CLOAK AND DAGGER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00587R000100200032-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: August 30, 2011
• Sequence Number: 32
• Publication Date: November 17, 1986
• Content Type: OPEN SOURCE

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NEWSWEEK
17 November 1986
Cloak and D
I t was the seventh anniversary of the
seizure of the American Embassy in
Teheran, and Hojatolislam Akbar Ha-
shemi Rafsanjani was exultant. A
cloak-and-dagger tale in a Lebanese
publication was embarrassing the Great
Satan, and the speaker of Iran's Parlia-
ment was only too pleased to confirm it.
According to the Beirut magazine Al
Shiraa last week, five American govern-
ment officials, including former National
Security Council chief Robert C. McFar-
lane, had flown secretly to Teheran in re-
cent months, bearing gifts. In Rafsanjani's
embellishment, some of the gifts were sym-
bolic: a cake in the shape of a key for
opening new ties), a Bible inscribed by Ron-
ald Reagan. There was even a promise of
Colt automatic pistols for top Iranian offi-
cials. In either version, however, the real
offering was startling: a planeload of U.S.
military hardware. Iran did not rise to the
bait, said Rafsanjani. "We told [them] wedo
not accept the gifts and had nothing to talk
about with them," he said. The Americans,
he gloated, "have resorted to us to solve
their problem in Lebanon."
The sudden revelation that the United
States had been courting the Khomeini
regime all but overshadowed last week's
joyful homecoming of David Jacobsen, the
55-year-old hospital administrator from
California who had been held hostage in
Lebanon for 17 months by the Islamic Ji-
had, a Muslim fundamentalist group with
close ties to Iran. Ever since taking office,
President Reagan has vowed that the Unit-
ed States will never negotiate with terror-
ists. Healso has pressed other nations foran
arms embargo of Iran. Yet for more than a
year the White House has secretly permit-
tedshipmentsofU.S. military equipment to
Teheran in return for help in securing the
release of Americans kidnapped by Iran's
Lebanese allies-and in apparent hopes of
someday restoring relations with a poten-
tial Middle East superpower.
It was an operation requiring tight con-
trol: all save a few senior National Security
Council (N SC) officials were kept in the
dark about the details, and the Central
Intelligence Agency, too, was bypassed, out
7 -concern that a covert UIA-rG'n venture
would have to be disclosed to Congress.
Since the operation began, Iran has re-
ceived-mostly through Israeli interme-
diaries-more than $60 million worth of
materiel, including antitank missiles, ra-
dar systems and spare parts for Iran's ag-
ing fleet of F-4 Phantom jets-all needed
for its stalemated war against Iraq.
Presidential mezzle: The seeming violation
of the no-negotiations policy disturbed
some senior administration officials, how-
ever, notably Secretary of State George
Shultz. Restrained from direct comment by
a presidential muzzle. Shultzmadeclear his
objections in conversation with reporters
aboard his plane returning from Vienna
arms talks. Otherssuggested that the prom-
ise of military supplies was actually an in-
centive to further kidnapping: "They'll al-
ways want to keep one (hostage] back," said
an NSC official. And, despite an emotional
plea from Jacobsen that reporters "be re-
sponsible and back off "from what he called
"unreasonable speculation" about the hos-
tages' plight-a request the press hon-
ored-sources in the U.S. government and
elsewhere continued to leak details con-
cerning the larger issue: was the secret op-
eration a first step toward the diplomatic
rehabilitation of Iran? McFarlane in par-
ticular "harped on the need to establish
links with Iran," said an Israeli source who
worked closely with McFarlane in his NSC
days. "He thought it was inadmissible that
a country as big and important as Iran
should be permanently in an orbit hostile to
the West and the United States."
The idea of bargaining arms for hostages
first arose sometime in the first half of
1985, NEWSWEEK has learned, when White
House aides began to abandon hope of help
from Syria. Despite ostensible Syrian con-
trol of the east Lebanon territory where
Islamic Jihad and other Islamic fundamen-
talist groups flourish, the fundamental-
ists-mostly Lebanese Shiite Muslims-
look to the Ayatollah Ruhollah Khomeini
pf Iran as their spiritual leader. Thus,
while Syrian President Hafez Assad would
get credit for the release of the TWA hos-
tages in June 1985-arranging to fly them
home from Damascus-it was [ran that
pulled the strings. "We tried the Syrian
angle very hard at first, thinking it would
be fruitful," said a Reagan aide. "But in the
wake of' the TWA hostage situation. we
realized that Syria didn't have the key.
Assaddidn't have the key he told us he had."
But even covert relations with a suspi-
cious Teheran do not come easily. Accord-
ing to one State Department source, the
administration tried to determine through
intermediaries whether Iran's religious
leaders would use their influence with the
militants in Lebanon to free the hostages.
The response, this source said, was "very
fuzzy and very negative." In their eyes the
United States was still an evil empire. But
there was one thing the Iranians wanted
very badly, they hinted: spare parts for
their fleet of'warplanes, purchased from the
United States by the late Shah Mohammed
Reza Pahlavi and now mostly grounded.
Washington, however, was hemmed in by
its cal l for an Iranian arms embargo.
or
Good-will gesture: At that point, Israel
stepped in with a timely offer, NEWSWEEK
has learned. David Kimche, a highly re-
spected senior civil servant appointed to
Israel's Foreign Ministry as director gen-
eral, suggested to then Prime Minister
Shimon Peres that Israel-as a gesture of
good will to the Reagan administration-
share its Iranian expertise and contacts.
Even Lifter the emergence of the bitterly
anti-Zionist Khomeini regime, Israel had
kept arms flowing to Teheran-a non-
Arab Islamic state with which it tries to
maintain a covert working relationship,
in part because of Iran's war with Iraq.
The Israelis may also have seen a U.S.
weapons deal as a cover that would enable
them to continue the profitable transac-
tions on their own.
In any event, Kimche suggested that Ja-
cob Nimrodi, 60, a former Mossad agent
with long experience in Teheran-he is
now a multimillionaire arms dealer oper-
ating out of London and New York-make
available to Washington his vast contacts
in Iran. Peres approved the idea, and
Kimche flew to Washington to present the
proposal personally to McFarlane, then
still' at the NSC. McFarlane said yes-
more, apparently, out of concern about
future U.S.-Iran relations than from en-
thusiasm for a hostage deal. Another Israe-
li, American-born Al Schwimmer, 70, who
founded Israel Aircraft Industries-manu-
facturer of Israel's Kfir jet fighter and oth-
er sophisticated weaponry-joined the
team as liaison with McFarlane. The Israe-
lis also enlisted the services of an Iranian
exile named Manucher Ghorbanifar. A
close friend of Iranian Prime Minister Mir
Hussein Moussavi, Ghorbanifar lives on
the French Riviera, maintains an office in
West Germany and is one of Iran's prime
sources of military supplies.
One senior aide maintains that the presi-
dent was fully on board. But McFarlane
and his freewheeling counterterrorism
aide, Marine Lt. Col. Oliver North (page
52), were the point men, and they operated
in such tight secrecy that most White
House officials, including spokesman Lar-
ry Speakes, knew nothing about the weap-
ons-for-hostages scheme at the time. The
notion of using Israel as a conduit for fun-
neling spare parts to Iran set off alarm bells
among U.S. diplomats and intelligence
sources, however, and led to heated clashes
between the State Department and the
NSC. Secretary of State Shultz was "aware
Continued
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of the general outline" of the plan, accord- sent to Teheran. On this occasion, with among them: Mehdi Hashemi, a relative by
ing to one department source, and ex- Israel running low on its own supplies of marriage who has acted as liaison with
pressed his "concern" on more than one U.S.-made spare parts, the Americans de- Iran's terrorist surrogates in Lebanon and
occasion. But, as one State Department livered the equipment directly to a site in elsewhere. He was arrested last month on
hand said, "This was an NSC project. State Portugal. It was reloaded on a charter jet charges of treason. To strike back at Raf-
was outraged." and flown to Israel for a change of pilots sanjani and the "moderates," some Iran
As the professional diplomats saw it, the before continuing on to Teheran. Again the watchers suspect, Hashemi's followers in
NSC was in danger of compromising Amer- Iranians failed to deliver a hostage. Again Lebanon leaked the details about McFar-
ican credibility on several fronts for the Nimrodi called Moussavi to complain. lane's secret flight to the West Beirut mag-
sake of a short-term goal: the release of a Again Moussavi claimed that Iran had no azine Al Shiraa. According to the specula-
half dozen hostages. Any deal that became control over the militants in Lebanon. tion, Rafsanjani delivered last week's
public-and State Department officials Despite the apparent foot-dragging, the speech taunting the United States in order
prophetically argued that the Iranians Iranians were cooperating. When Hizbul-
could not be trusted to keep a secret- to throw off suspicion that he consorted
would undermine the U.S. position on not lah(Party ofGod) militants failed todeliver with the enemy.
negotiating with terrorists and even spill Weir after the first plane shipment, the McFarlane refused to give a public ac-
over into already unsettled relations with Israelis learned later, Teheran sent armed count of his reported mission. But Al
Iraq and Syria. At worst, one embittered militiamen-presumably Iranian Revolu- Shiraa provided a distinctly different ver-
U.S. diplomat complained, the United tionary Guards stationed near Baalbek in sion than the humiliating sojourn depicted
States would end by sending Iran hardware the Bekaa Valley-to force the extremists by Rafsanjani, in which the former high
for hostages while their Shiite allies kept to give up the American. Hoping for a re- American official was said to have been
on "picking up new hostages. It was an on- peat, the Israelis arranged for the ship- placed under house arrest for five days,
going foreign-aid program." ment of two additional planeloads in No- then unceremoniously sent packing. Ac-
Broach of promise: But the deal apparently vember. But at the last minute the White cording to Al Shiraa, McFarlane stayed at
went ahead. Working through Ghorbani- House-apparently frustrated by Iran's the Independence hotel-formerly the Te-
far, the Israelis secured the promise of frequent stalling tactics-canceled the heran Hilton-and met with senior gov-
Iran's Prime Minister Moussavi to release takeoff. ernment officials as well as with Mo-
one American hostage within 24 hours fol- On Dec. 4 McFarlane resigned from the hammed Ali Hadi, chairman of the Iranian
lowing the delivery of one planeload of NSC and was succeeded by Vice Adm. John Parliament's foreign-affairs committee.
U.S.-made weaponry paid for by the United Poindexter. Around this time Kimche, White House sources confirm that McFar-
States. The deal was approved by McFar- Schwimmer and Nimrodi, caught in a bu- lane traveled to Teheran at least once,
lane at a meeting with Kimche in London reaucratic power play, dropped out of the though the date is in dispute. Some sources
on Sept. 3, 1985. Soon after, the Israelis picture and were replaced by Amiram Nir, say he went in May, others say that it was in
chartered a DC-8 and loaded it up with the Israeli prime minister's adviser on ter- September-and that he did indeed travel
TOW antitank missiles, spare parts and rorism. After a brief hiatus, the pace of aboard a plane carrying military equip-
shipments to Iran picked up under the new ment, as Al Shiraa claimed.
ammunition. An Israeli pilot flew it direct- team. Under Nir's direction, ships loaded Whatever the case, critics of the secret
ly to Teheran. But the next day no hostage with ground-to-air missiles, ammunition operation hold that McFarlane miscalcu-
was released. and spare parts shuttled regularly between lated badly if by going to Teheran he sought
After waiting a few days, Nimrodi, who the Israeli port of Elat and the Iranian port to develop personal contacts with "moder-
speaks fluent Farsi, placed a direct phone of Bandar Abbas-eventually producing ate" elements in Iran. Since the fall of the
call to Moussavi and complained about the the release of the Rev. Lawrence Jenco, a shah, said William Quandt, a Middle East
Iranian breach of promise. Moussavi re- Roman Catholic missionary, last July. Ja- specialist at the Brookings Institution in
plied that the Iranian government had no cobsen's release last week, according to Is- Washington and member of the NSC in the
control over the hostages, but he promised raeli sources, was cemented by a shipment Carter administration, any hint that the
to try again if Israel would send another of materiel that left Elat only a few days United States favored a particular Iranian
planeload of supplies. Nimrodi countered earlier in a ship that "flew no flag."
that the deal was one planeload, one hos- Pfstachie Met. (The shuttle of ships be- times l has been a kiss of death-some-
tage. Moussavi balked but said that he tween Elat and Bandar Abbas has pro- times literally, as in the case of the execut-
would send through Ghorbanifar a check duced a curious side effect-a pistachio-nut ed Foreign Minister Sadegh hostage criadeh,
for $10 million in payment of the first ship- glut in Israel. Apparently for the sake of who during the 444 day hostage crisis of
ment. He did so, but the Israelis returned it the ruse, each ship has returned from Iran 1979-81 pursued contacts with Jimmy Car-
via another intermediary to emphasize with a huge cargo of pistachio nuts for the ter aide Hamilton Jordan. "The time is
that they insisted on payment in hostages. Israeli market. Since August-sometime not yet right for any Iranian faction to have
A second DC-8 flew from Israel to Teheran, after the Danish freighter Ilsa returned to such a high profile with the West," says
and on Sept. 14 a hostage was released: the Elat from its fourth trip to Iran with mili- Quandt. To suggest that someone more
Rev. Benjamin Weir, a 62-year-old Presby- tary equipment and spare parts-pista- pragmatic might be more pro-American or
terian minister kidnapped in Beirut 16 chio-nut prices have dropped by half on the pro-West is self-delusion, in the view of
months before. Although the Syrians Tel Aviv market.) many experts. "Everybody [in Iran] is
claimed credit for gaining his freedom, Is- Meanwhile, Iran's longstanding faction- anti-American, even if some are more will-
raeli sources say that Schwimmer and al rivalries seem to be deepening-and this ing to deal with the United States than
Ghorbanifar actually coordinated with Ira- may have triggered last week's revelations others," said Gary Sick, another Carter
nian contacts the time and place of his of the secret missions. A dispute has devel- NSC staff member.
release. oped between the "pragmatists" who are Still, some American academics and in-
The Israelis then brokered a third plane- willing to deal with the West and the hard- tells enceexperts do give McFarlane credit
load of arms to Iran. Each load was worth liners determined to export Iran's Islamic for trying. James Bil , a prominent ran
$10 million to $15 million at going arms Revolution Ibox). Rafsanjani, the speaker sc o aratt eUniversityofTexas,believes
prices. The deals were entirely financed by of the Parliament, is seen as a leading prag- that Iran is at a "critical crossroads" in
the United States, which either supplied its matist. The hard-liners include people both its internal politics and its relations
own equipment or else compensated the close to Ayatollah Hussein Ali Montazeri, with the United States. He detects a "mel-
Israelis with new versions of the hardware Khomeini's designated successor. Chief ' lowing and modifying" trend, illustrated
Continued
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3
by the recent arrest of Hashemi and others
responsible for "encouraging violent acts"
in Lebanon, Saudi Arabia and Kuwait.
While he would have preferred the use of
quiet diplomatic back channels, he never-
theless applauded McFarlane's efforts to
establish a dialogue with Iran as "wise and
prudent."
No one disputes the strategic importance
of Iran itself. With a population of 45 mil-
lion, a large and willing army of soldiers
and militiamen, vast deposits of oil and an
economy of enormous potential despite its
current disrepair, Iran could be the super-
power of the Persian Gulf. Its long border
with the Soviet Union and its extensive
coastline facing other main oil-producing
countries give it unique geopolitical status.
Following the Soviet invasion of Muslim
Afghanistan, Iran has become militantly
anti-Soviet, which creates an opportunity
for the United States. "If we lose Iran to the
Russians, the world gets cut in half," said
former CIA Director Richard elms, who
served as ambassador in a eran under
the shah. "It would a grievous setback
or the United a es.
rentua r ory: ere was as much risk as
prudence in the new attention showered on
Iran. Stripped of his reputation as the key
power broker in the Middle East, Syrian
President Assad might revert to his famil-
iar spoiler's role in regionwide transac-
tions. Even more worrisome is the possible
effect on Saudi Arabia and other Arab
states that fear both Iran's Islamic militan-
cy and its military prowess. Although the
United States is officially neutral in the
six-year-old Iran-Iraq war, its announced
attempts to cut off Iran's military supplies
have always suggested a tilt toward Iraq.
Now, despite White House disclaimers, the
apparent U.S. willingness to supply Iran
could be interpreted as a signal that the
United States is willing not only to see
other nations sell arms to Iran, but also pean Community meeting in London this
to contemplate an eventual Iranian victo- week, France may agree to all of Britain's
ry. The result, said Gary Sick, could be a proposed sanctions against Syria-though
strong and negative "psychological im- not to the point of breaking relations with
pact" throughout the Persian Gulf. Damascus.
At the same time, Washington's playing In the end, the ones most overlooked in
of the Teheran card might tempt France to the controversy over the McFarlane mis-
sion were the hostages David Jacobsen left
behind in Lebanon: Associated Press corre-
spondent Terry Anderson; Thomas Suther-
land, dean of agriculture at American Uni-
versity of Beirut; Joseph Cicippio, an AUB
accountant; Frank Reed, the head of a pri-
vate school in Lebanon; Edward Tracy, a
children's-book author kidnapped only last
Amonth, and William Buckley, a U.S. Embas-
sy officer reported to have been killed. The
publicity surrounding the secret missions
seemed to be at least a temporary setback to
further hostage negotiations. With the
Iranians back on center stage and Reagan
officials now giving briefings in the wings,
the debate over the administration's secret
strategy is certain to intensify. But for the
moment, the White House was not giving
up: on the weekend an emissary was head-
ing across the Atlantic, full of hope. The
question was: with the principle of bargain-
ing established, how high a price would the
next hostage command.
AN Gus DEMINGU4th MILAN J. KURIC
tn.lerusalem. 1MARGARETGARRARD WARNER
IIWu.ih,n/;ton. FRED Co L EM A N In Paris.
CHRISTOPHER DICKEYInCrprusandbureaureports
'Be responsible and back off': Hostages Cicippio, Tracy, Anderson, Sutherland and Reed, at possible risk from publicity
Continued
MOSHEN SHANDIZ-SYGMA
Strapped for spars parts, Teheran slugs it out against Bat": Iranian soldiers at the front
seek a somewhat similar remedy for its own
troubles in the Mideast. Islamic militants
hold eight French hostages in Lebanon, and
the government of Prime Minister Jacques
Chirac-like the Reagan administration
before-has looked to Syria for help in gain-
ing their release. For that reason France
balked at supporting Britain's call for stiff
sanctions against Syria after a London
court's recent finding that implicated As-
sad's government in a terrorist attempt on
an El Al airliner. Indeed, according to press
reports, France has promised to supply Da-
mascus with sophisticated weaponry. But
so far Syria has failed to deliver any French
hostages, and France may already be reach-
ing toward Teheran. Last month France
agreed to repay a $1 billion loan to Iran
dating from the shah's days. And at a Euro-
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