Foreign policy and defense
Nicaragua is a nation in North America. Its capital city is Managua. After the change of power in 2007, foreign policy was radically changed. Priority was given to relations with other left-wing governments in Latin America, mainly in Venezuela, as well as in Bolivia and Cuba. Nicaragua also initiated diplomatic relations with Iran, which funded several construction projects, including a dam for a hydroelectric plant and a new hospital.
The United States has long been the country’s largest aid donor and has often used the aid as a means of pressure. When the Nicaraguan government refused to investigate allegations of electoral fraud in 2008, the United States froze part of its aid. The EU also withdrew some of its support. While Ortega has said he wants to have good relations with the United States and the EU countries, he has made frantic results that have meant that Nicaragua can do without their money. However, when it comes to the fight against drug smugglers, the countries cooperate. According to UN Drug Control Agency INCB, Nicaragua, together with neighboring countries Costa Rica and Honduras, had become major transit countries for drug smuggling from Colombia to the United States.
- Countryaah: Overview of business holidays and various national observances in Nicaragua for years of 2020, 2021, 2022, 2023, 2024 and 2025.
In 2007, Nicaragua joined the alternative trade and integration cooperation Alba (Alianza bolivariana de las Américas), which had been started by Venezuela and includes Cuba, Bolivia and Dominica, among others. Venezuela has become an increasingly important partner for Nicaragua both politically and economically. The oil country contributes with cheap oil, loans and investments. The aid from Venezuela was mediated through Alba, but was not included in the state budget and was therefore not controlled by the National Assembly. This was criticized by the opposition as well as by economists. According to media reports, the Alba money was controlled by the Sandlinist party FSLN and contracts financed by Alba often went to companies related to the Ortega family (see Financial overview).
Relations with Costa Rica are strained because of the extensive illegal immigration of Nicaraguan people to the neighboring country. The countries have also disputed the right to operate shipping and more on the San Juan border. The dispute continued even after the International Court of Justice (ICJ) in The Hague in 2009 ruled that the river lies on Nicaraguan territory but at the same time gave Costa Rica the right to conduct fishing and other business in the area. When Nicaragua later started building canals to connect the San Juan River with the Caribbean, the conflict entered a new phase. In a preliminary opinion in 2013, ICJ ordered Nicaragua to cease canal construction and other activities and in 2015 came a definitive message: the disputed area belongs to Costa Rica.
The neighboring country also turned to the ICJ with a request that the border between the two countries be set both in the Caribbean and in the Pacific. The ICJ made a statement on that issue in early 2018. At the same time, the court ordered Nicaragua to pay $ 380,000 in damages for environmental destruction in the San Juan River, as well as demolishing a military camp near the river.
Nicaragua has long had a dispute with Colombia over several islands in the San Andrés Archipelago in the Caribbean. The ICJ ruled in 2007 that San Andrés and two other islands belong to Colombia, in accordance with a 1928 agreement. In 2012, the court ruled that a number of smaller islands in the area also belong to Colombia, but at the same time drew the sea border to Nicaragua’s advantage. This gave the country the right to new fishing water and possible oil and gas resources under the seabed. However, Colombia did not approve the court’s ruling. In 2013, Nicaragua again turned to the ICJ to get the boundaries precisely set. According to President Ortega, bilateral talks were not a viable path because of Colombia’s attitude. In November 2013, the Colombian government called home its Nicaragua ambassador because of the dispute.
Nicaragua has also had a similar conflict with Honduras. In October 2007, the ICJ gave Honduras control over four small islands in the Caribbean, but at the same time decided to move the sea border to a point located midway between the countries. Both countries would thus have equal opportunities to search for oil and gas in the area.
Nicaragua participates in several regional collaborations. In 2001, for example, an integration agreement was signed between the Central American countries and Mexico’s southern states called Plan Puebla-Panama.
A comprehensive DR-Cafta free trade agreement between Nicaragua and several other countries in the region and the United States entered into force in 2006. The agreement, according to the Government’s Free Trade Commission, has been beneficial to Nicaragua, but it has also been criticized for risking knocking out small farmers in Central America because the conditions are uneven; both the United States and the Central American countries have abolished their tariffs, but the United States has at the same time retained its agricultural subsidies.
After several years of negotiations, an association agreement between the EU and Central America began to apply in 2013. The comprehensive agreement included free trade, development cooperation and political dialogue. The free trade section means that the Central American countries have free access to the EU market for 90 percent of their export products. However, in the case of important goods such as bananas, tariff rates would be gradually reduced or, as for sugar and beef, where export quotas would gradually increase. The agreement also applied to trade in services such as telecommunications and financial services, which also meant common rules on intellectual property rights.
Taiwan has been an important aid donor and investor since Nicaragua in 1990 recognized the country politically. Since both countries signed a free trade agreement in 2006, bilateral trade has doubled.
After the end of the civil war, the defense was severely cut. The mandatory military duty was abolished in 1990 and the defense has since been under civilian control. According to analysts, the military has been closer to the president since Daniel Ortega returned to power in 2007.
FACTS – DEFENSE
Army: 10,000 men (2017)
The air Force: 1 200 men (2017)
The fleet: 800 men (2017)
Military expenditure’s share of GDP: 0.6 percent (2017)
Military spending’s share of the state budget: 2.2 percent (2017)