Who? President Reagan and National Security Adviser Robert McFarlane.
Weapons And Why? In 1985, while Iran and Iraq were at war, Iran made a secret request to buy weapons from the United States. McFarlane sought Reagan's approval, in spite of the embargo against selling arms to Iran. The sale of arms would not only improve U.S. relations with Iran, but might in turn lead to improved relations with Lebanon, increasing U.S. influence in the troubled Middle East.
Hostages Are There But….? Reagan had become frustrated at his inability to secure the release of the seven American hostages being held by Iranian terrorists in Lebanon. As president, Reagan felt that “He had the duty to bring those Americans home," and he convinced himself that he was not negotiating with terrorists. But while shipping arms to Iran violated the embargo, dealing with terrorists violated Reagan's campaign promise never to do so.
Divided. The arms-for-hostages proposal divided the administration. Even so, with the backing of the president, the plan progressed. By the time the sales were discovered, more than 1,500 missiles had been shipped to Iran. Three hostages had been released, only to be replaced with three more.
Caught! When the Lebanese newspaper "Al-Shiraa" printed an exposé on the clandestine activities in November 1986, Reagan went on television and vehemently denied that any such operation had occurred. He retracted the statement a week later, insisting that the sale of weapons had not been an arms-for-hostages deal. During that time polls showed that only 14% of Americans believed the president when he said he had not traded arms for hostages.
Uh-oh! While probing the question of the arms-for- hostages deal, Attorney General Edwin Meese discovered that only $12 million of the $30 million the Iranians reportedly paid had reached government coffers. Lieutenant Colonel North of the National Security Council explained the discrepancy: he had been diverting funds from the arms sales to the Contras, with the full knowledge of National Security Adviser John Poindexter and with the blessing, he assumed, of President Reagan.
Now what? Poindexter resigned, and North was fired, but Iran-Contra was far from over. Fourteen people were charged with either operational or "cover-up" crimes. The press hounded the president: Did he know about these illegal activities, and if not, how could something of this magnitude occur without his knowledge?
Trying To Fix It… In the end, North's conviction was overturned on a technicality, and President Bush issued six pardons, including one to McFarlane, who had already been convicted, and one to Weinberger before he stood trial.
In The End. Although laws had been broken, and Reagan's image suffered as a result of Iran-Contra, his popularity rebounded. In 1989 he left office with the highest approval rating of any president since Franklin Roosevelt.