On June 10, the US government announced that it will cancel the Millennium Challenge Corporation (MCC) program in Nicaragua. The United States suspended MCC funding for Nicaragua in December of 2008 citing concerns about electoral irregularities following elections in which the FSLN won a majority of municipalities. However, the June decision permanently cuts off funding. MCC chief executive officer, Rodney Bent, stated that Nicaragua was veering away from "good governance."

President Daniel Ortega in turn accused the United States of being "manipulative, intervening in Nicaraguan internal affairs" and saying that the aid was canceled because "we don't do what the yanqui wants."

The International Budget Support Group, comprised of European donor countries, Canada, the IADB and the World Bank, suspended $70 million in critical budget support aid over similar concerns last year. However, in contrast to the U.S. position, the Budget Support Group is currently involved in negotiations with the government of Nicaragua and EU Ambassador Mendel Goldstein stated that there are promising openings on the part of the Nicaraguan government.

The MCC, considered to be an exemplary project in Nicaragua, was scheduled to have provided US$62 million in development aid for new poverty reduction projects in Nicaragua. The cancelation of the MCC program marks a new level of tension between the United States and Nicaragua. It also recalls the tragic policy of the 1980's when the U.S. applied economic sanctions on Nicaragua with disastrous consequences for the poor majority.