'PROJECT RECOVERY'

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000303560010-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: September 1, 2010
• Sequence Number: 10
• Publication Date: December 1, 1986
• Content Type: OPEN SOURCE

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AWAFWAOD
O
ON PN
AS
NEWSWEEK
1 December 1986
'Project Recovery'
A handful of 'cowboys' leads Reagan into the biggest blunder of his presidency
The operation was called "Project
Recovery." and the "cowboys"
were in charge. Directed from the
White House basement, members
of Ronald Reagan's staff shipped
arms to Iran in the same freewheeling style
they used in their dealings with the Nicara-
guan contras. Only a handful of need-to-
know officials in the entire administration
learned the full story. America's military
leadership and its civilian experts on Iran
were left in the dark. "I don't think any one
of us has yet grasped the dimensions of
what's been going on over there in the
White House," said a source at the highest
level of the Pentagon. "When it all comes
out there are going to be calls for a major
housecleaning." One of Reagan's top
White House aides put it more succinctly:
"This is a more serious episode than any-
thing in his presidency." As it turned
out. Project Recovery also was Ronald
Reagan's biggest blunder.
NEWSWEEK has learned that the press
dent's operatives sent $50 million to $100
million worth of weapons to Iran. They
used the Central Intelligence Agency to get
around normal legal restrictions on arms
exports, and they went to extraordinary
lengths to keep the Joint Chiefs ofStaff out
of the picture. With the CIA involved, raid-
ing the arsenals turned out to be easy. "If
you go to someone in the Armv and whis-
er. 'How many TOW lmissilesl have you
got :" Lind then tell them to assemble the
fol lowing_number at a particula_r.p1ace and
we'll take it from there, it works."a civilian
Pentagon official who was involve in the
-operation told NEWSWEEK. "Everybody has
"need to know' instilled in them. And if it's
done in whispers. everyone gets a little
chill of vicarious gratification. Sure, they
would wonder about the destination. But
nobody would imagine it could be Iran."
As incredible as it may seem, most of the
formal government of the United States is
still trying to figure out what Reagan's
cowboys were up to and how many weap-
ons they actually sent to Iran. Much of
the attention is focused on Marine Lt. Col.
Oliver North, the National Security Coun-
cil staffer who handles many of the presi-
dent's most sensitive jobs and was the
project manager on the weapons deal.
NEWSWEEK learned that North spent all
day last Saturday-from 7:30 a.m. until
late at night-being questioned by several
lawyers from the Justice Department. The
topic: a blow-by-blow reconstruction of
Project Recovery.
The president himself did his best to
play down the scope of the Iran operation.
At his news conference last week. Reagan
said soothingly that the entire arms ship-
ment "could be put in one cargo plane, and
there would be plenty of room left over."
But some well-placed officials have dug up
a different story. They said Washington
had shipped 2.008 TOW antitank missiles
to Iran, along with parts for Hawk antiair-
craft missiles and Phoenix air-to-air mis-
siles and other equipment-more than
enough to overload the biggest cargo plane
in the U.S. fleet. The replacement cost of
the TOW's alone was nearly $20 million.
"So far as we can tell, as much as 850
million worth [of supplies] appears to have
been sent out to Iran directly from the
United States," a senior official told
NEWSWEEK. "When you add in the quanti-
ties shipped from third countries, primari-
ly Israel, [and paid for by Washington] the
total could be S100 million or more."
To move all that hardware, the cowboys
went far outside normal channels. The CIA
carried out the operation. It opened a Swiss
bank account into which Iran paid money
for the purchase of American arms. The
agency chartered the cargo planes that car-
ried weapons to Teheran via Israel. The CIA
actually extracted the arms from military
arsenals in the United States without the
knowledge of the brass. Reagan's ad hoc
intelligence operation apparently was de- ii and Pentagon officials said a role in the
signed to circumvent both_congressional artec? operation is played by retired
scrutiny and the objections of top ad is- -\ir Force M Gen_ Richard Secord, an
tration officials. The president ordered ?occasional adviser to the contras. Secord,
Defense Secretary Caspar Weinberger to who has an Iranian business partner. told a
facilitate the arms transfers, despite Wein t ~~ SWFEK reporter that any sugeestion
t at he helped ship arms to Iran was "abso-
berger's expressed opinion that the whole 7uteTv f
:, 11
h
'
a se
e added:
at
Ifkd
you ase _ idea of cozying up to Iran was 'absurd." me %y s an a wiser on arm: imports to
Weinberger instructed Richard Armitage.
an tat's anot ec matter cant talk
assistant secretary for international secu- about that Pressed futher Secord asked.
rity affairs. to take charge. Armitage and p~ you kc~~?-m`-resume:'" When the re-
some civilian aides organized the sub rosa record went on 'Then you
requisitions from thesupplydepots in coop- know I worked for Cap \1 -einberger and I
eration with "Field Marshal North," as he know a lot about Iran."
isderisivety known in the Pentagon The White House stonewalled so etfec-
Weapons were withdrawn from Army tiyely that other agencies of government
arsenals in Anniston, Ala.. and Texarkana. to launch invests*ations to hn out
Texas. among other places. Other ship- what t e president's operatives had been
ments appear to have come from U.S. mill- doing. At t h e Pentagon. an outrage A m.
tary stockpiles in Italy, and perhaps in Tur
William ,ow-e_, c airman of the Joint
key as well. Laws regulating the export of Chiefs, or ere a fu inquiry Briefing con-
weapons may have been broken (page 3'2tJarsmen, erector William C asev oft e
Neither the State Department nor Con- - CTA_ an t e press en s national-security
gress was notified of the shipments to at yeses, . n oen eter, in icated that
Teheran, and Iran never showed up as the they didn t yet know the full details. After
destinationonthe"materiel releaseorder" `- -
Continued
forms that are required to remove weapons
from depots. Under standard covert proce-
dures,the CIA requisitioned weapons fpm
U.S. arsenals, listing the purpose merely as
Protect Recover "
In addition to selling Teheran TOW mis-
siles and Hawk parts, military officials sus-
pect that the administration supplied the
Iranians with equipment they needed to
get their American-made F-1-I fighters into
action in the war with Iraq. When the shah
fell in 1979. Iran had nearly `t0 F-1-Is, but
until recently the potent warplane had
never been used in its primary role as an
air-defense fighter. The reason, sources
said, was that Iran lacked guidance equip-
ment on board the F-14s to control their
Phoenix missiles. Just last month, howev-
er. an Iranian F-14 used a Phoenix to shoot
down an Iraqi Mirage tighter. Although
they can't prove it yet and officials in-
volved in the operation derv it some U.S.
military leaders believe that parts for the
F-14 system may have reached Iran
through North's pipeline.
'I worked for Cap': How the U S. supplies
actually got to their destination is still
something of a mystery: certainly no U.S
Air Force planes dew to Teheran. Accord-
ing to early reports, materiel drawn from
stockpiles overseas reached Iran in ships or
planes dispatched from Israel. Shipments
originating in the United States were car-
ne on aircra t c Itartered by the CIA Israe-
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hearing from Casey. Democratic Sen. Dan-
iel Patrick Moynihan of New York said: "I
can't believe what I heard-and I don't."
Reagan already had enough trouble on
his hands. At his news conference last week.
he insisted that his contacts with Iran did
not constitute "a fiasco or a great failure of
any kind. We still have those contacts ...
'and] we got our hostages back-three of
them." he said. "'So I think that what we
did was right." Reagan called off the arms
shipments. but almost no one was won over.
Sen. Robert Byrd. who will soon become
majority leader of the new. Democratic-
controlled Senate. called the Iranian opera-
tion "incredibly- clumsy and amateurish."
Republican Sen. Richard Lugar said the
administration ought to "bring in some big-
leaguers to run things."
The White House itself seethed with
backbiting and recriminations. Secretary
of State George Shultz complained that he
had been kept in the dark. In a television
interview, Shultz hinted, none too daintily,
that he was unhappy with the Iran policy
and left the impression that he might re-
sign: for his part. Reagan said at his press
conference that he very much wanted the
secretary to stay on. Shultz seemed molli-
fied by the president's vote of confidence,
apparently convinced that it would put
him firmly atop the nation's foreign-policy
apparatus. At the same time. however, he
was being undercut by an increasingly
powerful player at the White House: Nan-
cy Reagan page 30). Critics of the Iran
policy howled for the heads of Poindexter
and his feisty boss, chief of staff Donald
Regan. White House officials were stunned
when former national-security adviser
Robert ~Bud) McFarlane, the key go-be-
tween in the [ran operation. said that send-
ing arms to Teheran had been "a mistake."
Among Reagan's advisers. the dispute
produced some remarkably blunt public
language, much of which was at
variance with what the presi-
dent himself was saying.
Shultz, when asked wheth-
er more arms should be sent
to Iran: "Under the circum-
stances of Iran's war with Iraq,
its pursuit of terrorism. its asso-
ciation with those holding our
hostages, I would certainly say,
as far as I'm concerned, no."
Asked whether he spoke for the
administration on that, Shultz
replied: "No."
McFarlane on Shultz: "LIThe
arms deal] was not kept from
the secretary of state. I'm
somewhat surprised at the
portrayal that it was. For I told
him repeatedly and often of ev-
erv item that went on in this enterprise."
Regan on McFarlane i as reported by The
Washington Post): "Let's not forget whose
idea this was. It was Bud's idea. When you
give lousy advice. you get lousy results."
Shake-up talk: Amid the bickering, there
were calls for a shake-up among Reagan's
top advisers. One name mentioned fre-
quently was that of George Shultz. Officials
familiar with Project Recovery charged
that Shultz had indeed been fully informed
on the operation. Various rumors had it
that Shultz would be succeeded by Trea-
sury Secretary James A. Baker III; that
Regan might be replaced by presidential
friend Paul Laxalt or former Transporta-
tion Secretary Drew Lewis or even by Bak-
er, and that Poindexter would give way to
former NSC chief Brent Scowcroft or ex-
diplomat Lawrence Eagleburger.
The only man actually offering to resign
was Oliver North. -All this soldier did was
to carry out orders," he told one colleague.
"I never did anything without the permis-
sion of my senior officer." North's mood
was described as serene. He was said to
have viewed the arms deal as a way to
restore U.S. influence in Iran and to help
end the Iran-Iraq war by shoring up moder-
ates in Teheran who want to make peace-
as well as a way to recover U.S. hostages in
Lebanon. "If somebody has to take the fall,
I'm willing to do it," he confided to a friend,
"but I haven't done anything wrong."
There was no assurance that any heads
would roll right now-if ever. The presi-
dent hates to fire people, even when they
deserve it. Inside and outside the adminis-
tration, there was a widespread conviction
that weak staff work had badly under-
mined Reagan. The pounding that he con-
tinued to take in the opinion polls made it
clear that, on the issue of arms for Iran, the
American people did not agree with Rea-
gan-and didn't even believe him. The Ira-
nian fiasco damaged one of the president's
most important assets, his credibility, and
threatened his capacity to lead effectively
in the remaining two years of his term.
Who was to blame for the mess'' At his
news conference, Reagan said that "the
responsibility for the decision and the oper-
ation is mine, and mine alone." But the
president didn't seem to have a firm grasp
on the complexities of his Iranian policy.
When he was prepping for the news confer-
ence, some of his aides thought Reagan was
noticeably shaky on the sequence of events.
During the conference he insisted that no
third country had played a role in the ship-
ment of arms to Iran. despite public state-
ments by his own advisers that Israel had
been involved. Later the White House had
to issue a correction. Throughout the meet-
ing with reporters Reagan seemed queru-
lous and unsure of himself. Some conserva-
tives complained that he was running out
of ideological steam and was backing away
from tough positions, such as not bargain-
ing with terrorists for the freedom of hos-
tages. "He's tired," said a former aide.
z
"This Iranian mess is part of that fie,
getting older, and his soft heart got the
better of his judgment "
Many other critics blamed Reagan's staff
for the Iranian debacle. '1 think there
needs to be a very great strengthening of
the level of competence in the National
Security Council." said Lugar "Look what
happens when the NSC decides it can do all
these kinds of things." said Democratic
Sen. Patrick Leahy of Vermont. "You've
got the operations in Central America.
you've got the Libyan disinformation busi-
ness and you've got this thing. Well, three
strikes and you're out." Another respected
Democrat, Sen. Sam Nunn of Georgia. said
Reagan should "appoint a senior group of
wise men-or wise men and women-to
advise him on foreign policy and national
security."
Reagan's PR men apparently counted
too heavily on their ability to turn things
around. Of course, they have done it before,
as in the aftermath of the Reykjavik sum-
mit, when an aggressive White House
"spin control" operation transformed a
diplomatic flop into a public-relations tri-
umph. "They assumed, because of Iceland.
they could say anything and get away with
it," charged Democratic pollster Pat Cad-
dell. "They could sell Iceland because it was
us versus the Russians, and nobody's going
to side with the Russians. But this time the
substance of the issue was America cozying
up to the Iranians, America dealing with
terrorists. What Reagan's men don't real-
ize is that substance matters to the public."
You made a mistake': With the notable ex-
ception of George Shultz, who spelled out
his objections in a private meeting, Rea-
gan's men couldn't find a way to tell the
president he was wrong. Before the press
conference, Richard Nixon, among others,
called up to say that Reagan should simply
admit that he made a mistake when he sent
arms to Iran. But one White House aide
complained: "You don't get up and say,
'You made a mistake. Mr. President. Why
don't you admit it?' Nobody said that."
They didn't say it because Reagan doesn't
believe that he made a mistake.
Regan and Poindexter are quintessen-
tial yes men, and both of them have limited
experience. especially in foreign affairs.
"Wall Street is a very narrow arena," says
a former NSC official, alluding to Regan's
background. "So is the military." Another
Reagan adviser complains that the presi-
dent ""doesn't have a staff that can create
new ideas. It's an extremely timid staff.
intellectually and politically." But the im-
perious Don Regan doesn't want fresh
Continued
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\RTHI 10,P V F: vF%% IN F.h K
Poindexter and Regan confer: Casey (above):
Amid rumors of resignation and staff
backbiting, the principals tough it out
thinking from his staff. "I don't need these
guys for ideas," he once said. "I've got more
than enough of my own."
Some fingers were being pointed directly
at Poindexter. The Navy vice admiral
wrote the infamous disinformation memo.
He signed off on the FBI plan to arrest
alleged Soviet spy Gennady Zakharov last
August in New York, and he was partly to
blame for the administration's wobbly ini-
tial response to the Soviet seizure of Ameri-
can journalist Nicholas Daniloff. Now
Poindexter and his aides were being
blamed for failing to warn Reagan about
the pitfalls of his Iran policy. In public,
Regan continued to stand by his man, de-
scribing Poindexter as "honorable" and
"brilliant." But there were reports that the
chief of staff had begun to disparage the
NSC director, and some former Reagan
aides were hearing that Poindexter might
be sacked in the next few months.
Some outsiders thought responsibility
for the Iran fiasco should be more wide-
ly shared. Henry Kissinger found it
"strange" that "the president is stand-
ing out there alone, and no one stands up
to defend him." Kissinger argued that
shaking up only the NSC staff would do no
good. Another former national-security ad-
viser, Zbigniew Brzezinski, who worked for
Jimmy Carter, suggested promoting Oliver
North to brigadier general. "The bureau-
cracy is full of people who get paid for doing
nothing," said Brzezinski. "When you have
a guy who gets things done, promote him."
Both Brzezinski and Kissinger were in fa-
vor of taking a hard look at the top policy-
makers. Kissinger said that a "very careful
assessment of the decision-making pro-
cess" was needed if the administration was
to have any hope of "realizing the opportu-
nities of the next two years."
They still love him': Last week some Rea-
ganites were gloomy about the next two
years. With tax reform wrapped up, Rea-
gan's agenda for the end of his term looks
uninspiring. Arms control seems to be in
limbo. Budget reform lacks luster, welfare
An End Run Around the Law?
The uproar over Ronald Rea-
gan's Iranian misadven-
ture has damaged the presi-
dent's credibility-and one
reason is that the administra-
tion, at the very least, circum-
vented some laws. In the days
ahead, these end runs are cer-
tain to become an issue on Cap-
itol Hill. Here is the legal
situation:
^ The Arws Expert Ca" Act.
The law governs the trans-
fer of U.S. military weap-
ons to any foreign buyer-
even when the weapons are
actually sold by a third coun-
try acting as middleman. The
act says all commercial arms
sales must be licensed by the
State Department, any ship-
ment of more than $14 million
must also be cleared by the
Department of Defense and
the president must notify Con-
gress in advance of any sale of
more than $14 million worth
of U.S. weaponry. Congress
must also be notified of sales
totaling more than $14 mil-
lion of U.S.-supplied weapon-
ry between two foreign pow-
ers, such as Israel and Iran.
NEwswasa sources say
none of the arms shipments to
Iran was licensed by the State
Department. Though the Ira-
nian arms connection was su-
pervised by ranking civilian
officials of the Department of
Defense, Pentagon sources
say the uniformed brass was
kept in the dark. And though
arms sales normally require
an elaborate certification
process that inc1 des the
clear designation of the desti-
nation, the Iranian ship-
reform appears to be a nonstarter and cata-
strophic health insurance, proposed last
week, won't send many Americans dancing
through the streets. "The last two years are
basically out of gas," said one of Reagan's
senior advisers. His friends and foes know
that Reagan can always bounce back. The
Iran debacle may blow over. as the Bitburv
flap did last year. The next foreign-policy
challenge may break his way. Reagan may
fasten onto another cause that will galva-
nize his supporters-reducing the budget
deficit, perhaps. Above all, the president
remains uniquely popular with the .Amen-
can people. "Maybe they think he's out of
touch," says one Reagan man, "but they
still love him."
Personal popularity, however, is a warm
but worthless commodity when it no longer
translates into political clout. The kev to
Reagan's success as a president is his repu-
tation for candor, for consistency-and for
winning. All three qualities were badly
strained by the high-risk gamble that he
took when he started to haggle with the
Iranians. It is a wide-open question wheth-
er Reagan and his beleaguered staff are
resilient enough, and capable enough. to
overcome that defeat at a point in his presi-
dency when the lame-duck season can be-
gin at any time.
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ments were handled differ-
ently. U.S. Army records
contain no indication that
any of the recent weapons
shipments were destined for
Iran. The CIA and top Penta-
gon officials used a special
five-step procedure that re-
corded the shipments' desti-
nation merely as "Project Re-
covery." NEwswEEK sources
speculated that those who
arranged the Iranian deal
were careful to keep the size
of individual shipments be-
low the $14 million thresh-
old for congressional notifica-
tion. But the price of the total
package, many in the mili-
tary now suspect, was at least
$50 million and perhaps as
much as $100 million-which
if true may mean that admin-
istration officials sidestepped
at least the spirit of the law.
^ The Nalle"M Sscurtty Act. The
law requires "timely" notifi-
cation to Congress of covert
operations such as the Irani-
an weapons deal. The White
House, through press spokes-
man Larry Speakes, insists
that Reagan followed all ap-
plicable laws, and adminis-
tration officials say Attorney
General Edwin Meese III ad-
vised the president that the
law did not require congres-
sional notification while the
operation was going on.
Congressional leaders such
as Sen. Robert Byrd, however,
argue that the administra-
tion violated the intent of the
law in delaying notification
to Congress for 11 months-
and last week some Demo-
crats were proposing legisla-
tion to require notification
within 48 hours of any future
covert action.
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