Iran-Contra Affair: Arms Sales, Ethics, and Covert Policy

Historical Background of the Iran-Contra Affair

Nicaraguan Context

In the 1970s, dissatisfaction with a manipulative and corrupt government was escalating in Nicaragua. All socio-economic classes were affected, and by 1978 the situation had deteriorated into a short-lived civil war. Through violent opposition, the Marxist Sandinista guerrillas achieved power in 1979. By September 1980, the Sandinistas had suspended elections and taken control of the media. Leftist rebels in El Salvador received aid from Nicaragua, and as a result of these ties, the U.S. sponsored aid to the anti-Sandinista Contra guerrillas during the 1980s. El Salvador was undergoing a violent civil war at the time, with conflict between leftist rebels demanding political and military reform and the government in power.

The United States Context: Nicaragua

In February 1979, the U.S. suspended all new military and economic aid to Nicaragua. In 1981, CIA Director Casey established the Central American Task Force, which was authorized to "support and conduct political and paramilitary operations in Nicaragua" (CIA). These efforts were supported by $19 million from Congress, and Contra combat action began in September 1982. The Boland Amendment, enacted in December 1982 as part of the Defense Appropriations Act of 1983, effectively prohibited the Department of Defense and the CIA from funding activities designed to support an overthrow of the Sandinista government. By July 1983, the Boland-Zablocki legislation allowed arms interdiction but continued to prohibit aid to the Contras. In December 1983, Congress included $24 million in Contra assistance in the Defense Appropriations Act but determined the aid program would end on September 30, 1984, with the prohibition continuing until December 1985.

The Arms Export Control Act (AECA) prohibited retransfer of U.S. arms to a third-party country unless certain conditions were met: (1) the U.S. could not make the transfer directly; (2) the U.S. required certificates of receipt confirming transfer; (3) reports were required to be filed with the Speaker of the House and the Senate Foreign Relations Committee regarding the retransfer agreements; and (4) notice was to be given to Congress within 30 days following a retransfer of major defense equipment in excess of $1 million. The AECA provided no criminal sanctions for violations; a violation would not be viewed as criminal unless there was a concomitant conspiracy to defraud the United States. Further, Section 501(a) of the National Security Act of 1947 required intelligence activities to be disclosed to the House and Senate intelligence committees, except for those activities deemed too sensitive by the President. Especially sensitive information could be disclosed only to the intelligence committee chair and ranking member and to the leadership of the House and Senate. Covert action is intended to be a tool of policymakers — not intelligence agencies — when it is determined that the best way to achieve a specific policy goal is through secret means. According to Section 503(e) of the National Security Act, covert action is defined as "an activity or activities of the United States Government to influence political, economic, or military conditions abroad, where it is intended that the role of the United States Government will not be apparent or acknowledged publicly" ("Ethical Problems," 2011).

From late 1984 to May 1986, the National Security Council continued fund-raising in order to channel goods and cash to the Contras. President Reagan declared an economic embargo on Nicaragua in April 1985. Through the Intelligence Authorization Act, Congress authorized the CIA to provide communications equipment and intelligence to the Contras. Lethal assistance to the Contras was formally discontinued by the Presidential Finding in January 1986. The Kerry Committee of the Senate Subcommittee on Terrorism, Narcotics, and International Operations began an investigation into alleged narcotics trafficking and gun-running during the Contra War (Ebel, 1992; Hamilton & Inouye, 1995). A violation of the Boland restrictions by the National Security Council was reported by the Miami Herald in June 1986. In December 1986, Independent Counsel Walsh was named to investigate what had become known as the Iran-Contra affair. In fiscal year 1987, Congress provided $100 million to renew both nonmilitary and military assistance to the Contras. A provision of that legislation barred aid to any group engaging in drug trafficking, effectively clearing the way for the CIA to re-enter the Contra War.

The United States Context: Iran

The Shah of Iran, Mohammad Reza Pahlavi, was restored to power in 1953 by a coup organized by the Eisenhower administration and supported by the CIA and the British Foreign Intelligence Service (MI6) at the U.S. Embassy. The complexities of alignments and power-brokering over oil supplies and refining, coupled with Cold War fears, led the U.S. to align with British oil interests in hopes of shutting out the Soviets. The coup was directed against the nationalist Iranian government that was attempting to unconstitutionally unseat the Shah. A campaign of religious and secular unrest directed against the Shah began to escalate in October 1977. By January 1978, resistance to the monarchy had intensified until, in the final quarter of 1978, Iran was overcome with chronic demonstrations and strikes.

When the Shah entered the U.S. for medical treatment in 1979, Iranians feared another U.S.-backed coup to reinstall him. A radical student group seized U.S. citizens as hostages from several diplomatic compounds in Tehran. The 1979 Iranian Revolution successfully replaced the unpopular pro-Western Shah with a fundamentally anti-Western Islamic Republic of Iran. As Time reporter John Snow described it, the crisis in Iran-U.S. relations — exacerbated from an American perspective by the taking of hostages — was an entanglement of "vengeance and mutual incomprehension" (Snow, 1981). The taking of hostages violated established principles of international law that grant immunity from arrest to diplomats and recognize the sovereignty of embassies. The U.S. experienced the hostage crisis as a blow to its influence in Iran and as an end to its long-standing support of the Shah. A pivotal moment in Iran-U.S. relations, the hostage situation served to enhance the power and prestige of Ayatollah Khomeini, strengthen the political will of supporters of theocracy in Iran, and erode previous efforts to normalize Iranian relations with the West. Shortly afterward, the U.S. imposed economic sanctions against Iran, further widening the growing rift between the two countries.

In response to the hostage situation, and after unsuccessful attempts to negotiate the release of the hostages, the U.S. froze approximately $12 billion in Iranian assets. Following Iraq's invasion of Iran, the sanctions against Iran were increased in 1984 to prohibit weapons sales and all U.S. assistance to Iran.

The Iran Context

Iran became an Islamic republic in 1979 when the ruling monarchy was overthrown and Shah Mohammad Reza Pahlavi went into exile. A theocratic system of government replaced the monarchy, with governing power vested in the Supreme Leader — a conservative religious scholar accountable only to an elected body of 86 clerics known as the Assembly of Experts. In 1979, Islamic students and militants took over the U.S. Embassy in Tehran, signaling their support of the Iranian Revolution. On November 4, 1979, three U.S. citizens were taken hostage at the Iranian Foreign Ministry and 66 more were seized from the U.S. Embassy. Six Americans escaped with the aid of the Canadian government, which provided Canadian passports for the hidden hostages, and 13 were released on November 19 and 20, 1979. One more U.S. citizen was released on July 11, 1980. The remaining 52 American hostages were held for 444 days until their release on January 20, 1981.

The U.S. had been unable to negotiate a release, so a military rescue operation, Operation Eagle Claw, was attempted on April 24, 1980. The mission failed badly, destroying two aircraft and resulting in the deaths of one Iranian civilian and eight American soldiers. On January 19, 1981, the Algiers Accords were signed, securing the release of the hostages. Their release coincided with President Reagan's inaugural address immediately after he was sworn in as President, replacing Jimmy Carter. From 1980 through 1988, Iran and Iraq fought a violent and indecisive war, which led between 1987 and 1988 to clashes between the Iranian military and the U.S. Navy in the Persian Gulf.

The Lebanon Context

Between 1982 and 1992, Lebanese terrorists took 96 foreigners hostage, apparently as insurance against retaliation by the U.S., Syria, and other nations believed to be responsible for bombing incidents against a Marine barracks and the embassy in Beirut. At least eight hostages were killed outright and many others perished from maltreatment. The kidnappers were associated with different factions within the Hezbollah organization, and there was speculation that the Islamic Republic of Iran and perhaps Syria were actively involved in or had instigated the kidnappings. Tight security around the locations of the hostages and their captors prevented rescue. Public pressure and pressure from families eventually eroded the American and French policy of not negotiating with and not granting concessions to terrorists. The Reagan administration ultimately violated official Congressional policy by secretly negotiating an arms-for-hostages exchange with the Iranians, who were believed to have sufficient influence over Hezbollah to secure the release of the hostages.