The rolling disclosures of the Iran-contra debacle rumbled like a political earthquake through the Reagan presidency. Other presidents have been shaken by similar events: Eisenhower by the Soviet downing of the American U-2 spy plane in 1960; Kennedy by the dramatic failure of the Bay of Pigs invasion in 1961. Covert operations carry heavy costs when they fail or when their cover is blown. That is why most presidents keep covert operations at arm’s length, buried deep in the CIA. It leaves room for plausible denial about the president’s knowledge and involvement. But by bringing the Iran-contra operation into the NSC staff, Reagan had dynamite in his political household. When it exploded, he was too close to avoid serious injury.
The president’s evasions compounded the damage. Three days after a Lebanese newspaper disclosed McFarlane’s mission to Tehran, Reagan told reporters, “to us it has no foundation”—though Reagan himself had approved the mission. The very next day, he told reporters that Shultz and Weinberger had backed his policies (“yes, we have all been working together,” he said) though Reagan knew they had vigorously-opposed the Iranian deals. Next, Reagan was claiming “the modest deliveries, taken together, could easily fit into a single cargo plane.” Actually, many tons of equipment had arrived on at least eight planes. At his news conference on November 19, Reagan denied Israel had been involved and had to be corrected by his staff within minutes. Testimony by Shultz, McFarlane, Poindexter, and Regan showed that Reagan knew the truth before he misled the nation on those points.
The real shocker was the monumental deception of Reagan’s engaging in the Iranian operation at all. Having savaged Jimmy Carter in 1980 for allowing Iran to hold American diplomats hostage for fifteen months, Reagan torpedoed his own credibility. He violated his pledge never to make “concessions to terrorists,” and his denunciation of Iran as part of a “new international version of Murder, Incorporated.” He made a mockery of his legal ban against selling arms to Iran and made fools of Shultz and Weinberger for urging the arms embargo on other countries.
The operation exposed the traps inherent in the backdoor-policy game. The joint Congressional Committee investigating the Iran-contra operation and the president’s Special Review Board, headed by former Senator John Tower, documented a trail of folly—a scenario of American innocents abroad, gulled by crafty Iranians ever demanding a higher price and stalling on American demands. As the Tower board observed, the Americans proceeded “always apparently with an expectation that the process would end with the next arms-for-hostages exchange,” each time drawn deeper into the morass.41 Don Regan warned Reagan the United States was being “snookered” by “rug merchants.”42 Shultz groaned: “Our guys … got taken to the cleaners. You look at the structure of this deal. It’s pathetic that anybody would agree to anything like that. It’s so lopsided, it’s crazy.”43 Weinberger said the NSC staff had laid Washington open to blackmail.
Initially, the White House was told by the Israeli government that all six American hostages in Lebanon, including William Buckley, the CIA station chief in Beirut, would be freed for just one hundred American TOW antitank missiles. That shipment landed in Tehran on August 30, 1985, and not a single hostage was released. Another shipment of 408 TOW missiles was sent by Israel on September 14, and one hostage was released, the Reverend Benjamin F. Weir. In November, another Israeli shipment; no hostages. Fed up, McFarlane tried to halt the operation and quit the government on December 11, 1985, but Poindexter and North kept it going.
“We are signaling to Iran that they can kidnap people for profit,” Shultz protested to Poindexter, worried that paying arms ransoms would lead to more hostage taking.
But Reagan did not want to stop, and in his game of Persian roulette, he decided to bet more chips.
In a formal order, or “finding,” on January 17, 1986, the president authorized supplying Iran with four thousand TOW missiles—forty times the original deal. That night, he wrote in his diary, “I agreed to sell TOWs to Iran.”
In a memo to Reagan, Poindexter talked tough, asserting that “if all the hostages are not released after the first shipment of 1,000 weapons, further transfers would cease.”44 Those one thousand weapons went in February in two batches; no hostages were freed, but still the shipments went on. In May, McFarlane flew to Iran with more weapons; no hostages. In late July–early August, more weapons; one hostage freed, Father Lawrence Jenco. In late October, more weapons; one more hostage, Peter Jacobsen, freed on November 2. The next day, the whole operation was exposed by a Beirut newsweekly, Al Shiraa.
The Iranian middleman was Manucher Ghorbanifar, an arms merchant branded in 1984 by the CIA as a “talented fabricator.” The CIA had warned its agents not to deal any more with Ghorbanifar, but the NSC staff used him. By January 1986, Casey was so suspicious of Ghorbanifar, regarding him as an Israeli intelligence agent, that the CIA gave Ghorbanifar lie-detector tests. Casey told Reagan that Ghorbanifar had flunked on several counts; but by then, the Americans were so hooked that North championed Ghorbanifar, and strangely, Casey went along.
In all, the Americans and Israelis shipped Iran two thousand TOW missiles, eighteen Hawk antiaircraft missiles, and millions of dollars’ worth of spare parts. In return, they got three hostages—but three additional American hostages were taken, and Buckley was killed. The Joint Congressional Investigating Committee estimated that the Iranian government had paid at least $48 million for the arms. North’s agent, Richard Secord, testified that only $3.5 million of the profits went to the Nicaraguan contras; $8 million remained in the Swiss bank account of Secord’s partner, Albert Hakim.45
The back-channel operation betrayed a White House contempt for Congress, for most of government, for procedure, and for legal processes that might interfere with what Reagan and company wanted to do. The Tower board asserted that the “legal underpinnings” of the Iran initiative in 1985 were “at best highly questionable.” The congressional report accused the administration of “disdain for the law” in numerous instances. The secret funding of the contras, it charged, “evaded the Constitution’s most significant check on Executive power: The President can spend funds on a program only if he can convince Congress to appropriate the money.”46
The two arms deals carried out through Israel in the fall of 1985 were of such dubious legality (possibly violating the Export Control Act), that CIA Deputy Director John McMahon pressed for President Reagan to sign a retroactive order in early December to try to legitimize them. Later, on January 17, 1986, as he ordered further Iranian arms deals, Reagan specifically directed the CIA not to notify Congress, although “timely” notification was required by law.
In the whole affair, Reagan comes across as eager to move and impatient with legalities and with warring among his advisers. On three occasions, December 5, 1985, January 6, 1986, and January 17, 1986, Reagan signed findings—or orders—approving the Iranian arms deals and did not inform Shultz and Weinberger, though he had almost immediate opportunities each time to inform them. Like his NSC staff, Reagan was content to leave these two major dissenters in the dark and give ample leeway to the NSC staff to fill the policy vacuum. Obviously, the president knew that Casey and his NSC staff were pushing policy where he wanted to go.
NSC: How To Grab the Action
Even game players who know the great influence of staff aides were stunned by the power Oliver North accumulated. He was like a poker player with extra hole cards. Before the bubble broke, his leverage was incredible. When Israeli planes could not get clearance in Portugal, North got the CIA station chief in Lisbon to pressure the Portuguese government to let the Israeli planes land. In early 1986, high-level CIA officials repeatedly objected to North’s sharing American intelligence with an Iranian middleman, but North overruled them.
Like exploits lifted from James Bond movies, North’s operations had a fictional quality, a touch of fantasy. According to congressional testimony, one North agent picked up rolls of hundred-dollar bills in a Chinese market; North’s network built an
airstrip in Costa Rica and did “black” (disguised) airdrops of weapons; North lined up ships off Cyprus to pick up American hostages from Lebanon after Reagan agreed to pay $2.2 million in ransoms and bribes, to terrorist guards of the hostages; North steered a $10 million donation to the contras from the sultan of Brunei, but the money got lost—mistakenly deposited in the wrong Swiss bank account; North’s commercial agent told Iranian officials the United States was prepared to help Iran overthrow the leader of Iraq and “to fight Russia in Iran” if the Soviets invaded.
How this one Marine colonel got so much control of policy is a case study in the backstage power game. Early on, Shultz and Weinberger probably could have stopped the NSC staff’s Iranian operation. But once it was rolling, by late January 1986, probably nothing short of their resignations could have shaken Reagan sufficiently or broken the NSC staff’s momentum.
Actually, the NSC’s stunning ascent had been foreshadowed by David Stockman’s preeminence on the budget. Reagan’s hands-off habit of delegating great authority pays a premium to aides who are sharp and aggressive. In fact, Reagan’s permissive style was the most important element in the rise of his NSC staff. Ironically, in September 1986, just two months before the Iran disaster burst Reagan’s bubble, Fortune magazine carried a flattering cover story on Reagan’s management style. It promised: WHAT MANAGERS CAN LEARN FROM MANAGER REAGAN. Beside a head shot of Reagan was his formula: “Surround yourself with the best people you can find, delegate authority, and don’t interfere.”
That formula made a virtue out of Reagan’s shortcomings. If Jimmy Carter got mired in excessive concern with detail, Reagan’s weakness was being inattentive not only to detail but the whole sweep of policy implementation. Aides kept defending him as a strong leader, tenacious about his goals. But the Iran hearings in Congress underscored how lax he was, how rarely he pressed tough questions, prodded for explanations, checked the odds and consequences of failure, kept his staff on its toes. Even when the Iranian operation blew up in his face, Reagan was neither curious nor alert enough to ask Poindexter for an explanation of the diversion of Iranian funds (or so he said).
This fit Reagan’s pattern on foreign affairs. He would set a general course, but his understanding was often so hazy and simplistic that he was at the mercy of aides—more than most presidents. Republican senators, coming away from the Oval Office, told me of their shock at his weak grasp of important issues. Most Reagan aides loyally defended him, but some admitted embarrassment at his gaps or his mental laziness. Others reported having to step in and handle conversations for Reagan so that he did not look stupid. McFarlane complained that Reagan sometimes did not listen and did not absorb what he was told.
One high State Department official told me of his dismay at Reagan’s comments—after an hour’s briefing by other officials—”that showed he simply had not understood what we had been talking about. I got the impression on that occasion and others that his knowledge is shallow and superficial. The people around him can manipulate things to get his general approval on something and then keep complications away from him.”
Although Shultz, Weinberger, and Poindexter defensively disputed such a portrait of Reagan, the Tower board portrayed him as a slack, absentee boss. Former Senator Edmund Muskie, a Tower board member, said, “We were appalled by the absence of the kind of alertness and vigilance to his job and to these policies that one expects of a president.” Typical was Reagan’s flip-flop on whether in August 1985 he had approved in advance the first Israeli shipments of American arms to Iran. First, Reagan agreed with Bud McFarlane’s version that he had orally approved the shipments; then he shifted and agreed with Don Regan that he did not approve them beforehand. Finally, he said he could not recall. “I’m afraid that I let myself be influenced by others’ recollections, not my own,” he confessed weakly.
Reagan’s formula is made to order for an assertive, activist national security staff, taking general cues from the president and translating his wishes into orders to other agencies. That gives the NSC staff great leeway to speak for the president, leaving no one but the president in a position to challenge its word.
The second key ingredient in the NSC staff’s ascendancy was its own boldness. Despite the publicity given North and Poindexter, the quiet-spoken McFarlane, as national security adviser in May 1985, was the one who moved in on Iran policy, just as he had on SDI. McFarlane grabbed State’s normal diplomatic role after Shultz and Weinberger dismissed the idea of an opening to Iran. McFarlane had asked for their reactions to a CIA paper urging a policy shift to permit arms sales to Iran—to offset supposedly growing Soviet influence in Iran.
“Perverse,” Shultz responded. “Contrary to our own interests.” Prophetically, Shultz said it was wrong in principle, bound to be exposed, and thus damaging to the president.
“This is almost too absurd to comment on,” Weinberger jotted in the margin.
Stymied by the normal process, McFarlane launched his own back-channel diplomacy, seeking a link to Iran through Israel. His emissary was Michael Ledeen, a Georgetown University professor and part-time NSC consultant who had close contacts with high-ranking Israelis. In early May 1985, Ledeen went to Israel with McFarlane’s blessing and came back reporting that Israeli Prime Minister Shimon Peres wanted to know if the United States would approve a shipment of American-made arms to Iran.
Shultz was touchy about others invading his diplomatic turf. In 1983, he had threatened to resign when he learned that McFarlane had made a mission to the Middle East without State’s knowledge. The new NSC staff initiative offended Shultz, and he protested to McFarlane, noting that Israel’s diplomatic interests were different from Washington’s. A channel to Iran through Israel, Shultz warned, “contains the seeds of … serious error unless straightened out quickly.” McFarlane, playing down his links to Ledeen, replied to Shultz, “I am turning it off entirely.” But in fact, McFarlane pressed ahead, spurred by the Israelis. By mid-July 1985, two Israeli emissaries had urged McFarlane to use Israel as a channel for arms deals with Iran, and McFarlane got the president to let him explore the idea.
Here was a classic pattern of bureaucratic infighting, seen again and again in the Iranian operation—the NSC staff pushing, Shultz objecting, Shultz thinking the operation had stopped, the NSC proceeding on its own. At each stage, the NSC became more ambitious. McFarlane maneuvered the NSC staff into control of an active diplomatic channel. Shultz was still wary but significantly, he did not block the effort. Instead, he left the field to the NSC, asking only that State be kept informed. Shultz’s acquiescence at that point was crucial. It opened the way for the whole operation.
McFarlane grabbed the action, and within a couple of weeks, his man Ledeen was back in Israel, meeting not only with Israeli middlemen but with the Iranian arms dealer, Manucher Ghorbanifar, who put the arms-for-hostages issue on the table. Next, McFarlane jumped the chain of command and opened a back channel to the U.S. ambassador to Lebanon, without telling Shultz. McFarlane’s operation led to three arms shipments to Iran but only one hostage release. When McFarlane resigned in disgust in December 1985, Poindexter took over, providing protection for North. “I never carried out a single act, not one … in which I did not have authority from my superiors,” North told Congress.47
The third element in North’s rise to power was Bill Casey—North’s operational patron, tutor, adviser, de facto boss, and the mastermind behind North’s operations in Central America, according to North’s testimony. North was in awe of Casey as a spymaster and intellectual. And Casey evidently admired North’s can-do daring, and saw him as a soul mate, perhaps even as a son. They thought alike, and they were in almost constant contact. Records showed they had at least thirty-five meetings, and probably many more. Casey had an office “down the hall” from North on the third floor of the Executive Office Building (next to the White House).
North said it was Casey in 1983, expecting Congress to restrict CIA operations in Nicaragua, wh
o moved North to set up a private network for covert operations. “Casey suggested [my] setting up outside entities, and he gave me the name of General Secord as a person who could do it,” North told the Iran-contra hearing. In 1984, Casey instructed North how to set up a revolving operational cash fund to keep North’s operations secret from Congress. Casey worried about Soviet eavesdropping picking up North’s phone calls and persuaded North to shift to communicating with encryption devices. Casey warned North to face the prospect of torture and to be prepared to commit suicide on a mission to Iran in early 1986. North first shared the idea of diverting Iranian funds to the contras with Casey. (Casey loved it, North said, thought it was “the ultimate irony, the ultimate covert operation.”) In early October 1986, North said, Casey warned him that the Iranian operation was about to “unravel” and it was time to “clean things up”—meaning North should destroy his cash accounts ledger, notes, and official documents, in order to quash evidence of the “full-service covert operation.”48
Most importantly, North filled a need for Casey. The crucial moment was October 12, 1984, when Congress passed a ban against further aid—direct or indirect—to the contras by the CIA, Pentagon, or any other agency “involved in intelligence activities.”49 That created a vacuum, by taking the CIA out of the contra war. Ahead of time, Casey and North had laid the groundwork for North to step into the vacuum and replace the CIA as point man for raising funds, organizing support, delivering arms to the contras—in short, running the war for Casey and the president. Once Congress voted the aid ban, North pushed the argument that the law did not cover the NSC staff because it was not an agency “involved in intelligence activities”—a euphemism for covert operations. Casey also claimed a loophole for the NSC staff, and evidently got the rationale to Reagan, who wanted a way to get around Congress.
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