The Iran-Contra Affairs of the 1980s stemmed from the Reagan Administration’s foreign policies toward two seemingly unrelated countries, Nicaragua and Iran. The Administration believed that changes to these countries that occurred in the 1970s threatened U.S. national interests.
In Nicaragua, a socialist movement (the Sandinistas) seized power through a revolution in 1979. The Administration, fearful of the potential spread of socialism throughout Latin America, eventually backed paramilitaries (the contras) who sought to overthrow this revolutionary regime. In the section on Nicaragua, you will find a brief background of U.S. policy toward the region since the 19th Century; information on the history, composition, ideologies, and policies of the Sandinistas and contras; and a detailed description of the actions the United States took in Nicaragua from 1979 until the Iran-Contra Affairs. You will also find a brief description of Nicaragua since the affairs.
In 1979, power also changed hands in Iran when a radical Islamic movement overthrew the U.S.-backed government. Because the revolutionary government was unfriendly toward the United States and potentially allied with the Soviet Union, the Administration tried to bolster moderate elements within Iran, a policy that became more complicated when Iranian-backed Lebanese terrorist groups seized American hostages. In the Iran section, you will find a history of U.S. foreign policy toward Iran, as well as a history of Iran’s domestic politics. Additionally, you will find a detailed section on the Reagan Administration’s policies toward Iran with regard to both the regime and U.S. hostages.
“The common ingredients of the Iran and Contra policies were secrecy, deception, and disdain for the law…the United States simultaneously pursued two contradictory foreign policies — a public one and a secret one” ( Report of the Congressional Committees Investigating the Iran-Contra Affair ).
The Iran-Contra Affair of 1984-1987 was not one, but two separate covert foreign policy issues concerning two different problems, in two separate countries, that were dealt in two very different ways. Under the management of the same few officials, both the Iran and the Contra policies intersected at certain important points giving rise to the singular title, Iran-Contra Affair. The first covert foreign policy initiative was the continued support for the democratic rebel Contras against the communist Sandinistas in Nicaragua in a time when Congress had cut off funds to the Contras. The second covert foreign policy initiative was the selling of arms to Iran in exchange for the release of American hostages held by Iranian allies in Lebanon. The two policies intersected when profits from the arms sales to Iran were used to support the Nicaraguan Contras through third parties and private funds.
This overview of the Iran-Contra Affair is organized into the following sections:
1. Institutional History: NSC and CIA
2. The Nicaraguan Story
3. The Iran Story
4. Unraveling the Story
5. Investigating the Iran-Contra Affair
The National Security Council (“NSC”) and the Central Intelligence Agency (“CIA”) developed in such a way that structurally allowed each to work around Congress and have the Executive Branch and third party actors implement and frame the foreign policy of the entire Unites States. To understand how, one must look historically at the evolution of these two groups. The beginning starts with the National Security Act of July 26, 1947. Truman signed this piece of legislation that gave birth simultaneously to both the National Security Council and the Central Intelligence Agency.
The NSC was not originally founded to facilitate presidential decision making, but it evolved with each administration until it became structured and powerful enough to perform covert operations. During Eisenhower’s administration in the mid 1950’s the NSC became a “virtual adjunct of the presidency.” The NSC staff was now under a special assistant to the President and not the NSC directly, turning the Presidency into a bureaucracy itself. The Kennedy administration’s changes to the NSC were driven by the Bay of Pigs incident that left Kennedy skeptical of the traditional departments and led him to prefer a more direct and personal style of executing policies. It was under Kennedy that the “distinction between planning and operation” was altered. Whereas the NSC was previously a planning entity, Kennedy made it also function operationally. This allowed the executive branch to avoid the State Department and furthered a trend of inflating the Office of the President through its replication of the rest of the government. The Office of the President grew in ways that sometimes supported, sometimes competed with, and other times ignored other governmental agencies and offices.
The inflationary trend continued with the Reagan administration. The NSC became further professionalized with a staff of about forty-five under the National Security Advisor Robert McFarlane and more than 200 people in support.  It became further structured in reflection of the State Department under Robert McFarlane’s successor, John Poindexter when it was organized into twelve directorates i.e. the African office, European Office, etc. The person most hurt, and most undermined by this trend was the Secretary of State, George Shultz during the Reagan administration, because now the president was performing similar duties, with similar staff support from his own office. The NSC was now “large and varied enough to carry out the president’s wishes covertly- even from the rest of the government.” Lieutenant Colonel Oliver North, deputy director of political-military affairs for the National Security Council staff was deeply involved in both the Iran and Contra affairs.
Like the NSC, the CIA evolved with the different Presidential administrations. Under Eisenhower, the 1955 NSC directive outlined the spectrum of the CIA’s covert operations in an effort to turn the CIA into a “virtual Cold War machine against Communism-“ to “create and exploit troublesome problems for international Communism…reduce international Communist control over any areas of the world” and “develop underground resistance and facilitate covert and guerilla operations.”  Eisenhower did qualify that the covert operations had to be consistent with U.S. foreign and military policies.
The War Powers Resolution, which was created as a check on presidential power by Congress did not include a check of covert wars and paramilitary activities that the CIA was authorized to conduct. The CIA director during the Reagan administration was William Casey.
The U.S. has long intervened in Nicaraguan affairs, aiming to keep its political developments amicable with and aligned to American interests. As early as 1912 the U.S. has utilized military force to quell rebellions against American approved leaders or to help overthrow unwanted regimes. Therefore, when U.S. trained head of the Nicaraguan National Guard, Somoza García, forcefully took power in 1936, the U.S. made no move to protect the current administration under Augusto César Sandino. Sandino’s murder marked the beginning of the Somoza dynastic rule which lasted for the next 43 years. In 1961, the Sandinista National Liberation Front (“FSLN”), named in honor of Sandino, was created in opposition to the Somoza dynasty. Ideologically, the Sandinistas saw themselves as a Marxist-Leninist organization with aims of turning Nicaragua into a socialist state. Inspired by and closely connected to Cuba, the Sandinistas worked to create and consolidate their power in the context of a cold war era where socialist revolutions and uprisings were gaining in worldwide popularity.
In 1967, Anastasio Somoza Debayle, son of Somoza García, became president. He became notorious in Nicaragua for suppressing opposition and focusing on self-enrichment while in power. For example, in 1972, when an earthquake struck Managua, the capital of Nicaragua, Somoza exercised “emergency powers” to address the earthquake which in actuality resulted in him and his close friends confiscating the majority of international aid sent to help rebuild Nicaragua. This event consolidated the Nicaraguan’s disapproval of Anastasio Somoza Debayle, especially among the Sandinistas.
In 1974, the Sandinistas kidnapped several Nicaraguan elites at a Christmas Party. Somoza responded to the affair by declaring a state of siege which spiraled into a series of serious human rights violations and guerilla attacks on peasants. In response, the United States, hyper-sensitive to the threat of communism and in conjunction with a contemporaneous trend of protecting human rights victims, began to pay attention to Nicaraguan affairs for the first time since the Somoza dynasty commenced in 1936. President Jimmy Carter’s foreign policy was shaped not only by a consciousness of human rights, but also by a fatigue of foreign intervention due to the Vietnam War. President Carter cut off all aid to the Nicaraguan government until it improved its human rights violations. Somoza responded by lifting the state of siege. This was met by the Sandinistas re-initiating and expanding their attacks which were now supported by business elites including Alfonso Robelo, and academics, including Adolfo Calero.
On July 19, 1979, the Sandinista uprising culminated in their gaining full power in Nicaragua. The Sandinistas first move as new political leaders was to declare a state of emergency and expropriate land and businesses owned by the old dynastic family and friends, nationalize banks, mines, and transit systems, abolish old courts, denounce churches, and nullify the constitution, laws, and elections.
A socialist state was born in Nicaragua. President Carter immediately sent $99 million in aid to the FSLN in an attempt to keep the new regime pro-U.S. Simultaneously, however, Cuban officials were advising the FSLN on foreign and domestic policy and the FSLN sought an alliance with the Soviet bloc which they reached by March 1980 signing economic, cultural, technological, and scientific agreements with the USSR. Deliveries of Soviet weapons from Cuba began almost immediately after the signing of these agreements.
It was mid-1980 when José Cardenal and Enrique Bermúdez founded what would become the Nicaraguan Democratic Force, or FDN, the main contra group (“the Contras”). The Contras found support among the populations disaffected by Sandinista policies – i.e. protestant evangelicals, farmers, Nicaraguan Indians, Creoles, and other disgruntled and disenfranchised parties. The Argentinean government was the first to support the Contras. They directly oversaw the Contras, trained the military forces, and chose the Contra leadership whereas the U.S. took on the role of supplying money and arms. Many worried that the Contras were a continuation of the Somoza regime because of their use of brutal tactics against noncombatants and their alleged human rights abuses.
Once it became clear to Washington that the FSLN would not moderate its policies, President Carter authorized the CIA to support resistance forces in Nicaragua including propaganda efforts, but not including armed action. The Sandinistas supported expanding socialism abroad, including sending weapons to leftist rebels in El Salvador beginning in 1980 and continuing for the next ten years. Some argue that this international support from Nicaragua was also in effort to insure that the Soviets would fully support and protect Nicaragua in case of a U.S. attack or intervention. Sandinista support for the Salvadoran rebels had a profound impact on U.S.-Nicaragua relations throughout the 80’s.
January 20, 1981, Ronald Reagan was inaugurated during a rightward shift in U.S. politics. He quickly cut off all aid to FSLN indefinitely due to the Sandinista’s continued support of Salvadoran rebels. In response, the Sandinistas consolidated power and expanded arrests of perceived dissidents under the belief that the U.S. would invade. On December 1, 1981, Reagan signed an order that allowed the CIA to support the Contras with arms, equipment, and money. This order was implemented in conjunction with an overall strengthening of U.S. presence in Central America and the belief that covert activities are the most effective way to put pressure on a regime. This shift of foreign policy away from the Carter administration’s non-intervention culminated in June 1982 with the Reagan Doctrine which called for supporting democratization everywhere. It was at this point that the goal of the covert operations in Nicaragua shifted away from one of simply interdicting arms to one of supporting a change in government. Iran-Contra historian Theodore Draper, among others, argued, that this was the real goal all the long.
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