Origin and Development of the Contra Conflict

  1. The efforts of the Nicaraguan Contra organizations to unseat the Sandinista Government in Nicaragua spanned much of the 1980s but had their roots in earlier events. A 1911 treaty between the United States and Nicaragua gave the United States the right to intervene in Nicaraguan affairs, and U.S. Marines were dispatched to Nicaragua in 1912 to protect U.S. economic interests. The two-decade military occupation that followed helped foster the development of a guerrilla opposition, led by Augusto Cesar Sandino, that sought to rid Nicaragua of U.S. influence. The U.S. Marines left Nicaragua in 1933, but opposition to Nicaraguan National Guard Commander Anastasio Somoza Garcia, who had then assumed power, continued thereafter.
  2. In 1961, the Frente Sandinista de Liberacion Nacional (FSLN) was founded in Havana when Carlos Fonseca's Nicaraguan Patriotic Youth organization merged with Tomas Borge's Cuban-supported insurgent group. From its inception through the early 1970s, the FSLN was a marginal group that failed to marshal popular support or succeed in its low-level guerrilla war. The 1972 earthquake that devastated the capital city of Managua, however, changed the nature of the conflict. Support for the rebels increased because of the Somoza Government's profiteering from international relief efforts. Thereafter, fighting between FSLN elements and the National Guard steadily increased. The 1978 assassination of Pedro Joaquin Chamorro, editor of the opposition newspaper La Prensa, brought new protests that swept the country and swelled the ranks of the FSLN with new recruits. Additionally, non-Marxist resistance groups began to join with the FSLN, leading ultimately to the creation of a Broad Opposition Front. The Front sought to draw people from all economic classes, ages and professions into the anti-Somoza opposition.
  3. In February 1979, the U.S. Department of State (DoS) announced that the United States would suspend all new economic and military aid to Nicaragua because of Somoza's unwillingness to accept a negotiated settlement. The suspension of U.S. aid pulled the last support from under Somoza, and he fled the country in July. After Somoza's departure, Sandinista forces moved into Managua and assumed power. The United States quickly extended diplomatic recognition and offered aid. Despite the American actions, the new Sandinista Government turned increasingly against the United States and moved closer to Cuba and the Soviet Bloc. The Cubans were particularly active in educational programs that featured a strong pro-Marxist, anti-U.S. bias.
  4. The leadership of the post-Somoza Government, known as the Government of National Reconstruction (GRN), was initially a five-person directorate led by Daniel Ortega. It was composed of two FSLN members, a leftist intellectual and two moderate business representatives from the Broad Opposition Front. Before the inaugural session of a new national assembly, known as the Council of State, the FSLN unilaterally increased the total number of seats. This ensured FSLN control of the assembly and led the moderate business members of the directorate, Alfonso Robelo and Violetta Chamorro, Pedro's widow, to resign in April 1980.
  5. Despite promising free elections, free enterprise, an independent judiciary, and an end to political oppression, the Sandinistas seized television and radio stations, censored La Prensa, and established a Cuban-modeled internal security apparatus. In 1980, the Sandinista Government announced that it would not hold national elections until 1985. This convinced many Nicaraguans that the prospects for a true democracy were growing dimmer under FSLN dominance. In published statements, Sandinista officials expressed their desire for better relations with the United States and insisted that they had no intention of supporting insurgencies aimed at subverting their neighbors. Their actions, however, began to raise additional doubts. Weapons and equipment sent by Cuba through Nicaragua began making their way to rebels in El Salvador.
  6. During the Carter Administration, the United States was in "competition" with Cuba for the allegiance of the Nicaraguan Government and hoped that friendly relations could be maintained. Although President Carter authorized aid to the GRN, he also authorized support to the democratic elements in Nicaragua in the fall of 1979 because of the direction of the Sandinista's policies. In January 1981, Carter suspended financial aid to the GRN. The incoming administration of President Reagan continued this policy. Concern about the Sandinista's internal repression, their growing military force, their ties to the Soviet Bloc, and their support for the Salvadoran insurgency led Washington to consider ways to increase assistance to the regime's opponents. These opponents came to be called the Contras.
  7. Several groups of Contras began to emerge in the early 1980s. The Democratic Revolutionary Alliance (ARDE) and the Sandino Revolutionary Front (FRS) operated out of bases along Nicaragua's southern border with Costa Rica, while the Nicaraguan Democratic Force (FDN) operated out of camps in southern Honduras along Nicaragua's northern border. Initially, the FDN in the north was primarily composed of former National Guardsmen, although its membership and leadership diversified as the war progressed. ARDE and the FRS in the south were composed primarily of former Sandinistas. Following a merger of ARDE and FRS, both the FDN and ARDE/FRS relied on the U.S. Government for military and monetary aid. Both suffered significantly from the cessation by Congress of official U.S. aid between 1984 and 1986. During this time, these groups appealed to other governments and private sources for funds to continue their political and military efforts against the Sandinistas.
  8. Although the Sandinista military was larger and better equipped, the FDN and ARDE posed a serious threat to the Sandinista Government because of the economic damage they caused to the Nicaraguan infrastructure. The FDN emerged by 1987 as an effective force, and it actually controlled areas of northern Nicaragua for a time.
  9. In 1985, the United Nicaraguan Opposition (UNO) was formed to represent a coalition of Northern and Southern Front Contra groups. However, UNO was fraught with personality and ideological conflicts and made little progress in developing a political program that enhanced the Contra's appeal. As a result, UNO dissolved in early 1987 and was replaced by the Nicaraguan Resistance (RN) in May 1987. The RN expanded the resistance assembly, incorporated previously unrepresented blocs to broaden its appeal, and directed military operations along the Northern and Southern Fronts.
  10. In March 1988, both the Contras and Sandinistas, exhausted by the conflict and encouraged by the United States and Central American governments, signed a cease fire agreement. A series of agreements reached at Tesoro Beach, El Salvador in February 1989 and Tela, Honduras in August 1989 defined the framework that ended the conflict. The Contras were permitted to return to Nicaragua and compete in open elections monitored by international observers. On February 25, 1990, Violetta Chamorro, leader of the National Opposition Union political alliance, defeated Daniel Ortega in the Nicaraguan presidential election. On April 25, 1990 she took office, and the remaining Contra forces began demobilization.

Central Intelligence Agency Involvement with the Contras

  1. As the Sandinistas assumed control of the Nicaraguan Government (GRN), suppressing political opposition and deferring elections, many early supporters broke with the regime and left Nicaragua. Exiled mostly in Costa Rica, Honduras and the United States, many formed groups seeking the overthrow of the Sandinista Government. By 1981, groups of resistance fighters in Honduras, in particular, had sought military assistance from the Honduran Government.
  2. In 1981, DCI William Casey created the Central America Task Force (CATF) at CIA. A Presidential Finding, signed by President Reagan in December 1981, authorized Agency covert and paramilitary operations, facilitated through friendly governments, against Cuban and Sandinista targets involved in arms trafficking to insurgents in Central America. The Agency was initially allocated $19 million to support and conduct political and paramilitary operations in Nicaragua and elsewhere in Central America. Substantial numbers of Agency officers and amounts of equipment began arriving in Honduras in January 1982.
  3. CIA personnel became involved in building and maintaining the Contra forces. The Agency established a primary base of operations in Honduras. This base supported the FDN, led by Enrique Bermudez and Adolfo Calero. Airfields throughout the region were used to support Contra forces, and CIA personnel also trained Contra fighters and served as advisors to the leadership.
  4. In 1982, CIA also began to provide support to Creole and Indian groups operating in Eastern Nicaragua and to the group of former Sandinistas under the leadership of Eden Pastora that was based in Costa Rica. The Agency provided support to Pastora and the allied Sandino Revolutionary Front/Democratic Revolutionary Alliance groups (FRS/ARDE) from 1982 to 1984.
  5. To ensure CIA's program did not go beyond arms interdiction, Congress enacted an Intelligence Authorization Act in December 1982 that prohibited CIA from supplying money, arms, training, or support to any individual or organization seeking to overthrow the GRN or involved in provoking military confrontations between Nicaragua and Honduras. Despite this restriction, in 1983 the pace of Contra operations increased along both the Northern and Southern Fronts as newly trained fighters were deployed. With the quickening pace of military action, the Agency struggled to keep up with Contra demands for additional materiel.
  6. In September 1983, the Agency was given greater latitude in its relationship with the Contra forces by a new Presidential Finding that changed the objective of Contra support from interdicting arms trafficking to bringing the Sandinistas into peace negotiations. Congress, however, capped CIA spending on the Contra effort in December 1983 at $24 million. After CIA mining of Nicaraguan seaports became public knowledge, Congress denied a supplemental request by CIA for $21 million.
  7. By August 1984, the funding allotted for CIA support to the Contras had been expended. Additional legislation was enacted in October 1984 that precluded the Agency from providing paramilitary assistance to the Contra forces over the next two years. During this period, the combat effectiveness of the Contra forces declined.
  8. In the absence of U.S. support, Contra organizations successfully appealed to other governments and private sources for funds to continue their war effort. Under National Security Council (NSC) official Oliver North's direction, a network of companies and facilities was established in an effort to supply the Contras. The level of support, however, did not meet the overall needs of the Contras, and the Reagan Administration sought from Congress a resumption of direct aid to be managed by CIA.
  9. In October 1986, after considerable debate in Congress, the Agency was authorized to provide paramilitary support to the resistance forces and $100 million was allocated to this purpose for Fiscal Year 1987, beginning in October 1986. The legislation that authorized this assistance contained a provision that barred aid to any group whose members were found to have engaged in "gross violations of internationally recognized human rights . . . or drug smuggling, or significant misuse of public or private funds." By January 1987, CIA was providing large quantities of supplies and new weaponry. Extensive training was also provided to Contra fighters. The peak of military activity for the Contras came in 1987 when 10,000 to 12,000 personnel were infiltrated into Nicaragua to conduct guerrilla operations.
  10. In November 1986, U.S. Attorney General Edwin Meese announced that proceeds from the sale of arms to Iran had been "diverted" to the Contras at a time when U.S. military aid to the Contras was prohibited. Congressional support for the Contras waned dramatically as a result of investigations into the Iran-Contra affair in 1987. No additional funding for paramilitary support was appropriated by Congress after the expiration of the $100 million program in 1987. By December 1988, only humanitarian aid was being provided by the United States to Contra forces, although the Agency was still permitted to share intelligence with the Contras. As the Agency withdrew, the U.S. Agency for International Development took over responsibility for administration of the humanitarian aid program. Lacking continued access to military supplies, Contra forces began returning to their base camps outside Nicaragua, effectively ending offensive military operations.
  11. Building on a March 1988 cease fire agreement, the incoming Bush Administration sought to complete a negotiated settlement to end the fighting. Both the Contras and Sandinistas, exhausted by the war, supported a series of agreements in February 1989 and August 1989 that defined the framework to end the conflict.

Chronology of Key Developments Related to the Contra War


Broad Opposition Front formed. Backed by Cuba, Venezuela, Costa Rica.

February -- U.S. Government suspends all new economic and military aid to Nicaragua.

July -- Somoza flees. Provisional Government of National Reconstruction (GRN) formed. Sandinistas turn government leftward.


September -- Sandinistas suspend elections, take control of media.


March -- DCI Casey establishes Central America Task Force.

August -- Opposition groups form on northern and southern borders of Nicaragua.

December --


September -- Contra combat action begins.

December -- Boland Amendment, enacted as part of the Defense Appropriations Act of 1983, prohibits CIA and Department of Defense (DoD) from spending money to support activities designed to overthrow the Sandinista Government.


July -- Boland-Zablocki legislation bars aid to Contras, but allows arms interdiction.

September Presidential Finding authorized CIA to support, equip, train paramilitary resistance groups.

December -- Defense Appropriations Act includes $24 million Contra assistance program, but sets cut off for September 30, 1984.


February -- Mining of Nicaraguan harbors begins.

April -- Mining operations become public knowledge.

May -- La Penca Bombing. Pastora injured, several killed prior to press conference where Pastora planned to denounce CIA pressure for him to align with the FDN.

September -- Authorized appropriations for DoD and CIA support to the Contra program end. Prohibition in effect until December 1985.

Late 1984 -- NSC fund-raising efforts channel cash, goods to Contras until May 1986.


April -- President Reagan declares economic embargo on Nicaragua.

June -- Pastora's military forces driven out of Nicaragua Contra coalition, United Nicaraguan Opposition (UNO) formed.

August -- Humanitarian assistance bill leads to creation of Nicaraguan Humanitarian Assistance Office (NHAO) at Department of State.

December -- Intelligence Authorization Act authorizes CIA to provide communications equipment, intelligence to the Contras.


January -- Presidential Finding discontinues lethal assistance to Contras.

April -- Senate Subcommittee on Terrorism, Narcotics and International Operations (Kerry Committee) opens an investigation into alleged illegal gun running and narcotics trafficking associated with the Contra War.

June -- Miami Herald reports NSC violation of Boland restrictions.

October --

December -- Independent Counsel (Walsh) named to investigate Iran-Contra affair.


May -- Nicaraguan Resistance (RN) unites Contra groups. Start of joint Congressional hearings on Iran-Contra.

November -- Sandinistas announce readiness for indirect talks with Contras. Joint Congressional investigation report released on Iran-Contra.

December -- $100 million appropriated funds expended, CIA support reduced to intelligence sharing.


January -- Sandinista President Daniel Ortega agrees to direct talks with Contras.

February -- House of Representatives rejects Contra funding request.

March -- Tentative cease-fire signed.

December -- Senate Subcommittee on Terrorism, Narcotics and International Operations (Kerry Committee) report published.


February -- Tesoro Beach Agreement calls for supervised elections and Contra disarmament.

August -- Tela agreement sets timetable for Contra disarmament, elections.


February -- Sandinistas defeated in national election.

April -- Violetta Chamorro assumes office; Contras begin demobilization.

Cocaine Flows through Central America in the 1980s

  1. Movement of Cocaine through Central America. Throughout the 1980s and thus far in the 1990s, South American traffickers have used the Central American isthmus as an important secondary route for cocaine and marijuana transshipment operations, for importing drug refining chemicals and for laundering large sums of narcotics revenues. Traditional maritime drug smuggling routes throughout the Caribbean (the Yucatan, Windward and Mona Passages) continued to be important trafficking routes to the United States throughout the period. The Central American countries became more important staging areas and transshipment points for South American narcotics during the 1980s as Mexican traffickers began to handle a larger share of cocaine trafficking.
  2. Central America and some Caribbean islands offer favorable locations for drug trafficking. Their geographic proximity to major narcotics producing countries in South America and to the United States make this area a natural route for transporting illicit drugs northward. The thousands of remote islands, unpatrolled waterways, extensive coastlines, clandestine airstrips, and generally unguarded borders all facilitate drug trafficking. By the early 1980s almost all countries in the area were serving as transshipment, staging, or refueling points for boats and planes that carried cocaine to the United States. By refueling their aircraft and boats in Central America and the Caribbean, the traffickers greatly enhanced their chances of entering the United States undetected. They could bypass such choke points as the Yucatan Channel and Windward and Mona Passages and avoid Florida, where interdiction efforts were beginning to be concentrated. During the late 1970s and early 1980s, cocaine transiting Central America went to such diverse areas as Louisiana, Texas, Colorado, Georgia, West Virginia, and New York.
  3. In the 1980s, large cocaine trafficking organizations frequently controlled fleets of small aircraft--many with sophisticated communications gear and reconfigured with extra fuel tanks--that were used to carry drugs, people and money between Latin America and the United States. These operations were supported by a network of airfields, some of which were fairly large with concrete runways, others of which were small dirt strips. The organizations also had sizable numbers of trucks, small and large boats, helicopters, and other forms of transport needed to move the drugs from remote growing areas to clandestine processing sites and eventually to the U.S. market. By the end of the decade, major trafficking organizations were showing a greater preference for shipping larger loads via maritime routes and commercial conveyances and containers as well as utilization of various free trade zones.
  4. There are no authoritative estimates of the quantities of cocaine moved through Central America in the 1980s. However, the major routes were known to U.S. authorities and air and maritime transport were thought to be the primary trafficking modes. By 1996, however, it was estimated that the commercial and noncommercial maritime smugglers were shipping three times more cocaine than was being moved by air.
  5. While comprehensive cocaine movement figures are not available for the mid-1980s, a reasonable conclusion is that they would be roughly similar in relative magnitude to what was measured in the late 1990s. Noncommercial vessels--usually "go-fast" boats--most likely provide the primary means by which traffickers currently move cocaine into the Central America-Caribbean transit zone. Roughly 60 percent of the total amount of cocaine that is annually destined for the United States traverses the Eastern Pacific and the Western Caribbean up the Central America-Mexico corridor including about 10 percent that moves directly through Central America. Another 10 percent passes through the Caribbean directly to the United States. The remaining 30 percent enters the Caribbean and is then transshipped to the United States.
  6. Production and Export of Cocaine from South America. Within South America, cocaine is moved over a number of major routes. From the Peruvian growing areas, most cocaine base is moved by air, rivers and roads to Peru-Bolivia-Brazil border areas and is then flown to Colombia for processing into finished powder cocaine. Cocaine base from Bolivian growing areas is increasingly being processed into finished powder within Bolivia. Some Peruvian cocaine base is also moved by land to the Pan American Highway and transported from Peru through Ecuador to Colombia.
  7. Cocaine is a stimulant drug produced from the leaf of the coca bush, which grows almost exclusively in South America. Approximately 85 percent of the world's coca supply is grown in Peru and Bolivia, while the remaining 15 percent is grown in such areas as the rain forests of Colombia. Since the late 1960s, Colombia has dominated the processing and trafficking of cocaine manufactured from coca grown in Bolivia and Peru. However, until the late 1980s, Colombia produced relatively little coca.
  8. Extraction of cocaine is a process that usually requires three separate steps. After the coca leaf is harvested, it is first processed into coca paste and then turned into cocaine base. Coca paste and cocaine base are produced, in most cases, to ease transport by reducing the size of the product. In recent years, the paste manufacture stage is being bypassed, with coca being processed directly into cocaine base. Cocaine base is then processed into finished powder cocaine.
  9. Crack cocaine that is consumed in the United States is generally made from cocaine that has been imported into the United States. Crack cocaine is a form of smokeable, or "freebase," cocaine that was developed in the mid-1970s. Crack appeared in the early 1980s as an alternative to chewing, drinking, injecting, or inhaling the drug. In smokeable form, the drug is delivered to the brain more quickly and has a more intense effect. Crack is made by dissolving the drug in water, adding a material such as baking soda, and heating the mixture until "rocks" of crack are formed. This is a very simple process that can be performed near the final point of sale. Since crack is sold in smaller units than cocaine that is inhaled, the cost per dose is lower to the user. The dealer pays the same amount to a wholesaler for cocaine, alters it into the crack form, and makes up to four times higher profit than from the powdered form of the drug.

Results of Previous Investigations into Alleged Contra Drug Trafficking

  1. With the intersection of political, economic, geographic, and military factors in Central America affecting the Contra movement, allegations of arms smuggling, profiteering, corruption, drug trafficking, etc., developed early and were propagated during the period under review. Several previous investigations have explored allegations that the Contra effort was funded with the proceeds of drug trafficking. The relevant findings of these and other relevant investigations are summarized below.
  2. Iran-Contra Investigations. Between August 1985 and October 1986, the U.S. Government facilitated the sale of missiles and spare parts to the Government of Iran. In November 1986, the existence of these sales became publicly known. Moreover, there appeared to be a link between these sales and efforts to obtain the release of American hostages held in Lebanon by terrorists. On November 21, 1986, President Reagan instructed Attorney General Meese to conduct an inquiry for the purpose of compiling a "complete factual record" with respect to the Iran arms sale.
  3. On November 25, 1986, the Attorney General publicly announced that his inquiry had produced evidence that some of the funds obtained from the Iran arms sales had been diverted to the Contras to support their war against the Sandinista Government of Nicaragua. This had occurred at a time when restrictions on U.S. Government assistance to the Contras had been imposed by Congress under legislation commonly referred to as the Boland Amendments.
  4. As a result of these revelations, several official investigations were initiated. These included inquiries by the President's Special Review Board (the "Tower Commission"),te Select Committee on Intelligence, the House Select Committee to Investigate Covert Arms Transactions with Iran, the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition , and an Independent Counsel appointed pursuant to the Ethics in Government Act--the Independent Counsel for Iran/Contra Matters, Lawrence Walsh. In addition to these inquiries, CIA's Inspector General conducted a series of investigations focusing on the role of the Agency and the Agency's employees in the sale of arms to Iran and the provision of assistance to the Contras. On September 1, 1987, DCI William Webster appointed a Special Counsel to review the results of these inquiries and make recommendations for administrative action.
  5. CIA Investigations. The CIA OIG conducted four examinations of Iran-Contra activities, but none included the issue of drug trafficking allegations involving the Contras. A July 1987 review focused on Agency compliance with congressional restrictions regarding support to the Contras from 1984-87. A second investigation reviewed the Agency's role in the sale of missiles to Iran and the diversion of profits from those sales to the Contras. A third review was a "Special Investigation into Certain Activities of the Chief of Station San Jose." In addition to these CIA/IG reviews, DCI Webster's Special Counsel issued a "Report of the Special Counsel to the Director of Central Intelligence Concerning the CIA's Role in the Iran-Contra Matter" on December 15, 1987.
  6. Report of the Joint Congressional Committees Investigating the Iran-Contra Affair. A November 1987 "Report of the Congressional Committees Investigating the Iran-Contra Affair" was issued jointly by the House Select Committee to Investigate Covert Arms Transactions with Iran and the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition. In the course of this investigation, the Committees obtained and reviewed a large volume of documents from CIA and other sources and conducted interviews with CIA personnel. An appendix to this report contained a July 23, 1987 memorandum, titled "Allegations Re: Contra Involvement with Drug Smuggling" that was written by an investigator for the House Committee. It discussed allegations of Contra involvement in drug smuggling and stated:
  1. The July 1987 memorandum noted that, during the investigation,

Nonetheless, the appendix reported:

  1. The Joint Congressional Committee report also contained another appendix titled, "Organization and Conduct of the Committees' Investigation." Among other things, this appendix discussed the investigation of the Contra's sources of funds and stated:

An investigator involved in this examination, a retired FBI Special Agent, reiterates this point and says that "the [Certified Public Accountants] who were charged with auditing the Contra bank accounts found no evidence of influxes of cash attributed to drugs." He says that bank accounts examined included Contra organizations bank accounts in the Bank of Commerce and Credit International and personal bank accounts. According to the investigator, the sources of all the money in these accounts were accounted for and much came from third country contributors.

  1. The Joint Congressional Committee report also explained in detail the procedures used to track the Contra funds in another appendix.