In June 2008 the Nicaraguan Supreme Court disqualified the MRS and the Conservative Party from participation in municipal elections. In November 2008, the Supreme Electoral Council received national and international criticism following irregularities in municipal elections, but agreed to review results for Managua only, while the opposition demanded a nationwide review. For the first time since 1990, the Council decided not to allow national or international observers to witness the election. Instances of intimidation, violence, and harassment of opposition political party members and NGO representatives have been recorded. Official results show Sandinista candidates winning 94 of the 146 municipal mayoralties, compared to 46 for the main opposition Liberal Constitutional Party (PLC). The opposition claimed that marked ballots were dumped and destroyed, that party members were refused access to some of the vote counts and that tallies from many polling places were altered. As a result of the fraud allegations, the European Union suspended $70m of aid, and the US $64m.
On March 6, 2008, following the 2008 Andean diplomatic crisis, Ortega announced that Nicaragua was breaking diplomatic ties with Colombia "in solidarity with the Ecuadorian people". Ortega also stated, "We are not breaking relations with the Colombian people. We are breaking relations with the terrorist policy practiced by Álvaro Uribe's government". The relations were restored with the resolution at a Rio Group summit held in Santo Domingo, Dominican Republic, on March 7, 2008. At the summit Colombia's Álvaro Uribe, Ecuador's Rafael Correa, Venezuela's Hugo Chávez and Ortega publicly shook hands in a show of good-will. The handshakes, broadcast live throughout Latin America, appeared to signal that a week of military buildups and diplomatic repercussions was over. After the handshakes, Ortega said he would re-establish diplomatic ties with Colombia. Uribe then quipped that he would send him the bill for his ambassador's plane fare.
On May 25, 2008, Ortega, upon learning of the death of FARC guerrilla leader Manuel Marulanda in Colombia, expressed condolences to the family of Marulanda and solidarity with the FARC and called Marulanda an extraordinary fighter who battled against profound inequalities in Colombia. The declarations were protested by the Colombian government and criticized in the major Colombian media outlets.
On September 2, 2008, during ceremonies for the 29th anniversary of the founding of the Nicaraguan army, Ortega announced that "Nicaragua recognizes the independence of South Ossetia and Abkhazia and fully supports the Russian government's position". Ortega's decision made Nicaragua the second country (after Russia) to recognize the independence of Abkhazia and South Ossetia from Georgia. A day after Venezuela recognised the two Republics, Nicaragua established diplomatic relations with Abkhazia, and followed this by establishing diplomatic links with South Ossetia. Embassies have been mooted, but as of 2013 these had not opened.