As the deal unfolded—badly—assessments of Ghorbanifar within Reagan’s White House national security team included “corrupt,” “devious,” “duplicitous,” “not to be trusted,” and “one of the world’s leading sleazebags.” National Security Adviser Bud McFarlane even called him a “borderline moron.” There was pretty good evidence that Ghorbanifar’s main goal was money. And still, Reagan decided it would be good policy to continue to pursue the Ghorbanifar plan.
The way the first arms-for-hostages deal was designed, Israel would sell US-made weapons to Iran, and the US government would replace Israel’s weapons from its own stocks. As a favor to us, Israel was allowing itself to be used as a pass-through for America sending missiles to Iran. It was a shame that the first arms shipment of ninety-six TOW antitank missiles to Iran ended up (and this was truly unfortunate, everybody agreed) in the hands of Khomeini’s loyal Revolutionary Guard. Worse, no hostage was released. It turned out to be arms-for-no-hostages.
Reagan was undeterred, and, as ever, optimistic. “It seems a man high up in the Iranian govt believes he can deliver all or part of the 7 Am kidnap victims in Lebanon sometime in early Sept,” Reagan recorded in his diary a few days after the first failure. “They will be delivered to a point on the beach north of Tripoli & we’ll take them off to our 6th fleet. I had some decisions to make about a few points—but they were easy to make. Now we wait.”
In spite of Reagan’s high hopes, the second weapons delivery of more TOW missiles, also via Israel, shook loose only one hostage, and not the one McFarlane requested. In planning the third shipment, eighteen Hawk antiaircraft missiles, Reagan’s operatives managed to piss off Portugal, endanger Turkey, get the CIA illegally involved, raise protests from the Defense Department, and move Secretary of State George Shultz to think about resigning … and all for nothing. This time, according to Ghorbanifar, there would be no hostages released at all, because the Iranians were upset at having received substandard weapons. In fact, they’d like to return the Hawks.
Nearly six months and millions of dollars of weapons into the arms-for-hostages deal, Reagan had yet to inform Congress about the status or existence of the operation. The president had his reasons. The way Reagan told it to himself, the success of it hinged on secrecy. The president had kept his secretaries of state and defense largely out of the loop; hell, he withheld information from his own personal record of the events of his presidency. “I won’t even write in the diary what we’re up to.” No one could know, most especially Tip O’Neill and the Democrats in the House; Reagan didn’t want them to run crying to the press.
This insistence on secrecy was fueled in part by Reagan’s fear that the hostages or the men inside Iran doing the talking would be killed if details of the negotiations became public. Nobody in the Reagan administration had good enough contacts to know if this fear had any basis in reality. Hard data had never been—and would never be—a controlling factor in the Reagan administration’s decision-making process. But there was also just the embarrassment factor. Given a choice between secrecy and the public finding out about the operation’s Laurel-and-Hardy-worthy failures (up to and including the Iranians sending our weapons back, dissatisfied!), who wouldn’t choose secrecy? Finally, there was the fact that much of what Team Reagan was doing was not simply flying in the face of their own stated policy against dealing with terrorists (“We make no concessions,” Reagan had said. “We make no deals”) or state sponsors of international terrorism (Iran was a gold-plated designee on that list); it was not just shredding the president’s own executive orders and national security directives; it was not simply executing a spectacular and hypocritical affront to good sense and good diplomacy; but, in fact, much of this arms-for-hostages operation was quite flagrantly against the law. Flat-out illegal.
Reagan’s deal violated the Arms Export Control Act by permitting Israel to secretly transfer US-supplied arms to a third country and failing to report the transfer to the proper officials in the US legislature. And the CIA, in providing access to the jet that flew the Hawk antiaircraft missiles to Iran in November, had violated a post-Vietnam amendment to the Foreign Assistance Act that forbade the agency from undertaking covert operations in a foreign country unless a president issued a finding that the operation is “important to the national security of the United States.”
At a White House meeting three weeks after the disastrous and illegal-on-two-counts shipment of the TOW missiles, most of the president’s top advisers tried to pull him out of the arms-for-hostages racket. A CIA deputy director explained that the notion of an independent moderate faction in the Iranian Army was a fiction, which meant that, even if Casey’s deputy didn’t say it aloud, selling weapons to Iran meant selling weapons directly to Khomeini. George Shultz and Caspar Weinberger, who rarely agreed on anything, were agreed on the benighted nature of the Ghorbanifar operation. Secretary of State Shultz had never bought Reagan’s argument that because we put Israel between ourselves and Iran, and then put some unknown and unidentified “Iranian moderates” between ourselves and Hezbollah, this was not an arms-for-hostages deal. Those were a couple of strands of hair too fine to split. And Secretary of Defense Weinberger pointedly reminded Reagan of the violations of both the embargo on selling arms to Iran and the Arms Export Control Act. The president was visibly annoyed with both Shultz and Weinberger, Shultz later said, and “very concerned about the hostages, as well as very much interested in the Iran initiative.… Fully engaged.” Despite the vocal in-house opposition to the operation, the Iranian arms deal remained on the table for the next month, largely because Reagan himself would not let it be extinguished.
In the meantime, by the reckoning of the White House’s NSC staff, one good thing had come from this mess of an arms deal: a smallish but quite useful windfall had dropped into the Swiss bank account of a private American company set up almost exclusively to further President Reagan’s foreign policy agenda. That first arms-for-hostages profit didn’t happen by design. The logistics of the third weapons shipment—the Hawks shipment—became so knotty that Israel had to pay a retired US Air Force general to deliver to Iran their four separate planeloads of twenty antiaircraft missiles. They advanced Gen. Richard V. Secord and his partners at Lake Resources, a key subsidiary of what came to be called “the Enterprise,” a million dollars for the job. Only one of the four shipments was actually made. The Enterprise spent $150,000 of the $1 million making that one flight to Tehran, but what would become of the remaining $850,000?
As it turned out, the Enterprise, this web of shady little offshore companies, had another client in real need. That extra money became what Secord—and perhaps his contact inside the Reagan White House, Col. Oliver North—called a “Contra-bution.” And this is where Iran-Contra, the scandal that almost destroyed the Reagan presidency, earned its hyphen.
By the time General Secord got his unexpected windfall, the White House had been for a year secretly running a public-private partnership to keep the Contras in what the many Marines on Reagan’s team liked to call “beans, boots, Band-Aids, and bullets.” The privatization of the Contra aid operation was an idea first promoted in the highest circle of the Reagan administration in the summer of 1984, when it started to become clear that Congress was going to stop the US government from aiding the Contra military effort directly. According to now-declassified minutes, much of the June 25, 1984, National Security Planning Group meeting in the White House Situation Room was about funding the Contras. And everybody in the room understood they were edging up against legally questionable measures.
“If we can’t get the money for the [Contras],” said UN ambassador Jeane Kirkpatrick at the meeting that afternoon, “then we should make the maximum effort to find the money elsewhere.”
“I would like to get the money for the Contras also,” Secretary of State George Shultz countered, “but another lawyer, Jim Baker, said that if we go out and try to get money from third countries, it is an impeachable offense.
”
“I am entitled to complete the record,” CIA Director Casey chimed in, to remind everybody of the presidential finding on Nicaragua that Reagan had signed. “Jim Baker said that if we tried to get money from third countries without notifying the oversight committees, it could be a problem and he was informed that the [presidential] finding does provide for the participation and cooperation of third countries. Once he learned that the finding does encourage cooperation from third countries, Jim Baker immediately dropped his view that this could be an impeachable offense.”
“I think,” Shultz suggested, “we need to get an opinion from the attorney general on whether we can help the Contras obtain money from third sources. It would be the prudent thing to do.”
After a brief argument about the feeble prospects of a diplomatic push in Central America, Casey circled the conversation back to finding money for the Contras. “It is essential that we tell the Congress what will happen if they fail to provide the funding for the [Contras]. At the same time, we can go ahead in trying to help obtain funding for the [Contras] from other sources; the finding does say explicitly ‘the United States should cooperate with other governments and seek support of other governments.’ ”
“As another nonpracticing lawyer,” offered Ed Meese, a longtime presidential counselor, who was then more or less auditioning for the role of attorney general, “I want to emphasize that it’s important to tell the Department of Justice that we want them to find the proper and legal basis which will permit the United States to assist in obtaining third party resources for the anti-Sandinistas. You have to give lawyers guidance when asking them a question.”
A few minutes later, Casey seconded Meese: “We need the legal opinion which makes clear that the US has the authority to facilitate third country funding for the [Contras].”
As the meeting finally wound down, Vice President George Bush made a rare interjection, a tepid endorsement for the plan, with a tepid caveat: “How can anyone object to the US encouraging third parties to provide help to [Contras] under the finding? The only problem that might come up is if the United States were to promise to give these third parties something in return so that some people could interpret this as some kind of an exchange.”
National Security Adviser Bud McFarlane, clearly concerned about a discussion that had led off with the specter of impeachment, suggested extreme caution. “I propose that there be no authority for anyone to seek third-party support for the [Contras] until we have the information we need,” he told the group, “and I certainly hope none of this discussion will be made public in any way.”
Reagan agreed wholeheartedly with his national security adviser’s assertion of the need for absolute discretion. It was clear that he expected his team to keep their traps shut about this plan: “If such a story gets out,” the president said to close the meeting, “we’ll all be hanging by our thumbs in front of the White House until we found out who did it.”
Four months after that meeting, when Congress did cut off money for the US government to carry on with the Contras, the White House did not pause to consider the legal niceties of making its (covert) push for funding from third countries. Good news was that King Fahd bin Abdul Aziz of Saudi Arabia was already on board to the tune of a million dollars a month in direct aid to the Contras; the king was probably most appreciative for the 450 Stinger missiles Reagan had expressed to Saudi Arabia under the guise of presidential emergency powers, and for the US president’s promise to ask Congress for more. During Fahd’s visit to Washington in February 1985, the king capped a delightful private breakfast with the president with a promise to double his monthly donation. In all, Saudi Arabia would give about $32 million in aid to the Contras, or more precisely to the Enterprise. The only real disappointment for the president in his relations with Fahd was when the king tried to give Reagan a gift of four Arabian horses. He complained in his diary, “I couldn’t accept them as a gift—due to our stupid regulations.”
Word also got around in our hemisphere that the US president was up for bargaining with any country that would indulge him on his Contra obsession. Reagan used emergency powers to get Honduras $20 million worth of military supplies from the Pentagon. El Salvador wanted trade concessions. The Guatemalan president asked the United States to double its economic assistance package to his country, and triple the military package. Panamanian president Manuel Noriega offered to assassinate the leadership of the Nicaraguan government, but in return he wanted a commitment from the White House to lift the ban on US weapons sales to Panama, and also, maybe, a little help in revitalizing his image would be nice. The whole “dictatorial strongman” thing was apparently beginning to eat at Noriega. Reagan took a pass on the Noriega deal.
President Reagan left no continent undisturbed in his quest for “Contra-butions.” When, after Reagan had left office, an independent counsel attorney presented him with a document that suggested he had asked the leader of an Asian country to ship weapons to the Contras, Reagan stammered out a remarkable truth, under oath: “I know this man of course, very well, met with him a number of times in his own country.… I don’t recall seeing this and … my policy was not to involve others in this. I mean, I wanted them involved but I didn’t want to be on the record of doing it.”
That was the way Reagan liked to work, off the record. But those Marines on his national security staff—Bud McFarlane, John Poindexter, and Oliver North—heard the president loud and clear when he tasked them to keep the Contras alive “body and soul.” According to an independent counsel’s report on the Iran-Contra affair published after more than five years of investigation, “North described how he and Secord, in order to replace the CIA in assisting the Contras, in their covert-action Enterprise created a ‘mirror image outside the government of what the CIA had done.’ [North] claimed he never made a single trip or contact ‘without the permission, express permission, of either Mr. McFarlane or Admiral Poindexter, and usually, when I could, with the concurrence of Director Casey.’ ”
North turned out to be one hell of an operator; he understood that the president’s appreciation for “third party” assistance to the Contras went well beyond foreign royalty and foreign governments. North managed a team of private fund-raisers and arms dealers who kept the Contras alive in the year of living without congressional funding. He’d shake the change out of the pockets of wealthy donors at fund-raisers hosted by the (newly created, not-for-profit, all-contributions-tax-deductible) National Endowment for the Preservation of Liberty, and he’d make sure the best check writers got a private audience—and a picture, of course—with the president. The president was happy to help.
With a combination of Saudi dollars and contributions from private American citizens funneled into the Enterprise’s Swiss bank accounts, North and his friend Secord kept those Contras in millions of dollars (though not as many as they raised, but more on that later) of beans, boots, Band-Aids, and bullets. By June 1985, Secord’s Enterprise was acting as the sole purchasing agent and weapons supplier of the Nicaraguan Contras. Contra leaders had no access to the money given them; North and Secord controlled it.
By spring 1986 North, Secord and partners also controlled and directed the logistics of the Contra resupply efforts (this would be known as Project Democracy) and its $4 million in assets comprising two C-123 cargo jets, two C-7 planes, and a $75,000 Maule aircraft paid for single-handedly by a wealthy Republican, Ellen Garwood, after a private meeting with the president. Ms. Ellen’s two and a half million dollars also helped pay for a maintenance base in Miami, living quarters in El Salvador for eighteen or so resupply employees, and an airstrip in Costa Rica known as “The Plantation.” This was essentially the closest North could come to the “mirror image” of the CIA’s secret support to the Contras.
But unlike the CIA, which had to depend on money from Congress, this privately funded entity had added value: the privatization of Reagan’s foreign policy initiative turned out to be just the ticket for
evading all those barriers the legislature had erected. (Stupid regulations!) How could the president be obligated to report the activities of a private enterprise to Congress or anyone else? The Boland Amendment didn’t stop the administration from helping concerned citizens who just wanted to help the Contras. This quasi-privatization—with fronts like the National Endowment for the Preservation of Liberty, and for-profit companies like Secord’s Stanford Technology Trading Group International and Project Democracy’s Corporate Air Services—allowed the White House to run its Nicaragua operation unmoored from the Constitution and its fetters, free from congressional or statutory constraints, and clear of accountability. If anything went wrong, there was a firewall. Even though the Reagan administration directed the covert activity, there was a break in the formal chain of command; the orders up and down the line weren’t really traceable. So confident in the firewall of deniability was the White House that when the House Intelligence Committee got wind of the Contra resupply operation, Reagan’s NSC staff simply lied to Congress. “None of us has solicited funds, facilitated contacts for prospective potential donors, or otherwise organized or coordinated the military or paramilitary efforts of the resistance,” the national security adviser told House Intelligence Committee members. “There has not been, nor will there be, any such activities by the National Security staff.”
Drift: The Unmooring of American Military Power Page 11