Iran-Contra Affair
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The Iran-Contra Affair (also known as "Irangate") was a mid-1980s political scandal in the United States. President Ronald Reagan's administration sold arms to Iran, an avowed enemy. At the time, Americans were being held hostage in Lebanon by Hezbollah, a militant Shi'a organization loyal to Ayatollah Khomeini. The US government claimed that using the arms would influence Iran to release the hostages. At the same time, Iran, which was in the midst of the Iran-Iraq War, could find few nations willing to supply it with weapons. However, the arms shipments began before the first hostage was taken, and ended a long time after the last hostage was released. The U.S. diverted proceeds from the sale to the Contras, anti-Communist guerrillas engaged in an insurgency against the socialist Sandinista government of Nicaragua. Both the sale of weapons and the funding of the Contras violated stated administration policy as well as legislation passed by the Democratic-controlled Congress, which had blocked further Contra funding.
In January of 1986, the administration approved a plan proposed by Robert McFarlane employee Michael Ledeen, whereby an intermediary, rather than Israel, would sell arms to Iran in exchange for the release of the hostages, with proceeds made available to the Contras. At first, the Iranians had refused the weapons from Manucher Ghorbanifar, the Iranian intermediary, when both Oliver North and Ghorbanifar created a 370% markup (WALSH, Lawrence E. "Firewall"). The arms were eventually sold - in February, 1000 TOW missiles were shipped to Iran. From May to November, there were additional shipments of miscellaneous weapons and parts. However, Hezbollah proceeded to take more hostages after they had released old ones, and failing to produce any meaningful results, the arms-for-hostages program was finally cancelled.
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http://en.wikipedia.org/wiki/Iran-Contra