This chapter examines the reasons for the instability in Latin America during the Cold War. The oil crisis of 1973–4, followed by trade deficits, depression, and high inflation, helped promote revolutionary ideas among the landless peasants and urban poor of many Latin American countries. Under Jimmy Carter, with his interest in promoting human rights, a more active and enlightened US policy towards Latin America might have been expected. However, his aims were inconsistent, as the moral cause of human rights clashed with local realities and other American interests. The chapter first considers the Reagan Doctrine and Ronald Reagan’s meddling in El Salvador before discussing the involvement of the US in Nicaragua and the ‘Contragate’ scandal. It concludes with an assessment of the US invasions of Grenada and Panama.