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$Unique_ID{bob01010}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 2A   The NSC Staff Takes Contra Policy Underground}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{contras
support
nicaragua
administration
congress
covert
finding
government
intelligence
president}
$Date{1987}
$Log{}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 2A   The NSC Staff Takes Contra Policy Underground

     In December 1981, the President authorized a Central Intelligence Agency
(CIA) covert action program to support the Contras.  The CIA's activity,
however, did not remain covert for long:  within months, it was the topic of
news reports and the subject of Congressional debate questioning the
Administration's policy in support of the Contras.  The Administration
responded that it did not intend to overthrow the Sandinista Government in
Nicaragua, but sought to check the spread of communism to El Salvador and
other nations in Central America.

     In 1982, in the first Boland Amendment, Congress sought to enforce that
claim by barring the Administration from using Congressionally appropriated
money for the "purpose" of overthrowing the Sandinista regime.  The
Administration, although not pleased with the amendment, nevertheless accepted
it, because the amendment allowed the Administration to maintain support for
the Contras so long as that support had as its "purpose" stopping the spread
of the Sandinista revolution outside Nicaragua's borders.

     With the first Boland Amendment, then, came a temporary compromise
between the Administration and Congress.  But it was an inherently uneasy
compromise, based more on semantics than substance: The Contras were not in
the field to stop Sandinista arms flowing to El Salvador; they were in the
field to overthrow the Sandinistas.  The Intelligence Committees of Congress,
while rejecting that objective, nevertheless approved CIA use of contingency
reserve funding to support the anti-Sandinistas.  And the Administration
embraced the contradiction inherent in the new law, by emphasizing that U.S.
support was aimed only at interdicting arms destined for other Central
American Communist insurgencies.

     During 1983, press reports of a "secret" CIA war in Nicaragua led to
increased questioning in Congress.  In July, the House voted to end all Contra
aid.  Meanwhile, in the hopes of forestalling an aid cutoff, the
Administration accepted an invitation by the Senate Select Committee on
Intelligence to clarify its intentions in pursuing a covert program.  Despite
Administration efforts to meet those concerns, by the winter, the House and
Senate had agreed to cap Contra funding at $24 million, a sum that both the
Administration and the Congress knew would not last through fiscal 1984.

     Nonetheless, the Administration decided to escalate the operations in
Nicaragua.  When the Nicaraguan harbor mining was disclosed in April, it
created a storm of protest in Congress and around the country and, chiefly as
a result, Congress declined to appropriate more money for the Contras. With
the CIA out of funds for the Contras, the NSC staff took over the program of
supporting the Contras.  But this time, the operation was covert in a new
sense - it was concealed from Congress.

     Beginning in May 1984, when the CIA-appropriated funds for the Contras
ran out, the National Security Council (NSC) staff raised money for Contra
military operations from third countries with the knowledge of the President,
supervised the Contras' purchase of weapons, and provided guidance for the
Contras' military operations.  The operational responsibilities fell largely
to Lt. Col. Oliver L. North, a member of the NSC staff who reported to the
National Security Adviser, Robert C. McFarlane, and his deputy, Vice Admiral
John M. Poindexter.

     In October 1984, the Congress passed and the President signed the second
Boland Amendment prohibiting the expenditure of any available funds in support
of Contra military operations by any agency or entity involved in intelligence
activities.  Rather than halting U.S. support for the Contras, the CIA's
withdrawal was treated as a call for the NSC staff to take over the entire
covert operation, raising more money from a third country, arranging for arms
purchases, and providing military intelligence and advice.  The NSC staff went
operational - and underground.

The December 1981 Finding

     Within 2 months of President Reagan's inauguration, the CIA proposed, and
the NSC considered, plans for covert action to deal with the growing Cuban
presence in Nicaragua.  The United States continued to recognize the
Nicaraguan Government, but diplomatic relations became increasingly
adversarial because of the Administration's concern that the Sandinistas were
continuing to receive significant military support from Cuba, support
targeted, in part, for insurgent groups beyond Nicaraguan borders.

     In December 1981, President Reagan signed his first Finding specifically
authorizing covert paramilitary actions against the Sandinista Government in
Nicaragua.  Under the law, covert actions may be initiated only by a personal
decision of the President.  A Finding is an official document embodying that
decision.  By signing a Finding, a President not only authorizes action, but
accepts responsibility for its consequences.

     Sponsoring the CIA's new covert program in Central America was the
Director of Central Intelligence, William J. Casey.  Casey was a veteran of
covert operations, having served with the Office of Strategic Services (OSS),
the predecessor to the CIA, during the Second World War.  In 1945, Casey, just
32 years old and a Navy lieutenant, was chief of the Secret Intelligence
Branch that directed intelligence gathering in German-controlled Europe from
OSS headquarters in London.

     After the war, Casey became a successful corporate lawyer and a wealthy
investor, was appointed Chairman of the Securities and Exchange Commission,
and later became head of the President's 1980 election campaign.  Following
the 1980 election, Casey was named Director of Central Intelligence, the first
Director to enjoy Cabinet rank.  Casey was a firm believer in the value of
covert operations, and took an activist, aggressive approach to his craft. In
the words of the CIA's Deputy Director of Operations, Clair George, "Bill
Casey was the last great buccaneer from OSS."

Pastora Defects

     Casey saw the opportunity to make military headway against the
Sandinistas in early 1982, when rebel leader Eden Pastora defected from the
ruling Sandinista junta.  Pastora appeared to be an ideal candidate for Contra
military leadership.  Known to his followers by the nom de guerre, "Comandante
Zero," he had been one of the heroes of the fight against Somoza.  From 1977
to 1978, he served in the Sandinista National Liberation Front and later held
several high posts in the new Government until his abrupt resignation in 1981.
In April 1982, Pastora organized the Sandinista Revolutionary Front (FRS) and
declared war on the Sandinista Government.

     Although Pastora was a popular, charismatic leader with the potential to
challenge the Sandinistas, his geographic base presented a problem for the
Administration.  He insisted on operating in the southern part of Nicaragua.
The Administration, however, claimed that its only purpose in aiding the
Contras was to interdict arms flows to El Salvador, which lies to the north of
Nicaragua.  Support for Pastora in the South contradicted that claim.

     Casey's deputy, Admiral Bobby R. Inman, an intelligence professional who
had headed the National Security Agency, objected to this broadening of the
covert program.  He believed that it was unsound, and unauthorized by the
existing Presidential Finding.  Yet Casey was determined to proceed.  Inman
retired at the end of June 1982 and the CIA supported Pastora without any
change in the Presidential Finding.

A Proposal for a New Finding

     Pastora's rebel group "develop[ed] quickly."  By July 12, 1982, Donald
Gregg, then head of the NSC's Intelligence Directorate and responsible for all
covert action projects, proposed a new draft Finding to keep pace with
Pastora's developing operations.  Gregg, like Inman, believed that broad
support for Pastora was outside the scope of the December 1981 Finding.  He
wrote to William Clark, the National Security Adviser, that "additional
actions not covered by previous authority are now being proposed.  Those
"additional actions" included providing "financial and material support,"
training, and arms supply to Pastora's forces.  The problem with providing
that assistance under the December 1981 Finding, as Gregg saw it, was that the
"rationale" of the earlier Finding appeared "to be to have the anti-Sandinista
forces strike against the Cuban presence in Nicaragua rather than attacking
the Sandinista units."

     Vice Admiral Poindexter, then military adviser to the National Security
Adviser, disagreed.  In a handwritten note, Poindexter stated:  "I don't see
this really needs to be approved since the earlier Finding covers it, but
maybe it would be good to get a confirmation since we now have a better idea
as to where we are going."  As drafted by Gregg, the proposed Finding provided
for CIA paramilitary support to forces inside Nicaragua for the purpose of
"effect[ing] changes in Nicaraguan government policies."  This draft Finding,
with its broadly stated goals, was never approved by the President.

Boland I

     By the fall of 1982, press reports told of a growing U.S. involvement in
Nicaragua.  Administration spokesmen responded by stating that the U.S.
Government was seeking not to overthrow the Nicaraguan Government, but merely
to prevent it from exporting revolution to El Salvador.  Aid to the Contras
was presented as an act in defense of El Salvador, not a hostile act against
Nicaragua.

     Congress soon began to question this explanation.  The Contras were in
the field for the announced purpose of overthrowing the Sandinistas, not
simply to interdict supplies destined for El Salvador.  Congress debated the
issue extensively, with some Members questioning whether their own Government
was violating the charters of both the United Nations and the Organization of
American States by interfering in the internal affairs of Nicaragua. Members
voiced concern that U.S. support for the Contras was providing a "convenient
pretext" for the Sandinistas to impose martial law, suppress freedom of the
press, stifle religion, and undermine the rights of assembly and free
elections.  Those who supported these views called for a complete cutoff of
aid to the Contras.  There was equally strong support in Congress,
particularly in the Senate, for aiding the Contras.  Some Members believed
that the Sandinistas were trying to spread a Marxist revolution to neighboring
states.  They argued that no Communist regime had ever stepped down or
consented to free elections and that support for the Contras was necessary to
bring about democracy in Nicaragua.

     Out of this debate emerged an amendment to the Defense Appropriations
bill for fiscal year 1983, later known as Boland I.  Introduced by
Representative Edward P. Boland, the amendment passed the House by a vote of
411-0, and was adopted, in December 1982, by a Conference Committee of the
House and Senate.  This first Boland Amendment prohibited CIA use of funds
"for the purpose of overthrowing the Government of Nicaragua."

     The internal contradictions of the Administration's announced Nicaragua
policy were carried forward in the new law: Congress appropriated funds that
would be used by the CIA for Contra assistance, but at the same time rejected
the Contras' objective to remove the Sandinista Government.  During the floor
debate on his amendment, Representative Boland indicated that while the
Administration did not like his proposed restrictions, it would accept them.
Congress had not cut Contra funding; it merely had legislated an impermissible
purpose.  The Administration still could maintain support for the Contras and
did, by relying upon its original justification for Contra support - stopping
arms flows to El Salvadoran Communist insurgents.

     In December 1982, The New York Times reported intelligence officials as
saying that Washington's "covert activities have . . . become the most
ambitious paramilitary and political action operation mounted by the C.I.A. in
nearly a decade . . . ."  One month later, in January 1983, Senator Patrick J.
Leahy, accompanied by staff of the Senate Intelligence Committee, visited
Central America to review U.S. intelligence activities related to Nicaragua.
His findings, supplemented by followup Committee briefings and inquiries,
revealed that the covert action program was "preceding policy," that it was
"growing beyond that which the Committee had initially understood to be its
parameters," and that "there was uncertainty in the executive branch about
U.S. objectives in Nicaragua."

     Questions about compliance with the Boland Amendment increased throughout
1983.  In March, 37 House Members sent a letter to the President warning that
CIA activities in Central America could be violating the law. In April, news
reporters visiting Contra base camps wrote that "[t]he U.S.-backed secret war
against Nicaragua's leftist Sandinista regime has spilled out of the shadows."

     Challenged to defend the Administration's compliance with the law, the
President asserted in April that there had been no violation of the Boland
Amendment.  There would be none, said the President, because even a law he
disagreed with had to be observed:  "We are complying with the law, the Boland
Amendment, which is the law."  "[W]hat I might personally wish or what our
government might wish still would not justify us violating the law of the
land."  When asked if his Administration was doing anything to overthrow the
Government of Nicaragua, he replied, "No, because that would be violating the
law."

     According to some in Congress, the Administration was facing a "crisis of
confidence" about the legitimacy of CIA support for the Contras.  The
President responded with a major address on Central America to a joint session
of Congress on April 27, 1983.  Rejecting images of a new Vietnam, the
President stated:

But let us be clear as to the American attitude toward the Government of
Nicaragua.  We do not seek its overthrow.  Our interest is to ensure that it
does not infect its neighbors through the export of subversion and violence.
Our purpose, in conformity with American and international law, is to prevent
the flow of arms to El Salvador, Honduras, Guatemala, and Costa Rica . . . .

     It soon became clear, however, that the President had not made the case
for the Administration's Contra support policy with either the Congress or the
American people.  He was not helped by the Contras' performance on the ground.
The Contras had failed to win either popular support or military victories in
Nicaragua and could not, without both, sustain public support in the United
States.