What incident is commonly referred to as the XYZ Affair?

The XYZ Affair was a significant diplomatic incident that occurred in the late 18th century, specifically in 1797-1798. It arose from tensions between the United States and France, primarily over issues related to France's naval warfare against Britain, which American shipping was caught up in. The affair involved a failed negotiation with French diplomats, who demanded bribes before they would engage in peace talks with American envoys.

American representatives were sent to France to address these escalating tensions, but they encountered three agents, referred to as X, Y, and Z, who insisted on bribes as a precondition for diplomatic dialogue. This incident caused outrage in the United States and led to a quasi-war with France, and it significantly impacted American politics, contributing to the rise of the Federalist Party and the strengthening of the U.S. military.

The other options reflect unrelated historical events or contexts that do not relate to the core issue of the XYZ Affair, which is why they are not the correct answer. The focus of the affair was on the diplomatic and secretive nature of the demands for payment from the French, highlighting issues of integrity and national honor in foreign relations at that time.