The Iran-Contra Affair The tangled U.S. foreign-policy scandal known as the Iran-contra affair came to light in November 1986 when President Ronald Reagan said yes to reports that the United States had secretly sold arms to Iran. He said that the goal was to improve relations with Iran, not to get releases of U.S. hostages held in the Middle East by terrorists (although he later agreed that the arrangement had in fact turned into an arms-for-hostages swap). People spoke out against dealings with the hostile Iranian government all over the place. Later in November, Att. Gen. Edwin Meese discovered that some of the arms profits had been used to aid the Nicaraguan "contra" rebels