TIME: Almanac 1993/TIME Almanac 1993.iso/time/caps/86/86capts.14

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                ╙'7±                                                        ╚December 8, 1986

IRAN-CONTRA

Who Was Betrayed?


While his aides were out of control, Reagan was out of touch


They were only five words, and rather bland ones at that. But
they were among the most self-damaging the President of the U.S.
could have uttered. "I was not fully informed," Ronald Reagan
told the reporters he summoned to a special briefing last
Tuesday. In an attempt to defend himself from suspicion of
complicity in the biggest scandal to threaten Washington since
Watergate, he thus highlighted the most fundamental flaw in his
stewardship of the presidency, one that could undermine his
effectiveness for the remaining two years of his term.

More immediately shocking, to be sure, were the other matters
that Reagan and Attorney General Edwin Meese went on to
disclose. America's secret sale of arms to Iran, distressing
enough to begin with, had turned into an outright scandal: much
of the money Iran paid for the weapons had been diverted to the
contras in Nicaragua. There was every indication that laws had
been broken. Heads were starting to roll: Reagan had accepted
the resignation of National Security Adviser John Poindexter,
the fourth departure from that critical post in six years, and
fired Marine Lieut. Colonel Oliver North, Poindexter's
subordinate in the National Security Council. Perhaps most
startling of all, Reagan and Meese were asking the nation to
believe something that seemed flat-out incredible: that Ollie
North, a furtive, 43-year-old member of the NSC staff who
operated out of an office across the street from the White
House, had arranged the contra scam without the knowledge of the
State Department, the Defense Department, the CIA, the Joint
Chiefs of Staff, the White House chief of staff or anyone in
authority except his boss, Poindexter, who did nothing to stop
him.

It was more than enough to raise dread echoes of the word so
often tossed around in hyperbole, so rarely in earnest:
Watergate. The parallels might be exaggerated--this scandal,
after all, was announced by the Administration rather than
forced out by the courts--but they were there just the same.
Once again there were rumors of documents being destroyed (by
North and Poindexter). Once again the White House was resisting
demands for a special prosecutor (now called independent
counsel) put forth by Congressmen who did not trust the
Administration to investigate itself. Once again congressional
hearings were getting ready to launch upon their unknown and
potentially damaging course. Worst of all, there was a revival,
before last Tuesday's press briefing was over, of the quietly
poisonous question so well remembered from 1973: "What did the
President know and when did he know it?"

Yet in the end the truly shattering possibility presented itself
that Reagan really did not know what was happening across the
street. Indeed, questions about what he did not know and why he
did not know it seemed fully as unsettling as their echoes from
the Watergate era. That little secret everyone shared about the
President--that he is oblivious to the nuances of his policies,
out of touch with the daily operation of Government and blithely
detached from distracting bits of fact--has begun to seem in the
wake of Iceland and Iran and Nicaragua, to be far more dangerous
than bemusing.

In the past few years these tendencies have combined with two
others that were almost bound to cause trouble sooner or later.
One is a penchant for covert actions that fit in with Reagan's
gung-ho activism. Finding some legal justification for them was
another of those details that the President left to aides. The
other tendency was to delegate disproportionate authority to
subordinates who took a can-do approach, and then to let them
operate with little supervision. In retrospect it seems absurd
that so ostensibly minor a functionary as North would have been
entrusted with such delicate matters as negotiating freedom for
American hostages held in Lebanon and organizing a secret
network to supply the contras. And not only seems--it was
absurd, and it got Reagan right into a dangerous mess. For
almost six years Reagan got away with his approach to the
presidency. In fact, he managed to convince the public, and
even some of his critics, that it was part and parcel of his
magic for dynamic leadership. Like his policies or not, it felt
right to have a president who kept his eye on bold initiatives
and left the details to experts. Certainly mistakes were made,
and in the field of foreign policy in particular the
Administration often seemed to be speaking in a cacophony of
quarreling voices that the President could not or would not
harmonize. But on the whole the results appeared to be good.

Now, however, in the suddenly intertwined cases of Iran and the
contras, all the distressing tendencies of the Administration
have combined to produce the kind of blunders that resonate far
more than an error in judgment, however serious. Errors in
judgment can be, and in Reagan's case regularly have been,
forgiven. But this disaster throws a pitiless light on the way
the President does his job, confirming the worst fears of both
his friends and his critics. Simultaneously stumbling into the
Iran fiasco and allowing a bizarre scam to fund the contras to
take place had an impact powerful enough to scar Teflon
precisely because the events seemed to reveal personal
characteristics that were both fundamental and worrisome.

For that very reason, perhaps, Reagan stubbornly refuses to
admit he made any mistakes. Yes, he concedes, the diversion of
funds to the contras was "improper"--but then he did not know
about it. He fails to see he should have made it clear that he
would not tolerate any flouting of the express will of Congress.
And as for secretly slipping arms to Iran--well, he did it for
the worthy motives of restoring American influence in a
strategically vital nation and securing the release of hostages.
"I think we took the only action we could have in Iran," he
said in an interview with TIME last week. "I am not going to
disavow it. I do not think it was a mistake." Even now he seems
unable to appreciate that this action shattered his own
vehemently proclaimed principle of never paying ransom to
terrorists, and in the process dented the moral stature and
credibility that is the true source of America's unique clout
in world affairs.

For the same reasons, the blunder is a peculiarly difficult one
to repair. DIsastrous policies can be reversed, subordinates
who get a President in trouble can be replaced, and those who
may have broken the law can be punished. What is not readily
recoverable, once it has been lost, is trust. And Reagan has
seriously, if unwittingly, strained the trust of allies,
Congress and the American public in his Administration's
credibility and competence. it is too early to say that his
Presidency has been crippled, though that could happen if the
dismaying pattern of new revelations and unconvincing
explanations continues much longer. But it seems almost certain
that whatever comes of the many investigations now in progress,
Reagan will emerge as a diminished President, his aura of
invincibility shattered, his fabled luck vanished, his every
policy regarded with new suspicion.

That had been a strong possibility even before last week's
bombshells about the contra cash diversion. The sale of arms
to Iran had hit a raw nerve in a public still nursing bitter
memories of the violent anti-Americanism displayed during the
hostage crisis of 1979-81, and the Administration's early
explanations of the rationale and methodology of the shipments
convinced hardly anyone. Briefings of the Senate and House
intelligence committees by Poindexter, CIA Director William
Casey and other officials on Friday, Nov. 21, failed to dispel
congressional feelings that the full story had still not come
out. The Congressmen did not know that Meese shared their
opinion. The day before the briefings, Meese called his
assistant, Charles Cooper, into his office for a long review of
legal issues that Congressmen might raise. The more they
studied what the Administration officials proposed to say, the
more Meese became convinced that they were not entirely sure
what they would be talking about. Says Meese: "A lot of people
didn't know certain things that were going on that were being
done by others."

Worried that the Administration was about to damage its case,
Meese went to the White House Friday morning, while the
briefings were in session, to lay out his fears to the
President. They were joined by White House Chief of Staff
Donald Regan and Poindexter. Poindexter's head may already have
been on the block; Regan had been talking, perhaps
inadvertently, about the National Security Adviser's departure
as if it were an accomplished fact.

In any case, the President authorized Meese to conduct an
investigation and report results to him before the next meeting
of the National Security Council at 2 p.m. the following Monday.
It was a natural move; some of Reagan's retinue of unofficial
advisers from California had begun pressing to have control of
the Iran mess turned over to old Reagan loyalists, of whom Meese
is one of the most trusted.

Meese chose a select team of three assistants, including
Charles Cooper, who assembled and read documents Friday night.
On Saturday they began their questioning. The Attorney General
called on Secretary of State George Shultz at home and talked
with Secretary of Defense Caspar Weinberger and CIA Director
Casey as well. Other investigators questioned Poindexter and
his predecessor, Robert McFarlane, who had begun the contacts
with Iran. Meese's assistants pored over North's papers in his
office from early Saturday morning until late into the evening,
then summoned North to Meese's office in the Justice Department
on Sunday for a session that lasted all afternoon.

When the questioning began, nobody except North, Poindexter and
McFarlane knew of the trail that would lead from Iran to the
contras, or so goes the official story to date. On Saturday,
however, Meese's team came across some puzzling and alarming
evidence, in the form of "intercepts," hinting that Iran had
paid more for U.S. weapons shipped through Israel than the $12
million the U.S. had received for the arms. "Intercepts" is
intelligence-community jargon for transcripts of telephone or
cable messages that have been wiretapped. Says Meese: "There
was talk in the field that there were deficiencies in the amount
of money involved, and we found some documents that hinted at
this happening."

On Monday Meese went to the White House early to brief the
President and late in the day interviewed Vice President George
Bush. Bush later told TIME he is convinced the "President is
telling the full and total truth". That afternoon the NSC met
as scheduled, but the problems that had surfaced in Meese's
inquiry were not discussed in detail.

The President had other matters to worry about. He had to cope
with an open rebellion by the State Department, the most
astonishing example yet of how deeply his Iran policy had split
his own Administration. The previous week, Shultz had won
Reagan's grudging announcement that there would be no more arms
sales to Iran, but the Secretary was not satisfied. Just before
the NSC met, he dispatched Deputy Secretary of State John
Whitehead to testify at a hearing of the House Foreign Affairs
Committee. Whitehead directly contradicted Reagan's repeated
assertions that U.S. contacts with Tehran had caused IRan to
moderate its support of terrorism. Said Whitehead: "I don't
like to differ with my President, but I believe there is still
some continuing evidence of Iranian involvement in terrorism."
One U.S. official considered Whitehead's testimony "tantamount
to a declaration of war."

If so, Shultz won the war. At the NSC meeting Reagan agreed to
give the Secretary of State full control of future Iranian
policy. It was more a symbolic than a practical victory. Since
arms sales have been ended and Shultz is not eager to resume
diplomatic contacts with Tehran, even supposing Ayatullah
Ruhollah Khomeini would allow any, there is no longer much of
an Iranian policy to be in charge of. The State Department
nonetheless exultantly trumpeted its triumph and announced that
Shultz now planned to stay in office until the "end of the
Administration." Well, maybe: the Secretary is still under
fire at a displeased WHite House for this rebellion.
Speculation continues that the Secretary will quietly depart in
another few months after the uproar dies down.

Following the NSC meeting, events moved quickly toward the
climax almost nobody in Washington had anticipated. Late Monday
afternoon Meese personally questioned Poindexter for the first
time and got the impression that the National Security Adviser
was ready to quit. Poindexter, who is a Vice Admiral, promptly
confirmed that desire by immediately offering his resignation
to Reagan, who accepted it the next morning; he told the
President he wanted to return to active duty in the Navy.
Nobody made any attempt to dissuade him. According to one
insider, Reagan was far more angry with Poindexter than the
President would let on in public. North was "relieved of his
duties," as Reagan put it, sometime Tuesday morning. Although
he had tendered his resignation beforehand, he found out about
his ate officially only when Reagan and Meese went on
television.

At a special meeting Tuesday morning, Meese laid his findings
before the NSC. The advisers agreed that the Administration had
to disclose immediately what the Attorney General had
discovered. Reagan had asked Meese to conduct the press
briefing that was scheduled for noon that day. "I was not being
apprised of a great opportunity," joked Meese, but his manner
belied his words. He spoke with verve and at times appeared to
be enjoying playing again the prosecutor he once was.

The essence of his report was stark and startling. The U.S.
had provided $12 million in weapons and spare parts to Israeli
representatives. They then resold the arms to Iran for a much
higher price, and the money was paid into Swiss bank accounts.
The CIA received the original $12 million and repaid it to the
Pentagon. But anywhere from $10 million to $30 million went
into numbered accounts that Meese said were "under the control
of representatives" of the contras. Presumably, the money was
used to purchase weapons that the rebels need to wage their
guerrilla war against the Marxist Sandinista government of
Nicaragua. North was, according to Meese, the "only person in
the United States Government" who knew precisely of the money
transfer. Poindexter knew vaguely about the transactions, and
McFarlane learned something about them while pursuing diplomatic
contacts with Iran as a special presidential emissary after he
had resigned from the NSC. But neither seems to have told
anybody in the Administration's chain of command. Later in the
week, Meese added that "one or more consultants" to the
Government, whom he would not name or further identify, also
appear to have been involved.

The immediate result of Meese's revelations was a spate of
denials. In Jerusalem, the three top officials of the Israel
government--Prime Minister Yitzhak Shamir, Foreign Minister
Shimon Peres and Defense Minister Yitzhak Rabin--met in a crisis
session and drafted a statement. For the first time, the
government admitted what everyone knew: Israel had "helped in
the transfer of defensive weapons and spare parts from the U.S.
to Iran." But the Israelis flatly denied funneling any money
to the contras. According to the statement, "The payment for
this equipment was made directly by an Iranian representative
to a Swiss bank, in accordance with instructions from the
American representatives."

More surprising, Adolfo Calero, one of the three directors of
the contras' umbrella organization, vehemently insisted that
neither he nor any colleague that he knew of had got the cash,
or received arms that would have cost anything like $10 million
(let alone $30 million). His statements caused some private
grumbling among delegates to a contra meeting in Costa Rica;
some appeared to suspect that the money might have gone into
someone's pockets.

At week's end the mystery of who did get the money from the
slush fund was developing into one of the most intriguing
aspects of the entire affair. A whole complex array of
questions awaited answers: Who, exactly, negotiated the price
Iran paid for its U.S. weapons? Who might have set up the Swiss
bank accounts and really controlled those accounts?  What
happened to the money that supposedly flowed through the
accounts?  Was it connected in any way to the arms that a
network of private donors assisted by North had supposedly
bought for the contras and had flown to them from an air base
in El Salvador?

Another controversy was developing over the destruction of
documents. North's office was not sealed until after he was
fired, and he is said to have fed some papers into a pulverizing
machine before that happened. Administration officials
contended that copies of any official documents would still
exist in Government files, and doubted North's personal papers
would have shown much; North was not a man to leave a "paper
trail." They added that if Poindexter destroyed any documents,
they were only the kind that NSC staffers routinely pulverize
every night. The Senate Intelligence Committee nonetheless
seemed concerned that something important might have been lost.
It directed a letter to the White House on Friday, urging that
Reagan ensure that all documents that might aid investigators
be saved.

The scandal over the division of funds to the contras was itself
a diversion, at least for the moment, from the boiling debate
about the wisdom and legality of shipping arms to Iran as part
of a murky effort to free American hostages. But it is not a
diversion that can give the Administration any relief, given the
devastation that could come from revelations about the contra
slush fund. Nor is it likely that the search for the culprits
who mishandled the fund will completely distract attention from
more basic questions about allowing NSC officials to operate
covert arms schemes that run counter to stated U.S. policy.

Meese was the first to admit that he did not yet have the
answers to the almost innumerable questions raised by the
Iran-contras scandal. The Attorney General pledged to continue
his investigation until he did, and Reagan backed him with an
order to all Government departments to answer any questions
Meese and his probers might pose. The President also appointed
a panel--made up of former Senator John Tower of Texas, former
Secretary of State Edmund Muskie and former National Security
Adviser Brent Scowcroft--to investigate the structure of the NSC
and its role in coordinating and carrying out foreign policy.

But no amount of Administration self-investigation is likely to
satisfy Congress. In a letter to Meese that put on the record
what many other legislators had demanded, a House Judiciary
Subcommittee requested the appointment of a Watergate-style
independent counsel. Subcommittee Chairman John Conyers, a
Michigan Democrat, bluntly challenged the Attorney General's
ability to conduct an impartial probe, citing among other things
"your closeness to the President." The White House is so far
resisting calls for such a special prosecutor. But as more
information emerges each day, it becomes less likely that the
affair can be concluded simply through Meese's probe.

In the meantime, congressional committees are rushing to
schedule hearings, many of which will focus on the possible
involvement of other Government officials or agencies in the
Iran-contras scam. First up: the Senate Intelligence Committee,
which was scheduled to hold hearings Monday to investigate what
might have been known by Casey and the CIA, which keeps close
tabs on the contras and set up a Swiss bank account to receive
money paid by Iran for U.S. arms. Says Vice Chairman Patrick
Leahy, a Vermont Democrat: "I don't see how the money could be
transferred, the logistics could be handled the arrangements
could be made, without the help of some people in the CIA." He
added ominously, "There's no question that lies have been told
by Administration officials." At the closed-door session,
witnesses will be required to testify under oath.

The House Foreign Affairs Committee is already investigating
legal aspects of the arms shipments, and its members can expect
to be joined soon by many other congressional probers. They
will be mining a rich lode: the list of laws that might have
been broken by the arms shipments to Iran, the diversion of
funds to the contras, or both, is a long one.

First is the Boland Amendment, which forbade any use of federal
funds to aid the contras from 1984 until this October, when it
expired. Meese contends that "provisions had been made by
Congress to permit the U.S. to seek funding from third
countries," such as Israel, but he appears to be simply wrong.
The amendment was rewritten last year to include an explicit
prohibition against U.S. solicitation of third-country
financing, and that ban was in effect throughout the time
Iranian money supposedly was being funneled to the Nicaraguan
rebels.

Next, at least three arms-export laws include bans against the
exports of U.S. arms to countries that support terrorism--and
the Reagan Administration has formally identified Iran as such
a country. The laws do provide waivers that allow the President
to skirt them in the event of a crisis, but they generally
stipulate that the White House notify Congress, which it did not
do. More generally, the Intelligence Oversight Act requires
prior notice of covert operations to the House and Senate
intelligence committees.

Finally, some legislators are raising the question of whether
North and possibly others could be prosecuted under laws banning
the spending of money on secret missions that are not authorized
by Congress. The CIA is exempted from one of these statutes,
but other federal bodies, notably the NSC, are not. Unlike the
Boland Amendment and the Intelligence Oversight Act, the laws
against unauthorized transfers of funds provide criminal
penalties against violators.

One potential casualty of the revelation last week is the goal
that the bizarre scheme was intended to further: keeping alive
the contra struggle, which after five years of stop-and-go
funding has yet to seriously threaten the existence of the
Sandinista regime in Nicaragua. The President's fervent support
for the contra cause is the most visible manifestation of what
has been called the Reagan Doctrine, America's attempt to
counter the spread of Communism by fostering insurgencies to
undermine Moscow-backed regimes. After a long struggle, Reagan
squeezed out a narrow victory this May by persuading Congress
to authorize renewed, open military aid to the contras, who will
be provided with $100 million during the current fiscal year.

Even before last week's revelations, the President faced a hard
and uncertain fight to get the funding renewed when the new
Congress meets in January. Now Capitol Hill resounds with
predictions that angry legislators will cut off aid again as a
kind of punishment to North and those in the Administration who
failed to monitor his activities. Says Minnesota Senator David
Durenberger, a Republican and reluctant contra supporter: "It's
going to be a cold day in Washington before any more money goes
to Nicaragua. Ollie may have killed off his Nicaraguan
program." Such a reaction has little logic. There are valid
arguments for and against helping the anti- Sandinista
guerrillas, but the issue should be debated on its merits rather
than being made a kind of extralegal, and ineffective, penalty
against the NSC.

In other areas, the Administration--and the country--might have
to pay a heavy price for this latest and most serous blow to
the credibility and competence of U.S. foreign policy. The
prestige of the President has been seriously weakened, his staff
is in disarray, and the Administration seems less able than ever
to speak with a coherent voice on matters ranging from arms
control to antiterrorism. Reagan's ability to project a sound
foreign policy was badly hurt by revelations that he deceived
the American people, Congress and the world about his stance
against dealing for hostages and sending arms to Iran. The
latest disclosures that he was likewise deceived by members of
his own staff, who zealously pursued his desire to help the
contras despite the wishes of Congress, will make it even
tougher for his pronouncements to be greeted as believable.

One American official who deals with the Soviets on arms control
is picking up disquieting signals that the Kremlin now considers
Reagan to be so weak politically that it will rethink what
concessions it might offer in order to get a deal. Says he:
"Coming on the heels of the loss of the Senate, the Iran
business seems to have raised basic questions in Moscow about
how they should deal with Reagan, whether they need to bargain
with him seriously or whether they can just wait for the next
President." Reagan's decision last week to abandon the
unratified SALT II ceilings on strategic weapons is likely to
make Moscow even more standoffish.

In the Middle East, U.S. policy, to the extent that the Reagan
Administration still has one, seems likely to be paralyzed as
well. Moderate Arab nations friendly to the U.S. feel betrayed
by the Administration's arms sales to Iran, a nation they fear
because of its potential--and unconcealed desire--to stir up
Islamic fundamentalist revolution outside its own borders. Says
one veteran Arab diplomat in Cairo: "This Reaganite crisis will
incapacitate the Administration. I am very much afraid we will
have to wait tow years [that is, until Reagan's successor is
elected] before the U.S. can play a major role in the region."

In the U.S., the fear is not of incapacitation but of that
dreadful "W" word: Watergate. However, it comes to the same
thing. All over Washington last week there was a sickening
feeling of "here we go again," a dread of another orgy of public
self-flagellation, of deepening public suspicion that might
undermine all governmental authority. Nor was that foreboding
confined to the Administration's allies. Journalists could
sense among those Congressmen most determined to investigate the
Iran-contra scandal an unspoken fear of where the investigations
might lead, a kind of silent prayer that it would not once again
be straight into the Oval Office.

There is still time to avoid the worst consequences, though only
if the Administration pushed its own investigations hard enough
and fast enough to convince its critics that it has at last
provided a full and convincing explanation of its activities,
and one that does not spare the highest officials. "I think one
iron rule in situations like this is, whatever must happen
ultimately should happen immediately," said Henry Kissinger last
week. "Anybody who eventually has to go should be fired now.
Any fact that needs to be disclosed should be put out now, or
as quickly as possible, because otherwise...the bleeding will
not end."

Pursuing such a course is not, as some might claim, a self-
destructive obsession that represents an inherent flaw in a
democracy. The strength of the nation, not its weakness, comes
from the fact that it has a government of laws, run by officials
who can be held accountable. This moral principle, more than
even its arsenal of nuclear missiles, accounts for the
fundamental strength the U.S. exerts in its dealings with people
around the world. That is why any operation--whether it be the
convert shipment of arms to Iran or the secret diversion of
funds to the contras--that is run in a manner designed to skirt
legal accountability represents such a deep danger.

--By George J. Church. Reported by Ricardo Chavira, Michael
Duffy and Hugh Sidey/Washington.