Multimedia Mania/abacus-multimedia-mania.iso/dp/0105/01050.txt

Text File | 1993-07-27 | 19KB | 331 lines

$Unique_ID{bob01050}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 12D  New Demands}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{north
poindexter
meeting
iranian
ghorbanifar
hostages
parts
secretary
nir
iran
see
tables
}
$Date{1987}
$Log{See Table 2*0105001.tab
}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 12D  New Demands

     In late April and early May, Allen continued to communicate with
Ghorbanifar to gauge any changes in Iran's position on the long-promised
meeting in Tehran.  Following the February delivery of 1,000 TOWs, the Second
Iranian Official had promised that the hostages would be released if the
Americans agreed to a meeting with top-level Iranian officials.  By mid-April,
the requirement of a sale of HAWK spare parts was added.  On April 14,
Ghorbanifar called Allen with new demands.  In that conversation, Ghorbanifar
relayed an Iranian proposal for the sequential release of hostages following
the arrival of the Americans in Tehran and the delivery of the spare parts.
The Iranians were withdrawing their original promise to release the American
hostages upon the arrival of the American delegation and instead demanded
additional arms sales.  During his conversation with Allen, Ghorbanifar
recommended that North reject the Iranian proposal.

     The following day, Allen prepared a memorandum outlining what he
perceived to be obstacles in the initiative and his own recommendations. Allen
recognized that unless the United States was willing to provide additional
weapons, it had no alternative but to wait, a decision that would lead to
"additional hostages and threat of exposure."  He cautioned, "Every day that
passes, raises the risk of embarrassing disclosures."  Allen also suggested
"sweetening the pot" by an act of U.S. omission, that is, permitting the
Israelis to become an arms supplier to Iran, a position the Israelis were
anxious to take because "they would like to see Iran prevail."  Allen
recognized that without a sweetener, the Iranians had little motivation to
fulfill their bargain to release the hostages.

     Poindexter responded sharply to the new Iranian proposal, purporting to
communicate the President's own frustrations with the operation.  In a PROF
message to North written shortly before a meeting in Frankfurt among North,
Cave, Nir, Ghorbanifar, and the Second Iranian Official, Poindexter issued
North specific instructions:

You may go ahead and go [to the meeting in Frankfurt], but I want several
points made clear to them.  There are not to be any parts delivered until all
the hostages are free in accordance with the plan that you layed (sic) out for
me before.  None of this half shipment before any are released crap.  It is
either all or nothing.  Also you may tell them that the President is getting
very annoyed at their continual stalling.  He will not agree to any more
changes in the plan. Either they agree finally on the arrangements that have
been discussed or we are going to permanently cut off all contact.  If they
really want to save their asses from the Soviets, they should get on board.  I
am beginning to suspect that [the Second Iranian Official] doesn't have such
authority.

     Poindexter later sent a similar note to McFarlane, who was still awaiting
his trip to Tehran:

Here is the update we discussed on Saturday.  [The Second Iranian Official]
wants all of the parts delivered before the hostages are released.  I have
told Ollie that we can not do that.  The sequence has to be 1) meeting; 2)
release of hostages; 3) delivery of HAWK parts. The President is getting quite
discouraged by this effort.

This will be our last attempt to make a deal with the Iranians.  Next step is
a Frankfurt meeting with Gorba, [The Second Iranian Official], North and Cave.
Sorry for the uncertainty.

     McFarlane agreed:  "Roger John.  Your firmness against the recurrent
attempts to up the ante is correct.  Wait them out; they will come around.  I
will be flexible."

     The Israelis also came to believe that the Ghorbanifar channel might be
doomed.  Secord conveyed this message to North:  "I talked to Adam [Nir] this
a.m.  He [is] quite pessimistic re Gorba/[Second Iranian Official] cabal.  He
know[s] time is nearly over."

     In mid-April, North wrote in his notebooks that he had received "1st
acknowledgement that Iranians are committed."  While this encouraged North, it
suggested that the American demands would not be met.  In light of
Poindexter's concern that the Second Iranian Official might lack sufficient
authority, the Americans could not be certain that the Iranian delegation
would be able to secure the release of the hostages.

     Allen's April 15 memorandum noted that one of Ghorbanifar's efforts to
have the Americans "sweeten the pot" for Iran included the sale to Iran of two
U.S.-made radar systems.  Even though the radars were a subject of prior
negotiations, North had treated them as separate from the spare parts sale. In
a PROF note on April 29, North sought Poindexter's approval to sell the radars
during the upcoming Frankfurt meeting.  In the process, North pressured
Poindexter for an immediate decision on this additional concession to the
Iranian demands.

     On May 2, Nir telephoned Allen to discuss his most recent contact with
Ghorbanifar.  Nir stated that he had advised Ghorbanifar of the U.S. desire to
proceed to Tehran without a preliminary meeting.  Nir told Allen that in his
opinion it was essential for both sides to have complete assurance regarding
the "terms of the arrangements" prior to the primary meeting. With no advance
meeting, the Americans would have to rely even more heavily upon Ghorbanifar
as an intermediary.

     In contrast to North, Allen was pessimistic about progress made by the
Second Iranian Official and Ghorbanifar toward the release of American
hostages.  In a formal memorandum to Casey on May 5, Allen detailed his
interpretation of events in Iran:

1.  [Most recent information] suggests that the White House initiative to
secure release of American hostages in Lebanon remains dead in the water.  We
surmise . . . that [the Second Iranian Official] is unable to provide the
assurances and to make the arrangements demanded by our side.  Ghorbanifar has
not deposited the funds necessary to move the spare parts.

2.  We believe that the Iranian government has not been able to convince the
holders of the hostages to release them to Iranian custody.  This belief is
fortified by the experience of [another government].  Ghorbanifar's failure to
deposit the necessary funds indicates that he has doubts about [the Second
Iranian Official's] ability to obtain the release of the hostages.
Ghorbanifar is in a bind and he knows that once he deposits the money he
cannot get it back.  He also is aware that we have insisted that the spare
parts will [be] delivered eight hours after the release of the hostages and
only after the release of the hostages.

     Allen's memo must have been alarming.  He questioned whether the Iranian
Government had the ability to convince those who held the hostages to release
them.  In doing so, he cited the experience of another government.  Although
it is clear that U.S. officials were increasingly concerned with the Iranian
government's inability to release the hostages, there is no indication that
this concern was communicated to the President.

The State Department Hears Rumors

     While North and CIA operatives were wrestling with details of the
meetings and hostage exchange, other U.S. Government officials were conferring
about the broader goals and policy.  On February 28, Poindexter had briefed
Secretary of State George Shultz on the hostage situation. Poindexter told
Shultz that the Iranians "wanted a high-level meeting, and if there were a
proper high-level meeting discussing our future relationships, that would be
the occasion in which the hostages would be released."  Poindexter said that
the White House had selected Robert McFarlane to conduct the high-level
meeting.  Secretary Shultz responded that although the Iranian position
"sounds almost too good to be true," he would favor the meeting providing
McFarlane acted under written instructions.  Secretary Shultz was subsequently
shown such written instructions (or "terms of reference"), which he "thought
were fine" because they mentioned arms sales as only a future prospect, in the
event of a new relationship between the United States and Iran, an "end to the
Iran-Iraq war and an end to terrorism coming from Iran and so on."

     Poindexter did not inform Secretary Shultz that the agenda for the
proposed meeting between McFarlane and the Iranians would include current
deliveries of U.S. arms; and the written instructions reinforced Secretary
Shultz's view that the meeting would include no such agenda.  Poindexter also
did not tell the Secretary that only one day before their conversation the
United States had completed a shipment of 1,000 TOWs to Iran.

     By March 11, Poindexter called Secretary Shultz and told him that the
proposed high-level meeting "was off" as was the Iran initiative itself. Yet,
an event in London among a group of international arms dealers 2 months later
showed that the meeting and the initiative were very much "on" and that
Poindexter had been less than truthful with the Secretary.

     In early May, Saudi businessman Adnan Khashoggi, Nir and Ghorbanifar met
with Tiny Rowlands, a British entrepreneur, and sought to enlist him in a plan
to sell arms and other materials to Iran, a plan they maintained had been
endorsed by the U.S. Government.  According to Rowlands, Nir described a
program to transfer large amounts of grain, military spare parts, and weapons
to Iran.  Nir proposed that Rowland's company, Lonrho, serve as an umbrella
for managing future sales to Iran.  Khashoggi exhibited receipts of
large-scale transfers of cash to Swiss banks, indicating that large amounts of
money were involved in the transaction.  Moreover, in attempting to recruit
Rowlands, Nir and Khashoggi told him that not only were a number of
businessmen already involved in the deals, but also that the sales "had been
cleared with the White House" and that Poindexter was the "point man."
Rowlands learned that "only four people in the U.S. Government are
knowledgeable about the plan [and that] the State Department [had] been cut
out."  Following this meeting, Rowlands reported what had transpired to a U.S.
Embassy official in London, and Ambassador Charles H. Price was promptly
informed.  The Ambassador reported the incident to Under Secretary of State
Michael Armacost, and later briefed Poindexter by secure phone in Tokyo, where
Poindexter was attending the economic summit.  Poindexter acknowledged "a
shred of truth" in Nir's allegation of White House involvement in the plan but
contended that the involvement was minimal and that, in effect, Nir was "up to
his own games."  Poindexter told Ambassador Price that the U.S. Government had
become involved the previous year when it "caught the Israelis red-handed
delivering arms to Iran."  He maintained that the story Price had heard was
"all out of perspective" and advised that Rowlands be told to stay out of the
plan.  Poindexter assured Ambassador Price that he would "put things back the
way they should be."

     The same day, Secretary Shultz, who was also attending the economic
summit, received a cable from Armacost which detailed the Rowlands
information.  Shultz "expressed strong opposition on legal and moral grounds,
as well as concern for the President" and the potential damage to his
credibility that would result from exposure of the plan.

     Upon receiving the cable, Shultz immediately sought out Poindexter.
Unable to find him, he confronted White House Chief of Staff Donald Regan and
objected strongly to any such plan going forward.  Regan expressed alarm and
promised to raise the matter with the President.  When Secretary Shultz found
Poindexter, Poindexter denied any U.S. Government involvement in the deal,
saying, "We are not dealing with these people.  This is not our deal."
Poindexter further said he had informed Ambassador Price that there was "only
a smidgen of truth" in the report he had heard from Tiny Rowlands.  Regan
later reported to Secretary Shultz that the President became upset when
learning of the matter.  As a result, the Secretary concluded that whatever
transaction had been discussed with Rowlands, "this is not our deal," meaning
that "the representations [that] this is something that has been explicitly
endorsed by the U.S. Government were wrong."

     When Poindexter denied to Secretary Shultz that the United States was
selling arms to Iran, he avoided telling the Secretary of State that
McFarlane's proposed meeting with "high level" Iranians had been rescheduled
for Tehran.  Neither did he mention that plans for the meeting were rather
well-advanced, nor that it would include a shipment of HAWK spare parts.

     On the same day that Armacost cabled Secretary Shultz, Poindexter sent a
PROF message to North, informing him of Ambassador Price's phone call about
the Rowland-Nir-Ghorbanifar-Khashoggi meeting.  Poindexter blasted Nir,
telling North, "We really can't trust those SOB's."

     In his reply to Poindexter, North agreed, "We cannot trust anyone in this
game."  North recalled that he had briefed Poindexter a year before on efforts
to get Rowlands involved.  At that time, Rowlands had reported back to Casey
that the entire matter "smelled very badly."  North then informed Poindexter
that the story he had heard from Ambassador Price was "the one made up by Nir
to cover the transaction" and that it had been reported to North a few weeks
before by Clair George.  North concluded, as a result of the disclosure by
Ambassador Price, that the "bottom line" was that "this typifies the need to
proceed urgently to conclude this phase of the operation before there are
further revelations.  We all know that this has gone on too long and we do not
seem to have any means of expediting the process short of going to Iran."

     As these events occurred, North was preparing to meet Ghorbanifar in
London.  On May 5, 1986, the day after Poindexter told Secretary Shultz there
was no truth to the report from the U.S. Embassy in London, Poindexter ordered
North not to let anyone know he was going to London and not to have any
contact with the U.S. Embassy there.  In reply to a May 17 PROF note from
North questioning whether Secretaries Shultz and Weinberger and Director Casey
should be involved in a "quiet meeting" with the President and McFarlane
before McFarlane's trip to Tehran, Poindexter stated that he did not want such
a meeting.  By that decision, Poindexter ensured that Secretary Shultz would
remain in the dark about the Tehran mission, and that McFarlane would fly to
Iran for an expected high-level meeting with the Iranians without any
consultation with the Secretary of State.

Another Meeting In London

     On May 6, North, Nir, Cave, and Ghorbanifar met at the Churchill Hotel,
London.  The meeting focused on pricing of the spare parts shipment. Cave
denied discussing the issue, noting that North, Nir, and Ghorbanifar were
always careful to exclude him from such conversations.

     In discussing the upcoming meetings in Tehran, Ghorbanifar named Iranian
Government representatives whom the Second Iranian Official said would meet
the American delegation: Prime Minister Musavi, Speaker Rafsanjani, and
President Khameni, with a possible visit by the Imam's son, Ahmed Khomeini.

     Cave had his first telephone conversation with the Second Iranian
Official while he was in London.  He described a "major snag" that arose
regarding the sequence of the spare parts delivery.  The Second Iranian
Official was allegedly adamant that all the parts be delivered simultaneously
with the arrival of McFarlane in Tehran.  The Second Iranian Official finally
agreed that when the American delegation arrived in Tehran with as many spare
parts as the aircraft could hold, an Iranian delegation would be dispatched to
Lebanon to barter for the release of the hostages. When the hostages were
released, the remaining spare parts were to be delivered.  An Israeli present
during the meeting later confirmed this agreement.

     Once again, the American position had slipped.  Poindexter's firm resolve
only weeks earlier to refuse to deliver any parts until the hostages were
released had eroded.  The Iranians were insisting on complete delivery and the
American negotiators began to relent.

     North recorded many details of the London negotiation, and his notes
reflect the pricing of both the spare parts and the radars.  The first set of
figures came from pricing suggestions by Nir, North, and Ghorbanifar.

[See Table 2: Prices suggested by Nir, North and Ghorbanifar]

Cave Becomes Concerned About Pricing

     Several days following the London meeting, Cave received information that
he claimed was the first time he had heard of price manipulation by
Ghorbanifar.  Cave recalled his shock when he learned of Ghorbanifar's
exorbitant price.  Concerned that such pricing could jeopardize the operation,
Cave approached North.  Cave said that North expressed alarm at the price and
may have indicated that he would speak to Nir about it.

     According to Cave, Ghorbanifar's pricing of the May shipment was
confusing.  During the May meeting in London, Ghorbanifar complained about
having spent $1 million of his own money to support the NSC operation.  This
complaint, coupled with CIA's knowledge of Ghorbanifar's legal concerns
following his arrest and probable loss of funds through the U.S. Customs
"sting" operation, caused some CIA participants to conclude that Ghorbanifar
was simply trying to raise as much money as possible from the transaction.
C/NE rationalized that the price of the radars, an additional $6.2 million,
could have accounted for the inflated figure.  According to their testimony,
neither C/NE, Cave, nor Allen associated the inflated price with an effort by
North and others to obtain profits in support of Contra activities.

     During March and April the intelligence information gathered on the
initiative was available to a restricted group at the CIA.  Cave routinely
examined the information, which was controlled by National Intelligence
Officer Charles Allen.  Casey, Gates, Clair George, C/NE, and the Chief/Iran
Branch were among others to whom the intelligence reports were disseminated.
At least three reports showed that the Iranians were paying an exorbitant
price for the spare parts.  Information showed an attempt by the Second
Iranian Official and Ghorbanifar to raise $21 million to purchase the two
radars and over $20 million for the spare parts.  Seven highly placed CIA
officials thus had access to information that showed a huge mark up in the
price of the spare parts and radar shipments.  Yet all of them denied
suspecting a diversion of funds until much later.