Remembering the Iran-Contra Scandal

Ron Berger —

Amidst the evolving scandal involving the Trump administration’s dubious ties to Russia, which is currently under investigation by Senate and House subcommittees and independent counsel Robert Mueller, comparisons have been made to Watergate. Often forgotten or glossed over in our historical memory of presidential scandals, however, is the cluster of government crimes that took place during the administration of President Ronald Reagan and Vice-president George H.W. Bush: the Iran-Contra scandal. In this article, I remind readers of what this scandal entailed.

The two elements of this scandal—the Iran component and the Contra component—initially represented two separate foreign policy operations that later became linked. I begin with the Iran component.

The Iran Component

Mohammad Mossadegh

The roots of the United States’ problematic relationship with Iran go back to the early 1950s, when the Central Intelligence Agency funded and fomented a successful coup d’etat that led to the demise of the democratically-elected government headed by Prime Minister Mohammed Mossadegh, who was once dubbed by Time magazine as the “Iranian George Washington.” Under Mossadegh’s leadership, the Iranians had decided to nationalize the oil industry, which was controlled by the British. Mossadegh intended to compensate the Anglo-Iranian Oil Company, a corporation owned principally by the British, which according to journalist Stephen Kinser, “had held a monopoly on the extraction, refining, and sale of Iranian oil” since 1901. At that time less than 16 percent of the company’s profits were paid to Iran, a practice Mossadegh intended to change. Officials in the administration of President Dwight Eisenhower were concerned that this policy did not bode well for U.S. oil interests in the region.

The method of regime change in Iran, which was called Operation Ajax, employed both propaganda and violence. Journalists, publishers, Islamic clergy, and other opinion leaders were bribed to create a climate of public hostility and distrust toward Mossadegh and his government. Demonstrators were paid to flood the streets of the capitol of Tehran, converging on parliament to demand Mossadegh’s ouster. Gangs of street thugs started riots as the city descending into violence. According to the plan, order would be restored by turning the country back to its ruling monarch, Mohammad Reza Pahlavi, the Shah of Iran, whose influence had been dramatically curtailed under Mossadegh. The Shah’s subsequent rule, which lasted for a quarter century, was a brutal dictatorship, until he was overthrown in an anti-American Islamic revolution that erupted in November 1979, when anti-American forces seized the U.S. embassy in Tehran, taking more than 50 U.S. hostages during the administration of President Jimmy Carter.

The hostage crisis became a major problem for the Carter administration. Had Carter been able to pull off an “October surprise” just before the election, he would have had a better chance of winning. Former Carter administration official Gary Sick, among others, believes a deal may have been struck between the Reagan-Bush campaign and representatives of the Iranian government to delay the release of the hostages. There is evidence that William Casey, the Reagan-Bush campaign director who later headed the CIA, had met with Iranian arms dealers who had contacts in the Iranian government. Some also allege that the Reagan-Bush campaign had informants within the U.S. military-intelligence community who provided information about U.S. aircraft movements related to the hostage crisis. And some believe that someone associated with the Reagan-Bush camp stole briefing papers from President Carter’s reelection campaign before the October presidential debates. While these charges have not been proven, the history of Watergate and other actions of our clandestine government makes the allegations entirely plausible to more than a few people knowledgeable about that era. It is noteworthy as well, that the U.S. hostages were not released until just after Reagan was inaugurated on January 1981.

During the early years of the Reagan-Bush administration, Iranian forces bombed U.S. (and French) embassies in the Middle East. More than 200 U.S. troops stationed in Beirut, Lebanon, were killed in a suicide bombing. More hostages were taken, including the CIA’s chief of station in Beirut. The U.S. government’s official policy, the public was told, was not to negotiate with terrorists. It was also a violation of the U.S. Arms Export Control Act to sell arms to countries (like Iran) that supported terrorism. But negotiate with Iran we did; and selling arms (missiles and missile parts) to Iran we did, too, at first through Israel but later directly. In the process, arms-merchant middlemen such as retired U.S. Air Force general Richard Secord and Iranian-born businessman Albert Hakim (now a U.S. citizen) grew rich. Following the arms sales, hostages were not always released, and when they were, more were taken.

The Contra Component

This brings me to the Contra part of the Iran-Contra scandal. Like Iran, the Central American country of Nicaragua experienced a revolution in the late 1970s that the U.S. government opposed. Dictator Anastasio Somoza, an ally of the United States, was removed from power, and the Sandinista National Liberation Front took control. The Sandinistas turned to Cuba and the Soviet Union for economic and military aid. The Reagan-Bush administration, which believed the Sandinistas were fomenting revolution elsewhere in Latin America, found this unacceptable.

The Contras

The Contras, the armed Nicaraguan opponents of the Sandinista regime, did not have popular support in their country. They were essentially a creation of the CIA, which was now directed by Casey. Without the CIA and the money and training it supplied, there would have been no Contras. Although Reagan often compared the Contras to our “founding fathers,” they included former military officers of the Somoza regime as well as men who condoned terrorism, accepted money from drug traffickers, and even trafficked in drugs themselves.

In the aftermath of the Vietnam War, the U.S. public did not favor another controversial foreign policy campaign, especially if it threatened to involve U.S. troops. And the CIA-Contra operation did not get good publicity, as the press reported that Nicaraguan harbors had been mined and oil facilities burned, and innocent people were being terrorized and killed. Excerpts of a CIA pamphlet on guerrilla warfare that were found in the Contras’ possession were reported in the press as well: “It is possible to neutralize carefully selected and planned targets, such as court judges [and] security officials. … Professional criminals should be hired to [take] … demonstrators to a confrontation with the authorities to bring about uprisings and shootings that will … create a martyr.”

During the early 1980s, the U.S. Congress, which has constitutional power over government appropriations, vacillated in its support of the Contras, approving funds, taking them away, and approving them again. But in a definitive legislative statement, the Boland Amendment, Congress explicitly prohibited any agency of the U.S. government from directly or indirectly supporting any military or paramilitary operations in Nicaragua.

Oliver North

President Reagan signed the Boland Amendment into law in October 1984, creating a perplexing problem for his administration: How could it maintain the Contras when it was illegal to do so? The task of supporting the Contras was given to the National Security Council, a White House advisory board headed by Robert “Bud” McFarland. According to McFarland, Reagan instructed him to find a way to keep the Contras together. McFarland assigned a U.S. Marine lieutenant colonel, Oliver North, the job of working out the details and being the White House liaison to the Contras. North and his associates raised millions of dollars from private groups and individuals in the United States and from foreign allies in the governments of Saudi Arabia, Taiwan, and Brunei. Central American governments such as Costa Rica, El Salvador, Guatemala, and Honduras were also pressured or cajoled (with a promise of military aid) to allow their countries to be used as bases for the Contra resupply operation. At the request of Casey, North worked with Secord and Hakim to create a private (profit-making) organization, which they called “The Enterprise,” to coordinate the operation. Senator Daniel Inouye, a decorated World War II veteran, described The Enterprise as “a shadowy government with its own air force, its own navy, its own fundraising mechanism, and the ability to pursue its own ideas of the national interest, free from all checks and balances and free from the law itself.”

The Iran-Contra Link

The link between the Iran and Contra initiatives was forged as profits from the Iranian arms sales were diverted through The Enterprise to the Contras. This became, in North’s words, “an attractive incentive” to continue to sell arms to Iran. Moreover, Casey envisioned The Enterprise as a permanent “off-the-shelf” entity with the stand-alone capacity to conduct covert operations beyond the purview of Congress.

Eugene Hasenfus captured by Sandinistas

The secrecy surrounding these operations began to crumble in October 1986, halfway through Reagan’s second term, when a Contra resupply plane piloted by Eugene Hasenfus that was linked to the CIA was shot down over Nicaragua. The story was covered worldwide, and in November a Lebanese magazine also disclosed the arms sales to Iran. Reagan and other White House officials first denied the stories but soon decided to cut their losses, concede that some improper conduct had occurred, and develop a cover story to protect the president, which cast North in the role of a well-intentioned renegade soldier who had gone too far. But North was not willing to take all of the blame. When he was granted immunity to testify before the (televised) joint House and Senate hearing, which began in May 1987, he became a media sensation.

The full story of the Iran-Contra scandal, including Reagan and Bush’s sanctioning of the illegal transactions, was not known until after Reagan left office, in large part as a result of independent counsel Lawrence Walsh’s investigation (Walsh was named independent counsel in December 1986, but did not release his final report until August 1993). By that time Reagan’s impeachment was long moot, although revelations along the way about Bush’s role did hurt him in his unsuccessful bid for reelection in 1992.

In the end, several members of The Enterprise and a number of administration officials pleaded guilty or were convicted of crimes, although the sentences overall were less severe than the ones given to the Watergate offenders, and some were subsequently pardoned by Bush after he became president. North had his three felony convictions reversed on appeal, with the appellate court ruling that his right to a fair trial had been compromised by his congressional testimony. He pronounced himself “totally exonerated,” became a highly paid luminary on the lecture circuit, and was Virginia’s Republican nominee for the U.S. Senate in 1994. North lost the election but joined the ranks of right-wing media pundits.

A full accounting of the long-term implications of the Iran-Contra scandal, and our dim memory of it, are beyond the scope of this article. But one is worth mentioning here: the increasing privatization of our military apparatus. When I first read P.W. Singer’s Corporate Warriors: The Rise of the Privatized Military Industry, published in 2003, I was stunned to learn that the traditional practice of mercenary soldiers and armies had been corporatized. During the administration of George W. Bush and Dick Cheney, this development became normalized, as exemplified by Erik Prince’s Blackwater corporation, which was copiously illuminated in Jeremy Scahill’s Blackwater: The Rise of the World’s Most Powerful Mercenary Army in 2007. Prince, and his sister Betsy DeVoss, have close ties to the Trump administration. And so the story of presidential scandals continues…


Ronald J. Berger. 2011. White-Collar Crime: The Abuse of Corporate and Government Power. Lynne Rienner Publishers.

Joel Brinkley and Stephen Engelberg (eds.). 1988. Report of the Congressional Committees Investigating the Iran-Contra Affair. Random House.

Stephen Kinser. 2006. Overthrow: America’s Century of Regime Change From Hawaii to Iraq. Times Books.

Gary Sick. 1991. October Surprise: America’s Hostages in Iran and the Election of Ronald Reagan. Times Books.

3 thoughts on “Remembering the Iran-Contra Scandal

  1. Good job Ron
    The only information I did not believe is accurate is the bombing of “several US and French embassies by Iran” and the American military base in Lebanon was done by an organization fathering Hizbollah (it was done by female recruits). just for the record Iran has never been directly involved with terrorism except taking of hostages in Tehran. Iran was sued by the US in ICJ where US won based on Iranian government negligence in protecting foreign diplomates (the hostages were taken by a group called Students Following The Imam Line (Imam being Khomainie). Just a reminder unlike bombing of embassies in Pakistan and South America in that time period no one was killed in Iranian hostage crises. Iranian keeps the hostages until it was sure there will not be another Coup by the CIA similar to 1953.


  2. Thanks for the clear, concise recapitulation; we tend to forget complex past realities. Though beyond the scope of this piece, another political injection of poison was oozed into the Middle East scene when Reagan sent Donald Rumsfeld as special envoy to make nice with Saddam Hussein in late 1983 (recall the infamous photo of their handshake). In the middle of the 1980-88 Iran-Iraq war, the US pivoted & launched behind-the-scenes Saddam/Iraq supportive measures. As the old saying goes, “What a tangled web we weave, when we practice to deceive!”

    Liked by 1 person

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