DEEPENING CRISIS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504340005-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: February 24, 2012
• Sequence Number: 5
• Publication Date: November 26, 1986
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/02/24: CIA-RDP90-00965R000504340005-4
Deepening Crisis
Reagan Effort to Clear
Air About Arms to Iran
Raises More Questions
..~-r uu-c~
/A
WALL STREET JOURNAL
26 November 1986
-tine of President Reagan s highest
priorities, providing did to the Contras.
niav, be crippled by yesterday's disclo-
sures. The Contras Ihave ~1n0 million for
the fiscal year that began last month. hut
future assistance is another matter.
You've got to he concerned about ;t. '
s,iid Republican Richard Cheney of \ yn-
ming. i strong backer of tad to the Con-
its. This isn't going to help.
-The growing scandal threatens to par
,ilyze the administration. With the White
House preoccupied with the case and its
credibility severely h :rt, it will he near!
impossible to obtain bipartisan ?ongres.
sien,al cooperation on other fronts. ''I'ntil
this matter is resolved, there is nothing
else on the Re;ig;n agenda,'' said William
Schneider, a political analyst at the Ameri-
can Enterprise Institute.
Already, parallels are being drawn in
Washington between the handling of the
Iran arms affair and the Watergate scan-
dal, when the White House released da-
maging information and announced resig-
nations in a slow, halting process. '1 don't
want to see the gradual kind of unraveling
we saw in Watergate-it raises that spec-
ter," said Rep. Leon Panetta. a California
Democrat. Even if the comparisons aren't
fair or apt, the fact that they are being
made underlines the seriousness of the sit-
uation for the Reagan White House.
What's more, the admissions by the
White House through yesterday still leave
unclear how much, if anything, adminis-
tration officials knew about arms sales
that Israel is reported to have been mak-
ing to Iran for years. Israel has said it
never sold American-made military equip-
ment to other countries without U.S. ap-
proval, but the White House says the U.S.
condoned only one Israeli shipment to Iran
before this year, in September 1985. If con-
gressional or press investigations in the
coming weeks turn up knowledge by ad-
ministration officials of earlier Israeli
sales to Iran. the crisis could deepen.
Former White House Political Director
Edward Rollins called the revelations "the
most serious crisis this administration has
ever faced" and added. Its now more im-
portant than ever that everything be dis-
closed. The way this is handled could de-
termine the president's effectiveness for
the next two years."
Yesterday, Israel acknowledged for the
% ord That Proceeds of Sales
Went to Nicaragua Rebels
Brings Wrath of Congress
The Poindexter Resignation
By RUeF:RT S. GREENe,ii .F:R
WASHINGTON - President Reagan's
belated effort to end the damage done to
his administration by the Iranian arms
sales has resulted in disclosures that add
more problems than they solve.
The president yesterday accepted the
resimnarion of John Poindexter. his na-
tional security adviser, and fired Marine
Corps Lt. Col. diver North from the NSC
start. Then, in a surprise revelaton..Attor-
ney General Edwin Meese said that up to
?:30 million received from the secret sale of
I".S. arms to Iran had been transferred,
with assistance of Israelis. to U.S.-backed
Contra rebels fighting Nicaragua's Sandin-
ista government.
''The president knew nothing about it
until I reported it to him'' Monday, Mr.
Meese said at a news conference at the
White House. He ;added that Vice Adm.
Poindexter. who is returning to the Navy,
and Lt. Col North hadn't told the secretary
of defense T e -secretary of state or fte-
Central Intelligence Agency director of the
arrangement. Mr. Meese said an investiga-
tion he is making, designed to clear the
or, is continuing.
But congressional critics suggested that
yesterdays announcements upped the ante
more than cleared the air. 'There is some-
thing wrong when the president doesn't
know what's going on in the basement of
the White House.' charged Senate Demo-
cratic Leader Robert Byrd. Democratic
Rep. Stephen Solarz of New York declared
that "this has profound political and possi-
bly even criminal implications." adding.
'I don't think Congress will accept this ex-
planation from Meese and I don't think the
country will.''
Republicans weren't much more sup-
portive. 'That's an NSC run amok,''
charged House GOP Leader Robert Mi-
chel. ''This is a major problem facing the
administration, 'said Rep. William Broom-
field of Mictugan. the ranking Republi',in
on the House Foreign Affairs Commnic-'
"I think there is more to come in this in-
vestigation. There are probably others in
volved.'
In his press conference. Mr. Meese ar-
gued that the diversion of funds to the Con-
tras was an "aberration" in the president's
Iran policy and that the White House de-
served credit for swiftly disclosing it, even
before its investigation was complete. 'We
have been very careful to lay out the facts
for you.'' he told the reporters. A handful
of staunch Reagan supporters in Congress
agreed. Sen. Strom Thurmond said the
president was acting "properly and can-
didly." and Rep. Jack Kemp praised the
president for announcing his own inquiry.
On the whole, however, the White
House disclosures provoked doubts on Cap-
itol Hill and created new problems:
-The president's admission that he and
his most senior aides were unaware of the
details of his National Security Council's
orations in two major foreign-policy
areas presented two damaging ossi i (-
ties: Either members of the White House
, a
of have been operating out of control
situation that would cast serious doubt on
e competence of those in charge, or se-
tor officials, including C : DFFec or Cii
l ni Casey. knew more than Mr. Meese
said they did about the sensitive operation.
Said Sen. David Durenberger. t n MiniTg-
sota Republican who heads the Senate In-
telligence Committee: ' ' I sat next to m
Case this morning and an asked him if he
kfew anything aabout it. and he said no.
Maybe I was talking into his bad ear.
The two most powerful national-security
advisers in recent years expressed doubt
over the administration's explanation that
Lt. Col. North acted without the knowledge
of higher officials. Interviewed on the Mac-
Neil-Lehrer NewsHour. Henry Kissinger.
who once held the post under President
Nixon, said he found this contention ''hard
to believe.'and Zbigniew Brzezinski. na-
tional-security adviser to President Carter.
said the assertion "boggles the mind."
-The disclosures failed to deflect wide-
spread criticism of the president's decision
to sell arms to Iran during negotiations
over the release of U.S. hostages in Leba-
non, as well as the questions about the le-
gality of these actions. Rep. Les Aspin, the
chairman of the House Armed Services
Committee, plans to look into how arms
were shipped without the knowledge of the
Joint Chiefs of Staff. Other congressional
investigations are expected.
Declassified and Approved For Release 2012/02/24: CIA-RDP90-00965R000504340005-4
 Declassified and Approved For Release 2012/02/24: CIA-RDP90-00965R000504340005-4
first time that it had helped transfer arma-
ments to Iran from the U.S. But it denied
involvement in diverting money to the Con-
tras. "Israel was not and will not be pre-
pared to serve as a channel for this," a
statement read by Prime Minister Yitzhak
Shamir's spokesman said. Payment for the
arms "was transferred by an Iranian rep-
resentative directly to a Swiss bank. ac-
cording to American instructions, without
passing through Israel," the statement
said. "The government of Israel was sur-
prised to learn that supposedly a portion of
these funds were transferred to the Con-
tras. "
The administration's disclosures about
its Iranian arms shipments cast the spot-
light on the one area
of policy the White
House has been
most reluctant to re-
veal - its penchant
for covert foreign-
policy operations.
Moreover, the link-
age between Iran
and Nicaragua joins
the two most contro-
versial and legally
questionable aspects
of Mr. Reagan's for-
large extent, these
operations were designed to get around re-
strictive laws and to operate without public
or congressional knowledge.
The shakeup left the White House cast-
ing about for a new national security ad-
viser-the fifth in six years. Among those
under consideration for the job, sources
speculated. were U.S. Ambassador to
NATO David Abshire and Navy Secretary
John Lehman. Some conservatives were
touting Jeane Kirkpatrick, the former U.S.
ambassador to the United Nations. but Sec-
retary of State George Shultz is known to
have objections to her.
Mr. Meese said that Adm. Poindexter's
deputy, Alton Keel, an aeronautical engi-
neer who came to the NSC just four
months ago from the Office of Manage-
ment and Budget, will be the acting na-
tional-security adviser until a new one is
found.
White House officials hoped that
through the departures of Messrs. North
and Poindexter, they would stem a clamor
for further staff changes. White House
Chief of Staff Donald Regan was described
by a close associate as "elated" and ''fly-
ing high" about the disclosures, because he
believed the news would deflect criticism
of his own performance. But yesterday. the
clamor continued. GOP Rep. Broomfield
called for the resignation of all of the top
national-security and foreign-policy ad-
visers "to give the president a free hand to
take whatever action he needs to take."
Mr. Meese said that his department's
investigation would go on, but some con-
gressional leaders were suggesting more
than that-an independent prosecutor.
"The possible need for an independent I
counsel cannot be ruled out," said House
Speaker Thomas O'Neill. Rep. Solarz
pointedly remarked that Messrs. Poin-
dexter and North "are the last two guys I
you would expect to be free-lancing. They
are military men who know a chain of
command."
The bottom line, according to Democrat
Sam Nunn, the influential incoming chair-
man of the Senate Armed Services Com-
mittee, is that the disclosures raise ques-
tions of several possible illegalities, hurt
U.S. credibility and endanger any future
aid to the Nicaraguan Contras. "It seems
to me that the law has been violated," he
declared.
Among the legal issues were new ques-
tions about White House conduct of covert
foreign policy. Questions had already been
raised concerning the president's single-
handed lifting of the arms embargo
against Iran and his withholding from Con-
gress of prior notice of his intelligence op-
eration in Iran: beyond those issues. the
Contra financing scheme may have vio-
lated congressional strictures against di-
verting military aid to the Nicaraguan
guerrillas. Justice Department officials
said Mr. Meese and top aides were consid-
ering whether U.S. law was violated by ad-
ministration efforts to direct or encourage
the funneling of money to the Contras.
But even if administration officials
weren't directly involved in this operation.
U.S. law may have been violated. Under
the so-called Boland amendment, U.S. offi
cials are prohibited from engaging in the
"soliciting of third countries to provide
funding, material or other assistance to the
Nicaraguan Democratic Resistance !the
Contrast to support military or paramili:
tary operations in Nicaragua.''
Congress has authorized the State De-
partment to seek nonlethal aid from third
countries, but the authorization is specifi-
cally written for the State Department, not
the NSC or the CIA.
Mr. Meese said yesterday that 'we
don't know all the facts yet' but claimed
that his preliminary investigation showed
that the operation was initiated and run
single-handedly by Lt. Col. North. He
added that Mr. Poindexter "did know that
something of this nature was occurring.
but he did not look into it further.'' Mr.
Meese insisted that "no one in the chain of
command was informed.''
He also said that former National Secu-
rity Adviser Robert McFarlane. who left
government last December, learned of the
Central American operation last April or
May but apparently didn't inform the pres-
ident. Mr. McFarlane, acting as a special
envoy for Mr. Reagan, made a controver-
sial trip to Tehran last May with Lt. Col.
North.
Mr. Meese explained that between Jan-
uary 1986 and the present the 1'.S. shipped
about $12 million worth of weapons from
Defense Department stocks to Israel. Is- I
raeli "representatives'' then sold the
equipment to the Iranians for ''somewhere
between 310 million and $30 million'' above i
its cost. The Israelis paid, the S12 million.
plus transportation costs, to the CIA. which
reimbursed the Defense Department for its
weapons. Mr. Meese said that either the Is-
raelis or Iranians, acting either with Lt.
Col. North's knowledge or at his request.
then deposited the extra sums of cash into
a numbered Swiss bank account estab-
lished by the Contras.
After Mr. Meese's press conference,
Adolfo Calero. leader of the Nicaraguan
Democratic Force, the largest Contra
army, said, ''We know absolutely nothing
about the money that has been referred to
today," the Associated Press reported. Mr.
Calero said that his group has received
only "a trickle of money" this year and as-
serted that "I have never drawn any check
on any accounts in Switzerland or in any
other country."
The attorney general said information
about the Contra-financing plan started to
surface last Friday as administration offi-
cials began to prepare to testify on Iran
before congressional committees. "There
appeared to be more facts out there than
we had already put together." he said.
Mr. Meese went out of his way to isolate
top administration officials from the opera-
tion. "The only persons in the United
States government that knew precisely _i
about this-the only person-was Lt. Col.
North. Adm. Poindexter did know that
something of this nature was occurring,
but he did not look into it further," the at-
torney general said during his White House-
briefing. But later, in an interview with
CBS News. Mr. Meese, referring to Lt. Col.
North. said. ''There may be other people
working with him who may have had infor-
mation."
During the briefing. Mr. Meese stressed
that "CIA Director Casey, Secretary of
State Shultz. Secretary of Defense Wein-
berger. myself. the other members of the
'.NSC, none of us knew."
In the summer of 1984. Congress. in-
censed over another administration covert
operation, the mining of Nicaraguan har-
bors. cut off funding for military assis-
tance to the Contras. After prolonged de-
bate. President Reagan persuaded Con-
gress to approve $100 million for the Con-
tras this fall. But Mr. Meese admitted yes-
terday that the diverted funds were reach-
ing the rebels during the interregnum-a
period when the U.S. claimed that the Con-
tras were being supplied by private groups
and that the U.S. government had no in-
volvement. However. he said yesterday
that "no American person actually handled
any of the funds that went to the forces in
Central America. '
how
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 Declassified and Approved For Release 2012/02/24: CIA-RDP90-00965R000504340005-4
The State Department moved yesterday
to reassert its power over U.S. policy to-
wards Iran. Charles Redman, its spokes-
man, declared that the State Department
would "now take over implementation and
management" of that policy. The State De-
partment already coordinates the $100 mil-
lion Contra aid program.
Even though Mr. Meese asserted that
Mr. Shultz "is remaining in his position as
secretary of state," questions remained
about his tenure. He infuriated some White
House officials with his unusually vocal
criticism of the president's operations in
Iran.
And even some inside the administra-
tion fear that the worst might be still to
come. ''There are levels and levels of cul-
pability in this thing,'said one senior ad-
ministration official, "and it's all going to
unravel in time. The absence of knowledge
is not the same as the absence of culpabil-
ity."
Declassified and Approved For Release 2012/02/24: CIA-RDP90-00965R000504340005-4