Ortega returned to power after defeating conservative candidate Eduardo Montealegre in the 2006 presidential election. Seeming to have traded the uncompromising Marxism of his past for more-pragmatic politics, Ortega promised to uphold the free-market economic reforms of his predecessors. For its part, the government focused on the difficult task of stamping out official corruption and improving general economic conditions, particularly for poorer Nicaraguans. Nicaragua’s formal entrance into the Central America–Dominican Republic Free Trade Agreement (CAFTA-DR) with the United States in 2006 helped Nicaragua to attract investment, create jobs, and promote economic development. In 2007 the country’s $1 billion debt with the Inter-American Development Bank was canceled. Nicaragua continued to push for regional stability and peaceful relations with its neighbours. A long-standing maritime dispute with Honduras was settled by the International Court of Justice in 2007. In 2009 the same court settled a longtime conflict with Costa Rica over the use of the San Juan River, which runs along the Nicaragua–Costa Rica border. In October 2011 the Nicaraguan Supreme Court lifted the constitutional ban on consecutive reelection of the president, which permitted Ortega to run again and win the November presidential election, though there were allegations of election fraud. Moreover, voters handed the FSLN 62 seats in the 90-member National Assembly, a “supermajority” that gave the Sandinistas great sway over the direction the country would take.

From its outset in 2007, the Ortega regime had benefited from the PetroCaribe energy initiative of Hugo Chávez-led Venezuela, which provided crude oil at discounted prices to countries in the Caribbean region, such as Nicaragua. The Nicaraguan government then resold much of that oil at market prices and plowed much of the profits into popular social programs that helped to lift many Nicaraguans out of poverty (with general poverty falling from about 42 percent to about 30 percent between 2009 and 2014, according to one measure). At the beginning of the 21st century, per capita income in Nicaragua had been among the lowest in Latin America, and unemployment and underemployment had been stubbornly high. In the 2010s, however, the country’s economic fortunes began to improve, largely because of support from Venezuela and international financial organizations as well as foreign direct investment, strong agricultural and mining exports, diversified maquiladora production, and rising cash remittances from abroad (many Nicaraguans had migrated to Costa Rica, El Salvador, and the United States). Unemployment slid to about 7 percent, and GDP growth topped 6 percent in 2011 before falling to about 4 percent in 2015.

Nicaragua also continued to be a big beneficiary of CAFTA-DR, the U.S. having remained its largest trading partner despite economic inroads by China and Russia. Nicaragua’s pivot toward China was exemplified by the project to build an interoceanic canal across Nicaragua that was driven by Chinese billionaire Wang Jing. Ground was officially broken in December 2014 on the canal, which was slated to be roughly three times longer than the Panama Canal. However, the effective start of the project was delayed until 2016, largely in response to concerns about its environmental impact, especially on Lake Nicaragua. In October 2015 the question of whether the canal would ever be built was raised when Wang took a beating in the Chinese stock market collapse, his personal fortune tumbling from $10.2 billion to about $1.1 billion.

Meanwhile, Ortega’s popularity climbed with those who had benefited from his government’s social programs. Many in the middle class, however, grew disenchanted with what they saw as Ortega’s increasingly authoritarian rule, the lack of transparency of his government, and the growth of his control over the National Assembly, the courts, the military, and the police. Moreover, some of the profits from Venezuelan oil money were invested in private companies that were controlled by Ortega’s family and friends, who began indulging in conspicuous consumption that, critics claimed, mirrored that of the Somoza regime that the Sandinistas had toppled. Accusations of government corruption grew, but the opposition remained fragmented, and the FSLN used its supermajority in the legislature to push through changes to the constitution that removed term limits on the presidency—setting up Ortega to run for reelection in November 2016—and increased the chief executive’s ability to rule by decree. At the same time, the government denied that a “rearmed” Contra guerrilla force had taken up arms against it, though there was evidence to the contrary. Ortega was reelected by a wide margin. He captured more than 72 percent of the vote, though the voting was conducted without international observers and was boycotted by many in the opposition, who called the election a farce.

Ortega’s wife, Rosario Murillo, who had served as the chief spokesperson in Ortega’s previous administration, was elected vice president. As her influence increased in the new government, she and Ortega began to be perceived as copresidents. Their solid grasp of power was threatened in April 2018 when widespread protest and rioting erupted in response to the government’s implementation of social security reform that increased contributions by employers and workers while reducing benefits. Over several days the focus of the demonstrations shifted to a general denunciation of the Ortega-Murillo regime and spread from Managua to other Nicaraguan cities. In the process dozens of protesters were killed in clashes with police and government-dispatched counterdemonstrators. To quell the uproar, Ortega quickly rescinded the changes to social security. However, the government’s violent response to the demonstrations had sparked wider protests, which escalated to involve tens of thousands of Nicaraguans over the coming months. Although most of the demonstrations were peaceful, some protesters were armed with Molotov cocktails and makeshift mortars. The government accused the protesters of mounting a coup. In July police and paramilitary forces loyal to the government retook two places that had become strongholds of resistance, the National Autonomous University of Nicaragua in Managua and Monimbo, a suburb of Masaya, which, significantly, had been a focus of and a catalyst for anti-Somoza rebellion during the Sandinista revolution. Deaths from the violence that had begun in April were estimated to have exceeded 300. In calling for an end to the violence, a UN human rights spokesman accused police and authorities of extrajudicial killings, torture, arbitrary detentions, and denial of the right to freedom of expression. Similar accusations were made by other international organizations, including the Inter-American Commission on Human Rights (IACHR), which joined with the Organization of American States and the Nicaraguan government to create the Interdisciplinary Group of Independent Experts to investigate human rights abuses only to see that body expelled by the government in December 2019 on the eve of the group’s release of a damning report. The IACHR estimated that by January 2020 some 88,000 Nicaraguans had fled the country as a result of the unrest.

The government’s violent crackdown on the protests had stanched the uprising, but it left the country in the grips of what one UN official termed “a climate of widespread terror,” and it cost Ortega the support he had enjoyed in recent years from some in the Nicaraguan hierarchy of the Roman Catholic Church. To shore up his power base, Ortega used his increasing control of the media to persuade his traditional FSLN followers that the uprising had been a foreign-inspired coup attempt that sought to undermine not only his family but also the accomplishments of the Sandinista revolution. In keeping with his increasingly authoritarian impulses, Ortega also sought to control the narrative regarding his government’s lacklustre response to the global pandemic of SARS-CoV-2, a coronavirus first reported in 2019 in China that began afflicting the wider world in early 2020.

Having downplayed the threat posed by the virus, abjured the imposition of lockdowns and preventive social-distancing measures, and permitted large-scale gatherings to continue, Ortega cast his government’s response to the pandemic as uniquely successful. Official statistics put the number of Nicaraguans who had contracted the virus by June 2021 at fewer than 6,300 and attributed fewer than 200 deaths to COVID-19, the disease caused by the virus. On the other hand, independent monitoring organizations accused the government of egregious undercounting and argued that the Nicaraguan health care system had been overwhelmed by the pandemic. According to one organization, the Citizen Observatory, by June 2021 the real toll of the pandemic in Nicaragua was thought to have exceeded 17,000 cumulative cases of the disease and more than 3,300 COVID-19-related fatalities.

Meanwhile, during the last quarter of 2020 the legislature enacted a number of laws that appeared to threaten the freedom and fairness of the election process. One law made it illegal to disseminate news that had not been authorized by the government, and another prohibited “traitors” (broadly defined) from running for or holding public office. In June 2021 the security apparatus of Ortega’s government began using these laws and related allegations to justify its arrest of more than a dozen opposition figures, including seven potential candidates for the upcoming November presidential election. The actions were quickly met with widespread international criticism, including condemnation from the Organization of American States as well as sanctions from the U.S. government. The election itself, which returned Ortega for a fourth consecutive term as president, was almost universally dismissed by the international community as a sham.