What could 2 countries halfway around the world from each other - one in the Middle East and on in Central America - possibly have in common? Iran and Nicaragua were tied together in the 1980s in one of the most bizarre political scandals in our history. This is the story of how a shadow government under popular President Ronald Reagan ran a foreign policy secret from the Congress and secret from the American people.
Ronald Reagan was elected in 1980 on a sweeping conservative agenda, His ability to go on the television and persuade Americans that his conservative, anti-communist policies were right was unmatched. He could argue for supporting any armies in a faraway place as long as they were fighting communism. At the same time, he could argue for "constructive engagement" with the overtly racist Apartheid system in South Africa. Like every President, Reagan faced an impossible situation in the Middle East. In 1983 a Marine barracks was blown up in Lebanon costing the lives of 241 Marines. While the hostage crisis in Iran was over, there were still hostages held which the US had no success securing the release of. Meanwhile, on our own hemisphere, the Central American country of Nicaragua had been taken over by the Sandinistas in 1979 allied with Cuba and the Soviet Union. Reagan through the CIA had secretly begun to support the Contras, a fiercely anti-Communist group. Congress got wind of the secret program and banned all aid to the Contras unless it was explicitly voted for by the Congress.
After winning a whopping 49 states in 1984, the two problems still existed early in Reagan's 2nd term which no progress was being made. We had hostages held in Lebanon with no end in sight, and the Nicaraguan Contras were making no progress with overthrowing the Nicaraguan government.
Reagan had personal meetings with family members of the hostages, and being a human being he felt he had to do something. The stated policy was that there would be no negotiations with terrorists. This makes sense as a policy, but can you imagine looking into the eyes of a hostage family member and saying "there's nothing we can do?" Reagan must have been so anguished that he felt it was worth risking a break with the policy to try to do something. When the offer came from Iran for a "strategic opening" i.e. sell arms to Iran, and they'll do something about the hostages, Reagan went for it. I'm sure he hoped it would never become public.
Meanwhile, things weren't going well for the Nicaraguan Contras, and Reagan let it be known in his administration that the Contras should be funded by any means necessary. He went on TV repeatedly calling the Contras "freedom fighters" and "the moral equivalent of our founding fathers." In the deep corner of the White House was Oliver North, the can-do military guy whose job it was to carry out the orders of the Commander-in-chief, even if the orders were completely illegal. When money became available since they had overcharged Iran for the arms, Oliver North thought diverting this extra money to the Contras was "a neat idea". They kept this secret from the President so Reagan could deny it if it ever came out.
Well, oops, the whole thing did come out. First, the arms for hostages deal. On November 3, 1986, a Lebanese news magazine published a story of the exchange of arms to Iran as a condition to free hostages. This story was picked up by the mainstream press in the US right away. Reagan was forced to go on television and explain to the American people how this could have come about when the stated policy was that we would never negotiate with terrorists.
My purpose was... to send a signal that the United States was prepared to replace the animosity between [the U.S. and Iran] with a new relationship... At the same time we undertook this initiative, we made clear that Iran must oppose all forms of international terrorism as a condition of progress in our relationship. The most significant step which Iran could take, we indicated, would be to use its influence in Lebanon to secure the release of all hostages held there.
Then came the bombshell. On November 25, 1986 just weeks after the arms for hostages deal had come out, Attorney General Edwin Meese disclosed to the entire nation that money from profits of the sale of arms to Iran had been diverted to the Nicaraguan Contras. Reagan's story and that put out by the administration was the Reagan was not aware of the diversion of funds. However, many of the facts were lost from history as Oliver North ordered his secretary Fawn Hall to shred the documents that detailed the funding of the Contras from the sale of arms to Iran.
Reagan's power of persuasion was powerless against the onslaught of media scrutiny after it came out. First he said he didn't trade arms for hostages, then he said "mistakes were made". Many speeches later, Reagan admitted that he'd traded arms for hostages but was always maintained that he knew nothing of the funds going to the Contras.
A commission led by former Senator John Tower was formed to investigate the Iran-Contra matter, and for many months the hearings were on television. Key figures in the operation of the Iran and Contra portions of the scandal were brought in to testify. Oliver North vigorously defended his actions as legal and justified. One of the famous moments of North's testimony was, when questioned why he was dismissed by the President -
Let me just make one thing very clear, counsel. This lieutenant colonel is not going to challenge a decision of the Commander in Chief, for whom I still work. And I am proud to work for that Commander in Chief and if the Commander in Chief tells this lieutenant colonel to go stand in the corner and sit on his head, I will do so. And if the Commander in Chief decides to dismiss me from the N.S.C. staff, this lieutenant colonel will proudly salute and say, thank you for the opportunity to have served, and go. And I am not going to criticize his decision no matter how he relieves me, sir.
The Tower commission in the end concluded that many in the Reagan administration acted unethically, but Reagan himself was spared most of the blame. Unlike Nixon with Watergate, Reagan was largely unaware of the details of the operation so could not be held accountable. Oliver North was largely held responsible for the diversion of funds to the Contras, but the country was split as many conservatives felt Oliver North was a hero in fighting Communism. North was found guilty on 3 counts including destroying evidence, but he never served any jail time and the guilty counts were later reversed on a technicality. North is now a well-known conservative radio and television personality.
The animated video included with this article is a great introduction to the events of Iran-Contra.