By Matt Spetalnick

WASHINGTON (Reuters) – The Biden administration is working with international partners to prepare new sanctions that could be levied in response to Nicaragua’s Nov. 7 election, which Washington has denounced as a sham organized by President Daniel Ortega, U.S. officials say.

The U.S. government has also begun a review of Nicaragua’s participation in a Central America free trade agreement and have already halted support for any “trade capacity building” activities seen as benefiting Ortega’s government, a senior State Department official told Reuters on condition of anonymity.

President Joe Biden’s administration, building on sanctions imposed by his predecessor Donald Trump, has slapped punitive financial measures and U.S. travel bans on dozens of Nicaraguan officials, including Ortega family members, amid a government crackdown ahead of the election.

U.S. Secretary of State Antony Blinken said in a statement last week that Ortega, who is seeking a fourth term, and his wife, Vice President Rosario Murillo, were “preparing a sham election devoid of credibility, by silencing and arresting opponents.”

A source in the U.S. said that additional sanctions are being considered for the aftermath of the election. The State Department official indicated the same possibility.

“We’ll continue to use diplomatic and economic tools at our disposal to promote accountability for those who support the Ortega regime’s human rights abuses and attacks on Nicaraguan democracy,” the State Department official said.

“We do have sanctions tools. We are working with international partners, as well to work in multilateral fora, in ways that uphold our values, and we’ll continue to do so,” the official added.

The officials were unable to provide details about possible targets for sanctions or the timeframe of new measures. While the European Union has responded to certain U.S. sanctions, it is not known how far regional and EU governments would go to put pressure on Ortega.

It is not clear if the U.S. government is planning to directly target Ortega, an ex-Marxist leader in guerrilla warfare. Murillo has been placed under US sanctions.

The Biden administration spearheaded a resolution last week by the Organization of American States that expressed “alarm” over the Nicaraguan crackdown and is also looking for ways to squeeze Ortega’s government financially.

U.S. officials warn that Nicaragua’s membership to the CAFTA DR regional trading agreement gives preference to Central American exports to America. If Ortega rigs the election in his favor, it could put in danger.

An official from the State Department confirmed that an investigation was underway. “We’re continuing to review their participation in any U.S.-sponsored assistance program,” the official said.

Officials acknowledged that they were discussing legal barriers to Nicaragua’s suspension from the trade agreement. This is something experts suggest could hinder any actions.

One person familiar with the matter said there were also concerns within the administration that Nicaragua’s removal could hit its struggling economy hard enough to worsen Nicaraguans’ humanitarian plight, spurring further migration toward the U.S.-Mexico border.

Most of Nicaragua’s exports are to the United States. Dues under CAFTA-DR have been kept at a low level.