Let us say for arguments sake the international trade in arms was banned as of tomorrow. What would the obvious consequences of that be?

1: If we accept that one, if not the most important responsibility of any sovereign government, is the safety and security of the state, then from tomorrow every single country in the world now has to fend for itself - they now cannot just purchase what they need from others.

2: What all those countries immediately lose are the savings on time, energy and resources, that currently exist. Not every country designs and makes/builds weapons and weapon systems. So from tomorrow if they fulfil that obligation of defending their sovereign integrity, some will have to start from scratch and establish their own domestic capability to manufacture their own weapons and equip their own armed forces. This is going to be extremely costly and those newly created industries will only ever have one customer - themselves.

3: As from tomorrow some countries might decide that they do not need arms, or armed forces. International disputes and the desirability of ever depleting natural resources will not disappear and countries who have decided not to bother establishing adequate defence forces will soon find themselves divorced from their resources or out of existence as independent countries. Don't look to the United Nations to protect such states - the United Nations to date has not prevented any act of aggression by any member state.

I would say such a world is a far more dangerous place than the one we currently live in. Others might disagree.

On the Iran-Contra thing. It really was remarkably simple from the perspectives of both Iran and the USA and provided a "win-win" solution for both parties:

A) Iran in it's ongoing war with Iraq relied on the armed forces and the equipment purchased during the time of the Shah - these were in the main US, British and French weapons and weapons systems. When the Ayatollah Khomeini took over all supplies and spares were cut off. The Iranians found themselves facing defeat, Iraq who bought their weaponry from Russia and France could replace it's combat losses, Iran could not.

B) Iran held US hostages from the US Embassy in Tehran, these were, by the time we are talking about, becoming more of an embarrassment than an asset. They were however still a great bargaining chip.

C) The Iran/Iraq war was one where the International community wanted to see no clear victor as that would destabilise the entire region. In the early stages it looked as though Iraq was going to walk all over Iran.

The solution was blindingly obvious:

The US through proxies guarantee a source of weapons to allow Iran to prosecute the war and drive the Iraqis back in exchange for the US Hostages held in Tehran - That is precisely what happened. The Iran/Iraq War bimbled on for another couple of years and ended in stalemate which was exactly what the international community wanted.