During a trip to Jerusalem on May 5, 1985, Michael Leeden, the assistant to Ronald Reagan's national security advisor, Robert McFarlane, told his boss about a proposal he received from the Israeli prime minister, Shimon Peres. Peres purportedly informed Leeden of an Iranian offer to purchase large quantities of TOW anti-tank and Hawk anti-air missiles and Israel would serve as an intermediary by using its arms traffic network to Iran, but wanted a green light from the highest American authorities. What Israel believed to be beneficial to them was that they hoped to resume negotiations of repatriating more Iranian Jews to Israel, and with luck, Israel might even reap the profits of arm sales to Iran.
With the aim of exchanging weapons for hostages in Lebanon, Robert McFarlane undoubtedly thought that Ronald Reagan and CIA director William Casey would ccept the idea of such an exchange since they had already endorsed a similar scheme five years earlier. In June Robert McFarlane smoothly convinced William Casey to back his plan. In mid- July he visited Bethesda Hospital, where Ronald Reagan had just been operated on for colon cancer. The recovering president gave his agreement, convinced that he was working to protect his unjustly kidnapped compatriots. Secretary of State George Schultz and Secretary of Defense Caspar Weinberger were fiercely opposed to the clandestine operation, which they considered detrimental to the United States’ interests, but they had no choice but to follow the president’s decision.
Feeling confident, Leeden informed the Israeli government that the highest American authorities had agreed to the shipment of military equipment to Iran. As agreed, Israel would take the arms directly from its own inventory and deliver them to Tehran by airplane and ship. These shipments would supplement those Israel carried out on its own behalf. The United States would replenish Israeli stockpiles once it had received the money from the transaction. The whole operation had to remain secret.
On August 20, 1985, the first delivery of one hundred TOW missiles arrived in Iran. It was followed three weeks later by an additional 400 missiles. On September 15 the Islamic Jihad freed Pastor Benjamin Weir in Beirut. In mid-November Israel shipped Iran eighteen Hawk missiles with the White House’s blessing. But the missiles were not the version requested by the Iranian regime, which refused to free any hostages if the missiles delivered did not meet their requirements. To make matters more complicated, Manucher Ghorbanifar, the Iranian arms dealer involved in the deal, imposed a 40 percent increase on the price of the equipment delivered. Furious, the Iranians threatened to put a stop to the operation. Robert McFarlane, discouraged and increasingly contested in circles of power, stepped down on December 5, officially citing family reasons.
The tensions grew just as Admiral John Poindexter took McFarlane's position, who discovered the situation upon taking office. He decided to continue his predecessor’s operation, but suggested doing so without Ghorbanifar’s services, dealing directly with the Iranians.At this stage one of the affair’s key figures was brought in: Lieutenant Colonel Oliver North, a marine responsible for antisubversion efforts with the National Security Council. North proposed to use the money paid by the Iranians to finance the Contras, the anti-Communist guerillas fighting the Sandinista regime in Nicaragua.
Over the next few weeks, the new team settled in and negotiations between Washington, Jerusalem, and Tehran collapsed. In February 1,000 TOW missiles and large quantities of spare parts for Hawk missiles arrived in Iran on flights directly chartered by the CIA. Annoyed by the delays, the Iranians created more tension by refusing to release more hostages. They demanded more missiles, as well as the release of Shiite prisoners in Kuwait and fifty Hezbollah combatants held by the Israelis in South Lebanon. The Israeli authorities were delighted at this opportunity to get back into the negotiations and re-impose themselves as middlemen for weapon shipments.
On November 5, 1986, the Iranian Speaker of Parliament, Ali Akbar Hashemi-Rafsanjani disclosed details of an alleged visit to Iran a few months ago by Robert McFarlane and several other special security advisers to President Reagan, claiming that the Americans arrived in a cargo plane and asked permission to deliver a message from Reagan to Iranian leaders. According to Rafsanjani, whose remarks were broadcast by Tehran radio, Iranian leaders refused to meet the "uninvited visitors", who were deported after being detained in a hotel for 5 days. He also claimed the Americans offered gifts, including handguns and a Bible signed by Reagan. McFarlane asserted that the Iranians release the hostages in Beirut but the Iranians were unable to secure an immediate release. As for the proof of his claims, Rafsanjani said they photographed the visitors' passports and photocopied the Bible signed by Reagan. Iran is not yet completely certain that the "self-styled Mr. McFarlane" was genuine, he said, but the photograph is "similar" to the face of McFarlane.
Little did the Iranians know, discussions were complicated by the American raid on Iran's ally, Libya. On April 15, 1986, fifty U.S. air force and U.S. navy aircraft bombed several symbolic targets of the Libyan regime after Libya had ordered the deadly bombing of a Berlin nightclub in which several American servicemen had been killed. Two days later the American hostage Peter Kilburn and the British hostages John Douglas and Philip Padfield were executed in Lebanon.
To ease tensions, Vice President George Bush traveled to Kuwait to pressure local authorities to release some of the Shiite prisoners sentenced to death following the December 1983 terrorist attacks. He persuaded the Emir of Kuwait to agree not to execute them. Yet this was not enough to convince the Iranians to return to the negotiating table. Going for broke, Admiral Poindexter authorized a delivery of 500 TOW missiles to Tehran— this time through the Israeli network. He also created a small team of American experts, which he sent to the Iranian capital to directly negotiate the freeing of the hostages outside of Manucher Ghorbanifar’s stranglehold on the situation. He gave his predecessor Robert McFarlane a chance to come back into the game by appointing him head of the delegation.
Although McFarlane came out of the meeting empty handed, negotiations continued at a faster pace. On July 26, 1986, Father Jenco was released in Beirut. A week later the American government sent Iran another batch of spare parts, which allowed the Iranian army to put close to one hundred Hawk missiles back in service. In mid-September an Iranian delegation discreetly traveled to Washington to further discussions, which then continued in Germany in October. On October 28, another batch of 500 TOW missiles was delivered to Iran. On November 2, David Jacobsen was released in Beirut after spending more than a year and a half in captivity. He would be the last American hostage freed during the war; the next day the Iran- Contra scandal became worldwide news, putting the American administration in an extremely delicate position. In fifteen months the United States had only obtained the release of three hostages (out of five), in exchange for delivering Iran 2,500 TOW missiles and the equivalent of 300 Hawk missiles.
The purpose of this arms sale was that Iran was in desperate need to hold off Iraqi counter-offensives. From 1980 to 1988, Iran and Iraq was at war, costing a total of 900,000 dead and millions wounded. Iraq had the advantage of loans borrowed from Saudi Arabia and Kuwait, and used those loans to buy state-of-the-art weaponry to fight against Iran, one of those were tanks. By late 1988, Iraq had four times as many tanks, armored vehicles, artillery and six times as many combat aircraft as Tehran. Iranian generals estimated they would need the acquisition of 2,500 tanks, 2,000 artillery pieces and several hundred combat aircraft to regain the strategic parity with Iraq. Iran, isolated from the world, had to use all necessary means to prevent an Iraqi domination, including buying arms from the "Great Satan", the United States.
Sources: Rajaee, Farhang. The Iran-Iraq war: the politics of aggression. Gainesville: University Press of Florida, 1993.
Razoux, Pierre. The Iran-Iraq war, Cambridge, Massachusetts ; London, England: The Belknap Press of Harvard University Press, 2015.
FBIS (Foreign Broadcast Information Services) Middle East & South Asia Review Daily Report, "Iran," November 5, 1986.
Sauners, Harold H., "The Iran-Iraq War: Implications for US Policy," in Gulf Security and the Iran-Iraq War, edited by Thomas Naff, Washington D.C.: National Defense University Press.