Iran-Contra Scandal

U.S. government officials violated national policy by conducting the secret sale of arms to Iran and diverting the profits to Contra guerrillas who were attempting to overthrow the Nicaraguan government.

Summary of Event

In November, 1986, secret operations conducted in Iran and Nicaragua by the staff of the U.S. National Security Council National Security Council (NSC) became public, and the ensuing scandal endangered the presidency of Ronald Reagan. Reagan was the key figure in what became known as the Iran-Contra affair. He set policy for his administration but left the daily operations of government to his subordinates. In 1985, Donald Regan Regan, Donald became Reagan’s White House chief of staff, and Bud McFarlane was national security adviser, succeeded in December, 1985, by John M. Poindexter. These hardworking but politically insensitive men carried out Reagan’s policy without questioning its wisdom or legality. Iran-Contra scandal[Iran Contra scandal]
[kw]Iran-Contra Scandal (Nov. 13, 1986-May 4, 1989)
[kw]Scandal, Iran-Contra (Nov. 13, 1986-May 4, 1989)
Iran-Contra scandal[Iran Contra scandal]
[g]North America;Nov. 13, 1986-May 4, 1989: Iran-Contra Scandal[06230]
[g]United States;Nov. 13, 1986-May 4, 1989: Iran-Contra Scandal[06230]
[c]Diplomacy and international relations;Nov. 13, 1986-May 4, 1989: Iran-Contra Scandal[06230]
[c]Government and politics;Nov. 13, 1986-May 4, 1989: Iran-Contra Scandal[06230]
[c]Crime and scandal;Nov. 13, 1986-May 4, 1989: Iran-Contra Scandal[06230]
McFarlane, Bud
North, Oliver
Poindexter, John M.
Reagan, Ronald
[p]Reagan, Ronald;Iran-Contra scandal[Iran Contra scandal]
Secord, Richard V.

Reagan inherited two problems that, together, led to the Iran-Contra affair. On January 16, 1979, followers of the Muslim leader in Iran, the Ayatollah Khomeini, Khomeini, Ayatollah overthrew the ruler of Iran, Mohammad Reza Shah Pahlavi, Mohammad Reza Shah Pahlavi a longtime U.S. ally. The Reagan administration believed that the new government of Iran supported international terrorist organizations, including groups that had kidnapped Kidnappings several U.S. citizens who were being held in Lebanon. Through Operation Staunch, Operation Staunch Washington pressured U.S. allies not to sell arms to Iran. On June 30, 1985, Reagan proclaimed that the United States would not bargain with kidnappers: “The United States gives terrorists no rewards. We make no concessions. We make no deals.”

The second problem began on July 17, 1979, when the Nicaraguan dictator, Anastasio Somoza Debayle, Somoza Debayle, Anastasio was overthrown by Sandinista forces led by Daniel Ortega Saavedra. The Reagan administration believed that the Sandinistas Sandinistas were communists, and on November 17, 1981, Reagan approved covert support for the anti-Sandinista guerrilla groups that came to be known as the Contras, Contras whom Reagan regarded as heroic freedom fighters. Many members of Congress believed that U.S. involvement in a Nicaraguan civil war could lead to a quagmire similar to the Vietnam War. Beginning in late 1982, Congress passed legislation, called the Boland Amendments, Boland Amendments (1982) that prohibited the U.S. Department of Defense and the Central Intelligence Agency Central Intelligence Agency from conducting military operations in Nicaragua. Reagan then instructed his national security adviser, McFarlane, to keep the Contras together, “body and soul.”

The Iran and Contra covert operations became joined because they were both conducted by the staff of the National Security Council. Those who were involved in Iran-Contra had varied motives. McFarlane was concerned that the United States had no policy in place to try to influence outcomes in Iran in the event of the aged Khomeini’s death. Others, especially President Reagan, became obsessed with the plight of the U.S. hostages held in Lebanon.

Israel also influenced events. In July, 1985, the Israeli government informed McFarlane that it had established contact with moderate elements in Iran’s government in Tehran who wanted to improve relations with the United States. To demonstrate the seriousness of both parties, the Iranian moderates would persuade the Lebanese to release the U.S. hostages, and the United States would sell arms to Iran, then engaged in a long and bloody war with Iraq. If Washington approved, Israel would act as intermediary, selling Iran the arms and replenishing its stock by making purchases from the United States. Secretary of State George P. Shultz Shultz, George P. and Secretary of Defense Caspar Weinberger Weinberger, Caspar opposed the transfer, which they recognized as an arms-for-hostage trade that violated U.S. policy. Reagan, however, approved the sale. In August and September, 1985, Israel transferred 504 TOW missiles to Iran. Only one kidnap victim was freed, however, rather than all seven as the United States had expected.

In November, 1985, the United States began to handle the arms shipments directly rather than using Israel as an intermediary. McFarlane asked NSC staff member Lieutenant Colonel Oliver North to manage the operation, and North turned for assistance to retired U.S. Air Force general Richard V. Secord.

In December, 1985, McFarlane resigned as national security adviser and was replaced by John Poindexter, who left North in charge of the operation. Despite repeated disappointments in getting hostages released, the NSC staff, with Reagan’s support, continued shipping weapons to Iran. In May, 1986, Reagan asked McFarlane to conduct a special secret mission that took him to Tehran. After fruitless negotiations with various shadowy figures, McFarlane broke off talks and returned home. Two hostages were freed in July and one in October, but two additional U.S. citizens were kidnapped in September, 1986.

While the Iranian initiative unfolded, Poindexter struggled to carry out President Reagan’s directive to hold the Contras together. North, who handled operational details, brought Secord in to help in the Contra operation. The two men set up an organization they called the Enterprise to help carry out their activities. As Congress cut off funds for Contra military operations, North headed a campaign to raise money from private donors, and he secretly funneled millions of dollars from Saudi Arabia to the Contras through a network of nonprofit organizations and Swiss bank accounts. North and Secord’s Enterprise owned aircraft, warehouses, arms and other supplies, ships, and boats, and even had a hidden runway located in Costa Rica. North, with McFarlane’s and Poindexter’s knowledge, had created a secret government organization operating outside the authority of Congress.

In his search for funds, North intermingled the Iran and Contra operations. He diverted profits from Iranian arms sales to the Contras. This diversion of funds became the focal point of the investigations that began when news of the operations surfaced.

On October 6, 1986, the Sandinistas shot down an Enterprise airplane and captured a U.S. crew member. Four weeks later, on November 3, 1986, a Lebanese newspaper published an account of the secret McFarlane mission to Tehran. Investigative reporters scrambled for information on both stories. Because North had intermingled the secret operations, any discoveries about one endangered the other.

Lieutenant Colonel Oliver North testifies on July 7, 1987, about the Iran-Contra affair.

(AP/Wide World Photos)

On November 13, Reagan made a televised speech to the nation, followed a few days later by a press conference. The news media scoffed at the president’s claim that the Iranian operation was not an arms-for-hostages deal, and the press conference was riddled with misstatements of facts. Many Reagan advisers, who had watched Richard M. Nixon’s Nixon, Richard M. presidency destroyed during the Watergate scandal, pressed the president to get the full, accurate story before the public as quickly as possible.

On November 21, 1986, Reagan asked Attorney General Edwin Meese III Meese, Edwin, III to investigate the matter. As Meese started his probe, North began to destroy potentially incriminating documents. On November 22, however, Meese’s aides uncovered a memo that disclosed North’s diversion of funds from the Iranian arms sales to the Contras. After Meese informed Reagan of the diversion, Poindexter resigned and North was fired from the NSC staff. Several investigations soon got under way, and on March 16, 1988, North, Poindexter, and Secord were indicted on conspiracy to defraud the United States and other charges. Most of the American public’s attention to the Iran-Contra scandal diminished after May 4, 1989, with the end of North’s trial, which resulted in convictions on three counts.


Ronald Reagan’s quick action in ordering investigation of the Iran-Contra affair helped to minimize the damage to his presidency. The diversion of Iranian funds to the Contras became the focal point of the investigation, and the news media and Congress searched for evidence that Reagan had known of North’s activity. This search diverted attention from the broader problems associated with the notion that the White House was bargaining with a terrorist nation and conducting operations that were hidden from Congress. The highly publicized congressional investigation foundered when Poindexter testified that Reagan did not know of the diversion. Poindexter said that he had not told Reagan of the diversion because he wanted to protect the president in case the operation was ever disclosed.

Reagan’s presidency was damaged, but his popularity began to recover as he and Soviet premier Mikhail Gorbachev held a series of summit meetings that resulted in agreements to control nuclear arms. As Cold War tensions eased, the implications of the Iran-Contra affair became less worrisome to the public, and Reagan left office as one of the most popular presidents in history. Iran-Contra scandal[Iran Contra scandal]

Further Reading

  • Busby, Robert. Reagan and the Iran-Contra Affair: The Politics of Presidential Recovery. New York: Palgrave Macmillan, 1999. Focuses on the effects the Iran-Contra scandal had on Reagan’s presidency and on how Reagan had to work to reestablish his credibility in the aftermath of the affair. Includes bibliographic notes and index.
  • Cohen, William S., and George J. Mitchell. Men of Zeal: A Candid Inside Story of the Iran-Contra Hearings. New York: Viking Press, 1988. A forthright account of the Iran-Contra hearings by two senators, a Republican and a Democrat, who served on the investigating committee.
  • Draper, Theodore. A Very Thin Line: The Iran-Contra Affairs. New York: Hill & Wang, 1991. An excellent starting place for a study of Iran-Contra, written by a journalist who clearly mastered the available documentary evidence.
  • Ledeen, Michael A. Perilous Statecraft: An Insider’s Account of the Iran-Contra Affair. New York: Charles Scribner’s Sons, 1988. A description of the Iranian operation from a person who worked closely with the Israelis during the early part of the affair.
  • North, Oliver L., with William Novak. Under Fire: An American Story. New York: HarperCollins, 1992. North’s own telling of the Iran-Contra story is controversial, as many of its key claims have been disputed by others.
  • Walsh, Lawrence E. Firewall: The Iran-Contra Conspiracy and Cover-Up. New York: W. W. Norton, 1997. Detailed account of events by the man who served as independent counsel for the Iran-Contra investigation from 1986 to 1993. Includes illustrations and index.
  • Wroe, Ann. Lives, Lies, and the Iran-Contra Affair. New York: I. B. Tauris, 1991. An evenhanded account of the Iran-Contra affair by a British journalist. Includes reference notes and index.

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