What role did `Plan Colombia' – the United States' counter-narcotics aid package –play in the dynamics of Colombia's peace negotiations? This article explains how `Plan Colombia' can be perceived as a strategic move by the Pastrana Administration to overcome the protracted stalemate in the peace negotiations between the government and the Revolutionary Armed Forces of Colombia (FARC). Using basic tools from game theory, it is shown how `Plan Colombia' could have created incentives for both parties to move towards bilateral concession. However, it is argued that due to the absence of an imminent threat, the incentive structures were not altered sufficiently to induce the parties to compromise. A distinct consequence of `Plan Colombia' is that it irreversibly linked the United State's interest in the Colombian internal conflict to the issue of narcotics.