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Iran-Contra Arms Deal: United States Policy and Law Term Paper

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Updated: Mar 3rd, 2022

There seems to be two standards when it comes to the law of the land. There is one for the ordinary citizen and there is also one for the elite – the CEO’s, influential people and powerful politicians. It must be clarified though that when the high and mighty break the law, they do not do so in an obvious manner, like murder, petty theft, etc. When they break the law they look for weaknesses within the legal system and that is what they will exploit and this is the reason why they could not be punished like ordinary people. It can also be said that it is their knowledge of ambiguities in the law that gave them the ability to bend the rules. In the 20th century a term was coined to capture this deviant behavior and it is called white-collar crime. One good example is the Iran-Contra affair.


U.S. foreign policy dictates that the American government will not negotiate with terrorists. This policy is easy to understand because the act of negotiating with terrorists will make the U.S. government appear weak. Then, unscrupulous people and radical extremists will exploit this particular weakness and encourage them to kidnap Americans or blackmail them. In the 1970’s this was the official stance of the American government even if international turmoil intensified in Asia and the Middle East (Williams, 1998).

For many policymakers it was a good decision to continue with their protocol regarding kidnapping and blackmail. But everything was about to change during the 1980s because Americans were hit simultaneously by bombings, kidnappings and the expansion of the Communist regime led by the former Union Soviet Socialist Republic (“USSR”). President Regan was in a bind because he is well aware of the said foreign policy but American lives were on the line and at the same time the ascendancy of communist government threatened to upset the balance of world power.

The Iran Contra affair was without a doubt a good example of how a sovereign country can negotiate with terrorists. It does not require a political scientist to realize that the U.S. government risked so much for initiating this transaction but there were at least four major events that forced the Reagan administration to broker this deal. Firstly, the Reagan administration was greatly concerned about the growing Cuban and Soviet influence in the nation of Nicaragua while at the same time anxious that weapons can also be shipped from Nicaragua to communist insurgents in neighboring El Salvador (Williams, 1998). If this will happen then the U.S. government is faced with a multi-headed monster that will be very difficult to control and defeat.

Secondly, the Reagan administration authorized the Central Intelligence Agency (“CIA”) to support and train Nicaraguan exiles known as Contras to engage in a guerilla war against the Sandinista government (Williams, 38). Thirdly, 241 American servicemen were killed in a daring terrorist attack in Beirut (Williams, 1998). And finally, Americans were kidnapped in Beirut and the most notable of them was William Buckley – the city’s CIA station chief; President Reagan was distressed when he received information that Buckley was tortured (Williams, 1998). This was the last straw because and made Reagan to decide to take action without the knowledge of Congress.

When the Israelis suggested to the Reagan administration that it was time to build bridges towards the Iranian government, the national security adviser Robert McFarlane and Director of the CIA, Bill Casey began to draw up a strategy not only to deal with the hostage crisis in the Middle East but also the communist problem in Nicaragua. They tried to hit two birds with one stone in one complex deal that would involve the Israeli and Iranian government as well as the CIA-backed rebels in Nicaragua. Not everyone in the Reagan administration agreed to the complicated arms-for-hostage negotiation but it was clear that the President wanted Buckley out of Beirut (Williams, 1998). The Iran-Contra affair was initiated and Israel will play a major role in it.

Iran-Contra Arms Deal

The main goal in the initial stages was to conceal the shipment of arms to Iran. In order to this it was their counterparts within the Israeli government that delivered American-made weapons to Iran using their own stock, with the understanding that the U.S. government will replenish it after the completion of the deal (Williams, 1998). Afterwards the sales of arms required numerous intermediaries and various diversionary tactics to hide it from the general public. As a result, the U.S. Department of Defense would sell weapons to the CIA, then the CIA would turn around to sell the same items to an armaments company controlled by retired Major-General Richard Secord, the general would then re-sell the weapons to Manuchar Ghorbanifar, an Iranian citizen, and finally Ghorbanifar will deliver the same to the Iranian government (Williams, 1998).

The three-fold purpose of the Iran-Contra affair was enough to justify the violation of U.S. foreign policy never to negotiate with terrorists. By selling high-tech American-made weapons Reagan hoped to create better relations with Iran. The chance to use high-grade weapons was considered as a form of ransom payment for the American hostages. And finally, the money from the deal can be funneled to Nicaragua to help finance the guerilla warfare that tried to overthrow the Sandinista government (Williams, 1998). This is how they justified everything. In their minds there were no loose ends, at both sides of the equation, they can balance everything out. South America will be safeguarded from an overwhelming communist presence and the Middle East becomes more tolerable because America has gained a new friend.

Diversion of Funds

Concerning the sales of arms there is one simple question that needed to be answered although the answer may seem obvious to many people. The question has to be raised regarding the business component of the Iran-Contra affair. Why is it that the U.S. government sold armaments to the Nicaraguans? The idea of making a profit using clandestine operations and also through the use of U.S. resources is highly immoral not to mention the numerous U.S. laws that were violated in the process. But goal of the Reagan administration was not to make money from selling weapons. If this is the case, then they have a “higher cause” for doing such things and they can use it for their defense if these actions will turn into another Watergate scandal.

If the U.S. government did not sell weapons to profit from the trade, then where is the money from the sales? The deal was a desperate attempt to generate funds for Contras in Nicaragua. As mentioned earlier the Reagan administration already gave the go signal to support and train the rebels but close scrutiny by Congress.

The Reagan administration believed it was critical to turn the tide against communism in Latin America and so he needed money to finance the war against Soviet-backed governments in Nicaragua. While it is true that the government did not profit from the arms deal those who were involved in the Iran Contra affair broke the laws of the land when they negotiated with terrorists and when they sold U.S. property and diverted funds – going against protocol and the checks and balances instituted in democratic governments such as the United States.

White-Collar Crime

One of the most useful definitions of white-collar crime is the one that highlights the fact that it is the breaking of laws involving the high and might of society, in other words, “…a crime committed by a person of respectability and high social status in the course of his occupation” (Salinger, 2005). The combination of respectability and high social status is the reason why many were able to get away with it and why there were able to access resources that they used to take advantage of a particular set of circumstances. In many cases the collusion of the government and companies can be a serious topic of discussion regarding white-collar. But one of the most riveting involves the U.S. government. This is because the U.S. government is seen as oppressive by many and the fact that its involvement in a white-collar crime can easily trigger the protestations of the American citizenry. The same thing can be said of the Iran Contra affair.

Using the idea of national interest to justify controversial actions is not new to the United States government. In the case of the Iran Contra scandal one commentator was able to put it succinctly when she wrote, “At best, it could be agreed that some people defined the national interest one way and some defined it another way, and each side was equally well-meaning; only some had pushed their patriotism beyond the law…” (Wroe, 1991). This is a good example of a corporate crime involving the U.S. government.

For Love of Country

In other cases of white-collar crime authorities need only to deal with the complexity of the scheme and the way the rich and powerful tried to bend the rules to achieve unjust gains. But in the case of the Iran Contra affair those who were directly involved in the selling of weapons to Iran did not do it for money but for a “higher cause” (Michalowski & Kramer, 2007). This means that they were willing to sacrifice their reputation and their career in order to protect the vital interests of the United States government. If Reagan, North and Pointdexter sold weapons to Iran to enrich themselves then U.S. courts will have less difficulty in punishing them for transgressions of the laws.

The only problem here is that there are ambiguities in the law and U.S. policies that enable them to go beyond protocol for the sake of achieving a goal and to fight for a worthy cause. In this context it is hard to find fault with someone who made sure that America and the rest of the world did not become a communist country. Thus, there are those who argue that the government must cut some slack for the architects of the Iran Contra affair because they went beyond their call of duty in order to protect the American people.

According to one commentator, the Iran Contra scandal is a unique because it was posited on patriotism (Wroe, 1991). Apparently, it was not only high-powered government officials like McFarlane, Pointdexter and North who were enthusiastic about the project; even private citizens were also encouraged to help. In the subsequent investigation, it was found out that a few patriotic Americans donated hundreds of thousands of dollars for the cause of advancing democracy in South America (Wroe, 1991). If this is the sentiment of many Americans, then it is not hard to imagine that those who were responsible to make judgments regarding the case will rule in their favor. They will also succumb from the patriotic rhetoric and not see the legal violations created by the Iran Contra affair.

The Reagan administration was able to effectively deal with the fact-finding committee by using a technique of neutralization called “higher loyalty” and this is to justify the breaking of U.S. laws by making the claim that they conformed to other “normative standards” that conflicted with the law (Gerber & Jensen, 2007). The Reagan administration truly believed that even if they violated the laws of the land they were thinking of the future stability of the U.S. government. If one will for a moment agree with their stance, then it can be argued that the rise of communist influence in South America can snowball into something uncontrollable. Perhaps in the mind of Regan and his think-tank they could not afford to have a communist stronghold near their borders.

Although this kind of white-collar crime is unique because of the type of individuals involve, it must also be said that the involvement of a government in any organization is something that is not unique. It therefore prompted one commentator to explain that this is no ordinary white-collar crime and must be described using a different set of rules. Thus, experts in this field are saying that this calls for a new term and must be known as the: state-corporate crime (Michalowski & Kramer, 2007). In its strictest terms state-corporate crime means the harmful effects of collusion between state and corporations.

In the case of the Iran Contra scandal it was the joint efforts of the government and businessmen in Iran. The only problem with this model is that it could not pin down the problems created by selling arms. If there is then it is an indirect cause of their agreement. For instance, the agreement between key officials of the Reagan administration, working in tandem with Iranian citizens did not cause any particular harm then it becomes doubtful if the Reagan administration is guilty of white collar crime. Those who criticized the collusion between America and Iran pointed to the fact that the Reagan administration went against the Boland Amendment which specifically prohibits the American government from providing military aid to the Contras (Gerber & Jensen, 2007). But a closer examination will reveal that more good than harm was done and this is also the reason that aside from Pointdexter – who was sentence to go to jai – the rest of the key characters were able to evade the consequences of a harsher sentence.

In the Iran Contra affair there were no clear victors and there was no clear evidence to show that the Reagan administration was indeed guilty of a crime. But an expert in the law of the land can easily point out that two governments legally violated specific U.S. laws. Yet on the other hand it can also be argued that the U.S. government were able to secure the release of hostages and also prevented the spread of communism in South America. This is perhaps the reason why many of the key players of the scandal did not even saw the inside of a prison.


It was made clear by the definition of white-collar crime that the collusion between the U.S. government during the time of the Reagan administration and certain Iranian citizens to mastermind the sales of weapons to a rogue nation in order to deliver the funds to a group of rebel soldiers was in violate of the Boland Amendment. But the release of the hostages as well as the perceived success in terms of reducing the presence of communism in South America was the primary reason why many were able to evade a stricter sentence.

It was difficult to judge the case. This is because they seemed to be acting selflessly in the service to their country. They were able to put aside their selfish ambitions to work towards strengthening the United States from external threats. This is perhaps the reason why many turned a blind eye and did not pursue vigorously the fact that leaders of the land – who were supposed to uphold the law – were also the ones who went against it and violated the trust between the people and the elected officials.

They used the idea of patriotism to justify their actions but at the same time they made it clear that they were able to contribute to defense of the United States and enable its people to maintain their way of life. Yet it can be argued that no matter what the outcomes are the elected officials must follow the law or else society will be in chaos. This is the reason why white-collar crime is hard to detect and prosecute. In the case of the Iran Contra affair it was difficult to pass judgments on those who were willing to offer their lives to serve. But at the same time it can be said that they were not punished because they were in positions of power.


Gerber, J. & E. Jensen. (2007). Encyclopedia of White-Collar Crime. CT: Greenwood Press.

Michalowski, R. & R. Kramer. (2007). State-Corporate Crime and Criminological Inquiry. In International Handbook of White-Collar and Corporate Crime. H. Pontell & G. Geis (Eds.). New York: Springer.

Salinger, L. (2005). Encyclopedia of White-Collar and Corporate Crime. CA: Sage Publications.

Williams, R. (1998). Political Scandals in the USA. UK: Edinburgh University Press.

Wroe, A. (1991). Lives, Lies and the Iran-Contra Affair. New York: I.B. Tauris Publishers.

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