Excerpts From Senate Intelligence Panel’s Iran-Contra Report

WASHINGTON — Following are excerpts from the Senate Intelligence Committee report on the Iran arms- contra aid issue:

REAPPRAISAL OF POLICIES:

In May, 1985, the CIA national intelligence officer for the Middle East prepared a five-page memo which went to the National Security Council and the State Department, arguing for a change in U.S. policy that would seek a more constructive relationship with Iranian leaders interested in improved ties with the West.

The memo argued in part that the U.S. could permit allies to sell arms to Iran as one of the alternative means of establishing Western influence so as to offset growing Soviet inroads in Iran. Apparently using the arguments in this memo, two members of the NSC staff then prepared a draft National Security Decision Directive (NSDD) which proposed a departure in U.S. policy toward Iran. . . .

National Security Adviser Robert C. McFarlane transmitted the draft NSDD on June 17, 1985, to secretaries Shultz and Weinberger for their comment. State Department logs and Secretary (of State George P.) Shultz’s testimony indicate that he responded in writing on June 29 that the proposed policy was “perverse” and “contrary to our own interests.” Weinberger made the following comment in the margin of the draft: “This is almost too absurd to comment on.”

THE HOSTAGE FACTOR:

Testimony of several senior Administration witnesses indicates that during 1985 the Administration was occupied on a regular basis with matters relating to terrorism and the state of U.S. hostages. In particular, documents and testimony reflect a deep personal concern on the part of the President for the welfare of U.S. hostages both in the early stages of the initiative and throughout the program.

The possibility of the release of U.S. hostages was brought up repeatedly in conjunction with discussion of the program.

ISRAELI INTERESTS:

According to documents and testimony received by the committee, Israel had a strong interest in promoting contacts with Iran and reportedly had permitted arms transfers to Iran as a means of furthering their interests. A series of intelligence studies written in 1984 and 1985 described Israeli interests in Iran. These studies also reported Israeli shipments of non-U.S. arms to Iran as well as the use of Israeli middlemen as early as 1982 to arrange private deals involving U.S. arms.

PRIVATE PARTIES:

Documents and testimony indicate that Adnan Khashoggi and other international arms dealers, including Manucher Ghorbanifar, were interested in bringing the U.S. into an arms relationship with Iran, and had discussed this at a series of meetings beginning in the summer of 1984 and continuing into early 1985. These discussions reportedly included the idea of an “arms for hostages” deal in part as a means of establishing each country’s bona fides. . . .

Michael Ledeen, a professor at Georgetown University and a part-time NSC consultant beginning in February, 1985, appears to have played a key role in the initial contacts between the U.S. and Israel vis-a-vis Iran. . . . Ledeen testified that he talked to McFarlane in April, 1985, about the possibility of raising contacts with Iran with the government of Israel and that McFarlane agreed, and requested specifically that Ledeen get Israel’s perspective on fighting Iranian terrorism. . . .

Secretary of State Shultz learned of Ledeen’s activities and, in a message dated June 5, complained to McFarlane that Ledeen’s contact with Israel had bypassed the Department of State. Shultz noted that Israel’s agenda regarding Iran “is not the same as ours. . . .”

According to testimony by McFarlane, on July 3, 1985, David Kimche, director general of Israel’s Foreign Ministry and a former intelligence officer, contacted McFarlane. . . . Kimche stated that as a result of growing concerns with Soviet pressures, Iranian officials had asked Israel to determine whether the U.S. would be interested in opening up political talks with Iran. According to McFarlane, Kimche stated that the Iranians understood U.S. concerns regarding their legitimacy and therefore had proposed to use their influence with radical elements holding U.S. hostages in Lebanon.

McFarlane testified that he visited the President in the hospital on either July 13 or 14, 1985. According to testimony by (White House Chief of Staff Donald T.) Regan, he also attended the meeting and believes that it occurred three days after the President’s operation (i.e. July 16 or 17). Regan further testified that at the meeting McFarlane requested the President’s authority to use an Israeli contact with an Iranian as a channel to higher-ups in Iran.

According to Regan, McFarlane was vague about the specifics of the plan, and the President then questioned McFarlane on his confidence in the Iranian contact, Ghorbanifar. Regan testified that McFarlane defended Ghorbanifar on the basis of Israeli assurances and the President authorized McFarlane to explore the channel.

McFarlane testified that the plan he conveyed to the President was essentially what Kimche had suggested. McFarlane stated that he told the President that he would not be surprised if arms entered into the relationship later. According to McFarlane, the President was enthusiastic about the opening, hoped it would lead to the release of hostages. . . .

According to testimony by Shultz, Kimche and McFarlane met at the beginning of August, 1985, at which Kimche indicated that the Iranians not only wanted “a dialogue with America” but also wanted arms from the U.S. and TOW anti-tank missiles from Israel. In return the Iranians could produce hostages.

On Aug. 8, 1985, at a meeting of the National Security Planning Group in the White House residence, McFarlane, with (Vice Adm. John M.) Poindexter, briefed the President, Vice President (George Bush), Shultz, (Defense Secretary Caspar W.) Weinberger, Regan and (CIA Director William J.) Casey on the Kimche proposal to permit the sale of TOWs to Iran through Israel.

THE AUGUST-SEPTEMBER SHIPMENTS OF TOWS:

According to testimony by Regan, the President declined to authorize the sale of TOWs because of misgivings about Ghorbanifar’s credentials and influence in Iran. Regan testified that the other participants agreed it was premature to get involved in arms sales to Iran. McFarlane, on the other hand, testified that Ghorbanifar’s name never came up at the August meeting.

Secretary Shultz said there was a meeting on Aug. 6, 1985, where McFarlane briefed the President on an Israeli request for U.S. replenishment of Israeli TOW missiles proposed for shipment to Iran. In return, according to Shultz, the U.S. was to get four hostages and the entire transaction would be deniable. Shultz said he opposed the proposal, but the President did not make a decision.

McFarlane testified that subsequent to the meeting, President Reagan approved the Israeli request to ship arms to Iran and to purchase replacements from the U.S. Presidential approval was on the condition that the transfers would not contribute to terrorism or alter the balance of the Iran-Iraq war. Although there is no written record of a decision at this time, McFarlane testified that the President informed Shultz, Weinberger and Casey of his decision. . . .

One White House chronology prepared in November, 1986, simply notes that McFarlane conveyed to Kimche a presidential decision that a dialogue with Iran would be worthwhile. However, a second White House chronology presents conflicting accounts about whether the U.S. acquiesced in the Israeli delivery of 508 TOWs to Iran on Aug. 30.

According to testimony by McFarlane, Israel did not feel bound to clear each specific transaction with the U.S. Israel proceeded on the basis of a general authority from the President based on a U.S. commitment to replace their stocks.

According to documents received by the committee, the shipment of 508 TOWs left Israel on Aug. 30, 1985, transited a third country and arrived in Iran on Sept. 13.

On Sept. 15, 1985, the Rev. Benjamin Weir was released from his captivity in Lebanon. According to testimony received by the committee, there was reason to believe at the time that Ghorbanifar played a direct role in the event. . . .

It should be noted that the committee also received testimony inconsistent with this description of events. Secretary of Defense Weinberger testified in response to a specific question that he knew nothing about any connection between the release of Weir and Israeli arms sales to Iran.

Regan testified that McFarlane told the President--in his presence--that the Israelis, “damn them,” had sold 500 TOWs to the Iranians without U.S. knowledge. Regan further testified that he, the President, McFarlane and Poindexter decided to “ignore” the incident except to “let the Israelis know of our displeasure” and “keep the channel open. . . .”

The testimony of McFarlane is inconsistent with that of Regan. McFarlane, in testimony, disputed Regan’s characterization of his reaction to the TOW shipment and denied that the President had ever expressed disapproval of the Israeli action. McFarlane testified that the President was “elated” at Weir’s release and denied that the President had ever instructed him to reproach the Israelis.

THE NOVEMBER 1985 SHIPMENT OF HAWKS:

After the first shipment of TOWs, Ledeen continued to be active. He held meetings in the fall of 1985 with Kimche . . . Ghorbanifar (and other middlemen).

Iran demanded an arms shipment before each (hostage) release while the United States and Israel pushed for release in advance of any further arms shipments.

McFarlane testified that on Nov. 17, while in Geneva . . . he received a call from Israeli Defense Minister (Yitzhak) Rabin. Rabin requested assistance in resolving difficulties Israel was having in a shipment of military equipment through a European country onward to Iran. . . .

According to notes from the attorney general’s inquiry, Oliver North, (an NSC aide involved in the arms sale operation), said he suspected that the Israeli shipment McFarlane mentioned consisted of U.S. arms. . . . North said he then contacted retired Air Force Maj. Gen. Richard Secord, whom he described as a close personal friend, for assistance. Secord was to try to arrange a large cargo aircraft of neither U.S. nor Israeli origin for the flight.

A White House electronic message from North to Adm. Poindexter on Nov. 20 indicates that North had a detailed understanding of the HAWK plan by that time. This message indicates that Israel would deliver 80 HAWKs to the European country Nov. 27 for shipment to Tabriz; five U.S. hostages would then be released to the U.S. Embassy in Beirut; $18 million in payment had already been deposited in appropriate accounts; Secord would make all arrangements; and replacements would be sold to Israel. . . .

Regan testified that McFarlane informed the President in Geneva that some type of arms shipment was being considered, and that if the operation were successful, hostages might be freed. Shultz expressed reservations to McFarlane, but according to Shultz, was told by McFarlane that he had cleared it with the President.

After many communications between Washington and this European country, efforts to obtain flight clearances failed. . . .

Several witnesses testified that North then asked the CIA to identify a charter aircraft that might be used. In response, CIA proposed using its proprietary aircraft and advised the company to accept this NSC-related mission.

The CIA proprietary flew from Israel in the latter part of November, carrying 18 HAWK missiles identified as oil drilling spare parts.

On Nov. 25, (John) McMahon, (deputy director of the CIA), learned that a CIA proprietary had flown the arms to Iran in support of an “NSC mission” without his knowledge or approval. According to McMahon, he instructed that no further CIA activity in support of the NSC operation was to be conducted without a presidential finding authorizing covert action. McMahon also directed that involved CIA officials brief the CIA general counsel, Stanley Sporkin, on what had transpired. . . .

This draft finding was prepared by Sporkin, approved by Casey and delivered to Poindexter on Nov. 26. . . .

Subsequent to the flight, no U.S. hostages were released. The Iranians were dissatisfied with the type of HAWK missile they received and believed they had been cheated.

However, in the CIA, planning and support for future missions in support of the NSC operation continued. . . . The committee received testimony that senior CIA officials made repeated calls to NSC staff in late November and early December urging that the draft Nov. 26 presidential finding be signed.

According to a memorandum for the record prepared by McMahon on Dec. 7, CIA was informed on Dec. 5 that the President had signed the finding and had directed the CIA not to inform Congress for reasons of safety of the hostages. Sporkin testified that one of his assistants had been informed by North that the finding had been signed and was in Poindexter’s safe. . . . However, the committee has received no documentary evidence that any finding of Nov. 26 or Dec. 5 was ever signed.

PRESIDENTIAL FINDING:

In an electronic message of Dec. 4, North provided Poindexter with a status report on the situation. . . . It indicated that release of the hostages is tied to a series of arms shipments beginning later in December, and that North, Secord, Kimche and (Israeli middleman Al) Schwimmer were to meet in London on Dec. 7 to go over arrangements for the next shipments.

On Dec. 7, the President met with Shultz, Weinberger, McMahon representing Casey, McFarlane and Poindexter to discuss the Iran initiative. Most participants who testified before the committee believed there was a consensus at this discussion that McFarlane would inform the Iranians in London that the U.S. would not trade arms for hostages.

However, at least one participant, McMahon, testified that there was no decision or consensus. He testified that the meeting was divided over whether to proceed with the Iran initiative, with White House staff supporting the continuation and all others disagreeing. . . .

On McFarlane’s return, he reported to the President and others on his London meeting. According to Casey’s written account of that meeting, McFarlane recommended that the U.S. not pursue a relationship with the Iranians through Ghorbanifar, of whom he did not have a good impression, but that we should work through others. . . .

At this time, CIA sent a message through its channels to posts in countries involved in preparations for future missions, advising them that “the deal” was apparently off and everyone should stand down.

McFarlane resigned from the government on Dec. 11. He testified that he had no further involvement with the Iran matter during the period of January to April, 1986. . . .

On Jan. 7, the President met in the Oval Office with the vice president, Shultz, Weinberger, Casey, Meese and Poindexter to discuss the Iran program. According to participants who testified, two officials--Shultz and Weinberger--argued strongly against providing arms to Iran. According to these participants, the President wished to keep the channel open, and left unresolved the issue of providing arms to Iran. . . . Subsequent to the Jan. 7 meeting, legal analysis of the finding and various means to implement the program continued.

A final meeting was held in Poindexter’s office on Jan. 16 to review a final draft of the finding. Attending were Poindexter, Casey, Meese, Sporkin and Weinberger. Weinberger again voiced opposition to the program. There was also discussion of the question of notification of Congress. The attorney general testified that he gave his opinion that withholding notification was legal, on the basis of the President’s constitutional powers and justifiable because of jeopardy to the hostages. . . .

According to a memorandum from North to Poindexter, the final finding was presented to the President on Jan. 17 for signature. Poindexter orally briefed the President on the contents of the finding, in the presence of the vice president and Regan. . . .

Weinberger testified before the committee that later that day he received a call from Poindexter informing him of the President’s action. Weinberger testified that he instructed his military aide, Maj. Gen. Colin Powell, to arrange for transfer of the weapons under the Economy Act to the CIA.

THE FEBRUARY SHIPMENT OF TOWS:

According to documents received by the committee, full-scale implementation of the Jan. 17 finding began immediately. Lt. Col. North flew to London to brief and negotiate with Ghorbanifar, who was told what the United States was prepared to do as a sign of good faith and interest in a long-term relationship. He was told particularly that the United States would provide intelligence on Iraqi positions in the war zone.

Ghorbanifar also was told that more TOW missiles would be sold to Iran and that the unwanted HAWK missiles would be picked up and removed from Iran in connection with the first delivery of 1,000 TOWs.

According to documents received by the committee, by Jan. 24, North had prepared a detailed plan of the program. The plan provided for: provision of intelligence samples to Iran; the financing and delivery of 1,000 TOW missiles to Iran, to be followed by the release of all U.S. hostages and 50 Hezbollah prisoners held by Lahad in southern Lebanon, and the return of HAWK missiles to Israel; and the financing and delivery of 3,000 more TOWs for Iran and 508 TOWs for repayment to Israel. Secord was to be in charge of aircraft requirements.

The plan included a prediction that (Ayatollah Ruhollah) Khomeini would step down on Feb. 11, the anniversary of the Iranian Islamic Revolution; Ghorbanifar was telling U.S. officials that other senior Iranians were urging Khomeini to do this so as to ensure a smooth transition.

On Feb. 12, the CIA notified the Army that funds were available, and on Feb. 13 the TOWs were turned over to the CIA. The 1,000 TOWs were shipped to Israel on Feb. 15-16, and half of them were flown to Iran on Feb. 17. The plane that delivered the remaining TOWs . . . picked up the 18 HAWKs and returned them to Israel on Feb. 18.

Testimony indicates Khashoggi received four checks for $3 million each from Ghorbanifar, and that $1 million went to the investors as interest, while another $1 million covered expenses and profit.

At the end of February, Israeli Prime Minister (Shimon) Peres wrote to President Reagan encouraging him to continue his efforts to gain a strategic opening in Iran and pledging to assist in this effort. Director Casey proposed that the President call Peres to reassure him that the program would continue and to thank him for Israel’s assistance.

THE MCFARLANE MISSION:

In the period of March through May, 1986, all efforts in the Iran arms sale program were directed at arranging a high-level meeting between U.S. and Iranian officials. These efforts led to the McFarlane mission to Tehran in late May and the associated transfer of HAWK missile parts to Iran. Throughout this period, no hostages were released.

EFFORTS TO SOLICIT AID FOR THE CONTRAS

On May 16, 1986, the President held an NSPG (National Security Planning Group) meeting where solicitation of third-country humanitarian support for the Nicaraguan resistance was discussed. North, Poindexter, Regan, Casey, Shultz, Bush and Weinberger were among those present. . . . White House documents reflect that the issues discussed at this meeting included the negotiation process and the status of Contadora, and the $100 million aid package before Congress for the Nicaraguan resistance.

The document states that the situation with the resistance was good but could reverse abruptly as they were running out of money. Two options to get the money were considered--seek to get reprogramming through Congress or go to other countries.

The final decision was to look at both approaches. According to the documents, Secretary Shultz was to provide a list of countries which could be approached. . . .

In preparation for a meeting on Sept. 15, 1986, between the President and Israeli Prime Minister Peres, North prepared a memorandum for National Security Adviser Poindexter on matters the prime minister might raise with the President. The memorandum reported that on the previous Friday, Sept. 12, Israeli Defense Minister Rabin had offered a significant quantity of captured Soviet bloc arms for use by the Nicaraguan resistance. These arms were to be picked up by a foreign flag vessel the week of Sept. 15 and delivered to the resistance.

The memorandum advised that if Peres raised this issue, the President should thank him because the Israelis held considerable stores of bloc ordnance compatible with arms used by the Nicaraguan resistance. Poindexter noted on the memorandum received by the committee that he discussed it with the President.

Regan testified that he attended a briefing of the President one hour before the Peres meeting and that the Rabin offer was discussed. Regan testified that the subject was not expected to come up at the President’s meeting, but that if Peres raised it, the President should “just say thanks.” Regan recalled no discussion as to legality under American law.