Iran-Contra Weapons Scandal Taints Reagan’s Administration Summary

  • Last updated on November 11, 2022

U.S. weapons were sold to Iran and funds from the sale were secretly provided to the Contras, the anticommunist rebels seeking to overthrow the government of Nicaragua. A series of federal investigations raised questions of balance of power between the executive and legislative branches of government in the United States. Several top government officials were implicated in the scandal and more faced indictments.

Summary of Event

Two secret, interrelated U.S. government operations, both conducted by staff of the U.S. National Security Council (NSC) and both of which violated U.S. law and stated policy, were exposed in November, 1986. One operation encompassed the sale of arms to Iran to attempt to secure the release of U.S. hostages in the Middle East while the other operation used profits from the sale of these arms to fund the Contras, the anticommunist rebels in Nicaragua. The Iran-Contra affair, as the operations collectively came to be known, represented the most serious scandal involving a U.S. president since that of Watergate in 1972-1974. [kw]Iran-Contra Weapons Scandal Taints Reagan’s Administration (Nov. 13, 1986-May 4, 1989) [kw]Reagan’s Administration, Iran-Contra Weapons Scandal Taints (Nov. 13, 1986-May 4, 1989) North, Oliver Reagan, Ronald [p]Reagan, Ronald;Iran-Contra[Iran Contra] Iran-Contra weapons scandal[Iran Contra weapons scandal] Central Intelligence Agency, U.S.;Iran-Contra scandal[Iran Contra scandal] Communism;in Nicaragua[Nicaragua] Nicaragua Iran North, Oliver Reagan, Ronald [p]Reagan, Ronald;Iran-Contra[Iran Contra] Iran-Contra weapons scandal[Iran Contra weapons scandal] Central Intelligence Agency, U.S.;Iran-Contra scandal[Iran Contra scandal] Communism;in Nicaragua[Nicaragua] Iran Nicaragua [g]Central and South America;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [g]Middle East;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [g]United States;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [g]Iran;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [g]Nicaragua;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [c]Drugs;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [c]Government;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [c]Politics;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [c]Military;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [c]Corruption;Nov. 13, 1986-May 4, 1989:Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] [c]International relations;Nov. 13, 1986-May 4, 1989: Iran-Contra Weapons Scandal Taints Reagan’s Administration[02230] Secord, Richard V. McFarlane, Bud Poindexter, John M. Casey, William J. Weinberger, Caspar

Marine lieutenant colonel Oliver North testifies in July, 1987, before a joint congressional committee investigating the Iran-Contra affair.

(AP/Wide World Photos)

During Ronald Reagan’s first term as U.S. president, several events set the stage for the Iran-Contra affair. First, Iran and Iraq;war with Iran Iraq were engaged in a bitter civil war that began in 1980. Second, Hezbollah and other Middle East terrorist groups began taking more and more Western hostages, including U.S. citizens. Third, the Marxist Sandinistas, who took control of Nicaragua in 1979, were supporting leftist movements in other parts of Central America, particularly El Salvador. Reagan believed the Sandinistas were communists.

U.S. laws forbade trading arms with Iran following the events of 1979-1981, when Iranian students backed by their government seized and held American embassy staff hostage for 444 days. President Reagan had publicly pressured other nations to refrain from selling weapons to Iran. He reemphasized U.S. policy that mandated against negotiating with terrorists or making concessions to them.

At the same time, the Reagan administration, which took a hard line against communism around the world, also offered training and funds to anticommunist governments and movements through the Reagan Doctrine. In 1981, Reagan had approved covert support for the anti-Sandinista guerrilla groups that came to be known as the Contras, the anticommunist rebels in Nicaragua. However, in 1982, the U.S. Congress passed the Boland Amendments, which restricted U.S. Department of Defense and U.S. Central Intelligence Agency anticommunist military actions in Nicaragua. Reagan, seemingly emboldened by the attempt to curtail his support of the Contras, then instructed his national security adviser, Bud McFarlane, to keep the Contras together, “body and soul.”

After Reagan’s overwhelming reelection as president in 1984, certain representatives of the Iranian government contacted the United States about the possibility of buying weapons for its use against Iraq. U.S. policymakers debated the move. While Secretary of State George Shultz and Secretary of Defense Caspar Weinberger opposed the transaction, it was supported by CIA director William J. Casey and McFarlane. Casey and McFarlane reasoned that the sale not only would improve relations with Iran but also could hasten the release of American hostages held in Lebanon and other locations.

Reagan, who was adamant about freeing the hostages, one of whom was a CIA agent being brutally tortured, approved the sale of weapons on July 18, 1985. At first, the arms were funneled through Israel;and Iran-Contra[Iran Contra] Israel to Iran, with the United States promising to reimburse Israel with the same weapons. However, the resignation of McFarlane as national security adviser in December changed the nature of the operation. On the same day that John C. Poindexter replaced McFarlane, a military aide working at the NSC came up with two new ideas pertaining to the sale of missiles and other arms to Iran. That aide, U.S. Marine lieutenant colonel Oliver North, proposed selling weapons to Iran directly. In a move that brought the two operations together, North also suggested using the profits from the sale of arms to Iran to fund the Contras. Poindexter asked North to manage the operation, and North turned for assistance to retired U.S. Air Force general Richard V. Secord.

For the arms-sale ruse to work, the price of U.S. arms was inflated by as much as fifteen million dollars. Additionally, an Iranian arms broker who facilitated the transactions placed his own markup on the purchases. The overcharge for the weapons angered Iran and almost ruined the deal. However, by the time the sales and diversion were discovered, Iran had paid about thirty million dollars for several shipments of TOW missiles and assorted spare parts for HAWK antiaircraft missiles. One shipment of eighteen HAWK missiles was rejected by Iran.

While the Iranian initiative unfolded, Poindexter struggled to carry out Reagan’s directive to hold the Contras together. North, who handled operational details, brought Secord in to help in the Contra operation. North and Secord 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. The Enterprise had 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 in November, 1986.

Following the downing of an Enterprise cargo plane that was supplying the Contras in Nicaragua on October 6, 1986, the combined operations began to unravel. The lone survivor of the crash initially stated that the two persons killed in the plane crash were CIA agents. A book of telephone numbers found in the wreckage traced the plane to an airbase in Central America.

On November 3, a Lebanese newspaper, Al-Shiraa, broke the story of the weapons-for-hostages deal between Iran and the United States. On November 13, after ten days of White House denials over the story, Reagan admitted that there had been some sort of a deal, but he insisted that it was a deal to provide to Iran “small amounts of defensive weapons and spare parts for defensive systems” in an attempt to lessen the “animosity” between the United States and Iran. He added that about one thousand TOW missiles were involved and that the sale included only the United States and Iran as participants. Reagan misstated the facts, however.

Over the next few days, the Justice Department continued to investigate the matter, and on November 22 it found what would become a critical April, 1986, memo from North to the president that outlined how the “residual funds” from the arms sales would be diverted to aiding the Contras. Simultaneously, Attorney General Meese, Edwin, III Edward Meese III discovered that only twelve million of the thirty million dollars paid by Iran for the U.S. arms had been deposited in the U.S. treasury. Meese briefed Reagan about the diverted funds on November 24 and announced it publicly the next day before Congress and the full Reagan cabinet. They also announced that Poindexter resigned and North was removed from his job with the NSC and reassigned with the Marine Corps. It was later divulged that North had destroyed pertinent evidence about the operations over a five-day period in late November.

On December 1, Reagan appointed former Texas senator John Tower to chair a commission to investigate the matter. Not to be left out, the U.S. Senate and House of Representatives set up investigative committees in early January, 1987. The Tower Commission Tower Commission released its report on the scandal on February 26. A special prosecutor, independent counsel Lawrence E. Walsh, was appointed to investigate as well, and his report was released over a five-month period beginning on August 4, 1993.

The Tower Commission Report was the product of ten weeks of research that included the testimony of fifty-six witnesses. Though placing primary responsibility for the operations on the president’s staff, the report chided Reagan for being out of touch and for failing to oversee the implementation of his own administration’s policies. Televised congressional committee hearings into the scandal started on May 5 and lasted three months. They included 250 hours of testimony from twenty-eight witnesses, and they riveted television viewers. The congressional Iran-Contra committees issued their reports on November 18.

Congress largely agreed with the Tower Commission that Reagan’s detached management style was to blame for the scandal, though it found that Reagan was unaware of the diversion of funds to the Contras. The congressional report identified several violations of law, including failure to notify Congress of covert U.S. operations, diversion of federal funds for purposes prohibited by Congress, tampering with and destroying official documents, and lying to or misleading Congress.

On March 16, 1988, North, Poindexter, Secord, and several others were indicted on conspiracy to defraud the United States, theft of government property, and wire fraud. North’s charges included obstruction of congressional investigations, making false statements to a congressional committee and the attorney general, shredding and altering official documents, acceptance of an illegal gratuity from Secord in the form of a home-security system, conversion of traveler’s checks, and tax-fraud conspiracy. Eleven persons were convicted. The convictions of Poindexter and North were overturned on appeal. Most of the public’s attention to the Iran-Contra scandal diminished after May 4, 1989, with the end of North’s trial.

On December 24, 1992, U.S. president Bush, George H. W. [p]Bush, George H. W.;Iran-Contra[Iran Contra] George H. W. Bush—who had been vice president during Reagan’s presidency—pardoned six persons associated with the Iran-Contra scandal. The pardon of Weinberger kept him from being tried on charges of Perjury;Caspar Weinberger[Weinberger] perjury and making false statements. The pardon of McFarlane occurred after he pleaded guilty and was sentenced to probation and community service. The seven-year investigation by the independent counsel cost $48.5 million, which accounted for almost one-fourth of total funds spent by twenty-two special prosecutors on unrelated cases from 1978 to 1999.

After the 1986 discovery of the Iran-Contra operations, several investigations by think tanks, congressional committees, and journalists focused on the question of whether the CIA had engaged in criminal activity by financing the purchase of arms with the proceeds from illegal drug sales. Though the results of previous probes were inconsistent, a 1998 report by the CIA inspector general confirmed that the Contras were involved in drug trafficking and that their activities had been protected from law enforcement by the Reagan administration. The report stated that North and the NSC were aware of drug transactions by the Contras.

Impact

The Iran-Contra scandal had consequences on several levels. First, President Reagan suffered a twenty-one-point decline in his approval rating after the dual operations were discovered in November, 1986. This represented the largest drop of presidential popularity within a month’s time ever recorded. The revelations put the Reagan White House on the defensive, where it remained for almost all of the ensuing year. In March, 1987, Reagan admitted in a press conference that his previous assertions that the United States had not traded arms for hostages were incorrect.

Throughout the summer months, the televised congressional hearings into the scandal kept the public’s attention. The deep decline in the stock market in the fall of 1987 only compounded the image problem for the White House. However, time seemed to heal the public’s view of the president’s performance. By the end of 1988, Reagan’s popularity rating was close to where it had been before the scandal broke.

A second result of the Iran-Contra scandal was increased acrimony between the executive and legislative branches of federal government. That Reagan was the first of four chief executives in succession to experience split or opposition party control of Congress meant that the Reagan administration would have challenges in dealing with the legislature. Still, the Reagan team had an extremely successful initial year in 1981, enjoyed a forty-nine-state victory in the 1984 Presidential campaigns, U.S.;1984 Presidential campaigns, U.S.;Ronald Reagan[Reagan] presidential election, and even had some notable second-term achievements, such as tax reform. However, the discovery that the president and his staff carried out the Iran-Contra operations in secret and violated several laws did not sit well with Congress. In like fashion to the post-Watergate period, Congress sought to curtail unilateral executive authority to restore a balance of power. For example, the Senate rejected the nomination of Bork, Robert Robert Bork for the U.S. Supreme Court in October, 1987, and Congress overrode three of President Reagan’s vetoes after the Iran-Contra operations became public.

A third consequence of the Iran-Contra affair was the scandal’s international ramifications. Unquestionably, the sale of arms to Iran adversely affected the U.S.-led campaign against international terrorism. Not only did the operation contradict the policy of no negotiations with terrorists, it also likewise gave enemies of the United States the impression that the United States was prepared to offer concessions to hostage-takers.

The immediate result of America’s effort to gain release of its citizens held in Lebanon and elsewhere was nil: while three American hostages were released, others were subsequently taken and held for ransom. The expressed goal for the Iran operation—for the United States to improve relations with that nation—was similarly a failure. In 1987, the two nations traded attacks in the Persian Gulf after Iranian forces launched a missile at a tanker under U.S. escort. In 1988, a U.S. warship shot down an Iranian passenger jet after mistaking it for an F-14 fighter, killing all 290 persons aboard.

A final legacy of the Iran-Contra scandal involves its impact on the principal participants other than President Reagan. It was assumed that Vice President Bush was aware of the activities related to the Iran-Contra operations. However, he was not directly linked with the day-to-day running of the operations. The political damage suffered by Bush was minor. He was able to secure the 1988 Republican nomination and win the Presidential campaigns, U.S.;George H. W. Bush[Bush01] Presidential campaigns, U.S.;1988 presidential election that year. Other participants in the operations went on to work in the administrations of Bush and, later, his son, George W. Bush.

Perhaps the person most responsible for the scandal, North, fared best. North retired from active military duty and became a television commentator, syndicated columnist, and speaker for various conservative causes. Nicaragua Iran North, Oliver Reagan, Ronald [p]Reagan, Ronald;Iran-Contra[Iran Contra] Iran-Contra weapons scandal[Iran Contra weapons scandal] Central Intelligence Agency, U.S.;Iran-Contra scandal[Iran Contra scandal] Communism;in Nicaragua[Nicaragua]

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Carter, John J. Covert Action as a Tool of Presidential Foreign Policy: From the Bay of Pigs to Iran-Contra. Lewiston, N.Y.: Edwin Mellen Press, 2006. Focuses on the ongoing tensions between an executive branch that tries to subordinate the intelligence community and that community’s desire to play a major role in policymaking. Includes a chapter on Reagan and the Iran-Contra scandal.
  • citation-type="booksimple"

    xlink:type="simple">DeGregorio, William. The Complete Book of American Presidents. New York: Gramercy Books, 2001. Chapter on the Reagan presidency includes an extensive description of the Iran-Contra affair.
  • citation-type="booksimple"

    xlink:type="simple">Draper, Theodore. A Very Thin Line: The Iran-Contra Affairs. New York: Hill and Wang, 1991. A definitive account of the Iran-Contra scandal from a source not associated with the U.S. government.
  • citation-type="booksimple"

    xlink:type="simple">Kitts, Kenneth. “The Politics of Scandal: The Tower Commission and Iran-Contra.” In Presidential Commissions and National Security: The Politics of Damage Control. Boulder, Colo.: Lynne Rienner, 2005. An account of “the highly political, behind-closed-doors world of blue-ribbon investigative commissions convened in the aftermath of national security crises,” including the Iran-Contra affair.
  • citation-type="booksimple"

    xlink:type="simple">Martin, Al. The Conspirators: Secrets of an Iran-Contra Insider. Pray, Mont.: National Liberty Press, 2002. Every scandal has its conspiracy theories. This book explores the idea of an untold Iran-Contra conspiracy.
  • citation-type="booksimple"

    xlink:type="simple">Mayer, Jane, and Doyle McManus. Landslide: The Unmaking of the President, 1984-1988. Boston: Houghton Mifflin, 1989. A substantial part of this book about Ronald Reagan’s second term as president is dedicated to the Iran-Contra scandal.
  • citation-type="booksimple"

    xlink:type="simple">North, Oliver L., with William Novak. Under Fire: An American Story. New York: HarperCollins, 1991. North’s own telling of the Iran-Contra story is controversial, as many of its key claims have been disputed by others.
  • citation-type="booksimple"

    xlink:type="simple">Walsh, Lawrence E. Firewall: The Iran-Contra Conspiracy and Cover-Up. New York: W. W. Norton, 1997. Detailed account of events by the independent counsel for the Iran-Contra investigation from 1986 to 1993.

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