After a week of denying any covert activities, U.S. president Ronald Reagan publicly confirms that the U.S. secretly sold arms to Iran, using Israel as an intermediary, with the goal of improving relations with Iran. Reagan later admits the arrangement had become a swap -- arms assistance in return for hostages in Lebanon. The American public is outraged by the dealings with a hostile Iran, as well as with Reagan himself, for breaking his campaign promise to never enter into such negotiations. Some of the arms profits are later discovered to have been diverted to illegally aid Nicaraguan Contra rebels, who are locked in combat with the Communist-backed Sandinistas.