diplomat Arturo McFields, Nicaragua exports to Russia, Iran and China combined only between 5 and 10% of its total exports.

“That’s where you realize the weight that the United States has as the main trading partner” of Nicaragua, McFields told the VOA.

Evan Ellis, a professor and researcher at the Army War College’s Institute for Strategic Studies, told the VOA that some US measures to pressure the Ortega government, like the exclusion in july of Nicaragua from the countries that can export sugar to the US, have been “symbolic”. Nicaragua exported about 84 million dollars worth of sugar to the US, according to the US Department of Agriculture.

Ellis believes that although “there are not necessarily measures that will immediately restore democracy in Nicaragua,” it is important that Washington show its pressure on Ortega and support Nicaraguans.

Since Washington began imposing sanctions on Nicaragua after the protests against President Daniel Ortega that left more than 300 dead in 2018, the focus has been on sanctioning individuals or individuals. The Biden government maintains that the intention is not to affect citizens.

“While things are going well for the Ortegas in terms of the economy, which grew 10% last year and remittances increased 26%, then the message that elites need to be changed is not getting through,” said the expert. .

What does the government say?

At the moment, no government official in Nicaragua has reacted to the possibility that Washington will touch Managua’s exports to the US, however, on previous occasions the ruling party deputies have told the VOA that what is supposed to be paramount “is sovereignty”, more than anything else.

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