hostages in Beirut.
By the time Ghorbanifar presented his tantalizing arms-for-hostages plot, he was already well known in US intelligence circles. A lengthy CIA report described him as “personable, convincing… speaks excellent American- style English.” (Not even intelligence guys are immune to the charms of excellent American-style English.) However, the report concluded, Ghorbanifar “had a history of predicting events after they happened and was seen as a rumor-monger…. The information collected by him consistently lacked sourcing and detail notwithstanding his exclusive interest in acquiring money…. Subject should be regarded as an intelligence fabricator and a nuisance. Any further approaches by subject or his brother Ali should be reported but not taken seriously.” In fact, on the occasions the CIA had subjected Ghorbanifar to a polygraph test, he generally proved himself to be a liar on any question more complicated than his name and his place of residence. But still, under cover of secrecy, Reagan decided it would be good policy to get in bed with Ghorbanifar and his French silk jammies.
As the deal unfolded—badly—assessments of Ghorbanifar within Reagan’s White House national security team included “corrupt,” “devious,” “duplicitous,” “not to be trusted,” and “one of the world’s leading sleazebags.” National Security Adviser Bud McFarlane even called him a “borderline moron.” There was pretty good evidence that Ghorbanifar’s main goal was money. And still, Reagan decided it would be good policy to continue to pursue the Ghorbanifar plan.
The way the first arms-for-hostages deal was designed, Israel would sell US-made weapons to Iran, and the US government would replace Israel’s weapons from its own stocks. As a favor to us, Israel was allowing itself to be used as a pass-through for America sending missiles to Iran. It was a shame that the first arms shipment of ninety-six TOW antitank missiles to Iran ended up (and this was truly unfortunate, everybody agreed) in the hands of Khomeini’s loyal Revolutionary Guard. Worse, no hostage was released. It turned out to be arms-for-no- hostages.
Reagan was undeterred, and, as ever, optimistic. “It seems a man high up in the Iranian govt believes he can deliver all or part of the 7 Am kidnap victims in Lebanon sometime in early Sept,” Reagan recorded in his diary a few days after the first failure. “They will be delivered to a point on the beach north of Tripoli & we’ll take them off to our 6th fleet. I had some decisions to make about a few points—but they were easy to make. Now we wait.”
In spite of Reagan’s high hopes, the second weapons delivery of more TOW missiles, also via Israel, shook loose only one hostage, and not the one McFarlane requested. In planning the third shipment, eighteen Hawk antiaircraft missiles, Reagan’s operatives managed to piss off Portugal, endanger Turkey, get the CIA illegally involved, raise protests from the Defense Department, and move Secretary of State George Shultz to think about resigning… and all for nothing. This time, according to Ghorbanifar, there would be no hostages released at all, because the Iranians were upset at having received substandard weapons. In fact, they’d like to return the Hawks.
Nearly six months and millions of dollars of weapons into the arms-for-hostages deal, Reagan had yet to inform Congress about the status or existence of the operation. The president had his reasons. The way Reagan told it to himself, the success of it hinged on secrecy. The president had kept his secretaries of state and defense largely out of the loop; hell, he withheld information from his own personal record of the events of his presidency. “I won’t even write in the diary what we’re up to.” No one could know, most especially Tip O’Neill and the Democrats in the House; Reagan didn’t want them to run crying to the press.
This insistence on secrecy was fueled in part by Reagan’s fear that the hostages or the men inside Iran doing the talking would be killed if details of the negotiations became public. Nobody in the Reagan administration had good enough contacts to know if this fear had any basis in reality. Hard data had never been—and would never be—a controlling factor in the Reagan administration’s decision-making process. But there was also just the embarrassment factor. Given a choice between secrecy and the public finding out about the operation’s Laurel- and-Hardy-worthy failures (up to and including the Iranians sending our weapons back, dissatisfied!), who wouldn’t choose secrecy? Finally, there was the fact that much of what Team Reagan was doing was not simply flying in the face of their own stated policy against dealing with terrorists (“We make no concessions,” Reagan had said. “We make no deals”) or state sponsors of international terrorism (Iran was a gold-plated designee on that list); it was not just shredding the president’s own executive orders and national security directives; it was not simply executing a spectacular and hypocritical affront to good sense and good diplomacy; but, in fact, much of this arms-for-hostages operation was quite flagrantly against the law. Flat-out illegal.
Reagan’s deal violated the Arms Export Control Act by permitting Israel to secretly transfer US-supplied arms to a third country and failing to report the transfer to the proper officials in the US legislature. And the CIA, in providing access to the jet that flew the Hawk antiaircraft missiles to Iran in November, had violated a post- Vietnam amendment to the Foreign Assistance Act that forbade the agency from undertaking covert operations in a foreign country unless a president issued a finding that the operation is “important to the national security of the United States.”
At a White House meeting three weeks after the disastrous and illegal-on-two-counts shipment of the TOW missiles, most of the president’s top advisers tried to pull him out of the arms-for-hostages racket. A CIA deputy director explained that the notion of an independent moderate faction in the Iranian Army was a fiction, which meant that, even if Casey’s deputy didn’t say it aloud, selling weapons to Iran meant selling weapons directly to Khomeini. George Shultz and Caspar Weinberger, who rarely agreed on anything, were agreed on the benighted nature of the Ghorbanifar operation. Secretary of State Shultz had never bought Reagan’s argument that because we put Israel between ourselves and Iran, and then put some unknown and unidentified “Iranian moderates” between ourselves and Hezbollah, this was not an arms-for-hostages deal. Those were a couple of strands of hair too fine to split. And Secretary of Defense Weinberger pointedly reminded Reagan of the violations of both the embargo on selling arms to Iran and the Arms Export Control Act. The president was visibly annoyed with both Shultz and Weinberger, Shultz later said, and “very concerned about the hostages, as well as very much interested in the Iran initiative…. Fully engaged.” Despite the vocal in-house opposition to the operation, the Iranian arms deal remained on the table for the next month, largely because Reagan himself would not let it be extinguished.
In the meantime, by the reckoning of the White House’s NSC staff, one good thing had come from this mess of an arms deal: a smallish but quite useful windfall had dropped into the Swiss bank account of a private American company set up almost exclusively to further President Reagan’s foreign policy agenda. That first arms- for-hostages profit didn’t happen by design. The logistics of the third weapons shipment—the Hawks shipment— became so knotty that Israel had to pay a retired US Air Force general to deliver to Iran their four separate planeloads of twenty antiaircraft missiles. They advanced Gen. Richard V. Secord and his partners at Lake Resources, a key subsidiary of what came to be called “the Enterprise,” a million dollars for the job. Only one of the four shipments was actually made. The Enterprise spent $150,000 of the $1 million making that one flight to Tehran, but what would become of the remaining $850,000?
As it turned out, the Enterprise, this web of shady little offshore companies, had another client in real need. That extra money became what Secord—and perhaps his contact inside the Reagan White House, Col. Oliver North—called a “Contra-bution.” And this is where Iran-Contra, the scandal that almost destroyed the Reagan presidency, earned its hyphen.
By the time General Secord got his unexpected windfall, the White House had been for a year secretly running a public-private partnership to keep the Contras in what the many Marines on Reagan’s team liked to call “beans, boots, Band-Aids, and bullets.” The privatization of the Contra aid operation was an idea first promoted in the highest circle of the Reagan administration in the summer of 1984, when it started to become clear that Congress was going to stop the US government from aiding the Contra military effort directly. According to now- declassified minutes, much of the June 25, 1984, National Security Planning Group meeting in the White House Situation Room was about funding the Contras. And everybody in the room understood they were edging up against legally questionable measures.
“If we can’t get the money for the [Contras],” said UN ambassador Jeane Kirkpatrick at the meeting that afternoon, “then we should make the maximum effort to find the money elsewhere.”
“I would like to get the money for the Contras also,” Secretary of State George Shultz countered, “but another lawyer, Jim Baker, said that if we go out and try to get money from third countries, it is an impeachable offense.”
