Forty years on, the state too often operates along similar lines, but for a rare moment in the late 1980s, there was real accountability.

The first shock came about a month earlier, on Oct. 5, 1986, when the world awoke to the image of an American mercenary being led out of the jungle by two Nicaraguan soldiers. The new socialist government of Nicaragua had shot down a US airplane supplying weapons and ammunition to a CIA-backed counterrevolutionary army called the Contras. The only survivor of the crash was the man in the photo, Eugene Hasenfus. 

An experienced skydiver, Hasenfus was wearing a parachute and was close to the plane’s rear door, preparing to airdrop pallets of ammunition when the plane was hit. He immediately jumped. The pilot, co-pilot, and radio operator all died in the crash.  

Nicaraguan soldiers found Hasenfus huddled under his rain-soaked parachute. He was carrying identification that described him as an employee of Southern Air Transport, formerly owned by the CIA, and as a US military advisor working out of the Ilopango Air Force Base in El Salvador, where both the CIA and US military maintained a substantial presence. In the downed airframe’s wreckage were yet more documents linking the plane to the CIA and the Reagan White House. Hasenfus quickly confessed. Indeed, he was a CIA-contracted air-cargo specialist working on an agency-chartered transport plane delivering weapons to CIA-backed mercenaries; he had first worked for the agency almost two decades prior, as a cargo specialist with Air America in Laos and Vietnam. 

The Reagan administration denied everything, just as it would go on to deny the Ash Shiraa report about the arms transfers to Iran. But the stories wouldn’t go away. Competing journalists kept filling in details. Pundits started drawing comparisons to Watergate.

On Nov. 25, Attorney General Edwin Meese, hoping to get ahead of the Watergate comparison, held a news conference at which the administration copped to both crimes and surprised the world by admitting that the two stories were linked. “In the course of the arms transfers,” Meese explained, “certain monies which were received in the transaction between representatives of Israel and representatives of Iran were taken and made available to the forces in Central America, which are opposing the Sandinista government there.” The gamble failed. Public concern continued to grow. 

Iran-Contra offers a view into a type of elite power that is secret, illegal, and has major policy consequences. It exposed a species of nascently authoritarian statecraft that Peter Dale Scott would later call “deep politics.” The scandal also revealed much about American political and intellectual reluctance to confront such sub-rosa and anti-democratic maneuvering within the state apparatus. And it raised questions that have not yet been fully answered: what role do elite secrecy and illegality play in the reproduction of the current social order? In the case of Iran-Contra, the warmaking power that the US Constitution grants to Congress was illegally and secretly usurped by the executive branch, thus leading to a more violent and socially destructive foreign policy.

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To understand the scandal, it’s best to begin in Nicaragua in 1979, when a socialist revolution led by the Sandinista National Liberation Front overthrew the US-supported Somoza family dictatorship which had ruled Nicaragua since 1936. In power, the Marxist FSLN — known colloquially as the Sandinistas in honor of Augusto César Sandino, a populist rebel from the 1920s and ’30s — pursued a pragmatic mixed economy. Its five-member executive junta included two guerrilla leaders, but also prominent businessman Alfonso Robelo and liberal political dissident Violeta Chamorro, the widow of a martyred newspaper publisher.

The Sandinistas nationalized many large businesses and most of the banks, pursued land reform, created a public-health system, and launched a massive and successful literacy campaign. Yet they left significant room for private enterprise and market competition. They never pursued a totally nationalized, centrally planned, Soviet-style economic model. Indeed, over half of Nicaraguan economic output remained in private hands. There was repression and censorship, to be sure, but at a level comparable to that of Left- and Right-wing regimes across the region in those days. Nonetheless, the US government refused to accept the loss of a client state and the establishment of any type of socialist experiment and immediately began subverting the project.

When the Somoza regime fell, parts of its dreaded internal security apparatus fled into Honduras, where they were soon being equipped and trained by the CIA to run terrorist raids back in Nicaragua. At first, the US Congress supported this war to the tune of about $20 million a year (or about $74 million in current prices). However, the Contras’ methods were so barbarous — murder of civilians, widespread rape and torture, forced conscription — that their reputation as “freedom fighters” quickly eroded. In private, even Reagan called them vandals.

In late 1982, Congress passed the Boland Amendment, placing legislative restrictions on aid to the Contras, which were further strengthened in 1984. Money for the Contra war was thus tightened, and the CIA’s management role was, at least on paper, considerably diminished.

To legally comply with the Boland Amendment, formal control of the war passed from the CIA to the National Security Council, an inter-agency coordinating body within the White House. Key players in the NSC included the secretary of state, the secretary of defense, the director of the CIA, and the chairman of the Joint Chiefs of Staff. Below these honchos was a workforce of about 150, including a growing operations branch headed by Marine Corps Lt. Col. Oliver North. 

Reagan insiders acted as if this transfer of control from the CIA to the NSC were legal. Many in Congress saw it as profoundly unconstitutional. The legality of this arrangement was one of the scandal’s central conflicts.

The Contra resupply effort now went “off books,” managed by a loose network of intelligence-connected individuals and private businesses, referred to by insiders as “the Enterprise.” To raise money, the Enterprise relied on contributions from rich anti-communists; foreign governments, such as Saudi Arabia; and the proceeds from illegal arms sales to the Islamic Republic of Iran. Most shocking of all, the Enterprise collaborated with known drug traffickers, who used some of their income from cocaine smuggling to help fund the Contras.  

Funds were handled through secret Swiss bank accounts. The actual work of supply and training was done by a network of small companies. Prominent among these were Southern Air Transport, formerly owned by the CIA but privatized in the early 1970s, and a mercenary company out of Alabama called Civilian Military Assistance. 

By the winter of 1987, four separate federal bodies were investigating the Enterprise. There was the “Tower Commission”— a three-member panel established on Nov. 26, 1986, by the executive branch and headed by Sen. John Tower (R-Texas). Second was the Independent Counsel’s investigation, appointed by the Department of Justice and headed by former judge Lawrence E. Walsh. The third investigation was really two linked and coordinated congressional committees: the House Select Committee to Investigate Covert Arms Transactions With Iran and the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition. 

The fourth, and most important, probe was conducted by the so-called Kerry Committee, named for the 42-year-old junior senator from Massachusetts, John Kerry. A patrician Catholic and son of a diplomat, Kerry went to Groton, then Yale, joined the Navy, served in Vietnam, was wounded and decorated for valor in combat. Upon returning, he joined the radical peace group Vietnam Veterans Against the War. He marched in some of the group’s larger protests and, crucially, was part of the organization’s Winter Soldier Hearings, a grassroots, veteran-led investigation into American war crimes in Vietnam. As a former officer and social elite, Kerry lent the largely working-class, and frankly sometimes rather wild, VVAW a dose of credibility. Many in the establishment never forgave Kerry for these transgressions. As protest died down, Kerry earned his law degree from Boston College and launched his political career, arriving in the US Senate in 1985.

Kerry’s Senate investigation was formally known as the Senate Subcommittee on Terrorism, Narcotics, and International Operations. It dug deep into allegations of CIA-supported narcotics trafficking in the US homeland and, to the horror of many, found substantial evidence of drug smuggling by the Contras. 

Much of Iran-Contra was complicated: names, dates, front groups, agencies, meetings, more names, more dates. Plenty of ordinary people knew it was important, but found it tedious. 

However, the part about complicity with the cocaine trade wasn’t boring: it was simple and outrageous. You didn’t need to understand constitutional law to care about drug smuggling. By the late 1980s, America was awash in cheap, smokeable rock cocaine — the infamous “crack.” Addiction and violent crime were widespread. The US murder rate reached a second high in 1991 and has dropped considerably since then. American cities in the late 1980s were multiple times more violent than they are today. The country’s overdeveloped police and prison systems were then just gaining momentum. Many Americans felt viscerally the importance of Kerry’s investigation into Contra drug running.

Nor was the public totally naive to the history of CIA drug connections. The story of agency cooperation with heroin smugglers in Southeast Asia during the Vietnam War was then almost 20 years old and well-documented. The US Senate’s Church Committee, in 1975 and 1976, had exposed that the CIA had experimented on American citizens with LSD and other drugs as part of its MK-Ultra program. CIA partnership with drug dealers was already part of the historical record and late-night man-cave pontificating all over America. Nevertheless, the allegations that American money was supporting the flow of illegal drugs into the United States still shocked and enraged the public.

Kerry’s investigation began in April 1986, months before Hasenfus was shot down, as several papers, among them the Miami Herald and The Boston Globe, began reporting on allegations of drug smuggling by criminals involved with the Nicaraguan Contras. One source of these stories was a disgruntled American mercenary named Jack Terrell who had been employed by CMA, the Alabama mercenary company. Disgusted by what he witnessed, Terrell started talking to the media and Kerry’s research staff. 

None of the three other official investigations addressed government-condoned drug smuggling. In each of their final reports, a keyword search reveals that drugs, cocaine, and narcotics are mentioned only a few times in passing, with no sustained discussion or investigation. Even most of the mainstream media were openly hostile toward Kerry’s efforts. Newsweek was typical in calling the senator a “randy conspiracy buff.” Keep in mind that fear of ridicule and for one’s social standing are the most powerful forms of social control among the professional classes. At one congressional news conference in November 1987, an investigative journalist asked about government-condoned drug smuggling only to have The New York Times correspondent shout, “Why don’t you ask a serious question!” 

Important among the Kerry Committee’s trove of evidence was Oliver North’s personal diary, in which drug running was explicitly mentioned more than a dozen times. For example, in August, 1985, North noted the following: “Honduran DC-6 which is being used for runs out of New Orleans is probably being used for drug runs into [the] US.” In July 1985, North described a call from retired Air Force Gen. Richard Secord — a crucial player in the Contra resupply effort — during which the two men discussed a specific arms purchase by the Contras. According to the diary, Secord told North that “14 [million] to finance [the arms purchase] came from drugs.” 

At no point did anyone involved in the NSC’s secret war inform the US Drug Enforcement Administration or any other law-enforcement agency that airplanes laden with illegal cocaine were inbound for the homeland. Not only did the Reagan NSC accept the fact that their Central-American mercenaries were running drugs, but at one point North even attempted to divert money from an anti-narcotics DEA operation to the Contras. The DEA officials involved refused, and two DEA agents testified before the Kerry Committee. 

The Kerry Committee’s final report, released in 1989, found that “senior US policymakers were not immune to the idea that drug money was a perfect solution to the Contras’ funding problems.” Thus, the committee concluded that, “in the name of supporting the Contras, we abandoned the responsibility our government has for protecting our citizens from all threats to their security and well-being.” 

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Other investigations didn’t agree with Kerry. Even Democratic staff on the main Iran-Contra committee often refused to cooperate. As one Kerry investigator put it, “we had the White House and the CIA against us on one side and our colleagues in the Senate on the other.” National Public Radio and the major television networks didn’t broadcast Kerry’s hearings. Public exposure was limited. Respectable opinion avoided Kerry’s findings.

Nonetheless, in 1998, the CIA’s own Office of the Inspector General confirmed the Kerry Committee’s core findings that the agency had known and ignored that the Contras were deeply involved in cocaine trafficking. As the report put it, the CIA worked with at least “six companies that had been owned and operated by convicted or suspected drug traffickers and were linked to the Contras.” This connivance violated the CIA’s legal obligation to report crimes up the chain of command. The agency’s regulations stated that any violation of US criminal law “by CIA officers and employees, or relating to CIA affairs, shall be reported immediately by an employee to the Inspector General, who shall inform the General Counsel.” That was not done. Furthermore, the OIG found that the agency hid evidence to mislead Congress. 

The defining spectacle of the Iran-Contra affair came in the summer of 1987, when the House and Senate Joint Select committees held 40 days of public hearings. Though dismissed by many as an elaborate whitewash, the hearings did reveal significant illegal activity. Key players were hauled before the cameras and interrogated. Reams of incriminating documents were quoted and entered into the record. But the hearings also, at times conspicuously, avoided evidence of the most controversial crimes, such as drug smuggling. 

Enforcing these boundaries was the committee chairman, Sen. Daniel Inouye of Hawaii (and a World War II hero). A second-generation Japanese-American, Inouye had served in the all-Nisei 442nd Regiment of the US Army — the most decorated American unit in the war. As an infantry lieutenant, Inouye lost his right arm fighting the Germans in Italy. During convalescence, he befriended a wounded Bob Dole, who later became a senator from Kansas and a perennial Republican presidential candidate. The instinct of men like Inouye was: my country, right or wrong. 

Inouye was made chairman because of his diplomacy, perfect etiquette, and previous experience serving on the Senate Watergate Committee. Yet it was hard not to feel that Inouye had also been cast in this role because of who he was: a Japanese-American who literally gave his right arm for his country, even as his country forcibly incarcerated 120,000 innocent Japanese-Americans. Inouye, in short, was the embodiment of forbearance, equanimity, and forgiveness. His mere presence seemed to say: don’t overreact.

As chairman, Inouye had the power to shut down any line of questioning, and used that power to avoid inflammatory revelations. Indeed, Inouye appeared to want to expose as much painful information as needed to restore faith in the system, but no more than that. 

For example, when news broke that Oliver North and other members of the Enterprise had drawn up contingency plans for an emergency suspension of the Constitution — in case of, among other things, a US invasion of Central America — Rep. Jack Brooks (D-Texas) had the temerity to question North about these secret “plans for the continuity of government.” North, his lawyer, and several senators sitting around Inouye looked visibly stressed. The chairman, ever the diplomat, shut down the questioning with: “May I most respectfully request that that matter not be touched upon at this stage. If we wish to get into this, I’m certain arrangements can be made for an executive session.” A seemingly entranced Brooks complied.

Yet even Inouye acknowledged that there existed “a shadowy government with its own air force, its own navy, its own fundraising mechanism, and the ability to pursue its own ideas of the national interest, free from all checks and balances, and free from the law itself.”

As important as Kerry’s exposé was the surprisingly aggressive nature of the Independent Counsel’s investigation and then prosecutions. Lawrence E. Walsh was an old-school establishment Republican and loyal party insider. He had been a Wall Street lawyer and then a judge. Already 74 years old and with an ailing wife when first appointed, Walsh was initially dismissed by many as part of the cover-up. But Walsh put the Constitution above party. He went where the evidence led, even when that meant prosecuting top-level Reagan administration insiders. Both the Reagan and Bush administrations fought with and sabotaged Walsh at every step. But he carried on.

Ultimately, Walsh brought criminal charges against 14 individuals, and secured 11 convictions. Both Oliver North and National Security Adviser John Poindexter were convicted. Many of the convictions were overturned on appeal because of technicalities about certain types of legal immunity having created inadmissible evidence. Walsh was set to prosecute yet more suspects, including former Secretary of Defense Caspar Weinberger, but on Dec. 24, 1992, President George H. W. Bush issued pardons vacating one conviction, three guilty pleas, and two pending cases. The pardons crippled Walsh’s efforts. His final report was published in August 1993, and though it avoided CIA complicity in drug smuggling, it did establish that both Reagan and Bush knew “that high-ranking administration officials violated laws” and destroyed evidence as part of “a concerted effort to deceive Congress and the public.” 

Just as amazing as Iran-Contra’s season of sunlight was how quickly the media and public seemed to forget most of the basic history. A decade after Hasenfus had been led out of the jungle, The San Jose Mercury News reporter Gary Webb “broke” the story of CIA complicity in drug smuggling all over again. 

For those of us who had followed the Kerry Committee, the late 1990s surge of attention to CIA complicity in drug trafficking was welcome but also depressing. Everyone was outraged, all over again, including members of Congress who acted as if there weren’t already a 1,000-page report on this very question. The American urge to forget is deep; so, too, is the desire to be scandalized, again and again. 

During the second season of outrage, the Kerry Committee was rarely mentioned. Predictably, Gary Webb was soon attacked in the same fashion Kerry had been. The press turned on Webb, the intellectuals and liberal professionals abandoned him. Before long, it was only angry black people from drug-ravaged neighborhoods telling the truth about the government’s role in abetting the drug trade. More often than not, they were treated as crazy for pointing out facts that had been documented by the US Senate. The gatekeepers of national discourse, the condescending chattering classes, were hostile and had moved on. Webb eventually committed suicide.

In the end, the Iran-Contra investigations played a strangely dialectical role: they exposed real wrongdoing; but three of the four investigations also functioned as elaborate theatrical concealments of the more serious crimes uncovered by the Kerry Committee, foremost among those CIA-tolerated drug smuggling. So, too, the effects of the spectacle were contradictory. On the one hand, cynicism deepened. But on the other hand, liberal democracy’s immune system against tyranny kicked in, and the political cancer of undemocratic secret government was put, at least momentarily, into remission. 

During Iran-Contra, Congress at first funded a covert war, then cut off such funding. Both Congress’s funding and defunding of the war were fully legal powers of the legislative branch under the US Constitution — for example, the taxing and spending and war powers clauses. Outrageously, the executive branch defied Congress to secretly and illegally continue an unpopular war. And as part of that effort, it allowed addictive drugs to flood the country. Iran-Contra was, in short, the essence of anti-democratic, authoritarian politics.

Iran-Contra showed that the machinery of liberal democracy still, almost, had the capacity to defend and reproduce itself. Sadly, there is reason to fear that during the intervening 40 years, democratic government’s ability to impose accountability upon elite covert politics has only weakened, and that all we have left is the outrage.