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My paper interprets the discrepant and often contradictory manifestations of human rights promotion in U.S. development policy in the lead up to the Sandinista Revolution by analyzing U.S. development assistance and Nicaraguan human rights discourse in the late 1970s. Under President Carter, the U.S. Department of State and Agency for International Development (AID) endeavored to integrate an abstract commitment to human rights promotion into a strategic program of development assistance to address growing anti-U.S. sentiment while maintaining the United States’ regional hegemony. In 1977 the U.S. approved a two and a half million dollar foreign military sales agreement with Anastasio Somoza, while delaying a ten million dollar loan to improve rural education and health. These decisions were based on divergent U.S. assessments of the human rights situation in Nicaragua. The State Department cited the regime’s lifting of the state of siege, end of censorship, and improved prison conditions to legitimate the military sales. Meanwhile, the Inter-Agency Committee on Human Rights and Foreign Assistance postponed program approval due to continued allegations of disappearances, torture, and corruption. In the view of the U.S. embassy in Nicaragua and the press corps the latter decision punished poor Nicaraguans who stood to benefit from the education and health programs while strengthening the army responsible for human rights violations. Local history undermines the position that U.S. development assistance substantially improved the lives of poor Nicaraguans and demonstrates the contrived application of human rights discourse in development programs.