REBEL FUND DIVERSION ROOTED IN EARLY POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504870010-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: February 8, 2012
• Sequence Number: 10
• Publication Date: January 1, 1987
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/02/08: CIA-RDP90-00965R000504870010-0
WASHINGTON POST
1 January 1987
THE CONTRA COMMITMENT
First of two articles
Rebel Fund Diversion
R
ooted in Early Policy
ow-
The passionate i ununitment
to Nicaragua', anticommunist
rebels that led to the secret di-
version of money to the contra
cause had its roots in a decision
early in the Reagan administra-
tion to resist any new Marxist
foothold in the Western Hemi-
sphere, according to current and
former officials tanuliar with the
policy.
That determination not to per-
mit another Cuba eventually led
the White House to embrace the
contras as America's best hope
for ousting the leftist Sandinistas
in Nicaragua, the officials said.
Alliance with the contras,
originally sold to Congress as
part of a broader effort to con-
tain rather than undo the San-
dinista revolution, became such
an article of faith that the White
House never considered aban-
diming the rebels even after
Congress barred further military
,lid.
The turbulent ,ix-year rela-
rioiihip between the Reagan
-idmini,rration and the contras,
or c ow torrevoluti iiiaries, is
critical t0 iinder,tanding why
inenibers of the National Secu-
rity Council staff would establish
a secret conduit of funding that
no'.v threatens to tarnish the fi-
nal years of Reagan's presidency
with scandal.
Among the nearly three dozen
officials and experts interviewed
for this two-part series on the
evolution of the U.S,-contra al-
liance, no one indicated a belief
that the specific plan to help the
contras by skimming money
front clandestine arms sales to
Iran was concocted before late
1985 or early 1986. The White
[louse alleges that only Lt. Col.
Oliver L. North of the NSC staff
and his NSC superiors knew of
the diversion.
But rhese officials collectively
;~urtray .in adniinist- 1011 in-
creasingly committed to nurtur-
ing the contras as a firewall
"gam`t, communism, it general
conviction articulated most ear-
rie,tly by President Reagan and
translated by his aides into the
,pecitic deeds that led to a clan-
destine resupply operation and
the diversion of Iranian arms
protits.
The events that led to this com-
mitment-and indirectly to the cur-
rent uproar-were marked by four
turning points that shaped the ad-
ministration approach to Nicaragua
and Congress' eventual acquies-
cence last tall in again supporting
the contras militarily:
? First, the idea of negotiating a
peaceful settlement with Nicaragua
was rejected in early 1983 after a
tierce struggle within the adminis.
tration. Any agreement that would
leave the leftist Sandinistas in pow-
er has not been seriously consid-
ered since. Congressional action in
1982 that barred spending for the
overthrow of the Nicaraguan gov.
eminent was ignored as "a techni.
cality" full of easy loopholes, one
intelligence analyst said.
? Second, Reagan's personal ;n-
volvement as the contras' chief sup-
porter beginning in 1983 has cru-
cially affected the attitude of his
-sides and the conversion of Con-
gress. After largely sitting out the
public debate for nearly two years
because of concern about the po-
I
,itical climate, Reagan entered the
tray with a vigor that gradually
eliminated dissent on the issue
within the administration and
eroded congressional opposition.
^ Third, the relatively attractive
image of an energetic, idealistic
Nicaraguan revolution in 1979 de-
teriorated over the years to that of
a repressive, inept and totalitarian
regime allied with the Soviet bloc.
An aggressive Reagan administra-
tion public relations effort gave
maximum and sometimes exagger-
ated exposure to any repugnant
Sandinista behavior, stressing the
potential Soviet threat; many mem-
bers of Congress who had been
sympathetic to Nicaragua lapsed
into silence and eventually moved
into vocal opposition.
^ Fourth, the image of the cmntr.i,
concomitantly improved from that
of a ragtag bunch of brutal terror-
ists to a more disciplined fighting
force that was much easier for Con-
gress to support. Again, the admin-
istration's public relations effort
was key in showcasing progress
made by the "freedom fighters" and
discrediting critics.
Administration officials, hoping
that the dust of scandal will settle,
argue that none of these factors has
changed with the Iranian arms sale
revelations. In an effort to forestall
congressional attempts to rescind
the 6100 million contra aid package
voted last fall, officials also note
that there is no firm evidence that
the contras actually received any of
the diverted money.
But administration and congres-
sional sources concur that the up-
roar of the past two months may
have put the rebel aid program in
greater jeopardy than anything the
program's critics could have done
to undermine it.
Debate Begins Under Carter
Debate over what to do about
Nicaragua began as soon as the
Sai:dnustas, waving red tlags and
shouting Marxist slogans, ousted
iict;itor Anastasio Somoza in July
191-9. President Jimmy Carter,
mindful of charges that U.S. hos-
tility 20 years earlier had driven
Cuba's Fidel Castro into commu-
nism, provided economic aid to the
Sandinistas. Later, "absolutely con-
clusive evidence" that Managua was
supplying arms to Salvadoran guer-
rillas led Carter to suspend that aid.
said Robert Pastor, a member of
Carter's National Security Council.
The new Reagan administration,
otticials said, never considered let.
ting this communist presence in the
hemisphere go unchallenged. But it
divided sharply over what to do.
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involved in the debate described the
options as "long-term rollback,
working within the Sandinista sys-
tem, versus short-term military
rollback" by the U.S. Marines.
The "long-term rollback" ap-
proach would involve negotiations,
first "to get Cuba and the Soviet
Union out of there," the official said,
thus removing the immediate worry
of possible Soviet bases, and then to
guarantee that some dome,t:c po-
litical opposition would continue
within Nicaragua.
"We always figured they'd self-
destruct over time if there was an
opposition," the official said. At no
time did the policymakers contem-
plate leaving Nicaragua alone, he
added: "Even the softest-liners nev-
er said that."
Chiefs Oppose Military Role
The Joint Chiefs of Staff-mil-
itary heads of the Army, Air Force,
Navy and Marine Corps-were op-
posed then and remain opposed to
the short-term military solution,
several sources agreed.
"They had seen the JCS of 15
years before completely manipu-
lated by [President Lyndon B.
Johnson over Vietnam, and they
didn't want to get into that again,"
said retired colonel Lawrence L.
Tracy, a Defense Department sen-
ior adviser on Central and Latin
America at the time. Public opinion
polls, then as now, overwhelmingly
opposed U.S. combat troop involve-
ment overseas, especially in the
Third World.
In the policy planning councils,
then-Assistant Secretary of State
Thomas 0. Enders was the leading
proponent of "long-term rollback"
negotiations, and the JCS backed
him, according to those who took
part. Leading the other side, argu-
ing that Nicaragua would never ob-
serve any useful agreement, were
Fred C. Ikle, who remains under-
secretary of defense for policy, and
Central Intelligence Agency Direc-
tor William J. Casey.
Enders first brought up the pos-
,ibility of forging a U.S. tool from
the unimpressive bunch of disaffect-
ed Nicaraguans the Defense Intel-
ligence Agency was calling "terror-
ists," mostly former Somoza Na-
tional Guardsmen who were sniping
at Sandinista border positions, the
participants agreed.
Enders, almost larger than life at
6 feet 7 inches, was an elegant and
aggressively intellectual career dip-
He argued in mid-1981 that with
U.S. aid and training, the fragmen-
tary "September 15" group and oth-
er resistance elements could be-
come strong enough to put Nicara-
gua on the defensive, divert its re-
sources from helping the Salvador-
an guerrillas and become a bargain-
ing chip the United States could use
in winning Sandinista concessions.
But then-Secretary of State Al-
exander M. Haig Jr. was adamantly
opposed to the idea. "He thought
the contras were a sideshow that
Would detract attention from the
main event, which was Cuba, and
that they could never win," said one
former official familiar
thinking. 'We didn't
could win either, but
they could be useful."
with Enders'
think they
we thought
Haig wanted to "go to the source"
of communist activity in Central
America with a naval blockade of
Cuba, a proposal that "never got
much support beyond his office,"
the former official said. Haig kept
pushing the idea into the spring of
1982, but several members of Con-
gress said they never took it seri-
ously.
Still, it was Haig who brought the
entire debate into public view only
weeks after Reagan took office. In
February 1981, over Enders' ob-
jections, Haig publicly warned that
the guerrilla rising in El Salvador
was part of "a well-orchestrated
international communist campaign"
to take over the region from Pan
ama to Mexico.
Looking for a way to combat that
without sending U.S. troops, Haig,
Ikle, Casey and the White Hou,e
finally agreed with Enders that the
contras could be a useful tool-to
destabilize Nicaragua, if not to push
it to negotiate.
"There was a unity of interest
between those who wanted to de-
velop a bargaining chip with the
contras, and those who wanted
there to do the [rollback) job," the
current official said. "It was a total
convergence."
Support for the contras was jus-
tified to the congre?tonal intelli-
gence committees in a secret
March 1981 intelligence document,
known as a "finding," which Reagan
signed. The document said the con-
tras would help cut off Nicaraguan
aid to the Salvadoran guerrillas, at
the time viewed as the most press-
ing regional problem. But in fact,
the contras from the beginning
were both a bargaining chip and a
way around "the Vietnam problem"
.? Nuvuc iCiuctance to send in the
Marines, according to officials in-
volved in the decision. making.
Enders visited Nicaragua in Au-
gust 1981 to warn the Sandinistas
what was in store if they refused to
negotiate. Rep. Michael D. Barnes
(D-Md.), chairman of the House
Foreign Affairs subcommittee on
Western Hemisphere affairs and a
leading critic of the program, aui
he discussed Enders' visit .cirh the
~dnduu>ta,.
1 hey said this arrogant
?cue doiw n here, 1 l feet rah. .ii i
1 -i're going to lo A, B and L
or ?.ce- re going to blow .'ou off the
taco ',t the Earth,' ' Barnes related.
The official familiar with Ender,'
thinking said he had thought the
Sandinistas appeared to be respond-
ing favorably, but that impression
evaporated in September. By No-
vember 1981 a secret National Se-
curity Decision Directive further
ratified U.S. support for the contras
in the context of new economic aid
to the rest of the region, more eco-
nomic sanctions against Cuba and
CIA backing for "political and para-
military operations" in Nicaragua.
The directive envisioned an ul-
timate contra force of about 500
men, plus 1,000 or so already re-
ceiving training from Argentina. At
that point, the contras were so dis-
reputable that U.S. Embassy per-
sonnel in Honduras were instructed
"to stay away from them as unsa-
vory characters," recalled a diplo-
mat stationed there at the time.
The U.S. program gave Argen-
tina an estimated $50 million to
provide training, and the Argen-
tines crowded the Honduran capital
to the point where U.S. VIPs could
not get a room in Tegucigalpa's
posh Maya Hotel. the diplomat re-
called. The contras' first U.S.-
backed action in Nicaragua oc-
curred in March 1982.
At that point, several sources
recounted, the "Vietnam syndrome"
emerged, Latin-style. The White
House feared that Congress, if not
constantly accommodated and re-
assured that no overthrow of the
Sandinistas was pending, would
withhold it, support for the contra
program.
"It was hard to spell out what we
wanted to Congress. They wouldn't
have gone for it then," a former lob-
byist said.
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Sales Pitch `Kept Changing'
A Senate committee official
agreed. "As long as they sold it as
an interdiction [of arms flow(, peo-
ple backed it. But the pitch kept
changing," he said.
In every secret briefing, "the
numbers went up, the arms in-
creased, and nobody could say why
that was happening or what they
would do if the conflict widened," a
House intelligence committee
,ource recalled.
In July 1982, a State Department
policy paper drafted under Enders'
orders and later leaked to the press
advocated a major expansion of the
contra force on grounds that Nic-
aragua was receiving massive arms
shipments from the Soviet Union.
Approved by the CIA, NSC and
Pentagon, and discussed with Con-
gress, the paper called for new U.S.
military aid to build up Honduras
and Costa Rica.
"We responded positively [to the
paper). There was some exagger-
ation, but there was a real threat,"
Barnes said. "The Sandinistas said
they were doing it because the
United States wanted to overthrow
them, and I told them, 'We aren't
going to do that, you're just para-
noid.' "
In the 1982 intelligence author-
ization act, a classified annex ad-
dressed congressional worries with
language that limited CIA spending
to interdiction efforts and prohib-
ited efforts to oust the Sandinistas.
When Sen. Tom Harkin (D-Iowa),
proposed ending all contra aid dur-
ing debate on fiscal 1983 defense
funding, Rep. Edward P. Boland (D-
Mass.), who at that point backed
the interdiction effort, suggested
that the secret language be made
public as a compromise move that
would save the program.
It worked. The "first Boland
Amendment" of December 1982-
an effort to keep the program alive,
rather than to kill it-barred fund-
ing "for the purpose of overthrow-
ing the government of Nicaragua or
provoking a military exchange be-
tween Honduras and Nicaragua."
Enders hoped the language would
reassure Nicaragua of U.S. goals
while military pressure from the
contras made peace talks more at-
tractive, the source familiar with
his thinking said. Enders renewed
his overtures to Managua in early
1983, "and that caused a struggle
within the administration," the
source said.
Enders viewed the ultimate goal
as ridding Nicaragua and El Sal-
vador of Soviet and Cuban : influ-
ence, which he thought could be ne-
gotiated in return for a U.S. brom-
ise of nonintervention, accordjng to
several people in his office at the
time.
But then-national security advis-
er William P. Clark, Casey and Ikle
argued that Nicaragua itself was
the problem, according to informed
sources. They believed- hat an
agreement with Manama at the
Salvadoran leftist rebels that re-
stricted Cuban and Soviet influence
would only give the Sandinistas a
respite in which to consolidate, be-
come more repressive and renew
the export of revolution. It would be
like the agreement between Pres-
ident John F. Kennedy and Fidel
Castro that conservatives fek had
guaranteed Castro's survival.
Around that time, conservatives
were also formulating the "Reagan
Doctrine," the idea that Sviet-
backed governments in the Third
World could be subjected to dem-
ocratically-oriented rebellions that
might topple them without any di-
rect U.S. involvement. t caragua's
contras fit right into that vision;
negotiations did not. Then-United
Nations Ambassador Jeanie J. Kirk-
patrick visited Nicaragua and re-
turned to argue the Reagarr Doc-
trine case.
Enders was fighting a-4esing bat-
tle. One of his memos proposing a
"two-track policy" of military aid to
El Salvador plus "exploration of dis-
cussions with the (Salvadorans
left"-at that time anathema to the
Salvadoran government--was
leaked to the press irt-~ebruary
1983, and he was effectively side-
lined. He resigned in May.
Negotiating Option Dropped
although the view circulated that
Enders promoted talks =y as a
gambit to disarm U.S. c?ttics and
create dissent in the left. his critics
and supporters now say he was se-
rious, and that the peacft option
was never successfully argued after
his departure. Enders 'nay_ have
believed that the Sandinis would
never negotiate, his suppdter now
say, but he wanted the record to
show that the door had b= open.
"There's been a lot of talk about
negotiations since then, but no ac-
tion," said a former State Depart-
ment official who worked with End-
ers. Special negotiators Richard B.
Stone, Harry Shlaudemanand Philip
C. Habib all began their later efforts
under the impression that there
could be modifications in the open-
ing position they were instructed to
present. which the Sandttustas said
boiled down to Sandinista capitula-
tion.
Another former senior official
said Habib "thought he had freedom
to negotiate. He made ri'ipropos-
als and got his ears pinn=ack" by
the White House. .
In practice, neither st,~ver ,f-
fered significant conce=a, ac-
cording to several people to
the talks.
"They (the Sandinistas. wanted
all or nothing too," a font nego-
tiator said. "Those in to adminis-
tration who wanted that-Irom our
side couldn't have won iE the San-
dinistas hadn't been Z` bloody-
minded about it."
,NEXT.' Reagan takes the lead.
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A CONTRA CHRONOLOGY: THE EARLY YEARS
JULY Sar(1-sta Narona, L.ceraron
Font takes ,o:+er e'c, -? "ore 'a'
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N,carag..a
JANUARY president Carte' s..soerds
U S air, 'o Nicaragua
mMRi,n