The Iran-Contra Affair intensified the already existing Cold War tensions between the USA and the Soviet Union.
<em>The Iran-Contra affair</em> was a political scandal in the United States that occurred during the second term of Reagan's presidency. Arms were secretly sold to Iran and the profits obtained from the sale went to support the Contras in Nicaragua.
<em>In Nicaragua</em>, young Marxists known as Sandinistas took power and turned to the Soviet Union for support and advisers. Soviet Union and Cuba both backed the new Sadinistas government. Seeing it as a way to spread communism, the Reagan administration<em> backed the Contras</em> ( the opposition to the new government). The Contras rebels received financial and military support from the U.S., the rebels were also trained covertly by the CIA. The money for the Contras came from illegal arms sales to Iran. The funding of the Contras had been prohibited by the Congress.
<em>The official justification for the arms shipment to Iran</em> was to pay for the release of seven American hostages in Lebanon. Iran was the subject of arms embargo and any arms sales were prohibited. It turned out that the sales started even before any hostages were taken. Iran was involved in a war with Iraq and the United States feared that it would fall under the Soviet Union's influence, as the Soviet Union supported Iraq in that war.
A dollar diplomacy was 'the use of a country's financial power to extend its international influence.' and Moral diplomacy was is the system in which support is given only to countries whose beliefs are analogous to that of the nation.
