To make the propaganda work with Americans, it was important to conceal the fact that elements of the Catholic hierarchy and La Prensa were being financed by the CIA and were coordinating with the Reagan administration's destabilization strategies. [See Robert Parry's Lost History.]
Evidence of Payments
In 1988, I discovered evidence of this reality while working as a correspondent for Newsweek magazine. At the time, the Iran-Contra scandal had undermined the case for spending more U.S. money to arm the Contras. But the Reagan administration continued to beat the propaganda drums by highlighting the supposed persecution of Nicaragua's internal opposition.
To fend off U.S. hostility, which also included a harsh economic embargo, the Sandinistas announced increased political freedoms. But that represented only a new opportunity for Washington to orchestrate more political disruptions, which would either destabilize the government further or force a crackdown that could then be cited in seeking more Contra aid.
Putting the Sandinistas in this "inside-outside" vise had always been part of the CIA strategy, but with a crumbling economy and more U.S. money pouring into the opposition groups, the gambit was beginning to work.
Yet, it was crucial to the plan that the CIA's covert relationship with Nicaragua's internal opposition remain secret, not so much from the Sandinistas, who had detailed intelligence about this thoroughly penetrated operation, but from the American people. The U.S. public would get outraged at Sandinista reprisals against these "independent" groups only if the CIA's hand were kept hidden.
A rich opportunity for the Reagan administration presented itself in summer 1988 when a new spasm of Contra ambushes killed 17 Nicaraguans and the anti-Sandinista internal opposition staged a violent demonstration in the town of Nandaime, a protest that Sandinista police dispersed with tear gas.
Reacting to the renewed violence, the Sandinistas closed down La Prensa and the Catholic Church's radio station -- both prime vehicles for anti-Sandinista propaganda. The Nicaraguan government also expelled U.S. Ambassador Richard Melton and seven other U.S. Embassy personnel for allegedly coordinating the disorders.
Major U.S. news outlets, which had accepted their role as treating the Sandinistas as "designated enemies" of the United States, roared in outrage, and the U.S. Congress condemned the moves by a margin of 94-4 in the Senate and 385-18 in the House.
Melton then testified before the Senate Intelligence Committee first in secret and then in public, struggling to hide the open secret in Washington that Nicaragua's internal opposition, like the Contras, was getting covert help from the U.S. government.
When asked by a senator in public session about covert American funding to the opposition, Melton dissembled awkwardly: "As to other activities that might be conducted, that's -- they were discussed -- that would be discussed yesterday in the closed hearing."
When pressed by Sen. Howard Metzenbaum on whether the embassy provided "encouragement -- financial or otherwise -- of dissident elements," Melton responded stiffly: "The ambassador in any post is the principal representative of the U.S. government. And in that capacity, fulfills those functions." He then declined to discuss "activities of an intelligence nature" in open session.
On the Payroll
In other words, yes, the U.S. government was covertly organizing and funding the activities of the supposedly "independent" internal opposition in Nicaragua. And, according to more than a dozen sources that I interviewed inside the Contra movement or close to U.S. intelligence, the Reagan administration had funneled CIA money to virtually every segment of the internal opposition, from the Catholic Church to La Prensa to business and labor groups to political parties.
"We've always had the internal opposition on the CIA payroll," one U.S. government official said. The CIA's budget line for Nicaraguan political action -- separate from Contra military operations -- was about $10 million a year, my sources said. I learned that the CIA had been using the Church and Cardinal Miguel Obando y Bravo to funnel money into Nicaragua.
Obando was a plodding but somewhat complex character. In the 1970s, he had criticized the repression of the Somoza dictatorship and expressed some sympathy for the young Sandinista revolutionaries who were trying to bring social and economic changes to Nicaragua.