In late 1986 President Ronald Reagan became embroiled in in what became known as the Irangate Scandal. It was discovered that the Reagan administration had been selling arms to the Islamic fundamentalist government in Iran in order to gain the release of American hostages in the Lebanon.The profits of the deal were then used to supply the anti-Marxist Contra guerrillas fighting in Nicaragua.

The scandal was damaging to Reagan because he had told the American public he would never "yield to terrorist blackmail". As a result of the scandal, the White House chief of staff, Donald Regan and his National Security Adviser, John Poindexter, were forced to resign. Reagan survived but the case damaged his image and gave the impression that he was not in full-control of his administration.