MANAGUA, Nicaragua—A surge of violence has snuffed out economic activity and dimmed prospects to peacefully resolve a political crisis here that began as a protest against tax increases and turned into a revolt against Nicaragua’s longtime leader Daniel Ortega.

Since mid-April, more than 100 people have been killed in confrontations with police during mass protests and what human-rights groups say are paramilitary gangs aligned with Mr. Ortega’s government.

Among...