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Reagan’s desire to aid the Contras even after Congress ended its support led him, surprisingly, to Iran. In September 1980, Iraq had invaded neighboring Iran and, by 1982, had begun to gain the upper hand. The Iraqis needed weapons, and the Reagan administration, wishing to assist the enemy of its enemy, had agreed to provide Iraqi president Saddam Hussein with money, arms, and military intelligence. In 1983, however, the capture of Americans by Hezbollah forces in Lebanon changed the president’s plans. In 1985, he authorized the sale of anti-tank and anti-aircraft missiles to Iran in exchange for help retrieving three of the American hostages.

A year later, Reagan’s National Security Council aide, Lieutenant Colonel Oliver North, found a way to sell weapons to Iran and secretly use the proceeds to support the Nicaraguan Contras—in direct violation of a congressional ban on military aid to the anti-Communist guerillas in that Central American nation. Eventually the Senate became aware, and North and others were indicted on various charges, which were all dismissed, overturned on appeal, or granted presidential pardon. Reagan, known for delegating much authority to subordinates and unable to “remember” crucial facts and meetings, escaped the scandal with nothing more than criticism for his lax oversight. The nation was divided over the extent to which the president could go to “protect national interests,” and the limits of Congress’s constitutional authority to oversee the activities of the executive branch have yet to be resolved.

Visit the Brown University site to learn more about the Iran-Contra congressional hearings. Read transcripts of the testimony and watch the video of President Reagan’s address to the nation regarding the operation.

The cold war waxes and wanes

While trying to shrink the federal budget and the size of government sphere at home, Reagan led an unprecedented military buildup in which money flowed to the Pentagon to pay for expensive new forms of weaponry. The press drew attention to the inefficiency of the nation’s military industrial complex, offering as examples expense bills that included $640 toilet seats and $7,400 coffee machines. One of the most controversial aspects of Reagan’s plan was the Strategic Defense Initiative (SDI), which he proposed in 1983. SDI, or “Star Wars,” called for the development of a defensive shield to protect the United States from a Soviet missile strike. Scientists argued that much of the needed technology had not yet been developed and might never be. Others contended that the plan would violate existing treaties with the Soviet Union and worried about the Soviet response. The system was never built, and the plan, estimated to have cost some $7.5 billion, was finally abandoned.

Anticipating his reelection campaign in 1984, Reagan began to moderate his position toward the Soviet Union, largely at the initiative of his new counterpart, Mikhail Gorbachev. The new and comparatively young Soviet premier did not want to commit additional funds for another arms race, especially since the war in Afghanistan against mujahedeen—Islamic guerilla fighters—had depleted the Soviet Union’s resources severely since its invasion of the central Asian nation in 1979. Gorbachev recognized that economic despair at home could easily result in larger political upheavals like those in neighboring Poland, where the Solidarity movement had taken hold. He withdrew troops from Afghanistan, introduced political reforms and new civil liberties at home—known as perestroika and glasnost —and proposed arms reduction talks with the United States. In 1985, Gorbachev and Reagan met in Geneva to reduce armaments and shrink their respective military budgets. The following year, meeting in Reykjavík, Iceland, they surprised the world by announcing that they would try to eliminate nuclear weapons by 1996. In 1987, they agreed to eliminate a whole category of nuclear weapons when they signed the Intermediate-Range Nuclear Forces (INF) Treaty at the White House ( [link] ). This laid the foundation for future agreements limiting nuclear weapons.

Questions & Answers

it is the relatively stable flow of income
Chidubem Reply
what is circular flow of income
Divine Reply
branches of macroeconomics
SHEDRACK Reply
what is Flexible exchang rate?
poudel Reply
is gdp a reliable measurement of wealth
Atega Reply
introduction to econometrics
Husseini Reply
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Jorge
hi
abubakar
hi
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hi
Mahesh
Hi
Tom
Why is unemployment rate never zero at full employment?
Priyanka Reply
bcoz of existence of frictional unemployment in our economy.
Umashankar
what is flexible exchang rate?
poudel
due to existence of the pple with disabilities
Abdulraufu
the demand of a good rises, causing the demand for another good to fall
Rushawn Reply
is it possible to leave every good at the same level
Joseph
I don't think so. because check it, if the demand for chicken increases, people will no longer consume fish like they used to causing a fall in the demand for fish
Anuolu
is not really possible to let the value of a goods to be same at the same time.....
Salome
Suppose the inflation rate is 6%, does it mean that all the goods you purchase will cost 6% more than previous year? Provide with reasoning.
Geetha Reply
Not necessarily. To measure the inflation rate economists normally use an averaged price index of a basket of certain goods. So if you purchase goods included in the basket, you will notice that you pay 6% more, otherwise not necessarily.
Waeth
discus major problems of macroeconomics
Alii Reply
what is the problem of macroeconomics
Yoal
Economic growth Stable prices and low unemployment
Ephraim
explain inflationcause and itis degre
Miresa Reply
what is inflation
Getu
increase in general price levels
WEETO
Good day How do I calculate this question: C= 100+5yd G= 2000 T= 2000 I(planned)=200. Suppose the actual output is 3000. What is the level of planned expenditures at this level of output?
Chisomo Reply
how to calculate actual output?
Chisomo
how to calculate the equilibrium income
Beshir
Criteria for determining money supply
Thapase Reply
who we can define macroeconomics in one line
Muhammad
Aggregate demand
Mohammed
C=k100 +9y and i=k50.calculate the equilibrium level of output
Mercy Reply
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money as unit of account means what?
Kalombe
A unit of account is something that can be used to value goods and services and make calculations
Jim
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Muhammad
I want to know how can we define macroeconomics in one line
Muhammad
it must be .9 or 0.9 no Mpc is greater than 1 Y=100+.9Y+50 Y-.9Y=150 0.1Y/0.1=150/0.1 Y=1500
Kalombe
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Kalombe
hi can someone help me on this question If a negative shocks shifts the IS curve to the left, what type of policy do you suggest so as to stabilize the level of output? discuss your answer using appropriate graph.
Galge Reply
if interest rate is increased this will will reduce the level of income shifting the curve to the left ◀️
Kalombe
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Source:  OpenStax, U.s. history. OpenStax CNX. Jan 12, 2015 Download for free at http://legacy.cnx.org/content/col11740/1.3
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