More on the Iran-Contra Affair: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=227a83a9f89b96268ca0bc442383e9d3&camp=1789&creative=9325&index=books&keywords=iran%20contra
On 17 June 1985, National Security Adviser Robert McFarlane wrote a National Security Decision Directive which called for the United States to begin a rapprochement with the Islamic Republic of Iran. The paper read:
Dynamic political evolution is taking place inside Iran. Instability caused by the pressures of the Iraq-Iran war, economic deterioration and regime in-fighting create the potential for major changes inside Iran. The Soviet Union is better positioned than the U.S. to exploit and benefit from any power struggle that results in changes from the Iranian regime … The U.S should encourage Western allies and friends to help Iran meet its import requirements so as to reduce the attractiveness of Soviet assistance … This includes provision of selected military equipment.
Defense Secretary Caspar Weinberger was highly negative, writing on his copy of McFarlane’s paper: “This is almost too absurd to comment on … like asking Qaddafi to Washington for a cozy chat.” Secretary of State George Shultz was also opposed, stating that having designated Iran a State Sponsor of Terrorism in January 1984, how could the United States possibly sell arms to Iran? Only the Director of the Central Intelligence Agency William Casey supported McFarlane’s plan to start selling arms to Iran.
In early July 1985, the historian Michael Ledeen, a consultant of National Security Adviser Robert McFarlane, requested assistance from Israeli Prime Minister Shimon Peres for help in the sale of arms to Iran. Having talked to an Israeli diplomat David Kimche and Leeden, McFarlane learned that the Iranians were prepared to have Hezbollah release American hostages in Lebanon in exchange for Israelis shipping Iran American weapons. Having been designated a State Sponsor of Terrorism since January 1984, Iran was in the midst of the Iran–Iraq War and could find few Western nations willing to supply it with weapons. The idea behind the plan was for Israel to ship weapons through an intermediary (identified as Manucher Ghorbanifar) to the Islamic republic as a way of aiding a supposedly moderate, politically influential faction within the regime of Ayatollah Khomeini who was believed to be seeking a rapprochement with the United States; after the transaction, the United States would reimburse Israel with the same weapons, while receiving monetary benefits. McFarlane in a memo to Shultz and Weinberger wrote:
The short term dimension concerns the seven hostages; the long term dimension involves the establishment of a private dialogue with Iranian officials on the broader relations … They sought specifically the delivery from Israel of 100 TOW missiles …
The plan was discussed with President Reagan on 18 July 1985 and again on 6 August 1985. Shultz at the latter meeting warned Reagan that “we were just falling into the arms-for-hostages business and we shouldn’t do it.”