Nicaragua (1979-90)
See also: Iran-Contra affair
Further information: Psychological Operations in Guerrilla Warfare

Following the rise to power of the left-wing Sandinista government in Nicaragua, the Ronald Reagan administration ordered the CIA to organize and train the Contras, a right wing guerrilla group. On December 1, 1981, President Reagan signed an initial, one-paragraph "Finding" authorizing the CIA's paramilitary war against Nicaragua.[63]

The Republic of Nicaragua vs. The United States of America[64] was a case heard in 1986 by the International Court of Justice which found that the United States had violated international law by direct acts of U.S. personnel and by the supporting Contra guerrillas in their war against the Nicaraguan government and by mining Nicaragua's harbors. The US was not imputable for possible human rights violations done by the Contras. The Court found that this was a conflict involving military and para-military forces and did not make a finding of state terrorism.

Florida State University professor, Frederick H. Gareau, has written that the Contras "attacked bridges, electric generators, but also state-owned agricultural cooperatives, rural health clinics, villages and non-combatants." U.S. agents were directly involved in the fighting. "CIA commandos launched a series of sabotage raids on Nicaraguan port facilities. They mined the country's major ports and set fire to its largest oil storage facilities." In 1984 the U.S. Congress ordered this intervention to be stopped, however it was later shown that the CIA illegally continued (See Iran-Contra affair). Professor Gareau has characterized these acts as "wholesale terrorism" by the United States.[65]

In 1984 a CIA manual for training the Nicaraguan Contras in psychological operations was leaked to the media, entitled "Psychological Operations in Guerrilla War".[66]

The manual recommended “selective use of violence for propagandistic effects” and to “neutralize” government officials. Nicaraguan Contras were taught to lead:

...selective use of armed force for PSYOP psychological operations effect.... Carefully selected, planned targets — judges, police officials, tax collectors, etc. — may be removed for PSYOP effect in a UWOA unconventional warfare operations area, but extensive precautions must insure that the people “concur” in such an act by thorough explanatory canvassing among the affected populace before and after conduct of the mission.
—James Bovard, Freedom Daily[4]

Former State Department official William Blum, has written that "American pilots were flying diverse kinds of combat missions against Nicaraguan troops and carrying supplies to contras inside Nicaraguan territory. Several were shot down and killed. Some flew in civilian clothes, after having been told that they would be disavowed by the Pentagon if captured. Some contras told American congressmen that they were ordered to claim responsibility for a bombing raid organized by the CIA and flown by Agency mercenaries."[67] According to Blum the Pentagon considered U.S. policy in Nicaragua to be a "blueprint for successful U.S. intervention in the Third World" and it would go "right into the textbooks".[68]

Colombian writer and former diplomat Clara Nieto, in her book "Masters of War", describes the Reagan administration as "the paradigm of a terrorist state" remarking that this was "ironically, the very thing Reagan claimed to be fighting."