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Iran–Contra affair

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In November 1986, a small Lebanese magazine called Ash-Shiraa published a story that would unravel one of the most audacious covert operations in American history. The revelation was stunning: the United States government, which had publicly championed a worldwide embargo against selling weapons to Iran, had been secretly shipping arms to that very country. Even more explosive, the profits from those sales had been funneled to rebel fighters in Nicaragua—a scheme that Congress had explicitly made illegal.

This was the Iran-Contra affair, and it would shake the Reagan administration to its foundations.

The Two Crises That Created a Scandal

To understand how American officials ended up running an illegal arms-for-hostages operation, you need to understand two separate crises that were consuming the Reagan White House in the early 1980s.

The first involved seven American hostages being held in Lebanon by Hezbollah, an Islamist paramilitary group with close ties to Iran's Islamic Revolutionary Guard Corps. These weren't abstract policy concerns—they were individual Americans whose faces appeared on news broadcasts, whose families pleaded for their release, whose captivity was a constant political embarrassment.

The second crisis was in Central America. In Nicaragua, a left-wing revolutionary movement called the Sandinistas had taken power in 1979. The Reagan administration viewed this as an unacceptable expansion of Soviet influence in America's backyard and was determined to overthrow the Sandinista government. Their chosen instrument was the Contras, a rebel group fighting a guerrilla war from bases in Honduras.

Here's where things got complicated. Congress, exercising its constitutional control over federal spending, passed a series of laws known as the Boland Amendments that progressively restricted and eventually prohibited American support for the Contras. By October 1984, the ban was total. No agency of the United States government involved in intelligence activities could spend money to support military operations in Nicaragua.

President Reagan's response to this legal prohibition was blunt. He ordered the National Security Council to keep the Contras together "body and soul," no matter what Congress had voted for.

The Enterprise

What emerged was an operation that its architects called "the Enterprise"—a deliberately bland name for something extraordinary. On paper, it was a private sector arms-smuggling network headed by Richard Secord, a retired Air Force officer turned arms dealer. In reality, it was controlled by the National Security Council and existed for one purpose: to circumvent the will of Congress.

The legal theory, such as it was, rested on a technicality. The Boland Amendment prohibited government agencies from spending money to support the Contras. But what if the money came from outside the government? What if it came from, say, profits generated by selling weapons to Iran?

This is where the two crises intersected in a way that seemed, to some Reagan officials, almost elegant. Iran was desperate for weapons. The country had inherited a massive arsenal of American-made military equipment from the Shah, the pro-Western monarch who had been overthrown in the 1979 Islamic Revolution. But weapons require spare parts, and after Iranian students seized the American embassy in Tehran and held sixty-six Americans hostage for 444 days, President Carter had imposed an arms embargo. Iran's American-made tanks and aircraft were slowly becoming inoperable just as the country found itself locked in a grinding war with neighboring Iraq.

An Iranian arms dealer named Manucher Ghorbanifar proposed a solution. What if the United States sold weapons to Iran? In exchange, Iran would pressure Hezbollah to release the American hostages in Lebanon. The profits from the arms sales could then be diverted to the Contras in Nicaragua.

It was a scheme that violated American policy on multiple fronts. The United States had designated Iran a State Sponsor of Terrorism in January 1984. The Reagan administration had launched Operation Staunch, a diplomatic campaign to persuade other nations not to sell weapons to Iran. And of course, funding the Contras was explicitly illegal under the Boland Amendment.

None of this stopped the operation from going forward.

The Israeli Connection

The weapons didn't flow directly from the United States to Iran. Instead, they went through Israel, which had its own complicated relationship with the Islamic Republic.

This might seem counterintuitive. Israel and revolutionary Iran were hardly friends—the Ayatollah Khomeini's government was vocally hostile to the Jewish state. But Israel had a strategic interest in keeping the Iran-Iraq war going as long as possible. As long as these two potential enemies were preoccupied with each other, they couldn't focus their attention on Israel. So Israel was willing to serve as an intermediary, shipping American weapons to Iran while the United States quietly agreed to replenish Israel's stockpiles.

The arrangement actually predated the formal Iran-Contra operation. As early as 1981, secret Israeli arms sales to Iran had begun, even as the Reagan administration was publicly campaigning to stop worldwide weapons transfers to the country. A high-ranking Israeli Defense Ministry official later acknowledged there was an "oral agreement" with Secretary of State Alexander Haig permitting these sales—though Haig's advisers denied any such understanding existed. A former Central Intelligence Agency official who saw reports of these sales estimated Israel was shipping roughly two billion dollars worth of arms to Iran annually.

By the summer of 1985, the relationship became more formalized. In July, the historian Michael Ledeen, serving as a consultant to National Security Adviser Robert McFarlane, approached Israeli Prime Minister Shimon Peres for help arranging arms sales to Iran. The Israelis put the Americans in touch with Ghorbanifar, the Iranian arms dealer who would serve as the intermediary.

The Paper Trail That Wasn't

One of the most remarkable aspects of the Iran-Contra affair was how thoroughly its architects tried to hide what they were doing—and how badly they failed.

When the story broke in November 1986, Reagan appeared on national television and made a claim that was, at best, misleading: while weapons transfers had occurred, the United States did not trade arms for hostages. This was a distinction without a difference. The entire premise of the operation was that weapons would flow to Iran and hostages would be released in return.

The investigation that followed was hampered from the start. Large volumes of documents relating to the affair were destroyed or withheld by Reagan administration officials. The shredding of evidence became itself a symbol of the scandal, particularly the actions of Lieutenant Colonel Oliver North, a National Security Council staff member who was central to the operation.

By March 1987, Reagan's position had evolved. In another nationally televised address, he took "full responsibility" for the affair and offered a telling admission: "What began as a strategic opening to Iran deteriorated, in its implementation, into trading arms for hostages."

The Constitutional Showdown

At its heart, the Iran-Contra affair represented a fundamental clash between the executive and legislative branches of the American government.

The Reagan administration's position was bold: because the Constitution assigns the conduct of foreign policy to the president, efforts to overthrow the Nicaraguan government were a presidential prerogative. Congress had no right to halt these efforts through the Boland Amendments.

Congressional leaders saw it very differently. The Constitution gives Congress control over federal spending. If Congress decided not to fund a particular activity—like overthrowing a foreign government—that was Congress's constitutional right. The president couldn't simply find other money to pursue policies that the people's elected representatives had rejected.

A key legal question was whether the National Security Council was covered by the Boland Amendment's prohibition on intelligence agencies supporting the Contras. The amendment banned spending by "the Central Intelligence Agency, the Department of Defense or any other agency or entity of the United States involved in intelligence activities." The Reagan administration argued the National Security Council didn't fall under this language. Most constitutional scholars disagreed.

General Colin Powell, who served as Deputy National Security Advisor during this period, later offered a straightforward assessment in his 1995 memoir. The weapons sales to Iran, he wrote, were used "for purposes prohibited by the elected representatives of the American people [...] in a way that avoided accountability to the President and Congress. It was wrong."

The Investigation and Its Aftermath

Three separate investigations examined the Iran-Contra affair. Congress conducted its own inquiry. Reagan appointed a three-person panel known as the Tower Commission. And Lawrence Walsh, the Deputy Attorney General, was named as an independent counsel to investigate potential criminal violations.

Neither congressional investigators nor the Tower Commission found evidence that Reagan himself knew the full extent of the operations being conducted in his name. This raised its own troubling questions—if the president didn't know what his own National Security Council was doing, what did that say about his management of the executive branch?

The criminal investigation was more consequential. Several dozen administration officials were indicted, including Defense Secretary Caspar Weinberger and Oliver North. Eleven were convicted.

But many of those convictions didn't stick. Some were overturned on appeal. And in December 1992, in the final days of his presidency, George H.W. Bush—who had been Reagan's vice president throughout the affair—issued pardons for six of the principal figures, including Weinberger.

Independent Counsel Walsh was scathing about what he saw as a cover-up. He noted that Bush's pardons came just as Weinberger's trial was about to begin—a trial that might have produced evidence implicating Bush himself. Walsh wrote of a pattern of "deception and obstruction" by Bush, Weinberger, and other senior Reagan officials.

In the end, only one Iran-Contra defendant served any prison time. Some received probation. Others had trials pending when the pardons came through. Walsh submitted his final report in August 1993 and later wrote a book about his experience titled "Firewall: The Iran-Contra Conspiracy and Cover-Up."

The Strange Bedfellows of Cold War Arms Dealing

The Iran-Contra affair was not the only instance of Cold War powers selling weapons to ideological enemies during this period. In 1986, at roughly the same time American officials were secretly arming Iran, East Germany's Stasi intelligence service was running its own complex arms operation.

A Danish-registered ship called the Pia Vesta was at the center of a scheme to sell Soviet weapons and military vehicles to South Africa's arms procurement agency. Various intermediaries were involved to create distance between the sellers and buyers. One of those intermediaries was Manuel Noriega, the Panamanian dictator who had also offered to help the United States against the Sandinistas by providing training facilities for the Contras.

Noriega ultimately backed out of the Soviet arms deal, and the ship was seized at a Panamanian port. The incident led to a minor controversy, with Panama and Peru accusing each other—and the United States—of involvement in a shipment that had actually originated in East Germany.

The episode illustrated a broader truth about Cold War arms dealing: ideological commitments often took a back seat to practical interests. Countries and individuals on all sides of the superpower divide were willing to sell weapons to whoever would pay for them.

Why the Embargo Failed

One of the more telling documents to emerge from the Iran-Contra investigation was a secret study conducted by senior Reagan administration officials in July 1981, just six months after Reagan took office.

The study concluded that the arms embargo against Iran was essentially ineffective. Iran could always purchase weapons and spare parts somewhere else. Meanwhile, by refusing to sell to Iran, the United States was potentially pushing the country toward the Soviet Union. If America wouldn't supply weapons, perhaps the Kremlin would.

The conclusion was that the United States should resume arms sales to Iran as soon as it became politically feasible. The problem was that political feasibility seemed far off. Ayatollah Khomeini had openly declared his intention to export his Islamic revolution throughout the Middle East, overthrowing the governments of Iraq, Kuwait, Saudi Arabia, and the other Persian Gulf states. Americans perceived him as a major threat.

So publicly, the Reagan administration maintained the embargo and even expanded it through Operation Staunch, the diplomatic campaign launched in 1983 to persuade other nations not to sell weapons to Iran.

This helps explain why the scandal was so damaging when it finally broke. The hypocrisy was breathtaking. The same administration that had been pressuring allies around the world to stop arming Iran had itself been secretly shipping weapons to Tehran. American credibility on the issue was destroyed in an instant.

The Memo That Revealed the Plan

In June 1985, National Security Adviser Robert McFarlane commissioned a draft National Security Decision Directive that laid out the logic behind reaching out to Iran. The memo was remarkably candid about American concerns:

Dynamic political evolution is taking place inside Iran. Instability caused by the pressures of the Iraq-Iran war, economic deterioration and regime in-fighting create the potential for major changes inside Iran. The Soviet Union is better positioned than the U.S. to exploit and benefit from any power struggle that results in changes from the Iranian regime [...]. The U.S. should encourage Western allies and friends to help Iran meet its import requirements so as to reduce the attractiveness of Soviet assistance [...]. This includes provision of selected military equipment.

The idea was that by providing weapons, the United States might cultivate relationships with supposedly moderate factions within the Iranian regime—officials who might be more amenable to improved relations with Washington. This would give America influence in whatever power struggles followed Khomeini's eventual death.

Not everyone in the administration was convinced. Defense Secretary Caspar Weinberger wrote a dismissive note on his copy of the memo: "This is almost too absurd to comment on [...] like asking Qaddafi to Washington for a cozy chat."

Secretary of State George Shultz raised a practical objection: the United States had designated Iran a State Sponsor of Terrorism just the previous year. How could America possibly sell weapons to a country it had officially labeled a terrorist state?

But CIA Director William Casey supported McFarlane's plan. And the operation went forward.

The Lessons That Weren't Learned

The Iran-Contra affair exposed deep tensions in the American system of government. When the executive branch believes its foreign policy goals are essential to national security, and the legislative branch disagrees strongly enough to cut off funding, what happens?

The Constitution doesn't provide a clear answer. It gives the president authority to conduct foreign policy but gives Congress control of the purse strings. The Iran-Contra affair showed what could happen when an administration decided to circumvent that congressional power rather than accept its constraints.

The scandal might have led to a serious reconsideration of the balance between executive secrecy and congressional oversight in foreign policy. Instead, the pardons issued by President Bush effectively ended the legal accountability. The political wounds healed as Reagan left office with his popularity largely intact. And the fundamental constitutional questions remained unresolved.

What the affair did demonstrate, beyond any doubt, was the capacity of determined officials to conduct major covert operations in defiance of explicit legal prohibitions—and the difficulty of holding them accountable after the fact. The combination of destroyed documents, appeals court reversals, and presidential pardons meant that the full truth of what happened, and who authorized it, may never be entirely known.

Oliver North, the Marine lieutenant colonel who became the public face of the scandal, would later run for Senate (he lost) and host a television show. Ronald Reagan would be remembered by many as one of the most successful presidents of the twentieth century. And the questions raised by the Iran-Contra affair—about executive power, congressional oversight, and the rule of law—would continue to resonate in American politics for decades to come.