American involvement in Central America produced the greatest scandal of Reagan’s presidency, the Iran-Contra affair. In 1984, Congress banned military aid to the Contras (derived from the Spanish word for “against”) fighting the Sandinista government of Nicaragua, which, as noted earlier, had ousted the American-backed dictator Anastasio Somoza in 1979. In 1985, Reagan secretly authorized the sale of arms to Iran—now involved in a war with its neighbor, Iraq—in order to secure the release of a number of American hostages held by Islamic groups in the Middle East. CIA director William Casey and Lieutenant Colonel Oliver North of the National Security Council set up a system that diverted some of the proceeds to buy military supplies for the Contras in defiance of the congressional ban. The scheme continued for nearly two years.

As in the first part of the twentieth century, the United States intervened frequently in Caribbean and Central American countries during and immediately after the Cold War

In 1987, after a Middle Eastern newspaper leaked the story, Congress held televised hearings that revealed a pattern of official duplicity and violation of the law reminiscent of the Nixon era. Eleven members of the administration eventually were convicted of perjury or destroying documents, or pleaded guilty before being tried. Reagan denied knowledge of the illegal proceedings, but the Iran-Contra affair undermined confidence that he controlled his own administration.

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