In November of 1986 a newspaper story in Lebanon made its way back to America and exploded into a full-scale U.S. government scandal, which would make Watergate look puny by comparison.  However politically, the results were quite different from those of Nixon's Watergate, because politically the times were quite different.

It was first revealed that U.S. weapons had been sold to Iran, in part to help gain the release of American hostages in Lebanon from Hezbollah, operating there presumably with Iran's assistance.

In part the sale was made also to provide funding for a CIA-backed guerrilla group, the "Contras," attempting to overthrow the leftist Sandinista government of Nicaragua (drug money was also supposedly being funded to support the Contras).

The context of the Contra support was the turmoil that shook the whole of Central America.  El Salvador and Nicaragua were being deeply challenged by pro-Socialist guerrillas attempting to overthrow traditional regimes, regimes blamed for very sluggish economies cursed with high unemployment.  Things were also tense in Guatemala and Honduras.  But the violence was running very high in El Salvador. And worse, the pro-Socialist (Communist?) Sandinistas in Nicaragua were getting a lot of support from Castro's Cuba, indicating an even greater threat to America's allied governments and the American political position itself in this key Central American country.  Thus the support of the anti-Sandinista Contras.

However, all of this support of the Contras was not only being conducted clandestinely, but also quite illegally.  A Democratic-Party-controlled Congress had passed a ruling that the Administration was not to assist the Contras in their rebellion.  And the thus-illegal operation clearly had the authorization somewhere rather high up in the Reagan administration.  Reagan's role himself in the whole affair was not quite clear.

A three-man Tower Commission that was quickly set up by Reagan to look into the matter (and in general to survey the role of the National Security Council in monitoring such matters) concluded its work the following February (1987), finding little concerning any direct involvement of Reagan in the matter.

In March, Reagan, in a TV address, apologized to the nation for the crisis.  He explained that besides trying to set innocent Americans free, he was trying to improve Iranian-American relations by working more closely with Iran's political "moderates."

Finally that November, a report published jointly by Senate and House committees set up in January, which had conducted widely-watched televised hearings from early June to early August, concluded that there were no grounds for bringing criminal charges against the President. But the rreport also concluded that Reagan should have been more careful in supervising what was going on right under his nose.

Reagan's national approval rating plummeted abruptly from over two-thirds of the nation to less than one-half because of the scandal.  But Reagan was not going to be "Watergated" out of office, even with the huge Democratic Party majority in both houses of Congress.  Politically it was too dangerous to take him on, particularly as Reagan's approval rating soon climbed back up again because American eyes were turned more to his successes with Gorbachev in settling the Cold War than they were to his failures in the Iran-Contra affair.

Nonetheless, the affair undermined seriously the American commitment never to pay for hostages, lest payoffs should encourage more political kidnaping in the Middle East (which it certainly did).  And the affair made relations with Latin American neighbors much more difficult.

It also served to make presidential impeachment – which had been unused for over a century (1868-1973) – now since Watergate a rather frequent Congressional political tool designed to bring down an occupant of the White House.  To turn this into a now frequently-employed partisan political instrument was a very dangerous precedent to bring to American democracy.

To undercut the authority of a national leader by having that leader arrested and convicted for "crimes against society" was a frequent political game played in Third World countries.  To have U.S. Congressional opposition now frequently taking up this same political weapon (or then backing down when it became apparent that this action was politically suicidal for the accusing group) should have caused great concern within democratic America.  But sadly, political impeachment had now become part of modern America's new bag of political tricks.

In any case, in 1987 the American public had made it quite clear to their representatives in Washington that they liked their strong president and had no desire to see their country fall back into ideological division such as it had gone through in the later part of the 1960s and the whole of the 1970s – and which Reagan had finally brought the country out of.  Impeachment was not an option ... not at the moment, anyway.

Although the radical phase of Mao's Cultural Revolution was over as China entered the 1970s (Army General Lin Biao had been called in to settle the young Red Guards down and get things back to work, Mao remained still very much in control of the Chinese Communist Party (CCP).  And the Idealism of the Cultural Revolution also remained in place.  According to Mao, the Chinese economy was not to be run by party or government bureaucracy (as in Russia) nor by a capitalist class (as in America) but from the commitment of the Chinese people themselves to work toward high social goals – as outlined by Mao himself, of course.

During the border conflict with the Russians in 1969, General Lin Biao had taken on too much authority, and Mao purposely raised his long-time friend, the political pragmatist Zhou Enlai to power, to counterbalance the radical hardliner Lin's influence.  Ultimately Lin overplayed his hand (he was also very opposed to Zhou's opening up to the Americans) and was killed in a plane crash as he was making an escape to Soviet Russia in September of 1971.  But soon Mao's actress wife Jiang Qing took over Lin's position as the head of the CCP radicals.

In 1972 Mao suffered a stroke – and Zhou was diagnosed with cancer.  Thus the CCP moved to rehabilitate formerly-disgraced (and imprisoned) Deng Xiaoping, as Zhou's possible heir.  He too, like Zhou, was of the pragmatist, not radical, political mindset.  But this then stirred Jiang Qing and some of her radical allies to counter-action.  Things got tense inside the party as Mao's struggle with his health intensified.

Then in January of 1976 Zhou died, and Mao replaced Deng with Hua Guofeng (Hua was someone who stood somewhere in the middle of the radicals and pragmatists).  But then in September Mao died.  And without Mao's protection, Mao's wife Jiang and others of the radical "Gang of Four" were arrested the following month.  In the meantime, Hua tried to make himself appear to the Chinese people as the spiritual successor to Mao.

But the CCP was moving step by step in the direction of the pragmatists.  Many of the three million officials purged during the Cultural Revolution were slowly restored and gradually a number of pragmatists were reinstated to the CCP Central Committee.  At this point, although Hua remained at the top executive post, the real power behind the party was the restored Deng.

However Deng had evolved substantially in his thinking on economic matters over the years, and had come to the realization that China needed to open itself up to foreign investment in China and become active in the global market (like Chinese Taiwan) if the Chinese economy were ever to come to real growth.  Thus in 1977 the Cultural Revolution was declared over, and the next year Deng announced his Four Modernizations program (agriculture, industry, science and defense). Fourteen cities were designated as investment centers, with the idea of opening the Chinese economy to foreign investment, to get the Chinese economy back up and running again.

In 1980 and 1981 Hua was removed from some of his government positions, and a number of party leaders were appointed instead to some of these same positions.  Deng took for himself only the position as chairman of the Central Military Commission.  Nonetheless from this position Deng would hold tight control over Chinese politics during the entire 1980s.

In 1981 Jiang Qing and the other three members of the Gang of Four were finally put on trial for treason.  All four were convicted (death sentences, soon reduced to life imprisonment) and the Maoist radical wing of the Party was basically dismissed or silenced.

Deng now moved China toward his more "pragmatic" program of market-based economic reform.  Although the party and its bureaucracy would still preside over matters, the actual initiative in the development of the Chinese economy was directed toward the Chinese themselves, especially among the more personally ambitious, much as in the West's own market-driven system.

Deng's bringing the Chinese on board with his program at the grass-roots level would produce amazing achievements, but ones however that would fail to take hold elsewhere within the Communist or Socialist world (including Russia, as we shall see below).  Chinese exports now began to grow rapidly.  This occurred particularly because China's new Western trading partners (who were strong supporters of this Chinese economic transition to market economics) allowed the official subsidizing of the Chinese currency exchange rate.  This kept the prices of Chinese products very low on the international market, and the cost of foreign goods very high in China.  This gave the Chinese economy a major boost.  Chinese industrialism now took off at incredible growth rates of around 8-10 percent annually during the 1980s and 1990s (although there was a dip in 1989-1991).

A similar social-economic crisis had hit Soviet Russia during the 1970s, but unlike China, it continued into the 1980s.  And also unlike China, Soviet Russia would not find a successful path out of this crisis.

Soviet farming had never done well since the days of Stalin's forced collectivization, and Russia, once a major exporter of grain, long had to import grain to feed its people, a great burden on its foreign currency reserves.  Also the high cost of Soviet armaments had long cut into the ability of the state to offer its people a level of civilian material housing and comforts that a "workers' paradise" should have had.  Most Soviet workers knew well that their worker counterparts in the capitalist West lived much better off than they did.  In the Soviet Union, the workers' paradise had the feel of a Third World country.  This in turn was creating a decided drop in "working class patriotism" which was taking the form of a large amount of worker absenteeism at the job site, and even when workers did show up, it was not unusual for them to be drunk.  The Soviet economy was in trouble, big trouble.

The one thing Russia had in ample supply that was greatly needed abroad and could bring in hard currency to finance Soviet economic shortcomings was oil (and eventually also natural gas).  Thus the Soviet Union's decision in 1981 to break from the oil pricing of the OPEC oil cartel and sell oil, lots of oil, for whatever price it could get.  And with the underbidding of oil pricing by the Soviets, the price of oil came tumbling down.

Thus the Soviets would not reap the windfall profits from oil that they had been hoping for.  Indeed, many of the oil exporting nations now also found themselves in difficulty as their expected revenue from oil dropped away and they had to cut back drastically on investment plans for growth.

In Soviet Russia things continued to go from bad to worse.  The Muslim revolution in Iran had quickly spilled over into neighboring Afghanistan in the early 1980s as Afghani Muslims answered the call to jihad (the struggle against Evil) against the Soviets and their puppet Communist regime in Kabul.  At the same time, America did not want the Soviets occupying Afghanistan, a point from which they could put pressure on the Persian Gulf region (the major source of the West's oil). Consequently, America undertook to supply the Afghan rebels (the mujahedin) with advanced missiles that could easily kill Soviet tanks and jets.  The Soviets were finding themselves bogged down in a war that, even with a massive military presence in the country, they could not bring to a favorable close. It was as if Afghanistan were the Soviets' "Vietnam."  Soon anti-war feelings began to grow within Russian society, and even within the military itself. Russia was in deep trouble in Afghanistan.

Thus by the early 1980s Soviet morale was sagging terribly, at a time when America's was picking up.  Finally in 1988 the decision was made to withdraw from Afghanistan, the task completed by early 1989.

When Brezhnev died in late 1982, he was replaced as head of the regime by a KGB (Soviet secret police and intelligence operations) hardliner, Yuri Andropov. Andropov tried to tighten party discipline and clamp down on the political dissent that was spreading rapidly around the country.  But his health was failing and only a little over a year later he died.  He was replaced by another equally sick official, Konstantin Chernenko, who served as Soviet leader no more than a year before he too died.  But this time Soviet leadership was taken over by a younger and strongly reform-minded Mikhail Gorbachev, who knew that something dramatic was going to have to take place to save the Soviet Union from simply collapsing.

Reagan meanwhile had been stiffening his position against the Russians, announcing back in 1982 in a speech before the British Parliament how he intended to push the Russian "Evil Empire" to the point of collapse.  He put the B1-Bomber program back in place (which Carter had canceled), armed NATO with America's Pershing II missiles, and in 1983 announced a plan (the Strategic Defense Initiative)² to develop a laser-guided anti-missile defense system that would block incoming nuclear missiles, thus undercutting the Soviet nuclear deterrent.  It would be expensive, at least expensive enough that the Soviets, whose economy was stumbling at this point, would be unable to answer the challenge with a countering program of their own.  But in general, the American population was quite approving of Reagan's new "Star Wars" program.  But in the end, the program would not really be needed, for the Soviet Empire crumbled before the decade was out.

But mostly this challenged Russia in a way that the new Soviet Premier Mikhail Gorbachev knew that his country could not effectively answer. Gorbachev responded instead by offers of a new look to the Soviet Union and a new attitude toward the West.

Reagan, while carrying Teddy Roosevelt's "Big Stick" (his ramping up of America's defense posture) was also ready to follow Roosevelt's policy of "walking softly" with respect to the Soviet Union's new leader Gorbachev.  Reagan began to meet with Gorbachev to see what possibilities existed to develop a new thaw in East-West relations (similar to what was happening in U.S.-Chinese relations at that point).

In 1986, Gorbachev began to put into operation a number of social reforms for Russia, the most important of which were glasnost (a new openness in the society), perestroika (a restructuring of the economic system) and demokratizatsiya (democratization of the political system).  This was designed to put a new lease on life in Communist culture.

Gorbachev's reforms were greeted with great enthusiasm everywhere – in Russia, in Eastern Europe and even in America.

But for Reagan, this was not yet enough.  In June of 1987, as he stood before the Berlin Wall at the Brandenburg Gate, Reagan uttered a challenge which would have a dramatic impact on everyone:

. . . if you truly want peace and liberalization, Mr. Gorbachev, open this gate!  Mr. Gorbachev, tear down this wall!

The gate did not open right away.  The wall was not torn down right away. But things were now headed that way.  In the last years of his administration, Reagan had become a fond friend of Gorbachev, visiting back and forth between America and Russia.  Reagan truly wanted to support Gorbachev in his effort to reform Russia.

But in the process Gorbachev had set loose in the Soviet Union a small opportunity for the revolution of rising expectations to take root.  Could he reform Russia without having it break down in revolutionary chaos in the process?

The answer to that question would reveal itself soon after the new American presidential administration under Reagan's Vice President, George H.W. Bush, got underway in 1989.

²Termed derisorily by Kennedy as Reagan's "reckless Star Wars schemes."