Chapter 3 provides a concise history of Guatemala’s and Nicaragua’s highly divergent conflict dynamics, but also illustrates how similarly narrow and insulated counterinsurgent coalitions emerged. The chapter first describes the road to armed conflict in both countries. It then examines the variables central to the process of wartime institutional change: the perceived escalation of the insurgent threat and the creation of a narrow counterinsurgent elite coalition with heightened decision-making discretion. It chronicles two moments in the Guatemalan armed conflict (the late-1960s and mid-1970s) and one moment in Nicaragua’s Contra War (early to mid-1980s) in which state leaders perceived a marked increase in the threat posed by insurgent forces. Finally, it examines how this sense of state vulnerability reconfigured wartime structures of political power in both cases as state leaders sought to combat the mounting insurgent threat.