The cancelation of the U.S.’ fiscal-transparency waiver for Nicaragua has given President Daniel Ortega the perfect excuse to do something he’s wanted to do for years: turn the screws on civil society.

In a fiery speech on Saturday night, Ortega announced his intention to block all U.S. funding for civil society groups in Nicaragua in retaliation for the U.S. cutting bilateral aid to his government.

“If there is no money for [government] health, if there is no money for environment, if there is no money for the war on drugs, then there won’t be any money for the agents of the empire either,” Ortega said, referring to U.S. financing for non-governmental groups working in Nicaragua.

“We will close all the programs here. We are working to collect all the information so they won’t come here and act however they want to. Here will we close the spigot on all these programs,” Ortega said.

The president’s comments, the first he has made since the U.S. announced the cancelation of its transparency waiver last week, represent the most virulent tongue-lashing Ortega has given the United States in several years.

Ortega called the “yanqui” government the “biggest delinquents on our planet” and accused the U.S. of protecting big banks that laundered “$300 billion in drug trafficking money.”

“What moral or social lessons are the yanquis going to come teach us here? What lessons on institutionalism are the yanquis going to come teach us in Nicaragua?” Ortega demanded. “[The U.S.] doesn’t recognize the law anywhere on the planet. They impose the law of might makes right.”

Ortega said Nicaragua will continue to insist the U.S. honor its $17 billion debt that The International Court of Justice ordered it to pay in 1987 for illegally mining Nicaragua’s harbors and for other international crimes related to the contra war. U.S. administrations have ignored the World Court ruling. The government of Violeta Chamorro pardoned the U.S. debt in the early 1990s, though Ortega says that doesn’t count.

And the property waiver?

Ortega also put the future of the property waiver in greater doubt by lashing out against the list of U.S. citizens who are still claiming compensation for properties confiscated by the Sandinista government in the 1980s.

Of the remaining 193 U.S. citizens still seeking indemnification, 187 are Nicaraguans who were naturalized as U.S. citizens after the triumph of the revolution in 1979.

“Many of them were already indemnified by the neoliberal governments and now they are asking for another indemnification because they can’t stop being what they’ve always been: thieves who prey upon the people of Nicaraguan,” Ortega spat.

The president’s sharp words, which come two weeks after a mixed delegation of government and private-sector representatives traveled to Washington to lobby Nicaragua’s case, cast an even longer shadow of doubt on the future of the property waiver. While the office of Nicaragua’s Prosecutor General claims the Government of Nicaragua has upheld its end of the deal by resolving more than 50 property cases this year, the president’s political harangue on Saturday certainly won’t help Nicaragua’s case in Washington, where Republicans congressional leaders are calling on the Obama Administration to take stronger actions against the Sandinista strongman.

Pinching the middle class?

Ortega’s weekend tirade also appears to be an announced return to the oppressive policies that characterized his administration back in 2008-2009.

In September 2008, First Lady Rosario Murillo launched a brazenly aggressive government campaign called “Operation No More Lies” aimed at discrediting civil society by calling non-governmental organizations “modern day Trojan Horses” that mask an international campaign against the Ortega government.

The campaign, launched under the guise of investigative journalism Murillo’s news outlet, El 19, accused the Autonomous Women’s Movement (MAM), the Center of Investigations for Communication (CINCO), international development group OXFAM and a network of other Nicaraguan human-rights and democracy groups of being part of an alleged international conspiracy to destabilize the government.

Sandinista media outlets played the role of judge and jury by accusing various non-governmental organizations of “triangulating money”—an invented crime that sounded villainous. Meanwhile, public figures such as journalist Carlos Fernando Chamorro, feminist Sofia Montenegro and La Prensa director Jaime Chamorro were accused of money laundering in sappy and slanderous Sandinista media reports that were laughably melodramatic.

However, the Ministry of the Government (MINGOB) apparently took the reports seriously, and indeed seemed to interpret them an official directive. MINGOB quickly announced it was launching an investigation of MAM, CINCO and OXFAM on vague allegations of international criminal activity. The government raided the offices of CINCO and MAM, but—alas—was unable to produce any evidence of wrongdoing, not even of the invented crime of “triangulation.”

Eventually, the government called off its attack dogs as its investigated appeared increasingly ridiculous. By 2010, the administration’s relation with civil society was dialed down from openly aggressive to mutually suspicious.

But now the situation appears to be worsening again. If Ortega follows through on this threat to block some $27 million in U.S. aid to Nicaraguan civil society in retaliation for the waiver whack, it would mark a return to the open hostilities of the past.

By punishing civil society programs, Ortega would possibly affect hundreds if not thousands of Nicaraguans who work for or benefit from non-governmental organizations, one of the few sources of middle-class employment in Nicaragua. Ortega’s pushback against U.S.-backed civil society could then extend to European-backed civil society.

While Ortega thinks his crackdown will root out foreign efforts to destabilize his government, the president apparently doesn’t realize is that if civil society disappears, Nicaragua will become—by definition—a much less civil place.

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