WHAT THE TOWER COMMISSION DIDN’T REPORT

 

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WHAT THE TOWER COMMISSION DIDN'T REPORT 



—THE— 

IRAN 
CONTRA 
CONNECTION 

SECRET TEAMS AND COVERT 
OPERATIONS IN THE 
REAGAN ERA 

JONATHAN MARSHALL, 
PETER DALE SCOTT, 
AND JANE HUNTER 



This explosive book lays bare the full details of current events, 
exposing the personalities and institutional relations behind the headlines. 
It goes beyond the specific events of the recent period to discern the roots 
of contemporary U.S. covert activity in the history of the past two decades. 
It delves into the details of CIA and extra-CIA operations including drug- 
trafficking, gun-running, government-toppling, and assassination. 

The authors argue that the Iran-Contra scandal is not merely a plan 
gone awry, but a consistent outgrowth of a long tradition of covert U.S. 
activities. From the Bay of Pigs invasion teams to the NSC organizational 
team; from the CIA and the World Anti-Communist League to the IsraeU 
connection and State Department; this is the fuU story, unfettered by 
concerns of "damage control." 

"The Iran-Contra Connection" is as disturbing as "The Tower Report" is 
consoling. This extraordinary book narrates a frightening, shocking story that 
shakes the foundations of the repubUc. 

— ^Richard Falk, from the Preface 



Table of Contents 



Acknowledgements vi 

Preface by Richard Falk vii 

The Origins of Contragate 

I. Introduction 1 

II. Contracting Out U.S. Foreign Policy 7 

III. "Shadow Networks" and Their Stake in Covert Operations 19 

IV. The Growth of Reagan's Contra Commitment 51 

V. Israel and the Contras 83 

Iran-Contragate: Its Nature and Prospects 

VI. Contragate: The Disposal Problem 125 

VII. Arms for Iran: History of a Pohcy Disaster 149 
VCn. Irangate: The Israel Coimection 167 

The Future of the Crisis 

IX. Secret Wars and Special Operations 187 

X. The Deeper Malady: From Terrorism to Covert Action 203 

XI. Conclusion 227 

Footnotes 234 

Index 304 

About the Authors 315 



Acknowledgements 



Some of the material in this book appeared earlier, in different form, in 
the Tribune (Oakland, CA), Pacific News Service, The Nation, Crime and 
Social Justice, and Israeli Foreign Affairs. 

The authors would like to gratefully acknowledge Eric Bentley, Pete 
Carey, the Data Center (Oakland, CA), Paul L. Hoch, Ted Rubinstein, and 
Peter Spagnuolo for their assistance in the preparation of this book. We 
dedicate this book to the victims of unjust U.S. policies, declared and 
undeclared — and to those who work to create a world in which there will be 
no more victims. 



Preface 



by Richard Falk 



R.W. Apple, the New York Times correspondent with a sure feel for 
the sweet spot in the public mood, introduces the pubhshed text of The 
Tower Commission Report (Times Books, 1987, p. XV) with a focus on 
managerial ineptitude: 

[T]he report pictures a National Security Council led by reckless 
cowboys, off on their own on a wild ride, taking direct operational control 
of matters that are the customary province of more sober agencies such as 
the CIA, the State Department and the Defense Department. 

As a summary this is not too misleading, but offered as it is, in praise of 
the aptness of the Tower Report, it contributes its bits to the rituals of 
mystification that have become part of the American experience whenever 
the integrity of the governmental process is called deeply into question. 
The Warren Commission Report after John F. Kennedy's assassination 
initiated this kind of exercise in the politics of reassurance that now seems 
indispensable at times of public crisis. And yet the reassurance rarely 
reassures. So it is with the Tower Report. Nothing essential about the 
Iran-contra disclosures is there resolved. 

Contrary to the Tower presentation, the Iran-contra connections were 
not anomalous expressions of U.S. foreign policy, nor would the 
outcomes have necessarily been very different if the execution of the policy 
had been entrusted to professionals working for those supposedly more 



vii 



viii The Iran-Contra Connection 



sober agencies. If we think back, the Bay of Pigs venture was pure CIA, 
exhibiting in 1961 at least as little respect for bureaucratic proprieties and 
simple dictates of prudence. Even without the benefit of recall, we need 
only consider the current CIA role in relation to the contras, which includes 
disseminating a manual advocating selective recourse to civilian assassina- 
tion and arms supply arrangements that rely upon the darkest criminal and 
fascist elements to be found in the hemisphere. 

The opportuneness of this book by Jonathan Marshall, Peter Dale 
Scott and Jane Hunter cannot be overstated. The authors provide a 
comprehensive account of what lies below the surface of mainstream 
perception, and as such, enable us to interpret these events in a coherent and 
clarifying fashion. Indeed, to be useful citizens these days we must be 
armed with such "subversive" texts. If we adhere to the customary 
decorum in the manner of Apple/Tower, we will find ourselves mes- 
merized by the investigative narrative of who did what when and who 
knew about it, especially in the White House. As Watergate showed us, 
such a drama can be exciting theater, but as politics it works out to be one 
more pacification program, closing down any tendency to ask questions 
about institutions, procedures, and prerogatives. 

The Iran-Contra Connection is as disturbing as the Tower Report is 
consohng. This extraordinary book narrates a frightening, shocking story 
that shakes the foundations of the republic. Equally impressive, these 
crucial interpretations are accompanied by such substantial evidence and 
documentation as to be convincing for any reader with even a slightly open 
mind. It is quite remarkable that such a substantial book coincides with, or 
possibly precedes, the crest of the historical wave of public indignation and 
confusion occasioned by the original revelations of November 1986. 

Briefly, let me mention some of the more dramatic aspects of the 
picture portrayed. There is, above all, the lucid exposure of the deep roots 
of what appears on the surface as bureaucratic malady. The policies 
embodied in both the arms sales and the diversion of funds for a variety of 
dirty purposes were carried out by powerful transnational networks of 
individuals and organizations long associated with rabid anti-communism, 
and centering on a mixture of former CIA officials and anti-Castro exiles, 
bur stretching our to include military and civilian centers of reaction, as well 
as a mercenary cadre available for lethal undertakings of any sort. An 
extremely distressing element in the story is the incredibly durable half-life 
of former career participants in covert operations; only for plutonium is the 
disposal problem greater! For money, thrills, habit, and conviction these 
men find ways to regroup in the private sector and carry on with their 
efforts to destroy progressive and nationahst pohtical possibihties in Third 



Preface ix 



World countries, as well as to sell arms and drugs, and carry out an 
unauthorized private sector foreign policy that is vicious and invisible and 
acknowledges no limits. An unappreciated cost of the Reagan years has 
been to introduce into the sinews of government the virus of fascist 
conspiratorial politics, especially in the Western Hemisphere. In this 
regard, the reliance on North and Poindexter is not a managerial glitch, but 
rather a decision to depend on those with such a passionate commitment to 
the radical right who happened to be positioned for action, and would be 
trusted to serve as faithful instruments of policy, uninhibited by either 
standard bureaucratic procedures or constitutional restraints. 

It may be consoling, but it is wrongheaded to explain what went awry 
by reference to a rogue NSC or by the insistence that Reagan is indeed 
senile. It is now acknowledged that William Casey masterminded the 
whole undertaking, himself evidently seeking the more personalist control 
possible within the NSC setting than could be achieved within the 
reconstituted and still somewhat law-oriented CIA of the 1980s. Marshall, 
Scott, and Hunter explain the powerful circumstantial case that links large 
campaign contributions from and solicitation to the far right going back to 
the late 1970s, especially from sources prominently coimected to the 
struggle to suppress democratic forces in Central America, with the Reagan 
resolve to stand and fight in El Salvador and Nicaragua. The immediate 
priority of the Reagan presidency to intervene in the region may well be an 
outgrowth of these pre-election relationships, and what is more, the 
subsequent tendency to adhere addictively to such policies despite their 
failure and unpopularity, and in the face ofCongressional opposition, raises 
suspicions that some sort of illicit bargain had been struck. The adroit 
withdrawal from Lebanon after the 1983 incident killing 241 U.S. marines, 
exhibiting Reagan's skill in retrenchment, contrasts sharply with the 
compulsiveness of the contra commitment. All of Reagan's talent as a leader 
and command over the political process has been needed to keep the contra 
cause even vaguely viable during the years of his presidency, and at great 
cost to his leverage on other issues. 

But what is more frightening than these indications of presidential 
gridlock is the extent to which the real center of power and decision 
making on these matters may not even have been in the White House. A 
significant degree of policy-forming leadership may have actually been 
"privatized," passing to an assortment of fringe forces represented by such 
notables as Singlaub, Secord, and Clines, who in this sense provided the 
basic framework within which Reagan, McFarlane and Casey have acted, 
with North and Poindexter featured as trustworthy handmaidens. In this 
regard, the deferred consequences of the long buildup within government 



X The Iran-Contra Connection 



during the 1950s and 1960s of a secret paramilitary capabiUty entrusted 
with interventionary missions is beginning to be evident. The problem 
centers upon the CIA, and its large number of agents and ex-agents 
working around the globe in close collaboration with right-wing and 
criminal elements, including those that were operating death squads in El 
Salvador and Argentina, enhsting support from groups and individuals 
who were overtly fascist, even neo-Nazi. The laudable post- Vietnam 
move in Congress to cut back on the covert operations role of the CIA 
during the Nixon and Carter presidencies created an optical illusion that 
this secret government was being substantially destroyed, as indeed many 
hundred agents were prematurely retired or even fired. Thus CIA alumni 
were dumped into society or cynically relocated "off-shore," bitter, 
ambitious, and in contact with various anti-communist exile groups, as well 
as with a cohort of their colleagues continuing at work within the agency, 
themselves embittered by the adverse turn of the wheel of political fortune 
that deprecated their craft and scorned their politics. Such a subterranean 
presence brings terrorism home, as during the anti-Castro bombings of the 
1970s carried out by exile extremists in the eastem part of the United States. 
At the same time, there is created the nucleus of a poUtical conspiracy 
waiting to prey upon the very bureaucracy that seemed ungrateful, and 
lacks the convictions and capabilities needed to uphold American interests 
in a hostile world. 

This drastic mind-set of the resentful paramilitary professional is 
receptive to any proposal for adventure, however sordid, so long as money, 
violence, and right-wing backing are assured. For Reagan to convict 
himself of terrorism by identifying as a contra is to suggest how close to 
power this kind of extremist politics apparently came. And what makes the 
whole dynamic so sinister is that the citizenry had become deluded enough 
to believe that by supporting Reagan they were affirming an archetypal 
embodiment of American values. At last, it seemed that most of us again 
had a president capable of making us feel good and proud to be Americans. 
True, this affirmation included a measured cruelty toward losers in the 
capitalist rumble, but this too struck the bulk of the middle-class white 
majority as the American way of sustaining a lean efficiency in an era of 
impending struggle over shares of the world market. Unlike the rosy 
picture accepted by most Americans, Reaganism has undermined constitu- 
tionalism in structural ways by implementing national security policy 
through a reliance on capabilities outside of government, entaiUng such 
violent and unprincipled action that it became disillusioning even for 
adherents of a neo-conservative poUtical ethos. To embody this power shift 
in pohcy has made it necessary to circumvent Congressional will on the 



Preface xi 



contra issue, which for rightist perspectives has become as symbolic as the 
Palestinian or South African issues are for the Third World. In effect, Iran is 
the tail wagging the contra dog. The dangerous temptation to wheel and 
deal in Tehran probably proved irresistible because it promised to shake 
loose some of the slush funds needed to pursue in earnest the forbidden 
agenda of the far right. The possible release of hostages from Lebanon was, 
from this angle, merely part of "the deep cover" for this kind of ideological 
cabal that takes added delight in defying Congress and public opinion, and 
overcoming the complacency and decadence of the American polity. At no 
time in American history have the basic forms of popular democracy been so 
jeopardized, rendered vulnerable to dangerous and destructive forces. 

We find ourselves as a country in an extremely precarious situation. 
The Reagan presidency has rebuilt the formal legions of covert operations 
in the CIA and has, as well, given a taste of power to the shadow network of 
ex-CIA, ex-military, exile, and extremist forces in this country and abroad. 
Unless this structure is exposed and effectively discredited and dissolved, 
there is every prospect that it will continue to do severe damage. It is not 
just a matter of revitalizing constitutionalism at home, it is also a question of 
protecting iimocent people overseas and here at home from cruelty, 
repression, and outright criminality. The dangers are societal, as well as 
statal. This paramilitary orientation ravages society by preying upon its 
capacities for law and morality, infusing drugs, corrupting police and local 
govemment, and convincing the citizenry that their lives are played out in a 
virtual cesspool of vice and menace, and that activism is futile and 
unpatriotic. 

Reinforcing this drift toward contrapolitics has been the special 
relationship with Israel. This book devotes two chapters to documenting 
the degree to which Israel contrived the Iran-contra diplomacy and 
contributed to its implementation. Israel desperately needed customers for 
surplus arms, hard currency, and an involvement in Latin America that 
would enable some relief from its situation of diplomatic isolation. Pre- 
Khomeini Iran was a major outlet for IsraeU surplus arms production. After 
the fall of the Shah, Israel became the only reliable base for United States 
strategic operations in the Middle East, long regarded as the most volatile 
war zone in the world. In Ught of pubhc and Congressional opposition to 
support for the contras and the falling away of Argentina after the 
FaUclands/Malvinas War, it was left to Israel to fill the void. In all, the 
Israeli role is part of the deviousness with which unpopular and unlawful 
foreign pohcy initiatives were sustained during the Reagan years. 

Even before this book, it was evident that when it came to national 
security, our goverrmiental system of checks and balances and electoral 



xii The Iran-Contra Connection 



accountability was not working. The miUtarist consensus embodied in the 
state was too strong in relation to the formal checks of Congress and party 
rivalry and the informal checks of public opinion, media, and education. 
But now we find that even the modest limits set by these checks can be 
rendered inoperative by forces more extreme and corrupt than the 
governmental consensus, and that for these forces there are as yet no 
appropriate mechanisms of exposure and accountability. In this sense, 
North and Poindexter, like Rosencranz and Guildenstem, are quite 
expendable! 

Richard Falk 
Princeton, New Jersey 
April 1987 



I. 

Introduction 



The Iran-contra crisis has plunged President Reagan from his former 
Olympian popularity into the most serious political scandal since Water- 
gate. In the process it has called into question not only the viabiUty of his 
administration, but the future of U.S. intervention in the Third World and 
the ability of the public or Congress to redirect foreign policy along more 
humane and constructive lines. 

"Iragua," "Iranscam," "Iranamuck" — the cute name for the latest 
crisis are as endless as the wags' imagination. But what they signify remains 
far from clear. In their narrowest and least useful meaning, the terms refer to 
the probable diversion of money paid into Swiss bank accounts by Iranian 
arms purchasers to the anti-Sandinistas known as the contras. In a broader 
and more urgent sense, they describe a usurpation of power by an imperial 
President bent on subverting democratic processes at home by covert 
means to satisfy the demands of ruthless policies abroad. 

The intrigues that constitute that usurpation reach back long before 
the initiation of the Iran arms deals, back at least to the formulation of 
Reagan's anti-Nicaragua strategy in 1981. And to understand the people 
and institutions that made those intrigues possible requires an historical 
vision extending to the brutal covert wars in Cuba and Indochina in the 
1960s, even to the founding of the CIA in 1947. 

If the Iran and contra scandals have given the nation a chance to 
glimpse that vision, it is because they finally opened a crack in the 



1 



2 The Iran-Contra Connection 

President's teflon political shield. On November 25, 1986 what had been a 
growing political controversy over revelations of US arms sales to Iran 
became a full-blown scandal. Reagan went before a nationally televised 
press conference to confess that he "was not fully informed on the nature of 
the activities undertaken in coimection with this (Iran) initiative" and to 
announce that his national security adviser, Admiral John Poindexter, and 
his National Security Council aide, Lt. Col. Oliver North, had been 
relieved of their duties. 

Then Attorney General Edwin Meese took the podium to deliver the 
bombshell: funds from the Iran arms sales had been diverted, possibly 
illegally, to the contras.' The issue was no longer one of judgment but of 
law. 

What was revealed was nothing less than a conspiracy at the highest 
levels of government to break the law and contravene public policy on Iran, 
terrorism and military aid to the contras. Skeptics who deny the existence 
of conspiracies — after all, how many people can keep a secret? — miss the 
point. This conspiracy had never been a well-kept secret. The administra- 
tion had a more effective defense than secrecy: a President whose personal 
popularity could deflect isolated charges and accusations and a political 
opposition whose disunity discredited it in the public's eye. Without Meese 
certifying before the nation the existence of a veritable scandal, prior press 
revelations never added up to an issue of political significance. 

What made the difference, and what ultimately put Meese up on that 
podium, was a gradual and almost imperceptible weakening of the Reagan 
presidency in the fall of 1986. For the first time he had begun to lose the 
unquestioned support of his conservative constituency. 

The broadest cause of the erosion of support was the administration's 
apparent inability to hit upon an agenda for the second half of its final term. 
The staggering federal deficit persisted despite Reagan's increasingly half- 
hearted attempts to conomand domestic budget cuts. The miUtary buildup 
stalled in Congress. The President could not decide between arms control 
and Star Wars. Social legislation — on abortion, prayer in the schools and 
the Uke — was going nowhere. Tax reform inspired no great pubUc 
enthusiasm. And forward movement was stalled by what one conservative 
commentator called the "internecine" warfare between Reagan's top aides.^ 

Then came a series of episodes that cast doubt on Reagan's leadership, 
judgment and political clout. His swap of a Soviet for the American 
joumalist Nicholas Daniloff disappointed conservatives and foreshadowed 
future revelations of hostage bargaining with Tehran. Worse yet was for 
those conservatives Reagan's performance at Reykjavik; in impromptu 
arms talks with Soviet leaders, the President betrayed a hopelessly 



Introduction 3 



inadequate grasp of strategic issues. When Congress passed sanctions 
against South Africa, Reagan could not prevent a veto override in both 
Houses. Most important, on the first Tuesday in November Reagan lost 
his key pohtical ally, the Republican Senate. 

As the teflon chipped away, the press became bolder. It had always 
boasted a few fine investigative reporters whose early stories now seem 
remarkably prescient, like the CBS News account from 1984 of the CIA's 
use of Southem Air Transport, a private cargo line later tied to the Iran and 
contra affairs, to transport arms, airplane parts and soldiers to the contras 
via Honduras.^ AP reporters Brian Barger and Robert Parry consistently 
broke stories throughout 1984 and 1985 about Ohver North, the private 
aid network, and the contras' involvement in arms and drug trafficking. 
Jack Anderson reported the administration's tilt toward Tehran, and its 
arms sales, in April 1986. In July 1986, the financial conduits used by 
North for his fund diversions began unraveUing in pubhc.'' But few people 
listened: Reagan's popularity bolstered his aides' denials. 

His weakness began to show — and the press in turn became more 
vigorous — ^following the crash of a contra supply plane in Nicaragua in 
early October 1986. Secretary of State George Shultz declared that the 
"private people" who hired the plane "had no connection with the U.S. 
government at all"^ — otherwise the administration would be in violation of 
a law barring the provision of military aid to the contras. 

But the pilot who survived, Eugene Hasenfus, made statements that 
top administration and CIA officials had their fingerprints all over the 
operation. Ample documentation that went down with the plane confirmed 
it. So did telephone records subsequently made available from the 
Salvadoran "safe house" where the whole supply operation was managed. 
The calls from that base to the White House clinched the case. In the 
following two weeks, a deluge of news stories painted a picture of 
mercenaries, terrorists and private "spooks" in the indirect employ of 
administration officials to evade the will of Congress.^ 

On October 8, the FBI announced that it was investigating the 
company Unked to the two American pilots killed in the supply plane crash: 
Southern Air Transport. FBI officials were soon to learn, by way of 
worried NSC operators, that Southern Air was just then involved in top 
secret shipments of arms to Iran. A mini-coverup began — in fact, a 26-day 
delay in the FBI's investigation^ — but the White House was fast losing 
control. 

Behind the scenes, meanwhile, disgruntled Iranian pohtical factions 
had lost faith in the arms-for-hostages deals with Washington. Leaflets 
distributed in Tehran in mid-October revealed some details of a secret US 



4 The Iran-Contra Connection 

mission to Tehran. Then on November 3, the weekly Lebanese magazine 
Al Shiraa, quoting sources close to the AyatoUah Hussein Ali Montazeri, 
revealed that former National Security Adviser Robert McFarlane had 
personally visited Iran to trade military spare parts for American hostages 
held in Beirut. Not to be outflanked, the speaker of Iran's parUament who 
had been conducting the negotiations, AU Akbar Hashemi Rafsanjani, 
moved preemptively to distance himself from the embarrassment of 
negotiating with representatives of the "Great Satan." His confirmation 
that McFarlane and four other Americans had traveled to Iran set the press 
loose on its next — and far more explosive — scandal. 

What followed were a classic series of denials and half denials until the 
Reagan/Meese press conference blew the Ud off the story. That press 
conference was the result of a complex correlation of forces: blackmail 
threats by investors in the Iran arms deals, complaints by Secretary of State 
Shultz over what he beUeved would be perjured testimony before Congress 
by CIA Director William Casey, and North's statement to Meese that 
funds had been diverted to Central America. Bureaucratic rivalries within 
the administration, in particular the bitter reaction of officials kept in the 
dark about the arms deals, ensured the quick disintegration of the 
administration's efforts at damage control. 

Since then, the Senate Select Committee on Intelligence and the Tower 
Commission, appointed by President Reagan to report on the scandal, have 
issued initial findings on the Iran deals and certain related aspects of the 
contra supply operation. More investigations are underway by Congress, 
an independent counsel and armies of reporters. 

We are indebted to all of these sources for the raw material of the book 
that follows. But as vital as the search for information is the contest to 
impose an interpretation. If the nation is to profit at all from its recent 
political trauma it must come to understand what went wrong and what is 
needed to cure the political pathologies that, in retrospect, were inade- 
quately addressed after Watergate. But if the reporters and congressional 
investigators pose their questions too narrowly, the answers cannot supply 
that understanding.^ 

Was "Irangate" the Reagan-era equivalent of a third-rate burglary — 
an aberrational lapse by an inattentive president whose "compassion 
outstripped his competence," to quote Sen. Pete Wilson of CaHfomia? Did 
it simply reflect the inadequacy of President Reagan's "management 
style," as members of the Tower Commission declared? Did it call merely 
for a housecleaning to rid the administration of a few bad "cowboys" 
among the NSC and CIA staff? 



Introduction 5 



If the American public learns these lessons it will have learned nothing. 
New faces will inhabit the old slots. But the substance of policy and the 
potential for future abuses will remain intact. 

We shall argue instead that the extraordinary breakdown in political 
judgment, the bizarre execution of policy and the outright violations of law 
were all part oi a much broader aggrandizement of power by an 
administration committed to a militant program of foreign intervention and 
forced by domestic poUtical opposition to use covert means to achieve it. 
Ronald Reagan's election in 1980 marked not only the personal triumph 
of a former conservative outcast, but the victory of individuals — ^many of 
them CIA or military special operations veterans — dedicated to regaining 
power at home and abroad through clandestine politics. Emboldened by 
Reagan's landslide victory, which they interpreted as a sweeping mandate 
for action, they turned the power of the presidency against Congress and 
the American people in the course of turning it against foreign enemies. 

We shall argue further that the Iran and contra scandals were no 
aberration. They were a logical product of an administration that prized 
"covert" above "democratic" politics. In that spirit, former National 
Security Adviser Robert McFarlane wrote his long-time deputy Oliver 
North, "if only the world knew how many times you have kept a 
semblance of integrity and gumption to US pohcy, they would make you 
secretary of state. But they can't know and would complain if they did — 
such is the state of democracy in the late 20th century."' 

Time and space constraints have necessarily limited the scope of this 
argument. We make no attempt to recount the full, sorry history of U.S. 
intervention in Latin America, nor the political and economic relationships 
underlying that history. A valuable and growing literature, including 
Noam Chomsky's Turning the Tide,'" illuminates those essential topics. 
Nor, with our focus on the Reagan years, can we fully suggest the similar 
complicity of past administrations in foreign crimes and domestic coverups. 

This is a book about Irangate and Contragate, not primarily about the 
contras or Iranians. There are relatively few Nicaraguan or Iranian names 
here, for this is emphatically a book about the United States. This analytical 
limitation imposes a narrower moral focus than the whole of the events in 
Central America and Middle East surely warrant. In the larger context, the 
murder of peasants and health workers in Nicaragua and the stoking of a 
war that has already claimed hundreds of thousands of lives in Iran and Iraq 
far outweigh the legal or constitutional implications of America's scandals. 

But the millions of foreign victims have a stake in curbing the people 
and institutions in Washington that promote the destructive maintainance 
and expansion of American power abroad. To that end, an assertion of law 



6 



The Iran-Contra Connection 



and democratic control over foreign policy is at least a necessary, if not 
sufficient, condition. Our book is not written to promote a total politics of 
critical consciousness and understanding but to end the covert policies that 
have given Reagan — and prior presidents — the means to launch costly and 
often tragic interventions overseas. This is a subject to which we shall 
return in our conclusions. Suffice it to say for now that in Iran and Central 
America, as in the Vietnam War, those responsible for intervention were 
not the American people. Our book is an act of faith that ordinary citizens, 
if educated to the lies, law-breaking, drug-running and other scandals of the 
Iran-contra secret teams, can be roused to protest and force an end to such 
interventions, wherever their pohtical sympathies he. 



n. 

Contracting Out U.S. Foreign Policy 



The imperial presidency, temporarily checked by the Vietnam defeat 
and Watergate scandal, has reemerged during the Reagan years. As always, 
the reason Ues in excessive congressional deference to the executive branch. 
But since 1980, presidential power has been aggrandized by the Reagan 
administration's sophisticated strategies for circumventing Congress in the 
shaping and implementing of foreign policy. 

President Reagan's secret weapon is "contracting out" such normal 
government functions as funding and executing pohcy to the "private" 
sector while keeping pohcy making itself in the hands of the state. But 
unlike typical commercial examples of the practice, the administration has 
contracted to agents who are themselves total creatures of goverimient — ^in 
particular, of government intelligence agencies. In their "private" capaci- 
ties, however, these agents nonetheless fall largely outside congressional 
purview. 

This strategy involves much more than confining pohcy making and 
implementation to a tight circle within the National Security Council, 
however much a dismayed Secretary of State George Shultz has focused 
public attention on his personal exclusion from decisions. President 
Reagan's dependence on the NSC to the near exclusion of traditional 
bureaucracies is, after all, far from unique; Henry Kissinger mastered that 
art in the Nixon era and for it won the admiration of Congress and the 
American press. 



7 



8 The Iran-Contra Connection 

Reagan's innovation was much more significant: while bypassing 
standard channels of government, his administration found foreign 
governments and rich individuals to contribute the money; CIA and 
military special operations veterans to contribute the manpower; and 
private firms to contribute the logistics for its operations. In effect, White 
House operatives set up a parallel Treasury, Army, Air Force and State 
Department to negotiate with terrorists, fight covert wars and subvert the 
law wherever they deemed appropriate. Farming such covert operations 
outside even the CIA served to insulate the president and his advisors from 
scrutiny and responsibility.' 

As a result, major elements of White House policy escaped pubhc 
notice or congressional review. This parallel private network functioned 
outside normal lines of oversight and accountability, and once set in 
motion, could operate effectively with minimal presidential guidance. But 
as distinguished from "privatization," a term often misappUed to the Iran 
and contra affairs, the contracting method always left essential policy 
direction in the White House. 

The Reagan strategy had its roots in the classic intelUgence practice of 
using proprietaries and "cut-outs" to effect policy while preserving 
deniability. Always useful against unwanted public scrutiny, these tech- 
niques were perfectly suited to the 1980s' political enviroimient of 
presidential activism on behalf of the "Reagan Doctrine," the commitment 
to roll back pro-Soviet regimes in the Third World. Congressional doubts 
and public hostility made overt pursuit of that doctrine difficult or 
impossible. Even the CIA was a problematic tool of policy owing to legal 
requirements that it report covert operations to Congress.^ 

"Since the Vietnam War," one Reagan NSC member told a reporter, 
reflecting the widespread distrust of Congress by administration policy- 
makers, "we have had this growing involvement by the legislative branch 
in the details of foreign policy that — you can make a constitutional 
argument — are properly left to the president. When you do that, you drive 
him in the direction of using other techniques to achieve objectives."^ 

Ironically, however, deep-cover contracting also appealed to adminis- 
tration activists frustrated by bureaucratic gridlock between warring 
departments and the tendency of rival policymakers to leak details of 
unpopular, unwise or illegal policies. 

Such rivalries "made it impossible to function at all" except in secret, 
argued former Pentagon special operations planner Noel Koch. The lesson 
that individuals like Oliver North drew, according to Koch, was "If you're 
going to do anything bold or innovative, you're going to have to do things 
through irregular channels."* 



Contracting Out U.S. Foreign Policy 9 

Or as another "covert missions planner" said of North's decision to 
rely on former Pentagon special operations veterans for his secret missions, 
"the CIA and NSC have no capability to do things in a secure fashion. You 
want to do something quietly, then you can't tell the bureaucracies. Here's 
a guy who can go to key people in foreign countries and get things done. As 
a private citizen, he has no obligation to tell anyone."' 

And quite apart from the matter of capabiUties, many insiders doubted 
even the resolve of the CIA to implement tough poUcies abroad. Angelo 
Codevilla, a hawkish former staffer on the Senate IntelUgence Committee, 
expressed the view of many "roll-back" conservatives in Washington: 

The Director of the Central Intelligence Agency, William 
Casey. ..personally seems to favor the victory of liberation movements. 
His Agency has the charter for dispensing the aid. But from among the 
CIA's senior persoimel have come strong echoes of the State Department's 
view of the role of Uberation movements in U.S.-Soviet relations. In their 
dealings with Congress and the NSC, CIA officials have often outdone 
even their colleagues in the State Department in reticence to provide aid 
to such movements quantitatively and qualitatively sufficient for victory, 
declaring that the Agency would rather be rid of the burden of supplying 
such aid at all.* 

The White House decisionmaking center for covert operations and 
contracting-out strategy lay within a tiny team of select State, Defense, CIA 
and NSC officials known as the "208 Committee" or "Policy Development 
Group." Oliver North, the workaholic organizer of secret contra supply 
missions and Iran arms deals, was one of its most active members.^ Meeting 
in the Crisis Management Center in Room 208 of the Old Executive Office 
Building, surrounded by secure computer data links to the National 
Security Agency, this group could plan secret operations free from the 
obUgation to report to the intelligence committees of Congress. Its mission 
was to implement the Reagan doctrine of fighting Soviet influence 
throughout the Third World, wherever possible by supporting indigenous 
forces.* Its thorough overview of missions and logistics included such 
details as "which weapons will be shipped, which secret warehouse goods 
used, which middlemen will deliver them to clandestine airstrips."^ For the 
most sensitive pohcies, as with the Iran arms shipments, only a few 
members of even this group took part in policy discussions. 

For North and others in this select circle, the guiding principle was 
power and the task was to expand it without answering to other authorities. 
As one White House memo from 1982 outUned the mission of "Project 
Democracy" — the rubric under which the NSC began to undertake foreign 



10 



The Iran-Conrra Connection 



policy initiatives of its own — "we need to examine how law and executive 
order can be made more hberal to permit covert action on a broader scale. "'^ 
Contracting-out provided means to subvert the law and stretch the scope of 
executive orders. 



Nicaragua: The Test Case 

Nicaragua saw the first appUcation of the strategy. The Reagan 
administration's policy toward the Sandinistas from the start was summed 
up by the title of a report prepared by then-State Department counselor 
Robert McFarlane in early 1981: "Taking the war to Nicaragua."^' But 
owing to congressional reticence, the White House had to lie about its 
ultimate intentions, pledging that CIA assistance to the contras merely 
served to block Sandinista arms shipments to the Salvadoran rebels. "There 
were always two tracks," one CIA official explained, "the publicly stated 
CIA objective of interdicting weapons to Salvadoran guerrillas, and the 
overthrow of the Sandinista government. "^^ On March 9, 1981, President 
Reagan took the first step to launching the covert war under that public 
goal by issuing an official "finding" that Nicaraguan arms smuggling was 
harming U.S. national security interests. 

The need for continued deception and greater action prompted a 
November 16, 1981 presidential order to begin a full-scale campaign 
against Nicaragua. It authorized an initial $19.5 milhon for the guerrilla 
war, justified once again by the need for arms interdiction.'^ But as one 
contra source said of that rationale in 1982, "If that's what the CIA told 
Congress, they forgot to tell us."''' 

The November order specifically directed the CIA to wage its covert 
war "primarily through non-Americans" and "with foreign governments 
as appropriate."'^ In implementing that early version of the "contracting 
out" strategy, the CIA piggybacked on operations already underway by 
two other governments: Argentina and Israel. 

The first of these "deniable" partners was Argentina, whose military 
rulers had, since the mid-1970s, unleashed an orgy of violence against their 
own civilian population in the course of stamping out a leftist guerrilla 
movement. Argentine agents had worked in Nicaragua even before 
Somoza's overthrow to help track down Argentine Montoneros guerrillas 
who had teamed up in exile with the Sandinistas; they also advised security 
forces and death squads in Guatemala and El Salvador. Now Argentina's 
mihtary junta supphed as many as 100 veterans of its own dirty war against 



Contracting Out U.S. Foreign Policy 



11 



the left to train the first contras in urban terrorist tactics and guerrilla war. 
These were not just any contras: Argentina's proteges were all recruits 
from Somoza's brutal National Guard. Visits to Buenos Aires in 1981 by 
such Reagan administration emissaries as Joint Chiefs of Staff Chairman 
General Edwin Meyer, Ambassador-at-Large Vernon Walters and UN 
Ambassador Jeane Kirkpatrick helped establish the alliance of the CIA and 
Argentine military in Central America. A November 1 meeting of CIA 
director William Casey and the American-trained leader of Argentina's 
military junta, Gen. Leopold Galtieri, cemented it.^* 

At the same time, CIA paymasters — who had allocated $50 million to 
the training program" — ^prevailed on several key contra leaders to unify 
their anti-Sandinista groups behind the Argentine-trained veterans of 
Somoza's National Guard. Thus the Nicaraguan Democratic Front, or 
FDN, was formed on August 11, 1981, just when Gen. Galtieri was in 
Washington on an official visit. 



Foreign Money, Foreign Arms 

Money for the contras that once flowed freely from CIA contingency 
accounts began to dry up in 1983 when Congress began setting limits on its 
funding of the burgeoning and ever-more-unpopular war. Legislators were 
finally awakening to the fact that the Argentine-trained Somocistas wanted 
not a democratic accommodation with the Sandinistas, but their ouster. 

On December 8, 1982, the House of Representatives passed a bill 
sponsored by Rep. Edward Boland of Massachusetts barring U.S. covert 
actions "for the purpose of overthrowing the government of Nicaragua." 
That new law alone did not slow the administration down, but the demands 
of an enlarged war did. Later the next year, the CIA had to augment its 
budget by persuading the Pentagon to donate $12 million in "surplus" 
arms to the agency for delivery to the contras. That December, however. 
Congress voted a $24 million ceiling on CIA spending for its covert war in 
the coming fiscal year. 

In May 1984 that half-closed spigot was fully plugged in the wake of 
revelations that CIA agents, acting in the name of the contras, had seeded 
Nicaraguan harbors with mines. These agents included Salvadoran, 
Hondurans, Argentinians, Chileans and Ecuadorans — but ironically, no 
Nicaraguans. That provocative escalation had been conceived by the 
NSC's Oliver North and a top CIA officer in charge of anti-Sandinista 
operations to get more bang for limited bucks.^° But it outraged Managua's 



12 



The Iran-Contra Connection 



Western trading partners and chagrined Congress, whose intelligence 
oversight committees were taken by surprise. The fiction of "arms 
interdiction" held up no longer. Congress rejected a supplemental appro- 
priation for the contras. Three months later, in August, it passed the Boland 
Amendment, prohibiting any administration agency involved in "intel- 
ligence activities" from "supporting, directly or indirectly, military or 
paramilitary operations in Nicaragua by any nation, group, organization or 
individual."^' 

The contras had some resources of their own to fall back on — ^most 
notably, as we shall see in Chapter VI, profits from drug trafficking. But 
without more substantial help from the United States, their cause still 
seemed doomed until North covered his own harbor-mining folly with an 
even greater one: the proposal (accepted by National Security Adviser 
Robert McFarlane) to subvert Congress' intent by building a "private" 
funding and supply network.^^ North claimed that the Boland Amend- 
ment's reference to any "agency or entity of the United States involved in 
intelhgence activities" did not apply to the National Security Council.^^ He 
criss-crossed the globe in 1984 and 1985, raising as much as $1 million a 
month from private and foreign government sources to keep the adminis- 
tration's proxy war ahve.^"* North's agents in turn carried cash from his 
office safe to Central America for disbursement to the rebels.^^ 

One of North's allies in this project was Elliot Abrams, the Assistant 
Secretary of State for Inter-American Affairs and an enthusiast of the 
contra war against Nicaragua. Abrams solicited money from other 
countries, ostensibly for humanitarian purposes. But he consciously 
"decided to use the account opened by North without procedures for 
monitoring expenditures from the account," according to a Senate 
committee report. This studied lack of interest closely paralleled the 
CIA's own official policy of asking no questions about the origin of large 
sums of money in the contras' bank accounts. 

Together with Abrams and other officials and private agents. North 
raised money from a remarkable variety of sources outside the United 
States — and thus outside the jurisdiction of Congress. Amos Perlmutter, an 
American political scientist with close connections to the Israeli govern- 
ment, reports that, "All those who are clients of the United States have been 
told more or less, 'You've got to do something for the contras.'"^^ 

According to contra fundraiser and presidential candidate Pat 
Robertson, one helping hand for the anti-Sandinista rebels came from 
South Africa.^* For example, some of the planes that suppUed the contras 
were made available by a South African air freight company,^^ apparently 
after the head of the CIA's Latin America division took a secret trip to 



Contracting Out U.S. Foreign Policy 



13 



South Africa in early 1985 to solicit aid for the anti-Sandinista cause. The 
South African aid may help explain Reagan's vigorous opposition to 
economic sanctions and CIA director William Casey's efforts to line up 
Saudi oil for the apartheid regime.^' 

Brunei: In the summer of 1985, during the dry spell in congressional 
aid, Secretary of State George Shultz and his chief assistant on Latin 
American affairs, Elliott Abrams, approached the Sultan of Brunei for a 
donation to the contra cause.^^ The sultan, fabulously wealthy from oil and 
gas revenues, reportedly deposited $10 million in a Swiss bank account 
controlled by Oliver North. He was also a creditor to the key Irangate 
arms broker, Adnan Khashoggi.^"* Some U.S. officials suspect that the 
Sultan's money never reached the contras, but instead went to reimburse 
Khashoggi, who advanced miUions of dollars to finance U.S. arms sales to 
Iran.^^ 

Saudi Arabia: Casey also worked on Saudi Arabia — successfully — 
to support Washington's cause in Central America. The CIA director met 
with King Fahd in February 1984 to press his case. Working in tandem 
with Casey to persuade the royal family were two private individuals with 
tremendous experience in the field of Mideast arms sales: retired Air Force 
Gen. Richard Secord, who steered the sale of AW ACS surveillance planes 
to Saudi Arabia through Congress in 1981, and Robert Lilac, former 
commander of the U.S. Air Force Logistics Command in Saudi Arabia, 
who left the NSC in 1983 and now works for the Saudi Ambassador in 
Washington, D.C.^^ The Saudi royal family reportedly turned over $32 
million to the rebels in Honduras and Costa Rica in gratitude for the 
administration's success in overcoming the Israeli lobby's resistance to the 
$8.5 billion AWACS sale.^^ Saudi money also supported anti-connmunists 
in Angola and Afghanistan.^* Most recently, evidence has come to light 
that Saudi Arabia financed arms purchases by its feared adversary Iran, in 
hopes of moderating the regime's revolutionary, messianic mission.^' Some 
of these monies in tum were allegedly deposited by Israeli intermediaries in 
Switzerland for disbursement to the contras.'*'^ 

South Korea: Less visibly. South Korea, too, has given generously to 
the contras,'" and on at least one occasion shipped them arms paid for by 
Saudi Arabia."*^ It has also provided an important back channel for arms 
shipments to the Khomeini regime in Iran.'*^ The arms and funding 
pipelines from South Korea were kept open by a combination of 
Washington lobbyists, ex-CIA officers and private organizations, many 
with ties to Saudi Arabia as well."^ 

No country, however, has played a more significant surrogate role in 
both Central America and Iran than Israel. As early as 1981, Israel's 



14 



The Iran-Contra Connection 



economic minister Ya'acov Meridor had declared, "Israel will be your 
proxy. Although Israeh leaders have officially denied aiding the contras, 
the record of their involvement is clear and unequivocal.'^ As recently as 
September 1986, according to Assistant Secretary of State Elliot Abrams, 
Israel sent the contras by sea a large shipment of Soviet-made arms, 
presumably captured in Lebanon.'*' 

Israel's proxy activities on behalf of the contras grew out of a long 
tradition of military support for authoritarian regimes in Central America, 
including that of Anastasio Somoza in Nicaragua. Israel was also in on the 
ground floor with the contras when Somoza finally fled the country. Haifa 
University professor Benjamin Beit-Hallahmi reports that "when the CIA 
was setting up the contra organization in 1981, the Mossad was also there, 
carrying out the training and support for the first units.""** 

Finally, Israel was a leading arms supplier to Argentina during the 
period of its miUtary rule, despite ami-Semitic violence and the Falklands 
War. Indirectly, therefore, Israel bolstered the contras by arming their 
direct military supporters in the first years of opposition.'*^ 

The first major Israeli arms deUveries to the contras appear to have 
begun shortly after the pull-out of Argentine trainers and suppliers from 
Central America in the aftermath of the Falklands War.^" "As early as 
1982," according to U.S. News and World Report, Gen. Richard Secord 
rook charge of a Pentagon operation "in which Israel shipped tons of 
weapons captured during its invasion of Lebanon to a CIA arms depot in 
San Antonio. From Texas, the guns were shipped to the contras."^* 

More than arms seem to have been involved. Replacing the Argentine 
advisers were "retired or reserve Israeli army commanders. ..hired by 
shadowy private firms," according to Time magazine.^^ America's contrac- 
tors had apparently subcontracted the job. 

The point man for this cooperative strategy was David Kimche, a 30- 
year Mossad veteran who rose to direct Israel's Foreign Ministry until the 
fall of 1986. Known as Israel's "key contras specialist, "^^ he has been 
directly linked to surrogate funding of contras. And it was Kimche, by all 
accounts, who in 1985 persuaded the Reagan administration to sanction 
Israel's arms pipeline to Tehran in order to influence Iranian "moderates."^'* 
Kimche's Israeli patron Ariel Sharon was himself an architect not only of 
the contra supply operation but also of Israeh arms sales to Iran.^' And 
Kimche's White House contacts on the Iran operation — Robert McFarlane 
and Oliver North — were in turn the masterminds of the contra aid 
network. 

Nearly all of these foreign funding sources were either untraceable 
(AW ACS kickbacks, Iran payments through Switzerland) or untouchable 



Contracting Out U.S. Foreign Policy 



15 



(Israel, South Korea). A Congress united behind Israel was not (and still is 
not) inclined to ask too many questions about its arms deUveries in Central 
America or Iran.'* Nor, after Jimmy Carter's abortive talk of a puUback 
from Korea, would Congress cut off the Seoul regime. Thus the White 
House could, for a time at least, safely flout the intent of Congress with help 
from these U.S. aid recipients. 



Persoimel and Logistics: Going Private 

Just as Congress was loathe to touch these offshore suppliers, so was it 
reluctant to rein in the elaborate old-boy network of retired CIA and 
military covert operators who carried out Reagan's policies in the field. 
Their common experiences run the gamut from the CIA-sponsored war 
against Castro in the early 1960s, to the covert war in Laos later in that 
decade, to shady arms and intelligence operations in Iran by the mid-1970s. 
Out of these experiences came shared expertise, close-knit contacts and 
trusting friendships that would bring them together again as a covert 
network in the 1980s. 

Among the most significant of these figures is retired Gen. John 
Singlaub, a veteran of the CIA and military "special operations" in 
Indochina who now implements the Reagan doctrine through his leader- 
ship of the World Anti-Communist League and his Pentagon advisory 
role. His special operations colleagues from the Vietnam era run similar aid 
groups, including the National Defense Council, Refugee Relief Inter- 
national, and Air Commandos Association. All these groups coordinated 
their efforts through Oliver North on the NSC.'^ 

Working with North and Singlaub in Vietnam and Laos as an air 
supply specialist on CIA-coimected covert missions was (then) Lieutenant 
Colonel Richard Secord. In 1981, as deputy assistant secretary of defense 
for the Near East, Africa and South Asia, he acted as the Pentagon's chief 
representative and lobbyist on the AWACS sale that set the terms for 
subsequent Saudi kickbacks to the contras. His job also put him in a 
position to follow Israel's covert arms shipments to Iran in the early 1980s. 
A career-long specialist in coverr operations, Secord had what one 
congressional source called "incredible intelligence contacts."^** After 
leaving the government in 1983, Secord and his Iranian-born business 
partner Albert Hakim managed the private supply network for the contras 
under North's supervision, using Saudi and Iranian money deposited in 
Switzerland to purchase planes and other suppUes.'^ Secord was also a key 



16 



The Iran-Contra Connection 



logistics agent in the Iran arms deals of 1985-86. One intelUgence source 
called Secord "the 7-Eleven of this type of intelligence activity open 24 
hours a day." North's own assessment was equally apt; "A man of many 
talents ol' Secord is."*' 

Another Laos-era associate of Singlaub and Secord was CIA officer 
Thomas Clines. As a private businessman by 1986, he helped Secord 
arrange clandestine arms deliveries to the contras out of Portugal, recruited 
ex-ClA pilots for the supply operation and helped Oliver North obtain a 
ship used in the attempt to rescue American hostages in Lebanon.*^ 

Clines had begun putting together a private aid network even before 
Ronald Reagan entered the White House. In 1978, he and Ed Wilson, a 
former CIA agent and friend of Secord who has since been convicted of 
supplying explosive devices to Libya, reportedly began negotiating a 
$650,000 deal with Nicaraguan dictator Anastasio Somoza "to create a 
search and destroy apparatus against Somoza's enemies."*^ The negotia- 
tions commenced just as the Israelis were moving to supply essentially all of 
Somoza's arms. Both Israel's munitions representatives and CUnes, who 
left the CIA on bad terms with the Carter administration, were operating 
directly against official policy toward Nicaragua. But their efforts fore- 
shadowed perfectly Reagan's more miUtant strategy. 

So, it would appear, did the work of another retired CIA officer, Felix 
Rodriguez, who had served under Clines in countless CIA operations in 
Cuba, the Congo and Vietnam.'''' In his "retirement," Rodriguez went to 
work for CUnes in the late 1970s as a representative of his arms sales 
business in Latin America. Rodriguez also served as an arms broker for 
Gerard Latchinian in 1979-80. Latchinian, who would later be convicted 
of a drug-financed assassination plot in Honduras for the benefit of the 
CIA's favorite general, Gustavo Alvarez Martinez, was particularly close 
to IsraeU arms merchants in Guatemala and Miami. Thus Rodriguez 
appears to have supplied a connection between Clines and the Israelis in 
Central America.*' Rodriguez would later become the contras' logistics 
mastermind at Ilopango military airport in El Salvador.** 

A host of lesser covert operators joined these private individuals in 
carrying out the aims of the Reagan White House. They included Cuban 
exile terrorist veterans of the secret war against Castro directed by Chnes 
from the CIA station in Miami, former CIA contract pilots who flew 
supply missions to Central America, former Pentagon special operations 
officers skilled in covert missions, and a private aid network revolving 
around such organizations as the World Anti-Communist League, 
Sovereign Military Order of Malta and CAUSA, a political arms of Sun 
Myung Moon's Unification Church. 



Contracting Out U.S. Foreign Policy 



17 



Serving this group was also a network of private companies long 
experienced at serving undercover operations of the government. The best 
known of these is Southem Air Transport, a CIA proprietary company 
since 1960 that was sold in 1973 to its president. Sales of other such 
proprietaries were conditioned on "an agreement that the proprietary 
would continue to provide goods or services to the CIA," according to a 
1976 congressional report.*' Southern Air Transport (SAT) was the airUne 
of choice for both the private contra aid operation and the delivery of U.S. 
arms to Iran in 1985-86. The same aircraft that delivered U.S. weapons to 
Tehran via Israel picked up Soviet-made arms from Israeli-controlled 
stocks in Lisbon on their retum trips to Central America.** One retired Air 
Force officer involved in supplying the contras warned crew members to 
protect SAT's cover: "We don't want to get SAT or ourselves burned with 
a leak or get money hung up where we would have to expose the 
operation] to get it back."*^ 

In retrospect, the practice of contracting out foreign policy to such 
private agents, with all its dangers and abuses, was almost inevitable given 
the conditions of the Reagan presidency. A miUtant, sometimes radical 
group of policy makers confronted a much more cautious Congress and 
bureaucracy. A president flush with a tremendous election victory was 
frustrated by the unpopularity of so many of his specific foreign policies. 
The temptation under such circumstances was to skirt the law, even break 
the rules in the faith that deeply covered clandestine acts would go 
unnoticed and that the President's personal popularity would prevail in a 
showdown with political critics. The temptation, in short, was to use the 
contracting out strategy to achieve total presidential supremacy in foreign 
poUcy. Curbing the ability of future presidents to avoid public account- 
ability this way is an essential first step toward also curbing the domestic 
and foreign abuses that result. 



m. 



"Shadow Networks" and Their Stake in Covert Operations 



Introduction 



From their inception in 1979, the so-called contra anti-Sandinista 
forces have been involved in scandals, including the murder and torture of 
civilians, health workers, prominent clerics, and even members of their own 
forces.' These crimes, though they are not our subject, can hardly be 
subordinated to the more narrow Contragate scandal which has preoc- 
cupied the U.S. press since October 1986, and which, initially at least, 
focussed on the way bureaucratic backers of the contras in the Reagan 
White House National Security Council staff plotted to circumvent a cutoff 
of CIA aid dictated in 1984 by Congress. 

The investigative reporting of Contragate, however, has revealed 
more clearly what to some was already obvious: that the scandals of the 
contras and of their bureaucratic backers are inter-related and indeed part of 
a much larger and older intrigue, which involved not just the contras and 
their NSC support team but also a larger "shadow network" of veteran 
intelligence operatives in and out of government, and their right-wing 
intemational allies. This well-organized and experienced cabal, working 
inside and outside the United States, with access to ruthless operatives and 
covert international funds, contributed both to Reagan's election in 1980 
and to the self-damaging inflexibility of his commitment to the contra 
operation. The story of Contragate, seen from this perspective, is really a 



19 



20 The Iran-Contra Connection 

further chapter in the operation of the covert forces that the United States 
came to know through Watergate. 

Looking back, it is clear that Watergate was in part a story of 
corruption and conspiracy involving the recycling of foreign-based funds 
into U.S. elections, and also a story of disputes between factions whose 
power depended on relations with the CIA and other intelligence agencies. 
It may be that, with so much free-floating money in the world today, U.S. 
democracy will never be wholly free of such influence: even the reform- 
minded Carter presidency was tainted by the "Billygate" and then the 
"Irangate" scandals of the 1970s, which were not unrelated (as we shall see) 
to the Iran-Contra coimection of 1986. But in the Carter era there was also a 
concerted effort to cut back on illegal business payoffs, CIA political 
operations, and U.S. aid to foreign dictators (such as Anastasio Somoza of 
Nicaragua) who did not hesitate to invest some of the largesse back into the 
U.S. electoral process.^ 

Ironically, Carter's very reform movement, by forcing its opponents 
into defensive alhance, contributed to a more pervasive Iran-contra scandal 
of some seven years' standing: an on-going scheme (and in part an illegal 
conspiracy) to reverse the post- Watergate reforms of intelligence abuses, 
first by electing Ronald Reagan in 1980, and then by committing him, 
through the contra program, to a resurrection of abandoned CIA covert 
operations. 

Contragate, in this larger sense, was not just a covert operation on 
behalf of a presidency; it can also be seen in part as an electoral conspiracy in 
support of a covert operation. And though the principal schemers were 
North American, they did not hesitate to invoke the aid of neofascist 
foreigners. 

One principal foreign architect of this contra commitment appears to 
have been a former CIA Guatemalan protege called Mario Sandoval 
Alarcon, a leader of the reactionary World Anti-Connmunist League 
(WACL) and the so-called "Godfather" to all the death squads of Central 
America, including those of Major Roberto d'Aubuisson, his client in El 
Salvador. But Sandoval was not acting alone; his deals with the Reagan 
campaign in 1980 appear to have been part of a larger coordinated plan 
involving one of Washington's leading military-industrial lobbies, the 
American Security Council (ASC) at home, and ASC's WACL alUes 
overseas — especially Guatemala, Argentina, and Taiwan. 

In this chapter we shall see how the World Anti-Communist League 
has evolved since its origins in Taiwan in 1954, with the help of members of 
the U.S. "shadow network." This league was originally created by the 
ruhng intelligence networks of Taiwan and South Korea to provide a 



"Shadow Networks" 21 



platform to continue the militant cold war propaganda that Eisenhower had 
seemed to abandon when he negotiated an end to the Korean and Indochina 
Wars at the 1954 Geneva Conference. The groups attending these 
conferences from other countries and regions, and which eventually joined 
in 1967 to create WACL, all had one thing in common: their (often secret) 
links to U.S. intelligence and military experts in "political" or "psycho- 
logical warfare." Through their annual conferences in different parts of the 
world, they have also played host to rising U.S. anti-Communist 
politicians, such as Richard Nixon in 1964. 

Since their formation, the WACL chapters have also provided a 
platform and legitimacy for surviving fractions of the Nazi Anti-Komin- 
tem and Eastern European (Ostpolitik) coalitions put together under 
Hitler in the 1930s and 1940s, and partly taken over after 1948 by the 
CIA's Office of Pohcy Coordination.^ In the late 1970s, as under Carter 
the United States pulled away from involvement with WACL countries 
and operations, the Nazi component of WACL became much more blatant 
as at least three European WACL chapters were taken over by former Nazi 
SS officers. 

With such a background, WACL might seem like an odd choice for the 
Reagan White House, when in 1984 WACL Chairman John Singlaub 
began to report to NSC staffer Oliver North and CIA Director William 
Casey on his fund-raising activities for the contras.'* We shall see, however, 
that Singlaub's and WACL's input into the generation of Reagan's Central 
American policies and poUtical alliances went back to at least 1978. The 
activities of Singlaub and Sandoval chiefly involved three WACL coun- 
tries, Guatemala, Argentina, and Taiwan, that would later emerge as 
prominent backers of the contras. In 1980 these three countries shared one 
lobbying firm, that of Deaver and Hannaford, which for six years had 
supervised the campaign to make a successful presidential candidate out of a 
former movie actor, Ronald Reagan. 

Still unacknowledged and unexplained is the role which funds from 
Michael Deaver's Guatemalan clients played in the 1980 Reagan campaign. 
Although contributions from foreign nationals are not permitted under 
U.S. electoral law, many observers have reported that rich Guatemalans 
boasted openly of their illegal gifts. Half a million dollars was said to have 
been raised at one meeting of Guatemalan businessmen, at the home of their 
President, Romeo Lucas Garcia. The meeting took place at about the time 
of the November 1979 visit of Deaver's clients to Washington, when some 
of them met with Ronald Reagan.^ 

The Reagan campaign never admitted having received such illegal 
contributions. But observers of Latin America were struck by the presence 



22 



The Iran-Contra Connection 



at Reagan's first inauguration of several very controversial Guatemalans. 
Among these were Mario Sandoval Alarcon, the "Godfather" of the 
Central American Death squads.^ On Inauguration Day, before dancing at 
the President's Ball, Sandoval "announced that he had met with Reagan 
defense and foreign pohcy advisers before the election, and indicated that 
the Guatemala rightists expect Reagan will honor 'verbal agreements' to 
resume military aid to Guatemala and put an end to criticism of the regime's 
human rights record."^ The existence of these verbal agreements had been 
disclosed before the election by an American investigative journalist, Alan 
Nairn, who had learned of them from Guatemalan and U.S. businessmen. 
On October 30, 1980, Nairn reported that "perhaps most importantly, the 
Reagan supporters have agreed to cut back U.S. criticism of the death 
squads."** 

One question to be answered by Michael Deaver is whether he knew 
of these "verbal agreements." Another is whether these agreements 
included aid and protection to Sandoval's Nicaraguan death squad on 
Guatemalan soil, one of the original components of today's contras. At this 
time members of this cadre had already gone for terrorist training to 
Argentina, another country represented by Deaver.' The cadre leaders 
were being put up at Sandoval's expense in an apartment house behind his 
home.^° 

A small group of these men, headed by Somozista Colonel Ricardo 
Lau, had arranged the murder of El Salvador's Archbishop Romero in 
1980, under the direction of d'Aubuisson." 

Thanks to a captured notebook, some of these facts became known to 
Carter's State Department, so that Sandoval personally had good reason to 
fear "criticism" of his own human rights record.'^ Carter's Ambassador to 
El Salvador, Robert White, told Congress in April 1981 that the captured 
diary gave "the names of people living in the United States and in 
Guatemala City who are actively funding the death squads." Three years 
later he charged that "The Reagan Administration took on a great 
responsibility when it chose to conceal the identity of Archbishop 
Romero's murderer" and made d'Aubuisson "an honored guest at our 
Embassy."" 

But Reagan in 1980 had promised a "housecleaning" of the State 
Department. Among the first to go were the members of Carter's Central 
America team, including Ambassador Robert White. Not only did the new 
administration issue d'Aubuisson the U.S. visa which Carter had denied 
him; it promptly used documents supplied by d'Aubuisson to create, in its 
so-called White Paper of February 1981, a pretext for supplying aid to 



"Shadow Networks" 23 



Sandoval's contras. All this was done with a speed which suggests the kind 
of pre-election verbal agreement Sandoval had referred to.'"* 

One need not look only to financial payoffs to explain Reagan's initial 
enthusiasm for the contra forces in Nicaragua. Support for them was clearly 
indicated by his ideological anti-Communism and his strategic design for 
the hemisphere. But where Reagan's anti-conomunism elsewhere in the 
region has been at least pragmatically flexible (however ruthless) — in the 
case of the contras it has been unbending and geo-politically dangerous. 
For example, Reagan's initial support for the Garcia Meza regime in 
Bolivia waned as that regime was shown to be a mere front for local cocaine 
barons. But increasing reports of the contra involvement in the cocaine 
traffic seem only to have increased the administration's protectiveness and 
commitment (see Chapter VI).'' 



Contragate: A Hypothesis 

The difference can be explained by the existence of a powerful 
coalition that wished to see the United States itself get back into the 
business of covert political and paramilitary operations. This coalition 
included the foreign beneficiaries of such operations: men like Sandoval in 
Guatemala (whose CIA connections went back to 1954), and, until his 
murder in September 1980, the Nicaraguan dictator Anastasio Somoza 
(who in 1954 had been his father's liaison with the CIA Guatemala 
operation).'* 

Other countries where the CIA had been active had an equal interest in 
seeing a restoration of CIA covert operations. South Africa wanted CIA 
assistance in supporting the UNITA rebels in Angola. Thailand wanted 
CIA help in Cambodia. Arab countries like Saudi Arabia wanted financial 
support for the tribal resistance in Afghanistan. Each got what it wanted 
from the new Reagan administration, which, in tum, used these nations to 
carry out its own ends as well. A global lobby for all of these covert 
operations, including the contras, existed in the form of the World Anti- 
Communist League, or WACL, of which Mario Sandoval Alarcon had 
been a long-time organizer and leader in Central America. 

Before Reagan, the Taiwan-based WACL had been marginal to U.S. 
foreign policy, partly because of the involvement of some of its personnel in 
Nazi operations and the international drug traffic. Since 1984, however, 
WACL, under its American President retired General John Singlaub, has 
moved (with barely disguised White House connivance) into overt support 



24 



The Iran-Contra Connection 



for the contra operation, which its members (including Singlaub) ap- 
parently endeared to the Reagan campaign before the 1980 election. 

WACL in Latin America had moved into a particularly extremist, 
conspiratorial, and drug-linked phase after 1975-76, with the establishment 
of the W ACL-backed military dictatorship in Argentina. A new, overtly 
fascistic branch of WACL in Latin America (the Confederacion Anti- 
comunista Latinoamericana, or CAL), coordinated international plotting 
for a chain of right-wing military plots: notably the Bolivian "cocaine 
coup" of 1980 (involving the Nazi war criminal turned drug trafficker, 
Klaus Barbie) and Sandoval's schemes for the contras and d'Aubuisson. 
Sandoval, "according to one right-wing Salvadoran admirer, was to be the 
'on-site' manager who would put [CAL's] plans into action in Central 
America."" 

The mechanics of this CAL network seem to have been masterminded 
primarily by the secret police of Argentina, Chile, and Paraguay; its 
political use seems to have been coordinated with other countries at CAL 
meetings. The conspiratorial Italo- Argentine Masonic lodge P-2, an 
outgrowth of old U.S. anti-Communist plotting with the Italian drug- 
trafficking Mafia, and later a political underpinning to the Argentine 
military junta, is alleged to have siphoned millions of dollars into Latin 
America in support of their anti-democratic politics. Through such right- 
wing schemes, one Italian veteran of P-2 fascist plotting in Italy, Stefano 
delle Chiaie, was able to take part in the Chilean murder network which 
killed Orlando Letelier in Washington, the Argentine-backed "cocaine 
coup" in Bolivia, and the training of the death squads headed by Sandoval 
and d'Aubuisson in El Salvador.'^ Thus it was all the more ominous that the 
invitees to Reagan's inaugural balls in 1981 should include not only 
Sandoval, the Central American "Godfather," but Licio Gelli, the ItaUan 
head of P-2.'' 

In addition to this foreign network, there was a strong domestic lobby 
for U.S. covert operations as well. At the heart of this lobby were the 
spokesmen and bankroUers of a "forward strategy" and "pohtical warfare" 
or "psychological warfare," grouped mainly in the American Security 
Council, the most powerful lobby in Washington of the military-industrial 
complex. In the 1970s, with the increasing dependency of U.S. trade on 
arms exports and of U.S. industry on the defense budget, other U.S. 
business groups joined in the demand for a more aggressively anti- 
Communist foreign pohcy.^" There was assuredly broad corporate support 
for "overcoming Watergate" and "ending the Vietnam syndrome" and this 
could only make it easier to overcome the disfavor into which covert 
operations had fallen. 



"Shadow Networks" 25 



But in 1980 the ASC was also supported by a more desperate, 
manipulative, and even conspiratorial group pushing for the restoration of 
U.S. covert operations. These were the CIA's veterans of the clandestine 
services, who (often in mid-career) had been eased or kicked out of the CIA 
in large numbers after the CIA began to retrench on such operations in the 
1970s.^' 

Of the CIA's five most recent directors before 1980, four (beginning 
with Richard Helms) had faced the unpleasant task of creating dangerous 
enemies, by cutting back the CIA's Operations Division, especially after 
the scaling down of the Vietnam War. A thousand clandestine operators 
had been fired or forced to retire in 1973 by Nixon's Director of Central 
Intelligence (DCI), James Schlesinger. But the coup de grace to the 
clandestine services was delivered on October 31, 1977, by Carter's DCI, 
Admiral Stansfield Turner. By ehminating a further 820 positions, Turner 
is said to have reduced the clandestine services from 1200 to 400. John 
Ranelagh has written that "when Turner fired virtually all the [covert] 
operators in the DDO [Operations Directorate] — the whole clandestine 
service — in effect he eUminated the agency's special-project capability, 
forcing it to compete with specialized agencies in the burgeoning field of 
technical intelligence collection and analysis. "^^ 

These men, as we shall see, were on good terms with old CIA foreign 
contacts, such as Somoza and Sandoval, and in the Carter era they were 
increasingly forced to seek employment with them. As clandestine services 
fell more and more out of favor, their operators inside and outside the 
service resorted to more and more questionable activities. Revelations in 
the press about the work of rogue ex-CIA intelligence operative Edwin 
Wilson (for Libya's Khadafy) put several high-level CIA operators at risk: 
they faced possible prosecution unless (as happened) the election of Reagan 
and the restoration of CI A covert operations would result in the restoration 
of a de facto "CIA immunity" to prevent investigation of their past 
activities. 

The story of the contras, and of Contragate, is involved with a number 
of such individuals: men such as Tom CUnes, eased out by Turner because 
of his financial involvement in Ed Wilson's affairs, who then sought work 
with Nicaragua's Anastasio Somoza. We shall see how, after Reagan was 
elected, a Reagan appointee, Michael Ledeen, used allusions to a "covert 
operation" as part of a successful campaign to protect Clines and his 
suspected co-conspirators, two of whom were still working in the new 
Reagan administration. One of these, Richard Secord, was indeed already 
involved in the covert arms flow to the contras, and after his retirement in 



26 



The Iran-Contra Connection 



1983 he became a "private" arms suppUer to the contras, operating much as 
Wilson had.^^ 

The Iran-Contra revelations of late 1986 revealed how heavily the 
Reagan administration, in defying a Congressional ban on support of the 
contras, had come to rely on a well-integrated network of military and 
inteUigence veterans of covert operations, many of whom (Uke Secord) had 
come to have better relations with foreign groups than with their own 
government. Veteran CIA operatives and future contra backers, hke 
Secord, John Singlaub, and Thomas CUnes, came to be trusted by each 
other, and by the foreign backers of Contragate, more than by their 
superiors in Washington. 

Contragate, the collusion to install and maintain a U.S. covert 
operation (despite the expressed will of Congress), can be traced back to the 
decisions of successive CIA directors to scale down and virtually eliminate 
clandestine services, and to the "offshore" intelligence operations that grew 
as the CIA's operational assets were dispersed. The major scandals of the 
Carter-Tumer era involving the CIA's clandestine services — Edwin 
Wilson, the Sindona/P-2 affair in Italy, the drug-linked Nugan Hand Bank 
in Australia (see below), all strengthened the determination of former CIA 
operatives and their allies to restore their traditional immunity by reviving 
their former role in mounting covert operations. 



The Covert Operations Lobby 

Every historical change in modes of warfare has produced what is 
known as a disposal problem: what to do with no longer needed troops. 
This is one of the less apparent causes for America's current "contra" crisis. 
What is to be done, not just with the Nicaraguan mercenaries, who are now 
one of the major armies of Central America, but with their ex-CIA Cuban 
and American handlers, an increasingly powerful constituency inside the 
Reagan administration? 

In the fifteenth century a problem much like this one — what to do with 
ravaging knights who lived off the land — was a powerful motive for 
England to prolong the Hundred Years' War and keep its knights in France. 
America's disposal problem with the contras is on the point of becoming 
acute, especially if the $100 million voted by Congress is actually used for 
its stated goal of tuming the demoralized Nicaraguan contra forces into a 
well-disciplined army. 



"Shadow Networks" 27 



But the root disposal problem is the domestic one: what to do with a 
small but highly determined American army of covert operations specialists 
and their ex-CIA Cuban cohorts. This so-called "secret team" — old covert 
operations buddies like Generals Singlaub and Secord, and their CIA 
colleagues hke Thomas Clines and Felix Rodriguez — are at the center of 
the Iran-contra conspiracy to keep U.S. funds flowing to the contras in 
defiance of a Congressional prohibition. 

These men are not just fighting to preserve the contras; they are 
plotting above all to preserve their own style of clandestine warfare, despite 
a tentative consensus arrived at in the 1970s after Watergate and the ensuing 
Congressional investigations of the CI A — a consensus uniting the White 
House, Congress, CIA, and Pentagon — that such covert operations were 
counterproductive and ultimately injurious to larger U.S. interests. 

We have seen that, after widespread agreement that the CIA's covert 
operations bureaucracy had become far too large, CIA directors under both 
Republican and Democratic presidents moved to cut back the clandestine 
services to a fraction of their former size with the two biggest steps taken by 
CIA directors James Schlesinger in 1973 under Nixon, who eliminated 
some 2000 CIA positions (1,000 people were fired), and Stansfield Turner 
in 1977 under Carter, who eliminated 820 more.^" 

And although Carter grew steadily less hostile to Pentagon para- 
military operations, especially after the fall of the Shah of Iran and 
particularly the seizure of the U.S. Embassy in Tehran, even here the 
rationale for the Pentagon effort was not covert warfare as such, but 
antiterrorism. To this end, the military formed two elite commando units 
("Blue Light" and "Delta"), and later a joint task force for the rescue of the 
U.S. hostages, but all this was a far cry from the 15,000 troops which in 
1984 the Reagan administration centralized under the Pentagon's Joint 
Special Operations Agency (see Chapter IX). 

In any case, the disposal problem of what to do with impatient Bay of 
Pigs troops, which confronted the newly-elected president John F. 
Kennedy (see Chapter VI), is a problem that has never gone away and has 
only contributed to a succession of much larger disasters. For a while Bay 
of Pigs veterans like Felix Rodriguez (later a supplier of the contras), when 
they could no longer be used with impunity against Cuba, were reassigned 
to CIA operations in the Congo and later the Vietnam War. 

When that war ended in detente, the Cubans came home to Miami and 
a spate of domestic violence. This belligerence was only dispersed when the 
Cuban Bay of Pigs veterans were recruited for new secret wars: the 
Angolan fiasco of 1975-76; and then, since 1981, the training, supplying, 
and "advising" of the contras. 



28 



The Iran-Contra Connection 



The key members of the "secret team" behind both the Cubans and the 
Contragate scandal were all working together by the time of the covert 
operations in Laos and Vietnam. General John Singlaub, the Reagan 
administration's chief liaison in the so-called "private" contra supply effort 
of 1984-86, was from 1966 to 1968 the chief of the SOG ("Studies and 
Operations Group") in Vietnam, which launched covert cross-border 
operations into Laos. 

A number of men who were under Singlaub at SOG are now 
associated with him in the world-wide recruitment of mercenaries for the 
contras, through the branches of the World Anti-Communist League.^'' 
One of these associates is Singlaub's SOG Air Wing Commander, Harry 
("Heinle") Aderholt, who now in retirement leads the Air Commando 
Association (uniting some 1500 U.S. special warfare veterans) in its 
"nonlethal" anti-Communist support operations in Central America, 
principally Guatemala. 

Aderholt's successor as director of air support operations in Laos was 
Richard Secord, who after his retirement flew to Iran with Reagan's 
emissaries Robert McFarlane and OUver North in the May 1986 Iran arms 
deal. Through one of his private companies, Secord also sold at least one 
airplane to the contras. Secord's private company, Stanford Technology 
Trading Group International, was frequently phoned from the "safe 
house" in El Salvador housing the contra supply team of Eugene Hasenfus 
and his pilot, William Cooper. Hasenfus and Cooper, whom the Los 
Angeles Times called "one of the CIA's chief pilots in Southeast Asia," were 
both long-time veterans of Secord's covert air supply operations in Laos.^** 

In 1966-68, at the time of Singlaub's and Secord's Laotian operations, 
the CIA Chief of Station in Laos was Theodore Shackley, who from 
1962-65 had been in charge of the CIA Miami station directing the Cuban 
Bay of Pigs veterans against Fidel Castro.^' From 1969-72 Shackley was 
CIA Chief of Station in Saigon. Under him worked both FeUx Rodriguez 
(whom he knew from Miami), and his colleague Donald Gregg, who today 
is Vice-President Bush's liaison with Rodriguez and the contras.^" From 
1980 to 1983, Shackley was a consultant with Stanford Technology, 
whose owner was Albert Hakim, Secord's business partner. 

Oliver North, who has been depicted as the White House architect of 
the Iran-Contragate coimection, was far junior to these men and, initially at 
least, guided by them. In 1968, when he graduated from Annapolis, he 
went out to counterinsurgency activities in Vietnam, where he is alleged by 
some sources to have served at least briefly with Singlaub and Secord in 
Laos.^^ His introduction to covert arms deals may have come in 1981, 



"Shadow Networks" 29 



when under the guidance of Secord he lobbied for the Saudi AW ACS deal 
that helped pay for the contra covert operation and others. 

It is the collective bureaucratic clout of this well-coordinated team of 
U.S. secret war veterans, far more than that of the Cubans and Nicaraguans, 
that stiffens the Reagan administration's inflexibility, and drive towards 
escalation on the contra issue. They are fighting for the survival of special 
warfare itself. 

All of these U.S. special warriors were on the outs at the end of the 
1970s, unpopular not just with the Carter White House but with their own 
agencies. While it was President Carter who removed General Singlaub 
from his South Korea cormnand for his pohtical insubordination, the CIA 
itself sidetracked Theodore Shackley and his subordinate in Miami and 
Laos, Thomas Clines, thus provoking their resignations. 

Shackley and Clines were suspected of possible involvement in an 
arms deal with Egypt, which allegedly "bilked the U.S. govemment out of 
$8 million. "^^ The deal was said to have been put together by Shackley's 
former CIA contract employee Ed Wilson, who was later convicted for 
smuggling explosives to Libya.^^ 

Richard Secord was also investigated in the same arms deal, even after 
Reagan was elected. He refused to take a lie detector test, was briefly 
suspended from his job, and after the case was settled out of court left the 
government in 1983. One of those who intervened with the prosecutor on 
this case was Michael Ledeen, who has since confirmed that as a National 
Security Council consultant he helped set up the first contacts between 
Teheran and Washington on the Irangate arms deals (see Chapter Vlll).^'' 

These men were at the heart of a larger "secret team," of what 
Administration officials later called a "board of directors of sorts," behind 
North's Iran-Contra arms dealings. In plotting to preserve the contra 
operation against Congressional disapproval, this team was plotting for the 
survival of U.S. special warfare itself, since of all the U.S. -backed covert 
wars only the contra operation was being managed by large numbers of 
American covert war experts. Having allied themselves in the late 1970s 
with the incipient Reagan presidential campaign, this team played an 
important role in writing Reagan's foreign policy platform, and thus were 
well-positioned to implement covert warfare scenarios they themselves had 
helped devise. 

More directly than this, all four men were fighting for personal 
vindication. Only by involving the White House in the once discredited 
notion of clandestine warfare could they redeem themselves from the 
personal disrepute into which they had all fallen. Their own fate was thus 
much like that of the ex-CIA Cubans who flocked to the contra cause, after 



30 



The Iran-Contra Connection 



having been arrested on charges ranging from drug trafficking to (in the 
case of Luis Posada, Felix Rodriguez' colleague in the contra supply 
operation) allegedly helping blow up a Cuban civilian airliner. 

What is too little understood in the Contragate affair is the extent to 
which this secret team even more than their Cuban cohorts, helped 
engender the initial Reagan commitment to the contra cause. In the 1979- 
80 period General Singlaub, having linked his political future to that of 
presidential candidate Ronald Reagan, twice traveled to Central America to 
forge an alliance between the Reagan campaign and the local backers of 
what would later become the contra army. 

A biography of Ed Wilson, Manhunt by Peter Maas, charges that 
Shackley's former assistant Tom Clines, "even before he left the CIA.. .was 
promoting a deal with the Nicaraguan tyrant, Anastasio Somoza, to create 
a search-and-destroy apparatus against Somoza's enemies."^^ (Ted Shack- 
ley has vigorously denied allegations that he sent Ed Wilson to offer 
assassination services to Somoza, who at that belated point had been 
abandoned pohtically by President Carter and was on the point of being 
ousted.)^^ 

If Congress is to deal resolutely with the Contragate crisis, it must deal 
with more than the complex story of disappearing support funds in Swiss 
and Panamanian bank accounts. These are but the most recent symptoms of 
a much more serious disease: a self-serving bureaucratic determination to 
involve the United States in a covert war for which there is neither 
Congressional nor popular support. And, behind this, and beyond the 
scope of this volume, a decades long international policy geared not to 
enhance the well being of American or international citizens, but of 
American corporations and multinationals, a very different thing, indeed. 

What is really at stake in the debate over what happened in the Iran 
events is the future of covert warfare itself. The difficulties of the "disposal 
problem" should not once again become an excuse for postponing a clear 
decision, when the consequences of postponement are so clearly a still 
greater disposal problem in the future. 



The American "Secret Team" and Its Mafia-Drug Scandals 

Though the recent Iran-contra scandal has raised political problems 
for President Reagan and his National Security Council Staff, it has also 
revived old concerns about what a Senate committee once called "allega- 



"Shadow Networks" 31 



tions of substantial and even massive wrong-doing" within the CIA and 
the rest of the national intelligence system.^^ 

The present crisis reopens these old controversies, for today's 
Contragate connection reunites elements of the alliance between the CIA, 
Cuban exiles, and Mafia to assassinate Fidel Castro in the early 1960s, one 
of the CIA's most notorious plots. More importantly, it also raises two old, 
and ongoing, institutional questions. The first is the extent to which the 
current controversy is centered on operations which were controversial in 
the past, and more particularly on the individuals responsible for them. The 
second is the more fundamental question whether covert operations are not, 
by their very nature, inherently inimical to the pubhc interest, likely to 
transgress statutory authority, and hostile to pubhc accountability. (One 
can pose these pragmatic political questions without prejudice to the larger 
moral questions which unilateral expansionism also raises.) 

Histories of the CIA usually trace its covert operations back to the 
Special Operations of its World War 11 predecessor agency, the Office of 
Strategic Services (OSS). But the continuity glosses over an elemental 
difference. OSS Special Operations were designed to challenge the legal 
and political authority of our wartime enemies, chiefly Germany and 
Japan. Covert operations, more often than not, make a similar challenge; 
but as often as not they challenge authorities with which we are at peace, 
and indeed have recurringly challenged even our own government and 
laws. 

From their inception to the present, many CIA operations have been 
covert, not just to deceive foreign populations, but at least partly because 
they were designed to violate U.S. statutes and Congressional will. A 
relevant example is the so-called "Defection Program" authorized in 1947 
(by National Security Council Intelligence Directive 4, a document still 
withheld in full). Despite explicit Congressional prohibitions, this program 
was designed to bring Nazi agents, some of them wanted war criminals, to 
this country, to develop the covert operations capability of the United 
States. 

Some of these agents helped supply the cadres and trainers for the 
nascent U.S. Special Forces or Green Berets, some of whose veterans help 
supply the training and operational backbone of today's contra army in 
Central America.^' Others allegedly were among the Central Europeans 
who helped train the Cubans at the Bay of Pigs; their veterans' organiza- 
tion. Brigade 2506, is now a principal recruiting ground for contra 
supporters. 

According to a U.S. special warfare veteran, William Corson, some of 
these ex-Nazis became pilots in the 1950-52 supply operation of Civil Air 



32 



The Iran-Contra Connection 



Transport (later Air America) to opium-growing Chinese Nationalist 
(Kuomintang, or KMT) guerrilla forces in Thailand and Burma. Corson 
notes that those knowledgeable about an in-house murder and resulting 
"Thailand flap" have theorized "that the trafficking in drugs in Southeast 
Asia was used as a self-financing device to pay for services and persons 
whose hire would not have been approved by Washington (or condoned if 
discovered)."'"' 

Another book, Alfred McCoy's The Pohtics of Heroin in Southeast Asia, 
documents that the KMT forces were accompanied by white advisers, and 
that they were supported with arms and equipment by an American 
company. Sea Supply, Inc.'" In a sense, the Miami-based drug trafficking of 
the contras today can be traced back to this Miami-based corporation. As 
we shall see, its organizer, Paul L. E. Helliwell, had been a member of an 
OSS team in Kunming, Yunnan, that paid for its intelhgence operations 
with opium.''^ Later Helliwell and three other members of this OSS team- 
Howard Hunt, Lou Conein, and Mitch WerBell — would work with drug- 
deahng Cuban veterans of the Bay of Pigs invasion. WerBell in turn would 
work closely with General John Singlaub, the leading "private" backer of 
the contras today. ''^ 

Two senior CIA officials, one of them Colonel Richard G. Stilwell, 
left the CIA after the "Thailand flap" of 1952. In 1959 U.S. intelhgence 
officers would tell President Eisenhower that the Chinese Nationahst 
forces in Burma had caused "nothing but difficulty."'*'' 

The scandals arising from this drug traffic and murder caused the 
KMT supply operation to be officially "terminated" in 1952, with lasting 
consequences for the CIA. One was that the offending subordinate group, 
the Office of Policy Co-ordination (OPC), was merged into the Agency. 
This meant that the OPC "cowboys" who had relished their unsupervised 
use of former Nazis and drug traffickers were now theoretically subor- 
dinated to the somewhat more bureaucratic line of command in the CIA's 
Office of Special Operations (OSO). This was an unstable mix at the time, 
and it has been so ever since. 

Thomas Powers has contrasted the free-wheeUng, improvisatorial, 
"sometimes harebrained" style of the OPC "cowboys" with the profes- 
sionalism of the OSO, who "not only distrusted the tradecraft of the OPC 
people, but on occasion went so far as to wonder just who they were 
working for, anyway."''^ That tension would last through three decades of 
CIA operations to the scandals of Contragate. 

A second consequence with equal bearing on Contragate was that the 
severance of links to the Burma drug traffic was only cosmetic. As recorded 
elsewhere, the planes of Civil Air Transport, which had supplied the KMT 



"Shadow Networks" 33 



troops in Burma, accepted a U.S. government contract to fly them out of 
Burma in 1954. But in fact it only removed those troops who were ready 
for retirement. Fresh KMT troops were flown in and Civil Air Transport 
continued to supply them."** 

With Civil Air Transport in the 1950s, as with Southem Air 
Transport three decades later, the distinction between official and private 
had become blurred enough to permit the continuation of an operation that 
had been officially prohibited. What had up to now been an American 
operation became a KMT-Taiwanese one. However, since Civil Air 
Transport had a Taiwanese KMT corporate entity as well as an American 
CIA one, the planes, bases, and nature of the arms flow remained the 

47 

same. 

The planes were now being sponsored by a new group, the Asian 
People's Anti-Communist League (APACL), which had been set up by 
the governments of Taiwan and South Korea. APACL, later the World 
Anti-Communist League (WACL), was set up with the assistance (as we 
shall see) of members of the CIA "secret team" in 1954, the year the United 
States "officially" wound up its Burma air supply operation. This support 
of APACL for the Burma air supply operation became clear in 1961, when 
Fang Chih, a KMT and APACL official, admitted responsibility, on 
behalf of the Free China Relief Agency, for an unlisted plane that had just 
been shot down over Thailand by the Burmese Air Force. The Free 
China Relief Agency turned out to be a member agency of APACL, 
sharing offices with it at the same Taipei address. (Organized groups of 
ex-Nazi collaborators from Eastem Europe, later beneficiaries of the NSC- 
CIA Defection Program, have also been principal organizers of APACL/ 
WACL from its outset.'*^) 

Despite the "private" Taiwan cover in the years 1954-61, sophis- 
ticated U.S. equipment continued to be shipped via mainland American air 
force bases to the KMT opium growers, until these were driven from 
Burma into Laos in 1961 and the CIA again took over.^° In other words, 
the Civil Air Transport/Air America Burma drug supply operation never 
really closed down. On the contrary, it became a major factor in the 1961 
reopening of the CIA's secret war in Laos, which continued, using local 
traffickers. Green Berets, and the renamed Air America, for the next 
fourteen years.'^ 

That "secret" Laotian war of 1961-75, like the KMT Burma 
operation, involved air flights in and out of regions where the chief cash 
crop was opium. The CIA's prime Laotian protege, Phoumi Nosavan, who 
"had controlled the [drug] traffic for years," and his subordinate Ouane 
Rattikone, solved their fiscal crisis by having the U.S.-supported 



34 



The Iran-Contra Connection 



Laotian government "become directly involved in the import and export of 
Burmese opium. This decision ultimately led to the growth of northwest 
Laos as one of the largest heroin-producing centers in the world. "^^ 

Despite official prohibitions, there is no doubt that, as a CIA 
investigation conceded. Air America planes flew opium out of isolated 
opium-growing areas, especially those held by Meo tribesmen in north- 
eastern Laos, where land access was controlled by the enemy.^^ Top 
intelligence and rmlitary officials of both our Laotian and Vietnamese alUes 
were involved in this traffic, which led among other things to the seizure in 
1971 of sixty kilos of Laotian heroin (worth $13.5 million) from the 
suitcase of the chief Laotian delegate to the World Anti-Communist 
League.^" 

As we have seen, the CIA secret war in Laos and Vietnam was crucial 
in generating today's "secret team" behind the covert Iran-contra supply 
operation. It was in that Laotian war that the key players got to know each 
other: John Singlaub (now Chairman of WACL), Richard Secord, 
Theodore Shackley, Shackley's CIA assistant Tom Chnes, and Fehx 
Rodriguez (the anti-Castro veteran in charge of the contra air supply 
operation in El Salvador). 

But in that same Laotian war the Contragate "secret team" of today 
was subordinated to the reconstituted ex-OPC "secret team" of the Burma 
KMT drug operation. In 1965 Richard Stilwell, released from the CIA 
after the "Thailand flap," retumed to Thailand as U.S. military commander 
to oversee the secret war in Laos. Under Reagan, Stilwell retumed from 
retirement to the Pentagon, to promote the Reagan build-up of special 
warfare forces (see Chapter IX). Wilham DePuy, Stilwell's deputy in 
1952, also retumed to Indochina under Stilwell in 1964, as the chief of the 
Vietnam SOG before Singlaub.^^ Stilwell's OPC deputy and successor, 
Desmond FitzGerald, perhaps the archetypal CIA "cowboy," had risen in 
the CIA to be Shackley's superior in the 1963 anti-Castro plots. 
FitzGerald's promotion in 1965 to be in charge of CIA operations was 
promptly followed by Shackley's transfer to Laos.^' 

Underlying the continuity between the Burma, Laos, and contra 
operations is the importance to all three of the drug traffic. As John 
Ranelagh has written of the KMT Burma army, it "never fought; it rapidly 
became a drag-producing operation instead."^^ Though the fighting in 
Laos was real enough, the question has frequently been raised whether 
America's "secret team" was helping to maintain a drag operation in 
support of their anti-communist war, or helping to maintain a war in 
support of a drug operation. Similar questions have been raised about some 
of the contra leadership and their U.S. supporters (at least in Costa Rica): is 



"Shadow Networks" 35 



their primary motive to fight or to engage in the drug traffic (see Chapter 
VI). ^® hi Miami the FBI has allegedly received an eyewitness report of 
cocaine being loaded on Southern Air Transport planes in Barranquilla, 
Colombia, at a time when the contra- supporting Southern Air Transport 
planes were in the Barranquilla area, as confirmed by flight records found in 
the downed Hasenfus plane.*" (The airline has denied any involvement 
with drugs.) 

A leading institution in this historic continuity has been the drug- 
linked WACL, which between 1984 and 1986 was the principal publicly 
identified source of funding for the contras. Since 1984, General Singlaub, 
as WACL World Chairman, has, in his own words, "quite frankly used the 
WACL organization.. .to meet with some people who are capable of 
contributing" to the contra cause.*'' Singlaub identified his three principal 
WACL sources as Latin America, Taiwan, and South Korea — the three 
areas where WACL members and their alhes, as recently as the 1970s, have 
been recurringly linked to the narcotics traffic. 

There have been recurring rumors that profits from this same drug 
traffic have gone to finance an illicit lobby influencing and corrupting the 
American government. It is known that KMT officials in the U.S. 
narrowly escaped conviction on narcotics smuggling charges in the 1950s; 
and it has been alleged that the narcotics traffic was at this time "an 
important factor in the activities and permutations of the [KMT Taiwan] 
China Lobby. "^^ This is of current concern because of the continuity 
between the bribery and other illegal activities of the China Lobby of the 
1950s, the pro-Somoza and anti-Castro lobbies of the 1960s, the Chilean, 
Koreagate and Moonie lobbies of the 1970s, and the contra lobby today.*'* 

Whether or not the American Mafia continues to play its historic role 
in the import of drugs from Latin America, one must be concerned by the 
possibility their ongoing contacts with that part of the CIA-"private" 
shadow network which is now supplying the contras.*' Probably nothing 
ever did the CIA more harm than the decade of rumors, later proven 
correct, that it had collaborated with the Mafia to assassinate Fidel Castro. 
As Miami Station Chief from 1962 to 1965, Theodore Shackley did not 
inaugurate these contacts with Mafia figure John Rosselli, but he apparently 
helped maintain them in 1962, at a time when another CIA figure prepared 
an intemal memorandum, "which falsely stated that the operation invol- 
ving Rosselli was then being terminated," according to a Senate report.** 
According to that report, the Miami station chief (ie. Shackley) personally 
helped load a U-Haul truck with explosives, detonators, rifles, handguns, 
radios, and boat radar for Rosselh, to whom the keys of the truck were 
given.*^ 



36 



The Iran-Contra Connection 



In a recent civil suit filed by attorney Dan Sheehan for the Washington- 
based Christie Institute, a non-profit reUgious legal foundation, it is alleged 
that Shackley's Mafia contacts did not end when Shackley moved in 1965 
from Miami to Laos. It is a matter of record that in the same year a Miami 
syndicate representative, John Pullman, paid an extended visit to Hong 
Kong, and that Santo Trafficante, another figure in the CIA-RosselU 
assassination plots, met with prominent Corsican gangsters in Saigon in 
1968.^^ 

The Christie suit charges that Shackley faciUtated arrangements to sell 
opium from the Laotian guerrillas to Santo Trafficante, and that "in return, 
Shackley's organization received a fixed percentage of the income. "^^ 

It also alleges that arms from Shackley and Secord reached the contras 
via the firm of a Cuban called Rafael "Chi Chi" Quintero, once named by 
the New York Times as a business associate of Shackley and Clines.^" 
Business Week has just identified Quintero as "a Cuban-American who 
played a key role in the Bay of Pigs invasion and in subsequent efforts to 
assassinate Fidel Castro."^' And the Wall Street Journal has identified 
Quintero as involved, along with Clines, in the controversial NSC contra 
supply operation. 

If so, then two of the CIA's most notorious scandals, the post-war 
opium coimection and the 1960s assassination coimection, would appear to 
be origins of the supposedly "private" Contragate coimection today. 



The CIA's "Off-Loaded" Operations: The Nugan Hand Bank 

Throughout the history of the CIA, exposures of scandals, such as 
supply operations to opium-growing guerrillas in Southeast Asia, have 
been followed by the resignation or forced departure of key officials. It has 
not always been clear, however, that by terminating the employment of the 
official the CIA intended to end its relationship to the operation. On the 
contrary, the CIA may merely have "off-loaded" the operation, in effect 
giving it a deeper cover by giving it a more private appearance (and, more 
important, a non-Congressional financial base). 

We have seen how in 1954, when the CIA and its proprietary airline 
CAT Inc. terminated their support for the controversial Burma-KMT drug 
supply operation, the planes continued to fly for APACL (later WACL) 
and CAT Inc.'s Taiwan affiUate, CATCL. This privatization of 



"Shadow Networks" 37 



controversial operations was carried out on a much larger scale in the period 
1971-73, when the CIA was coming under increasing pubhc and 
Congressional scrutiny for its alleged involvement in the Southeast Asian 
drug traffic. 

In these years the CIA severed its formal connections with one of 
former Miami Station Chief Ted Shackley's Cuban exile groups (Opera- 
tion 40) whose drug-running operations had become known to the Justice 
Departments^ It also ostensibly "sold" its proprietary airhnes Air America 
(formerly CAT Inc.) and Southern Air Transport, after Air America had 
been publicly identified as to some degree impUcated in the narcotics traffic 
of Southeast Asia. 

Just how much was changed by this legal off-loading is very much 
open to question. In 1985-86 two Cubans from Operation 40 (Felix 
Rodriguez and Luis Posada) were found to be overseeing supply 
operations for the contras, using planes flown by former Air America 
personnel and operated by Southern Air Transport. 

The press subsequently learned that Southern Air Transport's 
Chairman and sole stockholder was James Bastian, who before the CIA 
divestment had been a vice-president of Pacific Corp., the CIA's parent 
holding company for Air America, and also Southern Air Transport's in- 
house attorney. 

Between 1970 and 1973 a number of covert operators and subordinate 
personnel resigned or were dismissed from the Agency. But for one of the 
most notorious, Ed Wilson, departure from the CIA made Uttle difference. 
When he was a career contract officer for the CIA, Wilson's job was to set 
up and run proprietary firms, sometimes profit-making, for his case officer, 
Thomas CUnes. He continued to set up intelligence proprietaries and to 
deal with Clines after 1971, when he moved from the CI A to a deeper cover 
in a parallel and more secret intelligence network. Task Force 157, under 
the U.S. Navy. After 1976, when he was no longer a U.S. employee, his 
companies received no more government assistance, but his contacts with 
Chnes and Clines' superior Ted Shackley continued. He now went into 
business with another ex-CIA employee, Frank Terpil, who was ap- 
parently dismissed outright from the CIA in 1972. 

Later Ed Wilson and Frank Terpil were both arrested for illegal 
smuggling of arms and explosives. Press exposure of the interrelated 
Wilson and Terpil scandals revealed that after their departures from the 
CIA the two men's "private" companies (some apparently authorized by 
Task Force 157 and some apparently not) continued to do business with 
both U.S. and foreign intelhgence.'^ 



38 



The Iran-Contra Connection 



Some of these companies and their personnel are close to the center of 
today's Contragate scandal. A WUson-Terpil company at the heart of 
Wilson's illegal dealings with Libya was Inter-Technology, set up in the 
office of a Terpil sales company called Intercontinental Technology, which 
was doing business with Iran. Intercontinental' s parent, Stanford Tech- 
nology was run by an Iranian-American, Albert Hakim, who was later 
involved in both the Irangate arms deals and the contra supply operation.^* 

The Cuban exile assassin called Rafael "Chi Chi" Quintero was 
associated with Rodriguez and Posada both in Operation 40 and at the 
Ilopango contra supply base.^^ His former CIA case officer (and Wilson's), 
Tom Clines, who served under Shackley in both Miami and Laos, has also 
been linked to Colonel Oliver North's covert NSC operations.'^ Both 
Quintero and Clines were also associated in API, another company set up 
with assistance from Ed Wilson, as were Ted Shackley and yet another 
Operation 40 veteran, Ricardo Chavez.'^ 

An affidavit filed by Dan Sheehan in the above mentioned lawsuit 
brought by the non-profit Christie Institute charges that Wilson and all of 
these associates (except Chavez, who is not mentioned) were allied in a 
"secret team" to continue covert operations which were being dropped by 
the CIA, and to finance these operations by their access to the Laotian and 
Caribbean drug traffic. It charges in particular that this long-established 
drug connection underlies the use of the Ilopango air base in an alleged 
contra arms-for-drugs operation, which is currently being investigated by 
the Miami FBI. 

The affidavit charges that drug profits during the Laotian secret air 
war were deposited in a secret Ted Shackley bank account at the Nugan 
Hand Bank in AustraUa. Shackley denies the existence of any such 
arrangement or account. On the other hand, though they are not mentioned 
in the affidavit, facts published four years ago by Professor James A. 
Nathan in the Carnegie Endowment's prestigious magazine Foreign PoUcy 
corroborate what his Australian sources called Shackley's "long, close 
relationship with the Nugan Hand bank."*" According to Professor 
Nathan, 

The bank's founders, along with Nugan and Hand, were four officials of 
Air America, a CIA property.... The director of [Nugan Hand's] Chiang 
Mai office [in Thailand] claimed on Australian television that he handled 
$2.6 million in less than six months. The money was garnered from the 
drugs transiting the area. The bank, he put it starkly, was a 'laundry' for 
Meo tribesmen and other poppy growers. The Bangkok office was run by 
the former CIA chief of station in Bangkok... records 



"Shadow Networks" 39 



from the Bangkok office were full of descriptions of troop deployments 
and arms sales in the region. Investigators found it hard to believe Nugan 
Hand was just a bank and not an abettor of U.S. intelligence.^' 

The article revealed that the bank's branch managers included U.S. Air 
Force General LeRoy Manor (who later collaborated with Secord and 
North on covert U.S. efforts to liberate the U.S. hostages in Iran), and 
Patry Loomis, a CIA employee who worked in Vietnam under Shackley 
and then helped Ed Wilson recruit a team of Green Berets to train Libyans. 
Ed Wilson himself was a close associate of the Nugan Hand Saudi 
representative, Bemie Houghton (through whom Wilson allegedly sup- 
plied 3000 weapons and 10 milUon rounds of ammunition to the CIA- 
backed rebels in Angola).*^ 

The extraordinary Nugan Hand story, little known in the United 
States, was front-page news in Australia six years ago. It was there alleged 
that the Nugan Hand milieu may have played a role in the 1975 downfall of 
the left-leaning Gough Whitlam Labor Government, at a time when 
Shackley was still chief of the East Asia Division of the CIA. 

Australian sources have given an even more sinister account than 
Professor Nathan of the extraordinary operations of Nugan Hand Bank, 
suggesting that the bank financed major drug deals in addition to 
laundering their profits. According to an Australian Royal Commission, 
Nugan Hand was the chief funding source for a series of major narcotics 
transactions which first brought heroin from the Golden Triangle to 
Australia in the early 1970s, at a time when the Nixon White House was 
giving a high priority to stopping the narcotics flow from the same sources 
to the United States.**^ 

These stories are so well known in Australia that in March 1982 the 
CIA issued a rare public denial (for Australian eyes only): "The CIA has 
not engaged in operations against the Austrahan government, has no ties 
with Nugan Hand and does not involve itself in drug trafficking."^'* 
Technically, the CIA statement may be correct. In the relevant period 
1973-75 Wilson was no longer working for the CIA, but (like Houghton) 
for the more shadowy parallel U.S. miUtary intelligence network. Task 
Force 157. A company set up by Ed Wilson (who visited Australia in 1976 
while still in Task Force 157) was alleged to have helped create the scandal 
that toppled Whitlam.^' 

If Wilson and Houghton (while still in Task Force 157) used the 
Nugan Hand bank to channel unauthorized support to CIA-backed rebels 
in Angola (in the face of Congressional opposition), then the off-loaded 
intelligence assets of the drug-linked Nugan Hand bank in the mid-1970s 



40 



The Iran-Contra Connection 



may well have been a close precedent for the drug-Unked aid to the contras 
today. 

The same "secret team" seems to have been involved in both 
operations. According to an informant quoted in an Australian government 
report on drug trafficking, when the Nugan Bank was being hurriedly 
closed in 1980, Tom Clines and Rafael Quintero called at the Geneva office 
of Nugan Hand; and, upon confirming that Houghton had left his travel 
case there, proceeded to remove a document from it. Chnes reportedly said, 
"We've got to keep Dick's name out of this," meaning by "Dick" Richard 
Secord, the Iran-Contragate figure.**'' 

In the same year, 1980, the new President of Nugan Hand, a Miami 
banker by the name of Donald Beazley, ceded control of a recenfly acquired 
British firm, London Capital Securities, to Ricardo Chavez, quite possibly, 
according to the same report, acting for Thomas Clines. 

The "secret team" may have been "off-loaded," but it would appear to 
have lost little of its cohesiveness and influence. In the early 1970s it would 
appear to have served the U.S. intelligence establishment, even after formal 
severance from the CIA. The available evidence suggests that it may be 
playing the same role today. 



The "Secret Team" and the Wilson EATSCO Scandal 



Back in 1980, of course, Shackley and Clines were still heros of that 
CIA minority of psy-war "cowboys" (mostly veterans, many of them fired 
by Jimmy Carter's CIA Director Stansfield Turner) who wished to see the 
agency retum to the business of covert and proxy warfare. Many CIA 
veterans like Singlaub and his longtime OSS-CIA ally Ray Cline were 
actively supporting the Reagan-Bush ticket; and at least one senior CIA 
officer (Security Chief Robert Gambino) resigned from the CIA to join the 
Bush and Reagan campaigns (under Chne's son-in-law, Stefan Halper). 
The fact that under Carter the clandestine service had been reduced by 820 
positions had produced, among men well trained in political warfare, a 
concerted will for revenge. Cline was a leader among those ex-CIA people 
who "now looked on with worry and concem."^^ 

What personally concerned Shackley and Clines was the punitive 
drive which Carter's CIA Chief, Admiral Stansfield Turner, had mounted 
against the clandestine services, and especially those officials who had been 
involved in two interlocking scandals: the case of Michael Townley, the 
assassin of the Chilean Minister Orlando Leteher, and that of Edwin P. 



"Shadow Networks" 41 



Wilson, the renegade ex-ClA agent turned arms dealer and assassination 
specialist for Libya. Chne's friend and associate, Michael Ledeen, published 
an article in March 1980 (at the beginning of the Carter-Reagan campaign) 
"savaging Admiral Stansfield Turner for forcing Ted Shackley [Edwin 
Wilson's most senior CIA contact, by now a veteran of the anti-AUende 
operation] out of the agency."*' 

The election of Reagan meant a reprieve for the clandestine services. 
Michael Ledeen, in his new capacity as the Reagan State Department's 
expert on terrorism, was now in a position to help close off the investigation 
of those still in government who had been involved with Edwin Wilson, 
perhaps the world's most notorious ex-CIA terrorist.'*^ 

Shackley's "private" involvement in CIA covert operations appears to 
have been used by Ledeen to contain the expanding Justice Department 
investigation into the illegal activities of the ex-CIA terrorist and arms 
dealer Ed Wilson. Government auditors had learned that one of Wilson's 
companies (EATSCO), which had been set up to gain shipping contracts 
on U.S. arms sales to Egypt, "had fraudulently billed the Pentagon for 
some $8 million, in addition to the big profits it was already making. 
Larry Barcella, the federal prosecutor on the case, had broadened the 
EATSCO investigation to include two CIA clandestine service veterans 
driven out by Turner, Tom Clines and Theodore Shackley, and two high- 
level men still in the Pentagon, General Richard Secord and Erich von 
Marbod. Witnesses told Barcella that the four men and Wilson each had a 
twenty percent share in the company, whose seed money had been supphed 
by Wilson. Allegedly, Clines and Shackley joined EATSCO after leaving 
the CIA; Secord and von Marbod, who generated the contracts, were 
hidden partners.'^ 

These men were of course much bigger fish than Wilson. Shackley had 
been tapped to become CIA Director if Gerald Ford had been re-elected 
President; and he told Barcella that, except for the investigation, he could 
have been either the CIA Director or Deputy Director under Reagan.'^ 

When auditors discovered the EATSCO fraud, von Marbod abruptly 
resigned, and General Secord, "the only one still in government service, 
was removed from his key position in the sale of arms to the Middle East, 
pending a polygraph." At this point Ledeen asked Barcella to lay off 
Shackley and von Marbod, saying that the "billing abuses... might have 
gone for a covert operation." Secord was reinstated by former CIA Deputy 
Director Carlucci, by then the number two man in the Defense Department. 
Then Barcella was taken off the EATSCO investigation, which ended with 
Clines (the only defendant) paying by plea bargain a $10,000 fine on behalf 
of his company.''* 



42 The Iran-Contra Connection 

By this point in Barcella's investigation, Secord and von Marbod had 
alledgedly contributed to a covert; operation paid for by padded arms sales 
contracts. This was the controversial sale of AW ACS radar airplanes to 
Saudi Arabia — another deal where funds were siphoned off. According to 
intelligence sources, milhons from this initial $3.5 bilhon contract have 
gone to arm the contras. 

Lt. Colonel Oliver North, "the administration's point man on the 
AW ACS sale," later acted as the White House's chief liaison with the 
contras — ^working with Singlaub and Secord. (Although Secord officially 
retired in 1983, at the end of the Wilson affaire, he was later a member of the 
Pentagon's Special Operations Pohcy Advisory Group.) Both Singlaub 
and Secord have worked to supply the contras with modem counter- 
insurgency STOL (short-takeoff-and-landing) aircraft; and perhaps as 
many as four STOL planes have actually been dehvered, via one of 
Secord's companies, to the contras in Honduras.'^ 

Ledeen suggested to Barcella that the falsified billings might have been 
a cover for a covert operation. But that hypothesis can also be turned 
around. A covert operation, such as the contras, can become a justification 
for putting back into business a clandestine service that has been all but 
banished from government because of past excesses. That of course has 
happened. Because of the contras, the CIA airlines are flying again, the 
"swift boats" are being launched from their mother ships, and operations 
are once again being co-ordinated out of a possibly illegal CIA operations 
station in Miami. This is an almost certain formula for the involvement of 
CIA personnel in the drug traffic — ^perhaps the chief reason why Shackley's 
covert operations in Miami were closed down. 

But a covert operation can also become a "CIA defense" — a cover for 
fraudulent profits from arms sales, and even for their diversion into illegal 
campaign contributions. Moreover, as we have seen from our historical 
review, it can easily become a cover for new illegal activities, particularly in 
that historical corollary to clandestine operations, the narcotics traffic. 



The Cuban S-Force and Narcotics 



So far we have studied the role played in the Iran-Contra arms scandal 
by a "secret team" or "shadow network," composed of Americans like 
Generals John Singlaub and Richard Secord, whose friendship during the 



"Shadow Networks" 43 



CIA covert war in Laos facilitated their collaboration in the "private" 
contra supply effort. 

But for years the American "secret team" has been allied with a more 
autonomous, close-knit band of Cuban exiles, whose work for their 
American handlers has included assassination efforts, major terrorist 
operations, and the famous Watergate burglaries under President Nixon. 
Some members were arrested in 1970 in the Justice Department's 
Operation Eagle, which was aimounced as the largest federal narcotics 
enforcement operation ever up to that time. 

The recent suit brought by the Christie Institute alleges that members 
of this Cuban "secret team," in conjunction with its U.S. intelhgence allies, 
have also looked to the narcotics traffic to pay for its so-called "contra" 
operations. According to an affidavit filed by the Christie General Counsel, 
Daniel Sheehan, the profit from a drug-smugghng network organized by 
contra supporters who were Bay of Pigs veterans "was being used to help 
finance the purchase of military equipment, ammunition and explosives 
needed by the Contras to wage their private war against the Sandinista 

,,97 

government. 

The political goal of this Cuban "secret team," and of at least some of 
its American handlers, has always been the overthrow of Fidel Castro. This 
political agenda has given them priorities different from those of any 
American president, Democrat or Republican, who has wanted to explore 
any degree of detente with the Soviet Union. This explains why so many in 
the Cuban team have turned for support to other right-wing governments 
like Argentina and Chile, whose own intemational intelligence operations 
have been financed by the same narcotics traffic.^* 

Today the two most prominent members of this second team are the 
Cubans in charge of loading the ill-fated Hasenfus supply plane at the 
Ilopango air base in El Salvador: Felix Rodriguez (alias "Max Gomez") 
and Luis Posada (alias "Ramon Medina"). But they are working in the 
contra supply operation with other ex-CIA Cubans, who have been 
recruited through Brigade 2506, the Bay of Pigs veterans association. Its 
president, Juan Perez Franco, who in 1985 made Brigade support for the 
contras official, is the same president who a decade earUer brought the 
brigade to publicly support acts of terrorism. 

One year later, in June 1976, Posada and Perez Franco, along with the 
brigade's new president, Roberto Carballo, and its military chief, Armando 
Lopez Estrada, attended the small ten-man founding meeting of CORU, a 
1976 Cuban terrorist alliance supported by the fascist governments of 
Chile and Argentina.'^ The Wall Street Journal reports Armando Lopez 
Estrada as saying that "on the instructions of a U.S. official in Costa Rica," 



44 



The Iran-Contra Connection 



he recruited Bay of Pigs veterans to advise the contras on the Costa Rican 
southern front/"" 

In retrospect, it is obvious that some if not most of CORU's terrorist 
operations were financed from the drug traffic. CORU interlocked with, 
and was funded by, the Miami-based World Finance Corporation (WFC), 
set up in 1971 by a Brigade 2506 veteran, Guillermo Hernandez Cartaya. 
The House Select Committee on Narcotics Abuse and Control later agreed 
with a local assistant U.S. attomey that WFC's activities included "pohtical 
corruption, gunrunning, as well as narcotics trafficking on an international 
level.""" 

For example, Duney Perez Alamo, a WFC employee and former CIA 
agent, was also an admitted CORU member. His friend Caspar Jimenez 
was arrested in 1976 for a CORU attempt at kidnap and murder in Merida, 
Mexico. According to the Miami Organized Crime Bureau, "Hernandez 
Cartaya financed and planned the Mexican action, with help from Perez 
Alamo." In March 1977 Jimenez escaped from a Mexican prison, 
apparently with the aid of $50,000 supplied by WFC. 
According to Peimy Lemoux, 

One of those who aided in the escape was Nestor Tony' Izquierdo, a 
Cuban exile formerly associated with the Defense Intelligence Agency. 
He was arrested while attempting to reenter the United States from 
Mexico, but was released on low bail when a retired Navy commander 
who had once worked with the DIA vouched for his 'good 
character.'.. .Government files further showed that Izquierdo's bond and 
legal fees were paid by WFC.'"^ 

The WFC had good relations with both the Washington establishment 
and, reportedly, the Mafia. One of its six founding stockholders and 
directors was Washington attomey Walter Sterling Surrey, a veteran of 
OSS. One of his WFC associates was, according to the Drug Enforcement 
Administration (DEA), an alleged narcotics wholesaler and member of the 
Trafficante Mafia family. In 1981, after WFC had collapsed, Hemandez 
Cartaya was convicted and sentenced to five years for income tax evasion. 
His successor as "godfather" of the Miami narcotics traffic was another Bay 
of Pigs veteran, Jose Medardo Alvero Cruz."'"^ 

Like Rodriguez and Posada, Perez Alamo and Izquierdo were not 
average members of Brigade 2506; they were members of a much smaller 
eUte of specialists trained in sabotage and other black arts. At least three 
members of this inner elite, which we shall call the S-Force, also were in 
touch with the renegade ex-CIA agent Ed Wilson. 



"Shadow Networks" 45 



This S-Force had its origins in the eighty-man force of sabotage teams 
given special training in Panama and Florida for infiltration into Cuba at the 
time of the Bay of Pigs. According to Warren Hinckle and William Turner, 
many of these Cubans had been recruited from the ranks of the Intemational 
Anti-Communist Brigade (lACB), a rag-tag private army funded chiefly 
by the dispossessed Havana casino owners with Mafia connections, and 
recruited and trained by the future Watergate burglar Frank Sturgis.^"^ 
These origins may explain why so many of the S-Force members ended up 
taking over the narcotics traffic that had been associated with the Havana 
casinos, before the Cuban revolution eliminated such goings on. 

Members of this smaller S-Force have been used for illegal purposes 
from at least 1971, when Howard Hunt attended the Brigade's tenth 
anniversary meeting to recruit some of the future Watergate burglars for 
the Nixon White House "plumbers" or "counter-intelligence" break-in 
teams.'"^ 

Hunt, seeking break-in specialists, went to the elite counter-intel- 
ligence operation of the CIA's station in Miami. Most of these 150 or so 
men were Bay of Pigs veterans who had subsequently been picked for 
further army training at Fort Jackson, and some, like Rodriguez and 
Posada, for officer training at Fort Benning. Some of this ehte force were 
then recruited to work for the CIA. This counter-intelligence operation, 
identified in the New York Times as "Operation 40," finally had to be 
closed down in the early 1970s, after one of its planes crashed in Southern 
California with several kilos of cocaine and heroin aboard.'"^ 

Both Rodriguez and Posada, like their close friend the Watergate 
burglar Eugenio Martinez, have been identified as members of Operation 
40.'"^ The Fort Jackson trainees had their own, more restricted veteran's 
organization, the "Ex-Combatientes de Fort Jackson." Among those who 
took part in Hunt's first Watergate break-in, and were never arrested, were 
Angel Ferrer, the president of the Ex-Combatientes, and Felipe de Diego, 
identified in Watergate testimony as a member of Operation 40. ' 

Eugenio Martinez, a close personal friend of both Felix Rodriguez and 
Luis Posada, was an active member of Operation 40 on the CIA payroll 
when he was arrested, along with his American handlers Howard Hunt and 
James McCord, for the Watergate break-in of June 17, 1972. In 1981 
Martinez was pardoned by newly elected President Ronald Reagan, a little 
noticed event that may have heralded the cementing of the Reagan- 
Contragate alliance. 

Martinez, Rodriguez, and Posada were all members of an even more 
elite group within the Ex-Combatientes de Fort Jackson and Operation 40. 
They had been part of the much smaller S-Force of about 80 men trained 



46 



The Iran-Contra Connection 



for sabotage and other special operations, including assassinations in 
coimection with the 1961 invasion. Although all three have been loosely 
called "Bay of Pigs veterans," in fact none of them went ashore there. 
Rodriguez and Posada had been infiltrated covertly into Cuba two months 
earlier. Martinez, a boat skipper, had taken Rodriguez in.'^' 

It is this special advance sabotage force, or "S-force," that has had the 
most intimate and conspiratorial relationship with the American shadow 
network behind Contragate. "Sabotage" is perhaps a euphemism for the 
range of tasks this "S-Force" (as opposed to the larger "Ex-Combatientes 
de Fort Jackson," and still larger Brigade 2506) was trained for. 

The most important of those tasks was the assassination of Fidel 
Castro. Business Week has identified Rafael "Chi Chi" Quintero, a member 
of the contra supply team at Ilopango and earlier one of the most important 
S-Force infiltrators, as a man "who played a key role in the Bay of Pigs 
invasion and in subsequent efforts to assassinate Fidel Castro.""^ 

Quintero was later hired (along with Ricardo Chavez, another S-force 
veteran) for a business venture set up by his former CIA case officer Tom 
Clines; this venture also involved Theodore Shackley, Clines' former boss 
as head of the CIA Miami station.'" 

Richard Nixon learned to his regret the dangers of hiring Cubans with 
a different poUtical agenda in order to bypass both the CIA and Congress. 
One can speculate that Ronald Reagan may be about to learn the same 
lesson. 



The Contragate Cubans: A Trojan Horse? 

Like Richard Nixon a decade earlier, Ronald Reagan, in order to 
bypass Congressional scrutiny in training and supplying the contras, 
tumed to the right-wing ex-CIA Cuban Bay of Pigs veterans of Brigade 
2506. The two Presidents' actions were similar but not identical; by the 
mid-1970s many Brigade 2506 members had turned against the United 
States government, and forged new alliances with foreign powers and 
groups that were overtly anti-Semitic and fascist. 

This split became obvious in 1974, under Presidents Nixon and Ford, 
when Secretary of State Kissinger was reported to be preparing for 
normalization of relations with Cuba. (In March 1976 Posada's ally 
Orlando Bosch, who would soon become the ideological leader of CORU, 
was briefly jailed in Costa Rica during Kissinger's visit. Miami police had 
"picked up word that Bosch was plaiming the bombing assassination 



"Shadow Networks" 47 



of... Kissinger. The apparent motive was Kissinger's earlier overtures to 
improve relations with Cuba."'^*) 

Many Brigade members responded to Kissinger's plans for detente 
with violence in Miami and overtures to fascists and neofascists in both 
Europe and Latin America. The most prominent of Brigade 2506's new 
alliances was with Chilean dictator Augusto Pinochet; at its April 1975 
anniversary conference, it gave him its first Freedom Award. Speakers at 
the meeting denounced the United States for betraying their cause, and 
even threatened to storm the Kennedy Library in Boston if their flag there 
were not returned.''^ 

Soon afterwards, for the first time in its history. Brigade 2506 began 
pubhcly taking credit for terrorist attacks against Cuba. In April 1976 
Brigade President Juan Perez Franco was quoted as endorsing an attack on 
a Cuban fishing vessel in which a seaman was killed."^ 

In June 1976 former Brigade 2506 President Roberto Carballo joined 
leaders of three other avowedly terrorist organizations — the neofascist 
CNM of Fehpe Rivero Diaz, the FNLC of Frank Castro, Alpha 66, and 
the Accion Cubana of Orlando Bosch — in creating a new terrorist alliance 
called CORU, the Congress of United Revolutionary Organizations. The 
purpose of CORU was to build political support for overthrowing Castro 
by performing hit jobs with and for right-wing governments, especially 
that of Pinochet in Chile and Somoza in Nicaragua. 

That CORU alliance, uniting mainstream ex-CIA Cubans with 
mavericks accustomed to survive from the drug traffic, was a historic step 
towards the contra alliance with drug-trafficking Cuban exiles today. One 
sign of this continuity is the presence at Ilopango of Luis Posada, who 
attended CORU's founding meeting. That meeting was organized prin- 
cipally by FNLC chief Frank Castro, who has been named in connection 
with alleged arms-for-drug deals through Ilopango in support of the 
contras."^ 

CORU was also actively supported by Alpha 66, the Cuban exile 
participants in the World Anti-Communist League. Alpha 66 was 
particularly close to WACL's Guatemalan contingent the MLN, headed by 
their ally Mario Sandoval Alarcon (later an initial backer of the contras). In 
July 1976 Alpha 66 also expressed its ideological debt to the Mexican 
WACL leader Jorge Prieto Laurens, a member of a secret neofascist 
society, the Tecos, who had circulated at the Roman Catholic Vatican 
Council II a document denouncing "Jewish imperialism.. .the worst 
imperialism the world has ever seen.""* 

In September 1976, after publishing CORU "war communiques" 
Promising that civilian airliners would soon be attacked. Brigade 2506's 



48 



The Iran-Contra Connection 



allegiance to CORU was publicly confirmed at a Brigade conference in 
September 1976, at which the keynote speaker was the Nicaraguan dictator 
Anastasio Somoza."^ To make it even more plain that the Brigade and 
CORU had broken with the constraints of U.S. foreign policy, CORU 
delegates attended an October 1976 meeting in Rome to charter a new 
Fascist International, together with representatives of groups responsible 
for a spate of bombings and bank robberies in Europe.'^" Some of these 
same European neo-fascists began attending the Latin American meetings 
of WACL, where they were introduced by representatives of Chile and 
Argentina. 

More importantly, CORU Cubans and European neofascists put 
together a series of joint terrorist actions and conspiracies designed to 
undermine U.S. foreign policy. In January 1977, for example, at a time 
when the United States was supporting Spain's first democratic election 
after the death of Franco, a CORU Cuban (Julio Carlos Perez) was 
arrested with an Argentinian and Mariano Sanchez Covisa, the leader of the 
Spanish "Guerrillas of Christ the King," for one of a number of gratuitous 
murders, part of a "strategy of tension" to prevent the elections from being 
held.^^^ 

Behind this "strategy of tension" was the so-called Aginter-Press, a 
group of former French intelUgence officers, once banished to Portugal for 
their plots to overthrow French President Charles de Gaulle. One of them, 
Yves Guerin-Serac, was at the center of a plot to restore dictatorship to 
Portugal, where after the death of the dictator Salazar, official U.S. poUcy, 
as enforced by Ambassador Frank Carlucci, was again to support 
democratic elections. 

Also prominent in this coup attempt were the same Spaniard, Mariano 
Sanchez Covisa, and "approximately 100 'anti-Castro' Cubans. "'^^ Just 
where these Cubans came from is not entirely clear. But in 1975 support for 
the coup came from a Fort Jackson sabotage-trained ex-CIA Cuban and 
top level drug trafficker, Alberto Sicilia Falcon. '^^ At the same time the 
Brigade 2506 office in Miami became a recruiting ground for Cuban exiles 
willing to fight for the UNITA forces of Jonas Savimbi in the former 
Portuguese colony of Angola.'^'' Inasmuch as these Cubans are not known 
to have arrived in Angola, and the ELP army was originally recruited for a 
coup in Angola, they may simply have become part of the CORU- 
Aginter-GCR alliance for a coup in Portugal. 

For the next five years, Cuban exiles and other members of the Fascist 
International would meet at the annual meetings of CAL, the Latin 
American chapter of the World Anti-Communist League (WACL). Bias 
Pinar, the brains behind the 1977 murders in Spain for which Carlos Perez 



"Shadow Networks" 49 



was arrested, attended the 1979 CAL Congress, as did the wanted Itahan 
terrorist Elio Massagrande, whose bank deposit box was supposed to have 
contained the treasury for this conspiracy. '^^ 

WACL at this time was supported by four governments (Taiwan and 
South Korea, the founders, joined by Saudi Arabia and the Phihppines) of 
which at least three were actively opposed to detente. As the United States 
moved toward coexistence in the 1970s, WACL moved in the opposite 
direction, toward a more open embrace of Nazi ideology and former war 
criminals. At least three WACL European Chapters (the German, the 
Austrian, and the Dutch) were taken over by former Nazi SS officers who 
had fought against America in World War 11. In this same period some 
WACL members proclaimed themselves (in the words of the Norwegian 
chapter) united for freedom "from both World Communism and the 
international financial-imperialism. " 

It might seem surprising that this narco-fascist conspiracy, uniting the 
CORU-Brigade 2506 terrorist alliance, the WACL neofascists, and 
various European terrorists, should have been so swiftly and eagerly 
embraced by the incoming Reagan administration. But as we shall see in the 
next chapter, the shadow network had been busy for some years preparing 
for just this alhance. 



IV. 



The Growth of Reagan's Contra Commitment 



Introduction: Private and Official Decision-Making 

By any accounting, Washington's decision to create and support the 
contras was a consensual one, reached in the heart of the Reagan 
administration's professional bureaucratic apparatus. The relative weight 
of outside "shadow networks" and inside bureaucrats in generating the 
formal contra commitment is neatly summarized in an excellent book by 
Christopher Dickey, With the Contras: 

Before any hard and fast decisions on the Secret War were taken, several 
CIA 'old-timers,' released from service during the cutbacks of the 1970s, 
were in contact with anti-Sandinista forces, acting as private citizens to 
reassure them that once Reagan was elected, their lot would improve.. .But 
while some of these men eventually served as contract agents in the 
Secret War, their importance in creating it is, 1 believe, overstated. The 
paramilitary operation against Nicaragua ultimately was not just an out-of- 
control creation of conspiratorial ex-spies and right-wing ideologues but a 
conscious decision by senior administration officials who consider 
themselves pragmatic policymakers.' 

Like other authors. Dickey locates this conscious decision making in 
the Senior Interagency Group on Central America set up under National 
Security Council guidelines and precedents, and initially responsible to 



51 



52 The Iran-Contra Connection 

CIA Director William Casey and Robert McFarlane (then Secretary of 
State Haig's counselor).^ Two names from this initial "Core Group" set up 
in 1981 would figure in the later Contragate story: Nestor Sanchez, a New 
Mexico-born CIA veteran of the Guatemalan "death squad" operations in 
1967-68, (later representing the Pentagon), and Colonel Ohver North 
from the NSC staff. 

Dickey's account, however, stresses the discontinuity between the 
"pragmatic" bureaucratic consensus of 1981, and the consensus of a year 
earlier under Jimmy Carter, when the message to Central American 
governments was not counter-revolution so much as "reform": 

Despite years of experience and seniority in the foreign service, most of 
the veterans associated with the Carter policy [in Central America] were 
fired, forced out or moved to obscure and distant posts. Carter's last 
assistant secretary was sacked. His principal deputy for Central America 
was transferred to Katmandu... [The men] brought in to replace them were, 
as one put it, 'action-oriented.'^ 

Clearly, then, the change in policy was not bureaucratic so much as 
political. The 1981 purge of those State Department hands who allegedly 
"lost Nicaragua," like the 1953 purge of those who allegedly "lost China," 
was undertaken to fulfill a campaign pledge, made in response to allegedly 
massive and illicit campaign contributions from the interested region. 
Those who acted to generate the change in poUcy were not just the self- 
important CIA "old-timers" to whom Dickey refers. The agents included 
these men's "anti-Sandinista" allies — most notably the deposed dictator 
Anastasio Somoza of Nicaragua, and after Somoza's murder in 1980, the 
Guatemalan death squad impresario, Mario Sandoval Alarcon. 

In the late 1970s, as indicated in the last chapter, three of the foreign 
forces who would eventually back the contras (the governments of Taiwan 
and Argentina, and right-wing forces in Guatemala), had taken an 
important step to ensure themselves a voice in Washington for a new U.S. 
foreign policy in Latin America to replace President Carter's. All three 
moved to hire as their Washington lobbyist Michael Deaver, the man then 
managing the campaign of future presidential candidate Ronald Reagan. 

After this, Deaver's Guatemalan clients, following visits from Reagan 
campaign representatives such as Richard Allen, Roger Fontaine and John 
Singlaub (the CIA "old-timer" and future WACL Chairman), began to 
raise funds for the Reagan campaign. On a BBC broadcast, these fiinds were 
estimated by former Guatemalan Vice-President VUlagran Kramer as 
amounting to perhaps ten million dollars.'* 



The Growth of Reagan's Contra Commitment 53 



Reagan, Deaver's Amigos, and the Death Squads 

The group that Deaver represented in Guatemala, the Amigos del Pais 
(Friends of the Country), is not known to have included Mario Sandoval 
Alarcon personally. But ten to fifteen of its members were accused by 
former Guatemalan Vice-President ViUagran Kramer on the BBC of being 
"directly linked with organized terror."' One such person, not named by 
Villagran, was the Texas lawyer John Trotter, the owner of the Coca-Cola 
bottling plant in Guatemala City. Coca-Cola agreed in 1980 to terminate 
Trotter's franchise, after the Atlantic Monthly reported that several workers 
and trade union leaders trying to organize his plant had been murdered by 
death squads.* 

One year earlier, in 1979, Trotter had traveled to Washington as part 
of a five-man public relations mission from the Amigos. At least two 
members of that mission, Roberto Alejos Arzu and Manuel F. Ayau, are 
known to have met Ronald Reagan. (Reagan later described Ayau as "one 
of the few people. ..who understands what is going on down there. "^) 

Roberto Alejos Arzu, the head of Deaver's Amigos and the principal 
organizer of Guatemala's "Reagan for President" bandwagon, was an old 
CIA contact; in 1960 his plantation had been used to train Cuban exiles for 
the Bay of Pigs invasion. Before the 1980 election Alejos complained that 
"most of the elements in the State Department are probably pro- 
Communist.. .Either Mr. Carter is a totally incapable president or he is 
definitely a pro-communist element."^ (In 1954, Alejos' friend Sandoval 
had been one of the CIA's leading political proteges in its overthrow of 
Guatemala's President Arbenz.) 

When asked by the BBC how ten million dollars from Guatemala 
could have reached the Reagan campaign, Villagran named no names: 
"The only way that I can feel it would get there would be that some North 
American residing in Guatemala, hving in Guatemala, would more or less 
be requesting money over there or accepting contributions and then 
transmitting them to his Republican Party as contributions of his own."' 

Trotter was the only U.S. businessman in Guatemala whom Alan 
Nairn could find in the Ust of Reagan donors disclosed to the Federal 
Election Commission. Others, who said specifically that they had con- 
tributed, were not so listed. Nairn heard from one businessman who had 
been soUcited that "explicit instructions were given repeatedly: 'Do not 
give to Mr. Reagan's campaign directly.' Monies were instead to be 
directed to an undisclosed committee in Califomia."'° 



54 



The Iran-Contra Connection 



Trotter admitted in 1980 that he was actively fundraising in this 
period in Guatemala. The money he spoke of, half a milhon dollars, was 
however not directly for the Reagan campaign, but for a documentary film 
in support of Reagan's Latin American poUcies, being made by one of the 
groups supporting Reagan, the American Security Council (ASC). The 
film argued that the survival of the United States depended on defeat of the 
Sandinistas in Nicaragua: "Tomorrow: Honduras... Venezuela, the Do- 
minican Repubhc, Mexico. ..the United States."^' 

Deaver's Amigos and Trotter were in extended contact with the ASC 
over this project. In December 1979, and again in 1980, the ASC sent 
retired Army General John Singlaub to meet Guatemalan President Lucas 
Garcia and other officials.'^ According to one of Singlaub's 1979 contacts, 
the clear message was that "Mr. Reagan recognizes that a good deal of dirty 
work has to be done."'^ On his return to the United States, according to 
Pearce, Singlaub called for "sympathetic understanding of the death 
squads."'"* In 1980 Singlaub returned to Guatemala with another apologist 
for death squads. General Gordon Sumner of the Council for Inter- 
American Security. Again the message to Lucas was that "help was on the 
way in the form of Ronald Reagan. "'^^ 

Jenny Pearce has noted that Singlaub's first ASC visit to Guatemalan 
President Lucas took place shortly after Lucas's meeting with Guatemalan 
businessmen, where he is "alleged to have raised half a million dollars in 
contributions to the [Reagan] campaign."'^ Since the 1984 Congressional 
cutoff of aid to the contras, Singlaub, as world chairman of the World 
Anti-Communist League, has been the most visible source of private 
support to the contras. He did this in liaison with both William Casey of the 
CIA and Col. Oliver North of the National Security Council staff." 

But Singlaub's contacts with the World Anti-Communist League go 
back at least to 1980, when he was also purporting to speak abroad in the 
name of Reagan. Did the help from Reagan which Singlaub pronoised 
Guatemalans in 1980, like the "verbal agreements" which Sandoval 
referred to at Reagan's Inaugural, involve commitments even then from 
Reagan to that fledgUng WACL project, the contras? 

Mike Deaver should be asked that question, since in 1980 he was a 
registered foreign lobbyist for three of the contras most important WACL 
backers: Guatemala, Taiwan, and Argentina. 



The Growth of Reagan's Contra Commitment 55 



Deaver, Taiwan, and WACL 

Through his CIA contacts, Sandoval had also become the leader of the 
Guatemala chapter of the World Anti-Communist League. This chapter, 
partly organized by Howard Hunt, was a lasting spinoff of the 1954 CIA 
operation. WACL as a world organization however was principally the 
creation of two Asian governments which owed their survival to their 
well-organized lobbies in Washington. These two governments are 
Taiwan, which was represented in 1980 by Deaver; and South Korea, 
which is represented by Deaver today. 

Through his long-time participation in WACL meetings, Sandoval 
has developed close relations with WACL's Taiwan organizers. It was 
largely through WACL that Taiwan picked up the task of training Central 
American police forces in "political warfare" (i.e. counter-terror), about 
the time that similar U.S. training programs were terminated by Congress 
in 1974. Today the Taiwanese embassy in Guatemala is second in size only 
to the American; and through Guatemala (and Sandoval) Taiwan has 
extended its influence to other Central American police forces. Deaver's 
double duty as a registered Taiwan agent and Reagan campaign organizer 
in 1980 helped generate one of the major controversies of that campaign. 
To understand it, one must go back to the origins of Deaver's public 
relations firm, Deaver and Hannaford, which he organized in 1974. Until 
that year both Deaver and Peter Hannaford had worked for Reagan in the 
California Governor's Office. In 1974, as Reagan retired to private life, the 
new firm undertook to book Reagan's pubhc appearances, research and sell 
his radio program, and ghost-write his syndicated column. All this was 
arranged with an eye to Reagan's presidential aspirations, which Deaver 
and Hannaford helped organize from the outset.'^ 

Nothing about this arrangement was especially remarkable until 1977, 
when Deaver and Hannaford registered with the Justice Department as 
foreign agents receiving $5000 a month from the government of Taiwan. 
This sum was not particularly large, and notably less than the $11,000 a 
month which the firm would receive in 1980 from Guatemala's Amigos. 
The fact remains that funds from three closely allied WACL countries, 
Guatemala, Taiwan, and Argentina, helped pay for the Deaver and 
Hannaford offices, which became Reagan's initial campaign headquarters 
in Beverly Hills and his Washington office.'^ 

Questions of conflicting interest were raised when a Reagan column, 
said to have been written by Hannaford, argued that normalized relations 
with the People's Repubhc of China "could prove disastrous, not only for 



56 



The Iran-Contra Connection 



Taiwan, but for the United States itself." When Carter, undaunted, 
established fuU relations in late 1978, Reagan became one of the loudest 
critics of this action. In 1980 Reagan stumped the country with the catch- 
phrase, "No more Taiwans, no more Vietnams, no more betrayals." 

As Reagan's Cahfornia team was melded into a national one, by the 
infusion of old Nixon supporters Uke William Casey and Richard Allen, 
Reagan's position on Taiwan appeared to soften. It was Allen's task at the 
Repubhcan national convention to assure reporters that Reagan did not 
intend to "turn the clock back."^' 

However the more balanced position which Allen projected, and 
which the Eastem estabhshment press was eager to hear, was misleading. In 
May 1980 in Cleveland, almost three months after Casey had become 
Reagan's campaign chairman, Reagan said in reply to a question that "One 
of the things I look forward to most if I am successfiil in this re-election is to 
re-establish official relations between the United States Government and 
Taiwan." Although Reagan did not spell this out, such a step would have 
involved a repudiation of Carter's 1978 agreement which recognized that 
"Taiwan is part of China."^^ 

Though the national press generally ignored Reagan's Taiwan 
position in May, they could not when on August 16 he repeated his pledge 
to establish "an official governmental relationship" with Taiwan. The 
occasion could not have been calculated to receive better press attention: 
Reagan's remarks were made as he was bidding bon voyage to his running 
mate George Bush, as he left on an image-building mission to Peking. As 
Time observed disapprovingly, Reagan's remarks "managed to infuriate 
Peking," and "create the impression of a rift between Reagan and Bush." 
When an embarrassed Bush tried to assure Peking officials that Reagan was 
not talking of relations "in a diplomatic sense," Reagan (in Time's words) 
"undercut" Bush by telling a reporter he still stood by his Taiwan 
statement. In the end Reagan grudgingly backed off ("I misstated"), while 
an embarrassed Casey tried to dismiss the whole episode as "semantic 
mishmash. "^^ 

Reflecting the concem of the Eastem Repubhcan estabhshment. Time 
analysed the problem as one of divisions between Reagan's "uncoor- 
dinated" staff. It claimed that the top echelon of Califomia insiders (among 
whom it specifically named Deaver) was "insensitive," with "httle 
Washington or national campaign experience. The outsiders — like Cam- 
paign Director Casey... — do have that valuable experience but exercise less 
influence over the candidate." 

On the crunch level of foreign policy decision-making, the lack of 
coordination appears to have been primarily between Richard Allen, who 



The Growth of Reagan's Contra Commitment 57 



carried the title of Foreign Policy Advisor, and Deaver. There was some 
irony in this, since Deaver and Hannaford were busy projecting images of 
Reagan and themselves as pragmatists, while Allen had once been under 
CIA surveillance for his links to Taiwan's Vietnam allies, and had 
subsequently been relegated by Nixon to a minor role.^"^ On the issue of 
Taiwan, however, Deaver and Hannaford were the ideologues, and Allen 
relatively a pragmatist. 

Though he had originated with the ideological right, by 1981 Allen 
had acquired far more experience as a registered foreign agent than Deaver 
and Hannaford; and underlying Reagan's Taiwan flap was the further 
irony that the great American patriot's foreign pohcy formulation was at 
this stage almost exclusively in the hands of registered foreign lobbyists.^^ 
But Allen had more varied and mainstream clients to worry about than 
Deaver — ^notably Japan, which had every interest in preventing Carter's 
China pohcy from being derailed. Twice Reagan's California team would 
use the pretext of Allen's Japan business profits to drop him — once five 
days before the election, and again permanently a year later. Little noticed 
at the time was the fact that the key architect in the plans for Allen's 
permanent removal was Deaver.^^ 



The Restoration of Arms Sales to WACL Countries 

Deaver's double duty as Taiwan agent and deputy campaign director 
was reported in the U.S. press, while his lobbying for Guatemalan 
businessmen has been noticed by radical Latin America watchers. No one 
has ever noted that through the 1980 campaign Deaver and Hannaford had 
one other intemational account: the military dictatorship of Argentina, by 
far the most notorious of Latin America's death squad regimes. 

Argentina 

Argentina's image problem in America was even more acute than 
Guatemala's. How to put a constructive face on the disappearance and 
presumed murder of between 6000 and 15,000 persons? The response of 
Deaver and Hannaford was to bring to the United States as apologist the 
junta's leading civilian. Economy Minister Martinez de Hoz, and allow 
him to address the United States through Reagan's radio broadcasts. Here 
is a sample of their description of what they called "one of the most 
remarkable economic recoveries in modern history." 



58 



The Iran-Contra Connection 



Today, Argentina is at peace, the terrorist threat nearly eKminated. 
Though Martinez de Hoz, in his U.S. talks, concentrates on economics, he 
does not shy from discussing human rights. He points out that in the 
process of bringing stabiHty to a terrorized nation of 25 million, a small 
number were caught in the cross-fire, among them a few innocents... If 
you ask the average Argentine-in-the-street what he thinks about the state 
of his country's economy, chances are you'll find him pleased, not 
seething, about the way things are going. 

Distasteful as this Deaver-Hannaford apologetics for murder may 
seem today, the real issue goes far beyond rhetoric. Though Deaver and 
Hannaford's three intemational clients — Guatemala, Taiwan, and Argen- 
tina — all badly wanted a better image in America, what they wanted even 
more urgently were American armaments. Under Carter arms sales and 
deliveries to Taiwan had been scaled back for diplomatic reasons, and cut 
off to Guatemala and Argentina because of human rights violations. 

When Reagan became President, all three of Deaver's international 
clients, despite considerable opposition within the Administration, began 
to receive arms. This under-reported fact goes against the public image of 
Deaver as an open-minded pragmatist, marginal to the foreign policy 
disputes of the first Reagan administration, so that his pre- 1981 lobbying 
activities had httle bearing on foreign policy. The details suggest a different 
story. 

Argentina could hardly have had a worse press in the United States 
then when Reagan took office. The revelations of Adolfo Perez Esquivel 
and of Jacobo Timmerman had been for some time front page news. This 
did not deter the new Administration from asking Congress to lift the 
embargo on arms sales to Argentina on March 19, 1981, less than two 
months after coming to office. General Roberto Viola, one of the junta 
members responsible for the death squads, was welcomed to Washington in 
the spring of 1981. Today he is serving a 17-year sentence for his role in the 
"dirty war." 

Though the American public did not know it, the arrangements for 
U.S. aid to Argentina included a quid pro quo: Argentina would expand its 
support and training for the Contras, as there was as yet no authorization 
for the United States to do so directly. "Thus aid and training were 
provided to the Contras through the Argentinian defense forces in 
exchange for other forms of aid from the U.S. to Argentina."^** Congres- 
sional investigators should determine whether the contemporary arms 
deals with Deaver's other cUents, Guatemala and Taiwan, did not contain 
similar kickbacks for their contra proteges. 



The Growth of Reagan's Contra Commitment 59 



But aid for the contras was only one part of a covert Reagan grand 
design for Central America in which Argentina would play the active role. 
This involved, among other things, 

...the training of more than 200 Guatemalan officers in 'interrogation 
techniques' (torture) and repressive methods... participation in the training 
at U.S. military bases of officers and elite troops of the Salvadorean 
army... training and combat leadership for incursions by Somocista bands 
based in Honduras... logistic and economic support for the.. .plot to 
overthrow the Sandinista regime... the despatch of at least fifty more 
officers to Honduras as para-military troops to intervene in counter- 
revolutionary activities throughout the region, particularly against 
Nicaragua ...the supply of arms and ammunition to the Guatemalan 
regime. ..direct participation in torture sessions in Guatemala, and — 
together with Israeh officers — the creation of an 'intelligence center' in 
that country.^' 

Argentina eventually became one of the two principal reasons why 
Reagan's first Secretary of State, Alexander Haig, resigned on June 25, 
1982. (The other area of disagreement was over Israel's invasion of 
Lebanon.) Haig later charged that his official poUcy of siding with Britain 
against Argentina (supported by Reagan, whose closest personal ally 
abroad was Margaret Thatcher) had been seriously undercut, not just by 
Ambassador Jeane Kirkpatrick, but by someone above her in the White 
House. 

There were contacts made with Argentinian officials by the White House 
which were neither discussed with me nor cleared with me and which had 
the practical effect of confusing the issue... This helped confirm that the 
outcome [the Falkland Islands war] would be inevitable.^" 

William Clark, Reagan's official national security adviser, purported 
to refute this charge by saying that all of his contacts with foreign officials 
had been cleared with Haig. However it was Deaver, not Clark, whom 
Haig suspected of offsetting his tilt against Argentina. "At an NSC 
session. ..Haig had observed Kirkpatrick passing Deaver a note. Con- 
cluding that Kirkpatrick was using Deaver to prime Reagan. ..Haig told 
Clark that a 'conspiracy' was afoot to outflank him."^' Haig's paranoia may 
have been justified. Soon Deaver (allied with Clark, whom Deaver had 
selected as Allen's replacement) was to play a principal role in dropping 
Haig, as he had earUer in dropping Allen.^^ 



60 



The Iran-Contra Connection 



What reason could anyone in the White House have for putting U.S. 
relations with Argentina ahead of relations with the United Kingdom? It is 
hard to think of any reason more urgent than that of agreement for covert 
Argentinian support of the contras, "which was broken by U.S. support 
for Britain in the 1982 Falklands War."^^ Although some Argentine 
advisers remained in Honduras, the pull-out of the Argentine govemment 
produced a temporary setback in contra operations, followed in December 
1982 by a major shake-up in the contras' nominal political leadership.^'* 



Guatemala 

Restoring arms deliveries to Guatemala proved a little more difficult 
than to Argentina. "The election of Reagan coincided with the bloodiest 
outbreak of Guatemalan death squad actions in history. Almost five 
hundred deaths a month, almost all attributed to the right, were being 
reported by the American Embassy, but even that figure was considered 
low by most other monitoring groups. Piles of mutilated bodies were being 
discovered every morning throughout the country. "^^ President Lucas 
Garcia, alleged to have personally raised half a milUon dollars from 
Deaver's Guatemala businessmen for the Reagan campaign, was said in 
February 1981 by the New York Times (citing Amnesty International) to 
be directly supervising the security agency in charge of the death squads.^^ 

The May 4 hearing of the Senate Foreign Relations Committee, in 
which the administration announced that it was disposed to give aid to 
Guatemala, followed two days of hard-hitting stories in the press about 
that country's increasing violence, including the murders of 76 leaders of 
the moderate Christian Democratic Party. When Congress balked at 
certifying that Guatemala was not violating human rights, the administra- 
tion acted unilaterally, by simply taking the items Guatemala wanted off 
the restricted list.^^ 



Taiwan 

On the issue of restoring arms sales to Argentina and Guatemala there 
was no dissent within the Reagan administration, all of whom were eager to 
repudiate Carter's human rights poUcies as quickly as possible. The 
arguments against arms sales to Taiwan, however, were geopolitical as well 
as ideological. The more seriously one chose to believe in a Soviet threat, 
the more important it seemed not to threaten the growing strategic 
relationship between Washington and Peking. 



The Growth of Reagan's Contra Commitment 61 



Reagan was confronted with this geopoHtical consensus as soon as he 
took office. After a year of fumbling, Haig (State), Weinberger (Defense) 
and Casey (CIA) united on a recommendation to Reagan: Taiwan should 
not receive the new weapons it was asking for. In August 1982 the State 
Department, after another visit to Peking by George Bush, announced a 
joint communique with China, in which the United States undertook to 
"reduce gradually its [weapons] sales [to Taiwan]... leading over a period of 
time to a final resolution. "^^ 

This result appeared to experts to represent a victory of "Geopolitics 
over Ideology."^' But while the communique called for a reduction, arms 
sales to Taiwan in fact increased, to new levels of $530 milhon in 1983, and 
$1,085 milhon in 1984. Each new arms sales announcement was greeted 
with loud protests from Peking, and with increasing rumors and reports of 
Sino-Soviet rapprochement."*" Once again, we now know that on the issue 
of Taiwan arms sales Haig at the State Department was being over-ruled by 
the Reagan White House staff 



Deaver, WACL, and the Contras 

The lobbying for increased U.S. arms sales came of course from at 
home as well as from abroad; and primarily from the American Security 
Council, the chief real-life incarnation of that military-industrial complex 
which President Eisenhower warned the country about a quarter of a 
century ago. Two prominent backers of the ASC (oilmen A.C. Rubel and 
Henry Salvatori) were also part of the trio of Los Angeles millionaires who 
had launched Reagan into politics after the Goldwater debacle of 1964."*^ 

The third. Holmes Tuttle, lent his weight to the small meeting of May 
1974 in Reagan's home where the decision was made for Reagan to begin 
his drive for the presidency. Four of Reagan's top aides attended that 
meeting: Meese, Nofziger, Deaver, and Hannaford. The Deaver and 
Hannaford agency was launched in 1974 as part of that presidential 
strategy. 

The international clients taken on by Deaver and Hannaford — 

Taiwan, Guatemala, and Argentina — were longtime causes of the ASC as 
well.*^ More importantly, the ASC helped out Taiwan's foreign policy 
creation, the World Anti-Communist League, by setting up an American 
affiliate for it, the American Council for World Freedom (ACWF). The 
young executive secretary of the ACWF, Lee Edwards, was by 1980 the 
registered lobbyist for WACL's Taiwan chapter, and also of Argentina. 
Edwards also wrote a Reagan biography. 



62 



The Iran-Contra Connection 



In 1976 Edwards' ACWF pulled out of WACL, on the grounds that it 
was becoming racist. The new U.S. WACL chapter, the Council on 
American Affairs (CAA), was however also headed by an ASC man: 
Roger Pearson of ASC's editorial board. By 1980, WACL had been 
largely taken over by former Nazis, SS men, Nazi collaborators, and 
outspoken anti-Semites. Most embarrassing, from the point of view of a 
"law and order" candidate like Reagan, was the presence at WACL 
conferences of wanted right-wing terrorist murderers, and, perhaps worse, 
bank-robbers.''^ 

The Reagan team, both before and after the 1980 election, appears to 
have adopted a two-fold approach to the problem of right-wing WACL 
terrorism. On the one hand they fostered a careful program to improve 
WACL's image, badly tarnished after British and American WACL 
members had protested WACL's penetration by anti-Semites. On the 
other, they moved through Deaver's cUents in Guatemala to make selected 
terrorists the lynchpins of the Reagan administration's poUcies in Central 
America. 

Two men appear to have been central in this double poUcy: General 
John Singlaub, who after Reagan's election became WACL's new world 
chairman, and Mario Sandoval Alarcon, the Guatemalan godfather and 
WACL leader who got to dance at Reagan's inaugural ball. The public 
relations work for both men, at least prior to the election, was in the hands 
of Mike Deaver. 

Singlaub was a long-time veteran of CIA and DOD "unconventional 
warfare" operations, which he once explained as including "terrorism, 
subversion and guerrilla warfare.. .sabotage.. .support to resistance groups 
...black and gray psychological operations."''' Singlaub was Uttle-known 
until 1978, when he was transferred from his Army Command in South 
Korea for publicly denouncing Carter's announced plans to withdraw U.S. 
troops from that area. A spirited defense of Singlaub and his position was 
promptly prepared for one of Reagan's 1978 broadcasts by Deaver and 
Hannaford."* 

Little noticed at the time was the fact that ten days before his 
retirement, in May 1978, Singlaub attended a meeting of right-wingers 
who "didn't think the country was being run properly and were interested 
in doing something about it." The meeting was hosted by Mitch WerBell, a 
conspiratorial colleague of Singlaub from their OSS days together at 
Kunming in China.'*^ As we have seen, Singlaub then began a series of 
co-ordinated visits to Central America, with Generals Graham and 
Sumner, laying the basis for Reagan's current support of the contras in 
Nicaragua. Singlaub's visits focused on Guatemala, where in 1982 WerBell 



The Growth of Reagan's Contra Commitment 63 



would support a coup attempt by the National Liberation Movement 
(MLN) of Mario Sandoval Alarcon and Lionel Sisniega Otero."* 

Singlaub's link-up with Sunmer in 1980 was particularly significant to 
the Guatemalans, since for a year Sumner had been one of the most 
prominent contra contacts in Washington who was "looking for some way 
to help Nicaraguans who wanted to fight" the Sandinistas.'*^ After the 
election that most prominent supporter would become Singlaub himself, 
by a series of events which seem to have been pre-arranged. 

The most important event was the creation of a new United States 
chapter of W ACL, to replace one which had been taken over by crackpots 
and racists. Singlaub did this on November 22, 1981, four days after a 
secret approval by Reagan of a CIA plan to begin direct assistance to the 
contras.^" 

The weeks after Reagan's election had seen a number of rapid 
developments. Some of Sandoval's contra group, headed by Colonel 
Enrique Bermudez who had been Sumner's contact, departed for training in 
Argentina. (This was training in terrorism; and one of the trainers is now 
wanted for his leadership of a cell attempting, by bombings and kidnap- 
pings, to destabilize the new Argentine civilian government. The 
Salvadorean death squad leader. Major Roberto d'Aubuisson, entered the 
United States illegally (the Carter administration refused to issue him a 
visa), and had conferences "with members of the Reagan transition team 
and with members of the staff of.. .Senator Jesse Helms. "^^ 

Meanwhile Singlaub flew to Australia to address WACL's Asian 
contingent, the Asian People's Anti-Communist League (APACL). He 
correctly predicted that there would be closer relations between the U.S. 
and WACL countries, and hinted that he himself would be helpful even 
though he would not be a member of the new administration.^^ This public 
healing of the rift between WACL and the United States had begun the 
previous July in Geneva, when the nominal head of WACL's U.S. chapter 
(a white racist who had once urged his state of Mississippi to secede from 
the Union) was upstaged by the presence at the WACL Conference of 
Singlaub's close friend Ray CUne. CUne was another strong Reagan 
supporter and a foreign policy adviser; he flew to Taiwan after the election 
to convey the message that "the new Reagan Administration will enhance 
U.S. relations with Taipei without damaging ties with Peiping [sic]."^'' 



64 



The Iran-Contra Connection 



Singlaub, WACL, and LaRouche 

In the Ught of W ACL's subsequent importance to the Reagan poUcy 
of supporting the contras, it is significant that the approaches of CHne and 
Singlaub to WACL began before the 1980 election. Singlaub and Cline 
were the logical team to consolidate the Reagan-WACL alliance, since their 
acquaintance with WACL's members and drug-fmanced intrigues went 
back to the 1950s, if not earlier. Singlaub had first met Cline, along with 
four future backers of CIA-Cuban operations (Howard Hunt, Paul 
Helliwell, Lucien Conein and Mitch WerBell) in a small OSS mission at 
Kunming in China, at the very center of the World War II KMT drug 
traffic. According to the Wall Street Joumal, OSS payments at this base were 
frequently made with five-pound shipments of opium.^^ The sixth and 
most mysterious of these men, Mitch WerBell, would himself be indicted 
on drug smuggling charges in 1976, two years before he began an extended 
and Uttle-noticed relationship with John Singlaub and Lyndon LaRouche. 

The other five men from the OSS Kunming mission went on into the 
CIA, and in the 1950s served in or supported CIA covert operations in 
Asia. HelUweU, from his law office in Miami, organized the arms supply to 
General Li Mi's drug-growing KMT troops in Burma, as he would later 
organize support for the CIA's Cuban sabotage teams in Miami (see 
Chapter III).^* Lucien Conein went on to be the CIA's Uaison with the 
Corsican gangsters of Saigon; and, according to Alfred McCoy, "did not 
pass on" to Washington the information he leamed about the large 
shipments of drugs these Corsicans were making to Europe, while they 
gave the 1965 Saigon govemment "a fixed percentage of the profits."'^ 
Howard Hunt was in 1954 assigned to a black propaganda psychological 
warfare operation based in Tokyo.^^ 

More directly impinging on what became WACL were the activities 
of Cline as CIA station chief in Taiwan (1958-62), and Singlaub as deputy 
CIA station chief in South Korea (ca. 1950-52). Chne is said to have helped 
Taiwan found its Political Warfare Cadres Academy at Peitou, which has 
through its training program developed a conspiratorial Latin American 
fraternity of thousands of mihtary and security officers, including Roberto 
d'Aubuisson. In this way the Kuomintang created in Latin America 
"carbon copies of what they had created in Taiwan: a politicized military 
whose first loyalty was to the party, then to the military, and finally to the 
nation."'^ 

All of this was in fulfilment of recommendations drafted in 1959 by 
General Richard Stilwell for a special Presidential Committee under 



The Growth of Reagan's Contra Commitment 65 



General Wilham Draper reporting to President Eisenhower: that the U.S. 
help develop "higher level military schools" with political-economic 
curricula in the Third World, to encourage local armies to become "internal 
motors" for "socio-political transformation."^" 

Former U.S. intelhgence officers have also suggested that the funding 
of APACL, and of the initial preparatory meetings in 1958 for WACL, 
came from U.S. Embassy Counterpart funds in Taiwan to which Cline had 
access.^^ As CIA deputy chief in South Korea during the Korean War, 
Singlaub is also said to have had a hand in developing what eventually 
became the Korean Central Intelhgence Agency, the other chief partner in 
setting up APACL."^ 

In 1954, when APACL was founded in Taiwan, its first Latin 
American affiliate was founded in Mexico City by Howard Hunt. Hunt 
did so in his capacity as political and propaganda chief of the CIA operation 
in Guatemala; but his creation (the Interamerican Council for the Defense 
of the Continent, or CIADC) would survive to be involved in other CIA- 
backed coups as well, notably the Brazil coup in 1964.^^ The CIADC soon 
became a vehicle for the international plotting of two of Hunt's young 
Guatemalan proteges: Lionel Sisniega Otero, who in 1954 was employed 
on clandestine radio operations by Hunt's assistant David Philhps, and 
Sisniega's mentor, the future "Godfather," Mario Sandoval Alarcon.^ 

By accident or by design, the simultaneous creation of APACL and 
CIADC in 1954 also had the effect of creating a conspiratorial China 
Lobby for Taiwan overseas, at precisely the time that the activities of the 
old conspiratorial China Lobby in Washington were being exposed and 
neutralized. When the first provisional steering committee for a combined 
WACL was announced from Mexico City in 1958, its General Secretary 
was veteran China Lobbyist Marvin Liebman, who earlier had organized 
Washington's "Committee of One Million" in support of Taiwan. Lee 
Edwards, Liebman's successor at the Committee of One Milhon, organized 
the first U.S. Chapter of WACL, with officers from the leadership of the 
American Security Council.*^ 

From the China Lobby bribes of the early 1950s to the contra raids of 
the 1980s, there have been continuing reports linking Taiwan's and 
WACL's activities to profits from the international narcotics traffic (see 
Chapter HI). The situation was aggravated by the evolution of the 1950s 
China Lobby into the 1960s Cuban exile-Somoza Lobby, particularly 
when ex-CIA CORU Cubans like Orlando Bosch, dropped from the CIA 
for their terrorist and/or drug trafficking activities, were simply picked up 
by Somoza. 



66 



The Iran-Contra Connection 



It made sense that Somoza, when his long-time backers were 
abandoning him in 1979, should have tried to hire Shackley's associate 
Tom Clines to work for him, along with Bosch. Shackley and Clines, by 
coincidence or not, personified the CIA-mafia connection that successive 
CIA Directors found impossible to eliminate. When Richard Helms closed 
down anti-Castro operations in Miami, dispersed its U.S. and Cuban 
personnel, and sent Shackley and Clines to manage the covert war in Laos, 
the two men were moving from a local drug-linked operation to a more 
distant one. Significantly, the Florida mob went with them. Two years 
after they were transferred to Laos in July 1966, Santos Trafficante, a key 
figure in the CIA-mafia assassination plots against Castro, was seen 
contacting local gangsters in Hong Kong and Saigon.^* 

But the Shackley-Clines links to Latin America increased as their 
former agents were dispersed there. One of these men was John Martino, an 
old mafia casino associate of Santos Trafficante in Havana. In 1970, posing 
as a mafia representative, John Martino became a business associate of 
President Arana, and the CIA control for Mario Sandoval Alarcon — ^two 
of the Guatemalans who attended Reagan's 1981 inaugural ball.^^ 

We see then that the Reagan-W ACL alliance was forged by two men, 
Ray Chne and John Singlaub, whose connections to WACL's Asian 
patrons went back three decades or more. One's first assumption is that, as 
loyal Americans, they would be more likely to approach WACL on behalf 
of Reagan than the other way round. Singlaub, in particular, has a 
reputation of being a "straight arrow," a "boy scout," for whom subversive 
intrigue would be anathema. 

There are nonetheless disturbing indications that Singlaub, at least, 
may have been working for a hidden agenda that went far beyond naive 
loyalty to a Republican presidential candidate. It is hard to explain his 
dealings in the same period 1978-82 with his former Kunming OSS 
colleague Mitch WerBell, and more importantly with WerBell's employer 
since 1977, Lyndon LaRouche. About his political activities with the 
LaRouche movement Singlaub has at the very least been less than candid. 
What makes this disturbing is that the LaRouche movement was then 
suspected of looking for a dissident general to lead a military coup.''** 

We have already seen that in May 1978, ten days before his retirement, 
Singlaub attended a meeting of right-wingers who "didn't think the 
country was being run properly and were interested in doing something 
about it." The meeting was hosted by Mitch WerBell, who in 1982 would 
travel to Central America in support of an attempted Guatemalan coup on 
behalf of WACL leaders Mario Sandoval Alarcon and Lionel Sisniega 
Otero.""' WerBell's career of covert activities in the Caribbean also involved 



The Growth of Reagan's Contra Commitment 67 



work for Cuban dictator Batista in 1959, Dominican RepubHc dictator 
Imberr in 1965, and a coup operation (said by Hinckle and Turner to have 
had possible Mafia backing) against Haitian dictator Duvalier in 1966.™ 

WerBell, when Singlaub visited him in 1978, had recently evaded 
separate indictments for arms smuggUng and for narcotics trafficking/' 
WerBell was also in touch with "Secret Team" members such as Ted 
Shackley and Richard Secord, and allegedly was paid once through the 
drug-hnked Nugan Hand Bank (see Chapter III) when he conducted 
"operations for U.S. intelligence."'^ More importantly he was also in touch 
with Cuban Bay of Pigs veterans suspected of involvement in the CORU 
assassination of Orlando Letelier.'^ 

WerBell, when Singlaub visited him in 1978, was employed as the 
"personal security adviser" to Lyndon H. LaRouche, then the leader of the 
so-called National Caucus of Labor Committees (NCLC), a group which 
previously had posed as left-wing but in fact harassed anti-nuclear and 
other left-wing demonstrations with the help of the right-wing domestic 
intelligence group known since 1979 as Westem Goals (backed primarily 
by W ACL donor and Texan millionaire Nelson Bunker Hunt). Singlaub 
and another leader of his U.S. W ACL chapter (Anthony Kubek) joined the 
advisory board of Westem Goals.'"* Though Singlaub left Westem Goals in 
1984, the organization is controlled today by Carl Spitz ChanneU, who in 
1986 met with Oliver North "five or ten times" about his TV advertising 
campaigns against political candidates opposed to contra aid.'^ 

In 1979 General Singlaub conceded to the New York Times that he 
had met with two of LaRouche's party officials at the home of WerBell, 
but claimed that he had 

...since rejected the orgaruzation. "It was so clear to me after the first three 
or four contacts that they wanted something from me," the general said. 
"They hounded me for months, they flooded me with documents, they 
showed up at places where I spoke." 

"1 think they're a bunch of kooks of the worst form. General Singlaub 
went on. "I've been telhng WerBell that if they're not Marxists in disguise, 
they're the worst group of anti-Semitic Jews [sic!] I've encountered. I'm 
really worried about these guys; they seem to get some people." 

The general was asked if any mention was made in his talks of the 
possibiUty of a miUtary coup in the United States — an idea that has recently 
received currency in the party as a way to put Mr. LaRouche in power. 
"Well, it didn't come up in that form, but it was suggested that the military 
ought to in some way lead 



68 



The Iran-Contra Connection 



the country out of its problems," General Singlaub replied. "I guess I 
stepped on them pretty hard on that, and it never came up again. It was one 
of the first things that made me realize they're a bunch of kooks."^^ 

Singlaub's worries about a LaRouchean military solution to America's 
problems, although expressed so strongly in this interview, do not appear 
to have been very profound or long-lived. According to Scott and Jon Lee 
Anderson, in 1982 Singlaub retumed to WerBell's counterterrorist training 
camp in Powder Springs, Georgia, to lecture WerBell's trainees. Many of 
these were security forces for the organization of Lyndon LaRouche, then 
the anti-Semitic leader of the so-called U.S. Labor Party, whose security 
director was WerBell." 



The Strategy of Tension: CAL, P-2, Drugs, and the Mafia 

Reports linking WACL to drugs became particularly flagrant in the 
period 1976-80, as the rift between WACL and Carter's CIA widened, and 
as a new Argentine-dominated affiUate of WACL in Latin America (the 
Confederacion Anticomunista Latina, or CAL) plotted to extirpate radical 
Roman Catholic priests and prelates fostering Uberation theology. 

A high-point or low-point of the CAL plotting was reached in 1980, 
when Argentine officers, bankrolled by the lords of Bohvia's cocaine 
traffic, installed the Bolivian drug dictatorship of Luis Garcia Meza. Two 
of the Argentine officers involved turned out to be wanted Italian terrorists, 
Stefano delle Chiaie and Pierluigi Pagliai; together with the veteran Nazi 
fugitive and drug trafficker Klaus Barbie, the neo-fascists seized the radio 
station as a signal to launch the coup.^^ 

Barbie and delle Chiaie were both deeply involved in the CAL project 
to identify and exterminate leftists and radical priests. Through this project 
delle Chiaie had advised d'Aubuisson by 1979; and at the September 1980 
meeting of CAL in Argentina, delle Chiaie and d'Aubuisson met and 
arranged for weapons and money to be sent to d'Aubuisson in El 
Salvador.™ 

That 1980 CAL Conference was presided over by Argentine General 
Suarez Mason, today a fugitive wanted on charges arising from the 
Argentine junta's death squads. In attendance were Bolivia's dictator, 
Garcia Meza, wanted by U.S. drug authorities for his involvement in 
cocaine trafficking, and Argentine President Videla, today serving a life 
sentence for his poUcies of mass murder and torture. A featured speaker at 



The Growth of Reagan's Contra Commitment 69 



the conference was Mario Sandoval Alarcon, who had brought his protege 
d'Aubuisson and arranged for him to be put in touch with delle Chiaie. 

What was being brokered at the September 1980 CAL Conference 
was nothing less than an "Argentine solution" of death squad dictatorships 
from Buenos Aires to Guatemala City. The inspiration and direction of this 
scheme was however not just Argentine, but truly international, involving 
the Italo-Argentine secret Masonic Lodge P-2 (of which General Suarez 
Mason was a member), and possibly through them the financial manipula- 
tions by insiders of the Milan Banco Ambrosiano and Vatican Bank.^" 

P-2 has come under considerable scrutiny in Italy, where it began, 
because of its on-going involvement in intelhgence-tolerated coup at- 
tempts, bank manipulations, and terrorist bombings. All of this has 
contributed to a right-wing "strategy of tension," a tactic of developing a 
popular case for right-wing order, by fomenting violence and disruption, 
and blaming this when possible on the left. Stefano delle Chiaie was perhaps 
the master activist for P-2's strategy of tension, assisted by a group of 
French intelhgence veterans working out of Portugal as the so-called press 
agency Aginter-Presse.^' The Aginter group had their own connections to 
WACL in Latin America before delle Chiaie did, especially to the Mexican 
chapter (the so-called "Tecos") and to Sandoval's WACL chapter in 
Guatemala. 

According to the Italian Parliamentary Report on P-2: 

P-2 contributed to the strategy of tension, that was pursued by right-wing 
extremist groups in Italy during those years when the purpose was to 
destabilize Italian politics, creating a situation that such groups might be 
able to exploit in their own interest to bring about an authoritarian 
solution to Italy's problems.^^ 

Delle Chiaie was a principal organizer for three of the most famous of 
these incidents, the 1969 bomb in the crowded Piazza Fontana of Milan (16 
deaths, 90 injuries), the 1970 coup attempt of Prince Valerio Borghese (a 
CIA client since 1945), and the Bologna station bombing of August 2, 
1980 (85 deaths, 200 injuries). In December 1985 magistrates in Bologna 
issued 16 arrest warrants, including at least three to P-2 members, accusing 
members of the Italian intelhgence service SISMI of lirst planning and then 
covering up the Bologna bombing.**'' One of these 16 was P-2's leader Licio 
Gelli, who had spent most of the post-war years in Argentina. 

A small group of anarchists, penetrated by delle Chiaie's man Mario 
Merlino, were blamed at first for the Piazza Fontana bombing, even though 
Sismi knew within six days that delle Chiaie was responsible, and Merlino 
had planted the bomb.*' 



70 



The Iran-Contra Connection 



After 1974, when the right-wing "strategists of tension" lost critical 
support with the ending of the Greek, Portuguese, and Spanish dictator- 
ships, they appear to have looked increasingly for new friendly govern- 
ments in Latin America. Delle Chiaie began to work for Chile's service 
DINA in 1975, the first contacts having been made through Aginter by 
Michael Townley, who would later murder Letelier with the help of 
CORU Cubans for DIN A."'' (Delle Chiaie is said to have come from South 
America to Miami in 1982, with a Turkish leader of the fascist Grey 
Wolves who was a friend of the Pope's assassin Mehmet Agca.**^) 

The P-2's support for Latin American terror seems to have been in 
part a matter of internal Roman Cathohc pohtics: an attempt by one faction 
to use right-wing death squads to eliminate the Church's liberation 
theologians and moderate Christian Democrats. Both the contras and 
Mario Sandoval Alarcon were part of the anti-liberationist campaign: the 
contra radio maintained a steady propaganda campaign against the 
Maryknoll Sisters in Nicaragua; Lau of the contras murdered Archbishop 
Romero of El Salvador; and Lau's patron Sandoval, at the 11th WACL 
Conference in 1978, denounced the "intense Marxist penetration.. .acting 
within the highest echelons of the Catholic hierarchy. During the two 
years after the CAL adopted the Banzer Plan in 1978, "at least twenty- 
eight bishops, priests, and lay persons were killed in Latin America; most of 
their murders were attributed to government security forces or rightist 
death squads. That number multiplied after 1980 as civil war spread 
through Guatemala and El Salvador."*^ We have already seen how 
Reagan's termination of the Carter "human rights" policies was followed 
by the decimation of the Guatemalan Christian Democrats. 

The CAL/P-2 connection was and remains a drug connection as well. 
The terrorist delle Chiaie has been accused of ties to some of the French 
Connection heroin merchants who had relocated to Italy; while CAL 
Chairman Suarez Mason, according to the Italian magazine Panorama, 
became "one of Latin America's chief drug traffickers."^" 

This Latin American WACL drug connection appears to have been 
originally put together by former Argentine Interior Minister Jose Lopez- 
Rega, a P-2 member and Gelli intimate who was responsible for restoring 
Peron to power in 1973 and arranging for European experts in "dirty war" 
tactics to launch death squad tactics against the terrorist left. Lopez-Rega 
was later said to have been directly involved with other P-2 members in the 
Argentine-Paraguayan cocaine traffic, and to have used French members of 
the Ricord drug network as terrorists for his underground AAA (Alianza 
Argentina Anticomunista).'' Ex-ClA Cuban exile terrorists involved in 
the drug traffic also worked with the AAA, as well as for Somoza.'^ 



The Growth of Reagan's Contra Commitment 71 



Paraguayan InteUigence Chief Pastor Coronel, a C AL participant and 
death squad co-ordinator, was also a smuggling partner of the Corsican 
drug kingpin in Latin America, Auguste Ricord, whose network trafficked 
with the Gambino Mafia family in New York.'^ Michele Sindona, the 
author of the Ambrosiano- Vatican Bank connection to P-2, had his own 
connections to the Gambino family, which surfaced when in 1979 he used 
them to stage his own "abduction" to avoid a New York court appear- 
ance.'"* According to Penny Lemoux, "the P-2 crowd obtained money 
from the kidnappings of well-to-do businessmen in Europe and from the 
drug traffic in South America. Sindona's bank laundered money from the 
notorious [Italian] Mafia kidnappers of Anonima Sequestri, who worked 
with ... Ordine Nuovo."'' Significantly, Mario Sandoval Alarcon has also 
been accused of resorting to the kidnapping of rich coffee-growers in 
Guatemala to get financing for his pohtical faction.'^ Since the fall of the 
Argentine junta and Suarez Mason in 1982-83, the AAA, abetted by delle 
Chiaie, has also taken to bank robberies and kidnapping. 



P-2, the Republicans, and Ledeen 

But P-2 had equally strong links to both the CIA and the Republican 
Party. Under President Nixon, the CIA allocated $10 million for centrist 
and right-wing parties in the 1972 ItaUan elections. The U.S. Embassy in 
Rome was acutely divided over whether the money should go through 
Sindona, who appeared to have "a direct line to the [Nixon] White House," 
or ItaUan IntelUgence Chief Vito Miceli, implicated in a 1970 CIA- 
financed coup attempt with delle Chiaie. Both Sindona and Miceli, as it 
happened, were part of the P-2 connection.'^ 

Sindona's U.S. investments were partnered by the Continental Illinois 
bank headed by Nixon's first Treasury Secretary, David Kennedy, and his 
interests were represented by the law firm of Nixon and his Attorney 
General John Mitchell. "In Italy, Sindona orchestrated the efforts of the 
neo-Fascist deputy Luigi Turchi to garner support for Nixon's election 
campaign. Sindona even offered $1 milhon, on condition of anonymity, to 
CREEP treasurer Maurice Stans. The offer was refused."'^ Turchi's efforts 
were co-ordinated by Philip Guarino of the Republican National Com- 
mittee, a P-2 associate later imphcated in the plotting to help Sindona escape 

go 

prosecution. 

We have seen how in 1980 Cline's associate, Michael Ledeen, 
pubhshed an article (at the beginning of the 1980 election campaign) 



72 



The Iran-Contra Connection 



"savaging Admiral Stansfield Turner for forcing Ted Shackley [one of 
Edwin P. Wilson's senior CIA contacts, a veteran of the anti-AUende 
operation] out of the agency."'"" A year later Michael Ledeen, in his new 
capacity as the Reagan State Department's expert on terrorism, was now in 
a position to help close off the investigation of those (specifically Shackley 
and von Marbod) who were being investigated along with Edwin Wilson, 
perhaps the world's most notorious ex-CIA terrorist."" 

Ledeen's efforts in 1980 on behalf of Shackley were paralleled by a 
dirty tricks campaign on behalf of Reagan in alliance with P-2 members of 
the Italian intelligence service SISMI. The chief of these, Francesco 
Fazienza, was a financial consultant of Roberto Calvi at the Banco 
Ambrosiano. Pazienza was ultimately indicted in an Italian court (with 
Ledeen as an unindicted co-conspirator) for luring President Carter's 
brother Billy into a compromising relationship with Qaddafi during the 
1980 presidential campaign. According to Edward Herman and Frank 
Brodhead, the prosecuting judge 

...had evidence that "SISMI was the architect of the scandal over Billy 
Carter," and that the material in this case was gathered mostly by 
Pazienza and by his American friend Michael Ledeen...." Pazienza 
availed himself of SISMI both for the use of some secret agents and for 
the expenses of organizing the scandalous plan. It seems that the 
organizers got a huge payoff for 'Billygate.' Moreover, [SISMI chief] 
Santovito [a P-2 member] and Pazienza got great advantages in return 
from American officials.""'^ 

Ledeen published his Billygate stories in three pro-Israeli publications; the 
New Republic of Martin Peretz, and two joumals controlled by Sir James 
Goldsmith, the chairman of the Banco Ambrosiano-linked oil company 
ERISA (see below), and later one of the multimillionaires consulted by 
Reagan in his Project Democracy.'"^ 

In 1980 Ledeen was also in high gear, allegedly again with assistance 
from Pazienza, as a propagandist for the notion of a terrorist threat 
requiring a beefed-up U.S. intelligence response. Given access in 1980 to a 
Czech defector from twelve years earher (Jan Sejna), Ledeen elicited from 
him the information, which Sejna had never volunteered in his extensive 
CIA debriefing, that the Soviet Union maintained a network of terrorist 
training camps as part of its plan for global domination. According to 
Herman and Brodhead, Ledeen had Sejna reaffirm the contents of a 
purported document on Soviet sponsorship of terrorism which Sejna had 
willingly claimed to be authentic a decade earher, and which was in fact a 
CIA forgery shown to Sejna for the purposes of testing his credibility."^ 



The Growth of Reagan's Contra Commitment 73 



This document and corroboration then became central to the case built by 
Ledeen and his friend Claire Sterling to show that the KGB and Bulgarian 
drug traffickers had plotted to have the Turkish fascist Mehmet Agca kill 
the Pope. '"^ This story was of course augmented by the "confession" of the 
assassin, whose testimony was later discounted as not credible. This 
confession now appears to have been generated by P-2 SISMI agents linked 
to Ledeen, among whom may or may not have been Pazienza.""' 

What inspired Michael Ledeen's zeal on behalf of Reagan and the 
shadow network? European journalists have suggested that an unspecified 
"huge payoff to the SISMI P-2 organizers of Billygate was followed by a 
payment of at least $120,000 plus expenses from SISMI to Ledeen in 
1980-81, after Ledeen "sold old U.S. inteUigence reports to SISMI at stiff 
prices."'"^ But there are indications that Ledeen had an affiliation, not just 
with SISMI, but (like his ally Pazienza) with P-2. There are unexplained 
stories that "Ledeen had Unks with Gelli...and that Ledeen, on behalf of the 
State Department, had tried to buy 480 P-2 files photocopied by the 
Uruguayan interior ministry" after a raid provoked by the P-2 scandal 
revealed by the investigation of Sindona.'*^^ 

It is obviously a convenient arrangement when P-2 contributions and 
favors to a right-wing U.S. President can be followed by the release of $10 
milUon in unvouchered CIA funds for poUtical use by P-2. No doubt their 
knowledge of such arrangements must have fuelled the zeal of Carter and 
Turner to cut back on the CIA's clandestine services. Conversely, the 
CIA's cutback on clandestine operations and subventions spelled both 
political and financial disaster for parallel operations, such as Wilson's and 
Sindona's, which had fattened on CIA handouts. The end of U.S. 
intelligence subsidies to Wilson's company Consultants International is 
clearly responsible for Wilson's move into the illegal Libyan deals for 
which he was eventually jailed. The same drying up of the CIA cash flow 
to right-wing assets appears to have contributed to the failure of Calvi's 
Banco Ambrosiano; and of another intelligence-related bank whose 
operations interlocked heavily with Wilson's: the drug-linked Nugan 
Hand Bank of Australia.'** Thus CIA reforms had the effect of building a 
powerful coalition of both Americans (ousted CIA clandestine operators, 
the Taiwan-Somoza lobby, the ASC) and foreigners (WACL, P-2), 
determined to restore the clandestine operations which had been cut back 
by four different directors of central inteUigence (Helms, Schlesinger, 
Colby, and Turner).''*^ 

Whatever the details, it appears that the P-2 Repubhcan connection 
remained as healthy in 1980 as it had been in 1972. Licio Gelli, the head of 
P-2, was invited by Republican bigwig Phil Guarino to Reagan's inaugural 
ball."' 



74 



The Iran-Contra Connection 



P-2, the Calvi Scam, and Nicaragua 

By 1980 the fate of Calvi's Banco Ambrosiano (and hence indirectly of 
P-2) depended largely on an anti-Communist turnaround in Central 
America. In 1977 Calvi had developed close relations with the increasingly 
isolated Nicaraguan dictator Anastasio Somoza, and opened a subsidiary 
(the Ambrosiano Group Banco Comercial) in Managua. Through another 
of his Ambrosiano-controUed companies, Central American Service, Calvi 
began prospecting for minerals and oil. As the Nicaraguan situation 
deteriorated in 1978-79, Calvi's Managua subsidiary received a steady 
flow of funds from Calvi's Bahamas subsidiary, which had come under the 
scrutiny of Italian govemment investigators.''^ By 1979, 

Calvi (probably with Gelli's intercession) was on good terms not only 
with the then dictator Anastasio Somoza, but also with the ever more 
menacing Sandinista opposition. To the end of his hfe [in 1982] he retained 
a Nicaraguan diplomatic passport, and in 1979 Calvi attempted to lobby 
the Rome government for an increase in coffee imports from 
Nicaragua... [0]f the foreign banks in Managua at the time of the left-wing 
takeover in... 1979, Ambrosiano's subsidiary was the only one not to be 
nationalized by the new revolutionary regime."^ 

Calvi had obviously estabhshed a bridge to the Sandinista junta's 
bankers, Alfredo Cesar and Arturo Cruz, and their allies such as Alfonso 
Robelo. By 1982 both Cruz and Robelo were working with the contras.""* 

In every account of the P-2/Banco Ambrosiano billion-dollar scam, 
the role of Somoza's Nicaragua is prominent. According to one source, it 
was Gelli who "smoothed the way" for Calvi's use of Somoza's offer of 
bank secrecy, "after several million dollars had been dropped into the 
dictator's pocket.""^ In this period the Italian construction magnate Mario 
Genghini (whose name was also on Gelli's P2 lists) "was one of the biggest 
foreign investors in Nicaragua.""^ In 1978, to avoid an investigation by 
the Bank of Italy, Calvi "moved the axis of [his international] fraud to 
Nicaragua"; one year later, as Somoza's position worsened, the fraud was 
moved to Peru.'" 

In 1981 Bishop Paul Marcinkus of the Vatican Bank "held a number of 
secret meetings with the convicted Calvi, which resulted in the Vatican 
Bank officially admitting an increase in its outstanding debts of nearly $1 
billion. This was the sum that was owed to the Calvi banks in Peru and 
Nicaragua as a result of their having loaned, on Calvi's instructions, 



The Growth of Reagan's Contra Commitment 75 



hundreds of milHons of dollars" to companies allegedly under Marcinkus's 
control. Just one of these companies, Bellatrix, received $184 million for 
P-2's political purposes, which included Gelli's purchase of Exocet missiles 
for Argentina during the Falkland Islands War.'" 

P-2's pohtical purposes also clearly involved the election of Ronald 
Reagan in 1980: 

On April 8, 1980, Gelli wrote from Italy to Phillip Guarino... "If you think 
it might be useful for something favorable to your presidential candidate to 
be published in Italy, send me some material and I'll get it published in one 
of the papers here.". ..The favorable comments about Ronald Reagan, 
carefully placed by Licio GeUi, duly appeared in Italy. In January 1981, 
Licio GelU was an honored guest at the presidential inauguration. Guarino 
later ruefully observed, "He had a better seat than I did."^^*^ 

In 1981, the period of its Argentine grand design for Central America, 
the Reagan administration appears in turn to have been exploiting P-2 
pathways. One of its first envoys to Argentina and Guatemala for the 
grand design was General Vernon Walters, a major figure in the Brazilian 
military coup of 1964, and reportedly a prime architect in the blending of 
the various contra forces into a united FDN under Enrique Bermudez in 
1981.'^' "In May 1981 General Vernon Walters. ..visited Guatemala as a 
'goodwill ambassador' of the Reagan Administration. At the same time, 
though, he was representing BRISA [Basic Resources International SA], 
which was seeking permission to export more oil. The Guatemalan 
military granted the request. "'^^ 

The fate of Calvi and his alUes, by then ominous, was tied up with the 
fortunes of BRISA, whose chairman, as previously mentioned, was Sir 
James Goldsmith. In 1977 the Guatemalan govemment (with Mario 
Sandoval Alarcon as Vice-President) had awarded an oil concession to 
BRISA, one of whose board members was Calvi's representative Antonio 
Tonello. In March 1981, as the Italian investigation of Sindona led to 
Gelli's files and Calvi's name, the Calvi case was nearing its denouement. 
On May 20, 1981, exactly one week after Walters' visit to Guatemala for 
Reagan and BRISA, both Calvi and Tonello were arrested (and soon 
convicted). 



76 



The Iran-Contra Connection 



The CAL-Reagan-Helms Triangle 

In 1980 the incoming Reagan administration had links to the Latin 
American chapters of WACL, not just through P-2, but even more directly 
through Republican Senator Jesse Helms. Indeed Helms became a focal 
point for U.S. intelhgence and Republican coimections to CAL in Latin 
America, following a visit in 1975 to WACL headquarters in Taiwan. 
Helms also travelled to Argentina (via a WACL Conference in Rio) in 
April 1975; and at least two of his aides, Ramon Molina and Nat Hamrick, 
returned, along with Daniel Graham, in early 1976, shortly before the 
Argentine generals' coup of March 24. Helms, according to Ramon 
Molina, "actually encouraged the miUtary to move in and depose President 
Peron."'^^ 

The president in question was not Juan Peron, who had died in June 
1974, but his widow, Isabelita, who was deposed in March 1976. This 
event followed from the more significant ouster in July 1975 of her mentor 
Jose Lopez Rega, the original fascist architect of the P-2/Italian terrorist 
presence in Argentina. The Argentinian army was responsible for both 
ousters, each of which followed a visit by Helms or his aides. 

The presence on the 1975 Helms delegation of two other associates 
(Victor Fediay and J. Evetts Haley), and the subsequent involvement of 
Daniel Graham, may help explain why the relatively inexperienced Senator 
from North Carolina (he had been elected in 1972) would involve himself 
in an Argentinian military takeover. In 1975 Fediay (a Russian emigre and 
prewar Pohsh fascist) and Haley (a Texas rancher) had just helped with 
Richard Allen to broker a request (which was eventually tumed down) for 
U.S. backing behind a Eurofascist secessionist coup in the Azores 
(sponsored by the so-called Aginter-Presse intelligence service, with 
which delle Chiaie was affiliated). One can imagine that the message to 
the Argentine military was similar: the U.S. could support a military take- 
over, perhaps even death squads and terrorists like delle Chiaie, but only 
if the Lopez Rega connection to the newly forming Fascist International 
in 1975 was eliminated. 

This U.S.-Argentine connection in 1975-76 (Helms, Mohna, Ham- 
rick, Richard Stone, and Daniel Graham) would become the hard core 
Reagan-Sandoval-contra connection after 1980.'^^ We have seen how 
Graham and Singlaub assured Guatemalans in 1979 that "Mr. Reagan 
recognizes that a good deal of dirty work needs to be done."'^^ 

It was Helms who (after his aide John Carbaugh met d'Aubuisson at 
the September 1980 CAL Conference) received Sandoval's protege 



The Growth of Reagan's Contra Commitment 77 



d'Aubuisson on an illegal visit in December 1980.'^^ (Since that time 
Carbaugh has worked closely with Mario Sandoval Alarcon's nephew, 
Carlos Midence Pivaral, to fashion a more marketable and "Republican" 
image for d'Aubuisson's new party, ARENA. '^'') Stone, a lobbyist for 
Guatemala in 1980, became Reagan's special ambassador to Central 
America.'^^ In 1981-82, Hamrick, while on Helms' staff, would lobby, 
together with the head of the Costa Rica W ACL chapter, for a friendly base 
for the contras in that country/^" 

But the most significant member of the Helms Argentine connection 
may have been Ramon Molina, a Cuban-American Bay of Pigs veteran 
who in 1976 was the apparent point of contact between his two employers, 
Nicaraguan dictator Somoza and Senator Helms/'^ In 1975-76 Molina 
appears to have been Somoza's connection to renegade ex-CIA Cubans, 
like Orlando Bosch, whose CORU assassination activities extended to 
Argentina by August 1976.'^^ It would appear that, just as in the 1972 
election Manuel Artime (another ex-CIA Cuban accused of drug traf- 
ficking) emerged as the connection between Nixon, Somoza, and the 
Watergate burglars, so in the 1980 election Ramon Molina emerged as the 
connection between Reagan and Somoza.'^'' 

The Helms camp has been very much of a right-wing embarrassment 
to the Reagan administration since it took office: in 1984 Helms put the life 
of Reagan's Ambassador to El Salvador at risk by leaking secret CIA data. 
In 1976 and in 1980, however, candidate Reagan was very much 
dependent on winning the support of Helms and his international WACL 
network. In 1976 the Reagan campaign appointed David Keene, an old 
Liebman sidekick and WACL participant, to be chief delegate hunter in the 
southem states. In 1980 a campaign aide, Belden Bell, travelled to Latin 
America and met both Deaver's Amigos and Ramon Molina.'^'' What may 
have interested the Reagan campaign in Molina was his capacity as a 
representative of Somoza's personal fortune, in whose employ he used his 
CIA training as a strong-arm man and enforcer (he allegedly once broke the 
jaw of a South Carolina concrete businessman). Somoza, until his 
assassination in September 1980, was said to be funding terrorist activities 
through CAL as a way of building an intemational neofascist coalition for 
his return. '^^ 



78 



The Iran-Contra Connection 



Reagan, the Contras, and Narcotics 

Such then was the state of WACL when Singlaub began his 

missionary activities to it on behalf of Reagan in 1979-80. It might be said 
in defense of their policies that WACL represented an old U.S. intelligence 
project out of control; and that Singlaub has worked to bring it back under 
control. Alternatively, the WACL collaboration might be seen as a kind of 
"constructive engagement" with neofascism, offering right-wing govern- 
ments equipment and support services, in exchange for their renunciation 
of death squad politics that would never play well in Peoria. 

It is clear that the Reagan administration has since backed away from 
many of its old C AL proteges, usually after revelations linking them to the 
drug traffic. It has relegated dAubuisson to the background, after a plane 
belonging to one of his financial supporters was detained in Texas with a 
cargo of $5.9 million in cash. It has helped extradite Pagliai (the younger of 
the two Italian terrorists) from Bohvia, after Pagliai was detected by the 
DEA at a high-level drug-traffic meeting in 1981.'^^ 

Eventually the Reagan administration helped ease both the BoHvian 
and the Argentine dictatorships out of power. After the failure in 1982 of a 
Guatemalan coup plot by Sandoval's associate Lionel Sisniega Otero 
(plotting with WerBell, the OSS colleague of Singlaub and Chne), the U.S. 
eventually accepted a civihan government headed by a Christian Democrat, 
of the party targeted by Sandoval and Sisniega for extermination. 

In marked contrast, the Reagan commitment to the contras has been 
unswerving. Modifications to its policy have been limited to a search for 
better personnel, as Congressional opposition mounted to the contra record 
of raping peasants and torturing social workers to death. In September 
1982 the CIA reorganized the contra directorate, and sent a new station 
chief to Honduras, with the task "of getting the Argentines out and getting 
the war back under control.""^ In late 1983 the CIA began its own covert 
operations against Nicaragua, cutting out the contras, and reorganizing 
their FDN directorate yet again. 

However the CIA, inevitably, was faced with a disposal problem. A 
handful of contra field officers were executed for various crimes, chiefly the 
murder of one of their peers. But the CIA was reluctant to send Argentine 
terrorists back to their home country at a time when the civilian 
government was barely establishing itself. Ricardo Lau, the murderer of 
Archbishop Romero, was detached from the contra hierarchy, but 
remained in Honduras to be the mastermind of the death squad operation of 
the CIA's and CAL's Honduran protege, General Gustavo Alvarez 



The Growth of Reagan's Contra Commitment 79 



Martinez. Alvarez was the point-man for the CIA-contra presence in 
Honduras, and even the godfather to the adopted daughter of the new CIA 
chief. When he was ousted in 1984 the CIA changed its station chief yet 
again, and Lau reportedly left for another country. 

These cosmetic changes of personnel do not appear to have reached to 
the level of eliminating the old CAL presence in the contras. Enrique 
Bermudez, the link between Sandoval's Guardia proteges and Washington, 
has remained through each successive FDN shake-up. As for the interna- 
tional drug traffickers, their interest in maintaining the contra status quo in 
Honduras was revealed when the FBI broke up a drug-financed plot in 
Miami to assassinate the elected Honduran president and restore Alvarez to 
power.'^° 

Since December 1985 it has become clear that the CIA contra 
operation has become as intermingled with drug trafficking as the old CIA 
Cuban exile operations which had had to be closed down in Miami (see 
Chapter HI). In December 1985, 

...the Associated Press cited a CIA report alleging that a "top commander" 
of the Costa Rica-based guerrillas had "used cocaine profits to buy a 
$250,000 arms shipment and a helicopter. "...Two Nicaraguan smugglers 
convicted in the largest cocaine seizure in West Coast history — 430 
pounds — admitted that they passed drug profits on to the contras. ..A 
leading Bay Area fund-raiser for the Honduras-based Nicaraguan 
Democratic Force, the largest contra group, was identified in 1984 by the 
Drug Enforcement Administration as "the apparent head of a criminal 
organization responsible for smuggUng kilogram quantities of cocaine into 
the United States."'*' 

The possibility that the contra operation serves as a cover for the Latin 
American drug connection does not seem to have occurred to the Reagan 
administration. On the contrary, its pressures to resume Congressional aid 
to the contras this year were not deterred by the revelation that the FBI was 
"examining assertions that cocaine was smuggled [into the United States] 
to help finance the rebels' war effort."''*^ Since then former Ambassador 
Robert White has charged that the Administration has attempted to kill this 
FBI inquiry. The stage has been set for a potentially explosive Senate 
investigation. 



80 



The Iran-Contra Connection 



Watergate, Contragate, and Foreign Campaign Contributions 

Why would the Reagan administration, whose ideology is supposed 
to be one of patriotism mellowed by pragmatism, have such a huge 
investment in a cause that is so controversial here as well as in Latin 
America? The Reagan response is to point to the alleged human rights 
violations by their opponents, and to the Caribbean basin's proximity and 
strategic importance. But it has been said in response to both arguments that 
the contras, by their excesses and sheer incompetence, are weakening rather 
than strengthening support for the U.S. in the area. 

A different question is whether the funds from Guatemala, P-2, 
Somoza, and other WACL sources, helped generate the private "verbal 
agreements" that Sandoval Alarcon referred to. The recycling of profits 
and AID funds from foreign countries back into American elections is 
perhaps one of the largest and least discussed scandals of the last three 
decades. WACL countries in particular, whose survival and affluence so 
often depend on U.S. support, have repeatedly been at the center of such 
rumors. 

This would seem to be an appropriate topic for any Senate investiga- 
tion into any illegal contra activities and cover-ups. But Congress in the 
past has proven most reluctant to pursue the question of illegal foreign 
funding in electoral campaigns. Renata Adler has described how the 
Congressional inquiry into Watergate faded at the point when traces were 
uncovered of large funds pumped into the Nixon campaign from the Far 
East.'**^ Nor did Republicans pursue similar allegations that dogged the 
campaign of even that cleanest of candidates. Senator George McGovern. 
Silence on such matters serves the interests of both parties. 

Some of the points made by Renata Adler, a member of the staff 
investigating Nixon for the House impeachment inquiry, bear closely on 
the Reagan-WACL connection. She referred to theories "that Nixon was 
driven from office by a conspiracy within government itself — more 
specifically, within the CIA." And she drew attention to the inability of the 
CIA "to give any satisfactory account" of its involvement in the Southeast 
Asian narcotics traffic (where its airhne Air America collaborated with 
members of Taiwan's WACL Chapter in supplying the opium growers of 
the Golden Triangle).''''' 

Adler did not refer specifically to the very efficient sabotaging of the 
Nixon White House by Howard Hunt, nor to the fact that Hunt's White 
House services went into their disastrous high gear after the June 1971 



The Growth of Reagan's Contra Commitment 8 1 



departure of Kissinger for Peking.''*^ But she specifically named Anna 
Chan Chennault, perhaps Taiwan's top lobbyist in Washington, as 
someone who had raised campaign funds for Nixon from the Phihppines, 
Hong Kong, Japan, and South Korea. Citing evidence too complex to 
review here, she concluded that "the South Vietnamese administration, not 
wanting peace to be at hand just yet, used some of the enormous amounts of 
money we were pouring in there to bribe our Administration to stay in."'"*^ 
The bribes were in the form of ilhcit foreign campaign contributions — 
possibly in 1968, and more clearly in 1972. Though she refers to him only 
as a Nixon "White House official," Adler refers to two distinct sub-plots 
where in each case a principal suspect was Richard Allen, the man who in 
1980 became Reagan's principal foreign policy adviser.'''* In the 1968 case, 

Mrs. Cheimault's activities had aroused the suspicions of the Washington 
intelligence community, and a plethora of agencies seemed to be watching 
her closely. According to published reports, the FBI tapped her telephone 
and put her under physical surveillance; the CIA tapped the phones at the 
South Vietnamese embassy and conducted a covert investigation of Richard 
Allen. Then, a few days before the election, the National Security 
Agency... intercepted a cable from the Vietnamese embassy to Saigon 
urging delay in South Vietnam's participation in the Paris peace talks until 
after the [U.S.] elections. Indeed, on November 1, her efforts seemed to 
have paid off when President Nguyen Van Thieu reneged on his promise 
to Lyndon Johnson... 

and announced he would not take part in the exploratory Paris talks. '""^ 

There are enough similarities between Allen's career and Deaver's 
(both men having gone on from the post of White House official to become 
the registered foreign lobbyist of Asian countries) to suggest that Adler's 
hypothesis for the origins of Watergate (bribery by illicit foreign campaign 
contributions, and the potential for blackmail thus created) might help 
explain the workings of the Contragate mystery as well. In 1980 as in 1968 
the WACL coalition apparently decided to conspire against an American 
Democratic incumbent, the main difference being that in 1980 the role both 
of ilhcit foreign funds and of American intelligence veterans appears to have 
been more overt. 

Congress should certainly investigate this possibility. But there is also 
a chance of a searching and objective inquiry in the special prosecutor's 
examination of the affairs of Mike Deaver. Deaver is already under scrutiny 
for his lobbying activities in South Korea. Some of these involve the U.S. 



82 



The Iran-Contra Connection 



Ambassador in Seoul, Richard Walker, a WACL participant since as far 
back as 1970. 

Deaver's connections with South Korea go back at least to February 
1981, when he "ushered President Chun Doo Hwan of South Korea into 
the Oval Office to meet Reagan." Chun was in fact the first of the 
WACL dictators, shunned by Carter, to be received into the Oval Office. 
In a sense his visit, hke Sandoval's, was a trial balloon for Reagan's new 
policy of tilting towards WACL and away from Carter's support of 
"human rights."''^ 

Chun's visit to Reagan is said to have followed a period of intense 
involvement in Latin American WACL intrigue by CAUSA, the political 
arm of the South Korean Unification (Moonie) Church. (The links 
between Moon's church and the South Korean Central Intelligence 
Agency are so overt that a decade ago they provoked a U.S. Senate 
investigation.'^^) CAUSA officials are reported to have offered $4 million 
for the Garcia Meza Bolivian coup of July 17, 1980; and one of them is said 
to have had worked directly with Klaus Barbie in organizing the coup.'^^ 
When Congress ordered a cutoff of miUtary aid to the contras in 1984, 
CAUSA worked with Refugee ReUef International, a creation of Singlaub 
and of WACL, to ferry non-military supphes to the same contra camps. An 
informed observer said that "the 'big three' countries that were expected to 
aid the contras [militarily] were Israel, South Korea, and Taiwan."'^'' 
Robert Owen, said to have served with Singlaub as a cut-out contact 
between the National Security Council and the contras, is a former 
registered lobbyist for South Korea. '^^ 

It is unhkely that Deaver's lobbying activities were more than a small 
part of the apparatus securing the Reagan- WACL coimection. The full 
story, if it could be told, would probably lead to grey intelligence-political 
alliances that were already in place when Deaver was a young boy. 
Undoubtedly Cline and Singlaub, not to mention Reagan himself, would 
know more about such matters. 

Singlaub, at least, probably faces a Congressional investigation in the 
months ahead. But Contragate is not a narrowly bureaucratic or adminis- 
trative scandal. Deaver's post- 1984 lobbying activities have already 
suggested to federal investigators that he may have violated U.S. statutes. 
Thus he too can be made to talk about how these coimections were forged. 
Under oath. 



V. 



Israel and the Contras 



It is no accident that Israel, rather than, for example. South Korea, 
which has also sold its share of arms to Iran, was caught in the thick of 
things when the two-legged Irangate scheme was exposed in November 
1986. For Israel was almost certainly the intellectual author of the plot to 
make Iran pay for the war against Nicaragua and Israel had already been 
selling arms to the contras, training them, and otherwise helping Reagan 
to circumvent Congressional restrictions on the contra program. To find 
the roots of this behavior we must return to Israel's earliest days. 

Surrounded by Arab states whose hostility endured from the rout of 
their armies and uprooting of the Palestinian population as the Jewish state 
estabUshed itself, Israel has from its outset sought international contact 
beyond its confinement in the Eastern Mediterranean. Its Labor Zionist 
government propounded a doctrine calling for the establishment of good 
relations with the peripheral, non-Arab states of the region: Ethiopia, 
Turkey, and, of course Iran. 

Looking farther afield, in the mid-1950s Prime Minister David Ben- 
Gurion attempted to involve Israel in what would later become the 
Nonaligned Movement, but was at the time a loose gathering of nations 
emerging from colonialism. Israel was barred from the now-historic 1955 
meeting at Bandung, Indonesia, because it was seen as an outpost of 
European coloniahsm. 



83 



84 



The Iran-Contra Connection 



Israel next turned to Africa, where, after some vigorous behind the 
scenes wooing of Ghana's founding leader Kwame Nkrumah,' Israel's 
anticolonialist credentials (based on having fought the British when they 
ruled Palestine) were accepted.^ As African nations were granted inde- 
pendence, Israel conunenced a program of development assistance on the 
continent that was nothing short of spectacular, given Israel's size, its 
resources and its own recent establishment. 

In Africa, and in part of Asia as well, Israeh technicians set up 
experimental farms, taught agricultural methods, established medical 
programs and "workers banks," helped develop infrastructure including 
roads, harbors and, for Ghana, a shipping line, and undertook youth 
training, labor union leadership training, and cooperative formation.^ Israel 
also established courses for foreign students in many of these subjects so 
that by the end of 1970 15,000 foreign students had been to Israel to study.'' 

Development programs run by Israel were successful because the 
Israelis technicians came from a small country rather than recent colonial 
masters, and because the Israelis made it a practice to work alongside their 
students. 

However there was also a less savory side to these programs. "For 
many years... the United States sent millions of dollars in covert aid to Israel 
for operations in Africa that included training several African intelUgence 
services."^ During the tenure of the Labor government (until 1977) 
European Social Democratic regimes also supported Israeh development 
activities.^ Understandably, Israel ammassed an enormous intelligence 
capability in sub-Saharan Africa. The big powers often consulted or 
coordinated with Israeli operatives.' Military training and arms sales were 
also a part of Israel's outreach to Africa, along with its humanitarian 
gestures. As a result of all this, by 1968 32 African nations had estabhshed 
diplomatic relations with Israel.* 

In the mid-1960s Israel expanded the programs which had been so 
successful in Africa (and in parts of Asia as well) to Latin America, a region 
which needed little courting as its already established governments had 
provided an important bloc of supporting UN votes in 1947 when that 
body was considering the partition of Palestine into Palestinian and Jewish 
states.^ 

After Israel's 1973 war the Organization of African Unity called for a 
diplomatic embargo of Israel, and all but three African governments — 
Malawi, Swaziland and Lesotho, all within the tight embrace of South 
Africa — either already had or shortly thereafter severed diplomatic rela- 
tions. Israel was then left with little choice but to focus on the Asian nations 
with which it had relations and on Latin America. 



Israel and the Contras 



85 



Following the 1973 war, which in turn had followed the 1967 war 
during which Israel had occupied territory belonging to Jordan, Syria and 
Egypt, the perception of Israel as an underdog beset by rapacious neighbors 
was wearing out. In much of the world Israel was criticized for its 
occupation of Arab territory, its oppression of Palestinians in that territory, 
its intransigence in the face of all opportunities for peace, and, increasingly, 
its close links with South Africa.'" Also around this time, Israel's focus was 
shifting from development to mihtary power. By 1980 Israel would be 
railing at the "petro-power" of the Arab governments of the Gulf — ^which, 
it claimed had tumed Africa against it, with promises of funding for major 
infrastructural projects — and selling $1 billion worth of arms to a curious 
assortment of customers, including some of its former African friends. 
While clinging to as much as it could of the old patina of the days when it 
was a "light unto the nations," Israel had redefined itself into an arms 
merchant. 



The Dictates of Israel's Arms Industry 

Well before there was a state, there was an arms industry, producing 
small arms which the Jewish settlers in Palestine used against the Arab 
inhabitants they found there." 

In the late 1930s and early 1940s arms acquisition by unconventional 
means, including smuggling war surplus from the U.S., became a 
preoccupation of Zionist leaders. After the United Nations approved the 
partition plan establishing a Jewish national homeland in Mandatory 
Palestine, great energy was expended securing weapons from a mostly- 
unwilling world for the fight that was expected, following the withdrawal 
of the British colonialists.'^ 

The difficulty experienced in obtaining weaponry, when combined 
with the legacy of the recently abated Holocaust, seems to have produced a 
certain mindset in the leaders of the new state of Israel. To call it determined 
would be to understate it. 

The Holocuast reconfirms the perspective that there are those who seek 
the destruction of the Jews and that Jewish survival should not depend on 
the guarantees or efforts of others. Thus, Israel sees that it must rely on its 
own defense capability to ensure its survival and protect its people.'^ 

Emblematic of this grim determination was the decision in 1952 to 
commit the fledghng nation to the expensive and politically risky 
development of nuclear weapons." 



86 



The Iran-Contra Connection 



A similarly far-reaching commitment to establish an arms industry 
was made in 1967, when France, at the time Israel's major source of 
weapons (and nuclear technology), cancelled contracts for major weapons 
systems. French President de Gaulle was angered by Israel's decision to go 
to war. Always resistant to political pressure, Israeli leaders determined to 
become self-sufficient in arms.'' 

The investment was a political one, without a thought to economies of 
scale'^ — which would have shown it to be foolish. Actually Israel had had 
the beginnings of a parastatal military industry from 1948, buUt up around 
the secret munitions workshops of the pre-state period.'^ In the late 1960s 
and through the 1970s new companies were founded and major weapons 
systems produced. Much of the technology for the weapons Israel 
manufactured came from abroad, first from France, then from the United 
States. Investment also was needed from abroad, most notably from U.S. 
firms estabUshing joint ventures or subsidiaries'^ and from the government 
of South Africa which agreed in 1976 to subsidize research and develop- 
ment on major Israeli weapons systems.'^ 

Israel's army is ranked among the best in the world, and it is very large 
in proportion to the country's tiny population, but no major arms- 
producing state manufactures weapons solely for its own mihtary. In order 
to lower the unit cost of weapons, they produce more than they need and 
try to export the difference. In Israel's case the problem was compounded 
because Israel's possible markets were severely hmited. NATO countries 
for the most part produce for themselves and each other, and Ukewise for 
members of the Warsaw Pact. With some notable exceptions (Ethiopia, 
Indonesia, and recently the Peoples Repubhc of China) the socialist and 
Islamic countries shun Israel. Since the 1973 break, most African nations 
have also kept their contacts with Israel to a minimum. What remained were 
the ASEAN nations, the pro- Western Asian grouping, Latin America, and 
the pariah, or untouchable, nations such as South Africa, Taiwan, Chile, 
and Guatemala. Latin America, where many countries fall into none of 
these categories and most of the rest fall into the pariah category, became 
Israel's premier market, although recently Israel has picked up some sales in 
Europe.^" 

The typical Israeli customer, wrote one leading analyst of Israeh arms 
exports, 

...is most likely to be a non- western country with a defense-conscious 
government, rightist in orientation, in which the military is either the 
actual or proximate locus of power. It is confronted by a security threat 
originating either domestically 



Israel and the Contras 



87 



or from a neighboring country.... [L]ike Israel, it, too, is isolated 
diplomatically and under international criticism, and therefore encounters 
problems in meeting military requirements from other sources of supply.^' 

Israel never managed to produce even half of its own miUtary gear.^^ 
But it did become hooked on arms exports, which represented 31 percent of 
industrial exports in 1975,^^ and are now thought to comprise 30 to 40 
percent of Israel's industrial output.^. Twenty percent of the industrial 
labor force works in arms production. By aggressively marketing its 
products where it could, by 1980 Israel had managed to boost its exports to 
over the $1 billion mark.^ With the possible exception of 1983,^^ they have 
remained at that level, and are now above $1.25 billion.^** Moreover, since 
these numbers are estimates based on observations and accounts of 
transactions in the international media — the Israeli govemment releases no 
information on its arms sales — if anything, they are too low. 

Yet these sales were never enough, especially after 1985, when Israel's 
defense budget began to suffer regular cuts and orders from the military 
dropped as part of an anti-inflationary program. The military industries 
were faced with the necessity of increasing exports to save jobs. 

The export statistics do not begin to describe the power wielded by the 
arms producers, much less the "pro-arms lobby," a wider group including 
top ranks of the Israeli military, directors of various industries, unions 
whose members depend on incoming weapons orders for their hvelihood, 
and several Israeli leaders with close ties to arms industries including 
Shimon Peres, who as a protege of Ben-Gurion at the defense ministry, is 
credited with being the architect of Israel's arms producing sector, and 
Moshe Arens, a former president of Israeli Aircraft Industries. 

Some critics even charge that the defense ministry, at the apex of the 
arms producing sector, has taken over Israeli foreign policy. That policy is 
directed, they say, for short term objectives which often foreclose the 
possibility of longer term diplomatic aims which might bring Israel out of 
its isolation. Under the sway of this system, Israel's overall "conduct of 
extemal affairs... tends to be unsystematic, with a strong emphasis upon 
short-term contingency planning and crisis management."^" "Because of 
the feeling which has taken root that weapons must be sold at almost any 
price, countries described as 'dirty' are attracted to us as to a magnet," 
lamented the military columnist for Israel's leading daily. "The irony is 
that many of these countries are even ashamed to publicize the fact that they 
purchase weapons from Israel, as though we were lepers."^' 

Compounding this situation is the process by which sales are 
approved. It is conducted in secrecy by four men — the prime minister, the 



88 



The Iran-Contra Connection 



defense minister, the foreign minister, and the minister of trade and 
industry — who convene as the Ministerial Committee on Weapons Trans- 
fers.^^ As with Israel's part in Irangate, other cabinet ministers are kept in 
the dark and, similarly, the Knesset, Israel's parUament has neither the 
authority nor the will to veto arms sales. 

None of this has been without its effect on Israel's mainstay, the 
United States, which has played a crucial role in IsraeU arms marketing in 
several respects. Much of what Israel has to sell contains U.S. technology 
and thus needs Washington's permission before it can be exported, or, as 
was the case with some of the sales to Iran, came to Israel through its U.S. 
military assistance grants. As the Jerusalem Post reported in March of 1985, 
its economy in serious enough trouble to warrant a supplementary U.S. aid 
package of $1.5 billion, Israel targeted the United States as an untapped 
market for its weapons exports. 

An interesting intersection with the U.S., and one with much bearing 
on Israel's relationship with the contras, is the search for markets. Israel has 
asked the U.S. to set aside certain markets for exclusive Israeli exploita- 
tion.^" It has requested help in marketing, and it has requested U.S. 
financing for its weapons sales to impoverished governments. It has also 
asked that recipients of U.S. military aid be allowed to purchase Israeh 
weapons, an unprecedented break with the traditional "buy American" 
practice, considered to be the underpinning of U.S. military assistance. 

None of these elements were operative when Israel first began 
marketing its military wares in Central America in 1973. Israel simply 
pushed into the market itself, introducing its new products at fairs and with 
a shipboard showroom. Aided by contacts developed during the previous 
decade when it had conducted technical assistance programs in the region, 
Israel sold its castoff French combat jet aircraft to El Salvador and in 1975 
to Honduras — these were the region's first jet fighters and first supersonic 
jets, respectively, and the buyers had not yet made peace following a 
shooting war in 1969 — and a variety of armored vehicles, patrol boats, 
counterinsurgency aircraft and small arms to these two nations and to 
Nicaragua and Guatemala.^* Before very long, however, IsraeU sales would 
increase and that increase would be thanks to events in the U.S., which 
created sales opportunities for Israel. 

Opportunity in Central America 

The same Carter human rights doctrine that brought campaign 
contributions from wealthy Guatemalans to Ronald Reagan brought 



Israel and the Contras 



89 



orders to the Israeh arms industries. By 1978 Nicaragua, El Salvador and 
Guatemala were found guilty of human rights violations connected with 
insurgencies arising from longstanding social and poUtical inequities. U.S. 
military aid was terminated and all three of these nations then turned to 
Israel to fill the gaps left by withdrawal of U.S. aid. 

As part of this windfall Israel suppUed the military regime of El 
Salvador with over 80% of its weaponry for the next several years, 
including napalm for use against the Salvadoran civilian population. Israeh 
advisers trained the Salvadorans in counterinsurgency and installed a 
computerized intelligence system able to track insurgents and, by moni- 
toring utility usage, pinpoint safe houses. 

It is almost certain that these advisers remained after 1981 when 
Washington made the cause of the Salvadoran landowning oligarchy its 
own and resumed mihtary aid. The Israelis thus helped the U.S. exceed the 
congressional limitation of U.S. advisers in El Salvador at any one time. 
According to a member of El Salvador's short-lived First Junta (1979-80), 
Israeli advisers who came to train officers of ANSESAL, the Salvadoran 
secret pohce originally established by the CIA and closely linked to the 
infamous death squads, remained in El Salvador as late as 1983.^^ 

Although increasing U.S. military assistance cut into the amount of 
business available to Israel, Israel continued its relationship with the 
Salvadoran military, most recently providing a sophisticated "pacification" 
plan which involves the forcible resettlement of civilians into communities 
under military control. Following the failure of confidently announced 
U.S. plans to "win the hearts and minds" of the long suffering Salvadoran 
populace, the Israeli program (funded by the World Bank, the U.S. and 
West Germany) is a quid pro quo for El Salvador's decision to move its 
embassy in Israel from Tel Aviv to Jerusalem. 

If Salvadoran "model villages" follow the pattern of those Israel has 
helped estabhsh in Guatemala, their "citizens" will soon be growing fancy 
vegetables for export in exchange for barely enough food for their families, 
tuming a profit for their military "guardians." The agricultural operations 
under Israeh advisement are likely to order Israeh high tech farming equip- 
ment and Israelis have invested heavily in Guatemala's agricultural sector. 
Already some Salvadoran officers are trying to imitate Guatemala's 
involuntary "self defense" forces, an integral part of its "pacification" 
program.^^ 

Since 1977 the Guatemalan military has relied heavily on Israel for 
each phase of its anti-insurgency campaign. Israeh advisers appeared on the 
scene when the military govemment was engaged in killing and disposses- 
sing the largely Mayan highland communities in an effort to squash the 



90 



The Iran-Contra Connection 



Indians' support for a revolutionary movement inspired by the incredible 
inequality of land ownership. Over the following eight years, Israeli 
weapons and advisers helped the Guatemalan military halt the growth of 
the insurgency — ^by a mass camage of at least 10,000 which some observers 
have not hesitated to call genocide. 

Israel, according to Benedicto Lucas Garcia, brother of head of state 
(1978-1982) Romeo Lucas Garcia, and former chief of staff of the 
Guatemalan Army, "did not provide us with large amounts, but it was the 
only [state] which provided us with military support so that we could deal 
with the guerrillas."^' The arms might not have been numerous enough to 
please Lucas, but in 1983 a Time reporter marveled that "the Israelis have 
sold the government everything from anti-terrorism equipment to trans- 
port planes. Army outposts in the jungle have become near replicas of 
Israeli army field camps."'*" 

Moreover, Israel also provided Guatemala with two computer centers, 
one of which, located in an annex to the Presidential Palace, was used to 
monitor dissidents and compile and disseminate death hsts. Israel has also 
been instrumental in providing advice and direction for Guatemala's 
audacious program of long term social control: four "poles of develop- 
ment" with dozens of "model villages" in which are interned indigenous 
peasants driven off their land or captured by the army. Wrested from their 
com-oriented culture and under direct military control, the peasants grow 
export crops. This social experiment — the Guatemalan officer who directs 
the program compared the model villages to Israeli kibbutzim — has 
enjoyed support from the U.S. religious right. South Africa is also known 
to be assisting with the "resettlement" program. 

Nicaragua escaped the same fate, but not for want of Israel's attention. 
In the late 1970s, dictator Anastasio Somoza Debayle, last of a dynasty that 
had run Nicaragua as a family fiefdom since 1933, was faced by an 
insurrection of virtually the entire population, and in 1978, at the latter 
stages of events, the Carter Administration finally cut off U.S. assistance. 
Somoza was then faced with a fairly rigorous informal embargo; no 
country seemed willing to sell him weapons. 

The Israelis were quick to take up the slack, and from September of 
that year until the following July when he was ousted, Israel sold Somoza 
98 percent of the weapons he used against the Nicaraguan population.'*' 
Those included not only Uzi submachine guns and "thousands" of Israeli- 
made Galil assault rifles,"*^ but large quantities of ammunition, surface-to- 
air missiles (the FSLN, the Sandinistas, had no air force)"^, nine combat- 
armed Cessna aircraft and two Sikorsky helicopters,''"* which Somoza's 
Guard used as platforms for machine gun strafing. Sometimes they rolled 
500 pound bombs out the hehcopter doors."' 



Israel and the Conrras 



91 



With the tacit permission of the Carter Administration, the IsraeUs 
continued to ship arms to Somoza until the end of June 1979. Three weeks 
before the dictator was forced to flee, Washington said "enough," and 
Israel recalled supplies (including two patrol boats) that were then on their 
way to Nicaragua."*^ From exile, Somoza fretted about the ship that was 
recalled to Israel: "Somewhere in Israel there is a large consignment of arms 
and ammunition which could have saved Nicaragua. Someday, his men 
would reclaim that cargo, but killed in Paraguay in 1981, Somoza would 
not Uve to see that, nor would he see how hard Ronald Reagan would work 
to restore Nicaragua to his National Guard. 

In response to criticism occasionally leveled at it in subsequent years, 
Israel has always insisted that it stood by Somoza because of a debt dating 
back to the 1930s. At that time, and again following World War 11, 
Anastasio Somoza Garcia, the father of the toppled dictator, vouched for 
weapons purchased in Europe by the pre-state Zionist military forces, the 
Haganah. The Zionists who dealt with him paid Somoza extremely well at 
the time,''^ so it is somewhat ludicruous for the Israelis to argue that they 
were honor bound to help his son murder thousands of Nicaraguans 
decades later. However, they have gotten by with this line of defense, since 
no one with any leverage over Israel has challenged it, and the arms sales 
were very lucrative, probably amounting to $250 milUon.^" 

Israel, the White House Junta and the Contras 

The lack of criticism from where it mattered — the U.S. Congress and 
influential liberal and progressive constituencies in the U.S. — ^to any of its 
arms dealings in Central America emboldened Israel to cooperate with the 
Reagan Administration in supporting the contras in the early days of the 
program. But there came a time, as early as the summer of 1983, when the 
administration wanted more from Israel than Israel was willing to risk. The 
tension that arose then persisted and almost certainly set the course for the 
scheme which would become known as Iran-Contra affair. 

Whatever else the story demonstrates, it shows clearly that Israel 
might cooperate extensively with the administration or its covert agents in 
many parts of the world, but it is far from the supine proxy that such a role 
suggests. The dickering back and forth which went on over what Israel 
could do for the contras was never completely resolved: when the federal 
furniture is rearranged following the investigations of the affair, there will 
be even greater pressure on Israel to stand up in pubhc with the contras. But 
much money and many weapons changed hands while the relationship 
grew up around that point of contention. The participants' divergent 
wishes about Israel's role with the contras resulted in the linking of two 
operations, which were eventually exposed as the Iran-Contra scandal. 



92 



The Iran-Contra Connection 



"Strategic" Cooperation 

Until the U.S. -approved Iran arms sales began, U.S.-Israeh collabora- 
tion in the war against Nicaragua appears to have been carried out in the 
framework of a series of agreements. Israel's Likud government, which 
took office in 1977, had always pursued concessions from the U.S. to help 
it develop and market weapons. Some elements of what Israel desired were 
incorporated in a Memorandum of Agreement signed by the two countries 
in March 1979. Four months after the Reagan Administration was sworn 
in. Secretary of State Alexander Haig signed a commitment extending the 
privileges of the 1979 pact. 

On November 30, 1981 the administration signed a Memorandum of 
Understanding (MOU) on Strategic Cooperation with Israel. In addition 
to provisions aimed at boosting Israel's weapons industry, the MOU 
bound the two countries into a loose mutual defense pact (aimed, as quickly 
became de rigeuer in the Reagan years, at the USSR) and covered 
cooperation in Africa and very likely other areas of the developing world. 
Although this agreement was suspended almost immediately when Israel 
angered Washington with its surprise annexation of the Golan Heights, "its 
spirit and some of its initiatives continue under the 1979 MOA."'' 
(Defense Minister Ariel Sharon said the suspension of the MOU did not 
hurt Israel as the U.S. would pay interest for the delay in its implemen- 
tation.'^) 

The cooperation was unspecified in the MOU, but an Israeli official 
said it was left to be evolved.'^ The Israehs wanted — and until David 
Kimche took his leave from the Foreign Ministry shortly before the Iran- 
contra scandal broke, continued to want — U.S. funding to entice African 
nations to reestabhsh diplomatic relations with them.'"* Defense Minister 
Ariel Sharon said that Washington had promised Israel money for its 
activities in Africa. (Sharon arrived in Washington to sign the MOU for 
Israel immediately after having traveled through Africa. He urged the 
Reagan Administration to sell arms to South Africa so it too could help in 
the fight against communism.'*) 

Israel was also eager for the formal pact because it beheved that the 
connection would boost pubUc perception of Israel as a "strategic asset" of 
the United States, rather than Washington's biggest foreign aid client — 
although the goal of the perception engineering was in part to obtain more 
U.S. aid.'^ 

Judging from the way the Israelis would keep seeking it, Washington 
never put a great deal of money into Israel's Africa operations. And 
whatever spirit of the 1979 Memorandum survived Israel's 1982 invasion 



Israel and the Contras 



93 



of Lebanon and, in the aftemath, Prime Minister Begin's arrogant rejection 
of the timid peace plan proffered by President Reagan, was quite withered. 

Moreover, with the resignation of Secretary of State Haig and his 
replacement by George Shultz, a longtime employee of the giant Bechtel 
construction firm with close business ties to Arab governments, Israel and 
its U.S. backers expected relations to get worse. Instead, then Deputy 
Secretary of Defense Frank Carlucci — ^he has since been appointed national 
security adviser — persuaded Shultz to work with Robert C. Ames, the 
CIA senior officer for the Middle East. Moshe Arens, Israel's ambassador 
at the time and his aide Benjamin Netanyahu (since Israel's ambassador to 
the UN) made the reeducation of Shultz their personal project, building a 
personal relationship with the Secretary of State. The "real turning point" 
came at the end of 1982, when Shultz tried to block a $200 miUion addition 
to Israel's U.S. assistance, proposed by Congress at the behest of AlPAC 
(the American Israel Public Affairs Committee, Israel's registered lobby in 
the U.S.). He lost and acknowledged the lobby's power — and Israel has 
regarded him as a firm friend ever since. 

That summer four Shultz assistants began to press the secretary to 
establish closer links with Israel. One of the four was Undersecretary of 
State Lawrence Eagleburger, who would later be assigned to act as U.S. 
liaison on bilateral covert activities. When the group had completed their 
position papers arguing for "strategic cooperation" with Israel, Shultz and 
Robert McFarlane, at the time national security adviser, went to see the 
President and sold him the new policy, over the opposition of CIA 
Director Casey and Secretary of Defense Weinberger. They argued that it 
would help contain Soviet expansion in the Middle East. 

The political correspondent for Israel's military radio credited Robert 
McFarlane with the breakthrough. "It is stressed in Jerusalem that even 
before the massacre [the October bombing of marine headquarters] in 
Beirut, a tendency had emerged in Washington toward increasing coopera- 
tion with Israel in the wake of deliberations in the U.S. capital after Robert 
McFarlane became the new national security adviser."'^ 

In late October 1983 President Reagan signed National Security 
Decision Directive 111, establishing strategic cooperation with Israel.^' 
Israel's Prime Minister Yitzhak Shamir arrived in Washington the follow- 
ing month to discuss the pact — he described it as, in part, "a dialogue on 
coordinating activity in the third world"*" — and it was formally signed the 
following March.*' 

Largely unknown in this country, in Israel the new pact was leaked 
before it was even signed, much less discussed, after a visit to Israel by 
Under Secretary of State Lawrence Eagleburger. The conservative Israeli 



94 



The Iran-Contra Connection 



paper Ma'ariv, said that early in November Eagleburger told Prime 
Minister Shamir that "the president would hke to meet with a personality 
or personalities from the most senior echelons in Israel." 

Ma'ariv pointed out that what the White House wanted was "sub- 
stantive, and not just intended to shut Israel up and justify the AW ACS deal 
with Saudi Arabia," and that it finally recognized Israel "as a real asset." The 
paper speculated that Eagleburger, Secretary of State Shultz, "and the 
members of the National Security Council advocating a pro-Israeh line are 
currently enjoying Reagan's support," over those aligned with Defense 
Secretary Weinberger. 

Ma'ariv said that the Reagan Administration admitted that it had dealt 
harshly with Israel over Lebanon and, "during the invasion of Grenada, 
when the United States used all the explanations Israel used to explain its 
invasion of Lebanon within the framework of the Peace for Gahlee 
Operation, which the United States did not find satisfactory."''^ 

Shamir left Washington with promises of increased U.S. aid, short 
term economic credits, concessions on the sales of Israeh weapons systems 
to the U.S., and an administration commitment to a Free Trade Agree- 
ment.^^ Shortly thereafter, the Defense Department relented in an ongoing 
standoff and released technology packages for the Lavi aircraft Israel was 
developing.** To the media. Secretary of State Shultz acknowledged that 
there was "no quid pro quo in the new arrangement with Israel, that the 
United States received no major concessions in return."*^ Clearly the 
administration was propitiating Israel and there was only one conceivable 
reason it could have been doing so: it wanted Israeli help with the contras. 

Well before the U.S. invasion of Grenada, and while the State 
Department was still fashioning its new pro-Israeli poUcy, a bilateral 
committee spearheaded by Robert McFarlane began what would become 
twice-yearly meetings. In 1982, as an aide to Secretary of State Alexander 
Haig, McFarlane had been sent to Israel to discuss Haig's vision of a 
conservative Middle East alliance. McFarlane's interlocutor had been 
David Kimche, director-general of the Israeli foreign ministry. When 
McFarlane moved over to the White House he established Unks between 
Kimche and senior State Department officials, launching what came to be 
known as the U.S.-Israel Political Military Committee. The committee 
'which would meet every spring and fall (alternately in Washington and 
Jerusalem)' was set up "to look at the big picture," meaning everything 
but what is euphemistically known as the Middle East "peace process."** It 
would later be subsumed under the 1984 strategic agreement. 

At the first meeting of the group, in June 1983, discussion was mainly 
on cooperation in the developing world, centered especially on Central 



Israel and the Contras 



95 



America — on "the intention of the U.S. Administration to get Israel to 
supply the armies of the pro- American regimes there," with funds "the 
U.S. cannot directly transfer to its allies in the region... paid to Israel 
directly from the United States. "'^^ 

During the same time frame the White House was starting to 
appreciate Israel for what it could do to promote administration aims in 
Central America and Israel's willingness to "assist" the U.S., administra- 
tion officials had said, helped to improve strained relations between the two 
countries.^^ An Israeli account said that such cooperation was the only 
"aspect of cooperation... to be energetically pursued during the last two 
years. "^^ 

Israel had allowed $21 million to be reprogrammed from its foreign 
assistance to El Salvador in 1981,^° before Congress had had an oppor- 
tunity to cave in to the new Reagan Administration's demands for major 
military aid for the Salvadoran regime. Israel already had the Guatemalan 
situation well in hand, and it had reinforced the words of UN Ambassador 
Jeane Kirkpatrick to debt-ridden Costa Rica: if you want aid you must 
create an army.'' And it was involved in a low-key way with the contras. 



Early Days with the Contras 

There are several stories about how and when Israel began arming and 
training the contras. One of them is that the Israehs helped launch the 
contras soon after Somoza was overthrown in 1979.'^ 

Some say that after the fall of Somoza, associates of Edwin Wilson and 
Thomas Clines transferred a "security assistance program" they had going 
with Somoza to the contras.'^ If another account is true, that this network 
"began funnehng aid to Somoza via Israel and EATSCO," then possibly it 
is also true that Israel took part in the network's activities in Honduras on 
behalf of the remnants of Somoza's secret police, whom they were said to 
have "outfitted" between August 1979 and January 1981, when the 
Reagan Administration was swom in.'"* 

Most sources set the date Israel became involved a year or two later. 
According to one account, in early 1982 after contras holding U.S. 
weapons were shown on U.S. television (causing, at the time, embar- 
rassment), some former Israeli intelligence officials approached the CIA, 
which was just getting back into gear after having been reduced during the 
70s and was having trouble finding untracable weaponry with which to 
equip the contras, with an offer to supply such weapons. The high U.S. 
official who related this version said that Washington authorities had 



96 



The Iran-Contra Connection 



assumed that the offer had the backing, awareness or sponsorship of the 
Israeli government. It came during a period when Israel was rejecting 
requests through "normal diplomatic chaimels" for weapons and funds for 
the contras. The CIA, he said, turned the offer down/^ 

Another version has it that an arrangement was made with Israel in the 
early 1980s to supply the contras with East bloc equipment^* under which 
Israel agreed to sell the CIA light arms and shoulder-fired missiles for both 
the contras and the Afghan rebels. "Then [w]hen the Israelis presented 
their bill for $50 million earlier this year, [1986] the CIA pleaded poverty, 
paying S30 million in arms, not cash."" 

Former FDN Director Edgar Chamorro said that Israel was among 
the international supporters that the contra leaders spoke of in 1982 to 
promote themselves.'" 

In December 1982 the FDN leadership had met with then Defense 
Minister Ariel Sharon in Honduras. It is certain that an arrangement was 
made at that time to funnel Israeli-held East bloc arms to the contras 
through Honduras. In addition, it is hkely that Sharon, in cahoots with 
the head of Honduras' armed forces, Gustavo Alvarez Martinez, made 
Washington a strings-attached offer to take the contra program under his 
wing. Just as the aftermath of his invasion of Lebanon was turning nasty, 
Sharon had turned up unannounced in Honduras with the director of the 
Israeli defense ministry and David Marcus Katz, Israel's Mexico-based 

4. 80 

arms agent. 

It was soon determined that Sharon and Alvarez were trying to close a 
deal for Israel's Kfir C-2 jet fighter planes. Also on the table were smaller 
weapons systems and some of the weapons Israel had captured in Lebanon; 
these were being offered free, with the taker to pay the freight.^^ 

As the Kfir contains a U.S. -made engine — otherwise it is made in 
Israel, based on the French Mirage — Israel needed U.S. permission to sell 
the aircraft to Honduras. Previously Washington had refused to sell 
Honduras (or Mexico, for that matter) the F-5 because it did not want to 
introduce a new level of sophistication in the region's aircraft. It was feared 
that if Honduras acquired such an advanced plane, Nicaragua would be 
forced to obtain the equivalent MIG from the East bloc, a move which the 
administration had made it clear would be regarded as a "provocation.""^ 

Even though there could be no deal for the Kfir without the blessing of 
the U.S., Alvarez and Sharon agreed to the sale of 12 of the aircraft,"^ at a 
price of $100 million. Honduras had no money, so Sharon asked the 
Reagan Administration to finance the deal, after the manner that had been 
set forth in the MOU."'' 



Israel and the Contras 



97 



The only thing that could possibly have tempted the Reagan White 
House into such a deal would have been a Sharon- Alvarez proposal to take 
over the contras, which were in the process of being abandoned by their 
Argentine trainers. Both were certainly motivated for the undertaking. 
Alvarez was an obsessive anti-communist and an advocate of the Argentine- 
style security state. Whether against Nicaragua or his domestic oponents, 
he advocated "preventive" war without frontiers.^^ 

In analyzing Israel's involvement in the Iran-contra scandal, the senior 
political columnist of Israel's major daily Ha'aretz recalled Ariel Sharon's 
approach to foreign pohcy: 

The Iranian affair resulted from the belief that no action is too big for 
Israel as an intemational mini-superpower. Ariel Sharon, who once said 
that Israel is strong enough to reach the gates of Odessa, was the natural 
candidate even before the outbreak of the war in Lebanon, to approach the 
U.S. with the suggestion of intervention in the Iran-Iraq war. Within the 
framework of the strategic understanding with the U.S., he offered the 
U.S. Israel's services in a war torn Central America, notifying the 
Americans of our readiness to participate in blocking the Soviet threat 
wherever we possibly can. 

Even after Sharon, Israeh diplomacy lived quite comfortably with the 
notion that we can, and should, play some role in every possible world 
arena.^* 

Whether with reluctance or out of concems about Sharon, who would 
shortly be forced to surrender the defense portfolio when Israel held him 
partly responsible for the massacres in the Sabra and Chatila refugee camps 
after the invasion of Lebanon, the Reagan Administration did not go for 
this deal. In 1986, with its contra war coming apart following the discovery 
of the "private" supply network, the Kfir deal would be revived and the 
administration would lean toward granting financing for the Israeli planes 
in hopes that they would be more acceptable to Congress than the F-5s the 
U.S. had wanted to sell Honduras.^^ But if anything, the Sharon-Alvarez 
episode awakened the administration's interest in working with Israel. 

Israeli advisers, well distributed in Central America, were almost 
certainly working with the contras when Sharon made his bid. In early 
1983, 50 Israeli specialists in guerrilla and psychological warfare were said 
to have gone to El Salvador and Honduras.**** That summer intelligence 
sources said that Israel was providing "special" guerrilla training to the 
contras. 



98 



The Iran-Contra Connection 



The following year President Daniel Ortega told Balfour Briekner 
rabbi of the Stephen Wise Free Synagogue in New York, that IsraeU 
military advisers had been working with the contras in Honduras.'" 

Israeli advisers were well paid, probably by the CIA, making 
$6,500—$ 10,000 a month compared with the $5,000- $7,000 being paid to 
Argentine advisers.^' and, although the Israeli government always claims 
that such trainers are mercenaries, running loose through the world (the 
IsraeU army graduates many, many of them, skilled in suppressing the 
smallest manifestation of Palestinian nationalism) to make their fortunes, in 
fact they were almost certainly sent by the Israeli government. 

An Israeli mercenary who had served in Central America said that 
Israelis were training and supervising the contras. He said they were 
recruited by "foreigners with excellent Israeli connections." Another 
IsraeU mercenary said that the Defense Miiustry was aware of the IsraeUs 
working with the contras and that they use IDF (IsraeU Defense Forces) 
manuals and catalogs.'^ 

A 1983 U.S. National Security Agency document revealed a request 
to Israel to arm the contras^^ and the first reports of Israeli weapons 
reaching the contras appeared. 

The earUest report of Israeli weapons to the contras was of 500 AK 
rifles in July 1983.^'* These were delivered to the Costa Rica-based ARDE 
(Revolutionary Democratic Alliance). 

In 1983 and early 1984 Israel devoted much of its attention to ARDE. 
This was undoubtedly part of an effort to preserve the "clean" image of 
ARDE's leader Eden Pastora. In what would ultimately be his undoing, the 
former "Commandante Zero" made his identification with social de- 
mocracy and his participation in the anti-Somocist insurgency a point of 
pride. Pastora often swore that he never got money from the CIA, although 
in the early days of its war against Nicaragua the agency was supporting 
Pastora — quietly, in the hopes that he could gain a following in the SociaUst 
International. According to one report, Pastora was a CIA informer during 
the years he was part of the Sandiiusta Directorate.'^ 

Disturbingly, ARDE leaders made frequent reference to having 
received funds from Jews, or Jewish groups in the United States. It is still 
not known whether this was a euphemistic reference to Israel or whether 
one or more Jewish organizations in this country has been funding the 
contras. 

In June 1983 ARDE leader Eden Pastora had been ready to fold, with 
only $3,000 left. In September ARDE boasted of "increased donations 

from individuals in Venezuela, Colombia, Mexico, Peru and some 
European countries, as well as "private American organizations and some 



Israel and the Contras 



99 



Jewish groups." Pastora was able to increase his guerrilla force from 300 to 
between 2,000 and 3,000 and was planning to arm an additional 2,000 to 
3,000. He was also receiving weapons from Israel described as captured in 
Lebanon.'^ 

Alfonso Robelo, at the time political leader of ARDE, said the 
mercenary grouping received "financial aid from German and Venezuelan 
citizens, Mexican organizations, U.S. Jewish organizations, as well as from 
Germans and Cubans in exile." He said he did not care where they got the 
funds they gave ARDE.^^ Another time Robelo reeled off a list of ARDE 
backers that included "the democrats of Venezuela and Mexico, the 
Nicaraguan exile community [colonias nicaraguenses] and the Jewish 
communities of the United States."'^ Yet another time Robelo said "weare 
receiving help from many democrats and private companies in France, 
Spain, Venezuela, Mexico, Colombia, and even Jews."^' 

In any event, it is known that Israel itself sent considerable quantities 
of arms, and advisers as well, to ARDE in Costa Rica. Referring to the 
armaments he had received, Pastora said "only the CIA or the Israehs could 
giveusthese."'"" 

Another reason for the Israeli- ARDE connection was that the Israelis 
had been very active in Costa Rica since the accession of Luis Alberto 
Monge to the presidency. Monge had made good on a campaign pledge to 
move Costa Rica's embassy to Jerusalem, and Costa Rica, which had prided 
itself on having no army, was receiving Israeh weapons and training for its 
security police and two newly-created special tactical squads. Israehs also 
carried out various "intelligence activities" in Costa Rica.'"' 

When the contras were just getting under way, Israel's ambassador in 
San Jose supplied them with passports and aliases so that they could travel 
through Central America.'"^ Pastora told one reporter that the Israeli 
ambassador had tried to sell him weapons."" Israel's parastatal Tahal was 
working with U.S. AID to develop plans for a border barrier, comprising 
roads, electronic barriers, and an agribusiness/settlement scheme.'** Ulti- 
mately a scaled-down version of the plan was begun. 

It later became known that Israeh arms also reached ARDE through 
Panama. In the autumn of 1985 Alvin Weeden, a Panamanian attomey and 
former secretary general of the Popular Action Party (PAPO) said that 
Gen. Manuel Antonio Noriega, commander-in-chief of the Panama 
Defense Forces, obtained the "materiel needed by the Southern Front to 
continue its struggle" from Israel. Noriega then distributed the supplies to 
ARDE, and, according to Weeden, in the process made himself some 
money. 



100 



The Iran-Contra Connection 



Weeden said his infomation came from Dr. Hugo Spadafora. 
Spadafora, a Panamanian physician who had fought with other guerrilla 
movements, had been fighting with ARDE and had enlisted Weeden to 
represent him in declarations he planned to make about Noriega's 
malfeasance and links with narcotics traffickers. Spadafora was murdered 
soon after. Weeden says the physician had left ARDE because of Pastora's 
close connection with Noriega.'* 

In October 1983 FDN Director Edgar Chamorro said that the 
Honduran-based main mercenary force had received 2,000 AK-47s from 
Israel.'"' 

Jack Terrell, now at the Intemational Center for Development Pohcy, 
said he was in Honduras when an Israeli arms shipment arrived for the 
contras. Terrell said that in November 1984, when he asked FDN chief 
Adolfo Calero for Uzis and 9 mm ammunition for a commando raid on 
Managua, Calero told him "I'll get this as soon as I can. We're expecting 
two ships in from Israel in February. When they get in, you will get your 
stuff. Terrell said that the Uzis arrived and were given out to the contras. 
(The choice of weapon might have been influenced by the fact that 
Nicaragua still uses some of the arms Somoza acquired from Israel.) 

Terrell said the sales were made by Israeh arms dealers acting with "at 
least the tacit support" of Tel Aviv and that he learned in Honduras that the 
documents covering the shipment were signed by Honduran officials (who 
made 30 percent on the deal) and were then sold to the contras. Terrell also 
said that he learned in early 1985 that Calero's brother Mario Calero had 
been to Israel to buy 10,000 AK-47s, said to have been captured in 
Lebanon.'"' 

Later, especially after ARDE collapsed following the CIA's decision 
to eliminate Pastora, Israel's main action would shift to the contras in 
Honduras. But as far as the administration was concemed, Israel never did 
quite enough. 



Israel Disappoints the Reagan Administration 

During the summer of 1983 the Reagan Administration had tested 
Israel's wilhngness to participate in its plans for Central America and 
discovered that Israel was not ready to go the distance. There had 
followed a demonstration of both picque and pressure from the White 
House. At that time the administration would have wanted help with 
supplying the contras in the field and training them. The Argentine 
officers who had at first performed those tasks had been withdrawn, 
following the administration's backing of Great Britain in the Malvinas- 
Falklands War. The 



Israel and the Contras 



101 



administration would also have wanted Israel's open political support of its 
contra poUcy, which was becoming controversial and unpopular. 

When Israel was not forthcoming, "senior Reagan Administration 
officials" let it be known through "a foreign source" that Israel was sending 
some of the arms captured in Lebanon to Honduras "for eventual use by the 
contras." The circuitous sources even hsted the arms: artillery pieces, 
mortar rounds, mines, hand grenades and ammunition. The administration 
told the New York Times that Honduras would pass most of the arms 
Israel suppUed on to the contras. 

The same sources explained that the arms shipments were indicative of 
an "enlarged" Israeh role in Central America" — ^more hke a surrogate for 
the U.S. and less like the independent supplier of amos Israel had been in the 
past. It was revealed that the administration had encouraged Israel to 
increase its presence in the region "as a way of supplementing American 
military aid to friendly goverrmients and supporting insurgent operations 
against the Nicaraguan Government." 

U.S. officials themselves coirfirmed the report, and said the Adminis- 
tration, braced for a congressional refusal to provide funds for the contras, 
was looking for "new lines of support to Nicaraguan rebels." 

Israel's response at the time was clear. An Israeli diplomat denied that 
Israeli activities were related to U.S. policies and said that there had been no 
change "in Israel's role as an arms supplier." Israel would make arms sales 
and provide trainers, but it would not take the heat for the pohtically 
unviable program. 

Spurious Charges of Anti-Senaitism 

The administration coupled its 1983 public "appeal" to Israel with 
what it perceived to be a special reason for Jews to support the president's 
contra program: Sandinista "anti-Semitism." As one in a series of efforts 
the Administration was making to promote its policy of backing the 
contras to special interest groups, the White House Office of Public Policy 
arranged a briefing for Jewish groups. During the Jewish briefing Isaac 
Stavisky and Abraham Gorn were introduced as Nicaraguan Jews who had 
fled their country, the victims of "anti-Semitic persecution" by the 
government. At the briefing the President accused Nicaragua of anti- 
Semitism, and Rabbi Morton Rosenthal, the director of the Anti- 
Defamation League's Latin America division told reporters that Stavisky 
and Gorn — "Nicaraguan Jews" the Rabbi generaUzed — ^had been driven 
out by the Sandinistas, who had expropriated their property and seized the 
synagogue in Managua."" 



102 



The Iran-Contra Connection 



There would be other similar pitches from the president, mostly 
focused on Nicaragua's links with the PLO, Libya and Iran. At the July 20 
briefing and for many months afterwards the White House gave out a 
document entided "The PLO in Central America" under the masthead of 
White House Digest seeking to show by means of crudely drawn cartoons 
the connections between the PLO and various "terrorist" organizations 
around the world. The FSLN [Sandinista National Liberation Front] was 
of course included, but so were defunct groups such as the U.S. Black 
Panther Party, and so were organizations that had long since become 
electoral formations in their respective countries. The document, said to be 
warmed-over IsraeU propaganda, was identical to one given out by JINSA 
[The Jewish Institute for National Security Affairs]."' These pitches 
reflected the administration's fevered thinking that, given Israel's popu- 
larity in the Congress and the strength of Israel's Jewish supporters in the 
U.S., "American cooperation with Israel can, during any U.S. military 
activities in the Caribbean, make the difference between success and failure 
in the House of Representatives.""^ 

None of the other ploys used to appeal to Jews, however, caused 
nearly as much consternation as the charges of anti-Semitism. These drew 
attention when Rabbid Rosenthal put out a bulletin charging that the 
Nicaraguan govemment had forced the entire Jewish community into exile 
and confiscated Jewish property, including the synagogue in Managua, 
converting it to a children's club. Rosenthal initially said that the 
Nicaraguan Jews "blame their plight on the relationship of the Sandinistas 
and the Palestine Liberation Organization.""^ But attention rapidly 
narrowed to the charges of Sandinista anti-Semitism. 

In fact, however, the charges had been discounted even before they 
were publicized at the White House. Four days before the debut there of 
Stavisky and Gom the U.S. embassy in Managua sent a cable to 
Washington. The ambassador wrote: 

...the evidence fails to demonstrate that the Sandinistas have followed a 
policy of anti-Semitism... Although most members of Nicaragua's tiny 
Jewish community have left the country and some have had their 
properties confiscated, there is no direct correlation between their Jewish 
religion and the treatment they received."'' 

Literally dozens of subsequent investigations further discredited 
Rosenthal's charges. Sergio Nudelstejer, who heads the American Jewish 
Committee's Mexico office said that the Jews left Nicaragua because of 
"factors other than anti-Semitism, including their belonging to the 



Israel and the Contras 



103 



propertied classes." A press release issued by the World Jewish Congress 
said Panama City Rabbi Heszel Klepfisc had been to Nicaragua in 
September 1983 and found that there was an "anti-Israel" tendency, but no 
anti-Semitism.'^^ New Jewish Agenda, the Council on Hemispheric 
Affairs, and other organizations sent teams to Nicaragua and concurred 
with Klepfisc's determination. 

Rabbi Rosenthal and his White House backers were not deterred. 
Relatives of the "exiled" Jews reappeared in 1985 as part of a campaign 
launched to lobby for $14 milUon in contra aid. Billed as "conservative 
Nicaraguan Jews" Elena Gorn and Sarita and Oscar Kellerman joined 
contra leaders in a national campaign "to convince American Jews that the 
Sandinista government is anti-Semitic and anti-Israel." The campaign 
specifically targeted Jewish members of Congress and members of 
Congress with large Jewish constituencies who had opposed contra aid. 
The three exiles joined contra leaders for Washington press conferences and 
then met individually with members of congress, at synagogues and with 
"conservative" groups. They called fresh attention to the old charges of 
Nicaraguan anti-Semitism."^ 

During the 1986 campaign for contra aid Rosenthal reissued his 
"White Paper" on Nicaraguan "anti-Semitism" and distributed it to every 
member of Congress.''^ 

Only later would it be known that the whole campaign was cooked up 
by the CIA. Edgar Chamorro, a former FDN official who is now a critic of 
the contras, told of a spring 1983 meeting with three CIA officers in Coral 
Gables, Florida during which the idea was hatched to "target" American 
Jews "by making the case that the Sandinistas were anti-Semitic." 

They knew that the two men they plaimed to invite to speak at the 
White House had been persecuted for their collaboration with Somoza, but 
Chamorro said the CIA operatives thought it would be "valuable" 
propaganda. 

Chamorro said, "They said that the media was controlled by Jews, and 
if we could show that Jews were being persecuted, it would help a lot." 

Chamorro said that Israel was not directly targeted in this campaign, 
but that "the White House event coincided" with the administration's 
leaked reports of a greater Israeli role."* 

Rabbi Rosenthal, whose special task this cause became, simply kept 
reiterating his accusations."' In a further irony, a real Nicaraguan anti- 
Semite was discovered. It was Bishop Miguel Obando y Bravo, who 
shamelessly worked with the U.S. government to create strife in Nica- 
raguan church and society. During an October 1984 sermon he preached in 



104 



The Iran-Contra Connection 



Managua, Obando y Bravo repeated the "Jews-killed-Jesus" calumny. 
When questioned by Rabbi Ronald B. Sobel, chair of the ADL Intergroup 
Relations Committee, Obando did not respond to Sobel's letter. 



The Kimche-Eagleburger Committee 

In November 1983, following Prime Minister Shamir's visit to the 
White House, Undersecretary of State for Political Affairs Lawrence 
Eagleburger and Foreign Ministry Director-General David Kimche were 
appointed to be coordinators of strategic cooperation outside the Middle 

East.'^' 

The administration had suffered a setback in October when the 
Congress slapped controls on CIA funding for the contras. After the 
Boland Amendment a series of administration meetings was held in 
December 1983 and January 1984. President Reagan put his weight behind 
CIA director Casey's proposal to find another means of supporting the 
contras, '^^ redoubling administration interest in sending Israel against 
Nicaragua. Israel was at the bottom of its worst economic crisis ever, 
making it, presumably, more susceptible to the administration's entrea- 
ties.'^^ The administration kept talking to Israel. '^"^ 



1984: Crucial Aid and an Impasse 

In the spring of 1984 Israeh support for the contras "became crucial to 
the war's continuation." Robert R. Simmons, who in 1984 was staff 
director of the Senate Intelligence Committee said that the Iran-contra 
affair would not "be fully understood until the events of 1984 are fully 
looked at."'^^ The last covert money was spent on March 8, 1984.'^^ 

Prime Minister Shamir told Seymour Reich, president of B'nai B'rith 
International, that the Reagan administration had approached Israel 
"several times" about supplying aid to the contras.'^^ 

A former U.S. official "who routinely reviewed intelligence reports" 
said that the Reagan administration made "at least two attempts in 1984 to 
use Israel to circumvent a Congressional ban on miUtary aid to the 
contras."'^" That former U.S. official or another one said that the Israelis 
had refused to supply "bridging financing," weapons and training and then 
later refused a request to launder and pass along U.S. funds to the contras.'^^ 

As the administration pressured Israel to help it get around congres- 
sional restrictions on arming the contras, Israel begged the U.S. to keep its 
involvement secret out of fear of Congressional anger }^ It was a sign of the 



Israel and the Contras 



105 



administration's desperation in April 1984 that after its "quiet diplomacy" 
had failed to produce the desired results and with Congress dead set against 
funding the contras in the wake of reports that the CIA had mined 
Nicaragua's major harbors and David Kimche due in Washington for the 
April 1984 meeting of the political-mihtary committee, the administration 
pulled out all the stops. 

In Israel, news leaked that at this third meeting of the political-military 
committee Kimche would be discussing setting up a special fund to finance 
Israeli assistance in Central America and Africa — "to improve Israel's 
position in Africa." 

An Israeh paper reported from Washington that the U.S. had proposed 
making Israel a conduit for U.S. aid to anti-Communist forces in Central 
America and that the U.S. would establish a fund "independent of the 
government budget to finance projects suggested by Israeh experts. "'^^ 

Kimche would be pressing for U.S. Agency for International De- 
velopment (AID) contracts to undertake agricultural and technical assis- 
tance programs in Africa, said the Jerusalem Post. In exchange, it was 
expected that the administration would push for "a higher Israeli pohtical 
profile in support of U.S. pohcy in Central America," which was currently 
under fire in Congress. 

This high profile would consist not only of increased Israeli aid to the 
contras: "The administration would like to see Israel encourage its own 
supporters in the Congress, the Jewish community and elsewhere to 
become more assertive in backing the "contras."'^' 

In Israel diplomatic sources acknowledged that discussions in Wa- 
shington would be about the setting up of a special fund which would cover 
programs in Central America and Africa — "this is nothing new," these 
sources said — ^but they would not say if the fund would cover mihtary 
aid.'^^ 

The State Department said the U.S. had "no intention of providing 
funds to third countries for the purpose of supporting covert activities in 
Central America.""^ However, requests were coming at Israel from a 
number of directions in a seemingly orchestrated manner. 

"CIA Director William J. Casey is considering the possibility of 
asking another country, such as Saudi Arabia, to send money to the 
Contras until the funding problem is solved, according to one well-placed 
source, but no decisions have been made," reported the Washington Post.'^'' 
The CIA later admitted having "unofficially" asked Israel and Saudi 
Arabia to support its covert operations against Nicaragua and its sources 
explained that the satellite iirformation Israel had been getting from CIA 



106 



The Iran-Contra Connection 



Director Casey was "so valuable" that the Israelis might have been 
expected to be eager to please the CIA by helping out with the contras/^^ 

A contra chorus line went into action. The FDN announced that 
because Congress had not authorized the $21 million asked by the 
administration for continuation of the contra program it would ask Israel 
for aid. An unnamed FDN official said the organization's leaders were to 
meet that day with U.S. intelligence officials "to discuss their options for 
finding new funds." FDN chief Adolfo Calero said, "We have looked for 
private money, but there isn't enough. We need a government. We think 
the Israelis would be the best, because they have the technical experience." 

Another contra official offered the view that Israel might be willing to 
assist the contras "as a favor to the Reagan administration," and out of 
consideration for the $2.6 billion in aid it received from the U.S. that 

138 

year. 

Simultaneously ARDE leader Eden Pastora deplored the condition of 
anonymity under which non-U. S. aid was given to ARDE. He said "1 
continue to complain about these people who call themselves democrats 
and who are ashamed of supporting us.... In this way we lose political 
support. "'^^ 

Bosco Matamoros, Washington representative of the FDN, also called 
on Israel to aid the contras. He said the interests of Israel and the contras 
"overlap" because the PLO was aiding Nicaragua. He also noted the "anti- 
Semitism" of the Nicaraguan government and the flight of Jews from 
Nicaragua. 

Matamoros said that after PLO Chairman Yaser Arafat visited 
Managua in 1982, Nicaragua became closer to Libya. He also warned that 
there was an "increase in anti-Semitism and anti-IsraeU feeUng in other 
countries in Central America, where rebels are being helped by the 
Sandinistas and the PLO." 

While neither confirming or denying whether the contras were getting 
arms, advice, or training from Israel, Matamoros said he was speaking "only 
of policy, not of military matters, so as not to embarrass Israel or the 
FDN." He added that his mother was Jewish — ^her name was Salomon — 
and that he hoped to visit Israel soon.''*" 

Once before when an aid cutoff had been threatened, the contras had 
spoken of using Israel as a substitute. In June 1983, when asked about 
reports that the U.S. would not continue providing aid to the contras, 
Marco Zeledon, one of the directors of the FDN, said "If this should be the 
case Israel would be a good candidate. "^"^ 

In one of the more curious, heavy-handed episodes of the whole affair, 
Fred Francis, Pentagon reporter for NBC News, reported from Honduras 



Israel and the Contras 



107 



at the site of a contra air drop operation. Francis said NBC had "learned" 
that Israel, "at Washington's urging, has armed a quarter of the rebel army." 
Live on camera (but not loquacious) Enrique Bermudez, FDN comman- 
dante, told Francis, "We received some weapons from the, the, that IsraeU 
government took from PLO in Lebanon." 

The gist of the report, a voiceover on footage made during a trip "into 
Nicaragua" on a C-47, is that Washington keeps the contras on a tight reign 
and won't let them win. Soon they might be abandoned altogether, and, 
concluded Francis, "forced to turn again to Israel and others to save 
themselves from becoming refugees of a war lost in a divided Wash- 
ington."'^^ 

Israel attempted to fend off some of the attention without attracting 
more. "Israeli observers" interpreted the statement of Enrique Bermudez 
that the FDN is receiving weapons from Israel "as an American tactic to 
link Israel with Reagan Administration poUcies" in order to prevail over 
congressional resistance to its funding proposals. The CIA "keeps a tight 
reign" on the contras, it continued, and Bermudez would never have 
spoken "without CIA approval or encouragement. 

IsraeU Embassy spokesman Victor Harel said he knew nothing of the 
contra request and said "We are not involved in any activity to overthrow 
any govemment in this part of the world, even if it is a very unfriendly 
govemment."'"^ But Israel "was so worried that increased Israeli aid to the 
contras might create bad publicity and difficulties in Congress" that Col. 
Aviem Sella — at the time studying in New York and running spy Jonathan 
Jay Pollard — was asked to find out what Israelis working with the contras 
were doing. ''^^ 

Washington was rife with "speculation that the Reagan Administra- 
tion, seeking to get around Congress' cutoff of covert-action funding for 
the contras, wants Israel or some other third country to take over financing 
and direction of the guerrilla campaign""*^ and there was a report that 
"some Administration officials in recent weeks have talked privately about 
the possibihty of persuading friendly governments, such as Israel to help." 
A State Department official said that "hawks" thought that Israel ought to 
help out because "it shares our concerns about the Soviets."'"*^ 

The pohtical — ^mihtary committee meeting was held on April 26. Both 
sides insisted that no agreement had been reached on funding Israeli aid 
programs and that the U.S. had not asked Israel to become involved in the 
contra program.'"** However, National Public Radio said that the idea of 
"joint U.S.-Israeli foreign aid was discussed," and noted speculation about 
a new fund that the U.S. would create "ostensibly for non-military aid 
projects which reportedly would allow the U.S. to funnel extra money for 
covert aid which could then be channeled by Israel when needed." 



108 



The Iran-Contra Connection 



In an apparent effort to dampen the speculation, Kimche had a 
breakfast meeting with reporters after his meeting with State Department 
officials, and he emphatically denied any Israeli contacts with or arms sales 
to the contras. He said Israeli policy is to only sell arms to "constitutionally 
organized countries and not to unofficial organizations." He said that Israel 
might have been mentioned in conjunction with Soviet-made arms supplied 
to the contras, but any such aid was "without our consent and without our 
knowledge." He noted that stories of Israeh arms going to the contras 
might have come from the contras "in the hopes that members of Congress 
sympathetic to Israel would then look more favorably on U.S. covert 
activity." '"^ 

Kimche "acknowledged that the talks had included discussion of how 
Israel might increase its technical assistance programs in Third World areas, 
including Central America." He said the aid would be hmited to "peaceful 
projects." However, he reiterated, "I haven't come to arrange how Israel is 
going to take over the contras.""" 

He said that Israel had decided "some time ago" against supporting the 
contras for two reasons: Prime Minister Shamir didn't want to have a 
debate on Central America during the Israeli election campaign then 
getting under way; Israel did not want to alienate Congress, upon which it 
depends for its aid.^'^ 

Apprently Kimche had come to Washington at least part way inclined 
to go along with the administration's desires. There was at least some Israeli 
sentiment in favor of an open role with the contras for Israel. UN 
Ambassador Benjamin Netanyahu had tried several times to get Israel to 
supply aid to the contras. Netanyahu's efforts began when he was an 
attache at the Israeli Embassy. Then the Israeh Embassy warned 
Kimche's ministry "that the growing controversy over the administration's 
pohcy in Central America could damage Israel's standing with 
Congress. "'^^ 

It is unlikely that Kimche's committee assignment was his only 
Washington contact. When Yitzhak Shamir moved from the foreign 
ministry to the premier's office in 1983 after the sudden resignation of 
Menachem Begin, he appointed no one to succeed him, leaving Kimche to 
function as de facto foreign minister.'^'* The April meeting in Washington 
would be the last with Lawrence Eagleburger as a counterpart. Kimche's 
new interlocutor would be Richard Armacost.'^^ During his April visit 
Kimche was also set to meet with membersof the NSC.'^* It is possible that 
the committee continued to meet, but it is also worth wondering whether 
the actual functions of the committee were transferred to the little White 
House junta led by NSC staffer Oliver North. In addition to his meeting 



Israel and the Contras 



109 



with Eagleburger (and the assistant secretaries for Africa and the Middle 
East, who also took part in that session) Kimche met with Langhome 
Motley, who was then assistant secretary of state of Inter-American 
affairs.'^ That post was later assumed by ElUot Abrams, a friend of Oliver 
North, who once said that the Nicaraguan government was anti-Semitic 
because it recognized the PLO,''^ and served on the task force assigned to 
promote the war against Nicaragua.'^' 

In autumn 1984 Kimche met with another White House body, the 
President's Task Force on International Private Enterprise. Headed by 
Reagan insider Dwayne Andreas, the task force was staffed by former U.S. 
AID employees who worked out of an office in suburban Virginia. Its 
ostensible purpose was to increase the participation of the private sector in 
foreign aid, which the Reagan philosophy has consistently approached as 
an unexploited profit-making opportunity for U.S. business interests (thus 
the constant equation of starvation in Africa with the quasi-social control of 
agriculture and marketing in many parts of the continent). It also had the 
appearance, and probably the capacity as well, of serving as a front for 
unmonitored distribution of funds for activities abroad. Israel was the 
only foreign government included in the planning process. David 
Kimche was "the only non- American to appear before the committee. "^^^ 

Nonetheless, whatever else Kimche had negotiated, '^^ from the 
standpoint of the contra backers, the stumbling block remained as it had 
been the previous year: Israel feared running afoul of Congress. 

However, Israel was apparently wilUng to assist in a joint attack on 
Nicaragua. A former diplomat said, "They are willing to go in with us in 
the open, but to get the onus for assisting the contras while the U.S. is 
standing aside and keeping their hands clean? No."^^ The following year 
the White House would make crude efforts to change this political reality. 
For the moment though, it showed its exasperation. U.S. officials said there 
was no foreign aid money for the IsraeU aid projects.'® The administration 
bought several aircraft from Brazil, Israel's rival in the arms trade, 
purportedly for use by the Honduran military. '^^ 

Apparently congressional Democrats did not feel aUentated when 
Israel increased its covert aid to the contras. They simply professed not to 
know anything about it.'*' Meanwhile, it soon became obvious that Israel 
had agreed to step up the tempo of the covert assistance it provided to the 
contras. 

Several contra leaders said that they had made arrangements to get 
Israeli assistance. Government sources said "Israel provided some type of 
well-concealed financial assistance to U.S. -backed guerrillas called con- 
tras," worth several million dollars. It "appeared" to be going to the contras 



110 



The Iran-Contra Connection 



through a South American intermediary. They said that Washington might 
be reimbursing Israel through its U.S. military or economic assistance. 

"Knowledgeable sources inside and outside the U.S. government who 
asked not to be identified said they beUeved that Israel would help U.S. 
aUies in Central America if Congress reduced its rmlitary assistance to those 
nations," said a report at the end of May. These sources said that 
"administration and State Department officials are delighted by Israel's role 
in arming Central America" — although they doubted that Israel and other 
third countries could replace the $177.4 million that the U.S. spent on the 
region 1983. Several international arms traders said that indirect reim- 
bursement of Israel by the United States would not be difficult. '^^ 

Between March and September 1984, $ 15 million came to the contras, 
by one estimate — an average of $2.5 million a month. FDN leaders, 
"government officials" and "White House sources" said that the source of 
the funds were big U.S. corporations and the governments of Israel, 
Guatemala, Venezuela, Taiwan, Honduras, El Salvador and Argentina. 
Israel's share of that total was estimated at just under $5 million. That 
sum was further broken down into contributions of "Soviet- and Chinese- 
made weapons believed captured in Lebanon" and cash payments "that 
help contras meet their $800,000 monthly payroll."'"'' 

The Israeli Embassy again denied that Israel was providing funds to 
the contras. Victor Harel, press counsellor said, "We deny it completely. 
Israel is not providing any aid to the Nicaraguan rebels, in any form." Harel 
said Kimche's denials of the previous April "remain operative today" and 
reiterated that Israel "can't prevent" arms it has sold to other countries in 
the region from reaching the contras.''^ But it looked as though an 
arrangement had been made that was fairly acceptable to both sides. 



An Evolving Modus Operandi 

In early 1985 both Reagan Administration officials and members of 
Congress said that Israel had again stepped up aid to the contras, but denied 
that U.S. foreign aid was funneled through Tel Aviv, El Salvador or 
Honduras."^ The denial came as the Reagan Administration began 
signaling its desire to find a legal way to send aid through third countries. In 
March 1985 it said it was considering asking "friendly" Asian countries to 
support the contras. Taiwan and Thailand were mentioned"'' and it was 
never made clear whether U.S. aid or the friendly countries' own resources 
would be used. An administration official said both U.S. aid recipients and 
non-recipients were under consideration. 



Israel and the Contras 



111 



Ominously, an administration official said "Right now there is a 
proscription from any third country providing assistance. Well, might the 
Congress not wish to reconsider that?"^^^ 

After a few such feelers on this score produced negative reactions from 
Congress, the pronouncements ceased. The White House announced that it 
had "rejected a series of proposals for indirect financing of the Nicaraguan 
rebels." '^'^ But the conniving continued. 

In July 1985 the Reagan Administration not only got $27 million 
"non-lethal" aid out of Congress for the contras, it also figured out a way to 
"legaUze" shaking down U.S. aid recipients for contributions to the 
mercenaries. (Incidental but not unrelated to this process, the $12.6 billion 
foreign aid bill containing contra aid — ^the first foreign aid bill since 1981 to 
stand on its own rather than skulk in a continuing resolution — won the 
votes of a number of hberals because it also contained $4.6 billion in U.S. 
aid for Israel. Rep. Howard Berman (D-CA) called it "critical assis- 
tance.""^ The House leadership either did not try to separate the contra aid 
from the aid to Israel or was unable to do so.'^^) 

The president signed the foreign aid bill containing the $2 7 million on 
August 8.'™ Before he signed it, however, while the bill was in a House- 
Senate conference the White House ordered surgery on one of its 
amendments. Named for Senator Claiborne Pell (D-RI), the offending 
language forbid the Reagan Administration from making a formal or 
informal arrangement with U.S. aid recipients to aid the contras. Unless the 
Pell Amendment was removed, it was threatened that the president would 
veto the entire bill. The State Department explained that the amendment 
might prevent the president from sohciting "nonlethal" aid from Israel, 
Taiwan, South Korea, and other such allies, some of which had already 
spoken to the White House about donations. 

In a highly unusual move. Sen. Pell, Foreign Relations Chairman 
Richard Lugar (R-IN) and White House and congressional staff sat down 
together and rewrote the amendment. The new language read: 

...the U.S. shall not enter into any arrangement conditioning expressly or 
imphedly the provision of assistance under this act... upon provision of 
assistance by a recipient to persons or groups engaging in an 
insurgency. ..against the government of Nicaragua. 

Both houses of Congress passed this language before they adjourned 
for the summer. Henceforth the administration was allowed to put the 
arm on aid cUents — just not to the point of threatening to cut off their aid! 



112 



The Iran-Contra Connection 



The following week it became evident that the heat was off Israel, as 
contra boss Adolfo Calero catalogued contributions for reporters: "A lot of 
people help on weapons. Gen. Singlaub, some Germans, some French. The 
people who help us are not govemment people, but governments can give 
leaves of absence or it can be a retired person. We have no IsraeU dealings. 
They have not given or sold us anything."'**' EarUer that year a reporter for 
National Pubhc Radio had seen Israeh-made artillery pieces at the FDN's 
main camp in southern Honduras.'*^ 

Although information is now coming to light about arms shipments 
made by the Secord-Hakim-North junta through Portugal and France, 
there have been very few reports of weapons coming from Europeans for 
the contras. As to financial contributions that might have been used to 
purchase weapons, Edgar Chamorro insists that the occasional reports of 
such money from Europe are a "smokescreen." "Money only goes through 
Europe to be laundered," he says.^^^ 

In 1986, in a scenario at least as ironic as the forcing of Iran to finance 
the war against Nicaragua, Richard Secord shook down the government of 
Saudi Arabia for funds for the contras. The Saudis gave in after being 
reminded that the administration had stuck its neck out and "defied the 
powerful pro-Israeli lobby" to get the AW AGs sale through Congress. 
Secord himself had lobbied for the sale. Secord then used the Saudi money 
"to acquire Soviet-made weapons from Egypt, from IsraeU-held stocks 
captured in Lebanon, and from international arms dealers."'^"* 

During the years Congress limited funding for the contras, CIA 
Director Casey and UN Ambassador Vernon Walters traveled to a number 
of U.S. clients and urged contributions. Both Israel and Egypt donated 
money in response to these pleas "when reminded of the substantial U.S. 
aid they receive."'^' 

It was not all giving though. While some of the money that Israel 
volunteered is said to have been passed through GUver North, it is more 
than likely that the money Israel gave was immediately recycled in Israel 
for weapons, a pattem that was to be repeated when the siphoning off of the 
Iran profits commenced. (The same pattem which ensures that much of 
U.S. foreign aid is spent on U.S. weapons or civilian imports.) Former 
contra leader Edgar Chamorro has pointed out that arms dealers do not seek 
out the contras, nor do the mercenaries often make purchases on the open 
market. He explained that "a very few people, close to the White House, 
tell the FDN how to get weapons. ..Calero is told by the people in charge 
where to go to buy weapons. They even make the connections."'^^ 



Israel and the Contras 



113 



Genesis of the Idea 

When Canadian investors came asking for their money and the plot 
started to unravel, hints in intelligence cricles that money from the Iran 
operation was going to the contras jelled into hard fact. While the facts were 
not quite so hard regarding who had initiated this angle of the operation, the 
preponderance of the evidence laid the intellectual authorship (and at least 
some of its execution) at Israel's door. Israel would have every reason to put 
two and two together: generating funds from Iran would be an obvious 
way to get the administration, with its constant pleas to do more for the 
contras, off its back. That aspect of the operation was begun in January 
1986, the same month when the President had signed the finding 
legitimizing the arms sales to Iran.^^* 

David Kimche, who had been Israel's main contra contact with the 
U.S. as well as the point man in the early part of the Iran scheme, was the 
logical villain in the piece. Robert McFarlane had great admiration for 
Kimche's intellect: "He gave McFarlane much of what passed for an 
intellectual construct," a State Department official said, adding, "of course 
it helped that McFarlane thought the Israelis knew everything." '^^ When 
he made his confession, Oliver North told Attorney Gen. Meese that the 
idea had originated with Kimche. Kimche vehemently denied suggesting 
shunting the funds, calhng North an unmitigated liar.^^' 

The Senate Intelligence Committee's report seized upon the ex- 
changes on the subject which North reported he had had with Amiram Nir, 
Prime Minister Peres' "terrorism" adviser. Various sets of notes taken by 
Justice Department personnel during Meese's November 23 questioning 
of North quote North as saying that Nir suggested using the arms sales 
profits for the contras, that the two discussed the contras, that North "also 
recalled turning down other Nir suggestions that U.S. funds to Israel or 
IsraeH's [sic] own funds could be used to support the Nicaraguan 
resistance." 

More tellingly, the report continued, "Other notes of that interview 
reflect only that Nir told North in January that the Israelis would take 
funds from a residual account and transfer them to a Nicaraguan ac- 
count. "^^^ That suggests that the scam had already been decided upon — 
probably by North's and Nir's superiors, which would be a far more 
egregious challenge to Congressional sensibilities. Obviously, it was much 
less threatening to construe this vital element in the affair as the concoction 
of renegade aides rather than a deliberate high level piece of collusion 
between the Israeh government and the White House — a conspiracy in 
which Israel left an adoring Congress out in the cold. Perhaps with this in 
mind the report totally ignored North's earUer statements about Kimche. It 



114 



The Iran-Contra Connection 



mentioned several other possible sources of the idea of diverting the 
funds — Albert Hakim, Manucher Ghorbanifar — without weighing or 
analyzing the discrepancies presented by the varying attributions. It also 
failed to take into account the relative bargaining positions of Israel and the 
U.S., with Israel repeatedly urging a reluctant White House to continue 
with the arms sales to Iran. 

The normally cautious Times of London said that "the Senate 
IntelUgence Committee had been given secret evidence strongly suggesting 
that the plan to divert money from the Iran arms operation to the 
Nicaraguan Contras was first put forward by Mr. Shimon Peres, then the 
Israeli Prime Minister." 

According to the Times Amiram Nir had simply conveyed the 
suggestion to Oliver North and Vice Admiral John Poindexter, the 
President's national security adviser, during a January meeting."^ 

It was also reported that Adnan Khashoggi suggested the idea to Gen. 
Secord, who passed it on to North. ''"^ 

Whichever IsraeU official or agent conceived the idea of overcharging 
the Iranians to generate cash for the contras, it was a somewhat risky gambit 
for Israel. There was always the (very sUght) chance that Congress might 
be really angry and cut back on Israel's aid.^'' In view of that risk, even 
though it had every appearance of being a concession to the administration 
in exchange for its participation and legitimization of the arms sales to Iran, 
it is no surprise that Israel would insist on making itself some money selling 
arms to the contras. A recycling of cash for arms would have been the least 
Israel would have demanded from the NSC junta for the risks to which it 
was putting its congressional image. 

Miami-based contra leaders suggested that was the reason FDN leader 
Calero insisted that he had never received any of the money the Israelis 
funneled through Switzerland. "I imagine that the money was handed 
directly over to the arms suppliers and the arms were sent to us," said one. 
"These things are all handled by the U.S. and Israel," he added, claiming to 
be unaware of the exact logistics of the transfers.''* 

Massive Israeli Arms Shipments 

After the administration doctored the Pell Amendment it was reported 
that the contras had received "substantial new arms shipments. "'^^ There 
was another surge in the spring of 1986, when proceeds from the Iranian 
arms sales began to reach the contras in the form of weapons. An arms 
expert estimated that the Israelis had sent the contras "thousands" of AK- 
47s. Seventy AK-47s and 100,000 rounds of AK-47 ammunition 



Israel and the Contras 



115 



were among other items on the plane shot down by Nicaragua on October 
5, 1986.'^^ 

During the 1985-86 period Israel sent at least 6 shiploads of East bloc 
assault rifles, grenade launchers and ammunition to Honduras for the 
contras. '^^ Some of the 400 tons of weapons shipped by Southern Air 
Transport to Ilopango Air Base in El Salvador came from Israel, via 
Portugal.^"" One shipment, a "significant quantity" of East bloc arms 
(interestingly, the only Israeli arms shipment to the contras to be 
mentioned in the Senate Intelligence Committee's report) was offered by 
Israeli Defense Minister Yitzhak Rabin on September 12, 1986. They were 
to be picked up during the following week and taken on a foreign-flag 
vessel to Central America. Admiral Poindexter had corresponded with 
Oliver North about the Israeli shipment and wrote North a note 
characterizing the deal as a "private deal between Dick [Secord] and Rabin 
that we bless," and telling North to "go ahead and make it happen." 

An Israeli source confirmed that the shipload of weapons had indeed 
been on the way to Central America. He said that it had been recalled after 
the scandal broke.^°^ 

In a briefing he prepared for President Reagan in advance of a 
scheduled September 15 meeting with Prime Minister Shimon Peres, 
Poindexter advised Reagan to thank Peres for the shipment "because the 
Israelis held considerable stores of bloc ordnance compatible with arms 
used by the [contras]. "^"^ Such shipments might have been a regular feature 
of the "strategic" relationship between the U.S. and Israel, or that blessed 
deal might have been a unique occasion. Many, if not most of the Israeli 
shipments went through private Israeli dealers, who exist for just such 
business. 



"Private" Dealers 

Ya'acov Nimrodi, who figured prominently in the arms-to-Iran 
dealings, also handled "shipments" of arms for the contras, which were 
paid for with several million dollars, given by the IsraeU government to the 
contras at the request of CIA Director Casey. ^"^ A former employee of 
Nimrodi's International Desahnation Equipment Co. said the sales were 
made through a U.S. company owned by Nimrodi and the dealer had done 
the deal as a "favor" to the contras, taking only a "small fee" for himself. 

Pesakh Ben Or, a big Israeh arms dealer based in Guatemala and 
Miami, owns Eagle Israeli Armaments and Desert Eagle. In late 1984 (at 
the earliest) Ben Or gave the Israeli defense ministry sale documents 
bearing the signature Col. Julio Perez, chief of logistics in the Honduran 



116 



The Iran-Contra Connection 



Army's Ordnance Corps. In a telephone conversation Col. Perez con- 
firmed the documents and verified his signature.^"' 

In all, Ben Or is known to have sold three shipments to the contras 
through the Honduran mihtary. The consignments included such items as 
RPG-7 grenade launchers, which the Honduran army does not even use! 
The contras do use them.^"^ 

As likely as not, the S A- 7 surface-to-air missiles which the contras use 
to try to bring down Nicaraguan hehcopters, came from Israel. The contras 
bought the missiles "by the dozens" starting in mid-1985.^'" 

Opinions vary as to whether Ben Or or Sherwood, a U.S. -based 
company widely understood to be an Israeh operation,^"* was the source. A 
report in Defense and Foreign Affairs "suggests that Ben Or may have 
supplied the Soviet SAM-7 missiles."^"' 

Moreover, Ben Or's operation and Sherwood are connected by a 
tangle of other Israeli arms dealers. At the time it was selling arms to the 
contras, Sherwood employed Pinhas Dagan and Amos Gil'ad, an Israeli 
transport officer, in senior positions.^'" Michael Kokin, president of 
Sherwood, confirmed that Pinhas Dagan and Amos Gil'ad were once 
Sherwood employees.^' ' 

Gil'ad was an acquaintance of Gerard Latchinian, arrested by the FBI 
in an assassination plot against Honduran President Roberto Suazo 
Cordoba. Gil'ad introduced Latchinian to Pesakh Ben-Or.^'^ 

Latchinian, whose role in the assassination plot was to obtain the 
necessary weapons, had at one time employed Emil Sa'ada^'^ who was 
identified by Honduran military sources as one of two former Israeli 
military men who had "helped arrange" arms shipments to the contras in 
deals dating back to 1984. 

The other Israeli was Yehuda Leitner, who said he worked for Sa'ada 
in Honduras. Sa'ada runs a melon growing operation called Acensa and also 
a business called Shemesh Agrotech. Leitner was also employed by ISDS, a 
"security expertise" exporter in Israel which confirmed his employment. 

Both Sa'ada and Leitner denied having sold arms and charged they 
were being scapegoated in the shuffle resulting from the Iran-contra scandal 
and from rivalry among regional arms deals, "including Marcus Katz."^'"* 

David Marcus Katz "helped broker [a] deal with the contras in 1985," 
according to an associate of his interviewed by the Miami Herald.^^^ And to 
bring the connection around full circle, Pesakh Ben Or began his career as 
chauffer to Katz.^'^ 

The IsraeUs vehemently denied any arms shipments to the contras, or 
any contact with them at all — though they were just a shade less vehement 
when it came to "private deals" put together by their middlemen. (These 



Israel and the Contras 



117 



they said they couldn't control, a contention which most Israeli arms 
dealers hotly chaUenge.^'^) A congressional investigator said the Israehs use 
the middleman technique so that they can maintain "plausible deniability" 
of their operations?'** Privately, senior Israeli officials conceded that David 
Marcus Katz and Pesakh Ben Or "appear to have acted in semiofficial 
capacities in previous arms dealings."^" 

Israel or its associated arms dealers might also have participated in the 
diversion of U.S. arms to the contras. A former U.S. Army combat pilot 
and supply officer now working as an arms expert for a conservative 
Washington think tank said that he had quizzed "Americans who had 
visited rebel training and supply camps in Honduras, and their conclusion 
was that the U.S. Defense Department was the ultimate source, through 
theft, cut-out deals with Israel and other governments, of most of the rebel 
arms." The arms expert said that major items such as batteries and aircraft 
parts had been accounted as discarded scrap and "had actually been diverted 
in good working order to the rebels." 

Former CIA senior arms analyst David MacMichael said that there 
had been a great deal of stolen ordnance and much that was reported used in 
training at an Alabama base could have gone to the contras.^^" 



Direct Contact with the Contras 

Although kept carefully under wraps, there was also direct contact 
between Israel and the mercenaries. "It is extremely rare for us to go to 
Israel," said a contra leader. "We do not have a formal relationship with the 
Israelis. We work with them quietly, usually outside Israel. There is no 
need for us to go directly to Israel." Referring to Israel's wish to deny any 
links to the contras, one of the leaders commented, "you wouldn't believe 
how hard it is to ship arms from Israel to Honduras. Contra leaders said 
that they normally obtained arms from Israel through the Israeli embassy in 
Guatemala. 

Yet in addition to the visit by Mario Calero, at least one other contra 
went to Israel seeking arms. Julio Montealegre, a Miami-based, high 
ranking aide of Adolfo Calero, spent two weeks in Israel in late January and 
early February 1986^^^ — just as the first of the arms shipments authorized 
by the Presidential finding would have gone to Iran and some of the profits 
from those sales diverted to Israel to purchase arms for the contras. 

According to contra sources, Montealegre went "to talk to some 
people. "^^ Bosco Matamoros, the FDN's UNO Washington spokesman, 
said the reports of a visit were "speculation," but two contra leaders in 
Miami said he was indeed in Israel in late January and early February 1986. 



118 



The Iran-Contra Connection 



"He was gone about 15 days," said one leader. "He did not say why he was 
going there."^^^ 

There was speculation that he was seeking the last cargo of arms which 
Somoza bought from Israel. The arms were paid for, but never delivered.^^^ 
In a bit of a reverse from the hne taken by their U.S. publicists that the 
contras are not Somoza's direct descendants, the contras were claiming 
what they considered to be their inheritance: "We have been trying to get 
those arms for a long time," said one of the contra leaders. 

The Israelis and the contras also seemed to be making direct contact on 
other levels. Soon after the second shoe of the scandal dropped, Adolfo 
Calero told the New York correspondent for IDF Radio that "one time I 
met with Gen. Simhoni, but not in relation to anything that is going on 
now. I heard that he might be of service to us once he retired. "^^** Gen. Uri 
Simhoni was until last summer the Israeh mihtary attache in Washington. 
He was apparently also an intimate of the fevered inner circle that ran 
operations out of the White House. During the November 1985 inter- 
ception of the aircraft carrying the Achille Lauro hijackers, Simhoni was in 
the White House situation room.^^' 

Another Israeli spoke anonymously on the state -run television: "1 
conducted negotiations with the contras. They need hght weapons, 
ammunition.... They want advisers from Israel." He said there were more 
Israelis working with the contras, and that relations between the two 
groups were "outstanding," so sympathetic that, in his words, "you feel 
after a day like you've known them for years."^'" 

Some of those instructors, said a report right after the New Year, were 
training the contras at U.S. Army bases in Honduras. The report said that 
the Israelis were paid by the Honduran government, but that Israeli 
military sources said the payment might be from "American sources or 
intelligence groups. "^^' 

The Jewish Campaign 

Clearly subordinate to the murder and mayhem perpetrated on 
Nicaragua by the contras was the administration's attempt to rearrange the 
Jewish body poUtic, to effect a 180 degree shift in its attitude toward the 
contras. In 1986, after Israel presumably relieved itself of some of the heat 
by funneling profits from the Iran arms sales to the contras. President 
Reagan's attention was directed to Israel's support system in the U.S. The 
first and obvious aim of this exercise was to enlist Jewish support for 
funding for the contras. Another was to soften up public opinion to a 
possible future overt Israeli role in the contra program. 



Israel and the Contras 



119 



Those Jews who supported the contra program hooked onto the 
administration's campaign with alacrity. It has been the hope of several 
right wing Jewish groups to force a shift to the right among Jewish 
organizations. They argue that, as they have become more affluent, Jews 
have continued to vote as liberals — against their own interests, these 
rightists argue. Underlying that line of argument is the hope (which was 
shared by Israel's Likud government and to a lesser degree by some Labor 
leaders) that U.S. Jews will ally themselves with the pro-arms, mihtarist 
right, likely to support military spending on Israel. 

It was also hoped that Jews would align themselves with the religious 
right, in reaction to the mainline churches' insistence on an evenhanded 
approach to the Middle East. This was of course what was behind the 
appalling friendship between Menachem Begin and Jerry Falwell and the 
much more sinister fawning of Pat Robertson on the Israeh intelhgence 
services. These religious figures made a great deal of money taking 
superstitious Biblebelters to Israel, after convincing them that the already 
embattled state would be the scene of the last battle of Armageddon as the 
televangeUsts read it literally from the Bible. 

All this left the majority of Jewish voters cold. Jewish males were the 
only white ethnic group which voted against President Reagan in 1984. 
But in the Washington world of perceptions a few photo-opportunities and 
the cunning press release can sometimes overwhelm the most compelling 
reality. 

On March 5, 1986 Reagan entertained leaders of major Jewish 
organizations to lobby for his contra aid bill. He assured them that "1 
would not consider any measure, including arms sales to moderate Arab 
nations, if I thought it might endanger the security of Israel." Then he told 
them "there's a vote coming up in Congress of utmost importance, and I 
have to tell you, I need your understanding and support." The vote was for 
$100 milUon in lethal aid for the Nicaraguan contras. In his pitch Reagan 
underscored Nicaragua's connections with the PLO, Iran and Libya. 

"If the Sandinistas are allowed to consolidate their hold on Nica- 
ragua," he told his guests, "we'll have a permanent staging ground for 
terrorism. A home away from home for Qadhafi, Arafat and the Ayatollah, 
just three hours by air from the U.S. border."^^^ (This was typical Reagan 
rhetoric of that period; on March 6 the president had made his famous 
statement that members of Congress must choose between supporting his 
administration or supporting communism.^^^) He also told the Jewish 
leaders that Jews should support contra aid because U.S. credibility with 
allies in Latin America and with Israel was at stake. 



120 



The Iran-Contra Connection 



Also lobbying for the $100 million contra aid bill, Vice President 
Bush told an Agudath Israel (religious and conservative) leadership 
gathering that the Nicaraguan government had used "Nazi-like tactics" 
against the Nicaraguan Jewish community. Bush also spoke about Nica- 
raguan connections with the PLO.^^* 

During the White House meeting the chairman of the Conference of 
Presidents of Major Jewish Organizations (MAJO), Kenneth Bialkin, 
endorsed the Reagan pohcy, but he stressed that he could not endorse it on 
behalf of the entire Jewish community which the conference purports to 
represent. It did not occur to Bialkin, whose organizational base, the 
Anti-Defamation League supposedly exposes and protests prejudice 
against Jews, that the President's cynical pandering might be anti- 
Semitic.^^*" 

In the Congressional Record of March 19 Rep. Vin Weber (R-MN) 
inserted a letter signed by prominent Jews such as Max Fisher and Jack 
Stein (former head of MAJO) stressing the coimections between the PLO 
and Nicaragua and saying that Libya had given Nicaragua $400 million 
over 4 years and trained its political police. The same day Robert Mrazek 
(D-NY) inserted an American Jewish Congress resolution opposing contra 
aid.^" 

In the March 20th vote on contra aid, 21 of the 30 Jewish members of 
the House voted no. The administration continued with its pressure on 
Jews, even entertaining Wall Street crook Ivan Boesky (in his hey day a 
heavy contributor to Jewish causes) along with ultraright Jewish Senator 
Chic Hecht (R-NE).^^** An early May news release by Sen. Rudy 
Boschwitz (R-MN) reiterated the fraudulent ADL anti-Semitism charge. 
To counter the impression that all Jews supported the contras, the Union of 
American Hebrew Congregations sent a letter refuting the anti-Semitism 
charges to all members of Congress saying that the 1.3 million Jews 
represented by the organization oppose military aid to the contras. 

During the 1986 battle over contra aid, Israeli diplomats also 
"discreetly encouraged American Jewish bodies" to lobby Congress in 
favor of the $100 million the President was asking for the contras.^" 

About this time — a month after Foreign Minister Shamir had been in 
Honduras and said nice things about the Contadora process^"*' — there 
began to come from Israel very hostile statements about Nicaragua. Shamir 
said that, in exchange for its assistance to the Nicaraguan government, the 
PLO had set up a base in Nicaragua. 

He told a group of high school students that terror was "an 
intemational monster spread over continents" and that Libya and Nica- 
ragua were aiding it. He "congratulated the United States on its antiterror 



Israel and the Contras 



121 



war in South America, saying that Israel favors cooperation for the 
suppression of terror. "^'^^ 

After the Iran-contra scandal broke, the Israelis shifted their approach 
and began to claim that they had made diplomatic overtures to Nicaragua, 
but that Nicaragua had rebuffed every attempt. 



Where Did the Money Go? 

Three months after it was divulged that funds were being shunted 
from the Iran operation to the mercenary war in Central America there was 
still no accurate estimate of how much money was actually involved. The 
first figure mentioned, $10 million to $30 million was drawn from the air 
by Attorney General Meese, interpolated from a statement made by Oliver 
North.^^ 

An "Undated Memorandum" discovered in Oliver North's office 
mentioned $12 million from an arms sale to Iran that would be used to 
purchase supplies for the contras. When questioned. North said he had 
obtained the figure from the Israelis, who would disburse the funds. ^'^^ 
After a White House briefing Rep. Jim Wright (D-TX) was able to provide 
a breakdown of one transaction: Iran had paid the Israelis $19 million. $3 
million of that had gone back to the Pentagon, $4 million went to arms 
brokers and $12 million went to the Swiss accounts for the contras. 
Other sums were bandied about: $30 million to $50 million in accounts 
earmarked for both the contras and the Afghan guerrillas;^'*' "the bulk" of 
$15 million from a May arms shipment that Ghorbanifar had told arms 
dealers Khashoggi and Furmark was "earmarked for Central America. "^"*^ 

When considered in tandem with the question of who, among the 
many that have been mentioned, moved the money from Iran to its final 
destination and who took a piece of it along the way, it can only be surmised 
that the network through which it was funneled was intentionally 
tangled — or that there were several networks shuffling a great deal more 
money than has yet been reckoned. 

Some of the money went to the Israeli government, which, according 
to OUver North, established the prices that Iran would have to pay.^^ One 
source, a private individual in the Middle East whose name was said to be 
"familiar from recent reports on this matter," said that $10 milUon was 
placed in Swiss bank accounts by Lt. Col. Oliver North and Amiram Nir 
and then transferred to the Israeli goverrmient by Nir for purchase of East 
bloc arms for the contras. According to this version, the $10 million from 
Brunei was used to cover money given to the IsraeUs.^"^ 



122 



The Iran-Contra Connection 



Exactly who did the banking in Switzerland (and in other offshore 
locations) is also not totally clear. Attorney General Meese's original 
announcement said that it was "representatives of Israel."^'' 

Albert Hakim's lawyer (who also represented Oliver North) told 
Assistant Attomey Gen. Charles Cooper that the money from the 
February shipment of TOW missiles and another shipment in May went 
"through Israehs into Hakim's financial network." Hakim distributed the 
money to other accounts. 

Oliver North said that after meeting with Amiram Nir in January 
1986 he "contacted Adolfo Calero and as a result of that contact three 
accounts were opened in Switzerland." North said he gave the numbers of 
the accounts to "the Israelis," who arranged for the deposits and that the 
money was deposited, and the contras were appreciative.^^^ Calero has 
denied having received any money at all and the Israehs insisted it was the 
CIA which opened the Swiss bank account in which profits from the Iran 
arms sales were deposited. They said Iranian "counterparts" got the money 
from Iran and made the deposits. ^^"^ 

The Senate Intelligence Committee report says that a Credit Suisse 
account was used by North, Hakim and Richard Secord for Iran arms sales 
proceeds. It also notes that it had obtained information (of "unknown 
reliability") about profits being deposited in Credit Fiduciere Services, the 
Secord/Shackley/Clines Swiss bank, and then fuimeled to CFS' subsidiary 
in the Cayman Islands. 

On November 26 the Los Angeles Times reported that it had learned a 
week earlier from an Israeli businessman that Adnan Khashoggi had 
arranged for the Iranians to put money into a Swiss account run by Ya'acov 
Nimrodi. A senior Israeli official said that Israeli middlemen "meddled" 
with a Swiss bank account and that their meddling might be connected with 
the disappearance of millions of dollars from the account.^^^ The missing 
money might be the money sought by Canadian associates of Roy 
Furmark. When CIA Director Casey asked Oliver North about the 
whereabouts of Furmark's friends' money. North said either the Israelis or 
the Iranians had it.^'^ 

Another Israeli report spoke of two other bank accounts — one for 
logistical expenses, to which the Israelis had access. That account also noted 
that before January 1986 Israehs had had access to an account in which Iran 
deposited money. 

On December 16 the Washington Times reported that, in addition to 
Adnan Khashoggi, "Swiss bankers identified other 'intermediaries' as 
Israeli arms merchants who used the names Amon Milchen, Shlomo 
Cohen, Marcus Kritz and Al Schwimmer."^^^ 



Israel and the Contras 



123 



Kritz is very likely the Mexico-based Israeli arms dealer David Marcus 
Katz. Al Schwimmer, one of the major Israeh dealers, was involved in the 
initial phase of the joint U.S.-Israeli arms sales to Iran. 

Arnon Milchan is an arms dealer and movie producer who has been 
involved in Israeh arms sales to South Africa. He has admitted laundering 
some of the more than $100 milhon spent by the South Africans during the 
1970s in an attempt to improve the white government's image abroad. 
(This scandal later became known as Muldergate.) More recently Milchan 
purchased in the U.S. on behalf of the Israeli government 810 electronic 
switches known as krytrons, which can be used to detonate nuclear 
weapons explosions. Israel and South Africa collaborate on an advanced 
nuclear weapons program.^^ Shlomo Cohen is the name of the Israeh 
ambassador to Honduras. 

As to what portion of the Iran profits actually went to the contras, in 
cash or in kind, North said that Amiram Nir decided on that. Confirmation 
of North's statement is contained in one of Prime Minister Peres' denials: 
after Meese's shocking announcement on November 25 1986 Peres 
telephoned him and said that Israel had only told the Iranians where to put 
the money, and how much to put in each account! 

If there is any question that Israeli arms merchants or government 
entities were on the receiving end of at least some of the money, it ought to 
be dispelled by the information North provided to the Attomey General: 
that when a price was set (presumably not by Israehs) for an October 1986 
shipment of 500 TOWs and no money for the contras was included because 
$100 million approved by Congress the previous summer had become 
available, Nir was upset. Also in October, as the operation unraveled, a 
CIA memorandum to Director Casey and his lieutenant Robert Gates 
spoke of the risk that Ghorbanifar might disclose to the press an account 
charging that the U.S. government had failed to keep several promises to 
him and that both the U.S. and Israeh governments had acquired substantial 
profit from the Iran arms transactions, some of which was redistributed to 
"other projects of the U.S. and Israel." 

The memo also alluded to "indications of funds needed for some 
unknown purpose by an Israeli official. "^^^ 

The Attractions of Obscurity 

Over the many hearings, investigations, and other dissections of the 
Iran-contra affair, Israel's purposes are hkely to remain obscure to the 
pubhc. Israeli citizens, be they officials, arms dealers, or civilian witnesses 
are not bound by U.S. law to testily or cooperate in investigations. Israel 



124 The Iran-Contra Connection 

has already made it clear that it will shield its citizens who were involved in 
the affair behind its national sovereignty and will only cooperate to the 
extent necessary to placate public opinion. 

And that, given the well-oiled media machinery of Israeli loyalists in 
the U.S., is a very hmited proposition. As was seen during the invasion of 
Lebanon, when the cameras focus in too close a vast cry will go up, 
charging media imbalance and probably also anti-Semitism. 

The Congress, which had many opportunities to examine Israel's 
activities in Central America and to discourage them, understands the 
problems attached to those activities all too well but members of Congress 
would be the first to admit (if only they dared) that they are powerless to 
restrain Israel. Organizations dedicated to reversing the post war trends in 
U.S. foreign policy are also unlikely to depart from their ingrained 
tendency to avoid confrontation with Israel. 

Israel's immunity to U.S. law and the silence it has created around itself 
by years of methodical intimidation will protect it through the bloodletting 
ahead. These built-in attractions are also hkely to make Israel the vehicle of 
choice for the next tragic and avoidable essay in covert foreign policy. 



VI. 

Contragate: The Disposal Problem 



Lessons of the Bay of Pigs 

The long-simmering, brutal war for Nicaragua may take years to 
conclude. But it's not too soon to begin considering the consequences of 
probable defeat for the administration's proxy war against the Managua 
regime. 

The $100 million in U.S. aid now flowing to the contras is a mere 
down payment for violence yet to come. Yet no one supposes it will 
purchase a contra victory. On the contrary, short of a U.S. invasion to 
decide the outcome, the money and supplies will only delay and embitter 
the collapse of the CIA's contra-waged counterrevolution. 

Ironically, U.S. policy will make Washington's allies, the contras, 
bleed as much as its enemies. Used as instruments of geopolitical pohcy, 
most of the contras will Ukely be abandoned and forgotten once the 
president's attention moves on to other regions. 

The syndrome is well known to students of other CIA-sponsored 
paramilitary campaigns, including the Kurdish revolt against Iraq and the 
resistance of the Hmong tribesmen in Laos to Pathet Lao and North 
Vietnamese troops. In both cases, withdrawal of U.S. support ensured 
defeat for U.S.-allied guerrilla armies. 

But the most notorious abandonment occurred during the 1961 Bay of 
Pigs invasion by CIA-trained Cubans against the Castro regime. The 



125 



126 



The Iran-Contra Connection 



failure of the Cuban people to rise in revolt led to the ignominious defeat of 
the landing. 

"We didn't call the Cubans of Brigade 2506 [the invasion army] that in 
1961, but they were our contras," observes David Atlee Phillips, former 
chief of Latin American and Caribbean operations for the CIA. 

The Bay of Pigs fiasco seared the CIA officers who planned that 
disastrous landing. "It is my worst memory of abandoning an ally, but it 
isn't the only one," Phillips recalls. "In my 25 years with the CIA, I was 
aware of too many instances in which allies and agents were left stranded 
after a successful operation or dumped after a failed one.... Our covert- 
action operations are too often tactical missions, short-term ventures for 
short-term ends. We ask people to take risks for us without fully 
comprehending the logistical — and moral — commitments we have made to 
them."' 

But there is another troubling aspect to such covert commitments. 
Allen Dulles, CIA director at the time of the Bay of Pigs invasion, called it 
the "disposal problem"^: What do you do with an army of trained, armed, 
indoctrinated and fiercely committed warriors once you no longer need 
them? How do you contain or safely vent their anger, resentment and 
energy? 

These possibiUties will soon apply no less to the contras of Nicaragua 
than they did to the contras of Cuba. Even Pentagon leaders with 
responsibility for Central America have been heard to wonder, "How are 
we ever going to cut this thing off?"^ The lessons of Cuba are thus vitally 
relevant to policy choices today. 

President Kennedy faced a disposal problem as soon as he took office 
and inherited the Eisenhower administration's plan for an invasion of Cuba 
by CIA-trained exiles. Dulles warned him of the difficulty and embarrass- 
ment of calling off a plan so far advanced. Kennedy felt he had httle choice. 
"If we have to get rid of these men," he rationalized just before authorizing 
the invasion, "it is much better to dump them in Cuba than in the United 
States, especially if that is where they want to go."'* 

But the plans failed and the "disposal problem" only worsened after 
Castro defeated the invaders and humiliated their sponsor. More bitter than 
ever, and fanatically committed to Castro's downfall, the exiles became a 
galloping horse that threatened to master its rider. 

"You train them and put them in business," veteran CIA office Ray 
Chne noted, "it's not that easy to turn them off."^ Or, as one militant 
Cuban who landed at the Bay of Pigs later put it, "Everyone thought they 
could wash their hands of it. But when the day came to wash their hands. 



Contragate: The Disposal Problem 127 

they could find neither soap nor water, and their hands stayed covered in 
mud."'^ 

Kennedy subsequently hit on a two-track approach to disposal: He 
cracked down on exile raiders operating against Cuba from U.S. soil while 
encouraging them to find offshore bases with CIA support. So long as their 
attacks could be directed away from U.S. targets and citizens, the CIA 
would continue to supply weapons, speed boats and even planes for use 
from Nicaraguan and Costa Rican staging areas. ^ 

But the strategy became a political issue of national significance after 
some anti-Castro guerrillas vowed resistance to Washington and some 
politicians — notably Richard Nixon — denounced Kennedy's efforts to 
"quarantine" the exiles. In New Orleans, Carlos Bringuier of the Revolu- 
tionary Student Directorate (DRE) pledged that his group "would continue 
efforts to liberate Cuba despite action by the United States to stop raids 
originating from U.S. soil."^ Eventually the FBI, CIA and at least two 
committees of Congress would take seriously the possibility that right- 
wing extremist exiles may have taken revenge by assassinating Kennedy. 

Keimedy's successors had no greater success in "disposing" of the 
violent and poorly adjusted minority of exiles for whom guerrilla war had 
become a way of hfe. "The problem was never worked out to everyone's 
satisfaction because it was so difficult," explains Phillips. "Some people 
entered American society with no trouble. But some who were revolution- 
aries were inchned to become terrorists. Terrorism among Cuban exiles 
became a real problem."' Indeed, exile bombings and assassinations 
wracked this nation from Miami to New York since the early 1960s. 

Some exiles, moreover, put their clandestine training to use in the 
lucrative field of drug smuggling. By the early 1970s, law enforcement 
officials estimated that no fewer than 8 percent of the Bay of Pigs army had 
been arrested or convicted of drug crimes.'" Many terrorists, in turn, 
financed their underground operations by importing marijuana, cocaine or 
heroin. 

Still other exiles became professional guerrillas, signing up for CIA 
missions in the Congo, Bolivia, Vietnam or Central America; joining the 
intelligence agencies of other Latin nations like Venezuela or Costa Rica; or 
taking on domestic missions like the Watergate burglary of June 1972, led 
by former Bay of Pigs political officer E. Howard Hunt. 

Drugs, terrorism, political destabilization: The American people and, 
indeed, people throughout the world, have paid a heavy price for the U.S. 
government's unleashing a war it could not contain. The contra war is far 
from concluded, but already it shows all the signs of producing a monster 
that will attack its creator. 



128 



The Iran-Contra Connection 



The Terrorist Blowback 

Mention "terror" and the average American thinks of fanatical Iranian 
mullahs or Palestinian hijackers — but the greatest terrorist threat to the 
United States in recent times has originated not overseas, but much closer to 
home, with Cuban exile extremists bent on avenging the loss of their 
homeland. 

Their bombings and assassinations, on U.S. soil and around the 
Caribbean, reached a crescendo in the mid-1970s, and have tapered off 
since only gradually. But the Cuban exile terrorists may someday be 
succeeded by an equally militant group of Nicaraguan exile terrorists, if the 
contras are similarly sent into battle and then hung out to dry. 

Orlando Bosch, a longtime leader in the anti-Castro movement, 
epitomizes the exile terrorist frustrated by the loss of official support. In an 
orgy of violence in 1968, his group blew up a Japanese freighter in Tampa, 
damaged a British vessel off Key West and bombed eight diplomatic or 
tourist offices in New York and Los Angeles to punish nations doing 
business with Cuba. Bosch was finally arrested while firing a bazooka 
against a Polish freighter in Miami Harbor. 

Sprung from jail four years later with help from powerful Florida 
poUticians, ' ' Bosch went abroad to carry on his crusade. "His main goal," 
according to one reporter who interviewed him in jail, "was to forge 
alliances with friendly governments in [Somoza's] Nicaragua, the Domin- 
ican Republic, Costa Rica and Venezuela — all countries with powerful 
Cuban exile communities." He bombed embassies in Caracas and Buenos 
Aires and arranged the murder of two Cuban diplomats in Argentina. On 
instructions from the Chilean military junta, he went to Costa Rica to 
assassinate a prominent Chilean leftist and — as an added bonus — ^plotted to 
kill Henry Kissinger who was due to arrive at the same time. In 1976, he 
played a prominent role in a meeting of 20 exile terrorist leaders who 
gathered in the Dominican Republic to form an umbrella organization for 
their desperate acts: Coordination of United Revolutionary Organizations 
(CORU). At least four other exiles from that elite terrorist fraternity later 
turned up in Central America as mihtary backers of the contras.'^ 

Offered up to the United States as a parole violator by both Venezuela 
and Costa Rica, Bosch had nothing to worry about. The Justice Depart- 
ment didn't want him back.''* Washington had solved its "disposal 
problem" by sending him abroad to attack pro-Cuban targets. 

Bosch was only one of many exiles who turned CIA training in 
demohtion, assassination and irregular warfare into tools of a hfelong trade. 



Contragate: The Disposal Problem 



129 



For years these exile terrorists, the flotsam and jetsam of the failed covert 
war against Castro, sponsored by benefactors at the highest levels of 
government, got the upper hand of law enforcement agencies. 

"I realize that part of what is happening in Miami today has sprung out 
of the Central American era," reflected Bay of Pigs leader Manuel Artime 
in 1977. "You must understand it was with an enormous patriotic sense 
these men went into training and it is bad to kick them out to the street. 
Because out of frustration and misguided patriotism come some senseless 
acts, like terrorism."'^ 

Artime himself was hardly the innocent social observer. Responsible 
for a lethal commando raid against an innocent Spanish freighter in 1964, 
Artime later used his influence to free Bosch from a Costa Rican jail.'* 

Nor was Artime's sponsor, the CIA, any more innocent. It built the 
very infrastructure of terror. Michael Townley, who hired Cuban exiles to 
assassinate former Chilean ambassador Orlando Letelier in Washington, 
D.C. in 1976, said, "The one thing 1 found out in Miami. ..[was that] due to 
all the stuff that they had obtained from the CIA. ..you could buy plastic 
explosives on any street just like you'd buy candy — weapons, explosives, 
detonators, anything that you wanted — and it was exceedingly cheap. "'^ 

Today a similar infrastructure of terror supports the Nicaraguan 
contras in the CIA-backed struggle against the Sandinistas. The violence it 
feeds has already spilled over to neighboring countries in Central America. 
And it may be only a matter of time before the terrorist methods it 
encourages also turn against the United States — an example of what 
intelligence professionals term "blowback." 

Like the Bay of Pigs Cubans who apparently got their deadly training 
in Guatemalan camps from East European SS veterans recruited by the 
CIA,'* many contras in turn have learned their trade from veteran Cuban 
exile terrorists. 

Those former Cubans gravitated to the contra cause from the start for 
ideological reasons. For those emigres, indeed. Central America became a 
prime "disposal" ground in the Reagan years just as it had been under 
Keimedy. Felipe Vidal, a Cuban-American active in Costa Rica on behalf 
of the contras, explained: 

During the 1970s the form of [our] struggle was terrorism against Castro 
in Mexico, France, Barbados and the United States. President Carter 
created this wave of Cuban [exile] terrorism because he began to 
negotiate with Castro. Once Reagan got into power, there was no need for 
these organizations because the government's policy coincided with the 
Cuban community's. In 1982, when Reagan came to Miami, he 



130 



The Iran-Contra Connection 



told us he was willing to support Cuban revolutionaries outside the U.S., 
just as long as nothing went on inside the U.S. So that's why we're here." 

Central America was not the only theater of Cuban exile-contra 
collaboration. Some of the earliest pro-Somocista contra contingents got 
their training in the backwaters of Florida, under the benign eye of 
Washington. The former director of Orlando Bosch's New York terrorist 
operations set up a training camp in 1981 to "share intelligence and 
coordinate maneuvers" with ex-Nicaraguan National Guardsmen and 
ruthless military representatives of Guatemala and Chile.^" 

But the real work went on in obscure faciUties in Honduras and 
Guatemala, where feared Argentine counterguerrilla specialists, fresh from 
an extermination campaign that took the lives of at least 9000 civihans in 
their own dirty war, came to teach the contras (and local death squads) 
what they knew of killing. The Argentinians included Army intelligence 
specialists and paramilitary thugs who had carried out the bloody work 
back home. Their method of urban counterinsurgency was simple but 
effective: kidnap suspects, question them under torture, kill and then repeat. 
They called it the "cleaning operation. "^^ 

Such techniques were appreciated by one Salvadoran rightist who told 
an American reporter, "The Argentines were a great help to the death 
squads (in Guatemala). Before, they used to kill right away. The 
Argentines taught them to wait until after the interrogation."^^ 

The head of the CIA-financed Argentine training mission in Honduras 
in 1981 was Col. Osvaldo Ribeiro, an urban warfare expert nicknamed 
Little Bullet. Based more on his own experience than the objective situation 
facing the contras, Ribeiro and his colleagues counseled a campaign of 
urban terrorism, not rural guerrilla war. The Argentines had no scruples 
about killing prisoners, which became a regular contra practice.^^ They had 
willing students: Many of the contra commanders were themselves 
graduates of Argentine military academies.^* 

Joining the Argentine trainers were at least two notorious Cuban CIA 
veterans. One of these was Felix Rodriguez, who helped blow up a Spanish 
freighter in 1964 under Manuel Artime's direction, interrogated Che 
Guevara just before his murder in 1967, and advised on counterinsurgency 
tactics in Vietnam. After his 1981 stint with the Argentines in Honduras, 
Rodriguez moved on to El Salvador where he handled contra supply 
shipments at llopango air force base.^' 

(One of his cohorts in that later contra supply operation was a fellow 
CIA special warfare expert, Luis Posada, who joined Orlando Bosch in a 
series of attacks on Cuban sugar mills and fishing boats in the 1960s. In 



Contragate: The Disposal Problem 



131 



1971, Posada allegedly took part in a CIA-sponsored plot to murder 
Castro in Chile. As a top officer in Venezuelan intelligence, where he 
worked with several other Cuban exiles still reporting to the CIA, Posada 
arranged protection for Bosch while the latter engaged in political 
bombings and murders throughout Latin America. The two met again 
during the June 1976 terrorist summit in the Dominican Republic to form 
CORU. After CORU took credit for the October 1976 bombing of a 
Cubana Airlines jet, which killed all 73 passengers aboard, Venezuelan 
authorities arrested Posada and Bosch for plotting the deed. In Posada's 
papers were found a map of Washington, D.C. with the work route of 
former Chilean ambassador Orlando Letelier, murdered in September 
1976 by Cuban exiles working for the Chilean secret poUce, DINA.^^) 

Yet another Cuban on hand to serve the Argentinians in 1981, 
according to CIA-trained saboteur and contra suppUer Rafael Quintero, 
was Dionisio Suarez. Suarez attended the CORU meeting in the Domini- 
can Republic with Posada and was later indicted as a conspirator in the 
1976 Letelier assassination.^^ He apparently joined the nascent contra 
movement in Guatemala on a Costa Rican passport.^' Before then, but after 
jumping bail on the Letelier case, Suarez reportedly "set off a bomb aboard 
a TWA airliner, firebombed the Soviet UN mission, and informants said he 
was in Union City the day before the Cuban diplomat was gunned down in 
New York."^° Suarez apparently belonged to a CIA unit that trained 
Nicaraguan exiles in sabotage and demolitions.^' 

Argentine methods, responsible back home for the "disappearance" of 
thousands of civilians under the military dictatorship, quickly took root 
with the contras. A 1982 Defense Intelligence Agency report noted that 
one typical contra operation included "the assassination of minor govem- 
ment officials and a Cuban adviser. "''^ The CIA officer in charge of the 
covert war, Duane "Dewey" Clarridge, admitted in 1984 that the contras 
were routinely murdering "civiUans and Sandinista officials in the provin- 
ces, as well as heads of cooperatives, nurses, doctors and judges." Clarridge 
said "there were no rules, no restrictions and no restraints at all on what the 
contras did inside Nicaragua." 

Still he justified the killings: "After all, this is war — a paramilitary 
operation."^' 

Indeed, a CIA-prepared briefing manual instructed the Nicaraguan 
rebels on the "Selective Use of Violence for Propagandistic Effects." 
Employing the standard euphemism for assassination, it advised readers "to 
neutralize carefully selected and planned targets such as [judges], police and 
State Security officials, CDS chiefs, etc."^'' 



132 



The Iran-Contra Connection 



Apparently the contras took that advice. "Frankly, 1 admit we have 
killed people in cold blood when we have found them guilty of crimes," 
said Edgar Chamorro, a director of the Nicaraguan Democratic Front, in 
1984. "We do beUeve in the assassination of tyrants. Some of the 
Sandinistas are tyrants in the small viUages."^^ Later, when Chamorro had 
left the contra movement in disgust, he described the process in more detail: 

FDN units would arrive at an undefended village, assemble all the 
residents in the town square and then proceed to kill — in full view of the 
others — all persons suspected of working for the Nicaraguan govemment 
or the [Sandinistas], including police, local miUtia members, party 
members, health workers, teachers, and farmers from government- 
sponsored cooperatives."^* 

Today the policy of terror seems as firmly implanted as ever. 
Reporters have documented the contras' strategy of targeting rural clinics, 
schools and agricultural cooperatives in order to undermine the Sandinistas' 
hold on the countryside.^^ The human rights organization Americas Watch 
reported in 1987 that the contras "still engage in selective but systematic 
killing of persons they perceive as representing the government, in 
indiscriminate attacks against civiUans...and in outrages against the personal 
dignity of prisoners. The contras also engage in widespread kidnapping of 
civihans, apparently for purposes of recruitment as well as intimidation; a 
significant number of the kidnap victims are children. "^^ Independent 
study missions to Nicaragua and the admissions of a former top security 
officer to the contras have confirmed these findings. 

No less troubling, the practice of terror against Nicaragua is leaving a 
bloody stain throughout the region. Nicaraguan exiles, like the Cubans 
before them, have become freelance killers in the service of shadowy death 
squads estabUshed and coordinated by CIA-trained Central American 
security forces. 

A former top Salvadoran intelligence official charged in 1985 that the 
contras' intelligence chief Ricardo Lau — a former torturer and hatchet man 
for Nicaraguan dictator Anastasio Somoza — had been paid $120,000 to 
arrange the assassination of El Salvador's Archbishop Oscar Romero in 
1980. The kilUng was apparently carried out by two former Nicaraguan 
National Guardsmen along with two Salvadoran soldiers. The former 
intelligence chief also accused Lau of having "played a key role in training 
the death squads" blamed for upward of 50,000 deaths in El Salvador, from 
his base in Guatemala."*" Reportedly helping Lau in that latter task were 
Argentine torture experts and several Cuban-Americans working for the 
CIA and miUtary.'*' 



Contragate: The Disposal Problem 



133 



Lau bore further responsibility for political killings in Honduras, a 
country with no tradition of such brutahty. With his help, Argentine 
advisers and anti-Sandinista contras joined CIA-advised Honduran secur- 
ity forces to systematically eliminate suspected Honduran leftists between 
1981 and 1984, according to U.S. and Honduran officials. These death 
squad victims totalled more than 200 during that period. Locals began 
talking of the "Argentine method" as a new import. CIA officials "looked 
the other way" when people disappeared, according to one American 
official there. The violence tapered off only after the ouster of the CIA- 
backed, Argentine-trained and notoriously corrupt Honduran miUtary 
commander. General Gustavo Alvarez Martinez.''^ 

Even so, the terrorist violence continues there, if more sporadically. 
The Honduran army major who first exposed the existence of these death 
squads was found, torture-murdered and largely decomposed, near the 
Nicaraguan border in September 1985."' A year earlier he had publicly 
charged the CIA with establishing a secret Honduran military intelligence 
unit responsible for pohtical kilhngs and he had accused the anti-Sandinista 
FDN with doing much of the dirty work.""* Police later charged three 
contras with his savage murder."*^ 

In Guatemala, such violence had long been institutionalized by 
security forces organized by the CIA, trained by Argentine and Chilean 
torture specialists and supported by Israeli computer and weapons 
experts. From his sanctuary in Guatemala, the Somocista torturer Lau 
was by late 1980 directing the "September 15 Legion," a group of former 
Nicaraguan National Guard officers financed by the Argentines and one of 
Somoza's cousins, in the "bloody underworld of politics and crime" 
controlled by Guatemalan veterans of the 1954 CIA coup. "There were 
robberies and kidnappings, threats and extortions," reports Christopher 
Dickey. "There were murders. Market vendors at the bus terminal in 
Guatemala City's fourth zone were prey to the operations described as 
'recuperating funds'.... And other actions were more political. There were 
jobs for the Guatemalan police and for certain Salvadoran exiles." And 
joining them all were members of the Argentine military formerly detailed 
to Somoza's Nicaragua.'*^ 

By no means were aU the contras so friendly toward the fascist element 
in Latin poUtics. But with the Argentinians in control of the purse-strings 
(as proxies, by the summer of 1981, for the CIA), the more democratic 
opponents of the Sandinistas carried little weight. Even honest conserva- 
tives could not call the shots. In late 1981, six major contra officers in the 
September 15 Legion rebelled against their leaders, demanding the ouster 
of Lau and his allegedly corrupt boss Col. Enrique Bermudez on grounds 



134 



The Iran-Contra Connection 



of "misuse of funds," "negligence of duty," "lying," and "lack of patriotic 
spirit." But the Argentine bosses prevailed. Bermudez and Lau purged 
their enemies.'*^ 

Nicaraguan exiles and their fellow Latins have no monopoly on anti- 
communist terror in the region. According to at least two direct partici- 
pants, a group of American mercenaries and a White House representative 
met in Miami in January 1985 to discuss plans to assassinate the U.S. 
ambassador to Costa Rica, Lewis Tambs. According to one of the 
mercenaries in on the planning, the same team had planted the bomb in May 
1984 that aimed to kill Eden Pastora, the dissident contra leader who had 
fallen from favor with the CIA. Now they talked of bombing the U.S. 
embassy in San Jose and making it look like a Sandinista job. As an added 
bonus, a cocaine drug lord would pay for the operation in revenge for 
Tambs' prior anti-drug crusade while ambassador to Colombia. The 
defection and arrest of several of the participants ultimately nixed the plot.'*' 

And so the circle begins to close back on the United States. A much- 
feared Cuban-American terrorist, Frank Castro, once declared, "I beheve 
that the United States has betrayed freedom fighters around the world. 
They trained us to fight, brainwashed us how to fight and now they put 
Cuban exiles in jail for what they had been taught to do in the early 
years."'" 

Ten years from now, will embittered Nicaraguan exiles be making the 
same pronouncements in Miami, New York or San Francisco? Will the 
United States once again inherit the terrorism it sponsors abroad? 



An Army of Smugglers 

The First Lady tells kids tempted by drugs to "just say no." But her 
advice goes unheeded by some of the CIA's closest alUes. 

America's drug problem today is arguably, in large measure, an 
outgrowth of the "secret war" against Fidel Castro begun under Presidents 
Eisenhower and Kennedy. And America's drug problem of tomorrow may 
similarly grow out of the Reagan administration's "secret war" against the 
Sandinistas. 

The connection isn't fanciful. Over the years, federal and local law 
enforcement officials have found CIA-trained Cuban exiles at the center of 
some of this nation's biggest drug rings. They had the clandestine skills, the 
Latin connections, the pohtical protection and the requisite lack of scruples 
to become champion traffickers. 



Contragate: The Disposal Problem 



135 



"A great many of the drug smugglers in Miami today are Bay of Pigs 
veterans," notes one Florida drug prosecutor who requested anonymity. 
"That's why they're so tough. They are intelligence trained. That's why 
we're having such a tough time."'' 

In 1974, a joint federal-state drug task force reached the same 
conclusion while investigating meetings between exiles and mobsters in 
Las Vegas. The Cubans were all Bay of Pigs veterans and criminal 
associates of Santo Trafficante, Jr., the Florida mob boss recruited by the 
CIA in 1961 to murder Castro. 

"The CIA not only taught these individuals how to use weapons but 
made them experts in smuggling men and material from place to place under 
Castro's nose," the task force report observed. "This training seems to be 
apphed here."'^ 

In 1970, strike forces in 10 cities around the country rolled up one of 
the biggest hard-drug networks of all time, said to control 30 percent of all 
heroin sales and up to 80 percent of all cocaine in the United States.'^ 

One of the ringleaders was a Cuban exile veteran of Operation 40, a 
secret CIA counterintelligence and assassination program set up at the time 
of the Bay of Pigs invasion. This 150-man operation was quietly 
disbanded in the late 1960s after one of its planes crashed in Cahfornia with 
several kilos of heroin and cocaine aboard.'^ 

Among the reported employees of this Cuban drug kingpin were two 
exile brothers, Ignacio and Guillermo Novo, who won a certain notoriety 
by firing a bazooka against the United Nations building in 1964. 
Guillermo was later convicted of being an accessory to the 1976 murder of 
former Chilean ambassador Orlando Letelier in Washington, D.C. (a 
decision overturned on appeal).^* 

Those brothers, who reportedly financed their organization from drug 
sales, were represented at the infamous summit conference of exile groups 
in June 1976 at a site in the Dominican Republic. In attendence, as we 
have seen, were such alleged terrorists as Orlando Bosch and Luis 
Posada, both arrested later in Venezuela for planning the bombing of a 
Cubana AirUnes jet. 

Another exile representative at that terrorist convention was Frank 
Castro, a Bay of Pigs veteran and head of the Cuban National Liberation 
Front. Castro, who received special guerrilla training at Fort Jackson, has 
been linked by investigators on the staff of Sen. John Kerry, D-Mass., to 
the contra cause.'^ 

Castro was a key operative in the smuggling organization of a fellow 
Bay of Pigs veteran who imported no less than one-and-a-half million 
pounds of marijuana before his arrest in 1981. Also implicated was an exile 



136 



The Iran-Contra Connection 



whose steamship company served the CIA in its abortive 1961 invasion of 
Cuba.^* 

Last but not least, Frank Castro was a close friend and parachute- 
training partner of Rolando Otero, one of Miami's most notorious 
bombers. Before his capture. Otero took out an FBI office, two post office 
buildings, a Social Security office, a bank and an airport locker. In 1983 he 
was convicted of a giant marijuana conspiracy .^^ 
The list could continue ad iirfinitum. 

These men were not bom drug criminals. They became smugglers for 
several reasons: to finance the anti-Castro struggle, to punish the host 
country that let them down, to apply the only skills they knew and to re- 
experience the thrill of clandestine operations. 

Precisely the same motives may someday spur another CIA -created 
and CIA-trained group of exiles, the Nicaraguan contras, into replacing the 
Cubans as America's premier drug smugglers. 

The process has already started. In late 1984, two reporters for the 
Associated Press wrote that "Nicaraguan rebels operating in northern 
Costa Rica have engaged in cocaine trafficking in part to help finance their 
war against Nicaragua's government, according to U.S. investigators and 
American volunteers who work with the rebels." 

The smuggUng was reported to involve "individuals from the largest 
of the U.S. -backed counterrevolutionary, or contra, groups, the Nicara- 
guan Democratic Force (FDN) and Revolutionary Democratic Alliance 
(ARDE), as well as a spUnter group known as M3." 

Their sources confirmed that "two Cuban-Americans used armed 
rebel troops to guard cocaine at clandestine airfields in northern Costa Rica. 
They identified the Cuban- Americans as members of the 2506 Brigade, the 
anti-Castro group that participated in the 1961 Bay of Pigs attack on 
Cuba."^° 

After numerous denials, the Reagan administration finally admitted 
that one contra group — formerly but no longer supported by CIA funds — 
helped a Colombian trafficker move drugs to the United States in return for 
money and materiel.^^ Adolfo Chamorro, one of the leaders of this group 
(ARDE), was arrested in April 1986 by Costa Rican authorities in the 
company of two Cuban exiles and held on suspicion of drug trafficking.^^ 

The administration's reticence on this subject owes less to ignorance 
than political interest. Thus one convicted smuggler, a former crop-dusting 
pilot from Arkansas, claims to have flown 1500 kilograms of cocaine from 
the farm of a CIA operative in Costa Rica to the United States. "It was guns 
down, cocaine back," he said. The two-way traffic was conducted "with 
the full knowledge and cooperation of the DEA and the CIA," he claimed. 



Contragate: The Disposal Problem 



137 



His partner, convicted smuggler and speed-boat champion Jorge Morales, 
confirmed, "The CIA was very, very aware of it."^^ 

Whatever the extent of official administration complicity, anecdotal 
evidence abounds of broader contra involvement with drugs. Two 
smugglers convicted in the 1983 "frogman" case — which netted federal 
agents 430 pounds of cocaine off a Colombian freighter in San Francisco 
harbor — admitted their connection to the anti-Sandinista cause. One of 
them, a former member of Somoza's air force, testified that the proceeds of 
his deals "belonged to.. .the contra revolution." The other said he deposited 
hundreds of thousands of dollars from cocaine profits in the coffers of two 
Costa Rica-based contra groups and helped arrange arms shipments for 
Fernando Chamorro, a "hard-drinking, hell-raising" leader of a small 
contra group in Honduras.*'' 

A Nicaragua!! exile now hving in Costa Rica, Norwin Meneses- 
Canterero, has been named by a DBA report as "the apparent head of a 
criminal organization responsible for smuggling kilogram quantities of 
cocaine to the Uruted States." He himself ad!iuts trafficking in cocaine "for 
about six months" in 1982; the DEA first suspected him of criminal drug 
activities back in 1976, when his brother was chief of the Managua police. 
Meneses, according to former contra members, "helped finance at least four 
contra functions" in the United States "a!!d sent a truck and video 
equipment to FDN members in Honduras." He was also reported to have 
visited the FDN's military commander, Enrique Bermudez, in Honduras in 
1983.*' 

At a 1986 drug trial in Costa Rica, according to CBS Evening News, 
"the government presented wire-tapped phone conversations between 
Horacio Pereira, charged with drug deaUng, and contra leader Huachan 
Gonsalez. In the conversations the men discuss large amounts of cocaine 
they were sending to the United States. The wire-tapped phone calls show 
the drug dealers have ties to the highest level of contra leadership in Costa 
Rica."** Pereira supplied the the frogman case defenda!!ts with cocai!!e and 
was an associate of Meneses.*^ 

In May 1986, Costa Rican agents arrested a Cuban exile carrying 204 
kilos of cocaine at a small air landing strip. A Costa Rican arrested later in 
the same case deiued knowledge of any drugs but said he had been asked by 
the Cuban to help smuggle arms for the contras.** 

One former FDN guerrilla, who left the FDN in 1982 out of disgust 
over the "corruption" in its higher ranks, charged that "Troilo Sanchez, 
brother of Aristides Sanchez who is a member of the FDN directorate, was 
caught it! Costa Rica with pillows full of cocaine." Troilo, who allegedly 



138 



The Iran-Contra Connection 



sold 200 pounds of cocaine for $6.1 million, is also the brother-in-law of 
contra political leader Adolfo Calero.*^ 

Summing up a group of similar tales, CBS correspondent Jane Wallace 
reported in 1986: "According to many in the private aid network some of 
the same secret routes used to bring weapons to the contras carry cocaine 
back to the United States. Contra suppUers taking advantage of their covert 
connections to run cocaine (sic)."^" 

One beneficiary of these air operations was said to be Jorge Ochoa, 
co-leader of Colombia's giant drug cartel. A contra-Ochoa connection 
seems more than plausible. One prominent Nicaraguan rebel, M3 leader 
Sebastian Gonzalez Mendiola, was charged by Costa Rican authorities in 
November 1984 with drug trafficking. He subsequently told U.S. 
authorities that the Colombian cocaine cartel was paying his group 
$50,000 to help move a 100 kilogram cocaine shipment.^' 

One of the contras' Miami-based weapons smugglers suppUed an 
assassination weapon to a group of Colombian hit men who murdered the 
U.S. government's chief witness against Ochoa, Barry Seal.'^ Seal, indicted 
in 1972 for a heroin-for-guns deal with anti-Castro exiles in Mexico,^^ 
began smuggling marijuana and cocaine on a regular basis in 1977. In that 
capacity Seal became well acquainted with the cocaine- wholesaling Ochoa 
family. Turned as an informant by the Miami DBA, Seal helped federal 
drug agents indict the major heads of the Colombian drug cartel: Jorge 
Ochoa, Pablo Escobar and Carlos Lehder.'"* In the same period. Seal was 
said to have become "a key asset in an elaborate logistics network of 
'private' suppliers, fund-raisers, transporters and advisers recruited by the 
White House to circumvent congressional restrictions on U.S. aid to the 
contras."^' One of the planes he had flown on drug runs as a DBA 
informant was later shot down over Nicaragua while on its way to a supply 
drop for the contras.^^ 

Ochoa's partner Pablo Bscobar also has direct ties to the contra cause. 
According to a Miami-based Cuban exile involved in arms smuggling to 
the Nicaraguan rebels, Bscobar offered to finance a plot by U.S. mercenaries 
and other contra backers to assassinate the U.S. ambassador to Costa Rica, 
Lewis Tambs. The bombing would serve to discredit the Sandinistas. And, 
of most interest to Bscobar, it would eliminate the man who had previously 
led Washington's anti-drug crusade in Colombia as ambassador to 
Bogota." 

The same Cuban informant said "It is common knowledge here in 
Miami that this whole contra operation in Costa Rica was paid for with 
cocaine. Bveryone involved knows it. I actually saw the cocaine and the 



Contragate: The Disposal Problem 



139 



weapons together under one roof, weapons that I helped ship to Costa 
Rica."^^ 

One result of the U.S. covert war against Nicaragua will thus surely be 
to make nonsense of the anti-drug push so lavishly funded by Congress. 
Washington has given less scrupulous elements of the contras all the 
training, support, cormections and motive to graduate into the top ranks of 
the international drug underworld. They are well on their way to climbing 
the ladder. 



A Region Under Fire 



The fragile democracies — and dictatorships — of Central America and 
the Caribbean have never been the same since the CIA dumped in their 
midst a small army of well-trained, well-financed and well-armed Cuban 
exile guerrillas after 1961. 

The failed Bay of Pigs invasion let loose upon the region a force of 
zealots without a home to call their own. Their subsequent coup attempts, 
bombings, invasion plots and assassination conspiracies have perilously 
destabilized an already unstable region. 

With the formation of another, even larger guerrilla army — the 
Nicaraguan contras — the Reagan administration may be setting the stage 
for another round of regional political turmoil far more harmful to U.S. 
interests than anything the Sandinistas could do in Nicaragua. 



Costa Rica 

Few nations ever suffered the indirect brunt of U.S.-sponsored 
"covert" wars against leftist targets in this hemisphere more than Costa 
Rica, Central America's showcase democracy. 

By late 1963, Costa Rica was host to two CIA-sponsored anti-Castro 
training camps. From there (and similar camps in Nicaragua) exile 
commandos under the direction of future Somoza business partner Manuel 
Artime infiltrated Cuba for hit-and-run sabotage missions. In May 1964 a 
team attacked a Cuban sugar mill, destroying 70,000 bags of sugar. Four 
months later another fired on a Spanish freighter off the coast of Cuba, 
killing the captain and two crew members.^' 

But Costa Rica was sadly mistaken if it hoped to buy immunity from 
rightist subversion. 



140 The Iran-Contra Connection 

In 1965 its security forces shut down the camps, ostensibly after 
discovering a smuggling operation in their midst. Actually, the exiles had 
been plotting with Nicaraguan dictator Anastasio Somoza, Dominican 
Republic military officers and local right-wing extremists to assassinate 
Costa Rican government leaders and install a right-wing dictatorship. 
According to a contemporary news account. 

The Cubans involved apparently believe a rightist government would be 
more willing to back military attacks on Cuba. Members of the neo-Nazi 
group are understood to have been given military training in the Cuban 
camp. With arms provided by the Cubans, the reports say, this group had 
planned to assassinate President Francisco Orlich; Jose Figueres, former 
president and one of the original leaders of the Latin America democratic 
left; and Daniel Oduber, former foreign minister and front-ruimer in the 
presidential election scheduled for next February. ^° 

The right-wing Free Costa Rica Movement (MCRL), founded in 
1961 with U.S. support to mobilize the nation against Castro, was almost 
certainly implicated in that plot.^' It was also accused of plotting the 
assassination of President Jose Figueres in 1970 and a coup in 1971, with 
help from a Guatemalan death squad leader, following a series of poUtical 
openings by the elected government to the Soviet Union. MCRL may 
again have been imphcated in a coup attempt in 1974, with support from 
Cuban exiles and the Chilean secret police, this time after the foreign 
minister made overtures to Cuba.**^ 

Today the Free Costa Rica Movement reportedly still maintains close 
relations with Guatemalan death squads and a Miami-based Cuban exile 
organization. Alpha 66. Always prepared for future emergencies, its 1000- 
member paramihtary branch trains with Israeli Gahl rifles, mortars and 
even anti-aircraft weapons, some of which were reportedly bought from a 
CIA-linked American rancher in northern Costa Rica.**"* The MCRL has 
led the call for the creation of U.S.-trained counterinsurgency forces, in a 
country whose constitution bars the formation of a standing army.^' 

Today the MCRL plays an important support role in the U.S.- 
sponsored contra war. One of its leaders, Bemal Urbina Pinto, a protege of 
the late Spanish dictator Francisco Franco, helps direct the Latin branch of 
the World Anti-Communist League, which has supplied arms and money 
to the contras. In 1981 he reportedly "met with Argentine military agents 
and exiled Nicaraguan National Guardsmen to plot the overthrow of the 
Sandinista regime."**'' Two representatives of the MCRL also conferred 
with an Argentine intelligence office that year to discuss means of 



Contragate: The Disposal Problem 



141 



pressuring the Costa Rican government to support contra operations; at the 
same time "there was talk with assistants to the Costa Rican foreign 
minister of setting up an incident in which the Sandinistas would appear to 
have made attacks inside Costa Rican territory," possibly including the 
assassination of dissident contra leader Eden Pastora, a thom in the side of 
the Somocistas.^^ In recent years, MCRL followers have disrupted the 
Legislative Assembly, mounted a riot outside Nicaragua's embassy (killing 
two civil guardsmen), and attacked the Central America Peace March.** 

Ironically, given this history of MCRL- sponsored violence, one of the 
movement's founders, the American-educated Benjamin Piza Carranza, 
ran the Ministry of Security from September 1984 until the late spring of 
1986. A strong contra sympathizer, he reportedly owed his job to U.S. 
pressure.*' He did little to curb what one of his predecessors in that post 
charged was a disturbing shift toward the "extreme right" and to 
"anticommunist hysteria" fed by groups like the MCRL.'° For example, 
his security forces did nothing to prevent the MCRL's attack on the 
Nicaraguan embassy in June 1985, despite having advance warning.'^ 

Even apart from the Free Costa Rica Movement, the contra rebellion 
has profoundly polarized the nation and introduced violence and nulitarism 
into its politics. 

In December 1980, for example, a detachment from the September 15 
Legion, the Somocista core of the fledgling contra movement, was sent by a 
group of Argentine advisers to knock over a left-wing radio station 
broadcasting revolutionary propaganda. The miUtary junta under Presi- 
dent Roberto Viola in Buenos Aires wanted it silenced in order to quiet the 
voice of exiled members of the Argentinian Montonero guerrilla move- 
ment. The Legion's first major miUtary operation failed, however, as Costa 
Rican police picked up the unsuccessful saboteurs.'^ 

That wasn't the end of the story, however. The MCRL stepped up its 
campaign to discredit the radio station and succeeded in having its license 
canceled.'^ Ten months after the attack, five commandos from a splinter 
group of the September 15 Legion hijacked 20 passengers and three crew 
members aboard a plane from Costa Rica's national airline. The terrorists 
threatened to kill the entire lot if Costa Rica did not free the jailed Legion 
members. Costa Rica met the demand, releasing the prisoners to El 
Salvador. The five hijackers and six free prisoners were detained by 
authorities in San Salvador — only to become the targets of rescue by a 
right-wing Salvadoran terrorist squad that attempted to take Salvadoran 
citizens hostage.'" Later the same contra group bombed a Nicaraguan 727 
jet in Mexico City and a Honduran plane in Managua.'^ 



142 



The Iran-Contra Connection 



The presence of as many as 8,000 armed contras and free-floating 
Nicaraguan exiles in northern Costa Rica made hfe tense and often 
dangerous for local citizens. Costa Ricans complained of armed bands 
robbing cattle, kidnapping families, intimidating local news broadcasters, 
trafficking in drugs and arms and pillaging small rural communities.^® 
Border provocations by contra forces have, on occasion, brought Costa 
Rica close to war with Nicaragua.^' With only a token security force at its 
disposal, the central government could not easily call the shots. 

Nor, under the conservative, anti-Sandinista administration of Presi- 
dent Luis Alberto Monge'** and Security Minister Piza, did the government 
always want to restrain the contras or preserve the country's neutrality. 
According to U.S. mercenaries jailed in Costa Rica, the Civil Guard during 
Monge's administration regularly supplied logistical information, vehicles 
and sanctuary to contras on the southern front.^' 

The U.S.-supported contra struggle hastened Costa Rica's sUde 
toward a partisan, militarized state by raising a host of new security 
problems that only Washington (and Israel) could help solve. In response 
to the drug epidemic brought by the contras and their air strips, for 
example, the United States conducted an "anti-drug" helicopter operation 
in the country in the spring of 1984 and proposed estabhshing a police 
training school under the auspices of the Drug Enforcement Administra- 
tion, which took over foreign police training from the CIA in the mid- 
1970s.'™ In 1986, the U.S. Southern Command in Panama laid plans with 
Costa Rica to help establish two naval faciUties, ostensibly to control drug 
traffickers.'"' 

On the military front, the pressures of war pushed Costa Rica steadily 
into Washington's arms. In 1982, following contra-provoked tensions 
between Nicaragua and Costa Rica, the once -pacifist nation set up a 
"Special Intervention Unit" for counterterrorist and security functions, 
with U.S., IsraeU and West German assistance. In 1984, after a cabinet 
shakeup triggered by MCRL agitation, the new security minister, 
Benjamin Piza, arranged training of Civil Guard units in Honduras and 
Panama under U.S. auspices. The course work included anti-guerrilla 
operations, explosives, nocturnal navigation, and aerial mechanics. The 
next year, without first obtaining approval from the Legislative Assembly, 
Monge and Piza also invited into the country a contingent of U.S. Special 
Forces to shape four Civil Guard companies into a special reaction battalion 
against the Sandinistas.'"^ The two leaders upgraded the right-wing, 
civiUan paramilitary Organization for National Emergencies into an 
official rural police reserve force under the president and security minis- 
ter.'"^ And Piza was reported to have helped the CIA-backed FDN contras 



Contragate: The Disposal Problem 



143 



set up a southern base in Costa Rica to challenge Eden Pastora's out-of- 
favorARDE group. 

Senior statesman Jose "Pepe" Figueres, who had three times served as 
Costa Rica's president, decried such moves as "the beginning of militarism 
in our country. "'"^ But they paid off in terms of U.S. aid, which chmbed 
from zero in 1980 to $18.35 million in 1984-85.'°'' 

Under President Oscar Arias, elected in February 1986, Costa Rica 
has taken some steps to reassert its neutrality despite heavy economic 
pressure from Washington.'"^ Arias, who has nothing but criticism for the 
Sandinistas, nonetheless blames the contras for frightening away domestic 
capital, foreign investment and tourism. His government closed an air strip 
in the north used as a base for guerrilla operations and drug trafficking, shut 
down contra medical clinics, barred their military leaders from entering the 
country and beefed up border security to prevent the establishment of 
guerrilla camps."® 

And in late 1986 Arias expelled a prominent veteran of countless 
CIA-sponsored anti-Castro attacks, Armando Lopez Estrada. In 1976, 
Lopez Estrada helped found that decade's most notorious Cuban terrorist 
organization, CORU, along with several fellow exiles who would later 
become prominent in the anti-Sandinista struggle."" Now he had been 
caught with two grenades strapped to the underside of his car. "The U.S. 
government sent me to Costa Rica to do intelligence work," he explained, 
'and serve as liaison to. ..the Nicaraguan contras with the purpose of 
providing them with advisors and miUtary equipment.""' 



El Salvador 

At the opposite political extreme from Costa Rica hes El Salvador, a 
country tom by war and burdened by a series of oligarchies and 
dictatorships throughout most of its history. But much like Costa Rica, it 
has suffered painfully from the intervention of Cuban and Nicaraguan 
exiles primed for war by the CIA. 

Anti-Castro groups in Miami, for example, trained Salvadoran death 
squad killers in retum for financing from wealthy Salvadoran exiles in the 
United States."^ And the demands of the CIA-sponsored contra war have 
undermined the civilian leadership in El Salvador by bolstering the 
autonomous status of Air Force commander Gen. Juan Rafael Bustillo."^ 
Out of his airbase Ilopango, the Cuban CIA veteran Felix Rodriguez 
helped coordinate the contra supply operation. Bustillo, a favorite of the 
CIA and known as "the great untouchable strong man of the death 
squads,""" was able to force the ouster of the government's defense 



144 



The Iran-Contra Connection 



minister in the spring of 1983. "The air force is very jealous of its 
independence," admitted the armed forces spokesman. ^'^ 



Guatemala 

The target of a successful CIA coup in 1954, Guatemala was the host 
to Cuban exile guerrilla bases throughout much of the 1960s. As in Costa 
Rica, some exiles even rose to high positions in government. The country 
naturally became a home to Cuban plotters throughout the region. 

In 1973, certain exiles reportedly conspired to use Guatemala as a 
launching pad for a "triple coup" — not against Cuba but against three 
wayward neighbors in Central America: Costa Rica, Honduras and 
Panama."* 

But also like Costa Rica, Guatemala enjoyed no immunity from right- 
wing Cuban exile plotters despite its hospitality. In 1978, the interior 
minister charged that Guatemala's fascist National Liberation Movement 
(MLN) was conspiring with anti-Castro Cubans and mercenaries from the 
mihtary dictatorships of Argentina and Chile to seize power. The MLN 
took credit for the March 1982 coup that (with Israeli assistance) 
unexpectedly brought to power General Jose Efrain Rios Montt. It has 
been held responsible for several coup attempts since then led by the 
MLN's number two man, Lionel Sisniega Otero."* 

Sisniega once proudly called the MLN "the party of organized 
violence. "'"in 1960 the party founded Guatemala's notorious death squad 
Mano Blanco (White Hand), which butchered thousands of moderate-to- 
leftist students, union leaders and politicians.'^" In its embrace of violence, 
the MLN has even kidnapped wealthy businessmen to raise money for 
election campaigns.'^' The MLN has also been responsible for subversive 
acts throughout Central America. It provided support and sanctuary for 
Salvadoran and Nicaraguan death squads, '^^ and financing for the Free 
Costa Rica Movement in its 1971 coup plot.^^^ 

The party's leader, Mario Sandoval Alarcon, is a veteran of the 1954 
CIA coup. An admirer of Spain's Falange movement and Chile's neofascist 
Patria y libertad, Sandoval once boasted, "I am a fascist."'^ Like his close 
Costa Rican collaborator Urbina Pinto, Sandoval is active in the pro-contra 
World Anti-Communist League headed by retired U.S. general and ex- 
CIA officer John Singlaub. A guest at Ronald Reagan's 1981 inaugural 
ceremony, Sandoval facilitated and inspired the terrorist and death squad 
collaboration between Nicaraguan contras and CIA-funded Argentine 
advisers in Guatemala that same year. He provided the land on which the 
first group of Somocista exiles trained with the Argentines before moving 



Contragatc: The Disposal Problem 145 

to Honduras.'^' And his party is now training hundreds of Guatemalans to 
assist the contras in overthrowing the Sandinistas/^* 



Argentina 

Though far from the scene, Argentina itself has suffered the con- 
sequences of its involvement in the contra war. Thus one contra trainer, a 
former security and intelligence agent under the Argentine military junta, 
was later implicated as the head of a right-wing terrorist cell bent on 
destabilizing the country's revived democracy. Police raids in Buenos 
Aires in mid- 1985 turned up caches of arms, sophisticated electronic 
equipment and uniforms. Authorities linked the rightists to arsenal 
robberies, kidnappings, extortion and several bombings. And several had 
ties to a mid-1970s death squad, the Argentine Anti-Communist Alliance, 
that carried out murders with the help of Cuban exiles and other foreign 
nationals.'^^ One of those Cubans was Luis Posada, who later joined the 
contra supply network.'^** 

But neither Costa Rica, Guatemala, El Salvador nor Argentina faces 
anything Uke the "disposal problem" that will confront Honduras when 
the Nicaraguan contras are turned loose as were the Cubans two decades 
ago. 



Honduras 

Once home to as many as 20,000 anti-Sandinista guerrillas, Honduras 
has an army of only 17,500 men.'^' It can hardly tell the contras to behave 
or go away. Its top military officers now fear the country will face 
"Lebanonization" if the contras fail to win back their homeland and instead 
make Honduras a permanent base for guerrilla warfare and terrorism.'^" 

Honduran president Jose Azcona walks a fine hue between the 
contras, Washington and his own U.S. -supplied military. "He is in a 
delicate position," said Ramon Zuniga, a professor at the University of 
Honduras. "He has so little real power that he must try not to antagonize 
any part of the armed forces."^'' 

Although Azcona has complained to the Organization of American 
States that the contras' presence on Honduran soil "causes constant 
friction," he supports Washington's aid to them. His logic is reveaUng: He 
says he wants to keep the rebels from "becoming an uncontrollable group" 
of bandits within his country if they lose U.S. backing. 

But they have already become bandits. Some contras have been 
impUcated in death-squad murders of local Honduran leftists.^^^ Recent 



146 



The Iran-Contra Connection 



bombings of the Honduran Human Rights Commission and of the car of a 
prominent radio news director appear to be hnked to the contras and their 
radicalization of the country's security forces.'^" 

Other Nicaraguan rebels have been linked to bribery and cormption in 
the armed forces. In one particularly notorious incident in August 1986, 
the heads of the Honduran Public Security Force and of military 
intelligence arranged a raid on the residence of an opposition deputy, 
apparently to muscle in on the enormous profits he and a rival group of 
army officers made selling supphes to the contras.''^ 

Economic disruption brought by the contras has soured the lives of 
thousands of Honduran citizens. The Nicaraguan rebels have taken over 2 0 
villages and made another 30 uninhabitable near the southem border. 
Coffee growers in the area have been mined; in the first half of 1986 alone 
they lost $2 million owing to cross border battles between the contras and 
Sandinista forces. "The government should expel all foreign troops and 
affirm Honduran sovereignty over its own territory," declared Wilfredo 
Castellanos, vice president of the Association of Coffee Producers. "The 
crisis will worsen soon if this does not happen because of the new (U.S.) aid 
program. "'^^ 

Echoing his sentiments, the president of the Honduran congress 
declared in October 1986 that "the anti-Sandinista rebels will have to leave 
Honduras. We want Honduras to be free from such irregular armed groups 
and to have a climate of peace and tranquility."'^* The same month, a 
conservative deputy introduced legislation calling for the contras' ouster 
from Honduras. "They point their rifles at Nicaragua now but one day 
they may have to aim them at us just to survive," he wamed.'^^ Foreign 
Minister Roberto Suazo Tome raised the specter of "internal conflict" if 
the United States withdrew its support of the contras. "How are we going 
to feed them?" he asked. "How are we going to disarm them?"''*" President 
Azcona himself declared in no uncertain terms, "The government of 
Honduras wants the contras fighting in Nicaragua, not in Honduras."''" 

Costa Rica, El Salvador, Guatemala and Honduras are all relatively 
weak nations. But not even the mighty United States can expect immunity 
from the "blowback" of its contra war, any more than it could during and 
after its prior war against Castro. 

We have seen how CIA-sponsored Cuban exile extremists left their 
legacy of drug trafficking, bombings and assassinations in this country and 
fed the anticommunist hysteria of the time that sanctioned extraordinary 
violations of democratic principles by agencies of the U.S. government, 
ranging from terrorism abroad to domestic spying at home. 



Contragate: The Disposal Problem 



147 



It was almost predictable that Richard Nixon, who planned the Bay of 
Pigs invasion in the Eisenhower White House, would later turn to former 
Bay of Pigs CIA officer Howard Hunt and his still-loyal band of Cuban 
exiles to engage in political burglaries, "dirty tricks" and even one 
assassination plot before Watergate blew up in their faces. 

The contra struggle will almost certainly leave a similar legacy of 
crime and political disorders if the United States refuses to heed the lessons 
of recent history. In the name of anti-communism, Washington has again 
set up a powerful movement it cannot entirely control. The contras, like the 
Cubans, will not be "disposed" of quietly; they will return to haunt us for 
years to come. 



vn. 



Arms for Iran: History of a Policy Disaster 



The controversy over the 1985-86 arms-for-hostages deals with the 
Khomeini regime has rocked the Reagan administration like no other 
foreign policy debacle. Yet the roots of the policy were firmly implanted 
back in the Nixon- Kissinger era; only the implementation bears the unique 
stamp of the Reagan contracting-out strategy. 

U.S. pohcy toward Iran since 1972 has varied remarkably little, even 
through a revolutionary change of regimes. Indeed, at least as far back as 
1954, when the State Department organized the Iranian Consortium of 
U.S. and British oil companies in the aftermath of a CIA-sponsored coup 
that brought the Shah to power, Washington has recognized the enormous 
value of Iran's oil reserves and strategic position vis-a-vis the oil-rich Gulf 
states and the Soviet Union. ^ 

President Nixon and his national security adviser Henry Kissinger 
shaped U.S. poUcy toward Iran according to their realization that the 
Vietnam War had sapped America's resources to the point where the 
unilateral exercise of U.S. power was no longer a viable option. Following 
the terms of the "Nixon Doctrine" enunciated in June 1969, the United 
States would henceforth rely on regional gendarmes to keep order, 
discourage insurgencies and neutralize Soviet gains. Unlike earlier attempts 
at regional alliances like CENTO, this new form of power sharing would 
rely on individual pro- American nations to carry out Washington's aims.^ 



149 



150 



The Iran-Contra Connection 



Kissinger remarked in his memoirs that he envisioned for Iran the role 
of filling "the vacuum left by the British withdrawal" from the Middle East 
and South Asia, a region "now menaced by Soviet intrusion and radical 
momentum." Iran's subcontractor role, moreover, "was achievable without 
any American resources, since the Shah was willing to pay for the 
equipment out of his oil revenues."' Undersecretary of State Joseph Sisco 
publicly spelled out Washington's conception of the Shah's role: "Iran, by 
virtue of its population, its economic and military strength, and its 
geographic position along the northern shore of the Persian Gulf, is 
destined to play a major role in providing for stability in the Gulf and the 
continued flow of oil to consumer countries.""* Kissinger himself spoke of 
ensuring a favorable security climate in the Persian Gulf by "thickening the 
web of interdependence" between Iran and the United States.' 

In late May 1972, during a visit to Tehran after their historic summit 
in Moscow, President Nixon and Kissinger made the Shah an offer too 
good to refuse: unlimited access to America's non-nuclear arsenal, along 
with support in quelling the Kurdish revolt.* The Shah in turn graciously 
agreed to guarantee the flow of oil and to act as the West's "protector" in 
the Gulf area.^ So eager was the White House to close the deal that it 
ignored the Pentagon's warning that sales of sophisticated U.S. arms would 
be "counter-productive" to the security of both the Persian Gulf and the 
United States.** 

This bargain had dramatic consequences, far beyond even Iran and the 
United States. In late 1973, as the Organization of Petroleum Exporting 
Countries was putting the squeeze on the Western consumer countries, the 
Shah himself led the militants in favor of what would soon become a four- 
fold price increase that would shock the world economy. Saudi Arabia 
made urgent appeals to Washington, offering to unload its huge reserves 
and beat the price down if the administration would rein in the Shah and so 
minimize the political risk for the Saudi royal family. Their appeals fell on 
deaf ears. Instead, the State Department resisted efforts by the major oil 
companies to break OPEC through joint negotiations.' 

Finally the Saudis could not help but conclude where the administra- 
tion's real interests lay. Their oil minister. Sheik Ahmed Zaki Yamani, 
observed cynically in a secret cable to Washington, "There are those 
amongst us who think that the U.S. administration does not really object to 
an increase in oil prices. There are even those who think that you encourage 
it for obvious political reasons and that any official position taken to the 
contrary is merely to cover up that fact.""* Yamani complained to the U.S. 
ambassador in his country, James Akins, that Secretary of State Kissinger 
"is speaking lower oil prices but in secret doing everything possible to jack 



Arms for Iran 151 



them up." Akins himself confirmed the minister's impression in a 
memorandum for his secret fUes, revealed years later.'' 

Jerome Levinson, chief counsel to the Senate Subcommittee on 
Multinational Corporations, concluded similarly after a study of the 
relevant documents that "The commitment to Iran is the fundamental 
commitment to which all else is subordinated."'^ 

In effect, Kissinger supported the oil price hike at the expense of world 
consumers as a clever means of financing the Shah's weapons purchases and 
boosting Iran as a regional power. Although American conmiuters and 
other energy users would suffer, Kissinger no doubt reasoned, the vital 
American defense sector would be saved from the pain of inevitable 
Vietnam War spending cutbacks. Moreover, the Shah had agreed to recycle 
much of his oil wealth back through U.S. banks into long-term U.S. 
government securities, as part of an agreement with the Treasury 
Department to disguise the volume of his investments.'^ While the U.S. 
economy would be hit by the price hikes, our competitors in Europe and 
Japan would suffer much greater setbacks. To Kissinger and the consti- 
tuencies he served the bargain looked good. 

Indeed, so long as the Shah stayed on the throne, the deal served one 
definition of the U.S. national interest. The Shah was a team player. At 
Washington's behest, he sent arms to Somalia and helped crush an 
insurgency in Oman.''* Kissinger notes that Iran was "the sole American 
ally adjoining the Soviet Union which did not permit the overflight of 
Soviet transport planes into the Middle East." The Shah, true to his word, 
did not join the oil embargo in 1973-4, continued to sell oil to Israel and 
South Africa, and supported Sadat's peace quest. '^ He flew squadrons of 
F-5s to Saigon in 1973 to tilt the military balance in Gen. Thieu's favor. He 
agreed to consider providing arms to Chad on behalf of the CIA. He 
provided a base for U.S. listening posts that gathered intelligence on the 
USSR and Afghanistan — and Saudi Arabia. And he was a key partner in 
the so-called Safari Club, an informal, anti-Soviet alliance of Middle East 
and African nations that included Saudi Arabia, Morocco, Egypt, Ivory 
Coast and Senegal.'* 

In the equally short term, the bargain also brought windfalls to certain 
private interests. A number of Eastem banks began specializing in the 
profitable recycling of petrodollars; chief among these, at least as far as 
Iranian oil funds were concerned, was Chase Manhattan Bank. Its 
chairman, David Rockefeller, was a longtime friend of the Shah, an alleged 
recipient of huge payments from the National Iranian Oil Company, and 
longtime mentor to Henry Kissinger, who would become chairman of 
Chase's intemational advisory committee.'^ 



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The Iran-Contra Connection 



Chase had taken a leading position in the Iran market by the 1960s, 
bolstered by Rockefeller's personal relations with the Shah. In 1972 it 
opened a merchant bank in London in 1972 in order to capture the business 
of extending oil-financed Eurodollar loans to Iran. By the next summer, the 
bank had a major taste of success: a $250 million syndicated loan to Tehran, 
the largest ever arranged to that time.'^ And in 1974 Chase created an 
important new joint venture in Tehran, the Iran-Chase International 
Bank.''' 

The potential profits to Chase skyrocketed after Kissinger's decision 
not to contest the Shah's inflationary price strategy. Iran's oil revenues 
skyrocketed from about $6 billion in 1973 to more than $20 billion in 
1974.^° By 1975, Chase was handling $2 billion a year in Iranian 
transactions.^' 

But above all these oil revenues vastly enriched U.S. defense manufac- 
turers.^^ The Shah's hunger for weapons was nearly insatiable. In line with 
Kissinger's goal of making Iran a pillar of regional security, the Shah 
announced plans to develop one of the "most advanced armed forces" in the 
world, sufficient to defend the Indian Ocean as well as the Persian Gulf.^^ In 
1974, the Shah spent fully 14 percent of his country's gross national 
product on American arms.^"* In 1977, his purchases amounted to $4.2 
billion, making Iran the largest foreign buyer of U.S. arms.^' In the decade 
as a whole, the Shah bought more than $17 bilUon worth of U.S. miUtary 
equipment.^^ 

Defense engineering firms and weapons manufacturers threatened by 
the phasing out of the Vietnam War found an immense new market that 
promised to serve them in the process of realizing the geo-political 
ambitions of Kissinger and the Shah.^^ Some companies, employing 
Vietnam veterans with special skills, literally organized whole units of the 
Iranian military and sold them the relevant equipment.^* 

One of the more ambitious contractors was the politically powerful 
Brown & Root construction company, which built many of the biggest 
mihtary bases in Vietnam. It took the lead position on an $8 billion project 
to build a vast new port at Chah Bahar — ^without competitive bid. The 
Shah's aim was to make the port a staging area for projecting naval power 
into the Indian Ocean (with a fleet to be built by Litton Industries); the 
U.S. Navy saw the opportunity to base a carrier task force for the same 
purpose and gain its first serious presence in that region. Brown & Root 
stood to make a fortune. And some Iranians made out handsomely from the 
deal, too. According to Barry Rubin, an historian of U.S. relations with 
Iran, "Top Iranian officers, including the navy commander and the admiral 



Arms for Iran 153 



charged with negotiations for the massive Chah Bahar harbor-drydock 
complex, were jailed for embezzling millions of dollars. "^^ 

So much money poured through the pipeline that the arms sales 
process spun out of control. Technically unsophisticated soldiers could 
barely operate, much less maintain, the state-of-the-art aerospace equip- 
ment coming their way. Iran's ports couldn't even unload the materiel fast 
enough to keep from choking. Still the Shah ordered more, impressed by 
write-ups of new weapons in arms trade journals and reports from trusted 
informants. Company representatives rushed to feed his fancy. 

Pentagon consultants and military assistance specialists viewed the 
U.S. military mission in Iran as a center of commercial intrigue — in the 
words of one, "captured by the aerospace industry." In the most notorious 
case, the CIA and Rockwell International pushed on Iran a gigantic 
electronic spying and communication system called IBEX. Described by 
one trade journal as "the most ambitious intelUgence program in the entire 
Middle East," IBEX was derided by a Pentagon reviewer as a "straight 
electronics boondoggle." Even Richard Helms, the former CIA director- 
tumed-ambassador to Tehran, castigated it privately.^" 

The IBEX project smelled for reasons beyond its doubtful con- 
tribution to Iran's defensive needs. Rockwell paid huge bribes to Iran's air 
force commander (and the Shah's brother-in-law). Gen. Mohammed 
Khatemi, to win approval for the $500 million project.^' Other military 
contractors, including Bell Hehcopter, Northrop and Grumman, hired 
agents who bribed Iranian officials with handsome conomissions, often 
amounting to millions of dollars. 

The practice was condoned by some U.S. officials as a means of 
keeping the Iranian miUtary dependent on the American presence.^^ 
Jonathan Kwitny writes. 

The curious thing about these particular commissions is that the sales were 
made through the U.S. govemment, which bought the planes from 
Northrop and Grumman, and sold them to the government of Iran. Why 
were the commissions paid?... All these companies rely for their business 
on huge contracts with the U.S. Defense Department. So it would 
obviously be easy for the govemment to arrange to have corporate 
payments overseas underwritten by American taxpayers. Domestic 
contracts that were otherwise legitimate could simply be padded to contain 
the payoff money.^'* 

But not everyone approved of these methods. Ambassador Helms told a 
representative of Defense Secretary James Schlesinger that he had "never 
seen... so many people out of control" in the Pentagon. The Shah himself 



154 



The Iran-Contra Connection 



complained that "the chicanery of Pentagon officials and their miUtary and 
civiUan representatives" was "intolerable."^^ 

A few far-sighted analysts in Washington warned that the Shah's 
insatiable appetite for weapons, combined with the Iranian public's 
growing disgust over the ostentatious wealth, corruption and secret pohce 
brutality that came in tandem with the arms trade, could together spark a 
revolt against the Shah and his American backers. 

In 1975, Defense Secretary Schlesinger, a persistent critic of the dizzy 
pace of arms sales to Tehran, drafted for President Ford a memo 
questioning whether "our policy of supporting an apparently open-ended 
Iranian military buildup will continue to serve our long-term interests." 
Kissinger blocked the memo and two months later Schlesinger was gone 
from his post.^^ 

A staff report issued by the Senate Foreign Relations Committee in 
1976 complained that Nixon's carte blanche pohcy toward the Shah had 
"created a bonanza for U.S. weapons manufacturers, the procurement 
branches of the three U.S. services and the Defense Security Assistance 
Agency." If there "were to be a change in govemment," the study warned, 
the small army of Americans in Iran could become "hostages" of radical 
elements. But the report offered no clear way out of the hole Washington 
had dug itself into: "The United States cannot abandon, substantially 
diminish, or even redirect its arms programs without precipitating a major 
crisis in U.S.-Iranian relations. "^^ And no one could afford to ignore the 
waming of Deputy Secretary of Defense WilUam Clements, that any curb 
on the export of arms would "decrease the potential contribution of 
sales. ..to strengthening both free world security and the U.S. balance-of- 
payments position. 

A State Department economist suggested in 1977 that by devoting a 
quarter of all public funds to the military, the Shah would "have insufficient 
resources to head off mounting poUtical dissatisfaction, including discon- 
tent among those groups that have traditionally been the bedrock of 
support for the monarchy." Certain CIA analysts pointed out that the 
Shah's miUtary was simply too backward and poorly trained to absorb the 
tidal wave of sophisticated armaments coming their way. Their superiors 
did not listen; such predictions did not fit with prevailing American 
policy."'' As late as August 1978 an official CIA estimate concluded that 
"Iran is not in a revolutionary or even a 'prerevolutionary' situation."*' 

Ignorance alone does not explain the intelligence community's failure 
to alert decision makers to the coming upheaval. The CIA's own 
operational arm was so deeply implicated in arms-for-oil deals with Iran 
that the agency could not objectively assess their impact. The CIA not only 



Arms for Iran 155 



financed local sales offices of U.S. defense contractors in order to gain 
intelligence, it undertook at the direction of the National Security Council 
"to select certain contractors who had a high expertise in certain areas and 
help them sell high-dollar projects surreptitiously" in order to recapture 
some of the $20 bilhon-a-year the United States was spending on Middle 
Eastern oil."*^ 

Thus the military binge continued unabated, led by a 201 -strong U.S. 
Mihtary Assistance Advisory Group, the largest in the world by 1975."*^ 
To Tehran came thousands of uniformed and civiUan Americans who daily 
reminded the Iranian people of U.S. complicity in the Shah's policies. As of 
December 31, 1977, there were 7,674 Americans in Iran working on 
military contracts."^ Some of these individuals were former Pentagon 
officers who now represented mihtary contractors hoping to sell their 
wares in Iran.*' 



The Iran Team 



Among the Americans were several especially important figures who 
would reappear in connection with the controversial contra supply and Iran 
arms deals of the Reagan years. Admiral Thomas Moorer, three months 
after stepping down as the controversial head of the Joint Chiefs of Staff 
under President Nixon, visited Iran in December 1974 as a representative 
of Stanwick Intemational, which had a contract to manage repairs for Iran's 
navy.''* Moorer's real interest was in advancing the Chah Bahar port 
project. "So great was his zeal for this extension of American naval power," 
write Ledeen and Lewis, "that Moorer far exceeded his authority and had 
to be restrained by Secretary of Defense James Schlesinger."''^ Today 
Moorer sits on the board of directors of the American Security Council, a 
right-wing group associated with Singlaub that pushes a militant Central 
America policy. 

While still heading the JCS, Moorer oversaw a shadowy naval 
intelligence operation called Task Force 157, which specialized in using 
private corporate fronts to gather information on Soviet naval activities. 
One of its agents, the notorious Ed Wilson, appeared in Iran in 1974, 
claiming to work for Moorer — and SAVAK, the savage Iranian secret 
pohce."*^ 

Iranian officials certainly could see Wilson had high-level connections. 
Wilson had already been introduced in 1971 by Thomas Clines, his former 
CIA case officer, to Colonel Richard Secord in Washington; by 1975 they 



156 



The Iran-Contra Connection 



were all together again in Tehran, where Secord headed the Air Force 
Mihtary Advisory Group, which in effect represented the U.S. arms 
merchants before the Shah.^" According to his Pentagon biography, Secord 
"acted as chief adviser to the commander in chief of the Iranian air force and 
managed all U.S. Air Force programs to Iran as well as some Army and 
Navy security assistance programs. "^^ That job would have given Secord a 
direct role (with the CIA) in the shady sale of IBEX and possibly (with 
Moorer) an interest in the U.S. Navy's plans for the Chah Bahar faciUty. 

Later, Wilson would claim to have joined his former CIA control 
officers Ted Shackley and Tom Clines in a fraudulent Egyptian arms 
transport venture, EATSCO. Secord was also named in coimection with 
the firm; he denied having a business relationship with it but ultimately left 
the Pentagon as a result of an official investigation of his ties to Wilson. 

A fifth alleged associate of EATSCO, Erich von Marbod, had worked 
closely with Secord to arrange covert financing for CIA-directed Thai 
guerrillas fighting in Laos in the early 1970s.'^ After that war ended, he led 
a Pentagon mission to Tehran begiiming in September 1975 to evaluate 
and bring order into the chaotic U.S. arms sales program. He worked 
with Clines during that assignment in Iran.^'' Von Marbod proved almost 
as controversial as the practices he was sent to clean up; the Shah reportedly 
considered him an undesirable agent of Northrop, E-Systems and Teledyne 
and asked that he be fired. After leaving Iran to head the Defense Security 
Assistance Agency, Von Marbod championed the Carter administration's 
controversial proposal to sell Iran 8 Airborne Warning and Control System 
(AW ACS) planes, a system blasted by the General Accounting Office as 
too advanced for Iran's needs and overpriced. The GAO suggested darkly 
that Carter's rationale for the deal was so thin that "there may be other 
undisclosed reasons underlying the proposed sale."'^ 

Members of this close-knit crowd, which came together first in 
Vietnam and then in Tehran, would later become the key to the covert 
policy scandals of the Reagan administration in Central America and Iran. 
Of these individuals, Secord and Clines were directly involved with contra 
support activities and the Reagan arms-for-hostages deal. 

Shackley, too, played a role in later events. He held discussions with a 
key Iranian arms broker in late 1984 that paved the way for later arms-for- 
hostage trades with Tehran.'^ From 1980 to 1983 he consulted for a 
shadowy firm — Stanford Technology Corp. which had picked up several 
electronics intelligence contracts in Iran, including one for SAVAK, the 
Shah's secret poUce.'^ The firm was, fittingly, also the home of another key 
player in the Reagan-era Iran story: the Iranian-bom Albert Hakim. 



Arms for Iran 157 



Hakim, Stanford Technology Corp.'s founder, fit right in with this 
tight-knit group of Tehran-based Americans. He was introduced to Secord 
in Iran by Ed Wilson, who did business with Libya out of Hakim's office in 
Switzerland/' (Wilson allegedly tried to arrange a lucrative Egyptian 
electronics contract for Hakim through Ted Shackley in 1976.^") In Iran, 
Hakim made a handsome Uving selling military equipment from such firms 
as Ohn Corp., Hewlett-Packard and his own Stanford Technology Corp. 
Hakim's STC had a $5.5 million contract to supply the notorious, CIA- 
promoted IBEX project, which Secord oversaw.*' 

Secord reportedly helped Hakim win another, $7.5 million contract 
with Iran's air force for a sophisticated telephone monitoring system to 
allow the Shah to keep track of his top commanders' communications.*^ 
The Shah's secret police, SAVAK, operated the equipment.*^ 

Hakim's business methods were as controversial as his products: He 
arranged the latter communications deal through the air force commander. 
Gen. Mohammed Khatemi, who Hakim bribed on at least one other deal 
and who also received hefty payoffs for approving the IBEX contract.*^ 
Hakim was also paying off top Iranian air force officials to win military 
contracts for Olin Corp. In a 1983 lawsuit. Hakim described the "total 
financial network" he estabhshed in Iran to funnel kickbacks to officials in 
return for contracts.*' "We have more class than using the word 'payoff,' " 
he testified.** 

Hakim's bribes were in line with the CIA's strategy of boosting U.S. 
military sales and poUtical influence by gaining corrupt leverage over 
foreign military commanders; Hakim in turn furnished the CIA with 
valuable intelligence.*^ Years later he would work with Secord and several 
CIA officials in laundering money through Swiss banks for U.S. arms deals 
with Iran and the contras.*" 

This group's privileged position at the vortex of the U.S. -Iran arms 
connection under the Shah, like the poUcy that made their mission possible, 
did not last long. The combination of blatant corruption, grotesque waste 
of scarce development funds on arms and ubiquitous presence of U.S. 
advisers helped spark a national revolt against the Shah's misrule.*' With his 
downfall, so went the strategy of employing Iran as America's surrogate in 
South Asia and the Indian Ocean. Only a few months into the Khomeini 
era, Iran's deputy prime minister — a man later linked to the Reagan arms- 
for-hostages negotiations — would announce the cancellation of $9 bilUon 
in arms contracts with the United States signed under the Shah.'° 

Contributing to the bitter divide between Washington and the new, 
post-revolutionary Iran, ironically, was the agitation of Henry Kissinger 
and his mentor David Rockefeller. Both felt genuine loyalty to the Shah; 



158 



The Iran-Contra Connection 



both had an interest, moreover, in preventing the Khomeini regime from 
withdrawing the deposits of the National Iranian Oil Company from 
Chase. With the help of former Chase chairman and ARAMCO attorney 
John J. McCloy, the three mounted a vigorous lobbying campaign within 
the Carter administration to admit the exiled Shah into the United States for 
medical care — despite explicit State Department warnings that such a move 
could trigger an embassy takeover and hostage crisis.^' Kissinger's pleas 
carried particular weight; his position could help make or break the SALT 
n treaty in the SenateJ^ 

In the end, incorrect or purposely falsified reports of the Shah's 
medical condition and of Mexico's wilhngness to readmit the Shah after 
treatment — and possibly threats by the Shah communicated through 
Rockefeller to cash in billions of dollars worth of U.S. government 
securities — convinced President Carter to admit the exiled ruler to the 
United States. The consequences proved disastrous for all but the Chase 
Manhattan Bank.^^ 



The Reagan Years 

Iranian policy has proved no less a disaster now for Ronald Reagan, 
who played Carter's difficulties into an election victory in 1980. Reagan's 
troubles stemmed not only from his willingness to bargain for the hostages, 
but also from his commitment to the same geopolitical assumptions that 
underlay U.S. policy toward Iran in the post- World War 11 era. 

Again, those assumptions boiled down to oil and anti-communism. As 
Reagan himself explained the thinking behind his policy, 

Iran encompasses some of the most critical geography in the world. It hes 
between the Soviet Union and access to the warm waters of the Indian 
Ocean. Geography explains why the Soviet Union has sent an army into 
Afghanistan to dominate that country and, if they could, Iran and 
Pakistan. Iran's geography gives it a critical position from which 
adversaries could interfere with oil flows from the Arab states that border 
the Persian Gulf. Apart from that geography, Iran's oil deposits are 
important to the long-term health of the world economy."^'* 

The administration's search for "moderates" in the radical Khomeini 
regime was more accurately an effort to cultivate anti-Soviet mullahs 
against a wing favoring an equidistant policy between the superpowers, 
represented by leftist Iranian President Ali Khamenei. If Khomenei were 



Arms for Iran 159 



edged out by the more anti-Soviet Rafsanjani, the White House apparently 
beheved, an Iran strengthened by U.S. arms and higher oil prices could 
better resist Soviet influence and serve U.S. aims in Afghanistan.^^ 

Although the arms side of this policy sparked an explosive controversy 
that still rages, the Reagan administration's oil diplomacy was perhaps no 
less scandalous. By helping Iran raise oil prices and replenish its depleted 
treasury, this policy permitted Iran to procure vast new stocks of arms on 
the world market — regardless of Washington's own sales pohcies — at the 
direct expense of the American consuming public. 

In preliminary discussions with U.S. representatives of the National 
Security Council, the Iranians stressed their interest in achieving higher oil 
prices and in acquiring the "defensive" arms needed to protect their oil 
installations, particularly the facility at Kharg Island, from Iraqi air attack. 
Low prices and disrupted production facihties cut Iranian oil revenues from 
$16 billion to only $6 bilUon in 1986.''® 

The White House went along with these requests, just as it had 
satisfied the Shah's oil-for-arms demands. The Hawk surface-to-air 
missiles and Phoenix air-to-air missiles that Iran acquired have dramatically 
limited Iraq's control of the air and thus safeguarded Iran's oil installations. 
And on the oil price front, before the talks became a world scandal, U.S. and 
Iranian negotiators were actually drafting a "protocol" that would have 
ended the formal state of hostility between the two countries and thrown 
Washington's support behind a world price of $18 per barrel.^^ 

The shift in oil policy was signalled by Vice President George Bush's 
visit in the spring of 1986 to the Gulf States. He asked his Saudi hosts to 
"stabilize" world oil prices "as part of our national security interest."^* At 
the time. Bush appeared only to be catering to his Texas financial 
constituency (oil producers and bankers dependent on their revenue); now 
it appears he was also supporting Iran's high-price policy against Saudi 
Arabia's more moderate position. Indeed, in a report to the Khomeini 
regime, an Iranian arms agent cited Bush's repeated calls for higher oil 
prices as evidence of Washington's good faith in the arms-for-hostages 
negotiations.™ Riyadh had been keeping production rates up, among other 
reasons, to punish radical states and quota-busters like Iran and Libya, and 
to discourage the long-term conversion of energy consumption away from 
oil to renewable resources. Bush, to the Saudis' surprise, undercut that 
strategy as part of the administration's covert pro-Iran tilt. 

From Bush, Saudi Arabia got the message to get on board with the 
winning team or face an implacably hostile Iran in the future.^" In October 
1986, Saudi Arabia's King Fahd received Iran's petroleum minister, 
Gholam Reza Aghazadeh; in the aftermath, Fahd agreed to seek an $18 



160 



The Iran-Contra Connection 



per-barrel price for OPEC oil and ousted his own oil minister. Sheik 
Ahmed Zaki Yamani, whose full production policy had been viewed by 
Iran as the near equivalent of a declaration of war. Saudi Arabia has 
reportedly even refined oil for fuel-short Iran. Fahd decided to cement this 
economic alliance after he learned of Washington's own overtures to 
Tehran and saw Iraq's poor showing on the battlefield. As Iran's petroleum 
minister put it, "The Saudis had no choice."*' 

American foreign poUcy functions most smoothly when strategic 
considerations mesh with domestic interest groups. The high-price oil 
policy was no exception. Though it flatly contradicted the Reagan 
administration's professed faith in the free market, it neatly served the 
interests of the Republican Party's most generous campaign supporters. 
Thus Bush's former national campaign finance chairman and colleague in 
the oil business, independent Houston producer Robert Mosbacher Sr., 
told the New York Times of his conviction that higher oil prices were 
essential to the well-being of the domestic oil industry. He added that 
"some of the people close to the President" had probably told Reagan of the 
national security imphcations "if the price of oil stays too low."*^ 
(Mosbacher is also a director of the Georgetown Center for Strategic and 
International Studies, the employer of Michael Ledeen, the NSC's 
"consultant" on the Iran deal.) 

Not surprisingly, U.S. oil industry executives are reported to be 
"smarting from the loss of two men they considered friends at the White 
House — ^former National Security Adviser Robert McFarlane, a key 
player in the arms deal, and his successor. Vice Adm. John M. Poindexter... 
Industry sources said McFarlane and Poindexter understood better than 
most in the administration the connection between a strong domestic oil 
industry and national security."*^ 



Playing the Anti-Soviet Card 

The first success of U.S. poUcy in post-Shah Iran occured not in 1985 

but 1982-83, when the CIA helped pass along to Khomeini details on 
Tudeh party activities and KGB penetration of the Tehran regime, based 
on the revelations of a KGB major who defected to the British earUer that 
year. Armed with the information, Khomeini's forces banned Tudeh, 
arrested or killed as many as 4,000 leaders and supporters, and expelled at 
least 18 resident KGB agents.*"* As David Newsom, former U.S. under- 



Arms for Iran 161 



secretary of state, remarked with satisfaction, "The leftists there seem to be 
getting their heads cut off."**' 

The CIA may have helped trigger that bloodbath, but the mullahs had 
earlier left no doubt of their attitude toward the Soviet Union. Even before 
the purge of the Tudeh party, Tehran had renounced the 1921 Treaty of 
Friendship (which gave the Soviets legal cause for military intervention), 
cancelled construction of a natural gas pipeline to the Soviet Union, and 
condemned the Soviet invasion of Afghanistan — all this despite receiving 
arms from Soviet client states with Moscow's approval.*^ 

The massacre of the Tudeh party ended any real prospect of a pro- 
Soviet coup. Even so, the specter of Soviet intelligence inroads in Iran 
continued to haunt administration officials primed to think in simplistic 
terms of cold war rivalries. Ignorant ofthe depth of Iranian hostility toward 
the atheistic superpower to the north, and possibly misled by Israeli- 
inspired intelligence reports, the White House misread the intentions of 
Iranian leaders whose pragmatism extended as much to Moscow as to 
Washington. Tehran was not about to fall into the Soviet orbit, but it was 
adept at playing off all powers for maximum advantage. 

By the spring of 1985, hundreds of Soviet technicians were reported to 
have dispersed throughout Iran, helping that country build and operate 
power stations, gas fields and other large engineering projects.*^ Rafsanjani, 
the "moderate" speaker of the Iranian parliament, announced that June 
that "We intend to increase and expand our relations with the Soviet 
Union."*^ 

That apparent expansion of Soviet influence had been cemented by 
arms, Washington might well have noted. On April 1, 1985, Iran's assistant 
deputy foreign minister told the Financial Times that Iran was "hoping for 
some indication from Moscow that it is prepared to scale down its level of 
mihtary supphes to Iraq in return for better relations with Tehran." He also 
indicated that "while Iran appreciates that it could not expect the Soviet 
Union to supply tanks or aircraft directly, there are, of course, many other 
routes through which such weaponry could be delivered. Syria and Libya, 
both of which are substantial purchasers of Soviet arms, would be seen in 
Tehran as possible conduits."**^ 

Two months later, Iran negotiated a deal with Libya to obtain Soviet- 
made Scud missiles. The Soviets stepped up arms deliveries to Iran via 
Czechoslovakia (chemical weapons equipment, light arms) and Poland 
(antiaircraft guns, rocket-propelled grenades, parts for armored equip- 
ment).*^ Since then, nearly half of all Iranian arms spending has gone to 
Soviet-bloc purchases.^' 

On May 17, the head of the CIA's National Intelligence Council, 
Graham Fuller, produced a report on Soviet gains in Iran, warning that the 



162 



The Iran-Contra Connection 



United States might be left out in the cold in case of a Khomeini 
government collapse. Press leaks at the time reported U.S. intelhgence 
estimates that the Soviet Union had 600 agents in Iran "poised to direct 
Iranian communists in a post- Khomeini power struggle."'^ Fuller, along 
with several NSC officials, advocated overtures to Iran based on this bleak 
analysis.'^ These assessments may have been erroneous; they may even 
have been disinformation produced by the Israelis or by certain CIA and 
NSC officials to steer the White House in a predetermined direction.^"* 
What matters here is that the administration acted in part on the basis of 
these warnings. 

White House overtures to Iran did not stop the ayatoUahs from 
exploiting the Soviets' own interest in achieving a rapprochement with the 
Islamic regime in Tehran. In August 1986, Iran agreed to resume natural 
gas deliveries to the Soviet Union for the first time since 1979. One month 
later, the Iranian-Soviet Chamber of Commerce held its first meeting in 
Tehran to announce plans to increase bilateral trade to $1 billion.^' In 
December, Iran and the Soviet Union signed a protocol to expand 
cooperation in commerce, banking, construction, transportation, fisheries 
and technology."' In seeking commercial contacts to the north, the 
Khomeini regime was simply returning to a policy long followed by the 
Shah himself. 

But the Reagan arms poUcy appears to have achieved at least one of its 
aims: relations between Iran and the Soviet Union soured for a time in the 
wake of revelations that at least some of those arms were transshipped to the 
anti-Soviet Afghan guerrillas across Iran's border.'^ The govemment 
newspaper Izvestia accused Tehran of cooperating "with the forces of 
imperialism in carrying out an undeclared war against the Democratic 
Republic of Afghanistan." It charged further that Iranian air and land forces 
had "carried out more than 60 acts of aggression" on Afghan territory in 
1986.^^ 



The October Surprise: An Hypothesis 

Although details are still lacking, the country now knows that the 
Reagan administration counted on a handful of highly trusted individuals 
within the NSC and private sector to implement this covert strategy of 
enticing Iran back into the U.S. orbit. Given the common background of 
several of these men, the disturbing possibihty arises that the Reagan camp 



Arms for Iran 163 



used them even before the November 1980 election as "moles" within the 
Carter camp to keep tabs on that administration's own Iran-hostage 
strategy and election chances. 

The discovery that the Reagan campaign had acquired copies of the 
briefing books used by Carter to prepare for the 1980 presidential debate 
sparked a brief scandal in 1983 known as "Debategate." Subsequent 
investigations by a congressional committee proved that the Reagan forces 
had infiltrated their rival's camp with one or more spies. By most accounts, 
this project was led by Reagan's campaign chairman, the intelligence 
veteran William Casey." Indeed, Casey boasted in the summer of 1980 of 
running an "intelligence operation" against the Democrats.'"" 

The penetration of Carter's government and campaign went far 
beyond a few "bent" campaign workers."" And its objective, far more than 
the debate briefing books, was inside news of secret Carter initiatives to 
salvage the hostages held in Iran. Much as Richard Nixon and Anna 
Chennault maneuvered to sabotage the 1968 Paris peace talks by estab- 
lishing a pipeline to South Vietnam's president,'"^ some of Reagan's top 
strategists may have hoped to make use of advance knowledge of Carter's 
plans to upset an untimely rescue of the embassy captives. 
Time magazine reported in 1983 that, 

Casey did indeed set up a political intelligence-gathering apparatus for the 
Reagan campaign. But it was not simply a casual use of retired military 
officers asked to stay alert for any U.S. aircraft moves'"^ that might signal 
the Reagan camp that Carter was about to gain the freedom of the U.S. 
embassy hostages in Iran — the 'October surprise' that Reagan's political 
aides feared. Instead, cooperative former agents of both the FBI and CIA 
were used to gather poUtical information from their colleagues still active 

^ • 104 

m the two agencies. 

Washington reporter Elizabeth Drew suggests the stop-Carter move- 
ment was staffed by intelUgence veterans outraged by the massive cutbacks 
ordered by CIA director Stansfield Turner (among whom Ted Shackley 
and Tom Clines were premier figures) and by "retired military officers and 
other strong supporters of the miUtary" who were angered by "what they 
considered Carter's 'weakening' of America's defenses."'"^ 

Evidence abounds of the existence of a classic intelligence operation 
against Carter, focused on the "October surprise." In August 1980, Jack 
Anderson ran an explosive series of columns alleging that Carter had 
chosen a "tentative invasion date" in mid-October for a punitive assault on 



164 



The Iran-Contra Connection 



Iran. Anderson claimed he had been supplied documents by someone 
working with the National Security Council. (Some source had also been 
supplying Reagan foreign pohcy adviser Richard Allen with staff reports 
going to National Security Adviser Zbigniew Brzezinski.) Anderson's 
mystery iirformant claimed that Carter had ordered the invasion "to save 
himself from almost certain defeat in November." Carter's people claimed 
the report was false. According to Carter press secretary Jody Powell, "If 
someone on the NSC staff confirmed the authenticity of these documents, 
much less described the President's motives for the non-existent orders, he 
was lying. """^ 

In September 1980, someone delivered to the Washington Post a 
document purporting to be a CIA estimate warning that 60 percent of the 
hostage rescue team would be killed or wounded. The implication was that 
Carter had played callously with human lives in April to advance his 
poUtical interests. The document has been called a forgery; however it cited 
the correct secret code-name for the mission. 

Hearst reporter John Wallach, known for his outstanding sources in 
the intelligence connmunity, informed the Reagan campaign's senior 
foreign policy adviser, Richard Allen, in October 1980 that a hostages-for- 
spare parts exchange might take place "at any moment, as a bolt out of the 
blue." The same day, a Chicago television station made national headUnes 
with "news" that such negotiations — ^remarkably reminiscent of those the 
Reagan camp later attempted — were nearing completion. A congressional 
investigating committee later learned that the source was "a highly placed 
member of the U.S. intelligence community" who hoped that "publicizing 
the secret hostage negotiations would have delayed a pre-election release of 
U.S. hostages in Iran, to the benefit of the Reagan-Bush campaign. "^"^ 

The same month, conservative columnists Evans and Novak claimed 
that Carter adviser Lloyd Cutler had been to Geneva to arrange a deal to 
bring out the hostages before the election in return "for military equipment 
vital to the Iranian war effort." The column included authentic-sounding 
details about weapons being transferred from Philadelphia Navy Yard 
warehouses for shipment to Iran.'°^ 

Worst of all, however, may have been a pre-hostage rescue mission 
leak — in the guise of an imaginative exercise — ^by veteran intelligence agent 
Miles Copeland. Writing in the Washington Star on April 20, 1980, just 
before the actual mission took place, Copeland outlined his scenario for 
rescuing the embassy captives. Its remarkable faithfulness to the real 
operation suggests that Copeland had tapped the "old boy" network to 
blow the mission's cover. 



Arms for Iran 165 



The overwhelming evidence of a Reagan penetration of the NSC and 
top miUtary and intelligence circles prompts inevitable speculation about 
the identity of the moles. No evidence yet exists to impUcate any of the 
following individuals in campaign dirty tricks. But all have in common two 
suggestive characteristics: a key role in the Carter Iran operation or NSC, 
followed by an especially trusted and political role in the Reagan 
presidency: 

* Donald Gregg — A veteran CIA officer, Gregg was detailed to the 
national security council as CIA liaison in 1979. When Reagan took 
office as president, Gregg became George Bush's top national security 
aide — a political assignment. In that position, he worked closely with 
Oliver North and the Shack-ley-Clines protege Felix Rodriguez on the 
Central American operations.'"^ 

* Albert Hakim — This shady mihtary sales agent, taken under the 
wing of Gen. Secord in the late 1970s, had a "sensitive intelligence" role in 
the 1980 hostage rescue and helped procure jeeps, vans and other vehicles 
for the desert operation. In particular he seems to have worked for the 
CIA near the Turkish border, just where OUver North was operating in the 
same period. Hakim shed no tears over Carter's downfall following the 
mission's failure; on the contrary "he couldn't have been happier when the 
Carter Administration ended," one of his former consultants said.'" In 
1985-1986, on North's behalf. Hakim established the network of financial 
and corporate conduits used to launder Iran arms money and supply the 
contras in the face of congressional opposition. 

* Robert McFarlane — A Marine heutenant colonel, McFarlane was an 
assistant to Sen. John Tower of Texas on the Armed Services committee in 
the Carter years. He reportedly came to the attention of the Reagan camp 
by authoring a report blasting Carter for the hostage rescue mission."^ 
More remarkably, he approached Reagan campaign adviser Richard Allen 
with a plan, and an Iranian exile to help implement it, for the Reagan 
camp itself to free the embassy hostages before the November election."^ 

* Oliver North — ^As Marine Corps major. North led a secret 
detachment to eastern Turkey to assist the 1980 Iran hostage rescue 
mission, then worked with Secord on a second rescue plan. The next year 
he joined Reagan's National Security Council where he organized and 
carried out covert operations.'"* 



166 



The Iran-Contra Connection 



* H. Ross Perot — This remarkable entrepreneur, who employed 
several former Green Berets to spring two former employees from an 
Iranian jail, was brought onto Brzezinski's "MiUtary Committee" of 
advisers on the rescue effort."^ In early 1982, President Reagan appointed 
Perot to the President's Foreign Intelligence Advisory Board, where he 
met NSC covert operator Oliver North. North tapped Perot in two failed 
ransom attempts for Brig. Gen. James Dozier, kidnapped in 1981 by the 
Red Brigades, and William Buckley, the CIA station chief in Lebanon, 
taken hostage in 1984."* 

* Richard Secord — Gen. Secord helped organize the botched April 
1980 hostage rescue and was deputy to the head of a planning group for 
another rescue attempt in 1980 that never got off the ground. In the 
Reagan years. North and McFarlane would tap him as a key intermediary 
both in the contra supply operation and the Iran negotiations."^ Working 
closely with him on those ventures in 1986 were at least three other key 
officers involved in the first Iran hostage mission: Robert Button, Richard 
Gadd, and John Cupp."^ 

* Larry Stearns — Col. Stearns was director of special operations at 
the Joint Chiefs of Staff in 1980, one of the key offices where the Iran 
hostage rescue mission was planned."' In the Reagan years, after retiring, 
he worked with the contra supply network.'^" 



vm. 



Irangate: The Israel Connection 



The conduct of foreign policy through covert channels presents 
certain obvious pitfalls, above all the danger of exposure and subsequent 
pohtical backlash from the public and unconsulted members of Congress 
and the executive branch. But another, less appreciated risk is of manipula- 
tion by the individuals and governments to whom covert poUcy implemen- 
tation is contracted out. 

As the Tower Commission noted, "Private or foreign sources may 
have different policy interests or personal motives and may exploit their 
association with a U.S. govemment effort. Such involvement gives private 
and foreign sources potentially powerful leverage in the form of demands 
for return favors or even blackmail."' 

Such manipulation can occur by rogue agents within the operation 
itself. Thus renegade CIA agent Ed Wilson made milUons of dollars selling 
his terrorist know-how to Khadafy and other buyers under cover of the 
aura of intelligence connections surrounding his own career and that of his 
many friends. Investigators looking at his activities could never be sure 
whether they had stumbled across a "sanctioned" operation or a purely 
criminal one. 

Such manipulation can also take place at the hands of foreign 
governments. In the case of Iran, the evidence suggests that certain Israeli 
officials and businessmen took advantage of trusting and ambitious 
members of the Reagan NSC to advance their own interests at the expense 



167 



168 The Iran-Contra Connection 

of the administration.^ Contrary to Washington's express wishes, Israeli 
leaders covertly supplied Tehran with arms and vital spare parts in order to 
punish the Arab regime of Saddam Hussein in Iraq; then they convinced the 
White House to endorse that very same violation of official U.S. policy. 
Playing off Washington's faith in Israeli intelligence, and using American 
and Iranian intermediaries who served their interests, Israeli officials 
effectively choreographed the entire affair. 

The official story from Israel is quite different, of course. Leaders there 
have insisted they merely tried to do a good deed at Washington's behest. 
"From the very beginning of this operation we have acted on behalf of the 
United States," one senior Israeli official claimed. "Everything we did, 
including shipping arms to Iran, we did with the explicit approval of 
Washington. We offered them our good offices and assets, and they used 
them."^ Or as Prime Minister Yitzhak Shamir sweepingly declares, 
"Everything attributed to Israel has no basis in reality."" 

But unofficial Israelis question this pat story. Yo'el Marcus, writing in 
Ha'aretz, was biting in his dismissal of the innocent claims of his own 
government officials: 

The contention that our involvement is only recent, at the request of the 
United States, is very dubious. For about 7 years now bits of information 
have been published in the world press which prove that Israel and/or 
Israelis are involved in assistance to Khomeini's Iran. It began before the 
Lebanese war, continued during it, and is still going on. There is even 
room to fear that Israel is the moving force behind the whole idea of 
assistance to Iran. Evidence of this hes in the fact that as early as July 1980 
the Jewish lobby was actively trying to convince the administration that 
the shipment of military spare parts and equipment to Iran would help in 
getting the hostages (members of the U.S. Embassy in Tehran) released!... 
It is exactly the same thesis, only now with different hostages."^ 

Even Israeli insiders, speaking not for attribution, contradict the 
denials of the top leaders, Shimon Peres and Yitzhak Shamir. One 
"knowledgeable Israeli source" who spoke to the New York Times "said 
the idea for the parts shipments to Iran was initially broached with the 
United States by Israel, which had been covertly supplying Iran since the 
fall of Shah Mohammed Riza Pahlevi in 1979. 'We had the contacts and we 
approached the Americans. We said: Look, we have these contacts, why 
don't you take advantage of them?'"^ 



Irangatc: The Israel Connection 169 



And as the top Israeli intermediary on the Iran arms deals himself 
admitted, "We activated the channel; we gave a front to the operation, 
provided a physical base, provided aircraft."^ 



The Israeli Interest in Iran 

To appreciate the accuracy and implications of these unofficial 
versions, one must recall the extent of Israel's involvement in Iran during 
the entire period of Khomeini's rule. 

Israeli interests in non-Arab Iran became prominent as early as the 
1950s, when Mossad, Israel's foreign intelligence agency, cooperated with 
the CIA in estabhshing the Shah's secret poUce, SAVAK. A 1979 CIA 
report on Mossad notes that: 

The main purpose of the Israeh relationship with Iran was the 
development of a pro-Israel and anti-Arab policy on the part of Iranian 
officials. Mossad has engaged in joint operations with SAVAK over the 
years since the late 1950s. Mossad aided SAVAK activities and supported 
the Kurds in Iraq. The Israelis also regularly transmitted to the Iranians 
intelligence reports on Egypt's activities in the Arab countries, trends and 
developments in Iraq, and Communist activities affecting Iran."* 

Cooperation between Israel and Iran touched many fields, including 
oil, trade, air transport, and various forms of technical assistance. But their 
most important mutual interest was in the military sphere. 

Like the United States, Israel cemented its relationship with Iran by 
the exchange of arms for oil, which both sides kept ahve through the worst 
of the OPEC oil embargo. The Iranian arms market was worth at least 
$500 million a year to Israel.' The Shah bought everything from Gabriel 
anti-ship missiles to advanced communications equipment.'" In 1977, Israel 
arranged a $1 billion arms-for-oil deal around Operation Flower, a joint 
Israeli-Iranian project to build a nuclear-capable surface-to-surface mis- 
sile." And like their American counterparts, certain Israelis also seem to 
have been part of the corrupt nexus through which top Iranian political and 
military leaders were enriched through arms sale commissions.'^ "When 
the Israelis decide to change their pohcy," one top State Department official 
told a reporter in the mid-1970s, "the first place the Israeh jet touches down 
is Tehran. Moshe Dayan is in and out of there quite frequently."'^ 



170 



The Iran-Contra Connection 



No Israeli representative in Iran during the Shah's reign was more 
significant or influential than Ya'acov Nimrodi, Israel's nuhtary attache. He 
reportedly helped organize and encourage the rebellion of Kurdish 
tribesmen against Iraq, the Shah's main political and military rival in the 
region."* As the chief government agent for Israel's burgeoning arms 
industry, known as an all-purpose "fixer," Nimrodi was intimate with the 
Shah and his generals. "1 was in partnership with the Shah," he told 
friends.'^ (Among other coups, Nimrodi sold the Iranian army on the Uzi 
submachine gun."") And as the Mossad agent who could properly boast of 
having "built" SAVAK into an efficient if brutal intelligence service, he 
was no less intimate with the keepers of the Shah's secrets.'^ With the arrival 
of the Khomeini regime, Nimrodi kept open his lines of communication as a 
private arms dealer who would become central to the Reagan arms-for- 
hostage talks. 

Though Israel, along with the United States, suffered a grievous loss 
with the fall of the Shah, its leaders concluded that lasting geo-political 
interests would eventually triumph over rehgious ideology and produce an 
accommodation between Tel Aviv and Tehran. The onset of the Iran-Iraq 
war in 1980 gave Israeli leaders a special incentive to keep their door open 
to the Islamic rulers in Iran: the two non-Arab countries now shared a 
connmon Arab enemy. As Israeli Defense Minister Ariel Sharon told the 
Washington Post in May 1982, justifying Israeli arms sales to Tehran, "Iraq 
is Israel's enemy and we hope that diplomatic relations between us and Iran 
will be renewed as in the past." Four months later he told a Paris press 
conference, "Israel has a vital interest in the continuing of the war in the 
Persian Gulf, and in Iran's victory." Such views were not Sharon's alone; 
Prime Ministers Itzhak Shamir (Likud) and Shimon Peres (Labor) shared 
them too.*** 

To this day, prominent Israelis still argue that strategic calculus 
unashamedly. Retired Gen. Aharon Yariv, former head of military 
intelligence, told a conference at Tel Aviv University in late 1986 that "it 
would be good if the Iran-Iraq war ended in a tie, but it would be even 
better if it continued." Otherwise, Iraq might open an "eastern front" 
against Israel.'^ The carnage of human life didn't figure in the equation at 
all. Uri Lubrani, Israel's chief representative in Iran under the Shah and 
Nimrodi's superior in Mossad, recently justified continued arms sales 
because "Khomeinism will disappear and Israel and the United States will 
again have influence in Iran."^° 

One other consideration, rarely articulated, also swayed successive 
Israeli leaders: money. According to Gary Sick, an expert on Iran who 
served on the NSC under Presidents Ford, Carter and Reagan, "Israel 



Irangatc: The Israel Connection 171 



acknowledged that arms sales were good business. One out of 10 Israeli 
workers is employed in arms-related production; military items constitute 
more than a quarter of Israel's industrial exports. "^^ The distinguished 
Israeli defense correspondent Ze'ev Schiff states that Israel's pro-Iran 
policy has been "guided by a ravenous hunger for profit rather than by 
strategic considerations..."^^ 

This hunger was all the more acute in view of severe unemployment 
that hit the Israeh arms industry in 1979 after the Iran market shriveled. 
Nimrodi, the Mossad-agent-tumed-arms-dealer, recalled that when he 
reported to the Israeli government on the millions of dollars to be had from 
arms sales to Khomeini's Iran, "people's eyes ht up here. They have been 
laying people off in the defense industry, and this meant jobs."^' 



The Arms Channel Opens 

Israel lost no time supplying the new Khomeini regime with small 
quantities of arms, even after the seizure of the U.S. embassy. The first sales 
included spare parts for U.S. -made F-4 Phantom jets;^ a later deal in October 
1980 included parts for U.S.-made tanks. Israel informed Washington, only 
"after the fact, when they were far down the line and right into the middle 
of the thing," according to a former State Department official. To Begin's 
ex post facto request for approval, "the answer was instant, unequivocal and 
negative," writes Gary Sick, the Iran expert on Carter's NSC.^^ 

The White House was in fact aghast to find that its embargo had been 
flatly violated. "We learned much to our dismay," Brzezinski noted later, 
"that the Israelis had been secretly supplying American spare parts to the 
Iranians without much concem for the negative impact this was having on 
our leverage with the Iranians on the hostage issue." Secretary of State 
Edmund Muskie demanded that Israel cease its shipments; Prime Minister 
Begin promised to comply. In fact, however, the supply line stayed open 
without Washington's approval, carrying tank parts and ammunition.^^ 

Why didn't the administration crack down? One reason is simply that 
no president since Eisenhower has ever really punished Israel for acting 
against U.S. interests. Prime Minister Begin bombed the Iraqi nuclear 
reactor, invaded Lebanon, annexed the Golan heights and speeded up the 
settlement of the occupied West Bank much to the Reagan administration's 
embarrassment, but considerations of military strategy and Israel's political 
clout in Congress always gave the client state the upper hand. 



172 



The Iran-Contra Connection 



Moreover, the administration could rarely prove what it suspected. 
Israel did its best to disguise these shipments by using layers of foreign 
brokers to cloak their source. Notes Ha'aretz correspondent Yo'av Karny, 
"The cloak of secrecy that surrounds Israeli arms exports is so tight that 
one can compare it to the technique for smuggling hard drugs. "^^ When 
caught in the act, Israeli officials maintained they were simply selling 
domestic arms, not embargoed U.S. weapons. "Whenever we would get 
word of shipments," one American official explained, "the State Depart- 
ment would raise the issue with Israel, and we would get the standard 
lecture and promises that there were no U.S. weapons involved."^** 

That standard lecture was clearly false, though Washington may have 
lacked usable evidence to prove it. U.S. -made weapons were very much for 
sale. On 24 July 1981, Israeli arms dealer Ya'acov Nimrodi — later to play a 
vital role in the arms-for-hostages negotiations — apparently signed a deal 
with Iran's Ministry of National Defense to sell $135,842,000 worth of 
arms, including Lance missiles, Copperhead shells and Hawk missiles.^' A 
sale of such magnitude must have had Israeli government acquiescence.^" 
Nimrodi's close personal friend Ariel Sharon, a wartime comrade from the 
1948 struggle,^' Ukely kept tabs on, if he did not direct, the private dealer's 
sales with Iran. 

Sometime the same year, David Kimche, director general of Israel's 
foreign ministry, apparently approached Secretary of State Alexander 
Haig and his counselor Robert McFarlane to discuss proposed Israeli 
shipments of $10 milUon to $15 million in spare parts to "moderates" in 
Iran. Kimche may have been referring to a contract to supply 360 tons of 
tank spares and ammunition — worth about $28 million, twice his 
estimate — to Iran by air via Cyprus.^^ But Haig denies that he ever 
approved any such shipments, a claim strengthened by the admission of 
Israeli officials that they went ahead based only on Haig's alleged failure to 
disapprove.^^ In any case, the shipments in question paled beside what 
Nimrodi was then arranging. 

In November 1981, Israeh Defense Minister Sharon visited Washing- 
ton, shopping for approval of similar arms sales. His U.S. counterpart, 
Caspar Weinberger, flatly turned him down. Sharon then went to Haig, 
hoping for acquiescence from the State Department. Again, McFarlane 
handled many of the discussions with Sharon and Kimche; this time Haig 
unequivocally opposed any violation of the embargo.^'* 

In numerous discussions with Israeli officials thereafter, administration 
decision makers flatly refused requests for permits to ship U.S. arms to Iran, 
and strenuously discouraged Israel from sending its own weapons to the 
radical Khomeini regime."*^ Undersecretary of State Lawrence Eagleburger 



Irangate: The Israel Connection 173 



at one point summoned the Israeli ambassador to protest his country's 
continued sales — only to be assured that they had been stopped. And 
officials who ran Operation Staunch, the project to block Iran's access to 
the world arms market, were never discouraged from extending their 
efforts to Israeli-linked deals. 

Yet as in 1979-80, Israel pursued its pohcy anyway, in flat violation of 
its arms reexport agreements with the Pentagon.^** In a May 1982 interview 
with the Washington Post, Sharon claimed that Israeh shipments had been 
cleared "with our American colleagues" months earlier and that details of 
all the shipments were supplied to the administration. Later that year, 
Israel's ambassador Moshe Arens declared that Israel's arms sales were 
cleared at "almost the highest levels" in Washington, "inconsequential" in 
size, and designed to undermine the Khomeini regime.^' Both times the 
State Department flatly contradicted the Israehs' claims.'*" At least Sharon 
and Arens were more credible than Foreign Minister Shimon Peres, who 
declared after the Irangate scandal broke in 1986 that "Israel's pohcy is not 
to sell arms to Iran."*' 

All the standard propaganda themes and practices were in place. Israel 
would continue seeking approval for arms sales on the basis of their 
potential political leverage, but would ship arms willy-nilly while falsely 
claiming Washington's sanction. 

And those shipments would continue to be enormous in size, 
estimated by experts at the Jaffee Institute for Strategic Studies in Tel Aviv 
at $500 milhon in value from 1980-83. Other arms market experts have put 
the total value at more than $500 milhon a year, including aircraft parts, 
artillery and ammunition."^ 

Anecdotes abound in the world press relating to Israeh sales to Iran: 

*In March 1982, the New York Times cited documents indicating 
that Israel had supphed half or more of all arms reaching Tehran in the 
previous 18 months, amounting to at least $100 million in sales.'*^ 

* Foreign intelligence sources told Aerospace Daily in August 1982 
that Israel's support was "crucial" to keeping Iran's air force flying against 
Iraq."' 

* An alleged former CIA agent reportedly visited Israel in 1982, met 
with the chief of staff of the Israeli Defense Forces and head of military 
intelligence, and "struck a deal with them involving the transfer of 
weapons and equipment, captured by Israel during the Lebanon war, to 
Iran.'"*^ 

* Israeli sources told Newsweek that "they sold the Iranians much of 
the light weaponry and ammunition that the Israeli 



174 



The Iran-Contra Connection 



army had captured during its invasion of Lebanon; subsequently, they 
sold overhauled jet engines, spare parts for American-made M-48 tanks, 
ammunition and other hardware — $100 million worth in 1983 alone."''* 

* Newsweek also reported that after an Iranian defector landed his F- 
4 Phantom jet in Saudi Arabia in 1984, intelhgence experts determined that 
many of its parts had originally been sold to Israel, and had then been 
reexported to Tehran in violation of U.S. law."*^ 

*ln 1984 and early 1985, a single one of Israel's many European 
brokers, based in Sweden, reportedly shipped hundreds of tons of TNT 
and other explosives to Iran, often by way of Argentina, worth 500 
million kroner.*^ 

*The Milan weekly Panorama reported that Israel had sold the 
Khomeini regime 45,000 Uzi submachine guns, antitank missile 
launchers, missiles, howitzers and aircraft replacement parts. "A large part 
of the booty from the PLO during the 1982 Lebanon campaign wound up 
in Tehran," the magazine claimed.''^ 

* Manila newspapers have reported since the Irangate scandal broke 
that former armed forces chief of staff Gen. Fabian Ver, a crony of 
Ferdinand Marcos, supphed phony end user certificates to allow Israeh 
intermediaries to divert U.S. arms to Iran in 1984.^" 



Washington Enters the Picture 



Israel finally succeeded in penetrating Washington's defenses at a time 
of crisis for the administration. An Iranian-backed terrorist group seized 
the CIA's Beirut station chief, Wilham Buckley in March 1984. Buckley's 
encyclopedic knowledge of terrorism, and familiarity with every CIA 
agent in Lebanon, made him a priceless catch, particularly since the 
destruction of the CIA station in the Beirut embassy bombing had left the 
United States with few eyes and ears in the region. "I thought it was vital to 
get him out," Casey declared. Yet the CIA's Herculean efforts to rescue 
him failed at every turn.^' Desperate for help, the Reagan administration 
tumed to the Israelis in early 1985.^^ 

The nature of the approach almost guaranteed the outcome. The key 
emissary — and a pivotal figure in the entire Iran story — was Michael 
Ledeen, an NSC consultant with a passion for cloak and dagger.^^ Ledeen 



Irangate: The Israel Connection 175 



had extremely close ties with Israel. His wife Barbara is an assistant in the 
Pentagon office of Stephen Bryen, who was investigated by the FBI in the 
late 1970s after an eyewitness alleged that he passed secrets to Israel. In 

1981 Ledeen was a founder of the Jewish Institute for National Security 
Affairs, a Washington group that lobbies for Israeh defense interests. His 
co-founders included Bryen and Richard Perle, another Pentagon official 
associated with the Israeli arms industry.''* And only a few weeks after its 

1982 invasion of Lebanon, the Israeh armed forces invited him to tour the 
conquered territory 

Ledeen planted the notion of exploring an opening to Iran with 
National Security Adviser McFarlane by claiming, supposedly on the basis 
of discussions with a European intelhgence official in April 1985, that the 
timing was favorable. Then at his own initiative, but with McFarlane's 
approval, Ledeen visited Israel in early May 1985 to pursue the idea 
unofficially. There he met with government officials to discuss means of 
contacting Iran's "moderates." "He was involved in the creation of the idea 
that we have to have some kind of relations with the Iranians," said his wife 
Barbara.'^ 

Ledeen says he asked Israeli Prime Minister Shimon Peres what could 
be done to further the cause of better U.S.-Iranian relations.'^ Peres did not 
turn for answers to his intelhgence professionals, as he would were his aim 
merely to exchange information. Instead he convened a tight-knit group of 
arms dealers including his longtime confidant Al Schwimmer, the 
American-bom founder of Israel Aircraft Industries.'^ 

Schwimmer, according to some Israeli news accounts, came up with 
the arms-for-Buckley formula. He also brought in his hfelong friend and 
partner in the arms business, Ya'acov Nimrodi.* Nimrodi, the Mossad agent 
and former Israeli military attache, had acted as a sales agent for Schwimmer 
in the Shah's Iran. As we have seen, evidence suggests that Nimrodi was 
also involved in shipping arms to Khomeini's Iran. 

Fellow career Mossad officer David Kimche, then director-general of 
the Foreign Ministry, came on board to steer the negotiations. Ledeen's 
chief contact in Israel, Kimche proved to be an ardent advocate of 
reopening relations with Iran's "moderate" elements. In fact, Kimche 
appears to have been one of the architects of Israel's arms sales to Iran ever 
since 1980.*' 

Leading these Israelis was Shlomo Gazit, former director of military 
intelligence and president of Ben Gurion University.*^ 

Peres also knew and trusted a fifth, non-Israeh, member of the team: 
Adnan Khashoggi, a wealthy Saudi arms broker and business partner of 
Nimrodi who frequently acted as an intermediary between moderate Arab 



176 



The Iran-Contra Connection 



governments and Israeli officials. Khashoggi would finance some of the 
U.S. arms deals with Iran. 

According to the Tower Commission, this group supplied the 
"catalyst" for the entire Iran catastrophe by "proferring a channel for the 
United States in estabhshing contacts with Iran."^^ That channel was 
Manucher Ghorbanifar, a former SAVAK commander and Iranian arms 
dealer Uving in exile.^ Khashoggi had apparently known him for years.^^ 
To this group he promised the necessary contacts with "moderates" in 
Iran — and Buckley's release — in exchange for arms.^^ In particular, he 
claimed to have access to Iranian Prime Minister Mir Hussein Musavi and 
Khomeini's heir apparent, the Ayatollah Hussein Ali Montazeri.^^ With 
Ghorbanifar, however, the truth was always hard to determine. He was 
branded dangerously unreliable by the CIA as early as 1980, repeatedly 
demonstrated himself a har and finally flunked several CIA he detector tests 
hands down.^^ Ghorbanifar was even said to have tried to trade intelligence 
for protection of several drug-trafficking associates.® 

Yet the truth about Ghorbanifar is much more sinister than that he 
failed some lie detector tests and struck nearly everyone who dealt with 
him — except Ledeen and the Israelis — as a "fabricator and wheeler-dealer 
who has undertaken activities prejudicial to U.S. interests."'" Far more 
telUng is the published report that Ghorbanifar "had worked for Israeli 
intelligence before the fall of the Shah."'' Until 1979 he was a partner in 
Starline International, a shipping firm run largely by Israelis that moved 
Iranian oil to Israel.'^ By 1986, if not long before, Ghorbanifar was directly 
on Israel's payroll.'^ CIA Director William Casey judged him unstable but 
noted that he "he appears to respond generally to... direction" from a top 
Israeli official involved in the Iran arms negotiations.''* Ghorbanifar is said 
to have been the source of the fanciful story about a Libyan assassination 
team dispatched to murder President Reagan in 1981. According to the 
Washington Post, "the CIA beUeved he was tied to both the Iranian and 
Israeli intelligence services, and that he had made up the hit-squad story in 
order to cause problems for one of Israel's enemies."'^ 

Probably unbeknownst to McFarlane and other American officials, 
Ghorbanifar and the others assembled by Peres had already met in late 
1984 — if not earlier — to discuss ways of reordering U.S. -Iran relations. 
Far from simply responding to American queries, Kimche, Nimrodi, 
Schwimmer and Ghorbanifar had been making plans months before the 
White House asked for Israel's help in contacting Tehran.'^ Nimrodi 
himself admits his government's chief interest in these early talks was in 
reaping profits and jobs from arms sales to Iran." Ledeen was simply the 



Irangatc: The Israel Connection 177 



most suitable intermediary in the summer of 1985 for influencing 
Washington to that end. 

The Ledeen contact in mid-1985 may not have been this group's first 
effort to lobby the United States for arms-for-hostages deals through 
Ghorbanifar. In November 1984, when the Israeh group had formed, its 
Iranian front-man made contact with the former high-ranking CIA officer 
Ted Shackley in West Germany. Ghorbanifar claimed an unselfish interest 
in bringing Iran back to the Western fold. "He feared that Iran would 
become a Soviet satellite within the near term — three to five years," 
Shackley reported back to the administration. "He rhetorically asked what 
can we do, for despite our ability to work with the 'moderates' in Iran, we 
can't get a meaningful dialogue with Washington. Ghorbanifar suggested 
ransoming the hostages for cash as a first step."^^ 

Ghorbanifar's approach to Shackley may have been more calculated 
than the latter has let on. Shackley had worked as a consultant to Stanford 
Technology, run by Ghorbanifar's fellow Iranian and one-time partner in 
arms deals, Albert Hakim.^' Hakim, as we shall see, succeeded by 1986 in 
occupying center stage in the financial end of the U.S.-Iranian transactions. 

In May 1985, Shackley revived the Ghorbanifar gambit — with 
historic consequences — at a meeting with his friend Michael Ledeen to 
discuss the hostage situation. According to Shackley, Ledeen said members 
of the U.S. govemment wanted to know in that coimection whether the 
Ghorbanifar channel were "still open."^" 

These reports, taken together, suggest the possibility that the entire 
Irangate affair was stage-managed by Israeli agents from the beginning. 
Certainly they put a whole new tight on Kimche's crucial assurances to 
National Security Adviser McFarlane that Ghorbanifar was trustworthy 
and reliable.**' They explain the pains taken by the Israelis to exclude the 
CIA — Ghorbanifar's nemesis — from any knowledge of the arms deals. 
Above all, they add special resonance to the Tower Commission's finding 
that "it was Israel that pressed Mr. Ghorbanifar on the United States. U.S. 
officials accepted Israeli assurances that they had had for some time an 
extensive dialogue that involved high-level Iranians, as well as their 
assurances of Mr. Ghorbanifar's bona fides. Thereafter, at critical points in 
the initiative, when doubts were expressed by critical U.S. participants, an 
Israeli emissary would arrive with encouragement, often a specific 
proposal, and pressure to stay with the Ghorbanifar channel."**^ 

Some Israeli accounts shift the responsibility by suggesting that the 
Saudi participant in the 1985-86 deals, Khashoggi, was the "key figure" in 
putting the whole deal together.**^ Such an emphasis points the finger 
directly or by implication at the Saudi royal family with some of whose 



178 



The Iran-Contra Connection 



members Khashoggi once enjoyed good relations. Some accounts, for 
example, have Khashoggi introducing Nimrodi to Ghorbanifar and thus 
setting the whole chain of events in motion. Such a role makes little sense, 
since Nimrodi knew the former SAVAK agent from the days of the Shah.**^ As 
the Mossad agent who as much as anyone built SAVAK, Nimrodi would 
have enjoyed close relations with Ghorbanifar, whether or not the latter 
worked directly with Israeli intelligence. And both men reportedly knew 
Maj. Gen. Secord during his service in Iran in the mid-1970s.** 

Moreover, Khashoggi was more likely an agent of the Israelis than of 
the Saudi regime, with which his relations were often "severely strained."*^ 
He introduced Israeli officials, including Sharon, to Sudanese president 
Nimeiri in the early 1980s, paving the way for the airlift of Falasha Jews 
from Ethiopia. **** His London-based lawyer was involved with several 
Israehs in some gigantic arms deals with Iran, said to have the approval of 
Prime Minister Shimon Peres.^^ He arranged the sale of Egyptian arms to 
Israel for resale to South Africa.* He greeted Peres at the Regency Hotel in 
New York on his first visit to the United States as prime minister.'' He was 
a business partner of Nimrodi and is reportedly a "close friend" of the 
Mossad veteran David Kimche.'^ Khashoggi was hardly able to manipulate 
the Israelis; he was simply their agent. 

As the Tower Commission noted in its report, this group of Israeli 
insiders and Israeli agents was seeking "U.S. approval of, or at least 
acquiescence in" its own program of arms sales to Iran. But there was 
another consideration, a corollary to Israel's perceived strategic interest in 
helping Iraq's enemy: "In addition, elements in Israel undoubtedly wanted 
the United States involved for its own sake so as to distance the United 
States from the Arab world and ultimately to establish Israel as the only real 
strategic partner of the United States in the region."'^ 

Ledeen retumed to Washington as a de facto emissary representing this 
group's aims. In particular he advanced and supported the Israelis' proposal 
to use Ghorbanifar as an intermediary. But Ghorbanifar demanded 500 
TOW anti-tank missiles as a sign of good faith. Israel would not ship them 
without U.S. approval.''* Thus began the critical period of poUcy making at 
the NSC. Ledeen, backed by McFarlane and North who both respected 
Israeli opinion to the point of admiration,'^ vigorously promoted the 
Ghorbanifar plan "inside and outside the government."'* 

McFarlane should have recognized Ledeen's account as skewed to 
Israel's self-interests. An April 1985 National Intelligence Estimate 
"indicated that Israel had its own reasons to promote the sale of arms to Iran 
and described those interests that diverged from U.S. policy," according to 
a draft report of the Senate Select Committee on Intelligence report on the 



Irangatc: The Israel Connection 179 



Iran affair. "The NIE also described the informal relationship that the 
Israeh Government maintains with Israeli arms dealers, facilitating their 
activities even when the Government of Israel officially supported the 
U.S.-led embargo of weapons for Iran." McFarlane did not see that 
analysis, however.^' McFarlane testified that "if he had known that the 
IsraeUs had previously shipped arms to Iran it would have made him less 
responsive to later Israeh proposals to resume shipments."'^ 

When George Shultz learned of Ledeen's back-channel mission, the 
secretary of state gave McFarlane a lesson. Complaining that State should 
have been consulted, Shultz wamed that Israel's agenda "is not the same as 
ours," that depending on Israeli intelhgence assessments "could seriously 
skew our own perception and analysis of the Iranian scene" and that the 
Israeli -brokered initiative "contains the seeds of... serious error unless 
straightened out quickly." McFarlane promised to "turn it off entirely."^^ 

The June 14, 1985 hijacking of a TWA jet to Beirut immediately 
tumed it back on again. McFarlane once again raised the possibility of 
opening hnes of communication to Tehran with Israel's help.'°° 

McFarlane may well have been influenced by a draft National Security 
Decision Directive submitted to him only three days before the hijacking 
by two of his most pro-Israeli aides, Donald Fortier, the NSC's executive 
secretary and Howard Teicher, the council's Israeli-educated Middle East 
expert."" In May they had closely directed preparations of a National 
Intelligence Estimate on Iran warning of a pro- Soviet takeover in the chaos 
that would follow Khomeini's death unless the West could "blunt Soviet 
influence" by filling "a military gap for Iran." The best strategy, this NIE 
concluded, was to encourage friendly states [read Israel] to sell arms to Iran 
to keep the country out of Moscow's corner.'"^ Now in their June 11 draft 
directive, Fortier and Teicher cited the very intelligence estimate they had 
shaped as reason to "encourage Western allies and friends to help Iran meet 
its import requirements.. .including provision of selected military equip- 
ment..." Fortier wrote McFarlane on the side, "the Israeli option is the one 
we have to pursue, even though we may have to pay a certain price for the 
help."'°^ 

CIA Director Casey "strongly endorsed" the thrust of the draft 
directive, but its argument failed to impress Defense Secretary Weinberger. 
"This is almost too absurd for comment," he scribbled. "It is based on the 
assumption that there is about to be a major change in Iran and that we can 
deal with that rationally. It's like inviting Khadafy over for a cozy 
lunch. "'"^ Secretary of State Shultz similarly complained that the proposed 
directive "is contrary to our interest in containing Khomeinism and in 



180 



The Iran-Contra Connection 



ending the excesses of this regime." Yet the proposal to unleash Israel 
was about to receive a new round of support. 

Three weeks after the hijacking, David Kimche, one of Ledeen's main 
contacts and director general of Israel's foreign ministry, flew to Washing- 
ton to make the same case as Fortier and Teicher.'"* Kimche argued it 
would be "criminal" not to take advantage of the new Iranian contact Israel 
had made.'*'' Ghorbanifar had warned the IsraeUs that Iran would "become 
a second Lebanon, in larger and more dangerous dimensions" or else "part 
of communist Russia" if moderate mullahs were not strengthened against 
the radicals.^"* From that assumption, Kimche argued that the hostages 
could only be freed, and Iranian moderates cultivated, with generous 
shipments of weapons.'"' Such arms would supply the Iranians with 
"evidence of American good faith," he maintained.^'" 

Reinforcing Kimche's message was the visit to McFarlane by Prime 
Minister Peres' personal adviser and emissary, Al Schwimmer, on July 13, 
the day of President Reagan's cancer operation. The American-bom arms 
dealer claimed that Ghorbanifar had made contact with a pro-Western 
faction in Iran and could both free the hostages and open a political dialogue 
if only Israel were granted permission to ship U.S. made TOW missiles to 
Iran.'" 

A few days later, McFarlane took up with the convalescing Reagan the 
general proposition of using an Israeli contact to establish a channel to 
Iranian policy makers. What happened next is particularly in dispute. The 
national security adviser may or may not have mentioned arms and Reagan 
may or may not have authorized an approach to Israel's contact Ghor- 
banifar. The recovering president may not have been fully attentive, but he 
was receptive at least to exploring a political opening with Iran."^ 

Meantime, the Israelis were taking no chances. In early July, Kimche 
arranged for Ledeen to meet with Al Schwimmer, the confidant of Israeli 
Prime Minister Peres, in Washington. The Israeli arms dealer spoke 
glowingly of Ghorbanifar and encouraged Ledeen to meet the Iranian as 
soon as possible. Leeden got McFarlane's approval to meet Ghorbanifar 
while taking a "vacation" in Israel later that month.''' 

Their meeting in late July was top-heavy with arms dealers: Schwim- 
mer, Nimrodi and Ghorbanifar attended along with Kimche. Leeden came 
away impressed by Ghorbanifar's "great quantity" of information on 
politics in Tehran and with his tantalizing promise that arms sales might 
induce Iran to release William Buckley and stop sponsoring further 
terrorism. Ledeen chose to discount the CIA's apparently well-founded 
suspicions about the Iranian's credibihty.'" Indeed, Ledeen has since called 



Irangate: The Israel Connection 181 



Ghorbanifar "one of the most honest, educated, honorable men I have ever 
known.""^ 

In case the administration did not get the hint, Kimche returned to 
Washington at the beginning of August and reiterated to McFarlane what 
Ledeen had already reported: Iran could produce the hostages only in 
return for TOW anti-tank missiles and other U.S. arms.''* 

On August 6, McFarlane made his case to Reagan, Bush, Shultz, 
Weinberger, CIA Director Casey and White House Chief of Staff Don 
Regan. Once again stories differ as to the outcome. The secretaries of state 
and defense, at least, opposed any arms sales. But McFarlane testified 
(contrary to Regan) that he carried the day and won the President's 
approval for an initial Israeli shipment of TOWs. Reagan did not issue an 
official "finding" to lend legal authority to the new policy."^ 

Then, claiming to speak for the president, McFarlane told Kimche that 
the administration would "condone" an Israeli shipment of arms to Iran 
and would replace the TOW missiles."** The national security adviser put 
Ledeen in charge of handling arrangements with Kimche to receive the 
hostages."' The first two arms shipments, financed by Khashoggi, were 
delivered in Iran on August 19 and September 14. On that latter date, his 
Lebanese abductors released the Rev. Benjamin Weir. Another shipment 
of HAWK anti-aircraft missiles followed in November, brokered by 
retired Maj. Gen. Richard Secord with help from the CIA.'"' 

With those first shipments, the process of hooking Washington was 
underway. Israel's hope must have been to keep the White House from 
disrupting the much larger Israel-Iran arms traffic that flourished while the 
administration agonized over the fate of U.S. hostages. Certain law 
enforcement agencies, on the other hand, could not so easily be constrained 
without endangering the White House's secret. Operation Staunch re- 
mained in effect — to the dismay of certain smugglers linked to the Israeh 

122 

govenmient. 

Key Israeli officials thus had every incentive to maintain their leverage 
in Washington and suppress White House doubts as long as possible. Those 
doubts were growing fast. By December 1985, National Security Adviser 
McFarlane had become disenchanted with the one-sided negotiations and 
the obvious failure of Ghorbanifar's contacts in Tehran to achieve the 
hostages' release. McFarlane obtained presidential approval on December 
7 to stop further arms shipments; the next day, he flew to London to call 
off the Israeli and Iranian middlemen. Ledeen, too, was told his services 
were no longer needed. Kimche argued in vain that the Iranian connection 
was still viable and promising; in particular he defended the credibility of 
Ghorbanifar, who struck McFarlane as a "man of no integrity. "'^^ 



182 



The Iran-Contra Connection 



McFarlane resigned from office as of December 11; the opportunity 
was thus ripe for an end run around his parting policy shift. All through 
December, North, Ledeen, Ghorbanifar, Richard Secord (North's private 
agent) and an Israeli representative of Peres, Amiram Nir, continued to 
meet.'^'* On a private trip to Europe, the NSC "consultant" met Ghor- 
banifar again, then retumed to brief CIA officials, including Casey, on the 
Iranian's immense potential value. More important, Ledeen arranged for 
Ghorbanifar to visit Washington and charm top administration officials in 
person. Ledeen told government associates that Ghorbanifar was a 
"wonderful man. ..almost too good to be true." Although the arms dealer 
flunked every significant question asked him on a CIA lie detector test, 
Oliver North decided to keep him on.'^^ Just why North and Casey 
continued to use Ghorbanifar remains something of a mystery.'^* One 
reason may be that the Iranian claimed, and North beUeved, that the 
Khomeini regime would order the hostages killed if Washington jettisoned 
Ghorbanifar and called off the arms deals. North also believed he could 
control Ghorbanifar adequately through Secord. '^^ 

Israel's pressure on Washington to resume its arms-for-hostages 
policy intensified. On January 2, 1986, according to the Tower Report, 
"just when the initiative seemed to be dying," Prime Minister Peres sent his 
special terrorism adviser, Amiram Nir, to Washington with "news" that 
logistical problems had been cleared up and the Iranian "moderates" were 
willing to bargain again in good faith. Nir asked the administration to 
reconsider its termination of arms dealings with Iran.^^^ As bait, he 
suggested that Israel might release some Shia prisoners held in southern 
Lebanon — along with 3000 TOW missiles — to expedite the release of 
American hostages. Shultz remained suspicious that Israel simply 
wanted to "get itself into a position where its arms sales to Iran could not be 
criticized by us" or cut off by Operation Staunch, the official embargo 
effort against Tehran. But President Reagan, desperate to get the hostages 
back, was persuaded to give the Israel channel another chance.'^" 

A memorandum for the president, prepared by Oliver North and 
delivered in summary by National Security Adviser John Poindexter on 
January 17, supplies powerful evidence of Israel's crucial role in initiating 
the resumption of U.S. arms sales to Iran in 1986: 

Prime Minister Peres of Israel secretly dispatched his special advisor 
on terrorism with instructions to propose a plan by which Israel, with 
Umited assistance from the US, can create conditions to help bring about a 
more moderate government in Iran... 



Irangate: The Israel Connection 183 



The Israeli plan is premised on the assumption that moderate 
elements in Iran can come to power if these factions demonstrate their 
credibiUty in defending Iran against Iraq and in deterring Soviet 
intervention. To achieve the strategic goal of a more moderate Iranian 
government, the Israelis are prepared to unilaterally commence selhng 
military material to Western-oriented Iranian factions. It is their beUef 
that by so doing they can achieve heretofore unobtainable penetration of 
the Iranian goveming hierarchy. The Israelis are convinced that the 
Iranians are so desperate for miUtary material, expertise and intelUgence 
that the provision of these resources will result in favorable long-term 
changes in personnel and attitudes within the Iranian govemment. Further, 
once the exchange relationship has commenced, a dependency would be 
estabhshed on those who are providing the requisite resources, thus 
allowing the provider(s) to coercively influence near-term events. 

North saved the strongest enticement for last. "They also point out," 
he noted, "...this approach through the government of Iran may well be our 
only way to achieve the release of the American hostages held in Beirut." 
Indeed, the whole deal ultimately rested on their fate. "If all of the hostages 
are not released after the first shipment of 1,000 weapons," North stated, 
"further transfers would cease." 

As evidence cited earUer proves, Peres's offer to "commence" arms 
sales was disingenous in the extreme. Such sales had never stopped. And his 
proposal to "penetrate" and control the Iranian govemment with them was 
no less misleading in view of the failure of past sales to change Tehran's 
behavior. 

According to North's memo, the Israelis asked only for "an assurance 
that they will be allowed to purchase U.S. replenishments for the stocks 
that they sell to Iran." Such an arrangement, the NSC official noted, would 
violate U.S. laws; but the "objectives of the Israeli plan could be met" 
legally if the CIA, acting under a presidential order, "purchased arms from 
the Department of Defense under the Economy Act and then transferred 
them directly to Iran after receiving appropriate payment from Iran." 

Although Weinberger and Shultz still firmly opposed further sales, 
Nir won over CIA director Casey, Attorney General Edwin Meese and 
National Security Adviser Poindexter. Together they convinced Reagan 
on the 17th to authorize — ^without notification of Congress — a renewed 
round of arms shipments for the purpose of moderating Iran's government 
and "furthering the release of the American hostages held in Beirut.. ."'^^ 
But now, for the first time, Washington would supply arms directly to 



184 



The Iran-Contra Connection 



Tehran: Israel would merely "make the necessary arrangements" for the 
deal"^ 

It was an extraordinary decision, even if the finding merely sanctioned 
an ongoing pohcy. For in writing, it put the President on record as 
violating his own arms embargo, bargaining with terrorists over hostages 
and potentially tilting the military scales in favor of America's sworn 
enemy, Iran. Thus began "Operation Recovery." 

Thereafter, various Americans, chiefly from the CIA and North's 
own private network, took the lead in making the arrangements and 
bargaining with Tehran. But — contrary to accounts that minimize Israel's 
role in the latter stages of the affair — ^Nir worked closely with Khashoggi to 
line up bridge financing for the deals.^^'* Nir further sat in on meetings the 
Americans had with Ghorbanifar and went — disguised as an American — to 
meetings with Iranian govemment representatives in Tehran. Prime 
Minister Peres personally appealed to the White House to include Nir in the 
delegation to Tehran, where he could keep tabs on the developing arms 
trade and report back to Israel. 

North claims further that it was Nir who first broached the scheme of 
financing the contras with profits from the sale of arms to Iran in the 
decisive month of January 1986 — a strategy seconded by Ghorbanifar, the 
expatriate Iranian arms dealer supported financially by Israel. Further 
investigation may determine the truth of North's allegation, but the record 
is clear that Israel had already grossly overcharged Iran for the August/ 
September 1985 arms shipments and thus established a precedent for 
generating profits that could be used for other ends.'^^ North may have 
believed that since the money came from Iran, not the United States or 
Israel, it could be diverted without actually breaking the law."^ 

Investigators believe some of these proceeds went to Swiss bank 
accounts controlled by North's private agents, Albert Hakim and Richard 
Secord. To fellow NSC officials. North described Hakim variously as vice 
president of a European company set up to "handle aid to resistance 
movements" and as the man who "runs the European operation for our 
Nicaragua!! resistance support activity.""^ According to his lawyer. 
Hakim arranged for the Iranians to purchase TOW missiles in February 
1986 in exchange for a contribution to the contras, and "the money from 
that sale was routed through Israelis into Hakim's financial network."^'*" 
Hakim was not a disinterested observer in this affair. He appears to have 
had a personal financial stake in arms deals with Khomeini's Iran.'"" One 
top CIA operations officer worried that Hakim was involved in arms 
transactions of his own "that might or might not be legal" and that might 
conflict with White House plans. But no less important to understanding 



Irangate: The Israel Connection 185 



his role may be the fact that he was reportedly an Iranian Jew with "strong 
Israeli military- type ties.""*^ 

Outside Central America, some of the Iran money may also have been 
diverted to purchase anti-aircraft missiles from Israel for the Afghan 
rebels.'"** The same bank account may have also financed military 
shipments from China. That materiel reportedly went both to Afghanistan 
and, via the Portuguese territory of Macao, to the former Portuguese 
colony of Angola to help the UNITA guerrilla movement.'"*^ A growing 
body of evidence suggests that the administration's private contractors 
circumvented the Clark Amendment barring aid to UNITA in the same 
way that they bypassed the Boland Amendment regarding the contras."*^ 

Still other profits went to Israel's foreign intelligence agency, Mossad, 
"for its undercover operations in Europe and the Middle East," according 
to Jack Anderson. "Casey went along with the secret diversion of money to 
Mossad," Anderson learned, "because in the past Mossad has undertaken 
delicate intelligence jobs for the CIA on request."'''^ Israeh press accounts 
indirectly support this story."** 

Last but not least, Ghorbanifar reportedly saw to it that several milhon 
dollars ended up in the coffers of top Iranian government officials and in the 
hands of financiers of the very group that kidnapped the Americans in 
Beirut.'*^ 

Any time the administration began to have second thoughts about this 
dangerous pohcy, Israeh officials were there to steer the White House back 
on track. In February 1986, for example. Prime Minister Peres wrote 
President Reagan, urging him "not to give up" and to "be patient that the 
policy would bear fruit. "*^" George Shultz later complained that "every 
time he was told the deal was dead, some Israeli would come over and stir 
the fiames."'^' 

The White House, in any case, was hooked. As Casey and others 
pointed out, there was no turning back: Cancelling the talks could make the 
situation "turn ugly" either at the expense of the hostages or the 
administration, which was now hostage itself to potential leakers like 
Ghorbanifar or Khashoggi.''^ 

Thus were the ransom negotiations kept alive and intensified until one 
faction in Iran (around Montazeri) leaked details of the deals to a Beirut 
newspaper,''^ followed by Attorney General Ed Meese's revelation in late 
November 1986 of the illegal siphoning of money from Swiss accounts 
maintained for the Iran arms deals to pay for contra supplies. 

Israeh pressure and manipulation, it must be stressed, could never have 
succeeded without the administration's consent, and would never have 



186 



The Iran-Contra Connection 



worked without a predisposition in the White House for resorting to back- 
channel policies contrary to declared policy. 

In retrospect, however, the Reagan administration was particularly 
vulnerable to Israeli offers of "assistance" because the CIA had developed 
no assets of any value inside Iran. "We had nothing going in Iran," one 
official said.'''' "We really had no alternative" to depending on Israel, 
McFarlane explained in a similar vein. With the fall of the Shah, he noted, 
the CIA suffered "an enormous loss of the means of collection in Iran that 
still gives us an imperfect picture of what is going on in Iran."''' 

Thus when the Israelis came up with Ghorbanifar as their window on 
Iran's "moderates," NSC staffers with little knowledge of the Middle East 
and Umitless faith in IsraeU intelUgence prowess took the bait. Not only did 
Israel win Washington's sanction for arms shipments, it advanced the goal 
of strengthening Iran against its supposed long-term enemy, Iraq. 

But the administration was vulnerable above all because it chose to 
undertake so much of its foreign policy in secret, without the benefit of 
pubhc debate and at the mercy of more experienced covert operators. The 
relatively unsophisticated staffers on the NSC were no match for profes- 
sional Israeli Mossad agents like Kimche and Nimrodi, or the champions of 
Israel's cause within the administration, like Fortier, Teicher, and Casey. 
Consumed by the operational details of their clandestine deals, they never 
stopped to assess the enormous risks either of exposure or of tilting the 
balance of the war in Iran's favor. In the case of Iran, at least, the 
administration effectively subcontracted not only policy implementation 
but policy formulation — and paid the price. 



IX. 



Secret Wars and Special Operations 



As Congress explores reforms to prevent further breakdowns of law 
and accountability at the top levels of government, legislators should not 
ignore one of their own obscure but vital contributions to the recent 
scandals. Even as Congress has demanded a more open foreign policy, it has 
promoted a significant expansion of special operations and unconventional 
warfare capabilities — necessary components of U.S. military forces, but 
ones that may conceal a perilous capability for unaccountable action by 
presidents, their advisers or rogue agents. 

The realm of military special operations lies beyond the day-to-day 
reach of the intelligence committees, and often beyond even the knowledge 
of all but a handful of officials in the executive branch. The hallmark of 
most special operations units — stealth and deception — ^keeps the American 
public in the dark no less than the enemy. In the wrong hands, their 
activities can no less easily be kept secret from Congress as well. 

And just as the special operations fraternity provided the training 
ground for most of the undercover specialists who are today notorious for 
their role in the illicit Iran and contra networks — including Oliver North 
and Richard Secord — so it will constitute the recruiting pool for similar 
abuses in the future. 

Special operations units, broadly defined, include the Green Berets, 
Army Rangers, Navy SEALs, Air Force Special Operations Wing, the 
Delta Force antiterrorist conomandos and related signal, civil affairs and 



187 



188 



The Iran-Contra Connection 



psychological warfare units. Depending on the unit in question, their 
specialized skills and training include "underwater demolition, sabotage, 
foreign weapons expertise, wilderness survival, parachuting, scuba, hand- 
to-hand combat, sniper, pathfinder, camouflage, escape and evasion, aerial 
resupply and extraction, intelUgence gathering, interrogation and psycho- 
logical operations."^ 

Such forces took their model from the irregular warfare units of the 
Office of Strategic Services (OSS), the World War Il-era predecessor to the 
CIA. In the postwar years, their first mission was to support America's 
earliest "contras": East European emigres, some of them veterans of Nazi 
military formations, who hoped to roll back Soviet control of their 
homelands.^ They first saw major action during the Vietnam War, 
working closely with the CIA on clandestine raids and guerrilla warfare 
throughout Indochina. Since the 1960s they have spearheaded U.S. 
training and counterinsurgency efforts in Latin America, ranging from the 
capture of Che Guevara in Bolivia in 1967 to recent support for 
government troops in Honduras, Costa Rica and El Salvador.^ 

In the last few years they have served in the 1980 Iran hostage rescue 
mission, the Grenada invasion and even the Los Angeles summer 
Olympics."* Special Forces training teams undertook missions in 35 
countries in the Reagan administration's first term.' The Army Special 
Operations Command is currently training forces for five separate regions: 
the Pacific, North Africa, Persian Gulf, Germany and Latin America.^ 



Special Operations: A Growth Field 

In the last few years, the special operations sector of the U.S. military 
has grown at a rate unprecedented in peacetime to meet such diverse "low 
intensity" challenges as classic counterinsurgency, anti-terrorist missions 
and support of anti-communist insurgencies that meet the tests of the 
"Reagan Doctrine."^ 

In the first five years of the Reagan administration, special operations 
forces (SOF) grew in manpower by 50 percent, with a goal of doubhng to 
more than 20,000 by the end of the decade.* Budgets directed to 
unconventional warfare have sextupled during the Reagan presidency.^ 
The Pentagon's five-year plan from fiscal 1988-1992 calls for spending 
$10.4 billion on special operations. 

Since 1982, several bureaucratic changes have given SOF heightened 
stature within the mihtary to match their increased resources. The Army 



Secret Wars and Special Operations 



189 



nut all its special operations units under one command at Fort Bragg in 
1982; the Air Force followed suit in 1983. In early 1984 the Joint Chiefs of 
Staff created the Joint Special Operations Agency to advise them on 
command and control of the SOF in all the services. And each of the unified 
theater commands set up Special Operations Commands to guide their 
SOF capabilities.^" Today such units actually have representation at the 
level of the National Security Council. 

The theory and practice of special operations enjoy a powerful 
constituency within the Pentagon, especially on the civilian side. These 
boosters cite the terrorist threat as one rationale for augmenting such forces. 
But today, as in President Kennedy's era, special operations units above all 
offer the illusory promise of allowing the United States to intervene 
successfully in the Third World "without U.S. involvement in large-scale 
armed conflict and with minimal cost in lives and resources," according to 
the U.S. Army." 

President Kennedy's explanation of their mission in 1961 could have 
come from President Reagan's mouth two decades later: 

It is clearer than ever that we face a relentless struggle in every corner of 
the globe that goes far beyond the clash of armies, or even nuclear 
armaments. The armies are there. But they serve primarily as the shield 
behind which subversion, infiltration and a host of other tactics steadily 
advance, picking off vulnerable areas one by one in situations that do not 
permit our own armed intervention... We dare not fail to see the insidious 
nature of this new and deeper struggle. We dare not fail to grasp the new 
concepts, the new tools, the new sense of urgency we will need to combat 
it — whether in Cuba or south Vietnam.'^ 

In 1982, Defense Secretary Weinberger justified the current buildup of 
special operations forces as essential "to project United States power where 
the use of conventional forces would be premature, inappropriate or 
infeasible." The sort of "low-level conflict" most suited to special 
operations forces, he maintained, "will pose the threat we are most likely to 
encounter throughout the end of this century."'^ Deputy Assistant 
Secretary of Defense Noel Koch told Congress in 1984 that "Special 
Operations Forces.. .provide us a precisely tailored capability" for resisting 
"insurgency and international terrorism in every region of the Third 
World." And according to Undersecretary of Defense Fred Ikle, these 
forces will give the United States the abiUty to match the Soviets in "all 
means — terrorist, covert, arms shipments, what have you — ^to topple 
governments or support govemments..."''* 



190 



The Iran-Contra Connection 



The Risks of Intervention 

In fact, as miUtary officers have been the first to stress, the use of such 
forces entails great risks of unintended escalation and overcommitment. Lt. 
Gen. John Chain, then Air Force deputy chief of staff for operations, 
warned in 1984 that relying on the Special Forces is "like carrying a loaded 
gun," tempting but dangerous to use before the nation is committed to 
war.'^ Policy makers attracted by the low visibility and supposed 
effectiveness of special operations forces may be disposed to deploy them 
without adequate political support at home. Dispatched as a limited 
beachhead of American troops in "low intensity conflicts," they may 
require conventional support when the going gets tough. Above all, they 
may entangle the country in the far-reaching consequences of their covert 
missions, without Congress even being notified under the War Powers 
Act'" 

Thus in Indochina, special operations forces made up the low- 
visibility spearhead of the Kennedy administration's first, and ultimately 
disastrous, commitment of forces. On May 11, 1961, a National Security 
Action Memorandum directed the military to "expand present operations" 
of one special unit "in guerrilla areas of South Vietnam under joint MAAG 
[Military Assistance Advisory Group |-C1A sponsorship and direction" 
and in Laos to "infiltrate teams" trained by the CIA and Special Forces to 
attack Vietcong lines of communication "under light civilian cover." 
Assisting in those operations were Navy SEAL frogmen and a CIA 
proprietary airline (VI AT) using pilots from Taiwan who could "provide 
plausible denial that the Vietnamese or U.S. govemments were involved in 
operations over North Vietnam."'^ These special units reported directly to 
the CIA or Defense Intelhgence Agency, bypassing normal military 
channels.'* 

By 1963, an average of four Vietnamese teams ttained by the Special 
Forces were entering North Vietnam each month to conduct "harassment 
and psychological operations."'^ Before year's end these infiltration 
missions, considered essentially futile by the CIA, were transferred to 
miUtary control "as part of a worldwide replacement of CIA leadership of 
clandestine paramilitary operations." Specifically, the operations were run 
by the Special Operations Group (operating undercover as the "Study and 
Observation Group"), which reported in practice not to local military 
commanders, but directiy to the Special Assistant for Counterinsurgency 
and Special Activities in the Joint Chiefs of Staff, a post estabhshed after the 
Bay of Pigs invasion.^" 



Secret Wars and Special Operations 



191 



A relative handful of military covert operators had a disproportionate 
effect on the war's pohtical development. SOG's clandestine raids on 
North Vietnam in 1964 triggered the infamous reprisal attack on U.S. 
naval vessels in the Gulf of Tonkin, the single greatest watershed in the 
early history of that war's escalation. Later, U.S. special forces, possibly 
without Washington's full knowledge and apparently against strenuous 
opposition from the State Department, helped destabilize the neutral 
regime of Cambodia's Prince Sihanouk, contributing to the escalation of 
war into his country and the ultimate collapse of that society into 
barbarism.^' Finally, special military units attached to the CIA helped carry 
out the notorious Phoenix program, which arranged the murder of tens of 
thousands of civilians suspected of sympathy with the Vietcong. Revela- 
tions several years later of the staggering abuses involved ultimately helped 
swing American public opinion further against the war.^^ 



Where Abuses Flourish 

William Jackson, an aide to Sen. Alan Cranston, D-Calif., argues that 
the real purpose of special operations forces is "to fight undeclared war, that 
is, a war kept secret from the American press. They specialize in the 'gray 
zone' between military and intelligence operations. Thus, the armed forces 
of the United States are engaged in covert military operations designed to 
circumvent the law and avoid congressional oversight. "^^ 

The clandestine nature of special forces encourages the same sort of 
abuses that have characterized the CIA, with one major difference: what 
goes on in the shadowy recesses of the nulitary is much less well studied or 
understood. The intelligence oversight committees acknowledge having 
Uttle expertise in this realm. As Senator Patrick Leahy, vice chairman of 
the Senate Select Committee on IntelUgence, has noted, "the new reliance 
on covert paramilitary action as a normal instrument of foreign policy — 
even as a substitute for foreign policy — has strained the current oversight 
process to the breaking point. 

Congress can only guess at what really goes on. In 1983, for example, 
an obscure embezzlement trial of a former two-star Air Force general 
revealed the existence of a secret Swiss bank account used to finance CIA 
and mihtary special operations'^ and "bribes to foreign officials." What's 
more, the account was managed not only by the mihtary but also by the 
chairman of the board of Lockheed Aircraft — an invitation to abuses and 
conflicts of interest that can only be imagined.'^ Many other defense 



192 



The Iran-Contra Connection 



contractors keep such Swiss accounts, according to retired Air Force 
intelligence chief, Maj. Gen. George Keegan. In effect, the military has 
taken over — or at least complemented — the CIA's longstanding practice of 
supervising the laundering of overseas corporate political payoffs.^^ 

This financial scandal, like others that have plagued military special 
operations,^^ grew out of what one military judge called the "extraordinary 
means" used to "circumvent accountability for money." Army special 
operations units laundered their funds and made purchases on the 
commercial market through front companies to avoid leaving any trace of 
their finances or activites.'"' Such practices appear to be a legacy of the 
Vietnam era, when the CIA bequeathed to miUtary Special Forces their 
lucrative if unorthodox funding and support system.^^ 

But "extraordinary means" have also been used to circumvent 
accountabiUty for policy no less than for money. 

In 1985, after revelation of yet another financial fraud, the Army 
disbanded a supersecret group of at least 250 officers called Intelligence 
Support Activity (ISA). Created in 1981 in the aftermath of the failed Iran 
hostage rescue operation, and owing its existence to lobbying by CIA-and- 
special-operations veteran Richard Stilwell,^^ ISA conducted classified 
missions in Nicaragua, El Salvador, parts of Africa and Southeast Asia. ISA 
backed the contras, supported the freelance efforts of Special Forces veteran 
James "Bo" Gritz^^ to find remaining U.S. POWs in Laos, and played a 
role in the rescue of Army Brig. Gen. James Dozier, kidnapped by the Red 
Brigades in Italy.^" ISA reportedly carried out covert activities for more 
than a year without proper presidential authorization, congressional 
oversight or initially even knowledge of the CIA director. ISA also 
supplemented its $10 million budget from Special Operations Division 
funds and with equipment from the Drug Enforcement Administration. 
The Army admitted that ISA "had been watched insufficiently closely. "^^ 

Frauds and embezzlement are the least of the problems posed by 
special operations missons. Sen. James Sasser, D-Tenn., warns of "a real 
danger that these Special Forces could be used by CIA programs and thus 
skirt congressional review." His worry is more than theoretical. The two 
sectors in fact routinely swap personnel.^* Undersecretary of Defense Fred 
Ikle boasts accurately that "there has been very good cooperation since the 
start" between the CIA and miUtary special operations forces.^^ "We gave 
the Agency pretty much anything they wanted," said one aide to the 
former CIA officer, Nestor Sanchez, who was until 1987 the top Pentagon 
officer for Latin America. "There is a terrible gray area about what to do in 
semi-declared wars. It helps to have the (Pentagon) and CIA working 
together in this situation."^* As mihtary units have become adept at setting 



Secret Wars and Special Operations 



193 



up private front companies, purchasing civilian planes for cover and 
bugging foreign trading companies, the hne dividing them from the CIA 
has all but vanished.'^ 

The failure of Congress to understand the intimate links between 
pentagon and CIA covert operations has seriously limited its review of 
presidential policies. The Church Committee's investigation of the CIA's 
complicity in the overthrow of Chilean President Salvador Allende, for 
example, neglected to examine the role of military intelligence and Navy 
SEAL teams in the 1973 coup."*" (Much like the later Iran and contra plots, 
the Nixon administration's military coup plans were never discussed at full 
NSC meetings and were known only to a tiny circle of White House and 
CIA officials.)^' 

Congress was similarly ignorant of the true scope of military 
cooperation with the CIA in mounting a bloodbath against tens of 
thousands of Guatemalan civilians during the 1960s. U.S. counter- 
insurgency experts established within the Guatemalan military the ruthless 
1st Special Forces Company, modeled on the Green Berets, and the Special 
Air Squadron, modeled on the U.S. Air Force 1st Air Commando 
Squadron (with which Richard Secord served in the 1960s). The Air 
Force-funded RAND corporation attributed the success of such forces to 
"the psychological impact of terror tactics," ranging from death-squad 
killings to indiscriminate napalming of villages. Contrary to congressional 
authorization and official Pentagon policy, U.S. Special Forces personnel 
and pilots almost certainly took part directly in these extermination 
campaigns. Nestor Sanchez was a CIA veteran of this bloody era.''^ The 
horrifying reports of abuses finally moved Congress in 1977 to cut off all 
aid and most training to the Guatemalan mihtary. But in 1982 a reporter 
discovered that at least one Special Forces adviser was still in the country, 
teaching skills ranging from demohtion to ambush techniques.*^ 

A more contemporary example of CIA-military "cooperation" was 
the Pentagon's provision of physical facilities in Honduras to the CIA to 
evade congressional funding restrictions on the intelligence agency.'*'* 
Through "Project Elephant Herd" in 1983, the Defense Department also 
supplied $12 million in military supplies, including 3 rocket-equipped 
planes, to the CIA at no cost for use by the contras.''^ 

More infamous yet was the CIA's translation of a 1968 Green Beret 
lesson plan — advocating selective assassination as an effective tactic of 
special operations — to instruct the Nicaraguan contras in "Psychological 
Operations in Guerrilla Warfare.""* 

News of special forces activity inside Nicaragua itself — where mem- 
bers of a secret Army helicopter unit have reportedly flown in support of 



194 



The Iran-Contra Connection 



the contras — further brings home the pertinance of Sasser's warning and 
highlights the dangers of escalation, without congressional authorization, 
inherent in the Reagan doctrine's support of anti-communist insurgencies 
through covert military channels. 



The Special Operations Samurai 

The perils inherent in such secret operations can only multiply as the 
covert infrastructure within the military expands. And those perils will 
persist even if Congress finally reins in the special operations forces. The 
legacy of past operations will haunt the United States, and the world, for a 
long time to come. Thus veterans of special operations in the Vietnam era 
today form a freelance pool of agents trained in the ways of money 
laundering, logistics, safehouses and dummy front companies. Under the 
right guidance, they have the knowledge and contacts to run a private 
foreign policy even against prevailing public policy. 

That capability was demonstrated in microcosm by the rogue CIA 
and naval intelligence veteran Ed Wilson, himself a protege of the special 
operations afficionado Thomas Clines, who supervised Wilson's activities 
for the CIA from Cuba to Laos.'*^ In the late 1970s, Wilson began turning 
his clandestine skills to a highly profitable end: supplying Gadhafy's Libya 
with advanced explosives, timing devices and military training. 

To the latter end, Wilson recruited more than a hundred ex-Green 
Beret sabotage, explosives and unconventional warfare experts."*' He hired 
them for legitimate work, then shipped them off for the illicit training 
program. His chief recruiter was a former Green Beret who fought in Laos 
under Ted Shackley before joining the CIA; this veteran in turn plugged 
into the network of highly trained special operations experts through an 
active-duty Special Forces master sergeant who had participated in many 
CIA-directed military actions in Latin America and Southeast Asia.'" 

Among their recruits was the chief parachute drop instructor at the 
Fort Bragg Special Warfare School; a top helicopter pilot for Air America, 
the CIA proprietary that flew supply missions in Laos and North Vietnam; 
and two employees of the top secret Naval Weapons Center in China Lake, 
California who had developed weapons for the CIA and Pentagon for 
special warfare in Vietnam. 

To help Gadhafy launch an attack in Chad, Wilson enlisted an eUte 
Special Forces veteran to plan the invasion in conjunction with several 
French mercenaries, former members of the extremist Secret Army 



Secret Wars and Special Operations 



195 



Organization (OAS) that attempted to assassinate French President 
Charles de Gaulle in the early 1960s. And Wilson hired yet another Green 
Beret vet, whose five tours of duty in Indochina had taken him on missions 
deep into Laos, as an enforcer to murder his own and Gadhafy's enemies. 
(Previously Wilson had made a $30,000 down payment to Rafael 
Quintero, a former CIA contract agent and alleged Castro assassination 
plotter, for one "hit" that never came off.^') For such services Libya paid 
Wilson $1.2 milhon a year.^^ 

Even as Wilson was breaking U.S. laws in the most sordid fashion, the 
Pentagon was giving him official cover indirectly through its own 
clandestine programs. Thus the head of the Defense Security Assistance 
Agency, Erich von Marbod, allegedly gave retired CIA officer and Wilson 
business associate Thomas Clines a contract in 1978 to gather information 
on Soviet weapons sold to Libya. Clines in turn hired as his agent Wilson's 
chief aide in Libya, Douglas Schlachter.'^ Thus Wilson could more 
believably claim — as he often has — that his terrorist supply contract in 
Libya was really a sanctioned covert operation.^"* 

Other employers of special operations veterans have made similar 
claims. Recruited to "sell their skills to unfriendly govemments and 
repressive regimes" with claims of CIA sponsorship, "former Green 
Berets, accustomed to handling sensitive and often unconventional covert 
tasks for the CIA while on active duty, assumed that the jobs had been 
approved by the Government," according to the New York Times. Their 
freelance work has encompassed such locales as Egypt, Zaire, Honduras, 
Mexico and Argentina. Chilean govemment agents recruited several ex- 
Green Berets in 1981 to conduct training exercises in Chile and counter- 
terrorist operations in El Salvador, purportedly on behalf of the U.S. 
government (see chapter VI). Several Special Forces and Navy SEAL 
veterans worked for Nicaraguan Gen. Anastasio Somoza on sabotage and 
assassination missions.^' And a Marine Corps intelligence officer who 
trained with the Delta Force and served as an instructor for a the Navy 
SEAL team became the security chief for contra political boss Adolfo 
Calero.'* 



The Iran-Contra Group 

Nowhere is the capabiUty of these retired practitioners of covert 
warfare for subverting an open foreign poUcy more graphically demonstra- 
ted than in the current Iran and contra scandals. Nearly every field operator 



196 



The Iran-Contra Connection 



named in either case had long experience in past unconventional battle- 
fields, above all in the gray zone between CIA mihtary special operations 
forces. 

Several of these individuals had been set up in business after military 
retirement with Pentagon contracts that "offloaded" sensitive SOF 
logistics missions onto their private companies. These firms, in tum, 
provided the essential infrastructure for "contracting out" foreign policy 
from the National Security Council.^^ 

The administration's access to these clandestine specialists provided 
the key to subverting the will of Congress and the American people. The 
private network of loyal covert operators, tapped by NSC officials in the 
name of patriotism or anticommunism, lay far outside the normal bounds of 
congressional oversight. 

* On the CIA end, Theodore Shackley and Thomas Clines, who ran 
sabotage operations against Cuba from the huge Miami CIA station in the 
early 1960s and then graduated to command the covert paramiUtary war in 
Laos later in the decade,^** were both reportedly involved in the Iran affair. 
Clines further arranged arms shipments for the contras.^' 

* Working with Shackley and Clines on anti-Castro infiltration and 
sabotage raids in the early 1960s were such Cuban CIA agents as Felix 
Rodriguez, Rafael Quintero and Luis Posada. Rodriguez worked with 
U.S. Army Ranger units to track down Che Guevara in 1967, then served 
as a special airmobile counterinsurgency expert in Vietnam with Shackley 
(and George Bush aide Donald Gregg) before tuming up in El Salvador as a 
leader of the undercover contra supply operation. Quintero and Posada 
joined him there — Quintero after working for CIA agent-tumed-terrorist 
Ed Wilson, Posada after escaping from a Venezuelan prison following his 
imprisonment for blowing up a Cuban passenger airline. 

* One of this CIA group's closest associates — and the single most 
important nongovernmental organizer of the secret NSC operations in 
Central American and Iran — ^was retired Gen. Richard Secord. Assigned to 
a special Florida-based air wing in 1961, where he may well have supported 
CIA operations against Cuba, he was first sent to Vietnam as a special 
warfare expert in 1962. In 1966-68 he was attached to the Shackley-Clines 
CIA station in Laos, where he directed and flew secret supply missions for 
their covert war. He was detailed once again to the CIA secret war in Laos 
in 1973. In 1980, he helped plan two hostage rescue missions in Iran.®* He 
is said to have participated in overseeing the Army's shadowy Intelligence 
Support Activity. Secord reportedly took advantage of another secret 
Army unit's Swiss bank account, which remained active after the unit's 



Secret Wars and Special Operations 



197 



disbandment, to aid the contras in 1985. Until 1985, Secord served as a 
member of the Pentagon's Special Operations PoUcy Advisory Group.*^ 

* The highly effective front man for the White House aid effort in 
Central America was retired Gen. John Singlaub. Singlaub was the covert 
warrior par excellence. An OSS veteran and then CIA officer responsible for 
China and Korea, Singlaub later directed the CIA-linked Special Opera- 
tions Group infiltrations of North Vietnam, Laos and Cambodia during 
the Vietnam War — provocative raids conducted with no consultation of 
Congress. 

* His Vietnam-era colleague, then-Air Force Major Harry Aderholt, 
oversaw special air operations for the CIA in Laos and was Richard 
Secord's deputy there. Today head of the Air Connmandos Association and 
unconventional warfare editor of Soldier of Fortune, he is active with 
Singlaub in private Central America aid missions. With Singlaub and 
CIA/military unconventional warfare veteran Edward Lansdale, Aderholt 
was tapped by Fred Ikle in the Pentagon in May 1984 to advise the mihtary 
on counterinsurgency tactics in Central America.^'* 

* Army Special Forces Master Sergeant John Cupp, a veteran of the 
elite counterterrorist Delta Force team, retired in December 1985 from the 
Low Intensity Conflict branch of the Pentagon's Joint Special Operations 
Agency. He subsequently recruited at least three other Delta Force 
veterans to help direct contra operations against Nicaragua.*^ 

* Edwin Dearborn, a former CIA pilot in Laos, Cambodia, Vietnam 
and the Congo, is now an aide to Singlaub and helping to advise and train 
the fledgling contra air force, commanded by Col. Juan Gomez, a former 
pilot in Somoza's National Guard.^^ 

* Col. Robert Dutton oversaw airUft and special operations in the Air 
Force's Office of Special Plans, which carried out jobs for the CIA. Upon 
retiring in April 1986, he went to work for Secord at Stanford Technology. 
Under that cover, he reportedly helped the contras obtain suppUes and 
arranged at least one arms delivery to Iran in October 1986.^^ 

* Richard Gadd, a former Air Force lieutenant colonel who served 
under Dutton at the Air Force Office of Special Plans, later became the 
liaison between Joint Special Operations Center at Fort Bragg and Joint 
Special Operations Agency, created to unify Green Berets, Air Force 
commandos and Navy SEAL units. After retiring in 1982, Gadd set up 
several private firms to which the Pentagon contracted out sensitive 
missions for the Delta Force and similar units. One such firm, Airmach, 
handled secret arms deliveries to the Nicaraguan contras. His American 
National Management Corp., run with Secord, reportedly included among 
its clients Southern Air Transport and Stanford Technology, the two firms 



198 



The Iran-Contra Connection 



most prominently linked to the Iran and contra scandals. One ANMC 
document boasted, "Special procedures and system methodology have 
been developed for discreet and expedited services which transcend 
military disciplines."*^ Gadd reportedly arranged with Chnes for arms 
shipments from Portugal to the contras.*^ 

* Richard Meadows was a member of Singlaub's "Studies and 
Observation Group," which mounted numerous secret missions in Laos 
and North Vietnam. In 1970 he helped plan the failed Son Tay POW camp 
raid. After retiring in 1977, he became a civilian adviser to the Army's 
Delta Force anti-terror team and then a key participant in the 1980 Iran 
hostage rescue mission. After working briefly for H. Ross Perot, the Dallas 
billionaire who bankrolled Oliver North's hostage ransom schemes. 
Meadows moved on to work in Central America, possibly for the contras.™ 

* Andy Messing, a reserve major with Army Special Forces, worked 
with the NSC's Oliver North to get help from the military in airlifting 
supplies to the contras. With Aderholt's Air Commandos Association, he 
has arranged the dehvery of medical supplies from World Medical Rehef to 
Guatemala's rural counterinsurgency program.^' 

*H. Ross Perot, the Dallas billionaire owner of Electronic Data 
Systems, supphed private funds to help the NSC's Oliver North ransom 
American hostages held in Lebanon, above all the former CL\ station chief 
William Buckley. Although not himself a special operations veteran, he 
bankrolled Arthur Simons, a former Special Forces colonel and veteran of 
White Star missions in Laos and the Son Tay POW camp raid,^^ in the 
successful 1979 rescue of two EDS employees in Iran. Perot then advised 
President Carter's national security adviser, Zbigniew Brzezinski, on the 
1980 embassy rescue mission. And he played a role, with the Army's 
shadowy ISA, in supporting both "Bo" Gritz's POW searches in Laos and 
the rescue of Gen. James Dozier, kidnapped by the Red Brigades in Italy .'^ 

* Larry Steams, now a retired Army colonel, directed special 
operations at the Joint Chiefs of Staff from 1980-82 before reportedly 
going to work in a private capacity with Richard Gadd's contra supply 
operation.^'* 

* Other, lower-ranking special forces veterans have joined private 
mercenary fronts like Civilian Military Assistance for action in El Salvador 
and Nicaragua. Two Americans shot down over Nicaragua in a CIA- 
supplied helicopter in 1984 were members of the 20th Special Forces 
Group, attached to the Alabama National Guard.^^ And many of the contra 
supply pilots, including WilUam Cooper and Eugene Hasenfus, were 
veterans of Air America and similar CIA air operations that supported 
Special Forces operations in Laos. 



Secret Wars and Special Operations 



199 



The Controllers 

Given the overwhelming representation of special operations veterans 
in the undercover implementation of White House policies in Iran and 
Central America, it should come as no surprise that all the key administra- 
tion overseers of special operations forces played at least some role in those 
affairs as well. Their involvement, barely publicized or investigated, 
deserves greater scrutiny. 

Until the spring of 1986, the head of the Special Planning Directorate, 
with policy responsibility for all special operations, was Noel Koch, 
deputy assistant secretary of defense for international security affairs. 
Senator William Cohen, R-ME, praised him as "instrumental in revitalizing 
special operations" and as "the champion of special operations on policy 
matters. "^^ He supervised many of Gen. Secord's activities in the Pentagon 
before the latter "retired." Koch battled the traditional services to beef up 
the special units; his foes in turn planted rumors that Koch had suspect 
loyalties to Israel.^^ According to testimony before Congress, Koch 
attended a February 1986 meeting with Oliver North, Secord, and two 
CIA officials to help arrange the Iran arms deals. 

Koch's boss, Richard Armitage, also oversees special operations, but 
may lose some of that responsibility in a recent Pentagon reorganization. A 
former aide to Erich Von Marbod in Vietnam, he has been accused in the 
Christie Institute's lawsuit of involvement in the 1970s-era drug trade 
associated with CIA covert operations in Southeast Asia.™ Along with 
Koch, Armitage oversaw Michael Ledeen's consulting for the Pentagon on 
terrorism. In 1986 Defense Secretary Weinberger assigned him to help 
manage the secret delivery of U.S. arms to Iran.^° 

Armitage in turn reports to Undersecretary of Defense Fred Ikle, a 
staunch advocate of special operations capabilities. Me sits on the 
interdepartmental "208 Committee" that plans covert operations, and 
heads a Pentagon "special coordination staff that supplies weapons and 
transportation for CIA operations. He has advocated a particularly miUtant 
line against the Sandinistas.^' Some Senate conservatives believe Dde fired a 
former aide to prevent the Iran arms deal from leaking to Congress.**^ 

Dde's main adviser on Central America until January 1987 was Nestor 
Sanchez. Sanchez took as tough a line as Ikle from his post as assistant 
secretary of defense for inter- American affairs. A veteran CIA officer with 
immense experience in the Western Hemisphere, Sanchez worked closely 
with Gen. Secord, Koch and others on secret military operations to aid the 
contra effort.**^ He helped place Felix Rodriguez in El Salvador to direct the 
contra supply effort and approved a "private" shipment of East bloc arms 



200 



The Iran-Contra Connection 



to Central America in 1986. He reportedly left the administration under a 
cloud, owing to his involvement with the contras.^^ 

Finally, Oliver North, the NSC officer who ran amok carrying out 
covert administration poUcies, reportedly met Singlaub and Secord as a 
young Marine officer in Vietnam assigned to counterinsurgency missions. 
He claims to have been "in the Special Operations Force, team commander" 
and to have undertaken "classified missions" in Laos.**'' Years later, put in 
charge of counterterrorist and other special operations at the NSC, North 
called upon this highly experienced group of clandestine operators for top 
secret missions of his own, knowing they had the contacts, skills and 
deniability needed to pull off projects that would otherwise have leaked 
within days.^^ 



The ResponsibiUty of Congress 

Such individuals will have an ever stronger institutional base in the 
future, thanks to efforts by a bipartisan team of congressional enthusiasts 
for special operations. 

In August 1985, reflecting a consensus in Congress, the House Armed 
Services Subcommittee on Mihtary Readiness named a Special Operations 
Panel. Its chairman. Rep. Earl Hutto, D-FL, declared that "the most 
valuable service the panel can perform is holding the services' feet to the fire 
and insuring that more conventional and lower priority programs do not 
supplant SOF requirements in service budgets."**** 

In June 1986, the House's leading SOF advocate. Rep. Dan Daniel, 
D-VA, introduced a bill to create a National Special Operations Agency, 
with a civilian director reporting to the president directly through the 
secretary of defense. The bill enjoyed bipartisan support, including from 
the House Armed Services chairman Les Aspin, D-WI.*' 

On the Senate side, Wilham Cohen, R-ME, and Sam Nunn, D-GA, 
took a different approach to boosting SOF: keeping it within the mihtary 
chain of command, but bringing all special operations under a unified 
command headed by a four-star general and reporting to a new assistant 
defense secretary. Like Daniel, they aimed to "greatly improve the 
effectiveness, funding levels, readiness, force structure, and command and 
control of special operations forces.""' Ironically, in Senate debate Cohen 
quoted retired Maj. Gen. John Singlaub on the need for greater integration 
of SOF functions." And in a chilling argument for a boost in special 
operations capabilities, Cohen noted in early 1986 that "today we face a 



Secret Wars and Special Operations 201 



situation in Central America which is in many respects similar to Vietnam 
and yet.. .we are not organized effectively to deal with it."^^ 

The final legislation closely followed the Senate model. It mandated a 
unified military command for special operations forces, a new board within 
the National Security Council for "low intensity conflict" and an 
accompanying presidential adviser on the same, and a new assistant 
secretary position within the Pentagon to oversee SOF.^^ The bureaucratic 
structure is now in place for a continued expansion of special operations 
resources and missions. 

Defense Secretary Weinberger has assured Congress of his commit- 
ment to a four-year, $8.5 billion expansion of special operations manpower, 
procurement and training. "Through the rest of this century," he told the 
Senate Armed Services Committee in January 1987, "low-intensity 
conflict will be the most likely challenge to U.S. national interests."^'* 
Defense insiders predict that Congress will appropriate the money even if 
Weinberger reneges.'^ 

If Congress exposes a few individual wrongdoers while strengthening 
the very institutions that made their abuses possible, it will lay the 
groundwork not for a more responsible foreign policy, but for a recurrence 
of the sort of back-alley crimes whose revelation has left this administration 
paralyzed and discredited. 



X. 



The Deeper Malady: From Terrorism to Covert Action 



A political crisis can rend or it can heal: everything depends on 
whether institutional reforms follow the trauma of scandal. 

Precious few deep remedies have been conceived or proposed in the 
months since the contra and Iran scandals began dominating the headhnes. 
Blame has fallen to individuals, not the system: a few overzealous officials 
derailed White House policy while the president slept at the switch. And as 
in Watergate, the focus of attention has shifted rapidly away from more 
significant issues to the coverup: did Oliver North shred the documents? 
Did his secretary alter key memos?' 

The investigations have produced enormous riches of information but 
a poverty of analysis. Members of Congress and media commentators have 
proposed limiting the number of military officers in the National Security 
Council and restricting the NSC's authority to conduct independent 
operations. Senate intelUgence conomittee chairman David Boren (D-OK) 
even identifies the "underlying problem" as the "collapse of the concept 
of a bipartisan foreign pohcy" and proposes that "disarray.. .be replaced by 
bipartisan unity." Such thoughts pass for profundity in Washington.^ 

The Tower Commission, appointed by President Reagan to study the 
affair, has powerfully shaped the public's perception of the crisis as a simple 
and ultimately innocuous failure of "management style."^ Its report portrays 
an inattentive and inadequately briefed president misled by a handful of 
overzealous NSC officers. Faulting individuals and not the system, it 
warns against "rearranging organizational blocks or passing new laws.""* 



203 



204 The Iran-Contra Connection 

Yet the Tower panel did propose one organizational reform — for 
Congress. "We recommend that Congress consider replacing the existing 
intelligence committees of the respective Houses with a new joint 
committee with a restricted staff to oversee the intelligence community..." 
Along with returning the institutional home of covert operations to the 
CIA from the NSC, the commission would strengthen the CIA's hand vis- 
a-vis Congress.^ 

That single recommendation sums up everything that is wrong with 
the debate over the current foreign pohcy crisis. The real scandal of the Iran 
and contra affairs is not the secret delivery of arms, nor even the lying and 
hypocrisy that went in tandem. The scandal — so far as Americans are 
concerned — ^is the subversion of law, congressional authority, and the will 
of the public in order to produce immoral and counterproductive policies. 
And the underlying problem is common to all covert operations: how can 
they be kept accountable? How can abuses be prevented in a climate of 
secrecy? How can secrecy and power not breed corruption? How can a 
democracy function effectively when vital information is kept from the 
American people? 

These questions go to the heart of the Reagan administration's foreign 
policy, so often has it rehed on covert intervention rather than public 
diplomacy. In six years. President Reagan has approved at least 50 major 
covert operations, more than any president since John Kennedy. "U.S. 
agents have armed anti-communist rebels, helped stage a successful 
revolution, manipulated elections, mounted propaganda campaigns, blocked 
supplies to leftist guerrillas and swapped weapons for American hostages," 
according to Miami Herald correspondent Alfonso Chardy. "In the United 
States.. .the administration has influenced press coverage on Central 
America and monitored Americans opposed to U.S. policies there."* 

And in the name of preserving its vital secrets from exposure, the 
administration has made a fetish of security measures: reviving the 
Espionage Act against leakers, hacking away at the Freedom of Information 
Act, proposing polygraph tests and life-time secrecy oaths for tens of 
thousands of government employees and cracking down on scientific 
papers and commercial databases. Domestic freedoms no less than foreign 
governments and movements have come under assault. 



The Deeper Malady 205 



The Price of Covert Operations 

Congress as a whole has never admitted what both champions and 
critics of the CIA have long maintained: covert actions cannot be both truly 
accountable and effective at the same time. When closely regulated, 
scrutinized, debated and second-guessed, covert actions remain secret only 
a short time. This logic has persuaded every administration since Harry 
Truman's to choose secrecy over accountability, in the name of national 
security. And it has persuaded every Congress since then to bow to 
presidential authority in the final showdown. Irangate was merely the latest 
product of that syndrome. 

The temptations of power and secrecy overcame law and con- 
stitutional authority from the CIA's founding by the National Security Act 
of 1947. The agency's first general counsel, Lawrence Houston, was 
quickly called upon to interpret the meaning of the act's phrase assigning 
the CIA "such other duties and functions related to intelligence affecting 
the national security as the National Security Council may from time to 
time direct." Houston concluded that "taken out of context and without 
knowledge of [the act's] history, these Sections could bear almost 
unlimited interpretation. In our opinion, however, either [propaganda or 
commando type] activity would be an unwarranted extension of the 
functions authorized by" the act. "We do not believe that there was any 
thought in the minds of Congress that the Central Intelligence Agency 
under this authority would take positive action for subversion and 
sabotage." Any such missions would necessitate going to Congress "for 
authority and funds. 

A mere three months later, the NSC directed the CIA to initiate 
psychological warfare operations against the USSR. Six months after that, 
the NSC added paramilitary, economic warfare and political action 
operations to the list. Covert action was officially bom. Future administra- 
tions would justify such authority on the basis of the president's inherent 
powers in foreign affairs and the willingness of Congress to appropriate 
money for the CIA. In effect, covert operations gave successive presidents 
the power to legislate as well as execute foreign pohcy with secret 
resources. Not until the 1980 IntelUgence Oversight Act did Congress 
supply clear authority for covert operations.^ 

On the other hand, Congress never showed the courage to rein in what 
had become a routine usurpation of authority. The closest it ever came to 
making fundamental reforms was in the mid-1970s, when House and 
Senate investigations of intelligence abuses uncovered evidence of assas- 



206 



The Iran-Contra Connection 



sination plots, illegal mail opening, illicit drug testing, massive domestic 
spying and sabotage of domestic political movements. The Senate commit- 
tee, named after its chairman Frank Church of Idaho, also looked at several 
covert operations, including the destabilization of Chilean President 
Salvador AUende, that had blackened America's image throughout the 
world. 

The Church Committee warned that covert operations had developed 
a dangerous "bureaucratic momentum." Numbering some 900 between 
1960 and 1975, such operations were becoming "increasingly costly to 
America's interest and reputation," the committee concluded. But instead 
of proposing truly meaningful reforms — other than the creation of 
permanent oversight committees — the panel merely implored that covert 
operations be reserved for "grave threats to American security" and be 
"consistent with publicly defined U.S. foreign policy goals." New York 
Times columnist Anthony Lewis called its recommendations "a gamble 
that the American system of checks and balances can work even in the 
powerful secret world of intelligence."' 

America is losing that gamble. It is losing because the pubUc's sense of 
concem did not survive the immediate scandals uncovered by the 
investigations. Covert operations only dimly affect the average citizen — 
until they trigger a foreign or domestic crisis. General indifference finally 
greeted Church's report on intelligence abuses. "It all lasted too long and 
the media, the Congress and the people lost interest," observed Rep. Otis 
Pike (D-NY), who headed the House investigation. His committee's report 
was never officially published and its conclusions were ignored.'" 

The ascendancy of a Democratic administration changed httle. 
President Carter still withheld from Congress advance notice of covert 
operations, despite the promise of his 1978 Executive Order 12036; 
Attorney General Griffin Bell held that guarantees of "prior" notice really 
meant "timely" notice." Carter sought further reductions in congressional 
reporting requirements and a "revitalization" of the CIA in the wake of the 
Soviet invasion of Afghanistan and political turmoil in Iran.'^ And he asked 
for sweeping exemptions from the Freedom of Information Act for the 
CIA, FBI, National Security Agency "and other intelligence agency 
components."'^ 

And when legislators tried to write a new CIA charter to limit 
presidential powers and check abuses. Carter's people fought every inch of 
the way. Exhausted liberals caved in. To complaints from the American 
Civil Liberties Union that the proposed charter was too permissive, 
Senator Joseph Biden (D-Del) said, "Let me tell you something, fellas. The 



The Deeper Malady 207 



folks don't care. The average American could care less right now about any 
of this. ..You keep talking about pubhc concern. There ain't none."'* 

In the end, in any event, the 1980 Intelligence Oversight Act required 
advance reporting of covert operations except under unusual circumstances 
(the loophole that permitted President Reagan to conduct the Iran arms 
deal without notifying Congress), but cut the number of oversight 
committees from eight to two to satisfy complaints from the intelligence 
community that leaks from Capitol Hill undercut the CIA's effectiveness 
and access to foreign intelligence sources. That year. Congress made it 
illegal to reveal the names of agents. 

Yet the "reforms" accomphshed little because they did not touch the 
underlying incentives for political abuses inherent in covert operations. 
"When Congress collapsed from eight to two committees, many of us 
beheved there would be a new day of openness and trust," complained Rep. 
Charlie Rose (D-NC), former head of House intelligence committee. 
"That day never came. It was foot-dragging and obfuscation as usual."'' 

The Reagan administration took such foot-dragging to new extremes. 
It understood "oversight" to mean Congress should overlook rather than 
review CIA practices. Its spirit was summed up in the declaration of the 
1980 transition team report on intelhgence: "Decisive action at the CIA is 
the keystone in achieving a reversal of the unwise poUcies of the past 
decade."'^ Congressional meddUng could not be permitted to stand in the 
way of that reversal. 

Perhaps the most blatant example of this contempt of Congress was 
the CIA's failure to notify the proper committees of the mining of harbors 
in Nicaragua, a violation of international law protested not only by the 
Managua regime, but by most of its Western European trading partners. 
(Such violations of the rights of foreigners figure nowhere in any official 
investigation to date of the Iran-contra connection.) The Nicaraguan 
government itself announced the mining on January 3, 1984, but the CIA 
first mentioned it in passing to the House intelligence committee on 
January 31. The Senate committee first heard of it in March. The CIA 
released major details only on March 27, to the House committee. CIA 
Director William Casey made it clear that what Congress didn't ask for 
explicitly, he would not tell them. The Republican Senator David 
Durenberger admitted, "We have to share, as a committee, some respon- 
sibility for the situation."'^ 

Only two months later, the CIA reportedly failed to inform the House 
committee of its covert intervention in El Salvador's election on behalf of 
Jose Napoleon Duarte, the Christian Democratic candidate for president. 
New York Times reporter Martin Tolchin noted at the time that "members 



208 



The Iran-Contra Connection 



of Congress rotate on and off the intelhgence committees, so that the 
intelligence community knows that it can outwait its severest critic."'^ 

Surely the most significant breakdown of oversight, however, came in 
the fall of 1985. Reporters from Associated Press and major newspapers had 
broken the story that an obscure NSC official, OUver North, was advising 
and raising funds for the contras in apparent violation of the Boland 
amendment. Rep. Lee Hamilton (D-IN), chairman of the House Intel- 
ligence Cormnittee, vowed to hold hearings to get to the bottom of the 
matter. Rep. Michael Barnes (D-MD) demanded that the White House 
produce records of North's activities for his Western Hemisphere sub- 
committee. Barnes came away empty handed. Hamilton was unable even to 
convene a hearing; all he could get was an informal briefing by Robert 
McFarlane and the national security adviser's "assurance" that North and 
others in the NSC were respecting the law. Ultimately, Hamilton and 
Barnes were stymied because Congress was politically divided; those 
members favoring aid to the contras didn't want to know the truth. The 
impasse led a despondent Rep. George Brown Jr. (D-CA) to declare that 
the oversight law "is not working."^' 

What little information the committees did pry out of the CIA 
convinced some members that covert action was out of control. "The 
planning is being handled sloppily," Vermont Sen. Patrick Leahy said with 
uncanny prescience. "Sooner or later they're going to get caught with their 
pants down and we'll all read about it in the newspapers."^" 

As serious as the inadequacy of oversight has been the legitimacy lent 
to covert operations by the appearance of oversight. Congress appears to 
grant its stamp of approval to operations it does not halt. Knowledgeable 
critics on the oversight committees suffer a special handicap: they cannot 
speak freely about what they know. "We become the buffer for the CIA to 
do whatever they want," observed Rep. Norman Mineta (D-CA). "They 
tell us, but we can't tell anybody, and they hide behind our skirts."^' 

Even when it has the facts, Congress rarely blocks covert projects. 
Most members are content to let the president take the heat if something 
goes wrong and unwilling to face responsibiUty for making foreign poUcy. 



A Blank Check for "Counterterrorism" 

But that predisposition has been heavily conditioned by historical 
circumstances. In particular, successive presidents have manipulated popu- 
lar fears to argue convincingly for centralizing power and excluding 



The Deeper Malady 209 



Congress from the making of national security policy. Over time the 
specific "threats" have changed, but the rehance of presidents on the 
pubUc's unquestioning reaction to them has not. 

Since World War II, the most important ideological prop to presiden- 
tial power has been anticommunism. More often than not, the charge was 
false and the intervention counter-productive, not to mention an exercise in 
imperial power. Having defined the Soviet Union as the preeminent threat 
to American security, Washington argued by extension that Soviet 
manipulation lay behind everything from turmoil in the developing world 
to political challenges from the left in Westem Europe. Thus nearly any 
form of foreign intervention could be justified in the name of anticom- 
munism. The CIA's overthrow of Iranian Prime Minister Mossadegh in 
1953 installed the Shah on the throne and sowed the seeds of the radical 
Khomeini revolution. Its 1954 coup against the Arbenz regime in 
Guatemala spawned an ongoing guerrilla war there and hardened the 
Marxist, revolutionary left elsewhere in Central America with results that 
haunt the Reagan administration today. Although Washington claimed 
otherwise, those CIA targets — and many others — were nationalists, not 
Soviet surrogates. 

With the advent of "detente" and the visit of arch-anticommunist 
Richard Nixon to the People's Republic of China, anticommunism lost 
much of its emotive appeal and thus its effectiveness in mobilizing Congress 
behind unquestioned acceptance of covert operations. The Nixon adminis- 
tration discovered a new and seemingly uglier menace to take its place: 
drugs. Nixon's "war on drugs" opened loopholes in congressional 
restrictions on foreign police training, provided cover for counterinsur- 
gency campaigns from Burma to Mexico and even justified plots to 
assassinate foreign political leaders. All were programs picked up from the 
CIA in the guise of narcotics enforcement.^^ 

Ronald Reagan's contribution was to fully develop the potential of the 
ultimate bogeyman: terrorism. His predecessors. Presidents Ford and 
Carter, had identified drugs and terrorism as two foreign intelligence 
targets of such unquestioned importance and sensitivity as to justify 
barring congressional supervision.^^ But the Reagan White House mastered 
the exploitation of public fears aroused by highly publicized terrorist acts as 
a means of restoring covert operations to their central role in presidential 
foreign policy. (The seizure of the American embassy in Tehran had 
dramatized the issue like no other event.) By defining terrorism sweepingly 
to include even guerrilla wars and insurgencies against uniformed amoies — 
but never anything the U.S. or its allies do — the administration expanded 
the rationale for anti-terrorist interventions. By inventing a new category 



210 



The Iran-Contra Connection 



of "narco-terrorism" with which to brand certain rebel groups, the 
administration conjured up even more nightmarish images.^"* And by 
defining diverse terrorist outrages as "Soviet sponsored," the administra- 
tion dealt the final blow to detente. 

The terrorist threat provides the perfect rationale for secrecy and 
covert operations. Responding to terrorist attacks requires speedy inter- 
vention and absolute secrecy, not lengthy debate with Congress. And if 
anyone doubts the means, the end of stamping out terrorism justifies them 
as well as anything could. 



Paradigm Shift 

The intellectual genesis of Reagan's anti-terror revolution goes back 
to 1970s, when cold-war conservatives were looking for new mobilizing 
issues to replace detente and human rights. The concept of Soviet- 
sponsored international terrorism as new mode of warfare against the West 
was kicked off at the Jerusalem Conference on International Terrorism in 
July 1979. Led by a group of top Israeli intelligence officers and political 
leaders, the conference was also studded with those Americans most 
actively seeking a renewal of the clandestine approach to American foreign 
policy. The participants included former CIA director George Bush and 
former CIA deputy director Ray Cline; the hawkish former Air Force 
intelligence chief Major General George Keegan, who resigned from the 
Air Force in 1977 to protest the Carter administration's estimate of the 
Soviet threat; Harvard's Soviet scholar Richard Pipes, whom Bush had 
recruited to bring the CIA's strategic estimates of Soviet power more in line 
with worst-case military thinking; some prominent neoconservatives 
including Commentary magazine editor Norman Podhoretz; the newspaper 
columnist and Reagan's 1980 debating coach George Will; and reporter 
Claire Sterhng, who two years later would publish this faction's bible, The 
Terror Network.^' 

At the conference, Ray Cline developed the theme that terror was not a 
random response of frustrated minorities, but rather "a preferred instru- 
ment" of East bloc pohcy adopted after 1969 "when the KGB persuaded 
the Politburo of the Communist Party of the Soviet Union to accept the 
PLO as a major poUtical instrument in the Mideast and to subsidize its 
terrorist policies by freely giving money, training, arms and co-ordinated 
communications." Terrorism, he maintained, had "hardened into a sys- 
tem — an intemational troublemaking system." The British propagandist 



The Deeper Malady 211 



Robert Moss extended the theory to Iran, where he charged that a Soviet- 
controlled PLO unit was functioning "as the nucleus of a secret poUce, a 
revolutionary SAVAK." And conference participants singled out the 
Sandinistas for their alleged international terrorist connections.^*' 

This formulation was as significant for what it ignored as for what it 
put in. Left out of the equation was any mention of terrorist acts by CIA- 
trained Cuban exiles, Israeli ties to Red Brigades^^ or the function of death 
squads from Argentina to Guatemala. Soviet sponsorship, real or 
imagined, had become the defining characteristic of terrorism, not simply 
an explanation for its prevalence. Moreover, there was no inclination 
whatsoever to include under the rubric of terror bombings of civilians, for 
example, or any other acts carried out by government forces rather than 
small individual units. 

The Heritage Foundation, a conservative, Washington-based think- 
tank that rode Ronald Reagan's coat-tails to influence, saw these themes as 
as a potent vehicle for reversing political reforms of the Watergate/Church 
committee era. Its master political blueprint, prepared before Reagan's 
inauguration to guide his transition team, urged "presidential emphasis on 
the nature of the threat, repeated speeches on the escalation of Soviet bloc 
intelligence activities, the nature of the terrorist threat and its international 
dimensions and the reality of subversion." Such tactics, the report hoped, 
would allow the CIA to regain authority to conduct "surreptitious entries," 
mail opening and other powers lost in the 1970s.^* 

The Reagan team took the report to heart. The lead item on the agenda 
of the its first NSC meeting on January 26, 1981 was terrorism. The next 
day. President Reagan declared, "Let terrorists be aware that when the 
rules of international behavior are violated, our poUcy will be one of swift 
and effective retribution."^' 

At his first news conference as secretary of state, on January 28, 
Alexander Haig gave terrorism an address. He charged that the Kremlin 
was seeking to "foster, support and expand" terror around world and was 
"training, funding and equipping" terrorist armies. And he vowed that 
"international terrorism will take the place of human rights" as the new 
administration's top priority. 

Jerusalem Conference alumna Claire Sterling was on hand to supply 
"massive proof that the Soviet Union and its surrogates, over the last 
decade, have provided the weapons, training and sanctuary for a worldwide 
terror network aimed at the destabilization of Westem democratic society." 
Her book The Terror Network, excerpted that March in the New York 
Times Magazine and New Republic, branded the 1970s "Fright Decade I" 
and warned that Fright Decade II was at hand.^^ 



212 



The Iran-Contra Connection 



Sterling's book, with all its evidentiary and methodological weak- 
nesses, was all that administration polemicists could cite to justify their 
claims. A CIA report drafted after Haig's outburst directly rebutted his 
claim that most terrorism found sponsorship from the Soviet Union. CIA 
Director William Casey sent the report back for further review. Casey 
also asked the more conservative Defense Intelligence Agency for a report, 
but found it inadequate as well. So a third report was prepared — but it, too, 
concluded that Soviets were not directly equipping or training terrorists, 
nor did they have a master plan for terrorism.^" What Uttle evidence there 
was against the Soviets came from unverifiable claims of a Czech defector. 
Gen. Jan Sejna, whose credibiUty the CIA came to doubt.^^ 

"There's just no real evidence for it," one administration official said 
of the Haig thesis.^* Another high administration source lamented that such 
charges put "the American intelligence community in a terrible poUtical 
bind. The CIA has been requested to look harder. When they come back 
and say it isn't true, that they don't see the hand of Russia everywhere, 
they're told, 'Goddamn it, you are either stupid or you aren't trying.'"^' 

FBI chief William Webster threw a little cold water of his own on 
official claims pointing out that the number of bombings had declined 
steadily in the United States, from 100 in 1977 to 20 in 1980. He added, "I 
can say that there is no real evidence of Soviet-sponsored terrorism within 
the United States."^** 

The administration was on the defensive. Since the evidence wasn't 
good enough, officials fell back on altering the data. Statistics on terrorist 
incidents were changed to include not only acts but also "threats," thus at 
one swoop doubling the apparent numbers.^' 

A more effective and subtle counter came from the private sector. 
Claire Sterling impugned the CI A as "the least informed and most timid of 
any intelhgence service on this issue."'*" Michael Ledeen, Sterhng's long- 
time journalistic collaborator, who would later become the key emissary in 
the Iran arms plot, also accused the agency of incompetence. "They are 
scared in the [State Department and CIA] bureaucracy," Ledeen main- 
tained, "because if Haig is right about the Russians, then they have failed in 
their jobs." In terms almost identical to Haig's, Ledeen called the Soviet 
Union "the fomenter, supporter and creator of terrorism" worldwide. In 
the late spring of 1981, Haig appointed him an adviser on international 

41 

terrorism. 

The Wall Street Journal editorial writers weighed in as well. They 
claimed — without having seen the analysis — that the CIA document's 
"underlying reasoning would not survive the light of public day." The 
editorial dismissed appeals to the evidence: "no one should be allowed to 



The Deeper Malady 213 



argue successfully that because there's evidence of the Soviet influence in 
some places but not in others, the whole Soviet-connection theory must be 
thrown out." And most important, the editorial insisted on the broadest 
possible definition of terrorism to justify a counter-revolutionary policy 
abroad: "no one should be allowed to say without challenge that Soviet 
support for national Uberation movements is by definition different from 
Soviet support for terrorism."*^ 

The themes formulated by Sterhng, Ledeen and the Journal served 
conservatives as a hammer with which to hit not only detente, but also the 
Carter-era CIA. Cold-war interventionists portrayed the CIA as crippled 
by excessive oversight, misplaced human rights concerns, a deplorable 
timidity toward covert action and the purge of experts in paramiUtary war. 
The terrorism issue thus ignited demands for a sweeping bureaucratic 
upheaval in the intelligence community. 

That February, for example. Senator Sam Nunn (D-GA) applauded 
Haig's speech and called for "a permanent, highly professional organiza- 
tion to plan and train on a continual basis" against terrorism. He stressed: 

One of the most important ingredients must be a strong, revitalized 
intelligence community... No anti terrorist capability can be adequate 
without excellent inteUigence, including covert capabihties which have 
largely been demolished... We must... repeal some laws and executive 
orders which go far beyond constitutional requirements or court decisions 
and which have resulted from a massive overreaction to the 
WatergateA^ietnam era."*^ 

Neo-conservative and intelUgence-connected circles quickly mobil- 
ized public support for giving the administration and CIA a freer hand 
abroad. Writer Midge Dector (the wife of Norman Podhoretz) founded the 
the Conamittee for the Free World in February 1981 to call attention to the 
terrorist threat and revive America's interventionist impulse. According to 
the New York Times, Dector 

said the idea for the committee emerged almost two years ago after she 
and others attended a meeting in Jerusalem on international terrorism. She 
said she came away convinced of the need for action against those who 
kidnap and throw bombs, many of whom are trained in the Soviet Union 
and Cuba, but also concerned about a spreading practice of indulging in 
self-criticism to the point of condoning terrorism as being justified."*^ 

The members included Michael Ledeen; former CIA deputy director of 
plans Ray CUne; Leo Cheme, chairman of the President's Foreign 



214 



The Iran-Contra Connection 



Intelligence Advisory Board; and Paul Henze, former CIA station chief in 
Turkey, who would take the lead with SterUng in pubhcizing alleged 
Soviet-bloc complicity in the attempted assassination of Pope John Paul 
11.^^ 

Lest domestic dissent at home hamstring administration plans for a 
tougher foreign poUcy, the terrorism issue served to break down barriers to 
surveillance and intimidation of domestic critics. The new Republican 
Senate formed a special subcommittee on security and terrorism in 
February. Senator Strom Thurmond (R-SC), chairman of the parent 
Judiciary Committee, predicted it would be "one of the most important 
subcommittees of the entire Congress. ""^^ The subcommittee's chief 
counsel, Joel Lisker, pledged that "we will do everything we can to modify 
and eliminate" restrictions on infiltration and surveillance of domestic 
groups. Members said they would strongly urge the administration to 
remove other restraints on the inteUigence agencies. Witnesses at their first 
hearing included Claire Sterling and Michael Ledeen, who reiterated their 
warnings of the Soviet threat."*^ 

In March, the Reagan administration moved on the same front. It came 
up with a draft executive order that would allow sweeping additions to the 
CIA's authority, particularly in area of domestic operations previously 
ruled off-Umits."*^ Several months later, the administration also proposed 
amending the Freedom of Information Act to exempt files relating to 
organized crime, foreign counterintelligence and terrorism. "It isn't an 
accident that they picked terrorism and foreign counterintelligence," 
observed Jack Landau, director of Reporters Committee for Freedom of 
the Press. "That's the mandate that the FBI used to violate peoples' civil 
liberties."^' 

The proposals naturally met opposition from civil libertarians and 
some members of Congress. Liberals who had not abandoned the Carter- 
era commitment to human rights deplored Reagan's apparent double 
standard on terrorism. In March, for example, the administration announ- 
ced its intention to lift the ban on urns sales to Argentina, imposed three 
years earlier by Carter because of the mass killing of civihans committed by 
the military.'" And the CIA was reported to be "considering the renewal of 
cooperation with anti-Castro Cuban exiles as part of a general expansion of 
its covert operations."'^ 

But Congress as a whole was in no mood to quibble over such 
inconsistencies. After the humiliation of the Tehran embassy crisis and the 
Reagan election sweep, it granted Reagan almost everything he wanted in 
the way of intelligence resources. The first three years of the Reagan 
presidency saw a 50 percent increase in CIA appropriations and a five-fold 



The Deeper Malady 215 



increase in tiie number of authorized covert operations. And after all the 
layoffs of the Nixon-through-Carter years, the CIA workforce grew by 
over a third.'^ The White House now had the tools and the incentive to go 
undercover with the implementation of its foreign policy agenda. 



Libya Bashing 

This initial vote of confidence in the CIA was not enough. The 

administration redoubled its domestic propaganda campaign to persuade 
the nation of the virulent menace of foreign terrorism. If no one could find 
convincing evidence of Soviet-sponsored terror, they could of Libyan 
support for violent European and Middle Eastern groups. And the 
administration could magnify the evidence until Americans felt positively 
threatened by what was in fact a weak and ineffectual power — and one that, 
far from being a surrogate of the USSR, did not even let the Soviets base 
ships at its ports. 

The campaign against Libya started at the New Republic, whose line 
on terrorism and foreign pohcy in general was shaped increasingly by 
editor Martin Peretz's strong poUtical commitment to Israel. The once- 
Uberal magazine had begun publishing regular articles by Michael Ledeen 
and former Newsweek correspondent Amaud de Borchgrave, a Jerusalem 
conference participant and a vociferous exponent of the theory that Soviet 
disinformation had duped the American media. (De Borchgrave would 
later become editor of the Washington Times, owned by the Rev. Sun 
Myung Moon.) Now, in March, the New Republic excerpted a chapter 
from Claire Sterling's new book on terrorism. Entitled "Qaddafi Spells 
Chaos," the kicker read "A murder, a maniac — and Moscow's man."^^ 

On July 26, 1981 Newsweek reported that the administration was 
gearing up a major effort to topple Gadhafi, involving a "disinformation" 
campaign to erode the colonel's domestic support, formation of a "counter 
government" of Libyan exiles and a program of paramiUtary and sabotage 
operations inside Libya to stir up discontent and expose Gadhafi's 
vulnerabihty. 

The next month, provocative U.S. naval exercises off Libya's coast 
provoked a rash — and desired — ^response from Gadhafi. U.S. jets downed 
two Libyan fighters in a dogfight over Gulf of Sidra. 

In September, columnist Jack Anderson confirmed that CIA director 
Casey had concocted a disinformation campaign to mislead the American 
press about Libya by planting false stories abroad. The stories accused 



216 



The Iran-Contra Connection 



Gadhafi of supporting the slave trade in Mauritania, mismanaging his 
country's petrodollar accounts and stirring up terrorism.^"* 

On October 19, Newsweek passed along a provocative leak that the 
administration was talking with Egypt about a possible invasion of Libya. 
After the August confrontation over the Gulf of Sidra, according to this 
account, Gadhafi hatched a scheme to kill the American ambassador in 
Rome, Maxwell Rabb. The plot "was aborted when Italian police deported 
ten suspected Libyan hit men," Newsweek reported. "Washington officials 
now believe Kaddafi has called off the assassination attempt, but they are 
not entirely certain." It also mentioned in passing that U.S. inteUigence had 
"picked up evidence that Kaddafi had hatched yet another assassination 
plot — this time against President Reagan." 

The plot continued to thicken — with numerous ominous leaks but no 
evidence. On October 25 the New York Times revived the Libyan plot to 
murder Rabb, reporting that he had been rushed out of the country 
"without even a change of clothes." (Other sources insisted he had simply 
left for Washington to lobby for the sale of AW ACS to Saudi Arabia. 
Gadhafi hotly denied the charge and noted correctly that to carry out such a 
plot would be suicidal.^'' 

November saw a positive flurry of reports hnking Gadhafi to terrorist 
plots. Newsweek cited reports of Libyan plans to attack four U.S. embassies 
in Western Europe.'^ Secretary of State Haig blamed Gadhafi for hiring a 
killer to target Christian Chapman, the U.S. charge d'affaires in Paris. 
Time magazine joined in with a report that National Security Advisor 
Richard Allen had discussed with French officials plans to assassinate 
Gadhafi.^' And in late November claims surfaced that Gadhafi planned to 
kill the president of Niger. *° 

But the most significant theme in this strategy of tension surfaced with 
Newsweek. Its voluble U.S. intelligence sources tipped the magazine that 
"Kaddafi is plotting to assassinate the president and other top American 
officials," including Vice President Bush and Secretaries Haig and 
Weinberger. The average reader could sympathize with administration 
officials who were said to "openly admit that they would be deUghted if 
someone else killed Kaddafi."''' 

The notorious Reagan assassination plot story hit the front pages of 
the New York Times on December 4. "The government has received 
detailed reports that five terrorists trained in Libya entered the United 
States last weekend with plans to assassinate President Reagan or other 
senior officials," the paper revealed. A "huge nationwide search for the 
potential assassins" was underway. Later reports added lurid flourishes: 



The Deeper Malady 217 



no less than Carlos "the Jackal," the infamous Venezuelan terrorist, was on 
his way to kill the president.^^ 

Fed a steady diet of Gadhafi rumors, the American public could be 
excused for believing President Reagan's dismissal of the Libyan's denials: 
"We have the evidence, and he knows it.... I wouldn't beheve a word he says 
ifl were you. "^^ 

A few skeptics raised questions. It seemed doubtful that any one 
informant (as reported) could supply so much detail on each member of the 
hit team, that Libya would send so large a squad and that the East bloc 
would have risked training the assassins.^"* Government sources told the 
Washington Post that reports of the plot included "lots of speculation" based 
on "a plausible scenario" resting on "a limited amount of knowledge. "^^ 

Haynes Johnson, a veteran Post correspondent, noted "It's almost as if 
public opinion were being prepared for dramatic action — say a strike 
against Libya or Qaddafi himself... It is reminiscent of the talk about Castro 
in the days when the United States was planning the Bay of Pigs invasion, 
and in fact, commissioning assassination schemes against Castro."** 

Then, as mysteriously as they had appeared, the hit teams vanished. 
By late December, officials decided "the hit squads have become inactive." 
Indeed, "the information about the hit squads has been and still is mushy," 
sources told the Washington Post. "The United States still does not know for 
sure whether any members of the two hit squads ever left Libya. 

Only in the context of the latest Iran arms scandal has the public finally 
learned that the source of the fanciful "hit squad" story was Manucher 
Ghorbanifar, a former Iranian SAVAK agent with close ties to Israeli 
intelligence. According to the Washington Post, the CIA beheved he was a 
lying schemer who "had made up the hit-squad story in order to cause 
problems for one of Israel's enemies."** 

These details confirm what the Los Angeles Times had learned in 1981: 
"Israeli intelUgence, not the Reagan administration, was a major source of 
some of the most dramatic published reports about a Libyan assassination 
team allegedly sent to kill President Reagan and other top U.S. officials... 
Israel, which informed sources said has 'wanted an excuse to go in and bash 
Libya for a long time,' may be trying to build American public support for 
a strike against Libyan strongman Moammar Kadafi, these sources said."*^ 

In short, the whole story was an intelUgence provocation from start to 
finish. So, it would now appear, was Israel's promotion of Ghorbanifar as a 
reliable go-between for Washington with Iran in 1985. 

But if it served Israeli interests to discredit Gadhafi, it also served the 
Reagan administration. The deadly threat from Libya swept aside public 
objections to a sweeping expansion of CIA powers. Never mind that the 



218 



The Iran-Contra Connection 



reality, as evidenced by the 1986 bombing attack on Tripoli, that in fact it 
was Reagan who planned and attempted to assassinate Gadhafi, not the 
reverse. 



Unleashing the CIA 

On the very day the New York Times reported the existence of the 
Libyan hit squad, President Reagan announced his signing of Executive 
Order 12333, a controversial and long-awaited blueprint for the intelli- 
gence community's resurgence. 

When first drafted in March 1981 under the supervision of an 
interagency task force led by CIA officials, the order provoked instant 
controversy. "The proposed order would recast Mr. Carter's [1978] decree 
in terms that authorize, rather than restrict, the collection of intelUgence 
information and the use of such techniques as searches, surveillance and 
infiltration," the New York Times had noted that spring. "The existing 
order says that intelligence agencies may collect, store and disseminate 
information about a person who is 'reasonably believed' to be acting on 
behalf of a foreign power or engaging in intemational terrorist or narcotics 
activities. The draft order drops the requirement for a 'reasonable' belief." 
Significantly, the Times added that the revised order had grown out of a 
meeting held at the outset of the administration "in which intelligence 
officials discussed terrorism with President Reagan. The White House 
asked various agencies to suggest changes in intelligence regulations to 
improve antiterrorism capabilities and approved a suggestion by the CIA 
for a study group to make specific recommendations."^" 

As Congress reviewed successive drafts. Republican Sen. David 
Durenberger warned the order would "give credence to many of the 
public's fears and worst-case scenarios of govemment misuse of power. 

But the timing of Reagan's announcement of the final order ensured a 
minimum of protest. Coming on the heels of so much talk of Libyan plots, 
his stress on the dangers of terrorism sold the plan. "The American people 
are well aware that the security of their country — and in an age of terrorism, 
their personal safety as well — is tied to the strength and efficiency of our 
intelligence gathering organization," Reagan maintained. "An approach 
that emphasizes suspicion and mistrust of our own intelhgence efforts can 
undermine this nation's abiUty to confront the increasing challenge of 
espionage and terrorism... We need to free ourselves from the negative 
attitudes of the past and look to meeting the needs of the country. "^^ 



The Deeper Malady 219 



Aside from opening the door to a renewal of domestic espionage — a 
poUcy shift that may explain the rash of burglaries suffered by organiza- 
tions critical of administration policy on Central America^^ — ^the order also 
contained an obscure loophole through which the NSC's covert operators 
would later slip. The order directed that "No agency except the CIA.. .may 
conduct any special activity unless the President determines that another agency 
is more likely to achieve a particular objective."^'* 



Washington Becomes Militant 

Ongoing political turmoil in the Middle East ensured that terrorism 
would continue to occupy center stage in the administration's foreign 
policy agenda. 

The antiterrorist fervor reached a new plateau after the April 1983 
bombing of the U.S. embassy in Beirut — wiping out the entire CIA 
station — and the devastating bombing of the Beirut Marine barracks in 
October 1983. Although the latter suicide attack targeted uniformed 
military personnel and nor civilians, administration spokesmen and rhe 
media denounced it as the most brutal act of terrorism to date. In response, 
the Joint Chiefs that January formed the Joint Special Operations Agency 
to coordinate special operations against terrorists.''^ And Congress would 
enthusiastically cooperate in promoting the buildup of SOF counter- 
insurgency forces in the name of fighting terrorism.^'' 

On April 3, 1984, President Reagan signed National Security 
Decision Directive 138, which guided 26 government agencies in drafting 
counter-terrorist measures. Deputy Assistant Secretary of Defense Noel 
Koch said it "represents a quantum leap in countering terrorism, from the 
reactive mode to recognition that pro-active steps are needed." Although it 
did not authorize U.S. "hit squads," as reportedly recommended by senior 
Pentagon officials and the NSC's Oliver North, the directive was said to 
permit "the use of force in other forms, such as by FBI and CIA 
paramilitary teams and Pentagon military squads." Administration sources 
called rhe aggressive plan an "effort to give the cloak and dagger back to the 
Central Intelligence Agency. The campaign will include pre-emptive 
strikes and direct reprisals" based on Israeli models. Officials admitted that 
the distinction between retahation and assassination was mainly rhe- 
torical." 



220 



The Iran-Contra Connection 



Jeff McConnell observed: 

This new policy on counterterrorism could not have come at a better time 
for the Reagan administration. Its effort to end the so-called 'Vietnam 
Syndrome' had blown up in Lebanon. Support in congress for war in 
Nicaragua was at an all-time low. ..Though the 1984 directive had been 
drafted with more limited purposes in mind, administration planners now 
saw in it a way to resuscitate its foreign adventures. Yet the poUcy lacked a 
rationale large enough to sustain so much. It was one thing to make a case 
for commando assaults against hijacked airliners, quite another to sell 
military action all over the world as counterterrorism. What was needed 
was an ideological framework for the new policy that would spell out 
terrorism's threat in a way clear enough to enlist popular sympathy and, at 
the same time, comprehensive enough to justify action against all the 
Third World nations that Washington opposed. "^^ 

That framework was found in the concept of "state-sponsored 
terrorism," and more particularly, the presumption of Soviet sponsorship 
of terrorist cadre that Haig and other administration officials had pushed 
from the opening days of the administration. Secretary of State George 
Shultz recalled those old themes along with the new counterrorism stance 
in late June at a Washington conference sponsored by the Jonathan 
Institute. He blamed the Soviets for providing "financial, logistic and 
training support for terrorists worldwide." They "use terrorist groups for 
their own purposes, and their goal is always the same: to weaken liberal 
democracy and undermine world stability," he charged. The threat called 
for tougher countermeasures. "It is time to think long, hard and seriously 
about more active means of defense — about defense through appropriate 
preventive or pre-emptive actions against terrorist groups before they 
strike." Shultz added, "We will need to strengthen our capabiUties in the 
area of intelligence and quick reaction." Those two areas encompassed the 
CIA and Pentagon special operations forces.™ 

CIA Director Casey told an interviewer in the same month that "I 
think you will see more...retahation against facilities connected with the 
country sponsoring the terrorists or retaUation that just hurts the interests 
of countries which sponsor terrorism" — an open-ended formula for 
aggression against any country that the administration labeled a sponsor of 
terrorism, with or without evidence.^*^ 



The Deeper Malady 221 



The Road to Irangate 

For many conservatives, and Americans generally, the contradiction 
between the administration's tough-minded fight against terrorism and its 
delivery of arms to the headquarters of Mideastern radicalism is the signal 
outrage of the whole affair. Was it not William Casey who, only four 
months before the first arms delivery to Tehran, said "more blood has been 
shed by Iranian-sponsored terrorists during the last few years than all other 
terrorists combined" Was it not President Reagan who declared, less 
than two months before approving that arms shipment, "America will 
never make concessions to terrorists" 

The hypocrisy was, in fact, institutionaUzed by the fact that the very 
officials in charge of handling the ransom to Iran were also the ones in 
charge of conducting planning and directing operations for counterterror. 
Chief among these officials was OUver North. Along with Central 
America, terrorism was his chief beat at the NSC. 

This confluence of apparently contradictory roles was no accident. 
North's leadership in such risky and macho adventures as the 1981 
dogfight over Libya's Gulf of Sidra, the 1986 bombing of Libya and the 
interception of the Egyptian airliner carrying the Achille Lauro hijackers 
gave him the prestige and authority, far beyond his rank of colonel, to 
circumvent the normal chain of command and lead audacious covert 
operations from the NSC. And the extraordinary importance of his 
mandate to stamp out foreign terrorism licensed his access to special 
intelligence resources and his demands for secrecy so tight that even the 
secretaries of state and defense were left in the dark.^^ 

North's influence reached its apogee just as President Reagan was 
giving official authorization for the Iran arms deals that would ultimately 
cripple his presidency. In January 1986, the very month of his "finding" 
approving those sales, Reagan issued another finding on counterterrorism. 
This one he showed to Congress as the law required. According to one 
source cited by the Washington Post, "Congress 'gulped' when it saw the 
directive but ultimately accepted it because of widespread alarm about 
terrorism. Among other things, the directive allowed the CIA to abduct 
suspected terrorists abroad and bring them to the United States for trial. "^^ 
It also authorized the CIA to "harass and interdict terrorists in foreign 
countries by sabotaging their suppUes, finances, travel, recruiting and 
operations."*' 

Shortly afterward, Vice President Bush's task force on terrorism 
issued its public report on terrorism. Among other recommendations, the 



222 



The Iran-Contra Connection 



task force proposed creating a new National Security Council position to 
strengthen coordination of counterterrorist programs. To that report, 
North (who was a task force member) added a classified annex that led to 
the creation of a secret interagency committee, the Operations Sub-Group, 
to oversee covert operations against terrorism. North chaired the committee 
with Duane Clarridge, the former manager of the CIA's war against 
Nicaragua whom Casey now put in charge of counterterrorism.*^ In April 
1986, the OSG received a boost from a new pesidential finding giving more 
specific authorization to aggressive measures against foreign terrorists. 
"The North group became the focal point within the government for 
devising tactics for penetrating and disrupting terrorist networks and for 
planning preventive or retaliatory strikes against them," according to the 
Washington Post.**" 

As its political momentum grew, so did this group's political reach. 
From counterterrorism it branched far afield from its given mission. "The 
group did start out just on terrorism," one source told Newsweek, "but 
because it was meeting so regularly it became the clearinghouse for all sorts 
of covert operations."^' 

The members of this secret and select committee also supplied much of 
the impetus for the Iran and contra operations. "At least two members of 
North's counterterrorism group had detailed knowledge of [the Iran arms] 
program," the Post reported. "One was Duane "Dewey" Clarridge, head of 
the counterterrorism section of the CIA. The other was Noel Koch, then- 
deputy assistant secretary of defense, who represented the Pentagon on 
the North group until May 1986."'" Clarridge helped North establish the 
Ilopango air base in El Salvador as a staging point for contra supply 
operations and supplied the logistics help in November 1985 to deliver a 
load of U.S. arms to Tehran without the knowledge of Congress or some of 
his superiors at the CIA." 

Other U.S. counterterror speciaUsts played a similarly prominent if 
ironic role in the Iran arms deals. These included Clarridge's assistant 
Charles Allen, who handled day-to-day contact with the chief Israeli 
representative (Amiram Nir, himself the counterterror adviser to Israel's 
prime minister), and the NSC's consultant on terrorism, Michael Ledeen, 
who acted as the go-between with Israel and Iranian arms broker Manucher 
Ghorbanifar on deals with Tehran.'^ Richard Secord, North's favorite 
private operator and arms logistics agent, reportedly ran a secret anti-terror 
unit set up in 1984 after his official retirement from the Pentagon. One 
Secord associate described Secord's operation as "a small group of 
government employees and consultants. ..experienced people from the 



The Deeper Malady 223 



Middle East and Southeast Asia... absolutely trastworthy, low profile 
people who won't talk."'^ 

The decision to entrust the Iran operation to the terror specialists in the 
NSC and CIA — rather than the area experts — contributed to the foreign 
policy disaster. A deep internal split within the administration wreaked 
havoc: "CIA activists in the agency's counterterrorism program [headed 
by Clarridge] supported the use of [Iranian arms dealer Manucher] 
Ghorbanifar but eventually were outmaneuvered by the agency's Middle 
East operations officers, who waged a campaign to discredit the Iranian," 
according to Time magazine. "...Infuriated, Ghorbanifar then urged an 
Iranian faction to leak the story of the whole sorry affair."^"* 

Evidence from the Tower Report bears out this analysis. The CIA 
counterterror expert Charles Allen wrote on February 20, 1986, "I believe 
we should move quickly to consohdate our relations with" Ghorbanifar.^' 
The chief CIA operations officer for the Near East said of Ghorbanifar, 
"This is a guy who lies with zest."^'' Ghorbanifar may have won the trust 
of these counterterror officers in part by planting juicy, if almost certainly 
untrue, stories about Libyan and Iranian hit teams in the United States and 
Europe.''' No doubt these anti-terror officers were swayed by the 
unstinting support of Ghorbanifar from Israel's top counterterror special- 
ist, Amiram Nir. But judging by Ghorbanifar's hopeless performance on 
CIA lie detector tests, the CIA's Middle East area officers would seem to 
have the better case. 



Looking to the Future 

The continued use of terrorism as an ideological rationale for 
expanded covert operations, foreign intervention and govemment secrecy 
still goes largely unchallenged in the wake of the Iran and contra 
scandals. Frank Carlucci, the former CIA deputy director brought to 
replace Admiral Poindexter as national security advisor and clean house on 
the NSC, has chosen to place reponsibility for counterterrorism 

under an expanded intelligence unit, as yet unnamed. 'Terrorism and 
intelligence are very closely related,' says Carlucci. 'The best way to stop 
a terrorist act is to know it's going to happen.' The head of the new 
section.. .will be Barry Kelly, who. ..had previously served in the CIA's 
clandestine service during Carlucci's tour as deputy director. 



224 



The Iran-Contra Connection 



The new intelligence unit, according to James Bamford, will handle not 
only counterterrorism and all covert actions, but narcotics control as well — 
significantly the one other area where Congress has abdicated its oversight 
responsibihties.'^ New officials have replaced old and discredited ones, but 
the potential for abuses may be greater than ever. 

Accompanying this centralization of secret authority for covert 
operations is a massive expansion of the president's ability to intervene 
abroad. A new Special Operations command at the Pentagon will 
coordinate covert terrorism and insurgency, grouping together some 
30,000 men from the Army Special Operations Command, the Rangers, 
SEALS, Delta Force and others. The command reportedly will be "very 
tightly controlled by the White House," so that it can carry out operations 
"closely tied to the national interest. "'' 

Finally, following the Tower Commission's recommendation, con- 
gressional conservatives are pushing for a merger of the House and Senate 
intelligence committees to further Hmit oversight of covert operations. 
Rep. Henry Hyde (R-IL) seeks a "lean, mean, small, very active committee 
with as few malcontents as possible."'™ It would be ironic, but far from 
unprecedented, if a "reform" commission ended up grossly aggravating the 
problem by so fundamentally misidentifying the cause. 

Covert action embodies in its purest form the philosophy that ends 
(anticommunism, counterterrorism, democracy, economic gain) justify the 
means (pohtical manipulation, disinformation, even support for death 
squads). Where such tools exist, abuses will follow whether the ends are 
good or not. The fact that the ends are so often verbal rationales themselves 
only makes the situation that much worse. Power corrupts, and secrecy is 
an essential element of unchecked power. Where secrecy is allowed to 
flourish, under the guise of protecting national security, fighting terrorism 
or combating narcotics traffickers, the conditions are ripe for presidential 
usurpation of power from the Congress and the cynical manipulation of 
public opinion. 

Secrecy and covert policy making are not only undemocratic, they 
inevitably lead to bad pohcy. Secrecy breeds arrogance among policy 
makers who consider themselves uniquely "in the know" and thus less 
falhble in their judgments; at the same time it motivates the elite of 
"cleared" individuals to elevate their status by confining secrets (and thus 
policy advice) to an ever tighter circle. The consequences can be disastrous; 
the administration's failure to consult a wider group of experts or members 
of Congress surely contributed to its extraordinary blunders in Iran. 
Ignorant errors are compounded by the temptation to adopt covert 
means — to avoid messy public debates — where pohcy objectives are 



The Deeper Malady 225 



unclear and public support is lacking. Most damaging of all, covert 
operations usually become overt, discrediting not only the particular 
administration but the United States as a whole. 

If the immorality of covert policies like the Iran and contra operations 
doesn't decide the case, these practical considerations should. Failure to 
curb the extraordinary power of presidents to wage covert foreign and 
mihtary campaigns can only ensure a succession of similar poUcy disasters 
in the future. 



XI. 



Conclusion 



Every crisis is also an opportunity. The Iran-Contra crisis is not one 
accidentally or gratuitously engaged upon, not the result of inadequate 
presidential attention or someone's misjudgments in the recruitment of 
White House personnel. It is deeply rooted in tensions which go back at 
least to the beginning of this century, if not earlier. 

It would appear that, time after time, vanguard experiments in liberal 
democracy (Athens, Rome, Spain, England), have become, from the 
resultant liberation of expansive social energy, vanguard experiments in 
imperial expansion. Leaving aside the debatable example of Rome (which 
had no imperial competitors), one is struck by how brief has been the period 
of vanguard imperial hegemony (usually not more than a century), and 
how costly to the economic base of the mother country. Especially when 
set against the examples of Germany and Japan (two nations frustrated in 
their early drift towards empire), the depressing examples of modern 
England and Spain are memorials to empire's appalUng erosion of both 
cultural dynamism and parliamentary institutions. They illustrate not only 
the crippling costs of maintaining a military hegemony, but also the 
ensuing flight of capital and entrepreneurship (and hence power) out of the 
home poUtical economy.' This calculus is unfavorable even before we take 
into account the overwhelming cost to the colonized peoples. 



227 



228 The Iran-Contra Connection 

Cradely put, this is the background of the Iran-Contra affair: the 
unresolved conflict between the needs of hegemony and the needs of an 
open society. The strong executive essential to the pursuit of hegemony is 
fundamentally at odds with the constitutional system of checks and 
balances and the restraints afforded by public opinion. Covert operations 
inevitably shield activist administrations from public accountability and the 
law. 

The striving for unilateral hegemony in a multi-polar world is, 
moreover, inevitably destabilizing, and dangerous to peace, world order, 
and international law. Indeed the sequence of illegal American covert and 
paramilitary interventions for at least the last three decades (by which even 
our closest allies have been increasingly alienated) has been a prime cause 
for the progressive erosion of America's professed commitment to 
international order. One does not have to romanticize that order to find it a 
more promising arena for global security, and our own, than the arena of 
the great-power adventurism we have long endured. 

The mining of Nicaragua's harbors in 1984 by the CIA (without even 
involving the contras) triggered the immediate conflict between the 
Administration and Congress; on the international level, it also showed 
how the cost of hegemonic intrigue is a decline in intemational influence. 
The United States has isolated itself in world opinion to a degree 
unthinkable even a decade ago, to a low comparable to that of Britain, 
France and Israel after their futile Suez Canal attack of 1956. 

Nicaragua's complaint to the World Court about the mining was 
sustained by that court by votes of twelve to three (On one issue the sole 
dissenting vote was cast by the judge from the United States.) After 
Washington announced that it would not consider itself bound by that 
court's ruling, Nicaragua appealed to the United Nations, where it won 
again. In the United Nations General Assembly the United States 
gamered a total of three votes, being supported by only its two client 
states, Israel and El Salvador. Even Canada, whose Conservative 
government had been elected on a Reaganite domestic platform, did not 
abstain, but voted against the United States. 

The adventurism of Britain and France in the 1956 Suez fiasco was in 
part an effort at self-prolongation and self-justification by threatened 
hegemonic bureaucracies — ^the obsolete armies and navies of two post- 
imperial powers. To their credit, the Joint Chiefs of the U.S. armed forces 
have so far shown no appetite to risk the pohtical future of the Pentagon on 
a similar venture in Central America, without Congressional or popular 
support. They know very well that Nicaragua, with its army of 75,000 
troops, will not be another Grenada. 



Conclusion 229 



That the United States, in pursuit of its contra policy, should 
nonetheless show similar disregard for international law and global pubUc 
opinion, is symptomatic of the way one small losing policy, essential to the 
survival of one small bureaucratic subset, can become a neurotic obsession 
when power is undemocratic. 

In the eyes of its allies, the United States' role as a residual guarantor of 
world order and process has been superseded, even more than before, by 
its eagerness to display its capacity for unilateral intervention and 
violence. 

Europeans, above all, find our preoccupation with violence and 
unilateraUsm especially unfortunate, at a time when a change of leadership 
in the Soviet Union has raised new hopes for a restoration of international 
understanding and possible breakthroughs in checking the arms race. As 
our country grows increasingly dependent on international support for its 
economy and currency, the mood in Washington for solipsistic defiance of 
global political opinion seems particularly short-sighted. 

It is important however to remember that this conflict between the 
needs of hegemony and the needs of an open society cannot be blamed on 
any single U.S. administration or party. It had been building for decades 
before it burst open in the Watergate crisis. Unfortunately, in the ensuing 
debate over Nixon's impeachment, about which press, politicians, and 
pundits have been so self-congratulatory ("The system worked!"), the 
deep issues about the imperial presidency in an open society were almost 
entirely replaced by discussions of personal responsibilities. Questions of 
constitutional infractions (such as, for example, the undeclared "secret" 
wars in Laos and Cambodia) were replaced by questions of cover-ups. 

We are not suggesting that the Watergate discussions and hearings 
were of no worth. Calling as they did for new levels of investigative 
journalism and Congressional inquiry, as well as of statesmanship and 
balanced citizen concern, the Watergate debate did perhaps as much as 
could be done at that time to rectify executive excess by democratic process 
as traditionally practiced in the United States. 

But when Congress failed to resolve the deeper questions, especially 
those relating to the desirability or undesirability of the so-called "Vietnam 
syndrome," the re-emergence of a new crisis like the present one was 
virtually guaranteed. The present crisis is not only deeper than Watergate, 
it is more directly related to the on-going debate over a hegemony for 
which no one ever voted. At the center is not a break-in, a "third-rate 
burglary" (with its consequent flurry of shredded memos), but a well- 
elaborated scheme to deceive Congress and responsible parts of the national 
security bureaucracy, as well as the public, by using a secret network of 



230 The Iran-Contra Connection 

parallel institutions to circumvent the law (see Chapter 11). 

To understand the inevitability of this confrontation, we have to put 
ourselves in the position of those responsible for forcing it to happen. CIA 
Director Casey had a point: it is just not possible to run a lot of covert 
operations abroad, and also report on them (as the law now requires) to a 
gallery of Congressional critics and their staffs. In his own way Casey was 
verbaUzing the dilemma of the need to choose between hegemony and 
democracy. 

So, in a more theoretical way, was Michael Ledeen, one of the first 
architects of the Irangate arms deals, when he argued that we must learn to 
understand the need for occasional law-breaking and assassination.^ We 
should be grateful for his candor. Failure this time to respond to such 
arguments, with equal energy and conviction, would be tacitly to concede 
by default that the time for an open society has passed. 

Thus the Iran-contra affair is an urgent challenge for all those who see 
hegemony, and not our open society, as the curse to be mitigated. A simple 
re-run of Watergate, in which the public are essentially spectators to a 
succession of sensationalist headlines and televised hearings, would almost 
surely degenerate, as the Watergate hearings did, into an elaborate public 
relations exercise in damage control: one in which the focus is transferred 
from systemic irregularities and basic policy questions to personal shortcomings. 

There is no doubt that Nixon, as a person, was responsible for 
Watergate, in a way that Reagan with his Teflon, or remoteness from 
decision-making, could never be. Many commentators have turned this, 
remarkably, into an argument that Iran-Contragate is less important than 
its predecessor — as if we should think of OUie North or of Albert Hakim as 
the problems, rather than the system of illegal covert intervention which 
needed them, and the hegemonic system which in turn depended on covert 
intervention.^ 

Such punditry is not encouraging. It should remind us that the media 
and Congress, necessarily, are part of and beholden to the systemic process 
which they must now criticize. The press, for example, is not hkely to 
expose the elaborate disinformation programs, such as Ghorbanifar's 
fictitious "Libyan hit-squads" in 1981, which played such an important 
role in re-mounting domestic CIA covert operations (see Chapter XI). 
Some of the media, to put it bluntly, were themselves too willing and active 
partners in such disinformation scenarios.'* Nor will Congress raise the even 
more sensitive and complex issues of pro-Israeli lobbying and the 
incorporation of Israel as an adjunct to unauthorized foreign operations — 
even though Israel is now clearly and unambiguously defined as a 
prominent player at both the Iran and the Contra end of the current 



Conclusion 23 1 



Iran-contra controversy (see Chapter V, VIII).^ 

The power of the intelhgence apparatus and its corporate alUes seems 
to have virtually silenced genuine Congressional opposition on the deep 
issues of covert operations. The Democrats in particular have flocked to 
show their support of the CIA and Pentagon, and for the most part have 
confined their criticisms to the behavior of members of the Reagan White 
House staff. As the New Yorker has observed, 

The buzzwords the Democrats have put forth — "competitiveness," 
"excellence," — are of singularly low voltage. They hardly buzz at all. 
Even in decline, Reagan seems more commanding than these opponents. 
His absence from the scene is larger than their presence on it. Reagan rose. 
Reagan fell. The Democrats seem to have had little to do with it.* 

In the last few years, unfortunately, members of Congress, much Uke 
Weinberger and Shultz, merely "distanced themselves" (to use the tactful 
rebuke of the Tower Report) from what was going on. In the fall of 1985, 
when the New York Times reported on the support of North and the 
National Security Council, both the House and the Senate Intelhgence 
Committees received assurances from McFarlane that no one on the NSC 
staff had broken the law; and declined to investigate further.^ Press stories 
the same year that aid was reaching the contras from third countries, 
including Israel, led to initial legislative efforts to close any possible 
loopholes. After White House lobbying, however, the final language had 
the opposite effect — ^to legitimize the administration's collection of "dona- 
tions" (including kickbacks) from third countries. 

It remains to be seen whether the isolated voices of Congressional 
opposition in both parties can now begin belatedly to articulate the mood of 
alienation and activism that is beginning to be heard on the nation's 
campuses, and enhst the corrective participation of a citizenry grown 
cynical. 

Opponents of the Iran-Contra system must first identify which parts 
of that system must be most urgently changed, and then not hesitate to 
work with some parts of the status quo against others, by working with, 
and hopefully influencing, existing currents for change. 

A viable pohtics must bring the values of an alternative system into 
engagement with those institutions which exist now, in all their defects and 
limitations. Thus for example it may be important to encourage and 
support Senator John Kerry and the Senate Foreign Relations Committee 
in their announced plans to investigate the contra involvement in earher 



232 



The Iran-Contra Connection 



smuggling and assassination conspiracies, even though Senator Kerry, to 
our dismay, has aheady declared Israel to be clean in the Iran-contra affair. 

One can and must make choices that are discriminating rather than 
absolute. Just as compassion without criticism changes nothing, so 
criticism without compassion is condemned to sterile fault-finding. 
Merely to reject the system, to pronounce it incorribigly corrupt, may be 
rhetorically cogent and psychologically gratifying. As matters now stand, 
however, such studied contempt for our existing democratic processes is 
more Hkely to favor the political fortunes of the extreme right, than of the 
left. 

In much of the world today, the current pohtical situation is one in 
which, as in the economic stagnation of the 1930s, there is danger of fascism 
of the WACL and P-2 varieties (see Chapter IV), and ultimately of war. 
Those forces abroad, unfortunately supported by too many states and 
multinational corporations, have over the decades been developing their 
alliances with forces of the right in this country. In the resulting crisis we 
can no more be defeatist than complacent about our institutions, which we 
should not be prepared to abandon unless we have within our power the 
ability to create better altematives. 

In our criticisms of Washington, we must not lose the ability to 
make discriminations. Even the present administration, for all its faults, is 
far more remote from the authoritarianism of a Ledeen, a Singlaub, or a 
Sandoval, than are some of the right-wing political forces hoping to replace 
it. This was demonstrated by Reagan's appointment of Frank Carlucci to 
succeed Admiral Poindexter as national security adviser, for Carlucci has 
enemies on the right as well as on the left. 

To say this, of course, does not mean that we can expect Carlucci to 
change the drift of the whole national security apparatus. On the contrary, 
Carlucci has already a new national security threat — "narco-terrorism" — 
to succeed past threats (the Red menace, Qaddafi's hit squads) as a pretext 
for further covert operations. More significantly, he has already placed the 
NSC response to this threat in the hands of yet another veteran of the CIA's 
clandestine service. 

What this does mean is that critics of hegemonic intervention must, 
more rigorously than in the 1970s, continue to do their homework. The 
details of the current crisis are difficult to master, and the Usts of shady 
characters are hard to retain. No doubt in the months ahead we will again, as 
in Watergate, be inundated in floods of detail; and excesses of information, 
just as securely as secrecy, can become a means whereby the issues are 
concealed. But in our view a coherent interpretation of these facts, however 



Conclusion 233 



abstrase and remote from the usual concerns of press and Congress, are 
necessary for understanding and articulating the real issues of the Iran- 
Contra crisis. And to keep these issues clear, as they develop, is an 
important part of the task ahead: for ourselves and for the North American 
people. 



Footnotes 



Footnotes to Chapter I 

1. San Francisco Chronicle, 11-26-86. 

2. Gregory Fossedal, "Strategic Defense Indecision," Washington Times, 2-9-87. 

3. Cited in Washington Post, 7-9-84. 

4. San Francisco Examiner, 7-27-86. 

5. Los Angeles Times, 10-8-86. 

6. On October 13, 1986 the Los Angeles Times referred to "a secret network of 
ex-ClA officials, foreign governments and arms dealers that has operated with the 
knowledge and approval of the White House but out of public view." 

7. Wall Street Journal, 12-24-86. 

8. The reluctance of those probers to cast their net too widely should be clear 
from a comparison of standard press accounts with the material in this book. To 
take a central example: over the last forty years the New York Times has given 
only the most cautious and limited references to those U.S. covert operations that 
have continuously, without interruption, intersected with and been enhanced by 
the international drug traffic. The sordid story of the drug-linked Nugan Hand 
Bank in Australia, and its connections to at least four members of the contra secret 
team, made front-page stories in the Australian press and were the subject of 
intensive investigation by two separate Australian government commissions. Yet 
despite the fact that the key figures were American intelligence veterans based 
mostly in the United States, the New York Times never reported the story until 
after the relevant pages in this book had (in slightly different form) already been 
published (see Peter Dale Scott, "Contra-gate and the CIA's 'Off-loaded 
Operations'," Pacific News Service, January 28, 1987; New York Times, March 8, 
1987. Cf Jonathan Marshall, Inquiry, November 24, 1980; Parapohtics/USA, 
March 1, 1983). 

9. Quoted in San Francisco Chronicle, 2-27-87. 

10. South End Press, 1985. 



234 



Footnotes to Chapter II 

1. Cf. Newsweek, 12-15-86 on Poindexter's concern for "insulation" for Reagan. 

2. Michael Ledeen, a key private operator in the Iran arms-for-hostages deals, 
"made the point that any serious covert action operation directed against Iran 
using Manucher Ghorbanifar should be run out of the White House not CIA 
because 'it will leak from Congress."' TCR, p. 204, citing undated CIA 
memorandum. 

3. James Bamford, "Carlucci and the NSC," New York Times Magazine, 1-18-87, 
p. 76. 

4. Washington Post, 1 1-30-86. Vice President George Bush came to much to same 
conclusion: "There has got to be a chance for the president and his NSC adviser to 
undertake certain things and do certain things for him that the State Department 

and the Defense Department can't do because of the bureaucracy or because of the 
ability of any individual who does not like the policy to abort the policy" (New 
York Times, 2-27-87). 

5. U.S. News and World Report, 12-15-86. 

6. Angelo Codevilla, "The Reagan Doctrine — (As Yet) A Declaratory Policy," 
Strategic Review, XIV (Summer 1986), 19. Codevilla may well be referring to 
former CIA deputy director John McMahon, who allegedly left the agency after 
conservatives complained of his lukewarm support for the Afghan rebels. It was 
McMahon — an opponent of Iran arms deals from the start — who insisted that the 
CIA demand a presidential finding before aiding Oliver North's back-channel 
arms deals with Iran (New York Times, 1-17-87; Washington Post, 1-22-87; 
Mideast Markets, 12-8-86). 

7. Washington Times, 12-8-86; Newsweek, 12-22-86; Washington Post, 12-19-86; 
Washington Times, 12-23-86; Los Angeles Tunes, 12-21-86; Boston Globe, 12- 
28-86; Village Voice 12-9-86. Besides North, the 208 Committee included CIA 
veteran Vincent Cannistraro, who helped direct the contra operation until moved 
aside in the wake of the scandal over the CIA-produced assassination manual; 
Clair George, the head of the CIA's clandestine service; Michael Armacost, 
Undersecretary of State; Fred Dde, Undersecretary of 



235 



236 



The Iran-Contra Connection 



Defense for Policy; Morton Abramowitz, head of the State Department's Bureau 
of InteUigence and Research; Navy Captain James Stark and the late NSC Deputy 
Director Donald Fortier. 

8. Newsweek, 3-2-87. Some of this smaller group's operations were later handled 
out of Room 302, right next to the NSC intelligence directorate on one side and 
the Crisis Management Center (moved to room 304) on the other. 

9. Washington Post, 3-9-86. 

10. New York Tunes, 2-15-87. 

11. Christopher Dickey, With the Contras (NY: Simon and Schuster, 1986), p. 
107. 

12. Washington Post, 2-24-85, quoted in NACLA Report on the Americas, 
July/August 1986, 23. 

n.New York Times, 4-8-83. 
14 Miami Herald, 12-19-82. 

15. New York Times, 4-8-83; Christopher Dickey, With the Contras, 112. 

16. The cooperation continued up to, and to some extend beyond, the FaMands 
war. On March 9, 1982, Assistant Secretary of State for Latin American affairs 
Thomas Enders, on an official visit to Buenos Aires, said he expected Argentina 
to be "active in whatever action is taken in Central America" by other Latin 
powers. One month earlier, Argentina had made public its commitment of military 
aid to El Salvador (Washington Post, 3-10-82). 

17. Washington Post, 1-2-87. 

18. Tribune (Oakland) 11-7-82; Washington Post, 12-18-82; Miami Herald, 12- 
19-82; New York Times, 12-6-82; Wall Street Journal, 3-5-85; Dickey, With the 
Contras, 54, 117, 123; Edgar Chamorro testimony before the World Court, 
reprinted in Peter Rosset and John Vandermeer, eds., Nicaragua: Unfinished 
Revolution (Grove Press, 1986), 236-237; Shirley Christian, Nicaragua: 
Revolution in the Family (NY: Random House, 1986), 197-202. Vernon Walters 
himself handled these negotiations, according to Chamorro. Several accounts note 
that Chilean officials supplemented the Argentinians' role in Honduras and El 
Salvador; cf. Latin America Regional Reports, Mexico & Central America, RM- 
81-10, 11-27-81; New York Times, 12-9-81. 

19. Washington Post, 9-15-84; U.S. News and World Report, 12-15-86 
(Operation Elephant Herd). 

20. New York Times, 1-3-87. The CIA officer was Duane Clarridge. In May 
1984, according to former contra leader Edgar Chamorro, Clarridge showed up 

with North in Tegucigalpa and reassured the rebels that "If something happens in 
Congress, we will have an alternative way, and to assure that, here is Colonel 
North. You will never be abandoned" (New York Times, 1-21-87). 

21. Washington Post, 12-7-86. 

22. Ibid; Miami Herald, 11-27-86. The process of "contracting out" to private 

individuals accelerated after the Boland Amendment in 1984. As one special 
operations veteran told U.S. News and World Report, "In Central 



Footnotes 237 



America, there is no suchi tiling as a private mercenary. But after the mining of the 
harbors in 1984, we needed deiuability. So these guys now worlc on contract" 
(U.S. News and World Report, 10-20-86). 

23. Washington Post, 12-7-86. 

24. Washington Post, 11-30-86. 

25. Los Angeles Times, 1-8-87 (Robert Owen to John Hull in Costa Rica). With 
the money talcen care of, the White House also saw to it that the contras had 
access to private arms sources regardless of congressional will. As early as 1981, 
CIA officials began advising the Nicaraguan exiles on how to smuggle weapons 
out of Miami under the nose of U.S. Customs (Miami Herald, 12-19-82). The FBI 
is now investigating a March 1985 shipment of mortars, rifles and ammunition 
from Fort Lauderdale to El Salvador, for transshipment to the rebels. 

26. Senate Select Committee on Intelligence, Report on Preliminary Inquiry into 
the Sale of Arms and Possible Diversion of Funds to the Contras (January 29, 1977), 
p. 45. 

27. Legal Times, 12-8-86. The major countries approached were Israel, Saudi 
Arabia, Brunei, Singapore, South Korea and Taiwan; San Francisco Chronicle, 1- 
23-87. 

28. Israeli Foreign Affairs, (IF A), March 1986. 

29. Dallas Morning News, 10-18-86. 

30. ABC News, 2-25-87; San Francisco Examiner, 3-12-87. At least 15 South 
African pilots and cargo handlers were based in Honduras to deliver supplies to 
the Contras. 

31. San Francisco Examiner, 10-21-86. 

32. The sultan had earlier been turned into a CIA "asset" by Ronald Ray Rewald, 
a Honolulu investment counselor convicted of fraud following the coUapse of 
what he says was a CIA front company (San Francisco Chronicle, 11-8-84; 
Counterspy, June- August 1984). 

33. Los Angeles Times, 12-6-86; New Yorls Times, 12-7-86, 12-25-86; Saw 
Francisco Chronicle, 1-16-87 (Jaclc Anderson). 

34. Los Angeles Times, 12-16-86. 

35. Los Angeles Times, 1-7-87; cf. MidEast Report, February 1, 1987. 

36. San Francisco Examiner, 10-21-86; New York Times, 10-22-86, 11-30-86. 

37. San Francisco Chronicle, 10-28-86; San Francisco Examiner, 1-12-87; New 
York Times, 2-4-87, 2-27-87, 3-15-87. 

38. New York Times, 10-22-86. 

39. San Francisco Chronicle, 11-27-86. 

40. San Francisco Chronicle, 1 1-26-86. 

41. Miami Herald, 10-12-86. 

42. San Francisco Examiner, 12-3-86. 

43. NBC 11-25-86; Wall Street Journal, 11-6-86, 5-2-84; Time, 7-25-83. 

44. Some of the relevant individuals with ties to South Korea arc: 

* Michael Deaver, the Reagans' trusted friend and a registered lobbyist for 



238 



The Iran-Contra Connection 



both South Korea and Saudi Arabia. He got his $500,000 a year contract to 
represent Riyadh from Prince Bandar bin Suhan, the Saudi Ambassador to the 
United States who coordinated covert Saudi aid to Afghanistan, Angola and the 
Nicaraguan contras (Washington Times, 12-8-86.) Deaver steered Robert 
McFarlane into the slot as national security adviser where he organized the contra 
supply operation and the Iran arms route (New York Times, 11-17-86 [Satire]). A 
California businessman, Sam Bamieh, alleges that King Fahd endorsed using 
Deaver to promote a U.S.-Iran rapprochement (Los Angeles Times, 2-25-87). 

* Robert Owen, a registered lobbyist for South Korea, Taiwan and the League of 
Arab States. He acted as the NSC's chief field liaison to the contras (Miami 
Herald, 6-8-86; NBC 6-13-86; AP 6-10-86; CBS 6-25-86; New York Tunes, 10- 
16-86). 

* Donald Gregg, George Bush's top national security aide, and former CIA station 
chief in South Korea. He served as a key White House contact of the veteran CIA 
Cuban exiles who organized the contra supply flights (Miami Herald, 10-11-86, 
Mia mi Herald, 10-12-86, Washington Post, 10-24-86). 

* Albert Hakim, chief executive of Stanford Technology Trading Group. He 
played a key role with retired Air Force major general Richard Secord in 
establishing the Swiss financial conduits through which Iranian arms money was 
transferred to the contras. The Iranian-born Hakim sold electronic security and 
monitoring systems to both South Korea and Saudi Arabia (Wall Street Journal, 
12-5-86; San Jose Mercury, 7-18-86; Tribune, 12-4-86). 

* Retired Gen. John Singlaub, who served in South Korea with the CIA and later 
as commander of U.S. forces there in the mid-1970s. As a private citizen and 
Pentagon counterinsurgency adviser in the Reagan period, he was assigned the 
task of raising funds in the United States and oversees for the contras and similar 
anti-communist resistance groups (Washington Post, 12-10-84; Boston Globe, 12- 
30-84; Village Voice, 10-22-85). 

*Thc World Anti-Communist League, an umbrella group for right-wing 
extremists including European nazis and Latin death squad leaders. It operated 
under Singlaub's direction as a prime conduit for funds and arms to the contras. 
Much of this support came from W ACL's two founder countries. South Korea 
and Taiwan (Miami Herald, 10-28-86). WACL member organization Alpha 66, a 
group of Cuban exile extremists, reportedly trained former Nicaraguan National 
Guard members in the Florida Everglades for service against the Sandinistas. 

* CAUSA, the poUtical wing of the Rev. Sun Mjoing Moon's Unification Church. 
It has taken a leading role in organizing political and material support for the 
contras in the United States and Latin America. Like its parent church, it is 
assumed to have close Korean CIA connections (Nation, 10-6-84; Washington 
Post, 1-4-86 [Jack Anderson]). 

45. Quoted in Honduras Update, #5 (early 1983). 

46. Los Angeles Times, San Francisco Chronicle, 12-3-86; New York Times, 12- 
3-86; San Francisco Chronicle, 11-26-86, 12-5-86; Washington Post, 11-28- 



Footnotes 239 



86, 12-12-86. 

47. San Francisco Examiner, 1-12-87. 

48. Benjamin Beit-Hallahmi, "U.S. -Israeli-Central American Connection," The 
Link, XVIII (November 1985). 

49. Bishara Bahbah, Israel and Latin America: The Military Connection (New 
York: St. Martin's Press, 1986), 123-134; New York Times, 12-5-86. 

50. During the period of its military dictatorship Argentina ranked behind only 
South Africa as a customer for Israeli arms; Argentina and Israel also collaborated 
on aid to right wing security forces in Central America (Washington Post, 12-16- 
84, 6-16-84; The Middle East, September 1981; NACLA Report, May/June 
1983). 

51. U.S. News and World Report, 12-15-86. 

52. Time, 5-7-84. 

53. San Francisco Chronicle, 11-26-86. 

54. Ironically, the chief Israeli intermediary on the Iran arms deal in 1986 
admitted that summer that "we are dealing with the most radical elements" in Iran, 
not the moderates (San Jose Mercury, 2-8-87). 

55. Monitin, April 83 [Shahak]; San Francisco Chronicle, 11-12-86 (Sharon 

interview). 

56. Wall Street Journal, 12-5-86. 

57. Miami Herald, 4-30-86,6-8-86; Washington Times, 10-8-85; New York 
Times, 11-9-86. 

58. Los Angeles Times, 12-7-86. 

59. New York Times 10-24-86; Los Angeles Times, 7-27-86; San Francisco 
Examiner, 7-27-86, 10-21-86; San Francisco Chronicle, 11-27-86; Joseph 
Goulden, The Death Merchant (NY: Simon and Schuster, 1984), 47-8. 

60. San Francisco Chronicle, 11-24-86 (Jack Anderson); New York Times, 1-17- 

87. 

61. Boston Globe, 12-14-86; TCR, p. 55. 

62. Wall Street Journal 1-2-87; New York Times, 12-6-86; San Francisco 
Examiner, 2-12-82. 

63. Peter Maas, Manhunt, 138, 231; Maas, "Oliver North's Strange Recruits," 
New York Times Magazine, 1-18-87, p. 22; San Francisco Examiner, 2-12-87; 
Dallas Morning News, 12-21-86. 

64. Los Angeles Times, 10-16-86. 

65. Miami Herald, 10-23-86. OUver North urged the State and Justice 
Departments to go easy on Latchinian (New York Times, 2-23-87). 

66. New York Times, 12-13-86. 

67. Senate Select Committee to Study Governmental Operations with Respect to 
Intelligence Activities, Final Report, Foreign and Military Intelligence, Book I, 
(Washington: USGPO, 1976), p. 239. 

68. New York Times, 12-4-86; San Jose Mercury, 11-26-86; Miami Herald, 12-9- 
86. 

69. Washington Post, 12-7-86. A more obscure firm. Race Aviation, reportedly 
made one U.S. -sponsored arms delivery to Tehran on July 4, 1986. 



240 



The Iran-Contra Connection 



Its predecessor, Global International Airways, previously flew arms to the Afghan 
rebels (presumably on behalf of the CIA) and, most significantly, delivered arms 
for EATSCO, the consortium associated with the Wilson-CIines group (Kansas 
City Star, 6-10-84,11-13-86; Wall Street Journal, 1-2-87). 



Footnotes to Chapter 111 

1. Christopher Dickey, With the Contras: A Reporter in the Wilds of Nicaragua 
(New York: Simon and Schuster, 1983), passim. 

2. U.S. Congress, Senate, Committee on Foreign Relations, Activities of 
Nondiplomatic Representatives of Foreign Principals in the United States, Hearings, 
88th Cong., 1st Sess. (Washington, Government Printing Office, 1963), pp. 1587, 
1626; cf. Peter Dale Scott, Crime and Cover-Up (Berkeley: Westworks, 1977), pp. 
26-28, etc. 

3. Scott Anderson and Jon Lee Anderson, Inside the League: the Shocking Expose 
of How Terrorists, Nazis, and Latin American Death Squads Have Infiltrated the 

Worid Anti-Communist League (New York: Dodd, Mead, 1986), pp. 10-45. The 
European regional secretary of the original steering committee in 1958 to convene 
a World Anti-Communist Congress for Freedom and Liberation was Alfred 

Gielen, a former Nazi pubHcist for Goebbels' Anti-Komintem. 

4. James Ridgeway, Village Voice, December 9, 1986. 

5. Jenny Pearce, Under the Eagle: U.S. intervention in Central America and the 
Caribbean (Boston: South End Press, 1981), pp. 178, 180. Officially Deaver's fkm 
did not register as agent for the group until August 27, 1980. However it did so 
after coming under Justice Department scrutiny for possible violation of the 
Foreign Agents Registration Act, for failure to register the contract within the 
required ten days (Washington Post, September 8,1980). A former Vice-President 
of Guatemala told the BBC in 1981 that the contributions to Reagan's victory, "all 
in all.. .went up to 10 million dollars" (Pearce, p. 180; cf. Marlene Simons, 
"Guatemala: The Coming Danger," Foreign Policy [Summer 1981], p. 101; 
Anderson, p. 175). 

6. Simons, p. 101; Anderson, p. 200. According to Simons, Sandoval "mixed with 
the Reagan inner circle during inauguration week." 

7. Washington Post, February 22, 1981. 

8. Alan Nairn, "Controversial Reagan Campaign Links with Guatemalan 
Government and Private Sector Leaders," Research Memorandum for Council on 
Hemispheric Affairs, October 30, 1980, p. 11. 



241 



242 



The Iran-Contra Connection 



9. Shirley Christian, Nicaragua: Revolution in the Family (New York: Random 
House, 1985), p. 197; Anderson, p. 176. 

10. Dickey, p. 87. 

11. Dickey, p. 88. 

12. Dickey, p. 88; Anderson, p.202. According to Dickey, "the CI A took more 
than two years to begin seriously analyzing these papers." By this time the Reagan 
administration had backed away from d'Aubuisson, who once told German 
reporters, "You Europeans had the right idea. You saw the Jews behind 
Communism and you started to kill them" (Oakland Tribune, August 15, 1986). 

13. Anderson, pp. 202, 207-08; citing White's testimony to Senate Foreign 
Relations Committee, April 1981, and to House Foreign Relations Committee, 
1984. 

14. Ronnie Dugger, On Reagan: The Man and His Presidency (New York: 
McGraw Hill), p. 273; Anderson, p. 208. The Andersons charge categorically that 
the documents supplied by d'Aubuisson were forged. 

15. Cf. e.g. "Is There a Contra Drug Coimection?" Newsweek, January 26, 1987. 

South Africa, the other most prominent example of Reagan's inflexibility, was like 
Deaver's three international clients in 1980 one of the hard core members of 
WACL. 

16. Stephen Schlesinger and Stephen Kinzer, Bitter Fruit: The Untold Story of the 
American Coup in Guatemala (Garden City, N.Y.: Doubleday, 1982), p. 11 

17. Anderson, p. 140. 

18. Magnus Linklater et al., The Nazi Legacy (New York: Holt, Rinehart, and 
Winston, 1984), pp. 278-85 (see Chapter IV). 

19. Penny Lemoux, In Banks We Trust (Garden City, N.Y.: Anchor/ Doubleday 
1984), p. 217. 

20. Thomas Ferguson and Joel Rogers, Right Turn: The Decline of the Democrats 
and the Future of American Politics (New York: Hill and Wang, 1986), pp. 89-100. 

21. John Ranelagh, The Agency: The Rise and DecUne of the CIA (New York: 
Simon and Schuster, 1986), pp. 549, 644. 

22. Ranelagh, p. 644. Under Schlesinger a total of 1500 are said to have left the 
CIA; under Turner, 2 800. Cf Theodore Shackley, The Third Option (New York: 
Reader's Digest Press/McGraw Hill, 1981), p. ix. 

23. San Francisco Examiner, July 27,1986; Newsweek, December 15,1986, U.S. 
News and World Report, December 15, 1986. 

24. Ranelagh, pp. 644-65. 

25. John Prados, Presidents' Secret Wars: CIA and Pentagon Covert Operations 
Since World War II (New York: William Morrow, 1986), pp. 351-54, 377. 

26. One of these men is Robert K. Brown, today the publisher of the mercenary 
magazine Soldier of Fortune. Cf. Search-light (London), May 17, 1985; reprinted 
in InteUigence/ParapoUtics (July 1985), pp. 25-26. 



Footnotes 243 



27. According to Newsweek (December 15, 1986), "in the late 1960s Secord 
directed air operations in support of the CIA's secret war in Laos." 

28. Los Angeles Times, October 10, 1986. 

29. Prados,p. 275. 

30. Miami Herald, October 23, 1986; Washington Post, October 24, 1986. 

31. Peter Maas, New York Times Magazine, January 18, 1987. 

32. Newsweek, December 15, 1986; Peter Maas, Manhunt (New York: Random 
House, 1986), pp. 279-80: "Although he had taken out at least two and a half 
million from EATSCO before being forced to depart.. .Clines in his own plea 
bargain.. .was let off with a corporate fine [and] paid $10,000" (p. 280). 

33. Peter Maas, Manhunt (New York: Random House, 1986), pp. 138-40. 

34. New York Times, November 27, 1986. 

35. Ibid. Shackley has denied any involvement in the Contra supply operation and 
we know oi no contrary evidence. 

36. Peter Maas, p. 138; cf p. 231. 

37. Daniel Sheehan, Affidavit, (Washington: Christie Institute, 1324 North 
Capitol St., Washington DC 20002, 1986), Para. 70.33. 

38. U.S. Cong., Senate, Select Committee to Study Governmental Operations with 
Respect to Intelligence Activities, Final Report, Book I Foreign and Military 
Intelligence, 94th Cong., 2nd Sess., Report No. 94-755 (April 26, 1976), p. 1. 

39. John Prados, Presidents' Secret Wars (New York: Morrow, 1986), pp. 1 19-21. 

40. William R. Corson, The Armies of Ignorance: The Rise of the American 
Intelligence Empire (New York: Dial Press/James Wade, 1977), pp. 322-23. 

41. Alfred W. McCoy, with Cathleen B. Read and Leonard P. Adams II, The 
Politics of Heroin in Southeast Asia (New York: Harper and Row, 1972), pp. 126- 
35. Cf. Peter Dale Scott, The War Conspiracy (New York: Bobbs Merrill, 1972), 
pp. 194, 199-212. At the time Washington officials countered the charge that the 
white advisers were American with the speculation that "the men may have been 
German deserters from the French Foreign Legion" (Time, August 13, 1953, p. 
38). 

42. Scott, pp. 210-11. 

43. Henrik Kruger, The Great Heroin Coup: Drugs, Intelligence, and International 
Fascism (Boston: South End Press, 1980), pp. 16, 20, 129-31, 181-82. 

44. Prados, p. 77. A vivid eyewitness description of StilweU's departure will be 
found in Ranelagh, p. 221; cf. p. 223. 

45. Thomas Powers, The Man Who Kept the Secrets: Richard Helms and the CIA 
(New York: Knopf, 1979), pp. 48-49; cf. Ranelagh, p. 199. 

46. Scott, War Conspiracy, p. 199. 

47. Technically, what happened was as follows: the CIA's American proprietary 
CAT Inc. (renamed Air America in 1959) had been supplying planes and pilots to 
a Taiwan airline, CATCL, which was controlled chiefly by 



244 



The Iran-Contra Connection 



KMT interests in Taiwan (with a 40% CIA minority interest). Thus it was not 
surprising that, despite the official CIA termination, the planes of Civil Air 
Transport (i.e. CATCL) continued to fly into Burma. See Scott, War Conspiracy, 
p. 197. 

48. New York Times, February 16, 1961; Singapore Straits-Times, February 20, 
1961, p. 1; Scott, War Conspiracy, p. 204. 

49. Scott Anderson and Jon Lee Anderson, Inside the League (New York: Dodd, 
Mead, 1986), pp. 10-45. 

50. McCoy, p. 315; New York Times, February 23, 1961. 

51. Scott, War Conspiracy, passim; especially pp. 8-24, 199-206. 

52. McCoy, p. 259. 

53. McCoy, p. 263. 

54. McCoy, pp. 186-87, 242-44. 

55. Prados, pp. 171, 176. 

56. Peter Dale Scott has speculated about DePuy's and SOG's possible 
responsibility for the South Vietnamese-U.S. provocations which preceded and 
possibly led to the Toiikin Gulf incidents of 1964: New York Review of Books, 
January 29, 1970; reprinted in Scott, War Conspiracy, p. 64. 

57. Ranelagh, pp. 223, 457 (FitzGerald). 

58. Ranelagh,p. 221. 

59. For example Jesus Garcia, a former contra supporter in Miami, told freelance 
reporters Vince Bielski and Dennis Bernstein in a telephone interview that "it is 
common knowledge here in Miami that this whole contra operation in Costa Rica 
was paid for with cocaine" (In These Times, December 10, 1986). 

60. Newsweek, January 26, 1987. 

61. Washington Post, October 19, 1986. 

62. Anderson, p. 141 (Paraguay). The Korean CIA is closely linked to the 
Unification Church of the Reverend Sun Myung Moon, some of whose business 
enterprises are believed by some Moonie-watchers to be "actually covers for drug- 
trafficking" (Anderson, p. 129). The church's political arm, CAUSA, collaborated 
with WACL members in the 1980 "Cocaine coup" in Bolivia (ibid.; Le Monde 
Diplomatique (February 1985); Covert Action Information Bulletin, 25 [Winter 
1986], pp. 18-19); and since the cutoff of CIA aid in 1984 has supported the 
Miskito Indian anti-Sandinista guerrilla force Misura of Steadman Fagoth 
(Anderson, p. 23). 

63. Ross Y. Koen, The China Lobby in American Politics (New York: 
MacmiUan, 1960), p. ix; Scott, War Conspiracy, pp. 203-04; cf. Kruger, pp. 15- 
16. 

64. For this continuity in the 1950s and 1960s, and its connections to organized 
crime, cf. Peter Dale Scott, Crime and Cover-Up: The CIA, the Mafia, and the 
Dallas- Watergate Connection (Berkeley: Westworks, 1977), pp. 8-11. For 
Koreagate, cf. Robert Boettcher, Gifts of Deceit: Sun Myung Moon, Tongsun 
Park, and the Korean Scandal (New York: Holt, Rinehart and Winston, 1980). 

65. For Mafia involvement in KMT drug activities in the United States, cf. Scott, 
War Conspiracy, p. 203. For Mafia involvement in the Caribbean and 



Footnotes 245 



ex-CIA drug traffic, cf. Kruger, pp. 7, 105, 223-24. 

66. U.S. Cong., Senate, Select Committee to Study Governmental Operations with 
Respect to Intelligence Activities, Alleged Assassination Plots Involving Foreign 
Leaders, Interim Report, 94th Cong., 1st Sess., Report No. 94-465 (November 20, 
1975, henceforth cited as Assassination Report), p. 132. 

67. Assassination Report, p. 84. 

68. Assassination Report, p. 84. 

69. United States District Court for the Southern District of Florida, Avirgan v. 
Hull, et al.. Case No. 86-1146-CIV-KING, Amended Complaint, October 3, 1986, 
pp. 25-26. 

70. New York Times, September 6, 1981; Maas, Manhunt, p. 223. 

71. Business Week, December 29, 1986, p. 45; cf. Maas, p. 65. 

72. Wall Street Journal, January 2, 1987, p. 2. 

73. New York Times, January 4, 1975, p. 9; Kruger, p. 16. 

74. Maas, pp. 24-27, 37, 54-56, 77. 

75. In 1976 Wilson's company Consultants International was shipping riot-control 
equipment to the new military junta of Argentina (see Chapter FV): Maas, p. 60. 

76. Maas, pp. 58-59; Newsweek, December 15, 1986. 

77. Wall Street Journal, January 2, 1987, p. 2. 

78. Wall Street Journal, January 2, 1987, p. 2. 

79. Maas, p. 223. 

80. James A. Nathan, "Dateline Australia: America's Foreign Watergate?" Foreign 
Policy (Winter 1982-83), pp. 168-85 (p. 183). 

81. Nathan, p. 182. 

82. Nathan, pp. 182-83; Commonwealth-New South Wales Joint Task on Drug 
Trafficking, 1983 Report, pp. 697-703. 

83. Jonathan Marshall, "The Friends of Michael Hand," Inquiry, November 24, 
1980, pp. 9-12; Wall Street Journal, August 24, 1982; National Times, September 
12, 1982; Penny Lernoux, In Banks We Trust (Garden City, N.Y.: 
Anchor/Doubleday, 1984), p. 75. 

84. Nathan, p. 170. 

85. Lernoux, p. 72, Mother Jones, March 1984). 

86. Commonwealth-New South Wales Joint Task Force on Drug Trafficking, 
Report (March 1983), IV, "Nugan Hand," p. 744. 

87. Joint Task Force Report, p. 763; Lernoux, p. 75n; National Times, September 
12, 1982; Parapolitics/U.S.A, March 1, 1983. 

88. Ranelagh, p. 636; Joseph C. Goulden, with Alexander Raffio, The Death 
Merchant: The Rise and Fall of Edwin P. Wilson (New York: Simon and 
Schuster, 1984), pp. 15, 176. 

89. Peter Maas, Manhunt: The Incredible Pursuit of a CIA Agent Turned Terrorist 
(New York: Random House, 1986), p. 247; Michael Ledeen, New York, March 3, 
1980. 

90. Maas, p. 247. 



246 



The Iran-Contra Connection 



91. Maas, p. 279. 

92. Maas, pp. 139,278. 

93. Maas, pp. 8, 233. 

94. Maas, pp. 247, 280. 

95. San Francisco Examiner, July 27, 1986. 

96. Ibid. Von Marbod by 1986 was also in the private arms sales business, having 
been hired by his former boss Frank Carlucci, who once ordered the reinstatement 
of Secord. The two men worked for a subsidiary of Sears Roebuck, perhaps the 
largest corporate backer of the American Security Council (Maas, p. 288). 

97. Affidavit of Daniel P. Sheehan (Washington: Christie Institute, 1324 North 
Capitol St., DC 20002, 1986), p. 22. 

98. According to John Dinges and Saul Landau, Manuel Contreras, the chief of 
the Chilean Intelligence Service DINA "set up his own men in.. .cocaine factories 
and shipping points. The anti-Castro Cubans had a piece of the action. The 
enormous profits went to supplement DINA's clandestine budget. The Cubans' 
share went into individual pockets and to the anti-Castro cause:" John Dinges and 
Saul Landau, Assassination on Embassy Row (New York: Pantheon, 1980), p. 
264n. For the drug involvement of Argentine intelligence under Lopez Rega in 
1973-75, cf. e.g. Lornoux, p. 177. 

99. Wall Street Journal, January 16, 1987, p. 11. Luis Posada, who once allegedly 
helped blow up a Cuban civihan airline for CORU, has also been linked by a 
Congressional staff investigation to CORU assassination plots against Cuban 
officials, including two who were murdered in Argentina on August 9, 1976, with 
the aid of Argentine intelligence (House Assassinations Committee, X, 44). 

100. Wall Street Journal, January 16, 1987, p. 1. 

101. Lemoux, pp. 147, 152. 

102. Lemoux, pp. 153-54. In 1977 the daughter of Orlando Bosch, CORU's most 
famous terrorist and spokesman, was arrested for allegedly attempting to import 
seven pounds of cocaine. In her address book was the name and address of WFC. 
Local police also learned that WFC had been printing and selling "bonds" to raise 
funds for CORU. 

103. Lernoux, pp. 147-48; 160. At one point a WFC-linked firm at the same Coral 
Gables address. Dominion Mortgage Corporation, was negotiating to buy the Las 
Vegas casino Caesar's Palace. 

104. Wall Street Journal, January 16, 1987, p. 11. 

105. The three-man team included Tom Clines' business partner Rafael Quintero 

and Hernandez Cartaya's close friend Rafael Villaverde. 

106. Hinckle and Turner, p. 53. The funds were handled by Norman 
"Roughhouse" Rothman, who had served as manager of the Sans Souci and 
Copacabana Clubs in Havana, representing the interests of the Mannarino brothers 
of Pittsburgh (Assassination Hearings, X, 183). 

107. Lukas,p. 95 

108. New York Times, January 4, 1975; Hinckle and Turner, p. 314. 



Footnotes 247 



109. Hinckle and Turner, p. 308; Warren Hinckle, San Francisco Examiner, 
October 12, 1986. 

110. San Francisco Chronicle, June 23, 1972; New York Times, June 23, 1972; 

Watergate Hearings, 1, 375. 

111. Miami Herald, October 23, 1986. 

112. Business Week, December 29, 1986, p. 45. The 1961 mission of FeUx 
Rodriguez and his companion Edgar Sopo was to establish contact with resistance 
leaders in Las Villas and Havana, and to seize the Havana radio station. It has also 
been alleged that Quintero was a member of Rodriguez' four-man team. Compare 
the piecemeal accounts in Hinckle and Turner, pp. 71-73 (assassination plot); 
Miami Herald, October 23, 1986 (Rodriguez and Sopo); Wyden, pp. 76, 112-13, 
246-48 (Sopo). Sopo was subsequently a source of information on the CIA's 
AMLASH assassination plot of 1963-65, involving Manuel Artime and Rolando 
Cubela: cf Jaime Suchlicki, in Donald K. Emmerson (ed.). Students and Politics 
in Developing Nations (New York: Praeger, 1968), p. 349. 

113. Maas, p. 223; New York Times, September 6, 1981. 

114. Hinckle and Turner, p. 320. 

115. Washington Post, November 7, 1976. 

116. Miami Herald, April 9, 1976. Perez said he had "no official knowledge of the 
attack. These are individual efforts of some of our members, but we congratulate 
them for carrying out operations of this type." Earlier a caller had taken credit for 
the action in the name of both the FNLC and Brigade 2506. 

117. U.S. Senate, Office of Senator John Kerry, "Private Assistance" and the 
Contras: A Staff Report (October 14, 1986), p. 9. 

118. Scott Anderson and Jon Lee Anderson, Inside the League (New York: Dodd 
Mead, 1986), pp. 76,280,298. The three foreign guests at the July 1976 Congress 
of Alpha 66, one month after the CORU meeting, were Sandoval's nephew and 
personal representative Carlos Midence Pivaral, as well as another Guatemalan 
MLN representative and Dr. German Dominguez from the Chilean junta. 

119. Hinckle and Turner, p. 322. 

120. Henrik Kruger, The Great Heroin Coup (Boston: South End Press, 1980), p. 
209; citing Information, February 22, 1977. 

121. Kruger, pp. 10-11, 204, 213; New York Times, Feb. 1, 1977, p. 8. 

122. CounterSpy (Spring 1976), p. 41; citing Temoignage Chretien, August 
21,1975. 

123. James Mills, The Underground Empire (Garden City, New York: Doubleday, 

1986), pp. 361-64. 

124. Hinckle and Turner, pp. 321-22. 

125. Anderson, p. 101; Laurent, p. 308. In the mid-1970s, a time of great 
international economic and political upheaval, European fascists were supported 
by some Americans as well as CORU Cubans. In 1975 Ray Cline, a key supporter 
of the contras and of WACL today, called upon the United States to rally behind 
Spinola. 



Footnotes to Chapter IV 



1. Christopher Dickey, With the Contras (New York: Simon and Schuster, 1985), 

p. 289, emphasis added; citing Miami Herald, June 5, 1983. 

2. Dickey, pp. 102, 107, 289; Los Angeles Times, March 3, 1985. 

3. Dickey, pp. 60, 102-03. 

4. Pearce, pp. 178-80. Cf. Chapter III, pp. 1-2. 

5. Pearce,p. 180. 

6. Pearce, p. 176; Atlantic Monthly, January 1980. Coca-Cola conducted its own 
investigation, which confirmed Trotter's involvement in the persecution 
(Congressional Record, February 25, 1980, p. 3627). 

7. Congressional Record, December 4, 1979, p. 34551; Pearce, pp. 178-79. 
According to Nairn, Ayau is "considered to be the ideologue of the more extremist 
sector of the [Guatemalan] business community" (p. 7). 

8. Nairn, p. 5. 

9. Pearce, p. 180. 

10. Nairn, p. 12: "Reagan himself was reportedly aware of the potential of the 
Guatemalan connection. One businessman tells the story of the wife of an Amigos 
del Pais board member who attended a Californian fund-raising party with 
Reagan. 'He was standing there.. ..She said, "1 represent 14,000 Americans in 
Guatemala," and Reagan turned around and said, "Get that woman's name!"'" 

11. Pearce, pp. 177, 180. 

12. On his first ASC trip, Singlaub was accompanied by former Defense 
Intelligence Agency director General Daniel O. Graham, later the Vice-Chairman 
under Singlaub of WACL's U.S. chapter, as well as a director of the political arm 
CAUSA of Sun Myung Moon's Unification Church and a leading lobbyist for the 
ASC's Strategic Defense Initiative (Anderson, pp. 126, 152). Trotter himself 
linked his ASC fundraising to the Singlaub-Graham visit (Pearce, pp. 177-78). 

13. Nairn, p. 9; Anderson, p. 174. In another interview, Villagran "recalled that 
among recent Amigos efforts was the invitation of retired U.S. military opponents 
of Carter's human rights pohcies to Guatemala" (Washington Post, September 8, 
1980). 



248 



Footnotes 249 



14. Pearce,p. 178. 

15. Anderson, p. 158. How Singlaub became empowered to convey such sensitive 
messages is unclear, but there is no doubt that his predictions were correct. 
Carter's Central American team was sacked, and in May 1981 Vernon Walters, 
another veteran of CIA covert operations, was sent to repeat publicly that there 
would be "no more Irans," and that it was "essential" that Lucas "get rid of the 
guerrillas" (Washington Post, May 14, 1981). A New York Times editorial on 
May 18 criticized Walters' "peculiar" words. 

16. Ibid. 

17. Miami Herald, October 28, 1986; Washington Post, October 19, 1986. 

18. Lou Cannon, Reagan (New York: Putnam's, 1982), pp. 192, 196. 

19. By "WACL countries" we mean those nations whose WACL delegations 
included persons exercising public or covert power, and which used WACL as a 
prominent instrument of their foreign policy. In 1980 the hard core of WACL 
countries included Argentina, Taiwan, South Korea, Paraguay, Bolivia, 
Guatemala, and South Africa. 

20. Dugger, p. 272; cf. Washington Post, June 6, 1980. 

21. Los Angeles Times, July 11, 1980, quoted in Camion, p. 272. 

22. Time, September 8, 1980; reprinted in Data Center, The Reagan File, pp. 558- 
59. 

23. Ibid. 

24. J. Anthony Lukas, Nightmare (New York: Viking, 1976), pp. 283-84. 

25. Lou Cannon would later claim that Deaver "took a leave of absence from the 
firm for the campaign" (p. 272), but as late as July 15, 1980, Jack Anderson 
reported that "Deaver and Hannaford confirmed their status as foreign agents." 
Deaver formally left his firm when he joined Reagan's White House staff in 
January 1981. 

26. Laurence 1. Barrett, Gambling with History: Ronald Reagan in the White 
House (Garden City, N.Y.: 1983), p. 233; Cannon, p. 399. 

27. Ronald Reagan, "Common Sense from a Neighbor," (August 1979); in 
Dugger, pp. 520-21. 

28. Ranelagh.p. 681. 

29. Alejandro Dabat and Luis Lorenzano, Argentina: the Malvinas and the End of 
Military Rule (London: Verso, 1984), pp. 80-81. 

30. Barrett, p. 238. 

31. Barrett, p. 239. Haig and Deaver had also clashed over a minor State 
Department appointment, and the President ruled in Deaver's favor (p. 235). 

32. Barrett, p. 236. 

33. Ranelagh, p. 680. 

34. Christian, pp. 202,286. 

35. Anderson, p. 177. 

36. New York Times, February 18, 1981; Pearce, p. 178. 

37. Anderson, p. 178. 

38. Quoted m Barrett, p. 290. 

39. Banning Garrett, "China Policy and the Constraints of Triangular 



250 



The Iran-Contra Connection 



Logic," in Kenneth A. Oye et al., Eagle Defiant: United States Foreign Policy in 
the 1980s (Boston: Little Brown, 1983), p. 265. 

40. Dugger, p. 373, citing New York Times, March 18, 1983, etc. 

41. Barrett, pp. 289-91,333. 

42. Cannon, p. 103. By 1980 Reagan's "kitchen cabinet" of L.A. millionaires 
included other ASC backers, such as Earle M. Jorgenson, Jack Wrather, and 
Lockheed investor William Wilson. 

43. Back in 1960 the ASC Washington Report had called for unleashing Chiang 
Kai-shek's soldiers in Vietnam, as a way of "assisting the Chinese Nationalists to 
regain their homeland and to overthrow on the way home the bloody Communist 
tyranny which holds much of Vietnam in its grip" (Turner, p. 205). 

44. Anderson, pp. 93-102: "Pearson... once bragged to an associate about his 
alleged role in hiding Nazi doctor Josef Mengele, the infamous 'Angel of Death' of 
the Auschwitz extermination camp. He is also the man who, as world chairman of 
the World Anti-Communist League in 1978, was responsible for flooding the 
European League chapters with Nazi sympathizers and former officers of the Nazi 
SS" (p. 93). 

45. Anderson, p. 150. 

46. Dugger, p. 529; quoting broadcast of 2/3/78. 

47. Hank Messick, Of Grass and Snow: The Secret Criminal Elite (Engle-wood 
CUffs, N.J.: Prentice-Hall, 1979), p. 84. 

48. Anderson, pp. 181-82; personal coimnunication. 

49. Dickey, pp. 62-63. 

50. Anderson, pp. 150-52; Dickey, p.l 12. 

51. Boston Globe, August 3, 1986, A20 (see Chapter VI). 

52. Christopher Buckley, Violent Neighbors (New York: Times Books, 1984), p. 

103. Congressional aides of Helms and of Congressman Jack Kemp, as well as 
Reagan advisors such as Richard Allen and Roger Fontaine, visited Guatemala 
through 1980 and spoke to right-wingers there (Pearce, p. 178, citing Nairn). 

53. Asian Outlook, November 1980, p. 19. Another Reagan supporter at the 
Conference, Congressman Daniel Crane, said that Carter's Nicaraguan policy had 
been, in General Sumner's word, "treason"; he promised that Reagan would strive 
to ensure that the "State department will be swept clean of communists and fellow 
travelers" (p. 15). 

54. Asian Outlook, November 1980, p. 45. The role of Ray Cline in generating 
the Reagan-W ACL-contra alliance was considerable. So was that of Cline's two 
son-in-laws, Roger Fontaine and Stefan Halpcr. Roger Fontaine made at least two 
visits to Guatemala in 1980, as well as (with General Sumner) drafting the May 
1980 Santa Fc Statement, which said that World War III was already underway in 
Central America against the Soviets, and that Nicaragua was the enemy (Pearce, 
p. 178; Dickey, p. 72). Halper was coincidentally a member of the Reagan 
campaign who became a principal suspect in the later Congressional investigation 
of "Debategate," the illegal transmission of 



Footnotes 25 1 



documents from the campaign of President Carter (U.S. Cong., House, Committee 
on Post Office and Civil Service, Unauthorized Transfers of Nonpublic 
Information During the 1980 Presidential Election, Report, 98th Cong., 2nd Sess., 
May 17, 1984, pp. 36-40). According to Elizabeth Drew, some former Reagan 
aides told her that, in his intelligence-gathering operation for the campaign, 
Halper "was receiving information from the C.I.A." Halper vigorously denied this; 
and so, for good measure, did Cline. (Elizabeth Drew, Campaign Journal: The 
Political Events of 1983-1984 [New York: Macmillan, 1985], pp. 130-31; cf. pp. 
133-34). 

55. Wall Street Journal, April 18, 1980; Lernoux, p. 79. 

56. Scott, War Conspiracy, pp. 194, 208, 210; fflnckle and Turner, p. 47. 

57. McCoy, p. 212. Conein is also said to have handled cross-border operations 
into North Vietnam for the so-called Studies and Operations group in Vietnam 
(SOG, cf. Chapters 111, IX): Scott, War Conspiracy, p. 162n. 

58. Tad Szulc, Compulsive Spy (New York: Viking, 1974), p. 72. 

59. Anderson, pp. 56, 135, 194, etc. 

60. "Training Under the Mutual Security Program (with emphasis on development 
of leaders). May 15,1959"; reprinted in L. Fletcher Prouty, The Secret Team: The 
CIA and Its Allies in Control of the United States and the World (Englewood 
Cliffs, N.J.: Prentice Hall, 1973), pp. 444-79; cf. especially pp. 463,477. Colonel 
Prouty, who observed the "secret team" from his vantage as Focal Point Officer 
for Pentagon-CIA liaison calls this document "one of the most influential 
documents of the past quarter-century... When highest officials of this 
Government assert that the majority of the nations of the uncommitted 'Third 
World' would be better off under the control of their military elite, an elite to be 
selected by Americans, it is time for other Americans to.. .sound the warning on 
the possibility that this same American elite may not [sic] become persuaded of its 
own role in this country" (pp. 442-43). Peter Dale Scott has argued independently 
for the importance of this document, and of the planning process it represents, in 
helping to engender the Indonesian miUtary coup of 1965. Cf. his articles in 
Malcolm Caldwell (ed.), Ten Years' Military Terror in Indonesia (Nottingham: 
Spokesman Books, 1975), pp. 218-21, 252-53; and in Pacific Affairs (Summer 
1985), pp. 246-51. 

61. Anderson, pp. 54-55. 

62. Personal communication. Singlaub's and Stilwell's careers were closely 
intertwined at this point, first in 1949 in establishing the special warfare training 
center at Fort Benning, then when both men were battalion commanders in South 
Korea, 1952-53 (Anderson, p. 151; Prados, p. 36; Ranelagh, pp. 221-23). The 
French intelligence liaison with CIA in the Korean War was Yves Guerinerac, 
later a key figure in the private intelligence group Aginter-Presse, melding the 
alliance between WACL in Latin America and European neofascists (see Chapter 
111, also below). In 1976 Singlaub succeeded Stilwell as U.S. Commander in 
South Korea. 

63. Personal communication from former CIA officer; Asian Peoples' Anti- 
Communist League, Twelfth Conference, Proceedings (Seoul, Oct. 31- 



252 



The Iran-Contra Connection 



Nov. 8, 1966), pp. 3 89-92 (CI ADC Report): "In March 1964 a military 'coup 
d'etat' dehvered Brazil of a corrupt and leftist government... The Confederation 
and the Brazilian Anti-Communist Crusade were instrumental in pushing the 
Armed Forces into taking that drastic liberating decision" (p. 392). 

64. David Atlee Phillips, The Night Watch (New York: Atheneum, 1977), p. 38; 
U.S. Cong., House, Select Committee on Communist Aggression, Ninth Interim 
Report, 83rd Cong., 2nd Sess. (Washington, 1954), pp. 92, 101 (Sisniega- 
Phillips); p. 1 10 (Sisniega-Sandoval). When Sandoval and Sisniega tried to launch 
a coup against Guatemalan President Rios Montt in 1982, Mitchell WcrBcll III 
(another veteran of the Cline/Hunt/Singlaub OSS team) flew down to neighboring 
Belize to assist them (Anderson, pp. 181-82). CUne was later an official in the 
Association of Former Intelligence Officers which Phillips formed on his 
retirement from CIA. 

65. Anderson, p. 83; William Turner, Power on the Right (Berkeley: Ramparts 
Press, 1971), p. 213. 

66. Alfred W. McCoy, The Pohtics of Heroin in Southeast Asia (New York: 
Harper and Row, 1972), pp. 215-16. See Chapter in. 

67. Personal communication from friend of Martino, 1980. John Martino claimed 
to have inside knowledge about the John F. Kennedy assassination, and was the 
first to offer the hypothesis (later given wide circulation by mafioso John Roselli 
and columnist Jack Anderson), that the President had been killed by an 
assassination team originally recruited (possibly, though Martino did not say this, 
by himself) to kill Castro: cf. U.S. Cong., House, Select Committee on 
Assassinations, Investigation of the Assassination of President John F. Kennedy, 
Hearings, 95th Cong., 2nd Sess., XI, 438-41; Hinckle and Turner, pp. 349-50; 
Anthony Summers, Conspiracy (New York: McGraw-Hill, 1980), pp. 126, 449- 
52. 

68. New York Times, October 7, 1979, B16. 

69. Hank Messick, Of Grass and Snow: The Secret Criminal Ehte (Englewood 
Cliffs, N.J.: Prentice-Hall, 1979), p. 84; Anderson, pp. 181-82. 

70. Washington Post, August 16, 1977, A8; Hinckle and Turner, pp. 250-59. The 

New York Times obituary for WerBell reported that his "anti-communist 
activities were often said to be linked with the Central Intelligence Agency" 
(December 18, 1983). 

71. Kruger, p. 8; Hougan, Spooks, p. 99; Messick, pp. 81-84. Hougan links 
WerBeU's arms indictment in 1974 to his alleged dealings with the fugitive 
financier Robert Vesco and also with his old Kunming OSS friend Lucien Conein, 
who in 1976 appeared at WerBeU's drug trial to testify for the defense. (He did not 
have to testify, the case having been thrown out after the mysterious death of the 
key witness. 

72. National Times [of Australia], September 12, 1982 (reprinted in Lemoux, p. 
158); quoting an unnamed former deputy director of the CIA. 

73. Propper, p. 182. WerBell was also alleged to have been involved in a potential 
arms deal with the ex-CIA Cuban drug king of Mexico, Alberto Sicilia Falcon, 
(who may have been installed there with the aid of Conein's 



Footnotes 253 



DEA hit squad of ex-CIA Cubans: see Chapter III): Kruger, pp. 182-83. 

74. Washington Post, August 16, 1977; Anderson, pp. 155-56. 

75. Miami Herald, December 14, 1986; Guardian, December 24, 1986; San 

Francisco Bay Guardian, December 24, 1986; see Chapter X. 

76. New York Times, October 7, 1979, B16. 

77. Anderson, pp. 181-82. 

78. Magnus Linklater et al.. The Nazi Legacy (New York: Holt Rinehart and 
Winston, 1984), pp. 266-84. 

79. Linklater, pp. 269-70; 288-89; Anderson, pp. 144-45, 204. 

80. Lemoux, p. 178: "What had all this plotting to do with the Vatican Bank? The 
bank's two principal financial advisers and partners, Michele Sindona and Roberto 
Calvi, were members of P-2, a neofascist Masonic lodge in Milan headed by the 
Italian fascist financier Licio Gelli, who had dropped from public sight. Gelli was 
wanted in Italy for, among other things, his connection with the Pagliai and delle 
Chiaie bombing of the Bologna railroad station.. .As shown by Italian authorities, 
P-2 was 'a state within the state,' its aim being to restore fascism in Italy and 
buttress its hold on Latin America... That Archbishop Paul Marcinkus, the 
American-bom head of the Vatican Bank, knew of such connections is considered 
unlikely, although the Vatican Bank was perhaps the largest shareholder in 
Ambrosiano and Calvi [who was murdered when his Banco Ambrosiano failed] 
worked closely with Marcinkus on financial matters. More to the point, the 
Vatican's own investigation of the Calvi connection disclosed that the Vatican 
Bank owned ten Panamanian shell companies that were used to advance the 
political ambitions of Calvi and Gelli in Latin America and, through them, the P- 
2." In February 1987 Archbishop Marcinkus was finally indicted by an ItaUan 
court for his role in the Banco Ambrosiano failure. 

81. Frederic Laurent, L'Orchestre noir (Paris: Stock, 1978), passim. 

82. Anderson, p. 298; Kruger, p. 211. 

83. Quoted in Edward S. Herman and Frank Brodhead, The Rise and Fall of the 
Bulgarian Connection (New York: Sheridan Square Publications, 1986), pp. 85- 
86. 

84. Herman and Brodhead, p. 93. 

85. Laurent, pp. 7-14; Herman and Brodhead, pp. 88-89, Linklater et al., p. 207. 

86. Propper, pp. 305-14. See Chapter III. 

87. Herman and Brodhead, p. 90; citing Martin A. Lee and Kevin Coogan, Village 
Voice, December 24, 1985. 

88. Dickey, pp. 88, ; Anderson, p. 144. "While Sandoval danced and chatted with 
the elite of Reagan's inner circle [in 1981], his minions back home were busy; the 
Secret Anti-Communist Army (ESA), which was believed to be an extension of 
Sandoval's MLN, had just threatened to exterminate the entire Jesuit order in 
Guatemala" (Anderson, p. 177). 

89. Anderson, pp. 145-56. 

90. Oakland Tribune, February 12, 1987, B6. 



254 



The Iran-Contra Connection 



91. Kruger, p. 114. When Lopez-Rega was Argentina's Minister of the Interior, 
Ed Wilson's company Consultants International was shipping "an array of riot- 
control equipment to Brazil and Argentina" (Maas, p. 60). 

92. Kruger, p. 1 1. 

93. Anderson, pp. 141-42; Henrik Kruger, The Great Heroin Coup (Boston: South 
End Press, 1980), pp. 85, 106, 110. 

94. Penny Lemoux, In Banks We Trust (Garden City, N.Y.: Anchor/ Doubleday, 

1984), p. 179; Kruger, p. 224. 

95. Lernoux, p. 189. Italian investigators traced the neofascist-Anonima Sequestri 
connection to a May 1972 Mafia meeting of Italian mafiosi involved in the trans- 
Atlantic narcotics traffic, including Tomasso Buscetta, the go-between between 
the Ricord drug network and the Gambino family in New York. Cf. Gaia 
Servadio, Mafioso (New York: Delta, 1976), pp. 259-60; Kruger, pp. 105-06. 

96. Anderson, p. 172: "Now [in 1978] in the opposition, Sandoval turned to 
Mafialike tactics to get financing. 'He authorized the leaders of his bands to obtain 
funds by robbery and kidnappings,' says a wealthy Guatemalan politician who 
knows the MLN chief [Sandoval] well. 'He would send death threats, supposedly 
from the guerrillas, to the rich finqueros [coffee growers] and the next day, either 
Lconcl [Sisnicga] or Raul [Midence Pivaral, Sandoval's brother-in-law] would 
collect the money." In the CIA's 1954 Guatemala coup, Sisniega worked directly 
under David Phillips. 

97. Lernoux, pp. 188-89; Herman and Brodhead, pp. 73-75. Lernoux claims that 
"both men belonged to the P-2" (p. 188); others point to Sindona as P-2's original 
financier (Cornwell, p. 47), and Miceli as a "close friend" of Gelli and source of 
his military intelligence connections (Gurwin, p. 187). John McCaffery, a veteran 
of British intelligence and of the wartime Allen Dulles OSS-SS deal known as 
"Operation Sunrise," prepared an affidavit in 1981 for his friend and banking 
associate Sindona. In it he stated that he helped Sindona plan the 1970 coup 
attempt and that he was "sure to a moral certainty" that the CIA was aware of the 
plot. The CIA-Miceh connection grew directly out of the World War 11 OSS-SS 
connection; and Prince Borghese, the nominal head of the 1970 coup attempt, was 
saved by then OSS-officer James Angleton from a Resistance death sentence in 
April 1945. In 1974 Borghese introduced the fugitive delle Chiaie to officers of 
the Pinochet Chilean Secret Service DINA, a connection which led to the 
attempted murder of a Chilean exile in Rome by delle Chiaie and Letelier's 
nemesis Michael Townley. A CORU Cuban group took credit publicly for this 
attack. 

98. Kruger, p. 225. 

99. Laurent, L'Orchestre noir, p. 254; Lernoux, p. 201. In the 1976 Italian election 
Guarino chaired a group, "Americans for a Democratic Italy," organized by 
Sindona, which channeled U.S. funds to the Italian neofascist party, the M.S.I. 

100. Peter Maas, Manhunt: The Incredible Pursuit of a CIA Agent Turned 
Terrorist (New York: Random House, 1986), p. 247; Michael Ledeen, New York, 
March 3, 1980. 



Footnotes 255 



101. Maas, p. 247. 

102. Herman and Brodhead, pp. 94-96; quoting the Italian journal La RepubbUca, 
in Diana Johnstone, In The.se Time.s, July 10-23, 1985. 

103. Gurwin, p. 191; New York Time.s, February 15, 1987. 

104. Herman and Brodhead, pp. 97, 135-36, 237; citing New York Daily News, 
June 24, 1984. 

105. A third collaborator with Lcdccn and Sterling, Paul Henze (former CIA 
Station Chief in Turkey), transmitted similarly belated "information" from a 1971 
Bulgarian defector (Stefan Sverdlev), about a purported Warsaw Pact plan to 
flood the western world with narcotics. The story was published in the November 
1983 Reader's Digest in a story by Nathan Adams, who earlier had written about a 
flood of drugs from Cuba and Nicaragua (Herman and Brodhead, pp. 225-33, 238- 
40; Reader's Digest, July 1982). The 1985 judgment against Pazienza found that 
SlSMl had prepared two diversionary reports of a Bulgarian drug connection, 
from information provided by Pazienza and an "external collaborator," whom 
Herman and Brodhead speculate may have been Ledeen (p. 93). Ledeen also took 
up the line that the Sandinistas had organized "a vast drug and arms-smuggling 
network to finance their terrorists and guerrillas, flooding our country with 
narcotics" (New York Times, April 16, 1984, quoted in Boston Globe, November 
17, 1984). 

106. Herman and Brodhead, pp. 105-09. Herman and Brodhead accuse the New 
York Times for the paper's "alliance with and protection of Michael Ledeen. 
Ledeen was given Op-Ed column space twice in 1984-85, allowing him to issue a 
call for the greater application of force in Lebanon and to stress the greater 
importance of National Security than individual Uberty — themes that would 
delight the heart of Licio Gelli. Ledeen's book Grave New World was given a 
substantial and favorable notice in the Sunday New York Times Book Review. 
Perhaps more serious has been the New York Times's cover-up of Ledeen's role in 
Italy and his unsavory Unkages to Italian inteUigence and the Italian Right. [With 
one exception] the Times has never mentioned his connections with Santovito, 
Gelli, and Pazienza [all P-2], his controversial sale of documents to SISMI, or the 
fact that the head of Italian military intelligence stated before the Italian 
Parliament that Ledeen was an 'intriguer' and unwelcome in Italy. Actually, the 
Times's suppressions on Ledeen have been part of a larger package of 
suppressions that excluded any information that would disturb the hegemony of 
the Sterling-Henze line [that Agca and the Bulgarians conspired to kill the Pope]. 
Thus, just as Sterling and Henze never mention P-2 in their writings, so the Times 
failed even to mention the Italian Parliamentary Report on P-2 of July 12, 1984, 
which raised so many inconvenient questions about the quality of Italian society 
and the intelligence services" (Herman and Brodhead, pp. 197-98). 

107. Herman and Brodhead, pp. 94-96. Ledeen has denied most of these 
allegations. 

lOS.Lemoux, p. 216. Pazienza allegedly supplied his private yacht to help Gelli 
flee Italy after his escape from prison. 



256 



The Iran-Contra Connection 



109. "In addition to drugs, Nugan Hand.. .also did business with Edwin 
Wilson... Memos and testimony by Nugan Hand employees show that Hand met 
with Wilson in Bangkok, and that Houghton held discussions with him in 
Switzerland. Intelligence sources also claimed that Houghton used Nugan Hand's 
Saudi Arabian branch to finance Wilson's arms-smuggling operations" (Lemoux, 
pp. 72-73; see Chapter III). Sindona's later career became dramatically 
intertwined with Wilson's and TerpU's. In January 1984 hearings began for the 
extradition of Sindona from a medium security New York jail to Italy, "to face the 
charge of ordering the assassination of Giorgio Ambrosoli, liquidator of Sindona's 
Italian bank" (Gurwin, p. 208). A key witness was William Arico, an American 
gangster accused of murdering Ambrosoli. Arico was awaiting extradition in the 
Metropolitan Correctional Center in New York, where a fellow-detainee was 
Edwin Wilson. Arico was planning an escape, and Wilson, whose rage against his 
federal prosecutor Larry Barcella was at a peak, arranged for $50,000 to be passed 
to Arico in London. During the attempted escape down a rope of knotted sheets, 
Arico was crushed to death by a falling accomplice, "an overweight Cuban drug 
dealer.. .Wilson, when confronted by these facts, denied that Barcella had been the 
intended target" (Maas, p. 289). Arico's death helped delay Sindona's extradition 
until 1986, as did an affidavit from Gregory Korkola, a former business partner of 
Wilson's partner Frank Terpil. (According to Korkola's affidavit, he heard Arico 
insist "that Michele did not have anything to do with the [Ambrosoli] murder; 
Nick Tosches, Power on Earth: Michele Sindona's Explosive Story [New York: 
Arbor House, 1986], p. 273.) In 1986 Sindona was finally extradited to Italy, 
following which he soon died by poisoning in an Italian prison. 

110. It is no coincidence that Edwin Wilson's two closest friends in the House, 
Congressmen John Murphy and Charles Wilson, were also the key figures in the 
House Somoza lobby (Maas, p. 52; Christian, p. 87). After Somoza's departure 
from Nicaragua, on August 1, 1979, Murphy presented Enrique Bermudez and 
other future contra leaders at their first pubUc press conference (Dickey, pp. 62- 
63). 

111. Lernoux, p. 217. Miguel Angel Napout, reputedly Paraguay's biggest 
smuggler, with links to Nixon's confidant, Bebe Rebozo, and South American 
heroin traffickers, allegedly received an invitation to attend the RepubUcan 
convention, where he hitcrviowcd presidential candidate Reagan (Lernoux, p. 217, 
citing Latin American Regional Report — Southern Cone, July 31, 1981). 

112. Gurwin, pp. 56-57; Rupert Comwell, God's Banker (London: Victor 
GoUancz, 1983), pp. 94-95. 

113. Comwell, p. 95. 

114. P-2 political influence, as opposed to CAL's, was marked by this double 
opening to both neofascists and social democrats. Robelo and Cruz owed some of 
their influence to their backing by European socialist parties such as Italy's, which 
had benefited from the CIA/P-2 handouts and "privileged financial treatment at 
Banco Ambrosiano" (Gurwin, p. 75). 



Footnotes 257 



115. David A. Yallop, In God's Name: An Investigation into the Murder of Pope 
John Paul I (New York: Bantam, 1985), p. 320. 

116. Gurwin, p. 56; cf. pp. 59-60. 

1 17. Yallop, p. 326; cf. Gurwin, pp. 56-57; ComweU, p. 95. 

118. Yallop, pp. 333-34. 

119. Yallop, p. 327. 

120. Yallop, pp. 359-60. 

121. Testimony of former contra leader Edgar Chamorro before the International 
Court of Justice, quoted in Ellen Ray and William Schaap, "Vernon Walters: 
Crypto-diplomat and Terrorist," Covert Action Information Bulletin 26 (Summer 
1986), p. 8. 

122. Gurwin, p. 194. 

123. KRON-TV News Release, August 7, 1986. 

124. Kruger, p. 20; Fred Strasser and Brian McTigue, "The Fall River 
Conspiracy," Boston (November 1978), pp. 124, 180, 182. 

125. U.S. Ambassador Robert Hill, who personally received Helms and his aides, 
was part of the CIA-State "team" on the 1954 Guatemalan Operation. A former 
employee of Grace Shipping Lines, which had interests in Guatemala, he became 
in 1960 a director of United Fruit: Stephen Schlesinger and Stephen Kinzer, Bitter 
Fruit: The Untold Story of the American Coup in Guatemala (Garden City, N.Y.: 
Doubleday, 1982), p. 107. 

126. Anderson, p. 175. 

127. Buckley, p. 103. 

128. Anderson, pp. 147, 207, 209. Carlos Midence Pivaral has also attended 
Miami meetings of AIpha-66, the leading Cuban exile connection to WACL. 

129. Buckley, pp. 311,318. 

130. Anderson, p. 246. 

131. Molina was associated with the American Nicaraguan Council and in 1976 
brought Fediay and a group of international anti-Communist journalists to 
Nicaragua; cf. Latin American Political Report, August 26, 1977. Meanwhile for 
years Molina, like Fediay, has been paid by a so-called news service, Capitol 
Information Services, run by James Lucier, an aide of Jesse Helms (Oakland 
Tribune, August 15, 1986, B-4). 

132. John Dinges and Saul Landau, Assassination on Embassy Row (New York: 

Pantheon, 1980), p. 252. Another Molina associate, Somoza employee, and Bay of 
Pigs Veteran, Fernando Penabaz, graduated from his position as "special 
assistant" to the Republican Party in 1964 to "a twenty-year sentence in the 
Atlanta penitentiary for smuggling nine and a half pounds of cocaine" (Hinckle 
and Turner, p. 315). 

133. This parallel may be more than superficial, as Watergate burglar Frank 
Sturgis is said to have collaborated with Howard Hunt's and David Phillips' 
Guatemalan proteges, Mario Sandoval Alarcon and Lionel Sisniega Otero, in the 
liberation from a Guatemalan jail of the CIA-Somoza coup candidate, Carlos 
Castillo Armas. Cf. Donald Freed with Fred Landis, Death in 



258 



The Iran-Contra Connection 



Washington (Westport, Conn.: Lawrence Hill, p. 1980), p. 41. 

134. Nairn, p. 3; Albosta Report, p. 60. 

135. Kruger, p. 217. 

136. Delle Chiaie, the more seasoned and sophisticated of the two terrorists, 
somehow eluded capture. He "was later to claim that, tlirough infiltration of both 
the American and ItaUan inteUigence services, he knew in advance of the plans" to 
seize him (Linklater, p. 300). 

137. Dickey, pp. 152, 156. 

138. Dickey, pp. 259-61. 

139. Anderson, p. 230; Dickey, p. 261. 

140. Anderson, p. 232; Dickey, p. 262. 

141. Oakland Tribune, August 17, 1986 (for further examples see Chapter VI). 

142. New York Times, April 11, 1986. 

143. Renata Adler, "Searching for the Real Nixon Scandal," Atlantic (December 
1976), pp. 76ff. 

144. Adler, pp. 77, 90; Peter Dale Scott, The War Conspiracy (New York: Bobbs 
Merrill, 1972), pp. 204, 206. 

145. Kissinger left Washington for Peking in late June 1971; Hunt was hired as a 
White House consultant on July 6. 

146. Adler, pp. 92-93. 

147. Adler, p. 91. 

148. Adler, pp. 91,94. 

149. Lukas, p. 283. 

150. San Francisco Chronicle, August 11, 1981, p. 6. 

151. To facilitate the Chun visit, and the resumption of normahzed relations with 
South Korea which followed, the Reagan adminstration delayed publication of the 
State Department's statutorily required report on international human rights, which 
noted a "deterioration" of human rights in South Korea in 1980 (New York Times, 
February 2, 1980, p. 8; February 10, 1980, p. 10). On his return to Seoul, Chun 
announced harsh new labor laws banning strikes (New York Times, March 1, 
1980, IV, 4). The United States followed with an announcement it would sell 
$900 million in arms to South Korea, including 36 F-16 fighters (New York 
Times, March 27, 1980, p. 9). 

152. Anderson, pp. 66-70. The church was also promoted with assistance from 
Sasakawa Ryoichi and Kodama Yoshio, two of the CIA's most notorious contacts 
in Japan. 

153. Anderson, p. 302; quoting he Monde Diplomatique, February 1985. 

154. Anderson, p. 129; Washington Times, Oct. 8, 1985, p. 5A. 

155. Miami Herald, June 8, 1986, p. 26A; NBC Nightly News, June 13, 1986. 



Footnotes to Chapter V 



1. Ehud Avriel, "Israel's Beginnings in Africa," Michael Curtis and Susan Aurelia 
Gitelson, Eds. Israel in the Third World, Transaction Books, New Brunswick, NJ, 
1976, pp. 69-74. The introduction was made by President Tubman of Liberia. 

2. This was more than a httlc ironic, as Zionist leader Chaim Weizmann wrote 
many times to British leaders trying to sell them on the merits of using an 
independent Jewish state (white and Western-educated in a darker sea of 
uncivilized humanity) as an outpost of the British Empire. 

3. Curtis & Gitelson, op. cit.. Appendix, pp. 393-397 and passim. Dahomey (now 
Benin) even received help setting up a state lottery. 

4. D. V. Segre, "The Philosophy and Practice of Israel's International 
Cooperation," Curtis & Gitelson, op. cit., p. 10. 

5. Washington Post, June 15, 1986. 

6. Latin America Weekly Report, May 4, 1984 The ERG also has recently been 
funding Israeli activities, see IFA October 1985. 

7. Africa Report, November-December 1983 and L'Express (Paris) October 7, 
1983. 

8. Hilmi S. Yousuf, A&ican-Arab Relations, Amana Books, Brattleboro VT, 
1986, p. 55. 

9. Edy Kaufman, Yoram Shapira and Joel Barromi, Israel-Latin American 
Relations, Transaction Books, New Brunswick, NJ, 1979 has a full account of 
Israeli development programs and political relations in Latin America. 

10. Yousuf, op. cit., pp. 90-94; Arye Oded, "Africa, Israel and the Arabs: On the 
Restoration of Israeli-African Diplomatic Relations," The Jerusalem Journal of 
International Relations, Vol. 6, No. 3, 1982-1983, among many others dealing 
with this issue. 

11. Aaron Klieman, Israel's Global Reach: Arms Sales as Diplomacy, Pergamon- 
Brassey's, Washington, London, N.Y., 1985, pp. 16 and 26 (footnote 7). 

12. Leonard Slater, The Pledge, Simon & Schuster, New York, 1970 celebrates 
the whole panoply of scams run by the pre-state arms smugglers. 



259 



260 



The Iran-Contra Connection 



Actually the borders established after the fighting created a state one third larger 
than that contemplated by the UN partition plan. And of course, there was no 
Palestinian state as provided for in the plan. Al Schwimmer, the Israeli arms 
dealer involved in the Iran-contra affair figures largely in The Pledge as the main 
organizer of aircraft for the Haganah, the pre-state army. 

13. Bernard Reich, Israel: Land of Tradition and Conflict, Westview Press, 
Boulder, CO, 1985, p. 151. 

14. Robert E. Harkavy, Spectre of a Middle Eastern Holocaust: The Strategic and 
Diplomatic Implications of the Israeli Nuclear Weapons Program, University of 
Denver Monograph Series in World Affairs, 1977 p. 5. Israel is now ranked as the 
world's sixth greatest nuclear weapons state, with an arsenal thought to include 
sophisticated thermonuclear weapons. 

15. Andrew J. Pierre, The Global Politics of Arms Sales, Council on Foreign 
Relations, Princeton University Press, 1982, p. 161. 

16. Klieman, Israel's Global Reach, p. 23. 

17. Ibid. pp. 17-19 and passim. 

18. Bishara Bahbah, Israel and Latin America: The Military Connection, St. 
Martin's Press, New York, & Institute for Palestine Studies, Washington, 1986, 
pp. 38-53. Some well known recent cases of theft are the technology for plating 
the inside of cannon barrels, for a sophisticated aerial photographic system, and 
cluster bomb packing machinery. (Israeli Foreign Affairs, October 1986) Israel's 
thefts of enriched uranium and spent nuclear fuel from the U.S. and Europe are 
legend. 

19. Jane Hunter, Israeli-Foreign Policy: South Africa & Central America, South 
End Press, Boston 1987 pp. 31-45. 

20. U.S. Assistance to the State of Israel, Report prepared by the General 

Accounting Office, June 24,1983 (and released in its uncensored version by the 
American-Arab Anti-Discrimination Committee) p. 43. 

21. Aharon Klieman, Israeli Arms Sales: Perspectives and Prospects, Jaffee Center 
for Strategic Studies, Tel Aviv University, February 1984, pp. 40-41. 

22. The figure 40% was cited for the late 1970s. Pierre, op. cit., p. 161. 

23. Klieman, Israel's Global Reach, p. 22. 

24. Neubach and Peri, The Military Industrial Complex in Israel, International 
Center for Peace in the Middle East, Tel Aviv, January 1985 p. 68. 

25. Klieman, op. cit., p. 57. 

26. Pierre, op. cit., p. 125. 

27. Neubach & Peri, op. cit., p. 81. 

28. Dan Fisher, Los Angeles Times, September 18, 1986. 

29. Ibid. 

30. Kheman, Israel's Global Reach, p. 93; Neubach and Peri, op. cit., p. 4 and 
passim. 

31. Zc'cv Schiff, Ha'aretz, December 17, 1986, translated in News From Within 
(Alternative Information Centre, 14/E Koresh Street, West Jerusalem Israel), 
January 10, 1987. 

32. Klieman, Israel's Global Reach, p. 99. 

33. Washington Report on Middle East Affairs, March 1987. 



Footnotes 261 



34. In 1981 an Israeli cabinet minister, Ya'acov Meridor laid this out: "Don't 
compete with us in South Africa. Don't compete with us in the Caribbean area or 
in any other country where you can't operate in the open. Let us do it. I even use 
the expression, "You sell the ammunition and equipment by proxy. Israel will be 
your proxy." And this would be worked out with a certain agreement with the 
United States where we will have certain markets... which will be left for us." 
Ha'aretz, August 25, 1981. 

35. U.S. Assistance to the State of Israel, pp. 36-45 (much of this material was 
censored out of the report originally released by GAO.) Also see Wall Street 
Journal, June 22, 1984. 

36. Bahbah, op. cit., table pp. 78-85. A recent report (ACAN (Panama City, 1959 
GMT, April 5, 1986 in FBIS Latin America) said that Israeli military sales to 
Honduras, second poorest nation in the hemisphere, were barter agreements, with 
Honduras paying in agricultural products. 

37. Hunter, Israeli Foreign Policy, pp. 95-143. 

38. Ibid. p. 128. Distribution of food aid in both El Salvador and Guatemala is 
often contingent upon moving into one of these fortified hamlets. Interview with 
Lucas, HaAretz Weekly Supplement, February 7, 1986, translated in News From 
Within, January 10, 1987. 

39. Time, March 28, 1983. 

40. SIPRI Yearbook 1980, p. 96. 

41. Miami Herald, September 17, 1978. 

42. op. cit., November 18, 1978. 

43. Latin America Political Report, June 29, 1979. 

44. Ibid., July 6, 1979. 

45. Miami Herald, Nov. 18, 1978. The "permission" was supposedly for "small 
arms," but Israel no doubt interpreted that to mean a Cessna rather than a 
Phantom. 

46. Washington Post, July 1, 1979. 

47. Anastasio Somoza Debayle, Nicaragua Betrayed, Western Islands, Belmont, 
Ma. 1980, pp. 239-240. 

48. Slater, The Pledge, pp. 257-259. 

49. Estimate based on knowledge of the remaining 2 percent, an Argentine sale 
worth $7 milUon (documented by a bill found after Somoza fled, it is not clear 
whether the weapons were ever delivered) and a few known shipments from a 
private dealer, worth perhaps $5 million. The final figure is arrived at after 
subtracting $100 million, in order to err on the conservative side. 

50. U.S. Asistence to the State of Israel, p. 38; Jerusalem Post, December 4, 1981 
in Shahak, Israel's Global Role, pp. 46-47; an Israeli official was quick to point 
out that the pact did not limit Israel's independence of action in attacking its 
neighbors. 

51. Ha'aretz, May 20, 1982 in FBIS Middle East & Africa, May 21, 1982, p. I-l. 

52. Jerusalem Post, Dec. 4, 1981. 

53. Africa was Kimche's special purview. He had done his Mossad service there 
and became known as "Mr. Africa" for his unflagging efforts as head of 



262 



The Iran-Contra Connection 



the foreign ministry to persuade various governments to renew ties. Only four 
ever did: Zaire, Liberia, Cote d'lvoire, and Cameroon. After Kimche left the 
ministry a change in policy was announced limiting Israeli attempts to establish 
diplomacy to a few "key" nations. 

55. Ha'aretz, May 20, 1982 in FBIS Middle East & Africa, May 21, 1982, p. 1-1. 

56. New York Times, December 14, 1981. 

57. New York Times, November 27, 1986. 

58. Tel Aviv IDF Radio, 0605 GMT, October 25, 1983 in FBIS Middle East & 

Africa, October 25, 1983, p. 1-2. 

59. Washington Post, August 5, 1986. Weinberger and Casey were afraid that the 
Arab governments in the Middle East would construe the pact as aimed against 
them (they have), while Israel has always taken pains to assure the Soviet Union, 
which it does not wish to alienate, that of course the agreement is aimed at "the 
Arabs.". 

60. Interview in Hatzofe, December 16, 1983 in FBIS Middle East & Africa. 

61. Ma'ariv, April 10, 1984 in FBIS, Middle East and Africa, April 10, 1984, p. 1- 
2. The UN condemned it. 

62. Ma'ariv (Tel Aviv) November 11, 1983 in FBIS Middle East & Africa, 
November 15, 1983, p. 1-5. 

63. Yediot Aharonot, December 4, 1983, FBIS Middle East & Africa, December 
6, 1983, p. 1-5. 

64. Ibid.; Aviation Week and Space Technology, Nov. 5, 1984. 

65. San Francisco Sunday Examiner & Chronicle, December 4, 1983. 

66. Los Angeles Times, January 11, 1987. Haig wanted to forge an alliance with 
conservative Middle East countries. Kimche urged the U.S. to do what Israel 
wanted: create an alliance with Ethiopia, Turkey, and Iran. There is also a 
military-political committee which discusses military cooperation. 

67. Ha'aretz, November 11, 1983 in Israel Mirror (nd). Kimche also asked that the 
U.S. authorize third world recipients of U.S. foreign military sales credits (the 
form in which military assistance is given) to spend their credits in Israel and that 
the U.S. buy Israel's obsolete and surplus mihtary equipment and resell it to third 
countries. Serious discussion of this proposal did not take place until the Reagan- 
Shamir summit of November 1983. Latin America Weekly Report, May 4, 1984. 

68. New York Times, July 21, 1983. 

69. Ha'aretz, November 11, 1983. 

70. Davar, January 3, 1982. The loan was confirmed by Danny Halperin, 
economic consul at the Israeh embassy. It was repaid in Israel's aid the following 
year. 

71. The Times (London), September 19, 1983. 

72. San Francisco Chronicle, December 5, 1986. 

73. Boston Globe, January 25, 1987. 

74. Boston Globe, November 30, 1986. According to this article, Daniel Sheehan 
of the Christie Institute said that his sources said the Shackley-Clines 



Footnotes 263 



connection began right after Congress passed the Harken Amendment forbidding 
military aid to Somoza. 

75. New York Times, February 8, 1987. 

76. Newsweek, October 10, 1983. 

77. Ibid., December 6, 1986. Reminiscent of paying the staff of a brothel in drugs. 

78. Boston Sunday Globe, January 18, 1987. 

79. Le Monde (Manchester Guardian English Section) May 6, 1984. 

80. Le Monde Diplomatique, October 1984. 

81. Washington Post, December 7, 1982; Le Monde Diplomatique, February 
1983. Ultimately the bulk of the war booty was sold to Iran. Israel has always had 
a huge stock of East bloc arms, however, only some of which are thought to have 
been captured in its wars. 

82. Latin America Weekly Report, December 17, 1982. 

83. SIPRl Yearbook 1984, p. 238. 

84. Miami Herald, December 13, 1982. 

85. Boletin Informativo? Honduras, Centro de Documentacion de Honduras, 

Tegucigalpa, March 16, 1985. 

86. Ha'aretz, December 3, 1986, in FBIS Middle East & Africa, pp. 1-3-4. 

87. Israeli Foreign Affairs, November 1986 and December 1986. 

88. AfriqueAsie, Paris, April 25, 1983. 

89. Quoting Washington intelUgence sources, ANN, ANSA, AP and EFE, 
unomasuno, (Mexico City) July 1, 1983. These sources also spoke of support 

from Brazil and Venezuela. 

90. Sh'ma, November 2, 1984. Nicaragua has thoroughly infiltrated the contras. 

91. Davar, cited by Latin America Regional Reports Mexico and Central 
America, March 23, 1984. 

92. (Davar), Guardian (London), October 11, 1985. 

93. Latin America Regional Report Mexico and Central America, February 14, 
1986. 

94. Der Spiegel, July 26, 1983 in Jesus Guevara Morin/Notimex, unomasuno, 
April 23, 1984. 

95. Counterspy, Sept. - Nov., 1983. 

96. Miami Herald, September 9, 1983. 5 or 6 donations to ARDE in the "tens of 
thousands of dollars" from "mysterious" sources might have come from the CIA. 
"The Most Dangerous Game," Time, October 17, 1983. 

97. Panama City ACAN, 0045 GMT, April 24, 1984 in FBIS Latin America, 
April 25, 1984, p. P-12. 

98. Sonia Vargas L., Alfonso Robelo, "Pastora debe aceptar union de ARDE y 
FDN," La Nacion Intemacional, (San Jose, Costa Rica) June 7-13, 1984. 

99. Madrid EFE, 022 GMT, September 25, 1984 in FBIS Latin America, 
September 27, 1984, p. P-15. 

100. Sunday Times (London) August 30, 1983, in Jesus Guevara Morin/Notimex, 
unomasuno, April 23, 1984. 



264 



The Iran-Contra Connection 



101. Diario La Hora (Guatemala) March 19, 1985 in Inforpress Centro-americana, 
March 28, 1985. New York Times, December 1982. 

102. Testimony of Hector Francis, a defecting Argentine contra trainer, to Latin 
American Federation of Journalists, Mexico City, published in Barricada, 
(Managua) December 2, 1982, translated by Carmen Alegria in Black Scholar, 
March- April, 1982. 

103. Author's source. 

104. Ha'aretz, November 1, 1982, transl. in Israeli Mirror, n.d.; Defense Latin 
America, August 1983 and Pittsburgh Press, March 1, 1983 in Counterspy, 
September-November 1983; Libertad, (San Jose) May 4-10, 1984 in FBIS Latin 
America, May 22, 1984; Los Angeles Times, May 23, 1983; Washington Post, 
February 14, 1983; Inforpress Centroamericana, April 11, 1985. 

105. Davar, July 25, 1986, FBIS Middle East & Africa. 

106. Rumbo Centroamericano, (San Jose, Costa Rica) September 26-October 2, 
1985. 

107. Time, May 7, 1984. 

108. Philadelphia Inquirer, May 31, 1984. 

109. New York Times, February 8, 1987; Congressional investigators "suspected" 
the "basic outline" of Terrell's account "to be accurate." 

llO.Ibid., July, 21, 1983. 

111. Interview with Michael Saba, 1985. 

1 12. Ha'aretz, Nov. 1 1 , 1983 in Israel Mirror, nd. 

113. Miami Herald, June 4, 1983. 

1 14. Latin America Regional Report, Mexico and Central America, May 4, 1984. 

115. Ibid. 

116. Los Angeles Times, March 14, 1985. 

117. Author's source. 

118. Boston Sunday Globe, January 18, 1987. 

119. Ibid. 

120. Washington Post, January 27, 1985, Jewish Currents, June 1986. 

121. Yediot Aharonot,, April 19, 1984, in FBIS Middle East and Africa. 
Eagleburger was replaced by Michael Armacost in mid-1984. 

122. San Jose Mercury News, October 28, 1986. 

123. Latin America Weekly Report, January 13, 1984. 

124. Ha'aretz, April 4, 1984, transl. in Israleft No. 244, May 4, 1984. 

125. Boston Sunday Globe, January 18, 1987. 

126. San Jose Mercury News, October 28, 1986. 

127. Washington Post in San Francisco Chronicle, December 3, 1986. 

128. New York Times, November 26, 1986. 

129. New York Times, November 27, 1986. 

130. Los Angeles Times, December 5, 1986. 

131. Ha'aretz, April 4, 1984, excerpt transl. in Israleft No. 244, May 4, 1984; other 

parts of article cited in Latin America Weekly Report, May 4, 1984. 

132. Ha'aretz, nd, presumably another fragment of the April 4 report, cited 



Footnotes 265 



in New York Times, April 22, 1984. 

133. Jerusalem Post, April 22, 1984. 

134. New York Times, April 22, 1984. 

135. New York Times, April 22, 1984. 

136. Washington Post, April 13, 1984. 

137. Washington Post, May 19,1984; The Saudis refused, according to the 
"sources" who provided the details of this report, which would be contradicted 
when the contra supply network was exposed in October 1986. 

138. Los Angeles Times, (in San Francisco Chronicle) April 16, 1984. 

139. Pastora Interviewed on Voice of Sandino (clandestine to Nicaragua) 2300 
GMT, April 16, 1984 in FBIS Latin America, April 17, 1984, pp. P-20-21. 

140. Davar, April 27, 1984 [excerpt] in FBIS Middle East & Africa, April 27, 
1984, pp. 1-4-5. Matamoros' name translates as "he kills Moors.". 

141. Jose Quintcro Dc Leon, "La Fuerza Democratica Nicaraguense y Su Lucha 
contra el Sandinismo," La Prensa (Panama), June 13, 1983. 

142. Fred Francis, NBC Nightly News, 5:30 p.m. (PDT), April 23, 1984. 
Transcript courtesy of November 29th Committee for Palestine, (P.O. Box 27462, 
San Francisco, CA 94127. 

143. Jerusalem Domestic Service in English, 1800 GMT, April 25, 1984 in FBIS 
Middle East & Africa, April 26, 1984, p. 1-5. 

144. Los Angeles Times, (in San Francisco Chronicle) April 16, 1984. 

145. Boston Sunday Globe, January 18, 1987. 

146. Washington Post, April 28, 1984. 

147. New York Times, April 28, 1984. 

148. Washington Post, April 27, 1984. 

149. Kathryn Ferguson report on "All Things Considered," National Public Radio, 
April 27, 1984. 

150. Washington Post, April 28, 1984 Another of the numerous flat-out lies told 
by Kimche was that Israel had sold arms in Central America, but not to El 
Salvador. 

151. New York Times, April 28, 1984. 

152. Washington Post in San Francisco Chronicle, December 3, 1986. 

153. Los Angeles Times, April 28, 1984. 

154. Kathryn Ferguson report on "AH Things Considered," National PubUc Radio, 
April 27, 1984. 

155. Jerusalem Post, April 22, 1984. 

156. Yediot Aharonot, April 19, 1984 in FBIS Middle East & Africa, April 19, 
1984, p. 1-3. 

157. Los Angeles Times, April 28, 1984. 

158. Los Angeles Times, April 28, 1984. 

159. Los Angeles Times, April 28, 1984. 

160. Two glossy 9" x 12" books The Private Enterprise Guide Book and The 
President's Task Force on International Private Enterprise: Report to the President, 
both Washington DC, December 1984, reveal very little other than a string of 
names from corporations, none of which is well known except for the Hearst 



266 



The Iran-Contra Connection 



Corporation. 

161. Jerusalem Post, International Edition, week ending October 13, 1984. 

162. Ma'ariv, October 5, 1984 FBIS Middle East & Africa, October 5, 1984. 

163. At around the same time, Fred Ikle (whose Israeli contacts were the hard line 
Defense Minister Arens and embassy minister Benyamin Netanyahu) at the 
Defense Department is said to have asked Israel to send advisers to El Salvador 
"openly, as a demonstration of Israeli participation in the load the United States 
bears in Central America." It was considered that Israel owed a debt to El 
Salvador because of that country's agreement in August 1983 to move its embassy 
from Tel Aviv to Jerusalem. Obviously, it would have been helpful to the U.S. if 
Israeli advisers helped them exceed the 55-man limit Congress had placed on U.S. 
advisers. Davar, May 3, 1984, in FBIS Middle East & Africa, May 4, 1984, pp. I 
6-7. 

164. New York Times, December 29, 1986. While Israeli embassy officials and 
some Zionist activists did support the contras, they warned Israel "to maintain its 
more discreet stance" so as not to alienate congressional Democrats, many of 

whom were staunch supporters of Israel and ardent foes of U.S. intervention in 
Nicaragua. See, Wolf Blitzer, "U.S. wants Israeli aid in Central America," 
Jerusalem Post, April 22, 1984. 

165. Oswald Johnston, "Israel Denies That It's Aiding Nicaragua Rebels," Los 
Angeles Times, April 28, 1984. 

166. Inforpress Centroamericana, June 14, 1984. 

167. Los Angeles Times Syndicate, May 10, 1984. 

168. Washington Post, May 19, 1984. When asked by House and Senate 
Intelligence committees if they knew of third country aid to the contras, Casey 
and other CIA officials said they did not. 

169. Philadelphia Inquirer, May 3 1 , 1984. 

170. This Week Central America and Panama, September 17, 1984. New York 
Times, September 4, 1984. Venezuela's relationship was with ARDE; the 
Argentine miUtary prevailed upon Alfonsin to complete earlier commitments. 

171. Miami Herald, September 9, 1984. 

172. Jerusalem Post, September 10, 1984 [excerpts in FBIS Sept. 11, 1984]. 

173. New York Times, January 13, 1985. 

174. At the time, Taiwan had good relations with Nicaragua. Subsequently 
Nicaragua decided to recognize the Peoples Republic of China. 

175. New York Times, March 6, 1985. 

176. Ibid., March 13, 1985. 

177. New York Times, July 12, 1985 The bill repealed the Clark Amendment 
which had forbid the CIA to support UNFTA mercenaries waging war on Angola. 
The bill also carried an amendment forbidding the sale of advanced weapons to 
Jordan until it recognized Israel and entered into peace talks with it and reaffirmed 

a ban on recognition of the PLO. 

178. An exhaustive investigation found opinion divided and few willing to 
discuss the issue. 

179. Oakland Tribune, August 9, 1985. 



Footnotes 267 



180. Washington Post, September 15, 1985; The Nation, September 28, 1985. 

181. New York Times, August 13, 1985. 

182. All Things Considered April 23, 1985. 

183. Guardian, (NY) October 2, 1985. 

184. San Jose Mercury News, October 28, 1986. 

185. Ibid. 

186. Washington Post, November 28, 1986. 

187. Guardian, (NY) October 2, 1985. 

188. Report on Preliminary Inquiry, p. 43. 

189. Los Angeles Times, January 11, 1987. 

190. New York Times, December 30, 1986. 

191. Jerusalem Post January 4, 1987. 

192. Report on Preliminary Inquiry, p. 43. 

193. London Times January 12, 1987. 

194. Washington Times, December 8, 1986. 

195. This hadn't happened with any of Israel's previous misadventures: the attacks 
on Iraq and Tunisia, the gift of nuclear weapons capability to South A&ica, but 
with $3 billion or so a year at stake, the risk was definitely there. 

196. Dallas Morning News, December 10, 1986. 

197. New York Times, October 21, 1985. 

198. Milwaukee Journal, January 19, 1987. 

199. Ncwsday, January 18, 1987 cited in Jack Colhoun, "Congress deflects gaze 
from contra side of scandal," Guardian, February 4, 1987. 

200. Newsweek, December 15, 1986. 

201. New York Times, February 8, 1987. 

202. Report on Preliminary Inquiry, p. 50. 

203. Washington Post, December 12, 1986. 

204. Miami Herald, December 1, 1986. 

205. Ma'ariv, November 27, 1986 in FBIS Middle East & Africa, December 1, 
1986, p. 1-7. The original Ma'ariv article December 13, 1985, translated by Israel 
Shahak in Collection: More about Israeli weapons trade, and the way it influences 
Israeli politics, which this one updates, focused primarily on Ben Or's activities in 
Guatemala. 

206. Washington Post, December 12, 1986. Another company with IsraeU links is 
Sherwood International Export Corp. Former U.S. Diplomat Wayne Smith said 
the administration had "used Sherwood before for weapons sales to the FDN" and 
that the CIA had frequently used it so that Israel wasn't directly supplying the 
contras. Smith said he had been told by an administration official that a shipment 
of weapons Sherwood sold the contras had come from Israel's East bloc stocks. 
Guardian, April 16, 1986. 

207. New York Times, August 10, 1985. Some were purchased by Gen. Singlaub, 
others came from Israel. Guardian, October 11, 1985. 

208. Guardian, April 16,1986. 

209. Latin America Regional Report Mexico and Central America, February 14, 
1986. Contra sources said that when they had trouble operating the SAM- 



268 



The Iran-Contra Connection 



7s, Gen. Singlaub arranged for a technician to fix them and train the contras to 
maintain them. Singlaub acknowledged the story but "refused to identify the 
technician or his nationality, saying, 'It would put too many people in jeopardy.'" 
Los Angeles Times, December 7, 1985. 

210. Ma'ariv, November 27, 1986 in FBIS Middle East & Africa, December 1, 
1986, p. 1-7. 

211. Guardian, April 16, 1986. Dagan and Gil'ad were friends of Ben Or. Dagan, 
who had once represented lAI in territory stretching between Mexico and 
Columbia, had lived in Ben-Or's Miami house. Ma'ariv, November 27, 1986 in 
FBIS Middle East & Africa, December 1, 1986, p. 1-7. 

212. Author's source. 

213. Jerusalem Post, January 19, 1987. 

214. Washington Post, December 12, 1986. 

215. Middle East International, (London) April 3, 1987. 

216. Los Angeles Times, September. 18, 1986. 

217. New York Times, February 8, 1987. 

218. Washington Post, December 12, 1986. 

219. Milwaukee Journal, January 19, 1987. 

220. Dallas Morning News, December 10, 1986. 

221. All Things Considered, National Public Radio, December 6, 1986. 

222. Newsweek, December 15, 1986. 

223. All Things Considered, National Public Radio, December 6, 1986. 

224. Dallas Morning News, December 10, 1986. 

225. All Things Considered, National Public Radio, December 6, 1986. 

226. Dallas Morning News, December 10, 1986. 

227. Tel Aviv IDF Radio, 0600 GMT, December 10, 1986 m FBIS Latin 
America, December 10, 1986, p. P-16. 

222. Reuters European Service, August 2, 1986. 

230. Dallas Morning News, December 7, 1986. 

231. Ha'aretz, cited in "Israeh contra training reported," Christian Science 
Monitor, January 13, 1987. 

232. Mideast Observer, March 15,1986; New York Times, March 6, 1986. 

233. New York Times, March 7, 1986. 

234. JTA, Washington Jewish Week, March 20, 1986. 

235. New York Times, March 6, 1986. 

236. Israeli Foreign Affairs, April 1986. 

237. Mideast Observer, April 1, 1986. 

238. Author's source. 

239. Jewish Currents, June 1986. 

240. Jerusalem Post, November 11, 1986. 

241. Panama City ACAN, 1959 GMT, May 5, 1986 in FBIS Latin America, May 
6, 1986, p. P 11. 

242. Ha'aretz, June 18, 1986 in FBIS Middle East & Africa, June 19, 1986, p. 1-2. 
Another version has Shamir saying that the Nicaraguan government is assisting 
the PLO, which maintains training bases and propaganda offices in 



Footnotes 269 



Nicaragua. La Jornada, (Mexico City) June 19, 1986. 

243. Dallas Morning News, December 7, 1986. This claim was doubly suspect in 
that soon after President Reagan told Time magazine that Israel had transferred 
the profits from Iranian arms sales to the contras, Henry Kamm, who usually 
reports from Athens (and from a rightist perspective) wrote a single article from 
Jerusalem, saying that Israel had been trying from 1982 "until last year" to 
establish diplomatic ties with Nicaragua. To this end, Kamm wrote, Israel had 
offered Nicaragua "various forms of development assistance." New York Times, 
December 12, 1986. Nicaraguan sources said that those claims were overblown, 
that Israel had played a very negative role in Central America — the week before 
Kamm's article, it had voted with Washington against a resolution endorsing a 
World Court judgment against the U.S. war on Nicaragua. In fact, although Israel 
has asserted its good intentions from time to time — it has also ritualistically 
endorsed the Contadora peace process and denounced apartheid — the most 
concrete gesture of reconciliation on record is a Nicaraguan offer conveyed to the 
New Jewish Agenda in 1984 to normalize relations. Israeli Foreign Affairs, 
January 1987. 

244. News Conference, November 25, 1985, CBS Radio News. 

245. Report on Preliminary Inquiry, pp. 44-45. 

246. New York Times, November 26, 1986. 

247. Washington Tunes, December 16, 1986. 

248. Report on Preliminary Inquiry, p. 54. 

249. Ibid., p. 45. 

250. MidEast, a twice-monthly New York report cited in Washington Times, 
February 3, 1987. 

251. Ibid. 

252. Report on Preliminary Inquiry, p. 44. 

253. Ibid., p. 46. 

254. Washington Post, November 28, 1986; if counterpart means Ghor-banifar, 
that is almost the same as IsraeU. 

255. Report on Preliminary Inquiry, pp. 50, 63. 

256. Ha'aretz, November 30, 1986 in FBIS Middle East and Africa. 

257. Los Angeles Times, December 28, 1986. 

258. Yediot Aharonot, December 5, 1986 in FBIS Middle East and Africa. 

259. Washington Tunes, December 16, 1986. 

260. Israeli Foreign Affairs, July 1986. 

261. Report on PreUminary Inquiry, p. 45. 

262. Ibid., p. 46. 

263. Ibid., p. 53. 



Footnotes to Chapter VI 



1. Washington Post, 4-6-86. 

2. Tad Szulc and Karl Meyer, The Cuban Invasion, (N.Y.: Ballantine Books, 
1962) p. 96. 

3. Washington Post, 10-27-86. 

4. Quoted by Bill Moyers, CBS 6-10-77. 

5. Ibid. 

6. Wall Street Journal, 1-16-87, quoting Jose Basulto. 

7. House Select Committee on Assassinations, (HSCA), appendix to hearings on 
the Assassination of President John F. Kennedy, v. 10 (Washington; USGPO, 
1979) p. 67. 

8. HSCA, V. 10, p. 15.. 

9. Interview with David Atlee Phillips, 1 1-4-86. 

10. Newsday, The Heroin Trail (London: Souvenir Press, 1975), p. 169. 

11. Warren Hinckle and Wilham Turner, Fish is Red, 319. 

12. New Times, 5-13-77. 

13. These CORU-contra Cubans are Armando Lopez Estrada, Luis Posada, Juan 
Perez Franco and Dionisio Suarez (Wall Street Journal, 1-16-87; and see below on 
Suarez). 

14. New York Tunes, 11-15-76. 

15. Miami News, 7-2-77. 

16. Ibid. 

17. Hinckle and Turner, Fish is Red, 316. 

18. Szulc and Meyer, The Cuban Invasion, 90. 

19. Anderson, Inside the League, 249. For the record, the terror wave began 
earlier under President Ford, who first explored the possibility of detente with 
Castro. Vidal "has been arrested at least seen times in Miami on narcotics and 
weapons charges." Miami Herald, 2-16-87. 

20. New York Times, 12-23-81; Miami Herald, 12-28-81. The camp organizer 
was Hector Fabian, possibly an alias for Hector Alfonso-Ruiz, head of Movimento 

Insurrecctional Martian. 

21. Los Angeles Times, 12-19-83; Washington Post, 12-18-82. 



270 



Footnotes 271 



22. Anderson, Inside the League, 177. 

23. WaU Street Journal, 3-5-85. 

24. These commanders include Colonels Enrique Bermudez, miUtary chief of the 
FDN; Ricardo Lau, former head of intelligence for the contras; and Emilio 
Echeverry. Hector Frances, "The War of Terror Against Nicaragua," Black 
Scholar, March-April 1983, p. 4; Christopher Dickey, With the Contras (Simon 
and Schuster, 1986), 55, 115-116. 

25. Los Angeles Times, 10-16-86. 

26. HSCA V. 10, p. 44. 

27. New Times, 5-13-77; Washington Post, 10-17-86, 11-3-86; Vicky Bergerson 
memo; Miami Herald, 12-30-81. 

28. Larry Barcella interview, 11-6-86. 

29. Peter Maas, Manhunt, 202; Eduardo Arocena telephone conversation, 12-30- 
82. 

30. John Cummings, "Omega 7," Gallery, November 1981; cf. Miami Herald, 3- 
27-79. 

31. Edgar Chamorro testimony to World Court, reprinted in Peter Rosset and John 
Vandermeer, eds., Nicaragua: Unfinished Revolution (Grove Press, 1986), 237. 

32. Defense Intelligence Agency, Weekly Intelligence Summary, 7-16-82. 

33. Philadelphia Inquirer, 10-20-84. 

34. Reed Brody, Contra Terror in Nicaragua (Boston: South End Press), 1985. 
The manual was put together by a CIA contract agent who went as "John 
Kirkpatrick." A former Green Beret, "Kirkpatrick" was reportedly a veteran of the 
Phoenix program, a Vietnam-era, CIA-directed operation to assassinate civiUans 
suspected of collaborating with the Vietcong. See Chapter IX below; Christopher 
Dickey, With the Contras, 226. 

35. Tribune (Oakland), 10-21-84. 

36. Testimony to World Court, reprinted in Nicaragua: Unfinished Revolution, 
238. 

37. Boston Globe, 6-12-86. 

38. Los Angeles Times, 2-10-87. 

39. Brody, op. cit. Joseph Adams, an American mercenary who served as chief of 
security to Adolfo Calero, head of the Nicaraguan Democratic Front, told a 
reporter that "he helped maintain a hst of Managua civilians — including members 
of the clergy as well as Sandinista politicians — who would be marked for 
assassination when the FDN forces entered the Nicaraguan capital. Adams also 
acknowledged participating in discussions at Calero's Miami home regarding 
plans to assassinate rival contra leader Eden Pastora. Calero knew and approved 
of the scheme, he said." (Allan Nairn, "The Contras' Little List," Progressive, 
March 1987, 24). 

40. San Francisco Chronicle), 3-22-85; Dickey, 88. 

41. Los Angeles Times, 12-19-83 (Argentinians); Christian Science Monitor 5-8- 
84 (Cubans). 

42. New York Tunes, 2-14-86; Washington Post, 12-16-84,3-21 -85; Miami 



272 



The Iran-Contra Connection 



Herald, 1-15-85; Dickey, With the Contras, 115-116. One of the victims was a 
pro-Marxist Argentine travelling on an Ecuadoran passport, who may have been 
targeted to suit the Argentine military {Washington Post, 1-15-85). Alvarez, the 
CIA's favorite, "was implicated in the Standard Fruit Company bribe scandal in 
1975" and was held responsible for the alleged embezzlement of $30 million in 
pubUc money by members of his deposed high command (Central America 
Report, 4-6-84). He may also have made illicit profits through his stock 
ownership in the Union Star company, which "supplies the Army with arms, 
liquor and other goods" (Central America Report, 4-27-84). 

43. Central America Report, 10-18-85. His name was Ricardo Zuniga. 

44. Christian Science Monitor, 1 1-19-85, 12-18-85; New York Times, 2-14-86. 

45. Central America Report, 10-4-85. The alleged head of the plot was a Cuban 
exile (Christian Science Monitor, 11-19-85). In March 1986, two contras 
murdered the Canadian head of CARETAS, a Catholic relief organization, 
apparently also for political reason (Larry Bims, CoUn Danby, and David 
MacMichael, "Getting in Deeper," Democratic Left, May-August 1986). And on 
January 14, 1987, a bomb exploded near the home of Honduras' top woman union 
leader, who is also a leading critic of the contras. Her union federation believes 
the contras targeted her (Guardian, 1-28-87). 

46. George Black, Garrison Guatemala (London: Zed Books, 1984), 164-166; 
Ha'aretz, 11-25-85; Cheryl Rubenberg, "Israel and Guatemala: Arms, Advice and 
Counterinsurgency," Middle East Report, May-June 1986. Another report notes 
"European diplomats in Guatemala say Israeli NCOs have also been used by 
private landowners to train their squads of security guards. Private security guards 
and off-duty military officers formed the fearsome 'death squads' which later 
spread to neighbouring El Salvador..." (Financial Times, 11-27-86). 

47. Dickey, 82-84; Shirley Christian, Nicaragua: Revolution in the Family (NY: 
Random House, 1986), 196-200 (financing from Argentina and Luis Pallais 
Debayle). 

48. National Public Radio, 6-21-86; Sen. Kerry memorandum, 10-14-86. 

49. In These Times, 12-10-86. More evidence on the Pastora plot has come to 
light from the American mercenary Joseph Adams. See Allan Nairn, "The 
Contras' Litfle List," Progressive, March 1987, 24-26. 

50. Miami Herald, 1-23-76. 

51. Interview, 11-6-86. 

52. Reno Evening Gazette, 1-8-75. 

53. Hinckle and Turner, Fish Is Red, 314. 

54. This drug kingpin was Juan Restoy. See Hank Messick, Of Grass and Snow, 
(NJ: Prentice Hall, 1979), 6; New York Times, 1-4-75; Szulc and Meyer, The 
Cuban Invasion, 95; Hinckle and Turner, 308. 

55. New York Times, 1-4-75. 

56. John Cummings, "Omega 7," Gallery, November, 1981. 

57. Kerry report, October 14, 1986. 



Footnotes 273 



58. Miami Herald, 8-6-81, 7-26-83. 

59. Nation, 3-19-77; Miami Herald, 12-30-83. 

60. Los Angeles Times, 12-21-85. 

61. San Francisco Examiner, 3-18-86; Washington Post, 4-11-86,4-17-86; 
Christian Science Monitor, 5-9-86; San Francisco Chronicle, 4-27-86. 

62. San Francisco Examiner, 4-24-86. 

63. AP 1-20-87; Newsweek, 1-26-87; cf. San Francisco Chronicle, 1-27-87 
(Morales pleads guilty); Chris Davis, "How the Feds Busted George Morales," 
Motor Boating and Sailing, October 1986, pp. 68ff. His partner was Gary Betzner. 

64. San Francisco Examiner, 3-16-86; characterization from Dickey, 117. The 
initials stand for Nicaraguan Democratic Union-Nicaraguan Revolutionary Armed 
Forces. 

65. San Francisco Examiner, 6-23-86. 

66. CBS 6-12-86. 

67. San Francisco Examiner, 3-16-86, 6-23-86. 

68. Central America Report, 8-8-86. 

69. UPI 4-26-86. 

70. CBS "West 57th St." 6-25-86. Working those "secret routes" on the arms side 
were the cargo planes hired by the CIA or agents of the National Security Council 
to serve the rebel army. The preeminent airline in the contra supply business was 
the former CIA-controlled firm Southern Air Transport. One witness, whose 
account has not been verified, told the Justice Department of seeing cocaine 
unloaded from a Southern Air Transport plane in Colombia. The airline denies 
any link to drug smuggling (San Jose Mercury, 10-31-86; AP 1-20-87; 
Washington Post, 1-20-87; Newsweek, 3-2-87). 

71. Miami Herald, 12-20-85. 

72. Miami Herald, 8-4-86 (Jose Coutin, Miami gun dealer); Dallas Morning 
News, 8-17-86 (Ochoa as unindicted co-conspirator in Seal's murder). 

73. New York Times, 7-3-72. "Seal was supposed to fly seven tons of plastic 
explosives to anti-Castro forces in Mexico" (Miami Herald, 10-12-86). 

74. Miami Herald, 10-16-86. 

75. Joel Millman, "Who Killed Barry Seal?" Village Voice, 7-1-86. 
16. Miami Herald, 10-9-86. 

11. In These Times, 12-10-86. 

78. In These Times, 12-10-86. Jesus Garcia, the informant, says he saw the 
cocaine in the house of Francisco Chanes, a Miami-based seafood importer who 
helps the contra cause. Chanes, in turn, was named in an October 14, 1986 staff 
report from the office of Sen. John Kerry as a business associate of exile terrorist 
and drug trafficker Frank Castro. 

79. Miami Herald, 4-14-83. 

80. Washington Post, 3-14-65. 

81. The owner of the properties on which Artime estabUshed his camps, Colonel 
Ludwig "Vico" Starke Jimenez, was a key figure in MCRL (Hinckle and Turner, 
Fish is Red, 149; Charles Ameringer, Don Pepe: A Political 



274 



The Iran-Contra Connection 



Biography of Jose Figueres of Costa Rica (Albuquerque: University of New 
Mexico Press), p. 258). Starke had previously lent his farm to the CIA for military 
training prior to the Bay of Pigs invasion (Jean Hopfensperger, "Costa Rica: Seeds 
of Terror," Progressive, September 1986). She notes further that the MCRL 
includes "former pro-Nazi Germans and their children." 

82. Latin America, 2-13-70; Ameringer, Don Pepe, 259-60. Starke was named in 
connection with both episodes as well. 

83. Latin America, 1-21-72; Guatemala and Central America Report, December 
1974. Among those linked to the plotting were the pro-Chilean Cuban Evarista 
Garcia Sarmiento and Patria y Libertad leader Benjamin Matte. Costa Rica's 
foreign minister, Gonzalo Facio, was the target of death threats for lifting 
sanctions against Cuba. 

84. Hopfensperger, op. cit. 

85. Central America Report, 6-27-81. 

86. Anderson, Inside the League (NY: Dodd, Mead & Co., 1986), 245. 

87. Washington Post, 12-2-82. Precisely such an assassination attempt took place 
in 1984 at La Penca. Two journalists injured in the bomb attack, Tony A virgan 
and Martha Honey, have since charged in a lawsuit that Americans and CIA 

agents close to the contra cause directed the plot. 

88. Nation, 10-5-85; Central America Report, 6-14-85; Central America Update, 
January-February 1986. The December 1985 peace march was disrupted after the 
U.S. Embassy in San Jose distributed to MCRL members a document purporting 
to show that the KGB was behind the march (Hopfensperger, op. cit.). 

89. Los Angeles Times, 4-27-86; Central America Update, September-October 
1984. 

90. San Francisco Examiner, 8-25-85, quoting Juan Jose Echeverria. 

91. Central America Report, 7-19-85. One might also note the fact that the 
Security and Intelligence Directorate under his control was caught wiretapping 
public officials and members of the ruling PLN (Central America Report, 6-14- 
85). 

92. Dickey, With the Contras, 90-92; Central America Update, March 1981. 

93. Central America Report, 2-21-81. 

94. Central America Report, 11-7-81. 

95. Defense Intelligence Agency, Weekly Intelligence Sunmiary, 7-16-82. 

96. Central America Report, 11-1-85. 

97. Tony Avirgan and Martha Honey, "The CIA's War in Costa Rica," Nation, 

January 31, 1987, 105-107. 

98. Monge sent a message of support to the World Anti-Communist League in 
1984 — read to the annual conference by Urbina Pinto (Anderson, Inside the 
League, 250-251). 

99. Central America Report, 7-19-85. Perhaps not coincidentally, Monge sought 
foreign aid and investment from three of the contras' major foreign backers: Israel, 
Taiwan and South Korea (Central America Report, 6-14-85). 

100. Central America Update, September-October 1984; Central America 



Footnotes 275 



Report, 10-5-84. 

101. Central America Report, 8-8-86. 

102. Central America Report, 4-12-85. 

103. Central America Report, 5-31-85. The training, took place on a ranch 
formerly owned by Nicaraguan dictator Anastasio Somoza, skirted Costa Rican 
prohibitions on foreign military advisers (Central American Historical Institute 
newsletter, 7-11-85). 

104. Central America Report, 4-12-85. 

105. Central America Update, July-August 1985. 

106. Central American Historical Institute newsletter, 7-1 1-85. 

107. Alan Hruska, "The Road from Switzerland to Honduras: The Militarization 
of Costa Rica," in Nicaragua: Unfinished Revolution, 283-286. 

108. Mediafile Central America Report, no. 3. How long Arias can maintain this 
neutrality remains to be seen, given the presence of at least six MCRL members in 
his administration (Hopfensperger, op. cit.). 

109. New York Times, 9-29-86; Wall Street Journal, 12-5-86. 

110. Miami Herald, 8-16-77; Wall Street Journal, 1-16-87. 

111. Central America Report, 8-22-86; New York Times, 9-14-86. 

112. San Francisco Examiner, 3-29-81. 

113. Washington Post, 10-19-86; Miami Herald, 10-11-86; Los Angeles Times, 
10-21-86. 

114. Christian Science Monitor, 5-8-84. 

115. New York Times, 10-15-86. 

116. NACLA, Guatemala, (New York: 1974) p. 119. 

117. Latin America Weekly Report, 4-7-78,6-30-78. In 1969, Miami-based Cuban 
exiles crowed about "our first coup" after they arranged with the MLN and the 
death squad MANO to oust a moderate interior minister under President JuUo 
Cesar Mendez Montenegro (Thomas and Marjorie Melville, Guatemala — Another 
Vietnam? (Penguin Books, 1971), 284). 

118. Central America Report, 5-6-83, 1-13-84; Peter Calvert, Guatemala: A 
Nation in Turmoil (Boulder, CO: Westview Press, 1985), 110; Anderson, Inside 
the League, 179-181, notes that the American arms dealer and special warfare 
expert Mitchell WerBell III plotted with Sisniega. On Israel's role, see George 
Black, Garrison Guatemala (London: Zed Books, 1984), 166). 

119. Washington Post, 2-22-81. 

120. The proper name for the MLN-sponsored terror organization was 
Movimiento Anticommunista Nacional Organizado, or MANO. Richard Nyrop, 
ed. Guatemala: A Country Study (Dept. of the Army, 1983), 31, 163; Black, 50. 

121. Latin America Political Report, 6-1-79; Anderson, 172. 

122. Dickey, 87. 

123. Ameringer, 261. 

124. Foreign Policy, Summer 1981; Black, 23. 

125. Dickey, 86ff; Miami Herald, 12-19-82. 

126. San Francisco Examiner, 12-18-86. 



276 



The Iran-Contra Connection 



127. Washington Post, 6-2-85. Thus Orlando Bosch claims to have arranged the 
murder of two Cuban diplomats in Argentina with the help of AAA (New Times, 
5-13-77). 

128. HSCA,v. 10, p. 44. 

129. New York Times, 10-31-86. 

130. Wall Street Journal, 12-8-86. 

131. Washington Post, 7-24-86. 

132. Washington Post, 5-29-86; cf. Tribune (Oakland), 12-14-84. 

133. San Francisco Chronicle, 2-14-86. See above on terrorism. 

134. People's Daily World, 9-12-86. 

135. Central America Report, 8-29-86; Guardian, 10-15-86; Los Angeles Times, 
5-9-86. 

136. Central America Report, 1 1-7-86; cf. Washington Post, 1 1-17-86. 

137. Washington Post, 7-24-86. 

138. Central America Report, 11-7-86. 

139. Washington Post, 11-17-86. 

140. Central America Update, Vlll (November-December 1986). 

141. Wall Street Journal, 12-8-86. 

142. Jonathan Marshall, "The White House Death Squad," Inquiry, March 5, 1979. 



Footnotes to Chapter VII 



1. San Francisco Chronicle, 3-29-74; Washington Post, 1-9-75. 

2. Michael Klare, "Arms and the Shah," Progressive, August 1979,15-21. 

3. Washington Post, 1-13-80. Joseph Sisco, Undersecretary of State for Political 
Affairs, told a House subcommittee in 1975 that "the major burden for assuring 
security: in the Persian Gulf region "must be borne by the guif states themselves, 
and in particular by the major nations of the region, Iran and Saudi Arabia" (New 
York Times, 6-11-75). 

4. Rene Theberge, "Iran: Ten Years After the 'White Revolution'," MERIP 
Reports, no. 18 (June 1973), 18. 

5. San Francisco Chronicle, 3-20-75. 

6. As a byproduct of this commitment, the CIA shifted its main Mideast station 

from Cyprus to Iran (Nation, 2-22-75, p. 195). 

7. Washington Post, 2-26-79 (George Ball). 

8. Neva York Times, 9-28-76. 

9. Forbes, 4-15-76. 

10. Washington Post, 5-31-79 (Jack Anderson). 

11. Washington Post, 1-18-79. 

12. Forbes, 4-15-76. 

13. Claudia Wright, "Buried Treasure at Chase Manhattan?" Inquiry, April 7, 
1980, p. 13. 

14. New York Review of Books 5-14-81. 

15. Washington Post, 11-29-79. 

16. Washington Post, 10-25-80; New York Times, 7-9-78; Michael Ledeen and 
William Lewis, Debacle (Knopf, 1981), 125. 

17. New York Times, 11-16-79. 

18. Ibid. 

19. (Washington Post, 11-16-79). 

20. Washington Post, 1-13-80. 

21. No Hiding Place, 153. 

22. The American taxpayer, on the other hand, seems to have lost out. In a 
confidential report to Congress, the General Accounting Office determined 



277 



278 



The Iran-Contra Connection 



that the Pentagon was not recouping its fuh administrative costs on arms sales, 
and that han was enjoying further subsidies through low-interest loans offered by 
the Export-Import Bank (New York Times, 1-2-75). 

23. New York Times, 5-18-75. Kissinger defended these purchases — which he 
noted were in cash — as helping han play a stabilizing role in the Middle East and 
South Asia, missions he said were in the "national interest of the United States" 
(New York Times, 8-8-76). 

24. Washington Post, 1-13-75. 

25. Sunday Times, 12-2-79. 

26. Los Angeles Times, 12-7-86. 

27. "Strong pressure also came from defense companies anxious to find a new 
market to replace the one lost through the winding down of U.S. procurement for 
the Vietnam war. For example. Bell Helicopter officials saw a need in October 
1971 to obtain Iranian military and civihan business for the company's U.S. 
plants, where 'sustaining work loads are increasingly needed,' according to 
documents pubUshed by the Senate Banking Committee. A Pentagon official 
knowledgeable about the overseas arms business describes how representatives of 
U.S. defense companies have moved from one lucrative market to another. 'The 
same men who were in Saigon and later Tehran, are now in Saudi Arabia, Egypt 
and Morocco,' he said." (Washington Post, 1-20-80). The Iran market literally 
saved Grumman Corp., manufacturer of the F-14 fighter, from possibly financial 
collapse (New York Times, 1-21-75). 

28. For example. Bell Helicopter International, headed by retired U.S. Maj. Gen. 
Delk Oden, put together a 500-man force of American civilians, many of them 
fresh from Vietnam, to set up Iran's Sky Cavalry Brigade modeled on the U.S. 1st 
Cavalry Division (New York Times, 2-12-75). 

29. Washington Post, 1-13-80; New York Times, 6-10-75, 8-26-75; Barry Rubin, 
Paved With Good Intentions (NY: Oxford U. Press, 1980), 129. The jailed navy 
commander was Admiral Ramzi Attaei (New York Times, 2-25-76). Note that a 
future commander of the Shah's navy, Rear Adm. Ahmad Madani, would later 
appear on the CIA's payroll (New York Times, 3-7-82). 

30. Washington Post, 1-13-80; Washington Post, 1-2-77; Defense Electronics, 
February 1979. The lead contractor on IBEX was Rockwell; other contractors 
included E-systems, GTE Sylvania, Martin Marietta, Stanford Technology, 
Watkins- Johnson and ARGOS Systems. Later Ford Aerospace replaced Martin 
Marietta and GTE Sylvania in the project. 

31. Washington Post, 1-27-80. Later, Rockwell lost its lead role in the project — a 
casualty of politics and bureaucratic delays in Iran and the United States. "In the 
last year the CIA reorganization (under Carter) has brought an entirely new 
program staff on the project," reported Electronics News [8-8-77], "which brought 
the procurement to a virtual halt... Sources said the delay allowed Rockwell 
competitors to market aggressively in Iran to share portions of the program that 
Rockwell felt it would handle as major contractor." The CIA reportedly was the 
procuring agency on the project. 

32. Grumman, for example, admitted that it arranged to pay more than $20 



Footnotes 279 



million in commissions on its $2 billion fighter plane deal with the Shah's air 
force (New York Times, 12-15-75). Bell Helicopter paid Gen. Khatemi and others 
$2.9 million in commissions (New York Times, 3-3-78). 

33. One former head of the U.S. Military Assistance Advisory Group in Tehran 
reportedly helped Northrop set up a slush fund in Switzerland to "pay off some 
mid-level Iranian officials," in the words of one company official (New York 
Times, 6-26-75). 

34. Jonathan Kwitny, Endless Enemies (NY: Congdon and Weed, 1984), 183. 

35. Washington Post, 1-2-77; Barry Rubin, Paved With Good Intentions, 163. A 
Pentagon investigation of the activities of the U.S. Military Assistance Advisory 
Group was thwarted by the destruction of records (New York Times, 9-16-76). 

36. As far back as 1952, Washington's ambassador to Tehran, Loy Henderson, had 
warned of the danger of triggering a xenophobic reaction in Iran: "The more 
attention that is attracted to the activities of these American nationals the more 
susceptible the Iranian people in general are likely to be to appeals to throw the 
Americans out of the country" (Rubin, Paved With Good Intentions, 136). 

37. Gary Sick, All Fall Down (NY: Random House, 1985), 17. 

38. Quoted in Barry Rubin, 174. 

39. Michael Klare, "Arms and the Shah," Progressive, August 1979, 18. 

40. Washington Post, 10-25-80. 

41. Gary Sick, 92. 

42. Joseph Goulden, The Death Merchant, 61. The CIA had at least 50 agents in 
Tehran, and another 100 "retired" U.S. intelligence specialists worked for 
American corporations in the country, some of them certainly undercover for the 
Agency (New York Tunes, 7-9-78). 

43. Barry Rubin, 165. 

44. Christopher Payne, unpublished ms. 

45. Barry Rubin, 164-5. These included General Hamilton Howe, hired to 
represent Bell Helicopter; former MAAG cormnander Major Gen. Harvey 
Jablonsky who flogged Northrop's telecommunications systems; former Air Force 
MAAG boss Major Gen. Harold L. Price who promoted Philco-Ford's aircraft 
warnings systems; and former Navy MAAG chief Captain R.S. Harward who 
represented TRACOR and then Rockwell International. 

46. Washington Post, 1-20-80. 

47. Ledeen and Lewis, Debacle, 59. After the Shah's fall, Moorer proposed that 
the U.S. convert the port of Gwadar, in the sensitive Baluchistan region of 
Pakistan, as a naval facility to replace Chah Bahar (New Yorker, 10-1-84). 
Pakistan has, indeed, become a mini-Iran: led by the unpopular Gen. Zia, it has 
become the third largest recipient of U.S. foreign aid, a platform for opposing the 
Soviet presence in Afghanistan (as was the Shah's Iran) and a would-be bastion of 
American influence in southern Asia. 

48. Indeed, he opposed abolishing it (International Herald Tribune 5-19-77). 

49. Goulden, 57; Washington Post, 2-1-83. 



280 



The Iran-Contra Connection 



50. Washington Post, 2-1-83; Maas, 54; Goulden, 47. 

51. Los Angeles Times, 12-7-86. 

52. Insight, 1-12-87. 

53. New York Times, 11-26-76, 2-9-77; Washmgton Post, 1-20-80. 

54. Baltimore News American, 10-7-82. 

55. Von Marhod's career was slowed neither by the Shah's dissatisfaction, nor by 

the formal reprimand he received in 1975 for vacationing at Northrop's luxury 
hunting lodge (Washington Post, 1-2-77). After that article appeared. Deputy War 
Minister Hassan Toufanian said it was "erroneous and misleading" and that Von 
Marbod was held in esteem (New York Times, 2-10-77). 

56. New York Times, 7-16-77, 7-21-77, 7-23-77, 7-26-77. As noted in previous 
chapters, the sales of AW ACS planes to Saudi Arabia in 1981 served to induce 
Saudi contributions to the contras. 

57. New York Times, 12-1 1-86. See also Chapter VIll. 

58. Defense Electronics, February 1979; interview with Shackley, 3-31-87. As the 
Shah was falling, SAVAK agents reportedly bartered some of Stanford 
Technology's equipment to South Africa and possibly Israel in exchange for 

asylum (Defense Electronics, June 1979). 

59. Los Angeles Times, 12-4-86; New YorkTimes, 12-6-86. Hakim was in turn 
introduced to Wilson by Wilson's fellow CIA renegade, Frank Terpil (Los 
Angeles Times, 2-14-87). 

60. Christopher Simpson, "The Middle East Connection," Computer-world, 
November 23, 1981, p. 8, citing former Wilson employee Kevin Mulcahy. 

61. San Francisco Examiner, 12-9-86. Rockwell International reportedly paid a 
$4.5 million commission for the IBEX contract to a Bermuda company controlled 
by a multimillionaire friend of the Shah, Abolfath Mahvi. Mahvi was also the 
agent for huge computer contracts obtained by Electronic Data Systems, the Texas 
firm of H. Ross Perot. Perot and Mahvi set up a joint venture to program 
computers for the Iranian navy, which fell apart when Mahvi was placed on the 
blacklist by Gen. Hassan Toufanian (Washington Post, 3-10-80). Perot would 
become famous for springing imprisoned employees from a Tehran jail in a 
private commando raid, and later for supplying Oliver North with cash in a failed 
attempt to ransom U.S. hostages in Italy (Gen. Dozier) and Lebanon (William 
Buckley). 

62. Los Angeles Times, 12-7-86, 2-14-87; New YorkTimes, 10-13-81. 

63. Defense Electronics, February 1979. 

64. Wall Steet Journal 12-5-86; Washington Post, 1-27-80; Defense Electronics, 
February 1979. 

65. San Jose Mercury 1-18-87. 

66. Los Angeles Times, 2-14-87. 

67. Los Angeles Times, 2-14-87. 

68. San Francisco Examiner, 12-9-86. Hakim's role in the Iran arms deal may 
explain Shackley's involvement in 1984; Hakim had already discussed arms-for- 
hostage deals with Manucher Ghorbanifar earher that year (New 



Footnotes 281 



York Times, 12-16-87). 

69. Ironically, this assessment is shared even by Kermit Roosevelt, the CIA agent 
who helped bring the Shah to power in 1953, then went on to represent Northrop 
Corp. In the Middle East and the Shah's government in Washington. He told 
Robert Scheer that the Shah had been ill-advised to squander so much money on 
military hardware, having been "encouraged by some Americans, including 
President Nixon, that he could become the bulwark of the West in the Middle East 
and that he could carry the flag against the Soviet Union, against any other 
enemies. And 1 think that it was a very misplaced notion, but certainly the Shah 
believed it, and apparently Nixon believed it and 1 guess Henry Kissinger believed 
it. And by the time it was made clear that it wouldn't quite work, it was too late" 
(Los Angeles Times, 3-29-79). 

70. San Francisco Chronicle, 8-11-79. Sadegh Tabatabai and Khomeini's son 
Ahmed have both been linked to the 1985 U.S. -Iran talks (San Francisco 
Examiner, 11-15-86; ABC, 11-21-86). 

71. Washington Post, 11-19-79 (Jack Anderson). 

72 No Hiding Place, 157 

73. Ibid., 150; Los Angeles Times, 12-20-79; Miami Herald, 12-25-79; 
Washington Post, 12-29-79; Claudia Wright, "Buried Treasure at Chase 
Manhattan?" op. cit. Chase froze Iran's assets on a blatantly false pretext and thus 
managed to stave off a potentially crippling outflow of deposits (see Rep. George 
Hansen statement, March 26, 1980, Congressional Record H2249). 

74. Clearly at some point, opportunism about the hostages also took hold. 

75. Remarks to Nation, 11-13-86. 

76. Cf. Washington Times, 12-1-86, on Afghanistan. 

77. Washington Post, 11-5-86. 

78. New York Times, 11-23-86. 

79. New York Times, 4-3-86; Wall Street Journal, 4-7-86. 

80. Oil and gas interests are reportedly major contributors to Bush's political 
action committee, Fund for America's Future (New York Times, 4-3-86). Texas 
bankers are no less happy at the prospect of an oil rise, it should be emphasized. 
The U.S. Comptroller of the Currency notes that the S18-a-barrcl price "could 
generate enough cash flow where some of the currently non-performing loans will 
begin to perform" (Los Angeles Times, 12-24-86). Some Texas banks have as 
much as 20 percent of their loan portfolio in the energy sector (New York Times, 
4-3-86). 

81. New York Times, 11-23-86,4-3-86. 

82. San Francisco Examiner, 12-7-86. 

83. Cf. San Francisco Chronicle, 11-29-86, re: allegations against Bush by 
Richard Brenneke. 

84. Los Angeles Times, 11-14-86. 

85. The Saudis had already opened modest lines of communications by sending 
their foreign minister. Prince Saud Faisal, to Tehran in May 1985. That 
December, the Iranians reciprocated by sending Foreign Minister Ali 



282 



The Iran-Contra Connection 



Akbar Velayati to Riyadh (Washington Post, 12-5-86). 

86. Washington Post, 11-5-86; New York Times, 11-23-86; Los Angeles Times, 

11- 27-86; Wall Street Journal, 12-29-86. 

87. San Francisco Chronicle, 11-19-86; San Francisco Chronicle, 4-3-85; 
Economist, 6-25-83. 

88. Quoted in Sheldon Riehman, "The United States and the Persian Gulf," Cato 

Policy Analysis, No. 46 (Washington DC: Cato Institute, 1985). 

89. Dennis Ross, "Soviet Views Toward the Gulf War," Orbis XXVIII (Fall 
1984), 438. 

90. New York City Tribune, 5-1-85; Washington Times, 11-25-86. 

91. Los Angeles Times, 12-21-86. 

92. New York City Tribune, 5-1-85. 

93. New York Times, 11-25-86. 

94. Los Angeles Times, 12-21-86. 

95. New York City Tribune, 5-1-85; Washington Times, 11-25-86. 

96. Washington Post, 11-18-86; Los Angeles Times, 12-13-86; New York Times, 

12- 23-86. 

97. TaNea, 12-2-86. 

98. New York City Tribune, 5-1-85; Washington Times, 1 1-25-86. 

99. Los Angeles Times, 12-13-86; Washington Times, 12-15-86. 

100. At most, 100 of the 2008 TOW missiles shipped to Iran were transferred to 
the mujaheddin (Wall Street Journal, 11-24-86). 

101. Los Angeles Times, 12-2-86. 

102. Among others directing this intelUgence net was Max Hugel, who Casey put 
in charge of covert operations at the CIA in 1981 (San Jose Mercury, 8-16-83). 

103. San Francisco Chronicle, 7-22-80. 

104. Ed Meese received one memo indicating that the commander of the Strategic 
Air Command wanted to "blow Jimmy Carter out of the water" (Washington Post, 
3-17-84). 

105. Power Peddlers, 46-49. 

106. Referring here to a network organized by Reagan campaign aide Adm. 
Robert Garrick (Ret.). 

107. Time, 7-25-83. 

108. New Yorker, 8-1-83. 

109. Rebel, 11-22-83. Certain facts could suggest that the Soviets, at least, 
believed those leaks. In August, the Soviets mounted a major military exercise 
aimed at simulating an invasion of Iran, of the sort permitted by the Iran-USSR 
friendship treaty in case an outside force (such as the United States) violates Iran's 
sovereignty (New York Times, 12-15-86). 

110. Washington Post, 6-10-84. 

111. Rebel, 11-22-83. 

112. Ibid. 

113. Washmgton Post, 10-24-86; Miami Herald, 10-11-86. 

114. New York Times, 1-16-87; MidEast Report, 12-19-86. 



Footnotes 283 



115. New York Times, 11-17-86. 

116. San Francisco Chronicle, 11-29-86. For indications that the plan may have 
been put into effect, see People's Daily World, 2-13-87. 

117. New York Times, 11-9-86. 

118. US. Rebel, 11-22-83. 

119. Washington Post, 12-2-86. 

120. Washington Post, 11-8-86; New York Times 12-6-86. 

121. San Jose Mercury, 12-12-86. 

122. Col Charlie Beck with and Donald Knox, Delta Force, 193. 

123. AP, 11-11-86. 



Footnotes to Chapter VIII 



1. The Tower Commission Report (hereafter TCR) (NY: Bantam Books, 1987), p. 
98. 

2. The evidence is limited by the failure of the Israeli government to cooperate 
with U.S. investigations to date. The Tower Commission reported, "The 
government of Israel was asked to make certain individuals available in any way 
that would be convenient to them. They decUned to do so. They agreed to answer 
written interrogatories. We dispatched those to the government of Israel but no 
response has, as yet, been received." TCR, p. 18. 

3. New York Times, 11-22-86. 

4. New York Times, 1-18-87. 

5. Ha'aretz, 11-18-86. 

6. New York Times, 11-8-86. 

7. Amiram Nir, quoted in memorandum by Craig Fuller, an aide to George Bush 
(San Jose Mercury, 2-8-87). 

8. "Israel: Foreign Intelligence and Security Services," March 1979 CIA report 
reprinted in Counterspy, May- June 1982. 

9. Bishara Bahbah, "Arms Sales: Israel's Link to the Khomeini Regime," 
Washington Report on Middle East Affairs, January 1987, p. 10. 

10. Rene Theberge, "Iran: Ten Years After the 'White Revolution'," MERIP 
Reports, no. 18 (June 1973), 19. 

11. Observer, 2-2-86; New York Times, 4-1-86. 

12. Thus Iran's air force commander, Gen. Mohammed Khatemi, deposited some 
of his commission payments — really bribes — in the Swiss Israel Trade Bank of 
Geneva (Washington Post, 1-27-80). 

13. Christopher Payne, unpubUshed ms. 

14. Davar, 11-29-85. 

15. London Times, 12-1-86. 

16. Observer, 11-30-86. 

17. Davar 11-29-85; Washington Post, 12-14-86. Although Nimrodi was a high- 
ranking Mossad agent, the head of the Mossad mission in the last days of the Shah 
was apparently Uri Lubrani, former Israeli ambassador to Ethiopia 



284 



Footnotes 285 



(Ledeen and Lewis, Debacle, 125). 

18. Israel & Palestine, June 1986,16-17; San Francisco Examiner, 11 -2 8-86; San 
Francisco Chronicle, 11-12-86. 

19. Haaretz, 11-21-86. 

20. Haaretz, 12-5-86. 

21. Los Angeles Times, 1-25-87. 

22. Ha'aretz, 11-28-86. 

23. New York Times, 2-1-87, referring to a 1985 deal. 

24. Former Israeli air force commander, Gen. Mordcchai Hod, gave a public hint 
of official policy in an interview with the Israeli newspaper Ma'ariv on September 

25. 1980. After raising the possibility that Iran's air force would coUapse, he 
suggested "an IsraeU initiative toward a rapprochement with (Iranian President) 
Bani-Sadr to offer him the aid which we alone are capable of furnishing him" 
(quoted in Executive Intelligence Review, 10-14-80). 

25. Los Angeles Times, 1-25-87. 

26. Time, 7-25-83; Middle East, January 1982. 

27. "Israel's Foreign Policy: The End of an Illusion," reprinted in Al Fajr. 

28. New York Times, 11-22-86. 

29. Contract reproduced in "Documents on Israeli Arms Supplement for 
AyatoUah Khomeini," extracted from Mujahed, issue no. 159, July 7, 1983. 
Nimrodi claims to have had no dealings with the Khomeini regime, and "informed 
observers" say Nimrodi believes the above cited contract "was forged by pro- 
Iranian groups bent on incriminating Israel and himself in illicit arms dealings" 
(Jerusalem Post, 12-1-86). 

30. Observer, 11-30-86. 

31. Washington Post, 12-21-86. 

32. Sunday Times, (London), 7-26-81; Middle East, January 1982. 

33. San Francisco Chronicle, 1 1-29-86; cf. Washington Post, 12-1-86. 

34. San Francisco Chronicle, 11-29-86. 

35. Washington Post, 5-28-82. 

36. Wall Street Journal, 11-28-86. Note the similarity to the CIA's false 
"admission" to Robert Kennedy that Mafia-backed plots to assassinate Fidel 
Castro had been initiated in the past but were no longer underway. Likewise, the 
CIA took the Kennedy's failure to complain about plots of which they had no 
knowledge as evidence of approval. 

37. Ibid., (including the Paul Cutter and Gen. Bar Am cases). 

38. Besides the air shipments, Israel made good use of sea routes for heavy loads. 
The Danish Sailors Union handled at least 3,600 tons of Israeli arms bound for 
Iran (Los Angeles Times, 11-17-86; New York Times, 11-9-86). Washington was 
not informed of these shipments, nor of Jonathan Jay Pollard's espionage mission 
for Israel to turn up U.S. studies of foreign missile systems that "might be 
available for sale to Iran" (Newsday, 8-21-86). Pollard focused on Cactus, the 
South African version of the French Crotale missile (IsraeU Foreign Affairs, 
October 1986). The sensitivity of this assignment was shown by the fact that 
Pollard called his wife soon after his arrest, asking her to destroy 



286 



The Iran-Contra Connection 



the "cactus." 

39. Boston Globe, 10-21-82. 

40. Washington Post, 5-28-82; Boston Globe, 10-23-82. 

41. Jerusalem Post, 11-25-86. 

42. Observer, 9-29-85. 

43. New York Times, 3-8-82, 11-23-86. 

44. Aerospace Daily, 8-18-82. 

45. Israel and Palestine, June 1986, 16-17. 

46. Newsweek, 12-8-86. 

47. Newsweek, 1-28-85. 

48. Dagens Nyheter (Stockholm), 6-16-86. There is a South African connection 
here. Schmitz also reportedly arranged the sale of South African explosives to 
han, and used Danish shipping companies that had previously been implicated in 
smugghng arms to South Africa. 

49. World Press Review, October 1985. 

50. Washington Post, 1-12-87. 

51. Time, 12-22-86. 

52. New York Times, 12-6-86. 

53. On his escapades with Italian inteUigence see Chapter IV. "Secrecy is often 

required," he has argued, "not because we have anything to be ashamed of, but 
because those who are actually doing the fighting wish for reasons of their own to 
keep our relationship secret" (Michael Ledeen, "Fighting Back," Coimnentary, 
August, 1985). 

54. New Statesman, 12-6-86. 

55. Washington Post, 2-2-87; Washington Report on Middle East Affairs, March 
1987. 

56. Senate Select Committee on Intelligence, Report on Preliminary Inquiry Into 
the Sale of Arms to Iran and Possible Diversion of Funds to the Contras (January 
29, 1987), 3. Hereafter cited as SSCI. 

57. Chicago Tribune, 11-16-86. 

58. Ledeen denies that he brought up the question of hostages. 

59. McFarlane described Schwimmer as "a Jewish American who provides lots of 
money to Peres" (TCR, p. 526). Schwimmer's expertise in using offshore dummy 
companies and friendly foreign governments (Somoza's Nicaragua) for arms 
smuggling dated back to 1948 (Leonard Slater, The Pledge (Simon and Schuster, 
1970), p. 223. 

60. Ha'aretz, 12-5-86. 

61. London Times, 12-1-86. 

62. TCR, p. 111. Gazit was a participant at the 1979 Jerusalem Conferance on 
International Terrorism (see Chapter X). 

63. TCR, p. 24 

64. Ha'aretz, 12-5-86; Los Angeles Times, 12-6-86. 

65. Ibid.; TCR, p. 529. 

66. New York Times, 12-11-86. 

67. Wall Street Journal, 11-13-86. 



Footnotes 287 



68. Los Angeles Times, 12-28-86; New York Times, 1-17-87; TCR,p. 24. Deputy 
CIA Director John McMahon cabled Casey in January 1986: "Everyone at HQ is 
opposed to weapons support and intelligence transfer because the Principal 
(Ghorbanifar) is a liar and we will be aiding and abetting the wrong people" (Wall 
Street Journal, 2-26-87). 

69. New York Times, 1-31-87. 

70. Quote from CIA memorandum. TCR, p. 208. 

71. Washington Times, 12-3-86. 

72. Boston Globe, 12-14-86; Los Angeles Times, 12-28-86; Washington Post, 2- 
12-87. 

73. SSCL p. 23. 

74. SSCI, p. 32, referring to Amiram Nir, special adviser on terrorism to Prime 
Minister Peres. 

75. San Francisco Chronicle, 1-31-87. Ghorbanifar made similarly false hit-team 
allegations in March and December 1985 in order to curry favor with the 
administration while pursuing his arms deals (TCR, p. 204). 

76. New York Times, 1-11-87; Tribune (Oakland), 1-12-87. The Tower 
Commission wrongly dated these meetings from January 1985, but even its 
chronology makes clear that Israel's moves predated Ledeen's exploratory mission 
(TCR, p. 208). 

77. New York Tunes, 2-1-87. 

78. TCR, pp. 106-107. Shackley apparently passed his report first to Vernon 
Walters, former CIA deputy director and the roving ambassador who lined up 
Argentine assistance to the contras in 1981 (TCR, p. 521). Note that Ghorbanifar 
also tried to interest the United States through another alleged CIA agent, William 
Herrmann (San Francisco Chronicle, 12-29-86). 

79. New York Times, 1-16-87. 

80. TCR, p. 123. To further complicate the picture, Iranian sources in Europe 
reportedly claim that Ledeen had met Ghorbanifar in October 1984 and again in 
April 1985, suggesting that he was an active manipulator of Washington poUcy 
rather than a passive transmitter of Israeli suggestions Washington Report on 
Middle East Affairs, March 1987). 

81. New York Times, 1-31-87. 

82. TCR, pp. 135, 150, 286, 83. Casey noted in a memo that "Peres and (Defense 
Minister) Rabin have put their reputation on the Ghorbanifar connection" (TCR, 

p. 377). 

83. Cf Los Angeles Times, 1 1-27-86; New York Times, 1 1-22-86, 1 1-26-86. 

84. Ibid. 

85. London Times, 12-1-86. 

86. New York Times, 12-23-86. 

87. Washington Post, 12-5-86. 

88. New York Times, 1 1-26-86; Los Angeles Times, 11-27-86. 

89. Chicago Tribune, 8-3-86. 

90. IsraeU Foreign Affairs, June 1986. 



288 



The Iran-Contra Connection 



91. New York Times, 11-26-86. 

92. MidEast Report, 12-19-86. 

93. TRC,p. 23. 

94. New York Times, 12-11-86. 

95. Los Angeles Times, 1-11-87. 

96. San Francisco Chronicle, 11-21-86. 

97. New York Times, 1-11-87, 1-17-87. 

98. SSCI, p. 2. 

99. TRC, p. 124; SSCI Report, p. 4. 

100. Ibid. 

101. The two reportedly had helped secure Pentagon funding for private "think- 
tank" studies that buttressed their case for the Israeli-brokered arms deals with 
Iran. (Ta Nea, 12-2-86; MidEast Markets, 12-8-86; New York Times, 11-27-86; 
Los Angeles Times, 12-13-86. 

102. TRC, p. 112-14. 

103. TCR, pp. 21,116. 

104. TCR, p. 22; Los Angeles Times, 12-28-86. 

105. TCR,p. 118. 

106. He came twice, on July 3 and August 2 (Wall Street Journal, 11-10-86, 11- 
13-86; San Francisco Chronicle, 11-20-86; New York Times, 11-22-86; Time, 12- 

22-86). 

107. San Francisco Chronicle, 11-24-86. 

108. Los Angeles Times, 12-28-86. 

109. Time, 12-22-86. 

110. Wall Street Journal, 11-13-86. 

111. SSCL p. 5; TCR, pp. 25-26. 

112. SSCI, p. 5; TCR, P. 26. 

113. SSCL p. 5. 

114. SSCL p. 6,8. 

11 5. Time, 1-19-87. 

116. SSCL p. 6. 

117. SSCL pp. 6-7. 

118. New York Times, 12-6-86; Time, 12-22-86. 

119. SSCL p. 7. 

120. New York Times, 11-14-86; San Francisco Chronicle, 11-21-86; TRC, p. 
151. 

121. SSCI, p. 10-13. The CIA official who oversaw this operation, Duane 
Clarridge, had previously run the contra program. As noted above, he probably 
knew Ledeen from their days in Rome together in the 1970s. 

122. One notorious arms operation apparently sanctioned by the Israeli 
government resulted in the April 1986 arrest of a former IsraeU general and co- 
conspirators of several other nationalities, including Khashoggi's London-based 
lawyer. Their several schemes, taken together, would have supplied Iran with 
nearly S2.6 billion in U.S. arms, including sophisticated jet aircraft. The 



Footnotes 289 



plot leader said in one conversation taped by undercover agents that authority for 
the deal went "right through to Peres" (Chicago Tribune 4-24-86). 
Significantly, too, Israeli intelligence handlers at exactly this time were using their 
civilian Pentagon spy, Jonathan Jay Pollard, to produce a report, based on 
classified U.S. secrets, on missile systems that "might be available for sale to 
Iran" (Jerusalem Post, quoted in Baltimore Sun, 12-27-86). 
Even to this day, despite aU the publicity around Irangate, the Israeli trade with 
Iran apparently continues to flourish: 

"Each week for the past two years an Iranian agent attached to [Iran's London 
arms] procurement office has delivered a list of needed supplies to the military 
attache at the IsraeU embassy in London. High-level Iranian diplomatic sources 
say the list is then transmitted to Tel Aviv and fed through an IsraeU armed forces 
computer, which tracks where parts and weapons are available. The data are 
transmitted back to the Iranian agent in London for forwarding to Tehran. Israel is 
said to get 10%-to-20% commission on each contract" (Business Week, 12-29- 
86). 

123. SSCI Report, 14; Tune, 12-22-86; London Times, 12-1-86; San Francisco 
Chronicle, 1-12-87. Weinberger pointed out in the December 7 meeting that 
"attempting to keep it on a clandestine basis would leave us open to blackmail of 
the very most elementary kind by the people who knew about it, that is, the 
IsraeUs and also Iranians, and that any time they weren't getting what they wanted, 
they could in one way or another, in Mideast fashion, go public with it and cause 
all kinds of problems with it..." (TCR, p. 185). 

124. TCR, p. 37. 

125. Note that despite Ledeen's subsequent claims to have opposed arms-for- 
hostage deals, he is said by McFarlane to have proposed sending Tehran Phoenix 
air-to-air missiles, among the most lethal arms in the U.S. arsenal (TCR, p. 174- 
75). Ledeen was cut out of the official picture once U.S. officials began to suspect 
he was profiting on the side from the arms deals along with Schwimmer, Nimrodi 
and Ghorbanifar (TCR, pp. 237-39, 254; North memo on p. 253 notes 
"$50/missile to Ledeen"). Ledeen denies any financial gain. But he would stay 
meddUng in the arms operation almost to the bitter end, at least until October 1986 
(SSCI Report, p. 35). 

126. SSCI, p. 15. Note that Ledeen would stay involved in the arms operation 
almost to the bitter end, at least until October 1986 (SSCI, p. 35). 

127. TCR, pp. 193, 196. 

128. Tribune (Oakland), 1-11-87; TCR, p. 38. 

129. Los Angeles Times, 1-14-87. 

130. TCR, pp. 37, 213-14,202. 

131. January 17, 1986 memo reprinted in San Francisco Chronicle, 1-10-87. 

132. TCR, p. 38. 

133. Ibid. 

134. New York Times, 12-23-86, 12-24-86; Los Angeles Times, 12-20-86. 

135. TCR, pp. 41, 43. 



290 



The Iran-Contra Connection 



136. SSCI,p. 43; Los Angeles Times, 1-12-87; New York Times, 1-19-87; TCR, 
p. 53. 

137. TCR, p. 52. 

138. San Francisco Chronicle, 1-10-87; Tribune (Oakland), 1-11-87. 

139. SCCl, p. 42. 
140.SCCl,p. 44. 

141. SCCl, p. 22 

142. TCR, p. 257. Ghorbanifar claims Hakim tried to get him to quit the field by 
issuing phony instructions from President Reagan. TCR, p. 266. 

143. Wall Street Journal, 12-5-86. 

144. Southern. 1987, p. 22; cf. Wall Street Journal, 11-24-86. 

145. New York Post, 11-29-86; cf. SSCl Report, p. 24. 

146. Guardian 12-31-86. 

147. San Francisco Chronicle, 1-28-87. 

148. Yedi'ot Aharonot, 12-5-86. 

149. San Francisco Examiner, 3-4-87; Wall Street Journal, 3-5-87; New York 
Times, 3-18-87. 

150. San Francisco Examiner, 1-8-87; New York Times, 1-9-87; Tribune 
(Oakland), 1-11-87; SCCl, p. 22. Israeli officials were no less active on the other 
side of the deal. Evidence indicates that they were "helping out Ghorbanifar 
financially" and supplying other arms on the side to Iran (SCCl, pp. 22-23). 

151. Wall Street Joumal, 1-22-87. 

152. SCCl, pp. 32-35. 

153. New York Times, 12-7-86. 

154. New York Times, 11-23-86. 

155. New York Times, 1-17-87. 



Footnotes to Chapter IX 



1. The Defense Monitor, XIV (1985), no. 2. 

2. Aaron Bank, From OSS to Green Berets (Novato, Ca: Presidio Press, 1986); 
John Prados, President's Secret Wars (NY: Wilham Morrow, 1986), p. 89; 
NACLA Report on the Americas, July/August 1986 (on James Bumham's 
contribution to the doctrine of political-subversive warfare in East Europe). 

3. Nation, 7-7-84; Washington Post, 3-24-85 (Green Berets in Honduras); Miami 
Herald 12-19-82 (Deka Force in Honduras). 

4. St. Louis Post Dispatch 6-17-85; Newsweek, 4-22-85. 

5. The Defense Monitor, op. cit. 

6. New York Times, 11-26-86. 

7. Michael Klare, "The New U.S. Strategic Doctrine," Nation, 1-4-86. 

8. New York Times, 1-6-86. 

9. The fiscal 1981 special operations budget was $440 million. The administration 
is asking for $2.5 billion in fiscal 1988 (Report of the Secretary of Defense Caspar 
W. Weinberger to the Congress, January 12, 1987, p. 296; cf Washington Post, 8- 
6-86. 

10. Armed Forces Journal International, January 1986, p. 38; The Defense 
Monitor, op. cit. 

11. Quoted in "A Plan of War for Central America," Resource Center Bulletin 
(Albuquerque), 1986. 

12. Remarks to Association of Newspaper Editors, April 20, 1961, quoted in The 
Pentagon Papers (Gravel Edition), 11 (Boston: Beacon Press, 1975), 33-34. Special 
Forces units saw a six-fold growth under Kennedy, from 1961-63 (McClintock I, 
20). 

13. New York Tunes, 6-1-82; New York Tunes, 11-26-86. 

14. The Defense Monitor, XIV, no. 2, 1985. 

15. Los Angeles Times, 1 1-18-84. Lt. Col. Richard Brawn wrote of their mission, 
"Low-intensity conflict is a pseudonym for a war without full political support - a 
war without the needed political will" (Boston Globe, 7-10-86). An Army study in 
August 1986 concluded disparagingly, "As a nation, we do not understand low- 
intensity conflict, we respond without unity of effort; we execute our activities 
poorly; and we lack the abihty to sustain operations" 



291 



292 



The Iran-Contra Connection 



(New York Times, 11-26-86). Military officers have resisted bureaucratic 
restructuring of special operations units "in part out of a fear that such an 
arrangement would make it too easy for civilian leaders to send the commandos 
into action," according to the New York Times. Many officers "believe that under 
the present arrangement, the cautious nature of the military serves as 'a brake' on 
precipitate use of special forces" (New York Times, 1-6-86). 
Id New York Times, 6-8-84. 

17. The Pentagon Papers, II, 641-3; Simpson, 145. 

18. Shelby Stanton, Green Berets at War (SF: Presidio Press, 1985), 31. 

19. Stanton, Green Berets at War, 37. 

20. Charles Simpson, Inside the Green Berets (Novato, Ca: Presidio Press, 1983), 
p. 146. Former Air Force Colonel and CIA liaison Fletcher Prouty writes, "The 
important thing to understand is that the much-heralded office of SACSA had 
very few military responsibilities. It was almost entirely CIA oriented. Most of its 
deahngs with the services were in areas in which the CIA was most active" 
(Prouty, The Secret Team (Englewood Cliffs: Prentice Hall, 1973), 407. The 
recommendation for the shift of authority to the military came from the local CIA 
station chief, John Richardson, to the head of the Far East Division, Desmond 
Firzgerald, based on a 1961 National Security Action Memorandum, which 
"stated in essence that whenever a secret paramilitary operation became so large 
and overt that the military contribution, in terms of manpower and equipment, 
exceeded the resources contributed by the CIA, the operation should be turned 
over to the Department of Defense" (Stanton, Green Berets at War, 51). 

21. Peter Dale Scott, The War Conspiracy (Indianapolis: Bobbs Merrill, 1972), 
54, 159-60; Charles Simpson, Inside the Green Berets 114; Prados, Presidents' 
Secret Wars, 248-9, 299-303. 

22. James William Gibson, The Perfect War (Boston: Atlantic Monthly Press, 
1986), 298-305; Noam Chomsky and Edward S. Herman, The Washington 
Connection and Third World Fascism, I (Boston: South End Press, 1979), 322- 
328. 

23. Philadelphia Inquirer, 11-25-84. 

24. As one member of the Senate Select Committee on Intelligence told an 
interviewer, "We are aware of the existence of the special operations units but not 
sufficiently informed about their activities or their connection to intelligence 
operations. We are trying to learn more" (New York Times, 6-8-84, quote from 
Sen. Joseph Biden, D-Del). 

25. New York Times, 4-22-86. 

26. Some of these, in Vietnam, apparently were SOG infiltrations of North 
Vietnam. 

27. The money may have paid for Air Force personnel stationed illegally in Laos 
and other locations in the guise of civilian employees of Lockheed Aircraft 
Systems. This practice is known as "sheep dipping." (Oklahoman, 10-5-86). 
Richard Secord would certainly have been "witting" of this practice, which was 
prevelant at the time of his 1968 tour of duty. 



Footnotes 293 



28. Miami Herald, 2-10-83, 6-28-83; New York Times, 10-24-83. 

29. After one probe of a special operations front, Business Security International, 
which supported "classified, sensitive special operations units" involved in 
"military and foreign intelligence missions," the Army relieved three high ranking 
colonels of their duties and imprisoned the former head of the Special Operations 
Division. Yet one of their secret Swiss bank accounts remained open after the unit 
was disbanded in 1983, and was apparently used by North and Secord to fund the 
contras in 1985. The allegations included embezzlement, drugs and prostitution. 
Another investigation resulted in the discipline of some 80 members of the Delta 
Force, a full quarter of the unit, for financial irregularities (Washington Post, 8-22- 
85; San Francisco Chronicle, 10-19-84; San Jose Mercury, 2-17-87; New York 
Times, 4-22-87). 

30. Washington Post, 11-29-85. 

31. This was accomplished under an accounting arrangement known as "Parasol- 
Switchback" (Simpson, 165; Prados 253). 

32. Stilwell headed the Far East division of the CIA's Office of PoUcy 
Coordination, to which the NSC assigned all unconven-tional warfare 
responsibilities (John Prados, Presidents' Secret Wars, 35-36, 63). Recently he sat 
on the advisory committee of Americares Foundation which provides private aid 
to Central America. (Tom Barry and Deb Preusch, The Central America Fact 
Book, (Grove Press, 1986) p. 97). 

33. Gritz commanded the Third Mobile Strike (Mike) Force in Vietnam (Simpson, 
139). 

34. St Louis Post Dispatch 6-17-85 mentions role of Delta Force as well in Dozier 
rescue. 

35. New York Times, 5-11-83, 6-8-84; San Jose Mercury, 5-15-83; Newsweek, 4- 
22-85; Washington Post, 11-29-85; San Jose Mercury, 2-17-87. Contrary to 
reports of its demise, some evidence exists that ISA survived. A memo by Oliver 
North from June 3, 1986 said. We already have one ISA officer in Beirut..." 
(Tower Report) p. 152. 

36. Simpson, op. cit., 22. 

37. Nation, 7-7-84. "The start" goes back nearly to 1948, when the National 
Security Council expanded the CIA charger to include unconventional warfare 
activities on behalf of resistance and guerrilla groups. The Army at first resisted 
the CIA's seizure of UW authority, but gradually learned to demarcate its 
responsibilities from those of the intelligence agency (Aaron Bank, From OSS to 
Green Berets, 146ff). Cooperation was no doubt improved by the fact that both the 
military Special Forces and CIA reported to the White House through the same 
aide, C. D. Jackson (Charles Simpson, Inside the Green Berets, 16). 

38. Washington Post, 9-15-84, quoting Richard C. Lawrence. 

39. Washington Post, 11-19-85; Newsweek, 12-16-85. 

40. Prados, 320-1; Thomas Hauser, Missing (NY: Avon, 1978). One military 
intelligence unit implicated in the coup was the Navy's Task Force 157, for which 
Ed Wilson was a leading operative; see "Former CIA Agent 



294 



The Iran-Contra Connection 



Implicated in DP Contract Scam," Computerworld, 11-16-81. 

41. Senate Select Committee to Study Governmental Operations with Respect to 
Intelligence Activities, Staff Report, "Covert Action in Chile, 1963-1973" (WDC: 
U.S. GPO 1975), 26. 

42. Indeed, he "was notorious during a tour of duty in Guatemala, where he 
worked closely with right-wing death squads — so closely, in fact, that other CIA 
agents working in Guatemala demanded transfers elsewhere in protest" (Volkman, 
Warriors of the Night, 349). 

43. Michael McClintock, The American Connection, v. II (London: Zed, 1985). In 
Volume I McClintock notes that the commander of the Special Warfare Center at 
Fort Bragg, Gen. William Yarhorough, had recommended training "select civilian 
and military personnel for clandestine training" to undertake "paramilitary, 
sabotage and/or terrorist activities against known Communist proponents" in 
Colombia (23). These recommendation were put into effect elsewhere, including 
Vietnam where Special Forces organized irregular units for "committing terrorism 
against known VC (Viet Cong) personnel" and to "conduct operations to dislodge 
VC-controUed officials to include assassination" (24, quoting official U.S. 
documents). 

44. Nation, 7-7-84. 

45. Washington Post, 9-15-84; Boston Globe, 1-3-87. Richard Gadd, a figure in the 
private contra supply operation, may have played a role in Elephant Herd while 

still at the Pentagon. 

46. The Defense Monitor, XIV (1985) no. 2; Prados, 388. 

47. Philadelphia Inquirer, 12-16-84. The unit was the 160th Task Force. 

48. Peter Maas, Manhunt, 26 

49. Maas, 89. According to Jack Anderson, at least four of these Special Forces 
veterans "had been members of the ultra-secret CIA A Team' that went after 
(Che) Guevara. Each team member wore a gold ring with 'Che' engraved on the 
inside" (Santa Cruz Sentinel, 3-29-83). In all probability, these individuals knew 
and had worked closely with Felix Rodriguez, the contra supply specialist 
working out of Ilopango air force base in El Salvador. 

50. Maas, 90-1; New York Times, 7-14-81. 

51. Maas, 66-68. On Quintero, see chapter III. 

52. Goulden, 189-90, 201, 243, 273ff; New York Tunes, 7-14-81 (China Lake). 

53. Newsweek, 3-8-82. 

54. Still unexplained is the fact that two counterintelligence officers at Fort Bragg 
told Special Forces master sergeant Luke Thompson, one of Wilson's recruits, that 
"We've checked this to the top and it's legal and aboveboard," referring to the 
claim that Wilson's operation was CIA-sanctioned (New York Times, 8-26-81). 

55. New York Times, 12-9-81; MH 9-11-78. 

56. Allan Nairn, "The Contras' Little List," Progressive, March 1987, 24. 

57. See especially Wall Street Journal, 2-13-87. 

58. The Laos war involved both the interdiction of North Vietnamese 



Footnotes 295 



supply lines and the training of Hmong tribesmen by Special Forces personnel to 
resist the military advances of the indigenous, but North Vietnamese supported, 
Pathet Lao communists. 

59. Maas, 26-31; San Francisco Chronicle, 11-24-86. 

60. Washington Post, 11-8-86; Newsweek, 4-22-85; Insight, 1-12-87; San Jose 
Mercury, 12-12-86. 

61. San Jose Mercury, 2-17-87. Nation, 1-17-87; New York Times, 4-22-87. 

62. Washington Post, 12-12-86. Secord left after refusing to fill out a personal 
financial disclosure form that would have revealed his deals with Albert Hakim on 
the Iran-contra plots (Philadelphia Inquirer, 12-5-86). His fellow panel member, 
retired Gen. LeRoy Manor, had played a key planning role with Secord in the 
1980 hostage rescue mission and, before that, in the Nugan Hand Bank. 

63. Boston Globe, 12-30-84; Nation, 11-2-85; Detroit Free Press, 2-11-86; New 
Statesman 1 1-2-84; John Prados, Presidents' Secret Wars, 270. 

64. Washington Post, 12-10-84; Boston Globe, 12-30-84; New York Times, 10- 
22-86. The Central America Fact Book, op. cit. p. 97. 

65. San Jose Mercury, 12-12-86. 

66. Los Angeles Times, 7-27-86; Newsweek, 11-3-86. 

67. Washington Post, 12-5-86; Tribune (Oakland) 12-21-86; San Francisco 
Examiner, 2-19-87. 

68. Wall Street Journal, 2-13-87; San Jose Mercury, 11-2-86; Associated Press, 
11-11-86; San Jose Mercury, 12-12-86. 

69. San Francisco Examiner, 2-19-87. 

70. Newsweek, 7-12-82; Prados, 364; cf. Private Eye, 3-11-83. On the scouting 
role of Green Berets in the 1980 mission, see also New York Times, 12-9-81. 

71. Boston Globe, 12-30-84; Nation, 11-2-85; MH 2-15-86; Nation, 10-6-84. 

72. The Son Tay raid was led by Gen. LeRoy Manor — later a figure in the Nugan 
Hand Bank scandal and the 1980 Iran hostage rescue mission. 

73. Rebel, 11-22-83; Washington Post, 12-2-83; New York Times, 12-15-86; 
Prados, 364). 

74. Associated Press, 11-11-86; Col. Charlie Beck with and Donald Knox, Delta 
Force, 193. 

75. San Francisco Chronicle, 4-1 1-86; Defense Monitor, 1985, no. 2. 

76. Armed Forces Journal International, January 1986, p. 39. 

77. Baltimore Sun, 4-1-85. Koch had, in fact, been a lobbyist for the Zionist 
Organization of America before joining the Pentagon (Claudia Wright, Spy, Steal 
and Smuggle (Belmont, MA: AAUG Press, 1986, 15). 

78. SSCI report, p. 19; TCR, p. 246. 

79. And according to Jack Anderson, Armitage was questioned by the President's 
Commission on Organized Crime about his close relationship with a Vietnamese 
refugee linked by law enforcement officials to organized crime (Washington Post, 
1-30-87). 



296 



The Iran-Contra Connection 



80. Washington Report on Middle East Affairs, March 1987; Newsweek, 12-1- 
86; New York Times, 12-14-86, 12-23-86; Boston Globe, 1-11-87. Armitage sat 
in with Koch on the Feb. 1986 logistics meeting for the Iran arms shipments. 

81. Wall Street Journal, 12-1 1-86; New York Times, 12-14-86. 

82. Washington Times, 12-1-86; New York Times, 2-1-87; San Francisco 
Examiner, 2-2-87. 

83. Washington Times, 12-12-86; The New Republic, 11-24-86; Miami Herald, 
10-14-86; Nation, 7-7-84. 

84. San Francisco Examiner, 2-19-87. 

85. New York Times, 1-15-87. 

86. San Jose Mercury, 1-1-87; Nation, 1-17-87. 

87. Along with Secord, he is also reported to have played some role in the Army's 
controversial Intelligence Support Activity (San Jose Mercury, 2-17-87). 

88. House Armed Services Committee press release, August 5, 1985. 

89. Armed Forces Journal International, August 1986, p. 12. 

90. Section 1 (16), S.2453, "A bill to enhance the capabilities of the United States 
to combat terrorism and other forms of unconventional warfare;" cf. Armed 
Forces Journal International, June 1986, p. 18. 

91. Congressional Record, May 15, 1986. 

92. Armed Forces Journal International, January 1986,42. 

93. Conference Report to Accompany H.J. Res. 738 (WDC: U.S.GPO 1986), 

128ff. 

94. U.S. News and World Report 1-19-87. 

95. Inside the Pentagon, 1-1-87. 



Footnotes to Chapter X 



1. Washington Post, 2-22-87, 2-24-87. 

2. The Tribune (Oakland), 2-27-87. 

3. See excerpts from press conference. New York Times, 2-27-87. 

4. TCR, p. 3. 

5. Ibid. p. 98. 

6. San Jose Mercury, 10-16-86. 

7. Jay Peterzell, "Legal and Constitutional Authority for Covert Operations," First 
Principles, X (Spring 1985), 1-3. 

8. Ibid. 

9. New York Times, 5-2-76. 

10. New York Times, 5-12-76. 

11. San Francisco Chronicle, 3-11-80. One operation not reported to Congress by 
Carter also involved Iran — the escape of six U.S. diplomats in Tehran who had 
hidden in the Canadian embassy (Washington Post, 3-3-80). 

12. New York Times, 1-11-80. 

13. Washington Post, 2-22-80. 

14. Washington Post, 3-26-80. Perhaps the media's role in obscuring the realities 
involved and the public's doubt that any opinion it might have will be heard and 
acted upon have something to do with the public's not being eager to spend much 
time addressing the matter. After all, the purpose of the secrecy was, in the first 
place, largely preventing the public from knowing enough to have any opinion at 
all. 

15. Jay Peterzell, "Can Congress Really Check the CIA?" First Principles VllI 
(May- June 83), 3. 

16. John Ranelagh, The Agency (New York: Simon and Schuster, 1986), 660. 
M.Los Angeles Times, 4-19-84. 

18. New York Times, 5-14-84. 

19. New York Times, 10-1-85 cf. Congressional Quarterly Weekly, March 7, 
1987, pp. 411-13. After Oliver North misinformed the House intelligence 

committee about the extent of his efforts on behalf of the contras, his boss 
Admiral Poindexter remarked, "Well done" (New York Times, 2-27-87). 



297 



298 



The Iran-Contra Connection 



20. New York Times, 5-28-82. 

21. New York Times, 5-14-84. 

22. Jonathan Marshall, "Drugs and United States Foreign Policy," Dealing With 
Drugs (Forthcoming, Lexington Books, 1987). 

23. Washington Post, 3-10-80. 

24. Perhaps the first significant warning of the narcoterrorist threat came in 1974 
from Argentina's Minister of Social Welfare, Jose Lopez Rega. Speaking on 
television to publicize the collaboration of his country and the United States in 
drug enforcement, Lopez Rega announced, "Guerrillas are the main users of drugs 
in Argentina. Therefore, the anti-drug campaign will automatically be an anti- 
guerrilla campaign as well." The deadly irony was that Lopez Rega was himself a 
terrorist (the organizer of the Argentine Anticommunist Alliance death squad) and 
on prominent cocaine trafficker. See Jonathan Marshall, "Drugs and United States 
Foreign Pohcy," op. cit. Michael Ledeen, a chief protagonist in this strategy of 
tension, joined the narco-terrorist bandwagon with his accusation that the 
Sandinistas were masterminding "a vast drug and arms-smuggling network to 
finance their terrorists and guerrillas, flooding our country with narcotics" (New 
York Times, 4-16-84). See chapter IV. 

25. Philip PauU, "The Jerusalem Connection," unpublished ms., 1981. One of the 
Israelis in attendance was former military intelligence director Shlomo Gazit, who 
led the Israeli group that persuaded the Reagan administration in 1985 to enter the 

arms for hostages deal with Iran. TCR, p. 111. 

26. Wall Street Journal, 7-26-79. The conference results were, in effect, written up 
by Robert Moss in "Terror: A Soviet Export," New York Times Magazine, 11-2- 
80. Four months later the same magazine ran another article on the identical 
subject by fellow conference participant Claire SterUng. 

27. Jerusalem Post, 1-18-82. 

28. New York Times, 4-21-81. 

29. New York Times, 5-3-81. 

30. Washington Post, 1-29-81. 

31. Claire Sterling, "Terrorism: Tracing the International Network," New York 
Times Magazine, 3-1-81, 19). 

32. Clare Sterling, The Terror Network, (NY: Holt, Rhinehart, and Winston, 
1981), p. 2. 

33. New York Times, 3-29-81, 10-18-81. 

34. New York Times, 5-3-81. 

35. Edward Herman and Frank Brodhead, The Rise and Fall of the Bulgarian 
Connection (NY: Sheridan Square PubUcations, 1986), 135-136. 

36. New York Tunes, 2-9-81. 

37. Blaine Harden, "Terrorism" Washington Post Magazine, 3-15-81 p. 16. 

38. New York Times, 4-27-81. 

39. New York Times, 4-24-81. 

40. Washington Post, 2-7-81. Cf. Michael Ledeen and Amaud de Borch-grave, 
"Terrorism and the KGB," Washington Post, 2-17-81, p. 19: "Given the crisis of 
the American intelUigence community, our allies may not be sharing all 



Footnotes 299 



their information." The message was clear: Congress should cut back on its 
oversight to restore the confidence of allies in the CIA's ability to keep secrets. 

41. Harden, op. cit., p. 21; Washington Post, 5-16-81. Ledeen was to share an 
office with Vernon Walters, whose main job seemed to be to restore good 
relations with the military dictatorships of Argentina, Guatemala and other 
countries whose murderous policies had provoked cutoffs of U.S. aid in the 1970s. 

42. Wall Street Journal, 4-9-81. 

43. Washington Star, 2-13-81. 

44. New York Times, 2-19-81. 

45. New York Times, 4-6-81. See chapter IV. 

46. Washington Post, 2-21-81. 

47. New York Times, 4-21-81. 

48. Baltimore Sun, 3-13-81. 

49. Wall Street Journal, 10-16-81. 

50. Washington Star, 3-17-81. 

51. Miami Herald, 3-13-81. 

52. New York Times, 6-11-84, 9-30-84, 7-7-76; Joseph Lelyveld, "The Director," 
New York Times Magazine, 1-20-85. 

53. New Republic, 3-7-81. 

54. Washington Post, 9-22-81. 

55. San Jose Mercury, 10-26-81. 

56. Corriere della sera, 10-27-81. 
51. Newsweek, 11-9-81. 

58. More likely, the man who shot and wounded him was Chapman's unhappy 
Moroccan lover (New Statesman, 12-25-81). 

59. Tribune (Oakland), 11-16-81. 

60. Philadelphia Bulletin, 11-22-81. 

61. Newsweek, 11-30-81. 

62. Miami Herald, 12-11-81. 

63. Washington Post, 12-8-81. 

64. Washington Post, 12-7-81. 

65. Washington Post, 12-8-81. 

66. Washington Post, 12-8-81. 

67. Miami Herald, 12-25-81. 

68. San Francisco Chronicle, 1-31-87. 

69. Los Angeles Times, 12-12-81. Jack Anderson added that the chief source 
'demanded $500,000 for his information" and "provided the names of some 
buddies in Beirut who would be willing to sell information on the drug traffic. The 
CIA recognized some of them as hustlers who had been peddling phony 
documents for years. ..Some of the informers are known to have connections with 
Israeli intelligence, which would have its own reasons to encourage a U.S. -Libyan 
rift" (Washington Post, 1-7-82). 

70. New York Times, 3-10-81. 

71. New York Times, 11-5-81. 



300 



The Iran-Contra Connection 



72. New York Times, 12-5-81. 

73. New York Times, 12-3-86, 2-19-87, 2-21-87; Los Angeles Times, 12-5-86,2- 
11-87. 

74. New York Times, 12-7-81, emphasis added. 

75. New York Times, 6-6-84; ef Tribune (Oakland), 12-29-83 on the renewed 
enthusiasm of the military chiefs for special operations forces. 

76. Senator William Cohen defended his bill (passed in late 1986) to ensure 
representation on the NSC and in the Pentagon of SOF advocates, as "necessary to 
ensure that counterterrorist and counterinsurgency operations are properly 
integrated into the overall framework of U.S. policy" (Congressional Record, 5- 
15-86). His S2453 was entitled, "A bill to enhance the capabihties of the United 
States to combat terrorism and other forms of unconventional warfare." 

77. Los Angeles Times, 4-15-84; San Francisco Examiner, 4-22-84; San Jose 
Mercury, 2-22-87 (North). 

78. Jeff McConnell, "The Counterterrorists at the Fletcher School," Boston 
Review, August 1986, p. 20. 

79. Tribune, 6-25-84. 

80. New York Times, 6-6-84. 

81. William Casey, "International Terrorism," Vital Speeches, 9-15-85, p. 713. 

82. New York Tunes, 6-19-85. 

83. As just one example, the Tower Commission reported that "From January to 
March 1986, LtCol. North received fifteen encryption devices from the National 
Security Agency for us in transmitting classified messages in support of his 
counterterrorist activities. Those devices enabled LtCol. North to establish a 
private communication network. He used them to communicate outside of the 
purview of other government agencies, with members of the private contra 
support effort" (TCR, p. 462). 

84. San Jose Mercury, 2-22-87. 

85. Wall Street Journal, 2-20-87. 

86. Ibid.; Time 2-2-87. Clarridge knew much about terrorism. He had planned the 
mining of Nicaragua's harbors with North and had approved issuance of the 
notorious CIA guerrilla warfare manual advocating selective assassinations of 
civilians as an appropriate tactic for the contras (New York Times, 1-21-87; San 
Francisco Chronicle, 2-9-87). 

87. San Francisco Examiner, 2-19-87; Wall Street Journal, 2-20-87. 

88. San Jose Mercury, 2-22-87. 

89. Newsweek, 3-2-87. 

90. San Jose Mercury, 2-22-87. North was reportedly put in charge of the Iran 
arms operation "with logistical help from a newly created CIA counter-terrorism 
office. The elaborate plan kept the administration's top officials in the dark" (Wall 
Street Journal, 12-18-86). 

91. New York Times, 1-3-87, 12-22-86, 1-27-87; Wall Street Journal, 3-5-85. On 
Koch, see chapter IX. 



Footnotes 



92. TCR, p. 47, 246, 266, 376. 

93. San Jose Mercury, 3-8-87. 

94. Time, 2-2-87. 

95. TCR, p. 536. 

96. Ibid. p. 205. 

97. Ibid. p. 202-06, 240. 

98. James Bamford, "Carlucci and the NSC," New York Times Magazine 1-18 

99. Washington Times, 2-3-87. 

100. Congressional Quarterly Weekly, March 7, 1987, pp. 414-15. 



Footnotes to Chapter XI 



1. Such a sweeping hypothesis cannot be argued here. Cf. Perry Anderson, 

Passages from Antiquity to Feudalism (London: Verso, 1978), pp. 29-103 (Athens, 
Rome); Lineages of the Absolutist State (London: Verso, 1979), pp. 60-84 (Spain); 
Femand Braudel, The Mediterranean and the Mediterranean World in the Age of 
Philip II (London: Collins, 1972), esp. I, 463-642 (Spain); Robert Gilpin, U.S. Power 
and the Multinational Corporation: the Political Economy of Foreign Direct Investment 
(New York: Basic Books, 1975) (England, United States). It is now offten 
forgotten that Castile was one of the first medieval kingdoms of Europe to 
develop a parliamentary Estates system (Anderson, Lineages, p. 63). 

2. Washington Post, February 16, 1987 (see Chapter XI). 

3. Although Hakim has always been presented in the press as a "private" arms 
dealer, we should not forget that CIA Director Casey found reason to grant him 
U.S. citizenship, on the CIA's quota, in 1983 (see Chapter III). 

4. Predictably, the reaction of the "responsible" press to the Tower Commission 
report of February 1987 was to characterize it as "a depiction not of inadequate 
institutions but of inept stewardship" (New York Times, February 27,1987). This 
particular bill of health for the institutional status quo came from the Times's R.W. 
Apple, the same man who in the midst of Watergate assured his readers that "it 
would not be easy in Washington to find anyone who knew [CIA Director] Dick 
Helms and ever doubted his word" (The Watergate Hearings, as edited by the staff of 
the New York Times [New York: Bantam, 1973], p. 57). In 1977, Helms pleaded 
nolo contendere to two misdemeanor charges of having misled the Senate Foreign 
Relations Committee in his testimony of February and March 1973 (Ranelagh, p. 
612). 

5. Nor is Congress likely, any more than during Watergate, to look at the floods of 
illegal foreign contributions which have helped to make 



302 



Footnotes 303 



Congress what it now is (many of the more courageous critics having been 
exemplarily defeated by South African or South Korean funds). Cf. Chapter IV. 

6. "The Talk of the Town," The New Yorker, February 23, 1987, p. 25. For 
considered thought towards a new foreign policy stance for the Democratic Party, 
see Sherle R. Schweiminger and Jerry W. Sanders, "The Democrats and a New 
Grand Strategy," World Pohcy Journal (Summer 1986, Winter 1986-87), pp. 369- 
418, 1-50). 

7. New York Times, September 6, 1985; Guardian, October 2, 1985. 



About the Authors 



JONATHAN MARSHALL (author of Chapters I, II, VI, VII, VIE, IX 
and X) is a former editor of Inquiry, editorial writer for the San Jose Mercury, 
and publisher of Parapolitics/USA. He is currently the Editorial Page 
Editor of the Tribune in Oakland, California. He has written numerous 
articles on U.S. foreign pohcy and other subjects. 

PETER DALE SCOTT (author of Chapters III, IV and XI), a former 
Canadian diplomat, teaches English at the University of Cahfomia, 
Berkeley. His books include: The Politics of Escalation in Vietnam (in 
collaboration); The War Conspiracy; The Assassinations: Dallas and Beyond 
(in collaboration); and Crime and Cover-Up. 

JANE HUNTER (author of Chapter V) is a long-time activist and the 
editor of the monthly IsraeU Foreign Affairs. She is the author of IsraeU 
Foreign Policy: South Africa and Central America (South End Press, 1987), as 
well as Undercutting Sanctions: Israel, the U.S. and South Africa and No 
Simple Proxy: Israel in Central America. 



315 



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About homelessholocaust

Tijuana Hobo , Hebrew Hobo Railroad Rabbi, The Truth Teller Tell True Truth Truthfully. If the Truth is Repugnant to you, You are a Reagan Cultist. Ronald Reagan was Taught by L. Ron Hubbard, Reagan & Hubbard FOUNDED THE SCIENCE FICTION MIND FUCKING GAME- SCIENTOLOGY- then REAGAN USED NERO LINGUIST PROGRAMMING as PRESIDENT to MURDER THE MINDS of AMERICANS!
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