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The Iran-Contra Scandal – Covert Affair in the 1980s

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Nicaraguan Contra Rebels

Nicaraguan Contra Rebels


Even though Ronald Reagan was an esteemed president during his time in office, his administration was often caught in scandals that led to the indictment or conviction of over 190 administration officials under charges of illegal activity. The Iran-Contra affair was unquestionably the most famous scandal that plagued the Reagan administration and that involved Reagan directly. The scandal emerged after the discovery that President Reagan authorized two clandestine overseas operations in Iran and Nicaragua, and interfered directly in their evolution.

The administration facilitated arms sales to Iran using Israel as a mediator, despite an arms embargo set previously by President Carter, with the goal of releasing several American hostages caught in the Lebanese war. In the same period, they also supported the antigovernment militants in Nicaragua known as Contras, in an attempt to overthrow the communist government, even though a specific law prohibited American involvement in the political affairs of the Latin country.

When the information leaked to the public, the political scene of the United States caught on fire, making Americans doubt the decisions of their chief executive.


The Contra Rebels in Nicaragua

It all started in July 1979, when the dictator Anastasio Somoza was overthrown in Nicaragua, and a new pro-soviet and leftist militant group took power. Daniel Ortega Saavedra became the leader of the new Sandinista government. In the Unites States, the Reagan administration was conflicted about an appropriate course of action concerning the changes in Nicaragua.

Many liberals from the administration and the Congress did not see a serious threat in the Sandinistas, which appeared to them as idealists focused on reforming the country. The general opinion was that the U.S. involvement in the state affairs of another country would simply lead to another unnecessary conflict such as the Vietnam War. Conservatives, however, were still caught in the Cold War mentality. They warned Reagan that letting communism spread in Latin America was a mistake that would affect the United States later. As a fervent anticommunist, Reagan agreed with the conservative views.

In February 1981, the administration decided to suspend all aid to Nicaragua, yet during the following months, Reagan gave his silent authorization to his National Security officials for running covert operations to bring down the communist Nicaraguan government. To be able to run a covert operation, the CIA supported the growth of an anti-Sandinista rebel movement, known as the Contras. Reagan was convinced that the Contras were the only hope of ensuring the return of freedom and the annihilation of communism in Nicaragua. The U.S. operations in Nicaragua received hundreds of millions of dollars in funding and led to the death of thousands of people.

By the end of 1982, news about the struggles in Nicaragua reached the media, and the Congress grew hostile towards the entire affair. With a vote of 411 to 0, the Congress passed the Boland Amendment, which banned the use of funds for antigovernment operations in Nicaragua, and set a limit to the amount of aid for the Contras. Having no other choice than to accept the unanimous vote, Reagan signed the bill. The anti-Sandinista campaign was taken over entirely by the National Security Council, with marine Lt. Col. Oliver North in charge of all covert military operations.

As soon as the funding for CIA operations in Nicaragua reached the bottom, Reagan decided to find other methods for supporting the Contras. He demanded National Security advisers Robert McFarlane and John Poindexter to do whatever was possible to maintain the operations in Nicaragua running. With no more access to funds in the United States, McFarlane and North sought help from other countries and private contributors. They received donations from Saudi Arabia, the sultan of Brunei, but also the governments of South Korea, Taiwan, South Africa, and Israel. Using his personal influence, Reagan appealed to wealthy businessmen, raising by himself millions of dollars.

Despite all Reagan’s efforts, the resistance movement in Nicaragua went through many difficulties in 1984, especially after Ortega Saavedra won 60% of the vote in the presidential election. In the same year, the American Congress passed a revised version of the Boland bill, completely barring aid to the Contra movement.

While at the surface, things were strictly settled, North and his supporters from the National Security Council continued their covert operations using the money raised by private means. They set up their own organization, “the Enterprise”. Clearly violating the Boland Amendment, they armed and trained the Contra rebels. The entire story went public in October 1986, when an American plane was shot down in Nicaragua, and crewman Eugene Hasenfus was taken hostage by the Sandinistas. Reagan refuted accusations of a government involvement, and the story was overshadowed by a bigger scandal since around the same period the media began covering America’s covert operation in Iran.

Money Flow Chart

Money Flow Chart

The Sale of Arms to Iran

At the beginning of 1979, the Islamic fundamentalist Ayatollah Khomeini and his followers overthrew the pro-American shah of the Pahlavi dynasty, and installed a new government in Iran. The relations between the United States and Iran suffered a quick deterioration, as many of Khomeini’s followers and Khomeini himself were hostile towards the U.S. The American embassy staff was taken hostage by the militant forces of the government. After more than a year of negotiations, the hostages were released, yet the angry tension between the two countries continued. The conflict intensified in 1983 when Iran went to war with Iraq. The American administration initiated Operation Staunch to ensure that other countries would not deliver arms to Iran, under the accusation that Iran was backing international terrorism.

American involvement in Iran did not stop here. In November 1984, an Iranian businessman Manucher Ghorbanifar proposed to the Reagan administration a partnership. He offered to rally moderates within Iran against the Soviet Union by providing them with arms from the United States. To assure the Reagan administration of their good intentions, the moderates offered to release four American hostages captive in the war-ridden Lebanon. When the Shah was still in power, the United States was the arms seller that provided Iran with the vast majority of its weapons, which were later inherited by the Islamic Republic of Iran. However, after the Iran hostage crisis, President Jimmy Carter placed an arms embargo on Iran.

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While the Israeli intelligence forces considered that the existence of a moderate group in Iran was highly plausible, the CIA did not believe Ghorbanifar’s story, arguing that the man was in fact working with agents of the Khomeini government. However, the National Security advisers McFarlane and Poindexter, and the president himself accepted the Israeli version. Reagan felt it was his duty to fight for the release of the hostages in Lebanon. The deal was to sell TOW antitank missiles to Iran in exchange for four or more hostages. Even though several other advisers, including Secretary of State Schultz opposed the deal, Reagan decided to comply to the agreement, with Israel as an intermediary.

In July 1985, Reagan publicly accused Iran of being part of a “confederation of terrorist states” while proclaiming his adamant refusal to make any concessions to terrorists. A month later, however, Israel delivered ninety-six TOW missiles to Iran, yet no hostages were freed. The sales continued and in September, Iran received another 408 missiles, paying through Israel. Only one hostage was released. The initial agreement transformed into a full arms-for-hostages transaction between the American administration and the Ayatollah himself, not the moderate faction as presumed. Schultz’s bleak predictions proved to be right. Since Iran was at war with Iraq, the Iranian government desperately needed arms. The story about the moderate group had only been a diversion. Moreover, the trade of arms for hostages went not only against American policy, but also against the law, since President Jimmy Carter had put an arms embargo on Iran. Nevertheless, Reagan gave his approval for another trade, sending to Iran even more sophisticated weaponry. Since no other hostages were released, the leaders of the Reagan’s administration argued against the sale.

Determined to set free every one of the hostages, Reagan decided to continue the trade, despite the fact that the Iranian government had become greedier. In January 1986, Reagan agreed to a sale of four thousand missiles between Israel and Iran. Despite releasing several hostages, Lebanese militants took others instead. At the end of the operation, Lebanon still held many American hostages. Meanwhile, North was secretly sponsoring the Contras in Nicaragua with the money from the arms sales to Iran, to the consternation of his superior MacFarlane who had no idea what North had been doing.

Map of Iran

Map of Iran

The Iran-Contra Scandal

By the end of the 1986, information about the covert actions in Nicaragua and Iran started to leak. Reagan was warned about the rumors and advised to reveal to the public the issues that had been going on, yet he held a press conference and denied all accusations. He was confronted by the Secretary of State, who was angry for having had his fair predictions dismissed. Cornered, Reagan asked the Attorney General Meese for a full investigation of the affair. North covered his tracks by destroying large amounts of incriminating documents.

The investigations progressed with difficulty since many other documents relating to the two operations were either destroyed or hidden by administration officials. The reputation of Reagan’s administration suffered under the weight of several heated debates and televised congressional hearings.

A scandal ensued on the public scene, and several other investigations were launched. The press hurried to uncover every single detail of the scandal, which led to a massive drop in Reagan’s approval rate, from 67% to 36%. The investigations revealed that Oliver North had been diverting funds to the Contras in Nicaragua, despite the law signed by Reagan in 1982.

The U.S. Attorney General Edwin Meese admitted that the Contra rebels in Nicaragua had been supported with the money raised from the arms sales to Iran. Reagan expressed his consternation officially and seemed to have not been aware of the actions of his senior officials. During a Special Review Board headed by the former senator John Tower, known as the Tower Commission, uncovered that Reagan had become very passive in the past few months and was unable to recall with clarity his decisions. McFarlane admitted that he had not informed the president about the transfer of funds because the president’s attention span did not encourage conversation. Years later, when Reagan was diagnosed with Alzheimer’s disease, many argued that the disease could explain why he had often seemed out of touch.

Violence has been Nicaragua's most important export to the world.

— President Ronald Reagan

The Outcome

Numerous members of the Reagan administration were forced to resign while the nation’s foreign policy was transferred under the command of Schultz. Eleven members of the administration staff were convicted, yet no one was sent to jail. In the spring of 1988, former national security adviser Robert McFarlane pleaded guilty to withholding information from Congress and later attempted suicide.Two convictions were overturned in court, including that of North, and all the other indicted or convicted officials were pardoned by President George H.W. Bush in his final days of presidency. Oliver North remained confident during his testimony, and many saw him as a patriot and defender of the right-wing values, who struggled to contain communism.

Several reports, including that of Tower, concluded that the president held responsibility for the Iran-Contra affair. In March 1987, Reagan finally admitted that an arms-for-hostages trade had been implemented with his knowledge. In a televised speech from the Oval Office, he addressed the American public, taking full responsibility for the actions committed under his administration. The story was humiliating for the entire American diplomatic staff that had put strong efforts to convince other countries not to sell arms to the Islamic Republic of Iran, in respect to the Operation Staunch. Vice President Bush was also forced to acknowledge his implication in the operations.

While it is clear that Reagan firmly supported the Contra movement, there is not enough evidence to know whether he agreed to use the profit from the arms sales to Iran for funding the anticommunist rebels in Nicaragua. The lengthy investigations were unable to determine the full extent of his implication on the multiple running actions. There are, however, indications that Reagan was indeed willing to respond to any charge of illegality in his attempts to have the hostages released. In his later autobiography, he claimed that the sole reason for which he agreed to the trade was to secure the safety release of the hostages.

Despite the massive blow of the scandal, many Americans believed in Reagan’s good intentions. Nonetheless, the Iran-Contra affair remains one of the major deceptions of political administration in the history of the United States, being placed as an example of post-truth politics.

Iran-Contra Affair Video


© 2017 Doug West

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