$Unique_ID{bob01045} $Pretitle{} $Title{Iran-Contra Affair: The Report Chapter 11C McFarlane Meets Ghorbanifar in London} $Subtitle{} $Author{Various} $Affiliation{} $Subject{ghorbanifar north mcfarlane iran hostages president casey cia initiative ledeen} $Date{1987} $Log{} Title: Iran-Contra Affair: The Report Author: Various Date: 1987 Chapter 11C McFarlane Meets Ghorbanifar in London On December 8, McFarlane joined Kimche, Secord, North, Nimrodi, and Ghorbanifar in London. McFarlane presented an agenda that focused on a political opening with Iran and on areas of possible common interests between the United States and Iran. In contrast, Ghorbanifar wanted to talk only about specified numbers of TOW missiles for each hostage. Ghorbanifar explained that the Iranians were very angry over receiving the wrong kind of HAWK missiles. McFarlane responded: "[G]o pound sand, that is too bad." McFarlane was "revolted" by the bargaining and found Ghorbanifar to be a "borderline moron." North's view of the meeting was slightly different. He thought McFarlane was telling Ghorbanifar that there could be no more arms sales until after the hostages were released, not that McFarlane was precluding arms sales. Once again, as the initiative began to come apart, North raised the specter of the death of the hostages in retaliation for a U.S. decision to break off the negotiations. In a memorandum to McFarlane and Poindexter, he wrote: "[A]ll it would take for the hostages to be killed is for Tehran to 'stop saying no' [to the captors]." McFarlane, North, and Secord flew back to Washington together on December 9. On the way back, McFarlane said he was very unhappy with Ghorbanifar's arms-for-hostages pitch. He viewed Ghorbanifar as a businessman interested only in profit and "one of the most despicable characters he had ever met." North was unhappy with McFarlane's negative reaction and that day wrote an "eyes only" memorandum to McFarlane and Poindexter entitled "Next Steps." In it, North reviewed options that he saw as necessary "[i]f we are to prevent the death or more of the hostages in the near future." After reviewing the problems of Ghorbanifar's untrustworthiness, Schwimmer's arrangement of previous deals that angered the Iranians and left Israel with inadequate funds for replenishment, and the United States' "lack of operational control over transactions with Ghorbanifar," North initially set out four options: the arms-for-hostage swap discussed in London, an Israeli delivery of 400 to 500 TOWs to Iran to restore "good faith," a military raid, and "do nothing." North summarily rejected the "do nothing" approach: Very dangerous since US has, in fact, pursued earlier Presidential decision to play along with Ghorbanifar's plan. U.S. reversal now in midstream could ignite Iranian fire - hostages would be our minimum losses. North testified that Casey shared his view that terminating the negotiations would lead to the death of the hostages. At the end of the memo, North described a "fifth option": the United States would directly sell arms to Iran, acting pursuant to a Presidential Finding and using Secord as an operational "conduit." The Iran initiative was restructured over the next few weeks to closely resemble this "fifth option." Moreover, using the Enterprise as a conduit for the arms sales proceeds facilitated the diversion of funds to the Contras that North had mentioned to the Israelis only a few days earlier. [On the same day that North prepared this "Next Steps" memorandum, he also met with the General Counsel of the CIA, Stanley Sporkin. (North Calendar, 12/9/85, N336) Sporkin recalls that McMahon was to attend this meeting as well and that the purpose was to discuss McMahon's desire that the CIA's role in the Iran initiative be eliminated or reduced. Sporkin Test., Hearings, 100-6, at 127-128.] McFarlane Briefs the President on the London Meeting On December 10, McFarlane briefed the President on the London meeting. Also present were Casey, Poindexter, North, and Regan. [Some of the participants place Weinberger at this meeting, but he has no recollection of it.] McFarlane emphasized that Ghorbanifar lacked integrity and that the initiative was unlikely to bear fruit if he remained the channel to the Iranians. At the same time, McFarlane or North said that abandoning the initiative would risk the lives of the hostages. The President seemed influenced by this concern. No decision was reached about the future of the initiative, and again there were differing perceptions about what would happen. The President continued to hope that its continuation might lead to freedom for the hostages. McFarlane recalled that the President asked, [W]hy couldn't we continue to let Israel manage this program, and was expressing and searching for, I think understandably, ways to keep alive the hope for getting the hostages back, and it is quite true that the President was profoundly concerned for the hostages. Casey left the meeting with "the idea that the President had not entirely given up on encouraging the Israelis to carry on with the Iranians." I suspect he would be willing to run the risk and take the heat in the future if this will lead to springing the hostages. It appears that Bud [McFarlane] has the action. Poindexter testified that the President was disappointed that Ghorbanifar appeared to be so unreliable, but was reluctant to abandon the project. In contrast, State Department officials were left with the impression that the initiative was dead. Under Secretary of State Michael Armacost reported to Shultz, who was in Europe, that "Bud's recommendation, upon returning from his latest discussions, was to drop the enterprise. That has now been agreed." Late that evening, Clarridge's deputy, who was the acting Chief of the CIA's European Division in Clarridge's absence, cabled CIA stations in Countries 16 and 18 to inform them that there would be no more flights, at least in the short run. He wrote: As late as last night the negotiating was still going on. We have just received word now that the deal is apparently all off. Don't know why yet or whether there is a possibility that it will revive in the future . . . . [F]or now it looks like we are standing down. Poindexter to North: Keep Trying Following the briefing, Poindexter had the clear impression that the President wanted to continue the program, and he moved to put it "on a sounder footing." Casey too was "a very strong advocate of proceeding." Poindexter told North to continue his efforts to keep the Iran initiative moving forward. This involved at least three steps: first, preparing a fully staffed and more comprehensive covert action Finding; second, substituting a new team - to be lead by North and Israeli Amiram Nir - to replace Ledeen, Schwimmer, and Nimrodi; and third, finding a legal way to sell arms to Iran. On this last point, Poindexter asked North to work with "the appropriate people at CIA and in [Attorney General] Ed Meese's office, if not Ed Meese himself." The CIA Evaluates Ghorbanifar Ledeen, with North's approval, aggressively urged the CIA to establish an intelligence relationship with Ghorbanifar. In early December, Ledeen met with the CIA's Duane Clarridge and Charles Allen. He told Allen the history of the Iran initiative, including the HAWK missile debacle. He then explained why he believed Ghorbanifar had contacts that could help the CIA gain insights into the Iranian regime and assist its counterterrorism efforts. Ledeen said Ghorbanifar was "a good fellow who is a lot of fun" and "praised [him] to the hilt." [At this time, Ledeen also outlined Ghorbanifar's proposal for an anti-Libyan "sting" operation in which the assassination of a leading opponent of Qadhafi would be staged and later revealed to be faked. Ledeen Dep., 6/22/87, at 167, 172-74.] Allen passed the information to the CIA's Near East Division for evaluation. After meeting with Ghorbanifar in mid-December in Switzerland, Ledeen met with Casey on December 19 and repeated his arguments for dealing with the Iranian. Casey reacted favorably but indicated a need to clear up the controversy over Ghorbanifar's poor record with the CIA. Casey called Deputy Director for Operations Clair George and instructed him to arrange a new evaluation of Ghorbanifar. On December 22, the Chief of the Iran branch at the CIA interviewed Ghorbanifar at Ledeen's home. Ledeen and Allen were there and North showed up near the end. Ledeen told the Chief of the Iran branch that Ghorbanifar is "a wonderful man . . . almost too good to be true." The conversation focused on terrorism and leading personalities in Iran. The Chief of the Iran branch reported to his CIA superiors that he was "only further convinced of the untruthfulness or lack of trust that we could put in Mr. Ghorbanifar." They decided that Ghorbanifar should be given a polygraph test, and Ghorbanifar agreed. After hearing the briefing on Ghorbanifar, Casey sent the President an "eyes only" letter stating that one of the ongoing initiatives to free the hostages was a plan involving Ghorbanifar. Casey wrote of Ghorbanifar: "He has 3 or 4 scenarios he would like to play out." The decision to consider continued reliance on Ghorbanifar was remarkable. Previously, Agency officials had found his information so marked by deceit, lies, and self-serving proclamations that it had issued a "burn notice" warning the U.S. intelligence community that he could not be trusted and should not be dealt with. Moreover, the information Ghorbanifar was providing was almost impossible to corroborate. He alone was explaining the Iranian position on the hostage issue. The last deal he had helped arrange, the November HAWK shipment, had been a complete disaster.