WASHINGTON REELS OVER IRAN-CONTRA REVELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605530001-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: August 20, 2010
• Sequence Number: 1
• Publication Date: November 26, 1986
• Content Type: OPEN SOURCE

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REUTERS
26 November 1986
WASHINGTON REELS OVER IR fl-CONTRA REVELATIONS
By EDWARD SHIELDS
WASHINGTON
President Reagan headed for his mountaintop retreat in California today,
leaving behind a National Security Council shattered by a complex foreign
operation gone wrong and a capital reeling with shock.
Before leaving for his ranch for the four-day Thanksgiving holiday, the
president was expected to take steps to set up a blue ribbon commission to
review the role and procedures of the National Security Council (NSC) staff and
of foreign and national security policy.
Reagan yesterday announced the resignation of NSC adviser Adm. John
Poindexter and the dismissal of his deputy, Marine Lt.-Col. Oliver North,
following the disclosure they were involved in diverting funds from clandestine
arms sales to Iran to U.S.-backed Nicaraguan rebels.
The coupling of arms for the hostile Iranian regime with the perennially
controversial issue of aid to the contras brought an outpouring of criticism
both in Congress and on television from Democrats and Republicans, former
government officials and political analysts who professed to see a president
with a foreign policy in crisis and a White House in disarray.
Attorney General Edwin Meese said $10 million to $30 million in profits from
U.S. arms resold to Tehran by Israel had moved through Swiss bank accounts to
the Nicaraguan rebels, known as contras, at a time when the Congress had cut off
military aid to the guerrillas.
The secret operation gradually unfolded over the past three weeks, after it
was first leaked by the Iranians, with the pressure steadily mounting on the
White House despite a nationally-televised speech and a subsequent news
conference by the president.
Reagan said the operation, which started 18 months ago, was designed to
establish better ties with the strategically important nation, bring an end to
the six-year-old Persian Gulf war and obtain the release of American hostages
held by Iranian-backed factions in Lebanon.
As a show of good faith, Reagan said, he allowed what he called a "modest"
quantity of arms to be sent to Iran, and to make that possible last January 17
he approved a finding waiving the arms embargo imposed against Iran in 1979
when Tehran took 52 Americans hostage for 444 days.
He said he did not know about the financial transaction by which profits from
the arms sales were transferred to the contras until he was informed by Meese on
the weekend.
Meese said North was the only person in the administration who "knew
precisely" of the operation under which the United States shipped an estimated
$12 million worth of anti-tank and anti-aircraft weapons to Israeli go-betweens,
who in turn sold them to Iran for $22 million to $42 million.
After paying the United States the estimated value of the weapons, the
Israeli arms dealers then deposited the remaining funds in a numbered Swiss bank
account available to the contras.
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The Israeli government confirmed yesterday it had transferred arms to Israel
for the United States but denied it knew payments were channeled to the contras.
Contra leader Adolfo Calero said in Miami his organization had not received
any of the funds decribed by Meese.
Administration sources discovered the diverted funds late last week when
they reviewed a secret intelligence interception of communications in which
Iranians and perhaps others discussed the price of the weapons in amounts far
higher than their actual value, the Washington Post said today.
In addition to Reagan's own commission, the Iran operation triggered an
apparently open-ended series of investigations, including a continuing probe by
Meese's Justice Department into possible criminal action and several, already
under way or planned, in Congress.
l'D Rep. Peter Rodino, a New York Democrat, and Sen. Patrick Leahy of Vermont
called for appointment of a special prosecutor, as was done in the Watergate
investigation of President Richard Nixon's White House, to investigate who had
known what and when about the Iran affair.
Senate Republican Leader Robert Dole of Kansas praised Reagan but added:
"The revelation that there is some kind of connection, apparently via
unauthorized actions, to private efforts to aid the contras is a bizarre twist
which has to be explored thoroughly before any final judgments are drawn."
Sen. Sam Nunn, a Georgia Democrat who will head the influential Armed
Services Committee in the new Senate, said: "it appears there may have been
legal violations (in the Iran operation) and I am sure the Attorney General is
going to make a thorough and exhaustive study of these."
At least five laws dealing with control of arms exports, anti-terrorism,
Congressional oversight of intelligence operations and military aid to the
contras were possibly contravened, according to critics.
In addition, many quarters questioned how North, a low-ranking Marine
officer, could have carried out a wide-ranging operation involving the transfer
of millions of dollars.
Leahy, currently vice chairman of the Senate Intelligence Committee, said:
"Somehow Colonel North was able to set up a Swiss bank account, move $30 million
around and nobody knew what was going on."
Leahy added: "I feel very, very confident that lies have been told by people
within the administration and lies continue to be told."
Sen. David Durenberger, a Minnesota Republican, said: "I think Ollie North is
not a Lone Ranger ... operating strictly on his own," and added his committee
hoped to take testimony from the Marine colonel.
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Durenberger added: "It's going to be a cold day in Washington before any more
money goes into Nicaragua."
The role of the Central Intelligence Agency ( CIA) was also unclear.
Authoritative sources said it apparently got arms from the Defense Department
and sold them to the Israelis for resale to Iran. But members of Congressional
F- intelligence committees said they did not think CIA Director William Casey had
lied to them when he said he had no knowledge of the dealings.
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However, Leahv said: "I am not convinced there were not people in the CIA
who knew this was going on."
There was also doubt whether the heads of Poindexter and North would be the
only ones to roll.
Rep. Les Aspin, chairman of the House Armed Services Committee which has been
holding hearings on the Iran affair, said the president had done the right thing
in "clearing the decks" but suggested more departures may be necessary.
"Poindexter and North were involved ... but the other two were (White House
chief of staff Donald) Regan and (Secretary of State George) Shultz," said
Aspin, a Wisconsin Democrat.
"If you have a clearing of the decks, you have to make sure you clear the
decks far enough ... and the question now is whether (dismissal of) Poindexter
and North has done it."
Meese urged all senior officials, who have been bickering and backstabbing
over who knew what and when in the Iran affair, to "stand shoulder to shoulder"
with the president in the crisis.
Shultz, who was reported to have aroused White House animosity by repeatedly
distancing himself from the whole operation, yesterday pledged support for
Reagan's initiative.
"I think the president has been giving magnificent leadership. We have a
foreign policy in place that is strong, that is serving the interests of the
United States ... and I am proud to be a part of the president's efforts in this
regard, including what we are trying to do in the Middle East," he said.
Some analysts said Shultz had recaptured control of foreign policy for the
State Department from the National Security Council, but others predicted
continuing hostility by White House staff would eventually bring about his
resignation.
The Washington Times said today the money Iran used to pay for the U.S. arms
was supplied by Saudi Arabian interests. Quoting well informed sources who asked
not to be identified, the report said the Saudis were persuaded by North it
would be in their interest to help Iran buy the arms.
The telling argument to the Saudis, the Times said, was that it would ease
relations with Iran, which have been tense because Saudi Arabia supported Iraq,
Iran's enemy in their six-year war.
it would also give them a way to help the Nicaraguan rebels, whom they have
been reported as supporting, although contra leasers have said they had no funds
from Riyadh.
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