II 114th CONGRESS 2d Session S. 3284 IN THE SENATE OF THE UNITED STATES September 6, 2016 Mr. Cruz introduced the following bill; which was read twice and referred to the Committee on Foreign Relations A BILL To oppose loans at international financial institutions for the Government of Nicaragua unless the Government of Nicaragua is taking effective steps to hold free, fair, and transparent elections, and for other purposes.

1. Short title This Act may be cited as the Nicaraguan Investment Conditionality Act of 2016 . 2. Findings Congress makes the following findings: (1) In 2006, Nicaragua, under President Enrique Bolaños, entered into a $175,000,000, 5-year compact with the Millennium Challenge Corporation (in this section referred to as the MCC ). (2) After the 2008 municipal elections, the MCC stated that there was a pattern of decline in political rights and civil liberties in Nicaragua. (3) In 2009, the MCC terminated the compact and reduced the amount of MCC funds available to Nicaragua by $61,500,000, which led to the compact ending in 2011. (4) According to the law of Nicaragua, the National Assembly is the only institution allowed to change the constitution but in 2009, Daniel Ortega circumvented the legislature and went to the Supreme Court, which he controls, to rule in his favor that presidential term limits were inapplicable. (5) The Committee on Foreign Affairs of the House of Representatives convened a congressional hearing on December 1, 2011, entitled Democracy Held Hostage in Nicaragua: Part 1 where former United States Ambassador to Nicaragua Robert Callahan testified, First, that Daniel Ortega’s candidacy was illegal, illegitimate, and unconstitutional; second, that the period leading to the elections and the elections themselves were marred by serious fraud; third, that Daniel Ortega and his Sandinista party have systematically undermined the country’s fragile governmental institutions. . (6) From fiscal year 2012 until the date of the enactment of this Act, the Department of State found that Nicaragua did not meet international standards of fiscal transparency. (7) On January 25, 2012, a press statement from Secretary of State Hillary Clinton said: As noted by international observers and Nicaraguan civil society groups, Nicaragua’s recent elections were not conducted in a transparent and impartial manner, and the entire electoral process was marred by significant irregularities. The elections marked a setback to democracy in Nicaragua and undermined the ability of Nicaraguans to hold their government accountable. . (8) According to the Department of State’s 2015 Fiscal Transparency Report: The government does not publicly account for the expenditure of significant off-budget assistance from Venezuela and this assistance is not subject to audit or legislative oversight. Allocations to and earnings from state-owned enterprises are included in the budget, but most state-owned enterprises are not audited. The supreme audit institution also does not audit the government’s full financial statements. Nicaragua’s fiscal transparency would be improved by including all off-budget revenue and expenditure in the budget, auditing state-owned enterprises, and conducting a full audit of the government’s annual financial statements and making audit reports publicly available within a reasonable period of time. . (9) According to the Department of State’s Country Reports on Human Rights Practices for 2015: In 2011 the Supreme Electoral Council (CSE) announced the re-election of President Daniel Ortega Saavedra of the Sandinista National Liberation Front (FSLN) in elections that international and domestic observers characterized as seriously flawed. International and domestic organizations raised concerns regarding the constitutional legitimacy of Ortega’s re-election. The 2011 elections also provided the ruling party with a supermajority in the National Assembly, allowing for changes in the constitution, including extending the reach of executive branch power and the elimination of restrictions on re-election for executive branch officials and mayors. Observers noted serious flaws during the 2012 municipal elections and March 2014 regional elections. . (10) According to the Department of State’s Country Reports on Human Rights Practices for 2015 in Nicaragua: The principal human rights abuses were restrictions on citizens’ right to vote; obstacles to freedom of speech and press, including government intimidation and harassment of journalists and independent media, as well as increased restriction of access to public information, including national statistics from public offices; and increased government harassment and intimidation of nongovernmental organizations (NGOs) and civil society organizations. . (11) The same 2015 report stated: Additional significant human rights abuses included considerably biased policies to promote single-party dominance; arbitrary police arrest and detention of suspects, including abuse during detention; harsh and life-threatening prison conditions with arbitrary and lengthy pretrial detention; discrimination against ethnic minorities and indigenous persons and communities. . (12) In February 2016, the Ortega regime detained and expelled Freedom House’s Latin America Director, Dr. Carlos Ponce, from Nicaragua. (13) On May 10, 2016, the Supreme Electoral Council announced and published the electoral calendar that aims to govern the electoral process. (14) After receiving the electoral calendar for the 2016 presidential elections, the Nicaraguan political opposition raised concerns and pointed to a number of anomalies such as the electoral calendar failed to contemplate national and international observations, failed to agree to publicly publish the precincts results of each Junta Receptora de Voto, and failed to purge the electoral registration rolls in a transparent and open manner. (15) Nicaragua’s constitution mandates terms of 5 years for municipal authorities, which would indicate that the next municipal elections must occur in 2017. (16) On June 3, 2016, the Nicaraguan Supreme Court, which is controlled by Ortega, instructed the Supreme Electoral Council not to swear in Nicaraguan opposition members to the departmental and regional electoral councils. (17) On June 5, 2016, regarding international observers for the 2016 presidential elections, Daniel Ortega stated: Here, the observation ends. Go observe other countries. … There will be no observation, neither from the European Union, nor the [Organization of American States] … . (18) On June 7, 2016, the Department of State’s Bureau of Democracy, Human Rights and Labor posted on social media: Disappointed government of Nicaragua said it will deny electoral observers requested by Nicaraguan citizens, church, and private sector. … We continue to encourage the government of Nicaragua to allow electoral observers as requested by Nicaraguans. . (19) On June 8, 2016, the Supreme Electoral Council, which is controlled by Ortega, announced a ruling, which changed the leadership structure of the opposition party and in practice allegedly barred all existing opposition candidates from running for office. (20) On June 14, 2016, Daniel Ortega expelled 3 United States Government officials (2 officials from U.S. Customs and Border Protection and one professor from the National Defense University) from Nicaragua. (21) On June 22, 2016, a Global Fellow from the Woodrow Wilson Center chose to leave Nicaragua because of fear. According to a media report, the fellow stated, Police were following me. I did not understand the reason why they were following me, but it was clear to me what they were doing. … Of course (I felt fear), I was surprised especially because the research I am doing is completely academic, not journalistic, and that made me wonder why they would be so interested in something like that. . (22) On June 29, 2016, the Department of State issued a Nicaragua Travel Alert which stated: The Department of State alerts U.S. citizens about increased government scrutiny of foreigners’ activities, new requirements for volunteer groups, and the potential for demonstrations during the upcoming election season in Nicaragua. … Nicaraguan authorities have denied entry to, detained, questioned, or expelled foreigners, including U.S. government officials, academics, NGO workers, and journalists, for discussions, written reports or articles, photographs, and/or videos related to these topics. Authorities may monitor and question private U.S. citizens concerning their activities, including contact with Nicaraguan citizens. . (23) On June 30, 2016, the Human Rights Foundation issued a press release stating: Daniel Ortega has used all sorts of trickery to push for constitutional reforms and illegal court rulings in order to extend his time in power indefinitely. … If the opposition is not allowed to meaningfully compete, the upcoming elections in Nicaragua cannot be considered free and fair and the Inter-American Democratic Charter should be applied to the Sandinista regime. . The release continued, stating, The principle of alternation of power is enshrined in the Inter-American Democratic Charter (IADC) as an essential element of democracy. Even though Ortega pushed through a constitutional amendment allowing for indefinite re-election, he did so by circumventing the separation of powers illegally. An uncontested re-election of Ortega would clearly violate the IADC, which was signed by Nicaragua in 2001. If that is the case, Secretary General Almagro should activate the IADC and, if necessary, call for the suspension of Nicaragua from the [Organization of American States]. . 3. Statement of policy It is the policy of the United States to support— (1) the rule of law and an independent judiciary and electoral council in Nicaragua; (2) independent pro-democracy organizations in Nicaragua; and (3) free, fair, and transparent elections under international and domestic observers in Nicaragua in 2016 and 2017. 4. International financial institutions (a) In general The President shall instruct the United States Executive Director at each international financial institution to use the voice, vote, and influence of the United States to oppose any loan or other utilization of the funds of the institution for the benefit of the Government of Nicaragua, other than to address basic human needs or to promote democracy, unless the Secretary of State certifies and reports to the appropriate congressional committees that the Government of Nicaragua is taking effective steps to— (1) hold free, fair, and transparent elections overseen by credible domestic and international electoral observers; (2) promote democracy, as well as an independent judiciary system and electoral council; (3) strengthen the rule of law; and (4) respect the right to freedom of association and expression. (b) Termination This section shall terminate on the day after the date on which the Secretary of State certifies and reports to the appropriate congressional committees that the requirements of subsection (a) are met. (c) Definitions In this section: (1) Appropriate congressional committees The term appropriate congressional committees means— (A) the Committee on Foreign Affairs, the Committee on Appropriations, and the Committee on Financial Services of the House of Representatives; (B) the Committee on Foreign Relations, the Committee on Appropriations, and the Committee on Banking, Housing, and Urban Affairs of the Senate. (2) International financial institution The term international financial institution means the International Monetary Fund, the International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, the African Development Bank, the African Development Fund, the Asian Development Bank, the Inter-American Development Bank, the Bank for Economic Cooperation and Development in the Middle East and North Africa, and the Inter-American Investment Corporation. 5. Organization of American States (a) Findings Congress finds that, according to the Organization of American States (in this section referred to as the OAS ) report on the 2011 presidential elections in Nicaragua entitled, Nicaragua: Final Report, General Elections, OAS (2011) , the OAS made the following recommendations to the Government of Nicaragua: (1) Prepare alternative procedures for updating the electoral roll when a registered voter dies. . (2) Publish the electoral roll so that new additions, changes of address and exclusions can be checked. . (3) Reform the mechanism for accreditation of poll watchers using a formula that ensures that the political parties will have greater autonomy to accredit their respective poll watchers. . (4) Institute regulations to ensure that party poll watchers are involved in all areas of the electoral structure, including the departmental, regional and municipal electoral councils and polling stations. Rules should be crafted to spell out their authorities and functions and the means by which they can exercise their authority and perform their functions. . (5) Redesign the [Supreme Electoral Council] administrative structure at the central and field levels, while standardizing technical and operational procedures, including the design of control mechanisms from the time registration to the delivery of the document to the citizens; the process of issuing identity cards should be timed to the calendar and, to avoid congestion within the process, be evenly spaced. . (b) Electoral Observation Mission The President shall direct the United States Permanent Representative to the OAS to use the voice, vote, and influence of the United States at the OAS to strongly advocate for an Electoral Observation Mission to be sent to Nicaragua in 2016 and 2017. 6. Statement of policy The Department of State and the United States Agency for International Development should prioritize foreign assistance to the people of Nicaragua to assist civil society in democracy and governance programs, including human rights documentation.