of external relations. It led to the one major scan-
dal of the Reagan era, the so called Iran–Contra
affair. In the Gulf War between Iran and Iraq,
there was no doubt which side the US favoured,
though it imposed an arms embargo on both
countries. Ayatollah Khomeini’s hate campaign
against the US as enemy number one and the
fanaticism of Iran’s Muslim fundamentalists
threatened the conservative Gulf oil states,
Kuwait, Saudi Arabia and the Gulf Emirates.
Consequently they supported Saddam Hussein’s
Iraq, even though he had started the Gulf War
with his invasion of Iran. When Iran countered by
attacking oil shipments from Kuwait, the US and
an international naval force moved in to protect
them. Kuwaiti tankers were reflagged in May
1987 so that they came under direct US protec-
tion. US warships shelled Iranian oil installations
in reprisal for attacks on the oil tankers.
Yet by a twist of fate the scandal that broke
concerned illegal arms shipments from the US by
way of Israel to Iran. The cause was humanitar-
ian. In the Lebanon imbroglio eight American
hostages were taken by Lebanese groups such
as the Hezbollah, the ‘Party of God’, believed to
be responsive to Khomeini’s commands. Their
release was secretly arranged in 1985 in return
for secret shipments of desperately needed arms
and spare parts to the Iranians. These were paid
for handsomely as well. The immediate organiser
of the deal was an intelligence operative in
Washington, Lieutenant-Colonel Oliver North. It
appears to have been his ‘neat’ idea that the
profits from the deal should be illegally chan-
nelled to the Contras. One hostage had been
released and more releases were in prospect when
the deal leaked. The subsequent judicial and
congressional investigations found that the par-
ticipants in the scheme, and Colonel North’s boss
Rear Admiral John M. Poindexter, the national
security adviser, had broken the law. President
Reagan accepted responsibility for dealing with
Iran, but not for the diversion of funds to the
Contras. It does seem unlikely that he fully
grasped what was going on. But the Iran–Contra
affair tarnished the administration’s record. With
the Iran–Iraq war ending in the summer of 1988,
the immediate urgency for active Gulf diplomacy
appeared to have ended. But peace in the Gulf
was soon to prove illusory.
When Reagan delivered his farewell address to
the American people on 11 January 1989 he
could claim with justice that ‘America is respected
again in the world, and looked to for leadership’.
It was also true that countries ‘across the globe
are turning to free markets and free speech – and
turning away from the ideologies of the past.
Democracy, the profoundly good, is also the pro-
foundly productive.’ The astonishing changes in
Eastern Europe in 1989 and 1990 were suddenly
to fulfil Reagan’s prophecy.Americans still felt good when it came to choosing
between the two presidential candidates in
November 1988. The problems of deregulation,
the deficit budgeting, easy credit and junk bonds
largely lay in the future. The economy was still
going strong, the balance of payments improving
and unemployment dropping to around 5 per
cent. But the Republican candidate Vice-President
George Bush was not very inspiring and early in
the summer looked like losing to the Democratic
candidate Michael Dukakis, the governor of
Massachusetts, who had greatly improved the
economy of his state. More charismatic than either
was the Democratic leader, the Reverend Jesse
Jackson. But the time was not ripe for an African
American Democratic vice-presidential running-
mate. Bush further handicapped himself by choos-
ing Senator Dan Quayle, a personable conservative
politician who was considered too young and too
inexperienced. The election turned largely on
domestic issues. Dukakis warned of the need for
higher taxes. Bush riposted with ‘Read my lips, no
new taxes’; it became virtually his campaign slogan.
The Dukakis campaign, by way of contrast, was
inept and lost him his big early lead. ‘Contented
America’, to use Professor Galbraith’s phrase, was
in the majority and turned to the safety of Bush
and to the comforting conclusion that spending
more money on welfare and urban deprivation
provided no solution to America’s social problems.
It was enough for Bush to promise help where it
was really needed and to express the wish to create
a ‘kinder, gentler nation’. On 8 November 1988,
he won convincingly.