U.S. political scandal of the 1980s, involving the secret sale of arms to Iran and the use of some of the proceeds to support a right-wing Nicaraguan guerrilla (see GUERRILLA WARFARE,) movement at a time when such aid had been barred by Congress.

Background.

The administration of President Ronald Reagan confronted two major foreign policy dilemmas in the mid-1980s, each with serious domestic policy implications.

Arms for hostages.

The first foreign policy dilemma concerned the fate of about a half-dozen Americans who were being held hostage by Islamic guerrillas in Lebanon. The guerrillas were known to have close ties to the Islamic government of Iran, with which the U.S. had been at odds since the late 1970s. Iran was desperate to buy weapons for its ongoing war with Iraq. At the same time, the government of Israel, pursuing its own security interests, did not want to see the government of the Iraqi revolutionary leader Saddam Hussein score a quick victory over the Iranians.

Beginning in 1985, acting on information from Iranian and Israeli emissaries, some U.S. officials came to believe that in exchange for the sale of U.S. weapons to Iran, the Tehran government would use its influence to gain freedom for the U.S. hostages in Lebanon. This arms-for-hostages plan had four important drawbacks. First, it contradicted President Reagan's publicly stated determination not to make deals with terrorists. Second, it contravened official U.S. policy not to sell arms to Iran. Third, it required absolute secrecy, since disclosure to Congress—and, through congressional leaks, to the public—would be extremely embarrassing. Fourth, there was no guarantee that the sale of arms to Iran would actually bring an end to the Lebanon hostage crisis. In fact, during 1985–86, while the U.S., with Israeli assistance, shipped thousands of missiles and other military hardware to Iran, the guerrillas took about as many new hostages as they released.

Aiding the contras.

The second, and initially unrelated, foreign policy dilemma was what to do about the Sandinista government in Nicaragua, which had come to power in 1979. The Reagan administration saw the left-wing regime as a beachhead for Communist subversion in Central America (see COLD WAR,) and was determined to support an antigovernment insurgency mounted by the Nicaraguan Democratic Resistance, generally known as the contras. The war was unpopular with Congress, however, in part because of the contras' ties to the corrupt Nicaraguan regime the Sandinistas had supplanted.

In December 1983, Congress imposed a cap of $24 million on spending by the CENTRAL INTELLIGENCE AGENCY to aid the contras. Sponsors of the measure expected that when the money ran out, the contra support program would be terminated, but that did not happen. Instead, authority over the program was transferred to the NATIONAL SECURITY COUNCIL (NSC), where clandestine efforts on behalf of the contras were coordinated by an NSC staff member, Lieut. Col. Oliver North (1943–    ). While the congressional ban on funds for the contras remained in effect, North and other Reagan administration officials solicited millions of dollars from private individuals and other countries to aid the contra cause.

North was also instrumental in negotiations leading to the sale of arms to Iran. More than $47 million flowed through a network of Swiss bank accounts controlled by North and his associates.

Disclosure, Investigation, and Prosecution.

The scandal unraveled rapidly in late 1986. The contra aid effort became public knowledge when the Sandinista government shot down a U.S.-operated supply plane on October 5 and captured one of the crew members a day later. On November 3 a Lebanese weekly broke the story of U.S. arms shipments to Iran. At a press conference on November 25, President Reagan and Attorney General Edwin Meese (1931–    ) revealed the existence of a memo written by North in early April that linked the two operations by specifying that $12 million from the arms sales would be used to aid the contras. Reagan and Meese also announced that National Security Adviser John Poindexter (1936–    ) had resigned and that North had been relieved of his duties.

Subsequent investigations focused on how much Reagan, Vice-President George Bush, and other top administration officials had known about the operations, and on the efforts of North, Poindexter, and others to conceal their activities from Congress and the public at large. Reagan appointed a blue-ribbon panel, headed by former U.S. Senator John Tower (1925–91) and known as the Tower Commission, which concluded that the president's “hands-off” management style had contributed to what the commission described as “an unprofessional and, in substantial part, unsatisfactory operation.” Public hearings conducted by a joint Senate–House committee between May and August 1987 painstakingly documented the intricate transactions and provided a public forum for testimony by more than 30 witnesses, including North and Poindexter, who testified under limited grants of immunity.

Appointed independent counsel in December 1986, Lawrence E. Walsh (1912–    ) issued his final report on the Iran-contra affair in August 1993. In the intervening period, his office charged 14 persons with criminal offenses and secured 11 convictions; some charges had to be dropped because the Reagan and Bush administrations refused prosecution requests to declassify certain documents so that they could be used at trial. North and Poindexter were separately tried and convicted on felony charges that included obstruction of Congress and destruction of documents, but both convictions were overturned on appeal, based on the defendants' claim that their immunized congressional testimony had tainted the proceedings against them. In October 1992, only a few days before the presidential election, Walsh took the highly controversial step of indicting former Defense Secretary Caspar Weinberger, citing a passage in Weinberger's 1986 notes which suggested that President Bush, who was seeking a second term, knew more than he had so far acknowledged about the arms-for-hostages arrangements. In December, shortly before leaving office, Bush pardoned Weinberger and five other former officials who were either awaiting trial or had been convicted on Iran-contra charges.