BOB LEVIN December 8 1986


BOB LEVIN December 8 1986



A Republican administration is reeling. Washington is rife with rumors of power abused and laws broken. The President orders an investigation, and two of his aides are forced out of their jobs. Yet the talk persists that those men are mere scapegoats, that the scandal reaches far above them, raising the most urgent and unsettling questions of all: what did the President know and when did he know it?

The ghost of scandals past came back to haunt Ronald Reagan last week. The Iranian affair was by no means another Watergate—the similarities still seemed more superficial than substantive. But the fact remained that Reagan, like Richard Nixon 13 years before him, faced the worst crisis of his presidency. Under mounting pressure to quell the controversy over U.S. arms sales to Iran, Reagan on Tuesday announced the resignation of Admiral John Poindexter, his national security adviser, and the firing of Lt.-Col. Oliver North, a National Security Council (NSC) staff member who specialized in cloakand-dagger operations. The shakeup was not surprising because both men had been implicated in the NSC-run arms affair. But the subsequent announcement by Attorney General Edwin Meese genuinely shocked Americans. As Meese explained it, Washington had sent its weapons to Israeli middlemen, who had sold them to Iran at inflated prices. They then deposited the estimated $10 to $30(U.S.) million profit in a Swiss bank—to be drawn on by U.S.-backed Nicaraguan rebels, or contras.

Links: The bizarre revelations provoked a bipartisan blitz of congressional criticism and left U.S. foreign policy in turmoil. And it seemed likely that more damaging disclosures— and perhaps more firings—lay ahead. Strangest of all was the linking of two

en'’.troversial Reagan policies: his secret arms shipments to Iran, which violated his own embargo and, despite his denials, were apparently traded for U.S. hostages held in Lebanon; and military aid to the contras fighting Nicaragua’s Sandinista government. Congress narrowly approved that aid last June—after the profits from the Iranian sales were reportedly delivered. Critics charged that the IranNicaragua operation may have vio-

lated as many as five U.S. laws regulating everything from arms ex ports to contra aid. Meanwhile, Israeli officials admitted that they had trans ferred arms to Iran at the United States' request, but denied knowing that the proceeds were slated for the contras (page 16). And, in another twist, contra leaders insisted that they had no knowledge of any secret funds in a Swiss bank.

Reagan appointed a panel to probe the role of his own NSC, while Meese headed a justice department inquiry into whether any Americans had committed crimes. Meese told a news conference that North was the only member of the administration who “knew precisely” about the Iran-Nicaragua operation. Poindexter knew “that

something of this nature was occurring,” Meese said, “but he did not look into it further.” But the next day the attorney general said that there may have been “some others” involved in the operation—but no top White House officials. And he took pains to deflect comparisons to Watergate. “In Watergate you had at least the allegation that people were trying to conceal things,” he said. “In this situation both the justice department and the

President have done just the opposite.”

Skeptics: In fact, Reagan maintained that he had not been “fully informed” of some details of the Iran initiative until Meese, after a preliminary investigation, told him about the cash-forcontras deal on Monday. But many skeptics openly doubted that the scandal stopped with the NSC. “Do you really think this whole thing was run by one lieutenant-colonel?’’ asked Democratic Senator Daniel Patrick Moynihan of New York, referring to North. “How do you feel about the tooth fairy?” No fewer than nine congressional committees announced that they would hold inquiries into the affair, and legislators from both parties called for the

appointment of an independent special prosecutor like the one who handled the Watergate case.

Allegation: Meanwhile, administration officials said that North had apparently shredded documents that were believed to have connected other government officials to the venture. But North, the tight-lipped ex-marine, was not protecting everyone: he reportedly told friends that White House Chief of Staff Donald Regan had known about the Iran-Nicaragua operation all along—an allegation which Regan called “ridiculous.”

Many critics said that President Reagan could not be exempted from blame—whether he knew about the operation or not. “If he did know about it,” said Democratic Senator John

Glenn of Ohio, “then he has wilfully broken the law. If he didn’t know about it, then he is failing to do his job.” According to an ABC News poll, 62 per cent of Americans surveyed believed that Reagan knew about the contra connection before last Monday, and 44 per cent said that he had known about it since the Iran operation started 18 months before. The poll also showed that his overall approval rating had dropped from a heady 67 per cent in September to 53 per cent last week. As a result, Reagan flew off to his California ranch for Thanksgiving under a spreading political cloud. And while he was in no immediate danger of being driven, Nixon-style, from the Oval Office, the once seemingly impregnable President could well spend his remaining two years there with little influence. “The Teflon is gone, the luck is gone,” said William Taylor of the Washington-based Center for Strategic and International Studies. “He is going to be a beleaguered President.”

Revelations: Reagan’s rapid decline had its genesis in the unlikeliest of places: an article in the Lebanese weekly Al-Shiraa five weeks ago, which revealed secret contacts between the United States and Iran. As the U.S. press swooped down on the story it seemed clear that, despite its professed refusal to negotiate with terrorists, Washington had swapped arms for hostages. Still, in a televised speech last month, Reagan said that the arms sales were designed only to gain influence with Iranian moderates. And while he publicly announced a halt to such sales the following week, he insisted that he had not broken any laws. But the Great Communicator looked decidedly defensive in both TV appearances.

As the crisis continued, Reagan conferred in Washington with a small group of longtime supporters, which reportedly included former national security adviser William Clark and ex-attorney general William French Smith. Those friends urged the President to clean house. The most frequently mentioned candidates for firing included not only Poindexter and North but Secretary of State George Shultz, who had taken pains to distance his department from the affair. Early last week Shultz’s deputy, John Whitehead, told the House foreign affairs committee that department officials still did not have a detailed record of the Iran operation and complained that they found it “difficult to cope with the National Security Council’s operational activities.”

But Reagan, before a top-level staff discussion of the Iran crisis, told reporters that his arms policy was not a

“mistake” and that “I am not firing anybody.” After meeting with Meese the next morning, however, Reagan quickly called a news conference. In a terse four-minute statement, he said that one of the actions undertaken in the Iran initiative “raised serious questions of propriety.” And he announced that Poindexter, 50, and North, 43, were leaving their posts. Then, after refusing to answer questions, the President exited—leaving Meese to drop the contra bombshell.

Discrepancy: According to Meese, the first hint that profits from arms sales to Iran had been diverted to the Nicaraguan rebels came in a justice department review of documents over the previous weekend. The documents—transcripts of routine intelligence interceptions of international communications, including radio messages and telephone calls—showed a discrepancy between the cost of the weapons and the amount Iran paid for them. Interviews with “one of the participants,” Meese added, elicited the details. As described by Meese and other sources, the transactions took place between last January and last week. The Hawk antiaircraft missiles and TOW antitank missiles, which the Iranians used in their war with Iraq, were shipped from military bases in the United States to Israel.

Congressional leaders reacted with predictable dismay. Republican Senator David Durenberger of Minnesota, chairman of the Senate intelligence committee, said that the revelation was “way beyond even our most creative imagination.” And Robert Byrd of West Virginia, who will become the

new Senate majority leader in January, said that “nobody seems to be really in charge of the foreign policy of this country.” In response, Reagan appointed a blue-ribbon panel to investigate his NSC. The board will be headed by former senator John Tower, a Texas Republican, and include former senator Edmund Muskie, a Maine Democrat. Muskie said that the review must be thorough. “If you get into a good mystery story,” he said, “why rush to finish it?”

Cowboys: Critics charged that the NSC had grossly overstepped its advisory role. They said it had become a group of overenthusiastic cowboys, mostly military or ex-military men, who ran a broad range of paramilitary operations out of the White House basement. Some Democrats called for greater controls over the NSC, including congressional approval of the national security adviser. For the moment, the NSC’s No. 2 man, Alton Keel, 43, will serve as acting national securi-

ty adviser, while Poindexter requested reassignment to the Navy.

As for North, he will take a desk job in the Pentagon, far from the field where he made his mark. An ex-marine decorated for valor in Vietnam, North joined the NSC in 1981 and became a key figure in some of the administration’s most controversial exploits. He is credited with masterminding the invasion of Grenada in 1983 and the bombing of Libya last April, as well as with plotting the aerial interception of the Egyptair flight, which resulted in the capture of the hijackers of the Achille Lauro cruise ship in October, 1985. He was also the administration’s chief liaison to the contras. After his firing, the Federal Bureau of Investigation (FBI) sealed his austere office, but not before he reportedly destroyed some of his files. When North tried to get into the White House on Thursday, security

guards stopped him. At week’s end, the White House ordered all staff members to co-operate with investigators, including preserving any written records or telephone logs.

But friends and former colleagues rallied to North’s support, saying that he was a patriot who had been made into a scapegoat. “They threw him to the wolves,” said one. Those associates reported that, the night after the sacking, Reagan personally phoned North to thank him for his service to the administration. And they added that North would never have undertaken anything like the Iran-Nicaragua operation without the knowledge—indeed, the authorization—of his superiors.

Questions: Just who had known about the Iran-Nicaragua venture remained the most compelling question of the moment. Meese’s statement that the Central Intelligence Agency (CIA) acted as an agent in the Iranian arms deal prompted some observers to ask whether CIA director William Casey had also known that the profits had gone to the contras. On Nov. 21 Casey told two congressional committees that the CIA had set up a Swiss bank account to receive the money from the Iran sale. According to congressional sources, Casey appeared nervous and was deliberately vague in his testimony, saying that he did not know who decided to set up the account or who determined what payments were made from it. It was Casey’s testimony that apparently prompted Meese to launch his inquiry into the affair. But Meese said that Casey had not been aware of the Nicaraguan connection.

On the other hand, North said that White House Chief of Staff Regan knew all about it. In his two years as Reagan’s top adviser, the former head of Merrill Lynch & Co. has outflanked

all rivals for access to the President, winning widespread enmity in the process. The President’s longtime supporters—as well as influential First Lady Nancy Reagan—are apparently pushing for Regan’s replacement. Insiders predict that Regan will be ousted by early next year at the latest.

Astute: The scandal also raised doubts about the future of Secretary of State Shultz. Meese said that Shultz knew nothing of the Iran-Nicaragua venture. And out of last week’s debacle, Shultz managed to seize a stun-

ning—if perhaps temporary—triumph. Reagan announced that he was placing Shultz firmly in control of the administration’s foreign policy in general and the Iran operation in particular. In return, an ebullient Shultz declared, “I support the President’s policies fully and across the board”—including the overtures to Iran he had criticized just the week before. Some observers credited Shultz with playing an astute game of political hardball in winning an end to covert operations by the NSC. “What Shultz did is remarkable,” said one former state department official. “He knew he could not be fired, and he went for broke.” But other analysts say that, having earned Nancy Reagan’s wrath for criticizing the President at a time of crisis, Shultz will eventually be forced out of office.

But the most disturbing questions centred on whether Reagan himself—

despite his denials—knew of the contra connection. In fact, there were conflicting reports of when he was informed. He and the First Lady both said that he got the news the day before the press conference. But in interviews, Meese said that he had told the President the previous week. Many analysts pointed out that even if Reagan did not know about the operation early on that, in itself, was politically damning. “It has always been a puzzle how the American public has been able to forgive Reagan of obvious gross ig-

norance,” said John Steinbruner of Washington’s liberal Brookings Institution. “Now we have a situation where sheer ignorance has in fact been shown to harm the country.”

That harm is most evident overseas, where Washington has suffered a series of recent embarrassments. And last week, in a long-planned move, the United States angered many European allies when it breached the SALT II treaty with the Soviets by deploying the 131st American bomber carrying cruise missiles.

Credibility: But the Iran deal was the most damaging, undercutting Reagan’s credibility in the Middle East. Last week former Iranian president Abolhassan Bani Sadr added yet another embarrassing detail. Speaking in Paris, Bani Sadr said that when North and ex-national security adviser Robert McFarlane flew secretly to Tehran

to make arms arrangements last May, one of the officials they met with was Deputy Foreign Minister Hossein Sheikholeslam—a former leader of the students who seized the U.S. Embassy in Tehran in 1979.

U.S. officials said that Reagan was considering sending Vice-President George Bush or Shultz to the Middle East to try to restore American standing. The U.S. position could be helped by reports that Saudi Arabia provided the money which Iran used to buy the weapons from the Israeli middlemen.

Sources in the region said that the Saudis, who have publicly supported Iraq in its war with Iran, wanted to improve ties with Tehran out of fear that Iran might win. The Saudis deny that they underwrote the Iranian purchases. But, said Geoffrey Kemp of the independent Carnegie Endowment think-tank, “if these reports of Saudi involvement are true, then the Arabs have a problem on their hands, too; they cannot be as critical of the United States” for violating its own ban to sell arms to Iran.

Crisis: But the IranNicaragua scandal also posed a serious threat to Reagan’s policy of aiding the contras. As Senator Durenberger put it, “I bet you it will be a cold day in Washington before any more money goes into Nicaragua.”

Last week, at his secluded ranch near Santa Barbara, Calif., Reagan took time off for a Thanksgiving turkey with his family. But it seemed clear that his list of things to be thankful for had grown shorter. At best, his lack of attention to detail, long a widely acknowledged weakness, had finally caught up with him. And his fabled ability to ride out a crisis by appealing directly to the American people had apparently failed. The Ronald Reagan who would return to Washington this week could still be thankful for deep reserves of personal popularity, and his grit and adroitness could not be underestimated. But he faced a host of unwelcome questions clamoring for answers, and he needed to move quickly—and convincingly—if he hoped to silence the eerie echoes of Watergate.

-BOB LEVIN with MARCI McDONALD in Washington