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The Iran–Contra affair was a political scandal in the United States that came to light in November 1986. During the Reagan administration, President Ronald Reagan and other senior U.S. officials secretly facilitated the sale of arms to Iran, the subject of an arms embargo. At least some U.S. officials also hoped that the arms sales would secure the release of hostages and allow U.S. intelligence agencies to fund the Nicaraguan Contras. Under the Boland Amendment, further funding of the Contras by the Reagan administration had been prohibited by Congress (backed by a strong majority opinion of the American public).

It was planned that Israel would ship weapons to a relatively moderate, politically influential group of Iranians, and then the U.S. would resupply Israel and receive the Israeli payment. The Iranian recipients promised to do everything in their power to achieve the release of six U.S. hostages, who were being held by the Lebanese Shia Islamist group Hezbollah, who in turn were connected to the Army of the Guardians of the Islamic Revolution. The plan deteriorated into an arms-for-hostages scheme, in which members of the executive branch sold weapons to Iran in exchange for the release of the American hostages. Large modifications to the plan were devised by Lieutenant Colonel Oliver North of the National Security Council in late 1985, in which a portion of the proceeds from the weapon sales was diverted to fund anti-Sandinista and anti-communist rebels, or Contras, in Nicaragua.

The affair was composed of arms sales to Iran in violation of the official US policy of an arms embargo against Iran, and of using funds thus generated to arm and train the Contra militants based in Honduras as they waged a guerilla war to topple the government of Nicaragua. A Human Rights Watch report found that the Contras were guilty of targeting health care clinics and health care workers for assassination; kidnapping civilians; torturing and executing civilians, including children, who were captured in combat; raping women; indiscriminately attacking civilians and civilian homes; seizing civilian property; and burning civilian houses in captured towns.

Col. North's handwritten notebooks and memoranda sent to North show that North and other U.S. officials were repeatedly informed that Contras ties to trafficking of drugs from Latin America into the United States and that airplanes from the U.S. used to supply arms to the Contras were being flown back with Contras personnel aboard carrying cocaine into the United States. The matter was further examined in the 1997 report of the US Department of Justice Inspector General, where the main question under investigation was whether CIA was instrumental in creating the crack cocaine epidemic in Los Angeles, and where evidence was presented of patronizing by CIA of drug trafficking to Los Angeles, California.

In the end, fourteen administration officials were indicted, including then-Secretary of Defense Caspar Weinberger. Eleven convictions resulted, some of which were vacated on appeal. The rest of those indicted or convicted were all pardoned in the final days of the George H. W. Bush presidency; Bush had been vice-president at the time of the affair. Some of those involved in the Iran-Contra affair who were convicted of felonies and subsequently pardoned, later became members of the administration of George W. Bush.
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