II 115th CONGRESS 1st Session S. 972 IN THE SENATE OF THE UNITED STATES April 27, 2017 Mr. Cruz (for himself, Mr. Rubio , and Mr. Perdue ) introduced the following bill; which was read twice and referred to the Committee on Foreign Relations A BILL To promote democracy and the rule of law on Nicaragua, and for other purposes.

1. Short title This Act may be cited as the Nicaraguan Investment Conditionality Act (NICA) of 2017 . 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 (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 Nicaraguan law, 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 [f]irst, 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 present, the Department of State found that the Government of Nicaragua did not meet international standards of fiscal transparency. (7) On January 25, 2012, a press statement from Secretary of State Hillary Clinton stated, 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: 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 June 3, 2016, the Nicaraguan Supreme Court, which is controlled by Nicaragua's leader, Daniel Ortega, instructed the Supreme Electoral Council not to swear in Nicaraguan opposition members to the departmental and regional electoral councils. (14) On June 5, 2016, regarding international observers for the 2016 Presidential elections, President Ortega stated, Here, the observation ends. Go observe other countries … There will be no observation, neither from the European Union, nor the OAS … . (15) 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. . (16) On June 14, 2016, President Ortega expelled three United States Government officials (two officials from U.S. Customs and Border Protection and one professor from the National Defense University) from Nicaragua. (17) On June 29, 2016, the Department of State issued a Nicaragua Travel Alert which stated, The Department of State alerts United States 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 United States 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 United States citizens concerning their activities, including contact with Nicaraguan citizens. . (18) On August 1, 2016, the Department of State issued a press release to express grave concern over the Nicaraguan government limiting democratic space leading up to the elections in November and stated, [O]n June 8, the Nicaraguan Supreme Court stripped the opposition Independent Liberal Party (PLI) from its long recognized leader. The Supreme Court took similar action on June 17 when it invalidated the leadership of the Citizen Action Party, the only remaining opposition party with the legal standing to present a presidential candidate. Most recently, on July 29, the Supreme Electoral Council removed 28 PLI national assembly members (16 seated and 12 alternates) from their popularly-elected positions. . (19) On November 7, 2016, the Department of State issued a press release stating, The United States is deeply concerned by the flawed presidential and legislative electoral process in Nicaragua, which precluded the possibility of a free and fair election on November 6. In advance of the elections, the Nicaraguan government sidelined opposition candidates for president, limited domestic observation at the polls and access to voting credentials, and took other actions to deny democratic space in the process. The decision by the Nicaraguan government not to invite independent international electoral observers further degraded the legitimacy of the election. . (20) In November and December of 2016, the Board of Executive Directors of the Inter-American Development Bank postponed consideration of a policy-based loan of $65,000,000 to the Government of Nicaragua due to the efforts of the United States mission that expressed serious concerns of the absence of transparency, systemic corruption, and the lack of free and fair elections in Nicaragua. (21) On February 2017, the European Parliament issued a resolution on the situation of human rights and democracy in Nicaragua and expressed concern of the deteriorating human rights situation in Nicaragua and deplores the attacks and acts of harassment to which human rights organizations and their members and independent journalists have been subjected by individuals, political forces and bodies linked to the State. . (22) According to the Department of State's Country Reports on Human Rights Practices for 2016: actions by the ruling Sandinista National Liberation Front (FSLN) party resulted in de facto concentration of power in a single party, with an authoritarian executive branch exercising significant control over the legislative, judicial, and electoral functions. . (23) According to the Department of State's Country Reports on Human Rights Practices for 2016 in Nicaragua: The November 6 elections for president, vice president, national assembly members, and representatives for the Central American parliament did not meet the conditions of being free and fair … The November 6 presidential and legislative elections were marred by allegations of institutional fraud and the absence of independent opposition political parties. National observers and opposition leaders claimed rates of abstention from 60 to 70 percent. . (24) According to the Department of State's Country Reports on Human Rights Practices for 2016: Companies reported that bribery of public officials, unlawful seizures, and arbitrary assessments by customs and tax authorities were common … The courts remained particularly susceptible to bribes, manipulation, and other forms of corruption, especially by the FSLN, giving the sense that the FSLN heavily influenced CSJ and lower-level court actions. . 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; (3) free, fair, and transparent elections under international and domestic observers in Nicaragua; and (4) anti-corruption and transparency efforts in Nicaragua. 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 for the benefit of the Government of Nicaragua, other than to address basic human needs or 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 judicial system and electoral council; (3) strengthen the rule of law; (4) respect the right to freedom of association and expression; (5) combat corruption, including investigating and prosecuting government officials credibly alleged to be corrupt; and (6) to protect the right of political opposition parties, journalists, trade unionists, human rights defenders, and other civil society activists to operate without interference. (b) Report The Secretary of the Treasury shall submit to the appropriate congressional committees a written report assessing— (1) the effectiveness of the international financial institutions in enforcing applicable program safeguards in Nicaragua; and (2) the effects of the matters described in section 2 on long-term prospects for positive development outcomes in Nicaragua. (c) Definitions In this section: (1) Appropriate congressional committees The term appropriate congressional committees means— (A) the Committee on Foreign Relations, the Committee on Appropriations, and the Committee on Banking, Housing, and Urban Affairs of the Senate; and (B) the Committee on Foreign Affairs, the Committee on Appropriations, and the Committee on Financial Services of the House of Representatives. (2) International financial institution The term international financial institution means— (A) the International Monetary Fund; (B) the International Bank for Reconstruction and Development; (C) the European Bank for Reconstruction and Development; (D) the International Development Association; (E) the International Finance Corporation; (F) the Multilateral Investment Guarantee Agency; (G) the African Development Bank; (H) the African Development Fund; (I) the Asian Development Bank; (J) the Inter-American Development Bank; (K) the Bank for Economic Cooperation and Development in the Middle East and North Africa; and (L) the Inter-American Investment Corporation. (d) Termination This section shall terminate on the day after the earlier of— (1) the date on which the Secretary of State certifies and reports to the appropriate congressional committees that the requirements of subsection (a) have been met; or (2) 5 years after the date of the enactment of this Act. (e) Waiver The President may waive the requirements of this section if the President determines that such a waiver is in the national interest of the United States. 5. Organization of American States (a) Findings Congress finds that, according to the Organization of American States (OAS) report on the Nicaraguan 2011 Presidential elections, 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 CSE 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 Organization of American States (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 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. 7. Report on corruption in Nicaragua (a) Report requirement Not later than 90 days after the date of the enactment of this Act, the Secretary of State, in consultation with the intelligence community (as defined in section 3(4) of the National Security Act of 1947 ( 50 U.S.C. 3003(4) )), shall submit to Congress a report on the involvement of senior Government of Nicaragua officials, including members of the Supreme Electoral Council, the National Assembly, and the judicial system, in acts of public corruption or human rights violations in Nicaragua. (b) Form The report required in subsection (a) shall be submitted in unclassified form, but may contain a classified annex. The unclassified portion of the report shall be made available to the public.