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American support for the long rule of the Somoza family had soured relations, and the FSLN government was committed to a Marxist ideology, with many of the leading Sandinista continuing long-standing relationships with the Soviet Union and Cuba. U.S. President Carter initially hoped that continued American aid to the new government would keep the Sandinistas from forming a doctrinaire Marxist-Leninist government aligned with the Soviet bloc, but the Carter administration allotted the Sandinistas minimal funding to start them off, and the Sandinistas resolutely turned away from the U.S., investing Cuban and East European assistance into a new army of 75,000. The buildup included T-55 heavy tanks, heavy artillery and HIND attack helicopters, an unprecedented military buildup that made the Sandinista Army more powerful than all of its neighbors combined. The Soviets also pledged to provide MiG 21 fighters, but, to the annoyance of the Sandinistas, the aircraft were never delivered.
Managua became the second capital in the hemisphere after Cuba to host an embassy from North Korea. Ironically, in light of the tensions between their Soviet sponsors and China, the Sandinistas allowed Taiwan to retain its mission and refused to allow a Chinese mission to enter the country.
The first challenge to the powerful new army came from the Contras, groups of Somoza's National Guard who had fled to Honduras. The Contras were soon under the control of Nicaraguan business elites who opposed Sandinista policies to seize their assets. The Contra chain of command included some ex-National Guardsmen, including Contra founder and commander Enrique Bermúdez and others. One prominent Contra commander, however, was ex-Sandinista hero Edén Pastora, aka "Commadante Zero," who rejected the Leninist orientation of his fellow comandantes.
After his election in 1980, President Ronald Reagan regarded relations between the United States and the Sandinista government as an active front in the Cold War. The Reagan administration focussed on the "Communist threat" posed by the Sandinistas, reacting particularly to the support provided to the Sandinistas by Cuban president Fidel Castro, and by the Sandinistas' close military relations with the Soviets and Cubans. They also sought to protect U.S. business interests, which it claimed were threatened by the policies of the Sandinista government. The United States attempted to overthrow the democratically-elected government of Nicaragua by expanding the supply of arms and training to the Contras in neighboring Honduras, as well as allied groups based to the south in Costa Rica. President Reagan called the Contras "the moral equivalent of our founding fathers" despite the fact that they had a reputation for brutal violence including hacking off limbs of anyone who opposed them.
American pressure against the government escalated throughout 1983 and 1984, including attacks on Nicaraguan ports and oil installations and the laying of magnetic mines outside Nicaraguan harbours, actions condemned as illegal in 1986 by the International Court of Justice. The U.S. refused to pay restitution and claimed that the ICJ was not competent to judge the case. The United Nations General Assembly passed a resolution in order to pressure the U.S. to pay the fine. Although only Israel and El Salvador, which was receiving massive amounts of military aid to fight its own guerrilla insurgency, voted with the U.S., the money still has not been paid. Jeane Kirkpatrick, the American ambassador to the UN under Reagan, criticized the Court as a "semi-judicial" body. The U.S. was legally bound by the court's decision, had signed the treaty and made use of the court in other cases. On May 1, 1985 Reagan issued an executive order that imposed a full economic embargo on Nicaragua, which remained in force until March 1990.
In 1982, legislation was enacted in the U.S. to prohibit further direct aid to the Contras. Reagan's officials attempted to illegally supply them out of the proceeds of arms sales to Iran and third party donations, triggering the Iran-Contra Affair of 1986-87. Mutual exhaustion, Sandinista fears of Contra unity and military success, and mediation by other regional governments led to the Sapoa ceasefire between the Sandinistas and the Contras on March 23, 1988. Subsequent agreements were designed to reintegrate the Contras and their supporters into Nicaraguan society preparatory in preparation for general elections.
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