Although the crisis in Central America derived primarily from domestic pressures, the region's growing instability during the 1980s had drawn the attention and intervention of numerous foreign actors, chief among them the United States, the Soviet Union, and concerned nations of Latin America. The Contadora negotiating process (named for the Panamanian island where it was initiated in January 1983) sought to hammer out a solution among the five Central American nations through the mediation of the governments of Mexico, Venezuela, Colombia, and Panama. The negotiations proved arduous and protracted. By mid-1985, the talks had bogged down. The Nicaraguan delegates rejected discussion of democratization and internal reconciliation as an unwarranted intervention in their country's internal affairs. Honduras, El Salvador, Guatemala, and Costa Rica maintained that these provisions were necessary to ensure a lasting settlement.

Another major point of contention was the cessation of aid to insurgent groups, particularly United States aid to the Contras. Although the United States government was not a party to the Contadora negotiations, it was understood that the United States would sign a separate protocol agreeing to the terms of a final treaty in such areas as aid to insurgents, military aid and assistance to Central American governments, and joint military exercises in the region. The Nicaraguans demanded that any Contadora treaty call for an immediate end to Contra aid, whereas all the other Central American states and the mediating countries, with the exception of Mexico, downplayed the importance of such a provision. In addition, the Nicaraguan government raised objections to specific cuts in its military force levels, citing the imperatives of the counterinsurgency campaign and defense against a potential United States invasion. In an effort to break this impasse, the governments of Argentina, Brazil, Peru, and Uruguay announced in July 1985 that they would join the Contadora process as a "support group" in an effort to resolve the remaining points of contention and achieve a comprehensive agreement.

Despite the combined efforts of the original "core four" nations and the "support group," the Contadora process unofficially came to a halt during June 1986 when the Central American countries still failed to resolve their differences sufficiently to permit the signing of a final treaty draft. The United States Congress's approval of military aid to the Contras during the same month hampered the process, according to representatives of most of the mediating countries. Although the mediators vowed to continue their diplomatic efforts and did convene negotiating sessions subsequent to the unsuccessful June 6 meeting in Panama City, the Contadora process was clearly moribund.

After the Contadora process stalled, the regional consensus of opinion seemed to be that a streamlined, strictly Central American peace initiative stood a better chance of success than one that included countries outside the region. During the course of the Contadora negotiations, the Honduran government had sought to achieve an agreement that would settle the Nicaraguan conflict in such a way as to assure eventual reassimilation of the Contras into Nicaraguan society. At the same time, the Honduran military had sought to maintain its expanded relationship with the United States. Paradoxically, the Honduran government found itself espousing positions similar to those supported by its traditional adversary, El Salvador. As a new democracy, Honduras also enjoyed support from the government of Costa Rica, a more established democracy. The government of Guatemalan president Marco Vinicio Cerezo Arévalo established a more independent position, but still supported the concept of a diplomatic solution to Central America's troubles.

Data as of December 1993