By late July 2026, Nicaraguan dictator Daniel Ortega announced the abolition of elections in Nicaragua. The end-of-democracy announcement—a departure from the wafer-thin charade—has sparked concern among Nicaraguan civil-society groups in exile in the United States.
On August 21 in Miami, Florida, Nicaraguan leaders called on the Donald Trump administration to take stronger action against the regime. Among other measures, they urged the United States to withdraw Nicaragua from the Central America–United States Free Trade Agreement (CAFTA-DR).
This request aligns with the Trump administration’s position. In April, when the administration imposed sanctions on Nicaragua’s gold sector, State Department spokesman Tommy Pigott said the United States “will continue to use all diplomatic and economic tools to defend US interests and amplify the demands of the Nicaraguan people for freedom, inalienable rights, and economic security.”
As international scrutiny and pressure grow, the dictatorship is attempting to reduce its dependence on the United States, particularly for oil. Three actions show how the Ortega-Murillo regime has turned to Tehran to achieve this goal.
1. The dictatorship has signed fuel agreements that no one intends to execute.
On July 4, in Tehran, Iranian Oil Minister Mohsen Paknejad told Nicaraguan Foreign Minister Valdrack Jaentschke that Iran could meet Nicaragua’s demand for crude oil and gas.
Nicaragua imported US$1.43 billion in oil, fuel, and lubricants in 2025. The United States supplied 66 percent of that total. The pattern continued in the first four months of 2026. Nicaragua imported $559 million in oil and fuel, including $373 million from US suppliers.
In contrast, in 2024—the latest year with available data—two-way trade of all kinds with Iran totaled less than $250,000. Nicaragua exported $81,450 to Iran and imported $142,657. In 2023, Nicaragua recorded no exports to Iran at all.
Replacing US supplies would require increasing trade flow with Iran by more than 1,000 times. Iran would need to ship oil halfway around the world on a sanctioned tanker fleet. Nicaragua would then need to process and store crude, but its current infrastructure could not handle it. Both sides would also need a banking channel that circumvents the SWIFT system and, thereby, US sanctions.
Paknejad himself acknowledged that the distance would drive up costs.
Oil-trade agreements are not new. In May 2022, Iranian Parliamentary Energy Secretary Hossein Hosseinzadeh announced crude oil supplies to Nicaragua on HispanTV. Nicaragua’s Trade Ministry also reported the signing of “energy contracts.” Then-Iranian Oil Minister Javad Owji visited Managua and promised a refinery and oil exploration in Nicaragua. None of those projects exists today.
Nicaraguan economist and former lawmaker Enrique Sáenz calls this pattern “Persian tales.” He mentions several agreements signed before the war began this year. They covered language, visas, and culture, but “not one was executed.”
Failure to execute these agreements does not mean the policy failed, because the Nicaraguan regime needs the signature. Ortega uses these announcements to create the appearance of an alternative to US supplies and to send a message to Washington.
2. The Ortega-Murillo regime has opened the door to Tehran’s strategic objectives.
José Arocha, a senior associate researcher at the Center for a Secure Free Society, told investigative outlet Expediente Publico that Nicaragua’s “permissiveness and ties to Iran, Russia, and China make it a key point.” The regime has eased entry requirements for Iranian officials, while most Western countries have tightened theirs. Arocha describes the pattern: “Everything is dual-purpose. It starts with diplomacy, moves into cultural and commercial ties, and ends with industrial and military dimensions.”
Bilateral agreements with these regimes now cover telecommunications, nanotechnology, and information systems. Iran’s Ministry of Justice and Nicaragua’s Supreme Court have also signed a memorandum covering legal training, drafting legislation, and building technical capacity within Nicaragua’s judiciary.
Robert Evan Ellis of the US Army War College has documented links between Ortega’s government and Iranian-aligned actors, including Hezbollah, dating back to at least 2007. He argues pressure on Cuba and the loss of Venezuela give Nicaragua a new role. Tehran can use the country as a platform to seek “soft targets” across the hemisphere.
3. The regime shoulders Iran’s regional agenda, including the criminal elements.
In Latin America, Hezbollah relies on a decentralized network of groups with operational autonomy. These groups use smuggling, drug trafficking, and money laundering to raise funds and move resources.
For nearly two decades, Hezbollah has built a presence in the Tri-Border Area—where Paraguay, Argentina, and Brazil meet—and Venezuela. Criminal organizations provide routes and local cover. Iranian-linked networks provide international connections and access to money-laundering channels.
The demise of the Chavista regime has opened somewhat of a logistical vacuum, being filled by Nicaragua. In April 2026, Argentina also designated Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization. Nicaragua is moving in the opposite direction by offering a country with limited scrutiny, access to the North American corridor, and a government willing to provide political cover.
Considering the oil agreement, Nicaragua might facilitate flagged vessels carrying Iranian and Russian fuel as part of the shadow fleet, helping Iran move sanctioned oil through international markets. Arocha describes the method: “They use proxies: companies or intermediary actors that allow them to move resources, information and operations without direct exposure.”
