WHO WAS BETRAYED?

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000303560004-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: July 23, 2010
• Sequence Number: 4
• Publication Date: December 8, 1986
• Content Type: OPEN SOURCE

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ORTtCLEa JPEgiiEp TIME
ON IA PAOE 8 December 1986
Was Betrayed?
Who
While his aides were out of control, Reagan was out of touch
They were only five
words. and rather bland
r= T= ones at that. But they were
among the most self-dam-
aging the President of the U.S. could have
uttered. "I was not fully informed," Ron-
ald Reagan told the reporters he sum-
moned to a special briefing last Tuesday.
In an attempt to defend himself from sus-
picion of complicity in the biggest scandal
to threaten Washington since Watergate,
he thus highlighted the most fundamental
flaw in his stewardship of the presidency,
one that could undermine his effective-
ness for the remaining two years of his
term.
More immediately shocking, to be
sure. were the other matters that Reagan
and Attorney General Edwin Meese went
on to disclose. America's secret sale of
arms to Iran. distressing enough to begin
with. had turned into an outright scandal:
much of the money Iran paid for the
weapons had been diverted to the contras
in Nicaragua. There was every indication
that laws had been broken. Heads were
starting to roll: Reagan had accepted the
resignation of National Security Adviser
John Poindexter, the fourth departure
from that critical post in six years. and
fired Marine Lieut. Colonel Oliver North.
Poindexter's subordinate in the National
Security Council. Perhaps most startling
of all. Reagan and Meese were asking the
nation to believe something that seemed
flat-out incredible: that Ollie North, a fur-
tive. 43-year-old member of the NSC staff
who operated out of an office across the
street from the White House. had ar-
ranged the contra scam without the
knowledge of the State Department. the
Defense Department, the CIA, the Joint
Chiefs of Staff. the White House chief of
staff or anyone in authority except his
boss. Poindexter. who did nothing to stop
him.
It was more than enough to raise
dread echoes of the word so often tossed
around in hyperbole. so rarely in earnest:
Watergate. The parallels might be exag-
gerated-this scandal. after all, was an-
nounced by the Administration rather
than forced out by the courts-but they
were there just the same. Once again
there were rumors of documents being de-
stroyed by North and Poindexter). Once
again the White House was resisting de-
mands for a special prosecutor ( now
called independent counsel) put forth by
Congressmen who did not trust the Ad-
ministration to investigate itself. Once
again congressional hearings were getting
ready to launch upon their unknown and
potentially damaging course. Worst of all.
there was a revival. before last Tuesday's
press briefing was over. of the quietly poi-
sonous question so well remembered from
1973: "What did the President know and
when did he know it"
Yet in the end the truly shattering
possibility presented itself that Reagan
really did not know what was happening
across the street Indeed. questions about
what he did not know and why he did not
know it seemed fully as unsettling as their
echoes from the Watergate era. That little
secret everyone shared about the Presi-
dent-that he is oblivious to the nuances
of his policies. out of touch with the daily
operation of Government and blithely de-
tached from distracting bits of fact-has
begun to seem, in the wake of Iceland and
Iran and Nicaragua. to be far more dan-
gerous than bemusing.
In the past few years these tendencies
have combined with two others that were
almost bound to cause trouble sooner or
later. One is a penchant for covert actions
that fit in with Reagan's gung-ho activ-
ism. Finding some legal justification for
them was another of those details that the
President left to aides. The other tenden-
cy was to delegate disproportionate au-
thority to subordinates who took a can-do
approach. and then to let them operate
with little supervision. In retrospect it
seems absurd that so ostensibly minor a
functionary as North would have been en-
trusted with such delicate matters as ne-
gotiating freedom for American hostages
held in Lebanon and organizing a secret
network to supply the contras. And not
only seems-it was absurd. and it got
Reagan right into a dangerous mess For
almost six years Reagan got away w ith his
approach to the presidency. In" fact. he
managed to convince the public. and even
some of his critics. that it was part and
parcel of his magic for dynamic leader-
ship. Like his policies or not. it felt right to
have a President who kept his eve on bold
initiatives and left the details to experts
Certainly mistakes were made. and in the
field of foreign policy in particular the
Administration often seemed to be speak-
ing in a cacophony of quarreling voices
that the President could not or would not
harmonize. But on the whole the results
appeared to be good.
Now, however. in the suddenly inter-
twined cases of Iran and the con-
tras, all the distressing tendencies
of the Administration have com-
bined to produce the kind of blun-
ders that resonate far more than an
error in judgment, however seri-
ous. Errors in judgment can be,
and in Reagan's case regularly
have been, forgiven. But this disas-
ter throws a pitiless light on the
way the President does his job.
confirming the worst fears of both
his friends and his critics. Simulta-
neously stumbling into the Iran fi-
asco and allowing a bizarre scam
to fund the contras to take place
had an impact powerful enough to
scar Teflon precisely because the
events seemed to reveal personal
characteristics that were both fun-
damental and worrisome.
For that very reason. perhaps.
Reagan stubbornly refuses to ad-
mit he made any mistakes. Yes, he
concedes, the diversion of funds to
the contras was "improper" -but
then he did not know about it. He
fails to see he should have made it
clear that he would not tolerate
any flouting of the express will of
Congress. And as for secretly slip-
ping arms to Iran-well. he did it for the
worthy motives of restoring American in-
fluence in a strategically vital nation and
securing the release of hostages. "I think
we took the only action we could have in
Iran," he said in an interview with TIME
last week. "I am not going to disavow it. I
do not think it was a mistake." Even now
he seems unable to appreciate that this
action shattered his own vehemently pro-
claimed principle of never paying ransom
to terrorists, and in the process dented the
moral stature and credibility that is the
true source of America's unique clout in
world affairs.
For the same reasons, the
blunder is a peculiarly difficult one
to repair. Disastrous policies can
be reversed. subordinates who get
a President in trouble can be re-
placed, and those who may have
broken the law can be punished.
What is not readily recoverable,
once it has been lost, is trust. And
Reagan has seriously. if unwitting-
ly. strained the trust of allies. Con-
gress and the American public in
his Administration's credibility
and,'competence. It is too early to
say that his Presidency has been
crippled, though that could hap-
pen if the dismaying pattern of
new revelations and unconvincing
explanations continues much long-
er. But it seems almost certain that
whatever comes of the many inves-
tigations now in progress, Reagan
will emerge as a diminished Presi-
dent, his aura of invincibility shat-
tered, his fabled luck vanished, his
every policy regarded with new
suspicion.
That had been a strong possi-
bility even before last week's Continued
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bombshells about the contra cash diver-
sion. The sale of arms to Iran had hit a
raw nerve in a public still nursing bitter
memories of the violent anti-American-
ism displayed during the hostage crisis of
1979-81, and the Administration's early
explanations of the rationale and method-
ology of the shipments convinced hardly
anyone. Briefings of the Senate and House
intelligence committees by Poindexter.
CIA Director William Casey and other of-
ficials on Friday, Nov. 21, failed to dispel
congressional feelings that the full story
had still not come out. The Congressmen
did not know that Meese shared their
opinion. The day before the brief-
ings, Meese called his assistant,
Charles Cooper, into his office for
a long review of legal issues that
Congressmen might raise. The
more they studied what the Ad-
ministration officials proposed to
say. the more Meese became con-
vinced that they were not entirely
sure what they would be talking
about. Says Meese: "A lot of people
didn't know certain things that
were going on that were being
done by others."
Worried that the Administra-
tion was about to damage its case,
Meese went to the White House
Friday morning, while the brief-
ings were in session, to lay out his
fears to the President. They were
joined by White House Chief of
Staff Donald Regan and Poin-
dexter. Poindexter's head may al-
ready have been on the block: Re-
gan had been talking, perhaps
inadvertently, about the National
Security Adviser's departure as if it
were an accomplished fact.
In any case, the President au-
thorized Meese to conduct an in-
vestigation and report results to
him before the next meeting of the Na-
tional Security Council at 2 p.m. the fol-
lowing Monday. It was a natural move;
some of Reagan's retinue of unofficial ad-
visers from California had begun pressing
to have control of the Iran mess turned
over to old Reagan loyalists, of whom
Meese is one of the most trusted.
Meese chose a select team of three as-
sistants, including Charles Cooper, who
assembled and read documents Friday
night. On Saturday they began their ques-
tioning. The Attorney General called on
-Secretary of State George Shultz at home
and talked with Secretary of Defense Cas-
par Weinberger and CIA Director
Casey as well. Other investigators
questioned Poindexter and his pre-
decessor, Robert McFarlane, who
had begun the contacts with Iran.
Meese's assistants pored over
North's papers in his office from
early Saturday morning until late
into the evening, then summoned
North to Meese's office in the Jus-
tice Department on Sunday for a
session that lasted all afternoon.
When the questioning began,
nobody except North, Poindexter
and McFarlane knew of the trail
that would lead from Iran to the
contras, or so goes the official story
to date. On Saturday, however,
Meese's team came across some
puzzling and alarming evidence, in
the form of "intercepts." hinting
that Iran had paid more for U.S.
weapons shipped through Israel
than the $12 million the U.S. had
received for the arms. "Intercepts"
is intelligence-community jargon
for transcripts of telephone or ca-
ble messages that have been wire-
tapped. Says Meese: "There was
talk in the field that there were deficien-
cies in the amount of money involved. and
we found some documents that hinted at
this happening."
On Monday Meese went to the White
House early to brief the President and late
in the day interviewed Vice President
George Bush. Bush later told TIME he is
convinced the "President is telling the full
and total truth" (see interview). That after-
noon the NSC met as scheduled. but the
problems that had surfaced in Meese's in-
quiry were not discussed in detail.
The President had other matters to
worry about. He had to cope with an open
rebellion by the State Department, the
most astonishing example yet of how
deeply his Iran policy had split his own
Administration. The previous week.
Shultz had won Reagan's grudging an-
nouncement that there would be no more
arms sales to Iran, but the Secretary was
not satisfied. Just before the NSC met. he
dispatched Deputy Secretary of State
John Whitehead to testify at a hearing of
the House Foreign Affairs Committee.
Whitehead directly contradicted Rea-
gan's repeated assertions that U.S. con-
tacts with Tehran had caused Iran to
moderate its support of terrorism. Said
Whitehead: "I don't like to differ with my
President. but I believe there is still some
continuing evidence of Iranian involve-
ment in terrorism." One U.S. official con-
sidered Whitehead's testimony "tanta-
mount to a declaration of war."
If so. Shultz won the war. At the NSC
meeting Reagan agreed to give the Secre-
tary of State full control of future Iranian
policy. It was more a symbolic than a
practical victory. Since arms sales have
been ended and Shultz is not eager to re-
sume diplomatic contacts with Tehran.
even supposing Ayatullah Ruhollah Kho-
meini would allow any, there is no longer
much of an Iranian policy to be in charge
of. The State Department nonetheless ex-
ultantly trumpeted its triumph and an-
nounced that Shultz now planned to stay
in office until the "end of the Administra-
tion." Well. maybe: the Secretary is still
under fire at a displeased White House for
this rebellion. Speculation continues that
the Secretary will quietly depart in anoth-
er few months after the uproar dies down.
Following the NSC meeting, events
moved quickly toward the climax almost
nobody in Washington had anticipated.
Late Monday afternoon Meese personally
questioned Poindexter for the first time
and got the impression that the National
Security Adviser was ready to quit. Poin-
dexter, who is a vice Admiral. promptly
confirmed that desire by immediately of-
fering his resignation to Reagan, who ac-
cepted it the next morning: he told the
President he wanted to return to active
duty in the Navy. Nobody made any at-
tempt to dissuade him. According to one
insider. Reagan was far more angry with
Poindexter than the President would let
on in public. North was *relieved of his
duties." as Reagan put it. sometime Tues-
day morning. Although he had tendered
his resignation beforehand. he found out
about his fate officially only when Reagan
and Meese went on television.
At a special meeting Tuesday morn-
ing. Meese laid his findings before the
\SC. The advisers agreed that the Admin-
istration had to disclose immediately
what the Attorney General had discov-
ered. Reagan had asked Meese to conduct
the press briefing that was scheduled for
noon that day. 'I was not being apprised
of a great opportunity." joked Meese. but
his manner belied his words. He spoke
with verve and at times appeared to be
enjoying playing again the prosecutor he
once was.
The essence of his report was stark
and startling. The U.S. had prov ided $ (-
million in weapons and spare parts to Is-
raeli representatives. They then resold the
arms to Iran for a much higher price, and
the money was paid into Swiss bank ac-
counts. The CIA received the original S 12
million and repaid it to the Pentagon. But
anywhere from S 10 million to $30 million
went into numbered accounts that Meese
said were "under the control of represen-
tatives" of the contras. Presumably, the
money wns use to purchase weapons that
the rebels need to wage their guerrilla war
against the Marxist Sandinista govern-
ment of Nicaragua. North was. according
to Meese. the "only person in the United
States Government" who knew precisely
of the money transfer. Poindexter knew
vaguely about the transactions. and
McFarlane learned something about
them while pursuing diplomatic contacts
with Iran as a special presidential emis-
sary after he had resigned from the NSC
But neither seems to have told anybody in
the Administration's chain of command.
Later in the week. Meese added that "one
or more consultants" to the Government.
whom he would not name or further iden-
tify. also appear to have been involved.
The immediate result of Meese's reve-
lations was a spate of denials. In Jerusa-
lem. the three top officials of the Israeli
government-Prime Minister Yitzhak
Shamir. Foreign Minister Shimon Peres
and Defense Minister Yitzhak Rabin-
met in a crisis session and drafted a state-
ment. For the first time. the government
admitted what everyone knew: Israel had
"helped in the transfer of defensive weap-
ons and spare parts from the U S. to
Iran." But the Israelis flatly denied fun-
neling any money to the contras. Accord-
ing to the statement. "The payment for
this equipment was made directly by an
Iranian representative to a Swiss bank. in
accordance with instructions from the
American representatives."
,Z.
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umbrella organization. vehemently in-
sisted that neither he nor any colleague
that he knew of had got the cash. or re-
ceived arms that would have cost any-
thing like 510 million (let alone $30 mil-
lion). His statements caused some
private grumbling among delegates to a
contra meeting in Costa Rica: some ap-
peared to suspect that the money might
have gone into someone's pockets.
At week's end the mystery of who did
get the money from the slush fund was de-
veloping into one of the most intriguing
aspects of the entire affair A whole com-
plex array of questions awaited answers:
Who. exactly. negotiated the price [ran
paid for its U.S. weapons? Who might
have set up the Swiss bank accounts and
really controlled those accounts' What
happened to the money that supposedly
flowed through the accounts' Was it con-
nected in any way to the arms that a net-
work of private donors assisted by North
had supposedly bought for the contras and
had flown to them from an air base in El
Sal, ador'
Another controversy was developing
over the destruction of documents. North's
office was not sealed until after he was
fired. and he is said to have fed some pa-
pers into a pulverizing machine before that
happened. Administration officials con-
tended that copies of any official docu-
ments would still exist in Government tiles.
and doubted North's personal papers
would have shown much: North was not a
man to leave a "paper trail." They added
that if Poindexter destroyed any docu-
ments. they were only the kind that NSC
staffers routinely pulverize every night.
The Senate Intelligence Committee none-
theless seemed concerned that something
important might have n lost. t directed
a letter to the White House on Friday. urg-
ing that Rea an ensure t at a documents
that might aid invests tors save .
The scandal over the diversion of funds
to the contras was itself a diversion. at least
for the moment, from the boiling debate
about the wisdom and legality of shipping
arms to [ran as part of a murky effort to
free American hostages. But it is not a di-
version that can give the Administration
any relief, given the devastation that could
come from revelations about the contra
slush fund. Nor is it likely that the search
for the culprits who mishandled the fund
will completely distract attention from
more basic questions about allowing NSC
officials to operate covert arms schemes
that run counter to stated U.S. policy.
Meese was the first to admit that
he did not yet have the answers
to the almost innumerable
questions raised by the Iran-
contras scandal. The Attorney General
pledged to continue his investigation until
he did, and Reagan backed him with an
order to all Government departments to
ator John Tower of Texas,
former Secretary of State Ed-
mund Muskie and former Na-
tional Security Adviser Brent
Scowcroft-to investigate the
structure of the NSC and its role
in coordinating and carrying
out foreign policy.
But no amount of Adminis-
tration self-investigation is like-
ly to satisfy Congress. In a letter
to Meese that put on the record
what many other legislators had
demanded, a House Judiciary
Subcommittee requested the ap-
pointment of a Watergate-style
independent counsel. Subcom-
mittee Chairman John Conyers,
a Michigan Democrat, bluntly
challenged the Attorney Gener-
al's ability to conduct an impar-
tial probe, citing among other
things "your closeness to the
President." The White House is
so far resisting calls for such a
special prosecutor. But as more
information emerges each day,
it becomes less likely that the af-
fair can be concluded simply
through Meese's probe.
In the meantime, con essional com-
mittees are rushing to sched a hearings,
many o w is wi focus on the possible
involvement of of er Government o -
cials or agencies in the Iran-contras scam.
First up: the Senate Intelligence Commit-
tee. which was scheduled to hold hearings
Monday to investigate what might have
been known y Casey and the CIA, which
keeps close tabs on the contras and set up
a~wiss ank account to receive money
maid by Iran for U.S. arms. Sys Vice
Chairman Patrick Leahy, a Vermont
Democrat: "I don't see how the money
could be transferred, the logistics cou
hart ed the arrangements cou
made, without the help of some people in
the cu-" He added ominously. "There's
no question that lies have been told by
Administration officials." At the closed-
door session, witnesses will be required to
testify under oath.
The House Foreign Affairs Commit-
tee is already investigating legal aspects of
the arms shipments, and its members can
expect to be joined soon by many other
congressional probers. They will be min-
ing a rich lode: the list of laws that might
have been broken by the arms shipments
to Iran. the diversion of funds to the con-
tras, or both, is a long one.
First is the Boland Amendment,
which forbade any use of federal funds to
aid the contras from 1984 until this Octo-
ber, when it expired. Meese contends that
"provisions had been made by Congress
to permit the U.S. to seek funding from
third countries," such as Israel, but he ap-
pears to be simply wrong. The amend-
ment was rewritten last year to include an
explicit prohibition against U.S. solicita-
tion of third-country financing, and that
ban was in effect throughout the time Ira-
nian money supposedly was being fun-
neled to the Nicaraguan rebels.
Next, at least three arms-export laws
include bans against the export of U S.
arms to countries that support terror-
ism-and the Reagan Administration has
formally identified Iran as such a country
The laws do provide waivers that allow
the President to skirt them in the event of
a crsis but they generally stipu ate t at
the White House notify congress which
it did not do. More generally the Intelli -
jgence Oversight Act re wires prior notwe
of_coyext operations to the House and
Senate intelligence committees.
Finally. some legislators are raisin
the question of whether North anssi-
blyothers could be prosecuted under laws
banning the spending of money on secret
missions that are not authorized by Con-
gress. The CIA is exempted from one of
these statutes, ut of er e eraT b-s,
notably the NSC. are not. Unlike the Bo-
land Amendment and the Intelligence
Oversight Act, the laws against unauth p-
rized transfers of funds provide criminal
penalties against violators.
One potential casualty of the revela-
tions last week is the goal that the bizarre
scheme was intended to further: keeping
alive the contra struggle. which after five
years of stop-and-go funding has yet to se-
riously threaten the existence of the Sandi-
nista regime in Nicaragua. The President's
fervent support for the contra cause is the
most visible manifestation of what has
been called the Reagan Doctrine, Ameri-
ca's attempt to counter the spread of Com-
munism by fostering insurgencies to under-
mine Moscow-backed regimes. After a
long struggle. Reagan squeezed out a nar-
row victory this May by persuading Con-
gress to authorize renewed. open military
aid to the contras. who will be
provided with $100 million dur-
ing the current fiscal year.
E yen before last week's
revelations. the Presi-
dent faced a hard and
uncertain fight to get the
funding renewed when the new
Congress meets in January.
Now Capitol Hill resounds with
predictions that angry legislators
will cut off aid again as a kind of
punishment to North and those
in the Administration who failed
to monitor his activities. Says
Minnesota Senator David Du-
renberger. a Republican and re-
luctant contra supporter: "It's
going to be a cold day in Wash-
ington before any more money
goes to Nicaragua. Ollie may
have killed off his Nicaraguan
program." Such a reaction has
little logic. There are valid argu-
ments for and against helping
the anti-Sandinista guerrillas.
but the issue should be debated
on its merits rather than being
made a kind of extralegal. and
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ineffective. penalty against the NSC.
In other areas, the Administration-
and the country-might have to pay a
heavy price for this latest and most serious
blow to the credibility and competence of
U.S. foreign policy. The prestige of the
President has been seriously weakened, his
staff is in disarray, and the Administration
seems less able than ever to speak with a
coherent voice on matters ranging from
arms control to antiterrorism. Reagan's
ability to project a sound foreign policy was
badly hurt by revelations that he deceived
the American people, Congress and the
world about his stance against dealing for
hostages and sending arms to Iran. The lat-
est disclosures that he was likewise de-
ceived by members of his own staff. who
zealously pursued his desire to help the
contras despite the wishes of Congress. will
make it even tougher for his pronounce-
ments to be greeted as believable.
One American official
who deals with the Soviets
on arms control is picking
up disquieting signals that
the Kremlin now considers
Reagan to be so weak polit-
ically that it will rethink
what concessions it might
offer in order to get a deal.
Says he: "Coming on the
heels of the loss of the Sen-
ate. the Iran business seems
to have raised basic ques-
tions in Moscow about how
they should deal with Rea-
gan. whether they need to
bargain with him seriously
or whether they can just
wait for the next Presi-
dent." Reagan's decision
last week to abandon the
unratified SALT II ceilings
on strategic weapons is like-
ly to make Moscow even more standoffish.
In the Middle East. U.S. Policy. to the
extent that the Reagan Administration
still has one, seems likely to be paralyzed
as well. Moderate Arab nations friendly
to the U S. feel betrayed by the Adminis-
tration's arms sales to Iran. a nation they
fear because of its potential-and uncon-
cealed desire-to stir up Islamic funda-
mentalist revolution outside its own bor-
ders. Says one veteran Arab diplomat in
Cairo: "This Reaganite crisis will inca-
pacitate the Administration. I am very
much afraid we will have to wait two
years [that is. until Reagan's successor is
elected] before the U.S. can play a major
role in the region."
In the U.S.. the fear is not of incapaci-
tation but of that dreadful "W" word: Wa-
tergate. However. it comes to the same
thing. All over Washington last week
there was a sickening feeling of "here we
go again." a dread of another orgy of pub-
lic self-flagellation. of deepening public
suspicion that might undermine all gov-
ernmental authority. Nor was that fore-
boding confined to the Administrations
allies. Journalists could sense among
those Congressmen most determined to
investigate the Iran-contra scandal an un-
spoken fear of where the investigations
might lead, a kind of silent prayer that it
would not once again be straight into the
Oval Office.
There is still time to avoid the worst
consequences, though only if the Admin-
istration pushes its own in-
vestigations hard enough
and fast enough to con-
vince its critics that it has
at last pro,tded a full and
convincing explanation of
its activities. and one that
does not spare the highest
officials. "I think one iron
rule in situations like this
is. whatever must happen
ultimately should happen
immediately." said Henry
Kissinger last week. "Any-
body who eventually has to
go should be fired now
Any fact that needs to be
disclosed should be put out
now. or as quickly as possi-
ble. because otherwise .
the bleeding will not end."
Pursuing such a course
is not. as some might
claim. a self-destructive obsession that
represents an inherent flaw in a democra-
cy. The strength of the nation. not its
weakness, comes from the fact that it has
a government of laws. run by officials who
can be held accountable. This moral prin-
ciple. more than even its arsenal of nucle-
ar missiles, accounts for the fundamental
strength the U.S. exerts in its dealings
with people around the world. That is
why any operation-whether it be the co-
vert shipment of arms to Iran or the secret
diversion of funds to the contras-that is
run in a manner designed to skirt legal
accountability represents such a deep
danger. -By Caorge J. Church. Reported by
Ricardo Chavira. Michael Duffy and MrBh Slday/
Washlnaton
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Approved For Release 2010/07/23: CIA-RDP90-00552R000303560004-2