The Iranian Islamic Revolution in 1979 and the hostage crisis in Tehran frustrated American policymakers whose response came as an embargo on the new government of Iran. On January 20, 1981, the day Ronald Reagan was inaugurated, the hostages in Tehran were released. In turn, the embargo was relaxed, but relations with Iran did not improve diplomatically. In fact, the newly elected Reagan refused to sell arms directly to Iran. Even so, arms manufactured in the US that were sold to foreign nations continued to find their way to the Iranian military arsenal. The Iran–Iraq War raised the demand for arms and "created opportunities that arms merchants around the world simply could not afford to miss. Indeed, the lure of windfall profits was so great that few countries had any scruples about selling weapons to Iran or Iraq—or both at the same time."