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The Iran-Contra Connection: Secret Teams and Covert Operations in Reagan Era

a book by Jonathan Marshall, Peter Dale Scott, Jane Hunter

[1987] Sourced

This explosive book lays bare the full details of current events [circa 1987], exposing the personalities and institutional relations behind the headlines. It goes beyond the specific events of the recent period to discern the roots of contemporary U.S. covert activity in the history of the past two decades. It delves into the details of CIA and extra-CIA operations including drug-trafficking, gun-running, government-toppling, and assasination.

The authors argue that the Iran-Contra scandal is not merely a plan gone awry, but a consistent outgrowth of a long tradition of covert U.S. activities. From the Bay of Pigs invasion teams to the NSC organizational team; from the CIA and the World Anti-Communist League to the Israeli connection and the State Department; this is the full story, unfettered by concerns of "damage control."

Part 1 - Contracting Out U.S. Foreign Policy
Nicaragua: The Test Case
Foreign Money, Foreign Arms
Personnel and Logistics: Going Private
Part 2 - The Growth of Reagan's Contra Commitment
Introduction: Private and Official Decision-Making
Reagan, Deaver's Amigos, and the Death Squads
Deaver, Taiwan, and WACL
The Restoration of Arms Sales to WACL Countries
Deaver, WACL, and the Contras
Singlaub, WACL, and LaRouche
The Strategy of Tension: CAL, P-2, Drugs, and the Mafia
P-2, the Republicans, and Ledeen
P-2, the Calvi Scam, and Nicaragua
The CAL-Reagan-Helms Triangle
Reagan, the Contras, and Narcotics
Watergate, Contragate, and Foreign Campaign Contributions
Part 3 - Israel and the Contras
The Dictates of Israel's Arms Industry
Opportunity in Central America
Israel, the White House Junta and the Contras
''Strategic'' Cooperation
An Evolving Modus Operandi
Massive Israeli Arms Shipments
The Attractions of Obscurity
Part 4 - Irangate: The Israel Connection
The Israeli Interest in Iran
The Arms Channel Opens
Part 5 - The Deeper Malady: From Terrorism to Covert Action
The Price of Covert Operations
A Blank Check for "Counterterrorism"
Paradigm Shift
Libya Bashing
Unleashing the CIA
Washington Becomes Militant
Jeff McConnell observed:
Looking to the Future
Part 6 - Conclusion
Iran-contra controversy

... rituals of mystification ... have become part of the American experience whenever the integrity of the governmental process is called deeply into question. The Warren Commission Report after John F. Kennedy's assassination initiated this kind of exercise in the politics of reassurance that now seems indispensable at times of public crisis.

The policies embodied in both the [Iran-Contra] arms sales and the diversion of funds for a variety of dirty purposes were carried out by powerful transnational networks of individuals and organizations long associated with rabid anti-communism, and centering on a mixture of former CIA officials and anti-Castro exiles, but stretching out to include military and civilian centers of reaction, as well as a mercenary cadre available for lethal undertakings of any sort. An extremely distressing element in the story is the incredibly durable half-life of former career participants in covert operations; only for plutonium is the disposal problem greater! For money, thrills, habit, and conviction these men find ways to regroup in the private sector and carry on with their efforts to destroy progressive and nationalist political possibilities in Third World countries, as well as to sell arms and drugs, and carry out an unauthorized private sector foreign policy that is vicious and invisible and acknowledges no limits. An unappreciated cost of the Reagan years has been to introduce into the sinews of government the virus of fascist conspiratorial politics, especially in the Western Hemisphere. In this regard, the reliance on North and Poindexter is not a managerial glitch, but rather a decision to depend on those with such a passionate commitment to the radical right who happened to be positioned for action, and would be trusted to serve as faithful instruments of policy, uninhibited by either standard bureaucratic procedures or constitutional restraints.

The Reagan presidency has rebuilt the formal legions of covert operations in the CIA and has, as well, given a taste of power to the shadow network of ex-CIA, ex-military, exile, and extremist forces in this country and abroad... This paramilitary orientation ravages society by preying upon its capacities for law and morality, infusing drugs, corrupting police and local government, and convincing the citizenry that their lives are played out in a virtual cesspool of vice and menace, and that activism is futile and unpatriotic.


Contracting Out U.S. Foreign Policy

The imperial presidency, temporarily checked by the Vietnam defeat and Watergate scandal, has reemerged during the Reagan years. As always, the reason lies in excessive congressional deference to the executive branch. But since 1980, presidential power has been aggrandized by the Reagan administration's sophisticated strategies for circumventing Congress in the shaping and implementing of foreign policy.

President Reagan's secret weapon is "contracting out" such normal government functions as funding and executing policy to the "private" sector while keeping policy making itself in the hands of the state. But unlike typical commercial examples of the practice, the administration has contracted to agents who are themselves total creatures of government-in particular, of government intelligence agencies. In their "private" capacities, however, these agents nonetheless fall largely outside congressional purview.

This strategy involves much more than confining policy making and implementation to a tight circle within the National Security Council, however much a dismayed Secretary of State George Shultz has focused public attention on his personal exclusion from decisions. President Reagan's dependence on the NSC to the near exclusion of traditional bureaucracies is, after all, far from unique; Henry Kissinger mastered that art in the Nixon era and for it won the admiration of Congress and the American press.

Reagan's innovation was much more significant: while bypassing standard channels of government, his administration found foreign governments and rich individuals to contribute the money; CIA and military special operations veterans to contribute the manpower; and private firms to contribute the logistics for its operations. In effect, White House operatives set up a parallel Treasury, Army, Air Force and State Department to negotiate with terrorists, fight covert wars and subvert the law wherever they deemed appropriate. Farming such covert operations outside even the CIA served to insulate the president and his advisors from scrutiny and responsibility.

As a result, major elements of White House policy escaped public notice or congressional review. This parallel private network functioned outside normal lines of oversight and accountability, and once set in motion, could operate effectively with minimal presidential guidance. But as distinguished from "privatization," a term often misapplied to the Iran and contra affairs, the contracting method always left essential policy direction in the White House.

The Reagan strategy had its roots in the classic intelligence practice of using proprietaries and "cut-outs" to effect policy while preserving deniability. Always useful against unwanted public scrutiny, these techniques were perfectly suited to the 1980s' political environment of presidential activism on behalf of the "Reagan Doctrine," the commitment to roll back pro-Soviet regimes in the Third World. Congressional doubts and public hostility made overt pursuit of that doctrine difficult or impossible. Even the CIA was a problematic tool of policy owing to legal requirements that it report covert operations to Congress.

"Since the Vietnam War," one Reagan NSC member told a reporter, reflecting the widespread distrust of Congress by administration policymakers, "we have had this growing involvement by the legislative branch in the details of foreign policy that-you can make a constitutional argument-are properly left to the president. When you do that, you drive him in the direction of using other techniques to achieve objectives."

Ironically, however, deep-cover contracting also appealed to administration activists frustrated by bureaucratic gridlock between warring departments and the tendency of rival policymakers to leak details of unpopular, unwise or illegal policies.

Such rivalries "made it impossible to function at all" except in secret, argued former Pentagon special operations planner Noel Koch. The lesson that individuals like Oliver North drew, according to Koch, was "If you're going to do anything bold or innovative, you're going to have to do things through irregular channels."

Or as another "covert missions planner" said of North's decision to rely on former Pentagon special operations veterans for his secret missions "the CIA and NSC have no capability to do things in a secure fashion. You want to do something quietly, then you can't tell the bureaucracies. Here's a guy who can go to key people in foreign countries and get things done. As a private citizen, he has no obligation to tell anyone."

And quite apart from the matter of capabilities, many insiders doubted even the resolve of the CIA to implement tough policies abroad. Angelo Codevilla, a hawkish former staffer on the Senate Intelligence Committee, expressed the view of many "roll-back" conservatives in Washington:

The Director of the Central Intelligence Agency, William Casey...personally seems to favor the victory of liberation movements. His Agency has the charter for dispensing the aid. But from among the CIA's senior personnel have come strong echoes of the State Department's view of the role of liberation movements in U.S.-Soviet relations. In their dealings with Congress and the NSC, CIA officials have often outdone even their colleagues in the State Department in reticence to provide aid to such movements quantitatively and qualitatively sufficient for victory, declaring that the Agency would rather be rid of the burden of supplying such aid at all.

The White House decisionmaking center for covert operations and contracting-out strategy lay within a tiny team of select State, Defense, CIA and NSC officials known as the "208 Committee" or "Policy Development Group." Oliver North, the workaholic organizer of secret contra supply missions and Iran arms deals, was one of its most active members. Meeting in the Crisis Management Center in Room 208 of the Old Executive Office Building, surrounded by secure computer data links to the National Security Agency, this group could plan secret operations free from the obligation to report to the intelligence committees of Congress. Its mission was to implement the Reagan doctrine of fighting Soviet influence throughout the Third World, wherever possible by supporting indigenous forces. Its thorough overview of missions and logistics included such details as "which weapons will be shipped, which secret warehouse goods used, which middlemen will deliver them to clandestine airstrips." For the most sensitive policies, as with the Iran arms shipments, only a few members of even this group took part in policy discussions.

For North and others in this select circle, the guiding principle was power and the task was to expand it without answering to other authorities. As one White House memo from 1982 outlined the mission of "Project Democracy"-the rubric under which the NSC began to undertake foreign policy initiatives of its own-"we need to examine how law and executive order can be made more liberal to permit covert action on a broader scale." i° Contracting-out provided means to subvert the law and stretch the scope of executive orders.

Nicaragua: The Test Case

Nicaragua saw the first application of the strategy. The Reagan administration's policy toward the Sandinistas from the start was summed up by the title of a report prepared by then-State Department counselor Robert McFarlane in early 1981: "Taking the war to Nicaragua." But owing to congressional reticence, the White House had to lie about its ultimate intentions, pledging that CIA assistance to the contras merely served to block Sandinista arms shipments to the Salvadoran rebels. "There were always two tracks," one CIA official explained, "the publicly stated CIA objective of interdicting weapons to Salvadoran guerrillas, and the overthrow of the Sandinista government." On March 9,1981, President Reagan took the first step to launching the covert war under that public goal by issuing an official "finding" that Nicaraguan arms smuggling was harming U.S. national security interests.

The need for continued deception and greater action prompted a November 16, 1981 presidential order to begin a full-scale campaign against Nicaragua. It authorized an initial $19.5 million for the guerrilla war, justified once again by the need for arms interdiction. But as one contra source said of that rationale in 1982, "If that's what the CIA told Congress, they forgot to tell us."

The November order specifically directed the CIA to wage its covert war "primarily through non-Americans" and "with foreign governments as appropriate." In implementing that early version of the "contracting out" strategy, the CIA piggybacked on operations already underway by two other governments: Argentina and Israel.

The first of these "deniable" partners was Argentina, whose military rulers had, since the mid- 1970s, unleashed an orgy of violence against their own civilian population in the course of stamping out a leftist guerrilla movement. Argentine agents had worked in Nicaragua even before Somoza's overthrow to help track down Argentine Montoneros guerrillas who had teamed up in exile with the Sandinistas; they also advised security forces and death squads in Guatemala and El Salvador. Now Argentina's military junta supplied as many as 100 veterans of its own dirty war against the left to train the first contras in urban terrorist tactics and guerrilla war. These were not just any contras: Argentina's proteges were all recruits from Somoza's brutal National Guard. Visits to Buenos Aires in 1981 by such Reagan administration emissaries as Joint Chiefs of Staff Chairman General Edwin Meyer, Ambassador-at-Large Vernon Walters and UN Ambassador Jeane Kirkpatrick helped establish the alliance of the CIA and Argentine military in Central America. A November I meeting of CIA director William Casey and the American-trained leader of Argentina's military junta, Gen. Leopold Galtieri, cemented it.

At the same time, CIA paymasters-who had allocated $50 million to the training program-prevailed on several key contra leaders to unify their anti-Sandinista groups behind the Argentine-trained veterans of Somoza s National Guard. Thus the Nicaraguan Democratic Front, or FDN, was formed on August 11, 1981, just when Gen. Galtieri was in Washington on an official visit.

Foreign Money, Foreign Arms

Money for the contras that once flowed freely from CIA contingency accounts began to dry up in 1983 when Congress began setting limits on its funding of the burgeoning and ever-more-unpopular war. Legislators were finally awakening to the fact that the Argentine-trained Somocistas wanted not a democratic accommodation with the Sandinistas, but their ouster.

On December 8, 1982, the House of Representatives passed a bill sponsored by Rep. Edward Boland of Massachusetts barring U.S. covert actions "for the purpose of overthrowing the government of Nicaragua." That new law alone did not slow the administration down, but the demands of an enlarged war did. Later the next year, the CIA had to augment its budget by persuading the Pentagon to donate $12 million in "surplus" arms to the agency for delivery to the contras. That December, however Congress voted a $24 million ceiling on CIA spending for its covert war in the coming fiscal year.

In May 1984 that half-closed spigot was fully plugged in the wake of revelations that CIA agents, acting in the name of the contras, had seeded Nicaraguan harbors with mines. These agents included Salvadoran Hondurans, Argentinians, Chileans and Ecuadorans-but ironically, no Nicaraguans. That provocative escalation had been conceived by the NSC s Oliver North and a top CIA officer in charge of anti-Sandinista operations to get more bang for limited bucks. But it outraged Managua's Western trading partners and chagrined Congress, whose intelligence oversight committees were taken by surprise. The fiction of arms interdiction" held up no longer. Congress rejected a supplemental appropriation for the contras. Three months later, in August, it passed the Boland Amendment, prohibiting any administration agency involved in "intelligence activities" from "supporting, directly or indirectly, military or paramilitary operations in Nicaragua by any nation, group, organization or individual."

The contras had some resources of their own to fall back on-most notably, we shall see in Chapter VI) profits from drug trafficking. But without more substantial help from the United States, their cause still seemed doomed until North covered his own harbor-mining folly with an even greater one: the proposal (accepted by National Security Adviser Robert McFarlane) to subvert Congress' intent by building a "private" funding and supply network. North claimed that the Boland Amendment's reference to any "agency or entity of the United States involved m intelligence activities" did not apply to the National Security Council. He criss-crossed the globe in 1984 and 1985, raising as much as $1 million a month from private and foreign government sources to keep the administration's proxy war alive. North's agents in turn carried cash from his office safe to Central America for disbursement to the rebels.

One of North's allies in this project was Elliot Abrams, the Assistant Secretary of State for Inter-American Affairs and an enthusiast of the contra war against Nicaragua. Abrams solicited money from other countries, ostensibly for humanitarian purposes. But he consciously "decided to use the account opened by North without procedures for monitoring expenditures from the account," according to a Senate committee report. This studied lack of interest closely paralleled the ClA's own official policy of asking no questions about the origin of large sums of money in the contras' bank accounts.

Together with Abrams and other officials and private agents, North raised money from a remarkable variety of sources outside the United States-and thus outside the jurisdiction of Congress. Amos Perlmutter, an American political scientist with close connections to the Israeli government, reports that, "AII those who are clients of the United States have been told more or less, 'You've got to do something for the contras."

According to contra fundraiser and presidential candidate Pat Robertson, one helping hand for the anti-Sandinista rebels came from South Africa. For example, some of the planes that supplied the contras were made available by a South African air freight company, apparently after the head of the ClA's Latin America division took a secret trip to

South Africa in early 1985 to solicit aid for the anti-Sandinista cause. The South African aid may help explain Reagan's vigorous opposition to economic sanctions and CIA director William Casey's efforts to line up Saudi oil for the apartheid regime.

Brunei: In the summer of 1985, during the dry spell in congressional aid, Secretary of State George Shultz and his chief assistant on Latin American affairs, Elliott Abrams, approached the Sultan of Brunei for a donation to the contra cause. The sultan, fabulously wealthy from oil and gas revenues, reportedly deposited $10 million in a Swiss bank account controlled by Oliver North. He was also a creditor to the key Irangate arms broker, Adnan Khashoggi. Some U.S. officials suspect that the Sultan's money never reached the contras, but instead went to reimburse Khashoggi, who advanced millions of dollars to finance U.S. arms sales to Iran.

Saudi Arabia: Casey also worked on Saudi Arabia-successfully- to support Washington's cause in Central America. The CIA director met with King Fahd in February 1984 to press his case. Working in tandem with Casey to persuade the royal family were two private individuals with tremendous experience in the field of Mideast arms sales: retired Air Force Gen. Richard Secord, who steered the sale of AWACS surveillance planes to Saudi Arabia through Congress in 1981, and Robert Lilac, former commander of the U.S. Air Force Logistics Command in Saudi Arabia, who left the NSC in 1983 and now works for the Saudi Ambassador in Washington, D.C. The Saudi royal family reportedly turned over $32 million to the rebels in Honduras and Costa Rica in gratitude for the administration's success in overcoming the Israeli lobby's resistance to the $8.5 billion AWACS sale. Saudi money also supported anti-communists in Angola and Afghanistan. Most recently, evidence has come to light that Saudi Arabia financed arms purchases by its feared adversary Iran, in hopes of moderating the regime's revolutionary, messianic mission. Some of these monies in turn were allegedly deposited by Israeli intermediaries in Switzerland for disbursement to the contras.

South Korea: Less visibly, South Korea, too, has given generously to the contras, and on at least one occasion shipped them arms paid for by Saudi Arabia. It has also provided an important back channel for arms shipments to the Khomeini regime in Iran. The arms and funding pipelines from South Korea were kept open by a combination of Washington lobbyists, ex-CIA officers and private organizations, many with ties to Saudi Arabia as well.

No country, however, has played a more significant surrogate role in both Central America and Iran than Israel. As early as 1981, Israel's economic minister Ya'acov Meridor had declared, "Israel will be your proxy." Although Israeli leaders have officially denied aiding the contras, the record of their involvement is clear and unequivocal. As recently as September 1986, according to Assistant Secretary of State Elliot Abrams, Israel sent the contras by sea a large shipment of Soviet-made arms, presumably captured in Lebanon.

Israel's proxy activities on behalf of the contras grew out of a long tradition of military support for authoritarian regimes in Central America, including that of Anastasio Somoza in Nicaragua. Israel was also in on the ground floor with the contras when Somoza finally fled the country. Haifa University professor Benjamin Beit-Hallahmi reports that "when the CIA was setting up the contra organization in 1981, the Mossad was also there, carrying out the training and support for the first units.

Finally, Israel was a leading arms supplier to Argentina during the period of its military rule, despite anti-semitic violence and the Falklands War. Indirectly, therefore, Israel bolstered the contras by arming their direct military supporters in the first years of opposition.

The first major Israeli arms deliveries to the contras appear to have begun shortly after the pull-out of Argentine trainers and suppliers from Central America in the aftermath of the Falklands War. "As early as 1982," according to U.S. News and World Report, Gen. Richard Secord took charge of a Pentagon operation "in which Israel shipped tons of weapons captured during its invasion of Lebanon to a CIA arms depot in San Antonio. From Texas, the guns were shipped to the contras.

More than arms seem to have been involved. Replacing the Argentine advisers were "retired or reserve Israeli army commanders...hired by shadowy private firms," according to Time magazine. America's contractors had apparently subcontracted the job.

The point man for this cooperative strategy was David Kimche, a 30-year Mossad veteran who rose to direct Israel's Foreign Ministry until the fall of 1986. Known as Israel's "key contras specialist," he has been directly linked to surrogate funding of contras. And it was Kimche, by all accounts, who in 1985 persuaded the Reagan administration to sanction Israel's arms pipeline to Tehran in order to influence lranian "moderates." Kimche's Israeli patron Ariel Sharon was himself an architect not only of the contra supply operation but also of Israeli arms sales to Iran. And Kimche's White House contacts on the Iran operation-Robert McFarlane and Oliver North-were in turn the masterminds of the contra aid network

Nearly all of these foreign funding sources were either untraceable (AW ACS kickbacks, Iran payments through SwitzerIand or untouchable (Israel, South Korea). A Congress united behind Israel was not (and still is not) inclined to ask too many questions about its arms deliveries in Central America or Iran. Nor, after Jimmy Carter's abortive talk of a pullback from Korea, would Congress cut off the Seoul regime. Thus the White House could, for a time at least, safely flout the intent of Congress with help from these U.S. aid recipients.

Personnel and Logistics: Going Private

Just as Congress was loathe to touch these offshore suppliers, so was it reluctant to rein in the elaborate old-boy network of retired CIA and military covert operators who carried out Reagan's policies in the field. Their common experiences run the gamut from the CIA-sponsored war against Castro in the early 1960s, to the covert war in Laos later in that decade, to shady arms and intelligence operations in Iran by the mid-1970s. Out of these experiences came shared expertise, close-knit contacts and trusting friendships that would bring them together again as a covert network in the 1980s.

Among the most significant of these figures is retired Gen. John Singlaub, a veteran of the CIA and military "special operations" in Indochina who now implements the Reagan doctrine through his leadership of the World Anti-Communist League and his Pentagon advisory role. His special operations colleagues from the Vietnam era run similar aid groups, including the National Defense Council, Refugee Relief International, and Air Commandos Association. All these groups coordinated their efforts through Oliver North on the NSC.

Working with North and Singlaub in Vietnam and Laos as an air supply specialist on ClA-connected covert missions was (then) Lieutenant Colonel Richard Secord. In 1981, as deputy assistant secretary of defense for the Near East, Africa and South Asia, he acted as the Pentagon's chief representative and lobbyist on the AWACS sale that set the terms for subsequent Saudi kickbacks to the contras. His job also put him in a position to follow Israel's covert arms shipments to Iran in the early 1980s. A career-long specialist in covert operations, Secord had what one congressional source called "incredible intelligence contacts." After leaving the government in 1983, Secord and his Iranian-born business partner Albert Hakim managed the private supply network for the contras under North's supervision, using Saudi and Iranian money deposited in Switzerland to purchase planes and other supplies. Secord was also a key logistics agent in the Iran arms deals of 198S-86. One intelligence source called Secord "the 7-Eleven of this type of intelligence activity open 24 hours a day." North's own assessment was equally apt: "A man of many talents ol' Secord is."

Another Laos-era associate of Singlaub and Secord was CIA officer Thomas Clines. As a private businessman by 1986, he helped Secord arrange clandestine arms deliveries to the contras out of Portugal, recruited ex-CIA pilots for the supply operation and helped Oliver North obtain a ship used in the attempt to rescue American hostages in Lebanon.

Clines had begun putting together a private aid network even before Ronald Reagan entered the White House. In 1978, he and Ed Wilson, a former CIA agent and friend of Secord who has since been convicted of supplying explosive devices to Libya, reportedly began negotiating a $650,000 deal with Nicaraguan dictator Anastasio Somoza "to create a search and destroy apparatus against Somoza's enemies." The negotiations commenced just as the Israelis were moving to supply essentially all of Somoza's arms. Both Israel's munitions representatives and Clines, who left the CIA on bad terms with the Carter administration, were operating directly against official policy toward Nicaragua. But their efforts foreshadowed perfectly Reagan's more militant strategy.

So, it would appear, did the work of another retired CIA officer, Felix Rodriguez, who had served under Clines in countless CIA operations in Cuba, the Congo and Vietnam. In his "retirement," Rodriguez went to work for Clines in the late 1970s as a representative of his arms sales business in Latin America. Rodriguez also served as an arms broker for Gerard Latchinian in 1979-80. Latchinian, who would later be convicted of a drug-financed assassination plot in Honduras for the benefit of the CIA's favorite general, Gustavo Alvarez Martinez, was particularly close to Israeli arms merchants in Guatemala and Miami. Thus Rodriguez appears to have supplied a connection between Clines and the Israelis in Central America. Rodriguez would later become the contras' logistics mastermind at Ilopango military airport in El Salvador.

A host of lesser covert operators joined these private individuals in carrying out the aims of the Reagan White House. They included Cuban exile terrorist veterans of the secret war against Castro directed by Clines from the CIA station in Miami, former CIA contract pilots who flew supply missions to Central America, former Pentagon special operations officers skilled in covert missions, and a private aid network revolving around such organizations as the World Anti-Communist League, Sovereign Military Order of Malta and CAUSA, a political arms of Sun Myung Moon's Unification Church.

Serving this group was also a network of private companies long experienced at serving undercover operations of the government. The best known of these is Southern Air Transport, a CIA proprietary company since 1960 that was sold in 1973 to its president. Sales of other such proprietaries were conditioned on "an agreement that the proprietary would continue to provide goods or services to the CIA," according to a 1976 congressional report. Southern Air Transport (SAT) was the airline of choice for both the private contra aid operation and the delivery of U.S. arms to Iran in 1985-86. The same aircraft that delivered U.S. weapons to Tehran via Israel picked up Soviet-made arms from Israeli-controlled stocks in Lisbon on their return trips to Central America. One retired Air Force officer involved in supplying the contras warned crew members to protect SAT's cover: "We don't want to get SAT or ourselves burned with a leak or get money hung up where we would have to expose the op[eration] to get it back."

In retrospect, the practice of contracting out foreign policy to such private agents, with all its dangers and abuses, was almost inevitable given the conditions of the Reagan presidency. A militant, sometimes radical group of policy makers confronted a much more cautious Congress and bureaucracy. A president flush with a tremendous election victory was frustrated by the unpopularity of so many of his specific foreign policies. The temptation under such circumstances was to skirt the law, even break the rules in the faith that deeply covered clandestine acts would go unnoticed and that the President's personal popularity would prevail in a showdown with political critics. The temptation, in short, was to use the contracting out strategy to achieve total presidential supremacy in foreign policy. Curbing the ability of future presidents to avoid public accountability this way is an essential first step toward also curbing the domestic and foreign abuses that result.

The Growth of Reagan's Contra Commitment

Introduction: Private and Official Decision-Making

By any accounting, Washington's decision to create and support contras was a consensual one, reached in the heart of the Reagan administration's professional bureaucratic apparatus. The relative weight of outside "shadow networks" and inside bureaucrats in generating the formal contra commitment is neatly summarized in an excellent book by Christopher Dickey, With the Contras:

Before any hard and fast decisions on the Secret War were taken, several CIA 'old-timers,' released from service during the cutbacks of the 1970s, were in contact with anti-Sandinista forces, acting as private citizens to reassure them that once Reagan was elected, their lot would improve...But while some of these men eventually served as contract agents in the Secret War, their importance in creating it is, I believe, overstated. The paramilitary operation against Nicaragua ultimately was not just an out-of-control creation of conspiratorial ex-spies and right-wing ideologues but a conscious decision by senior administration officials who consider themselves pragmatic policymakers.

Like other authors, Dickey locates this conscious decision making in the Senior Interagency Group on Central America set up under National Security Council guidelines and precedents, and initially responsible to CIA Director William Casey and Robert McFarlane (then Secretary of State Haig's counselor). Two names from this initial "Core Group" set up in 1981 would figure in the later Contragate story: Nestor Sanchez, a New Mexico-born CIA veteran of the Guatemalan "death squad" operations in 1967-68, (later representing the Pentagon), and Colonel Oliver North from the NSC staff.

Dickey's account, however, stresses the discontinuity between the "pragmatic" bureaucratic consensus of 1981, and the consensus of a year earlier under Jimmy Carter, when the message to Central American governments was not counter-revolution so much as "reform":

Despite years of experience and seniority in the foreign service, most of the veterans associated with the Carter policy [in Central America] were fired, forced out or moved to obscure and distant posts. Carter's last assistant secretary was sacked. His principal deputy for Central America was transferred to Katmandu...[The men] brought in to replace them were, as one put it, 'action-oriented.

Clearly, then, the change in policy was not bureaucratic so much as political. The 1981 purge of those State Department hands who allegedly "lost Nicaragua," like the 1953 purge of those who allegedly "lost China," was undertaken to fulfill a campaign pledge, made in response to allegedly massive and illicit campaign contributions from the interested region. Those who acted to generate the change in policy were not just the self-important CIA "old-timers" to whom Dickey refers. The agents included these men's "anti-Sandinista" allies-most notably the deposed dictator Anastasio Somoza of Nicaragua, and after Somoza's murder in 1980, the Guatemalan death squad impresario, Mario Sandoval Alarcon.

In the late 1970s ... three of the foreign forces who would eventually back the contras (the governments of Taiwan and Argentina, and right-wing forces in Guatemala), had taken an important step to ensure themselves a voice in Washington for a new U.S. foreign policy in Latin America to replace President Carter's. All three moved to hire as their Washington lobbyist Michael Deaver, the man then managing the campaign of future presidential candidate Ronald Reagan.

After this, Deaver's Guatemalan clients, following visits from Reagan campaign representatives such as Richard Allen, Roger Fontaine and John Singlaub (the CIA "old-timer" and future WACL Chairman), began to raise funds for the Reagan campaign. On a BBC broadcast, these funds were estimated by former Guatemalan Vice-President Villagran Kramer as amounting to perhaps ten million dollars.

 Reagan, Deaver's Amigos, and the Death Squads

The group that Deaver represented in Guatemala, the Amigos del Pais (Friends of the Country), is not known to have included Mario Sandoval Alarcon personally. But ten to fifteen of its members were accused by former Guatemalan Vice-President Villagran Kramer on the BBC of being "directly linked with organized terror." One such person, not named by Villagran, was the Texas lawyer John Trotter, the owner of the Coca-Cola bottling plant in Guatemala City. Coca-Cola agreed in 1980 to terminate Trotter's franchise, after the Atlantic Monthly reported that several workers and trade union leaders trying to organize his plant had been murdered by death squads.

One year earlier, in 1979, Trotter had traveled to Washington as part of a five-man public relations mission from the Amigos. At least two members of that mission, Roberto Alejos Arzu and Manuel F. Ayau, are known to have met Ronald Reagan. (Reagan later described Ayau as "one of the few people...who understands what is going on down there.")

Roberto Alejos Arzu, the head of Deaver's Amigos and the principal organizer of Guatemala's "Reagan for President" bandwagon, was an old CIA contact; in 1960 his plantation had been used to train Cuban exiles for the Bay of Pigs invasion. Before the 1980 election Alejos complained that "most of the elements in the State Department are probably proCommunist...Either Mr. Carter is a totally incapable president or he is definitely a pro-communist element." (In 1954, Alejos' friend Sandoval had been one of the CIA's leading political proteges in its overthrow of Guatemala's President Arbenz.)

When asked by the BBC how ten million dollars from Guatemala could have reached the Reagan campaign, Villagran named no names: "The only way that I can feel it would get there would be that some North American residing in Guatemala, living in Guatemala, would more or less be requesting money over there or accepting contributions and then transmitting them to his Republican Party as contributions of his own."

Trotter was the only U.S. businessman in Guatemala whom Alan Nairn could find in the list of Reagan donors disclosed to the Federal Election Commission. Others, who said specifically that they had contributed, were not so listed. Nairn heard from one businessman who had been solicited that "explicit instructions were given repeatedly: 'Do not give to Mr. Reagan's campaign directly.' Monies were instead to be directed to an undisclosed committee in California."

Trotter admitted in 1980 that he was actively fundraising in this period in Guatemala. The money he spoke of, half a million dollars, was however not directly for the Reagan campaign, but for a documentary film in support of Reagan's Latin American policies, being made by one of the groups supporting Reagan, the American Security Council (ASC). The film argued that the survival of the United States depended on defeat of the Sandinistas in Nicaragua: "Tomorrow: Honduras...Venezuela, the Dominican Republic, Mexico...the United States."

Deaver's Amigos and Trotter were in extended contact with the ASC over this project. In December 1979, and again in 1980, the ASC sent retired Army General John Singlaub to meet Guatemalan President Lucas Garcia and other officials. According to one of Singlaub's 1979 contacts, the clear message was that " Mr. Reagan recognizes that a good deal of dirty work has to be done." On his return to the United States, according to Pearce, Singlaub called for "sympathetic understanding of the death squads. " In 1980 Singlaub returned to Guatemala with another apologist for death squads, General Gordon Sumner of the Council for InterAmerican Security. Again the message to Lucas was that "help was on the way in the form of Ronald Reagan."

Jenny Pearce has noted that Singlaub's first ASC visit to Guatemalan President Lucas took place shortly after Lucas's meeting with Guatemalan businessmen, where he is "alleged to have raised half a million dollars in contributions to the [Reagan] campaign." Since the 1984 Congressional cutoff of aid to the contras, Singlaub, as world chairman of the World Anti-Communist League, has been the most visible source of private support to the contras. He did this in liaison with both William Casey of the CIA and Col. Oliver North of the National Security Council staff.

But Singlaub's contacts with the World Anti-Communist League go back at least to 1980, when he was also purporting to speak abroad in the name of Reagan. Did the help from Reagan which Singlaub promised Guatemalans in 1980, like the "verbal agreements" which Sandoval referred to at Reagan's Inaugural, involve commitments even then from Reagan to that fledgling WACL project, the contras?

Mike Deaver should be asked that question, since in 1980 he was a registered foreign lobbyist for three of the contras most important WACL backers: Guatemala, Taiwan, and Argentina.

Deaver, Taiwan, and WACL

Through his CIA contacts, Sandoval had also become the leader of the Guatemala chapter of the World Anti-Communist League. This chapter, partly organized by Howard Hunt, was a lasting spinoff of the 1954 CIA operation. WACL as a world organization however was principally the creation of two Asian governments which owed their survival to their well-organized lobbies in Washington. These two governments are Taiwan, which was represented in 1980 by Deaver; and South Korea, which is represented by Deaver today.

Through his long-time participation in WACL meetings, Sandoval has developed close relations with WACL's Taiwan organizers. It was largely through WACL that Taiwan picked up the task of training Central American police forces in "political warfare" (i.e. counter-terror), about the time that similar U.S. training programs were terminated by Congress in 1974. Today the Taiwanese embassy in Guatemala is second in size only to the American; and through Guatemala (and Sandoval) Taiwan has extended its influence to other Central American police forces. Deaver's double duty as a registered Taiwan agent and Reagan campaign organizer in 1980 helped generate one of the major controversies of that campaign. To understand it, one must go back to the origins of Deaver's public relations firm, Deaver and Hannaford, which he organized in 1974. Until that year both Deaver and Peter Hannaford had worked for Reagan in the California Governor's Office. In 1974, as Reagan retired to private life, the new firm undertook to book Reagan's public appearances, research and sell his radio program, and ghost-write his syndicated column. All this was arranged with an eye to Reagan's presidential aspirations, which Deaver and Hannaford helped organize from the outset.

Nothing about this arrangement was especially remarkable until 1977, when Deaver and Hannaford registered with the Justice Department as foreign agents receiving $5000 a month from the government of Taiwan. This sum was not particularly large, and notably less than the $11,000 a month which the firm would receive in 1980 from Guatemala's Amigos. The fact remains that funds from three closely allied WACL countries, Guatemala, Taiwan, and Argentina, helped pay for the Deaver and Hannaford offices, which became Reagan's initial campaign headquarters in Beverly Hills and his Washington office.

Questions of conflicting interest were raised when a Reagan column, said to have been written by Hannaford, argued that normalized relations with the People's Republic of China "could prove disastrous, not only for Taiwan, but for the United States itself." When Carter, undaunted, established full relations in late 1978, Reagan became one of the loudest critics of this action. In 1980 Reagan stumped the country with the catchphrase, "No more Taiwans, no more Vietnams, no more betrayals."

As Reagan's California team was melded into a national one, by the infusion of old Nixon supporters like William Casey and Richard Allen, Reagan's position on Taiwan appeared to soften. It was Allen's task at the Republican national convention to assure reporters that Reagan did not intend to "turn the clock back."

However the more balanced position which Allen projected, and which the Eastern establishment press was eager to hear, was misleading. In May 1980 in Cleveland, almost three months after Casey had become Reagan's campaign chairman, Reagan said in reply to a question that "One of the things I look forward to most if I am successful in this re-election is to re-establish official relations between the United States Government and Taiwan." Although Reagan did not spell this out, such a step would have involved a repudiation of Carter's 1978 agreement which recognized that "Taiwan is part of China."

Though the national press generally ignored Reagan's Taiwan position in May, they could not when on August 16 he repeated his pledge to establish "an official governmental relationship" with Taiwan. The occasion could not have been calculated to receive better press attention: Reagan's remarks were made as he was bidding bon voyage to his running mate George Bush, as he left on an image-building mission to Peking. As Time observed disapprovingly, Reagan's remarks "managed to infuriate Peking," and "create the impression of a rift between Reagan and Bush." When an embarrassed Bush tried to assure Peking officials that Reagan was not talking of relations "in a diplomatic sense," Reagan (in Time's words) "undercut" Bush by telling a reporter he still stood by his Taiwan statement. In the end Reagan grudgingly backed off ("I misstated"), while an embarrassed Casey tried to dismiss the whole episode as "semantic mishmash."

Reflecting the concern of the Eastern Republican establishment, Time analyzed the problem as one of divisions between Reagan's "uncoordinated" staff. It claimed that the top echelon of California insiders (among whom it specifically named Deaver) was "insensitive," with "little Washington or national campaign experience. The outsiders-like Campaign Director Casey...-do have that valuable experience but exercise less influence over the candidate."

On the crunch level of foreign policy decision-making, the lack of coordination appears to have been primarily between Richard Allen, who carried the title of Foreign Policy Advisor, and Deaver. There was some irony in this, since Deaver and Hannaford were busy projecting images of Reagan and themselves as pragmatists, while Allen had once been under CIA surveillance for his links to Taiwan's Vietnam allies, and had subsequently been relegated by Nixon to a minor role. On the issue of Taiwan, however, Deaver and Hannaford were the ideologues, and Allen relatively a pragmatist.

Though he had originated with the ideological right, by 1981 Allen had acquired far more experience as a registered foreign agent than Deaver and Hannaford; and underlying Reagan's Taiwan flap was the further irony that the great American patriot's foreign policy formulation was at this stage almost exclusively in the hands of registered foreign lobbyists. But Allen had more varied and mainstream clients to worry about than Deaver-notably Japan, which had every interest in preventing Carter's China policy from being derailed. Twice Reagan's California team would use the pretext of Allen's Japan business profits to drop him-once five days before the election, and again permanently a year later. Little noticed at the time was the fact that the key architect in the plans for Allen's permanent removal was Deaver.

The Restoration of Arms Sales to WACL Countries

Deaver's double duty as Taiwan agent and deputy campaign director was reported in the U.S. press, while his lobbying for Guatemalan businessmen has been noticed by radical Latin America watchers. No one has ever noted that through the 1980 campaign Deaver and Hannaford had one other international account: the military dictatorship of Argentina, by far the most notorious of Latin America's death squad regimes.


Argentina's image problem in America was even more acute than Guatemala's. How to put a constructive face on the disappearance and presumed murder of between 6000 and 15,000 persons? The response of Deaver and Hannaford was to bring to the United States as apologist the junta's leading civilian, Economy Minister Martinez de Hoz, and allow him to address the United States through Reagan's radio broadcasts. Here is a sample of their description of what they called "one of the most remarkable economic recoveries in modern history."

Today, Argentina is at peace, the terrorist threat nearly eliminated. Though Martinez de Hoz, in his U.S. talks, concentrates on economics, he does not shy from discussing human rights. He points out that in the process of bringing stability to a terrorized nation of 25 million, a small number were caught in the cross-fire, among them a few innocents...If you ask the average Argentine-in-the-street what he thinks about the state of his country's economy, chances are you'll find him pleased, not seething, about the way things are going.

Distasteful as this Deaver-Hannaford apologetics for murder may seem today, the real issue goes far beyond rhetoric. Though Deaver and Hannaford's three international clients-Guatemala, Taiwan, and Argentina-all badly wanted a better image in America, what they wanted even more urgently were American armaments. Under Carter arms sales and deliveries to Taiwan had been scaled back for diplomatic reasons, and cut off to Guatemala and Argentina because of human rights violations.

When Reagan became President, all three of Deaver's international clients, despite considerable opposition within the Administration, began to receive arms. This under-reported fact goes against the public image of Deaver as an open-minded pragmatist, marginal to the foreign policy disputes of the first Reagan administration, so that his pre- 1981 lobbying activities had little bearing on foreign policy. The details suggest a different story.

Argentina could hardly have had a worse press in the United States then when Reagan took office. The revelations of Adolfo Perez Esquivel and of Jacobo Timmerman had been for some time front page news. This did not deter the new Administration from asking Congress to lift the embargo on arms sales to Argentina on March 19, 1981, less than two months after coming to office. General Roberto Viola, one of the junta members responsible for the death squads, was welcomed to Washington in the spring of 1981. Today he is serving a 17-year sentence for his role in the "dirty war."

Though the American public did not know it, the arrangements for U.S. aid to Argentina included a quid pro quo: Argentina would expand its support and training for the Contras, as there was as yet no authorization for the United States to do so directly. "Thus aid and training were provided to the Contras through the Argentinian defense forces in exchange for other forms of aid from the U.S. to Argentina." Congressional investigators should determine whether the contemporary arms deals with Deaver's other clients, Guatemala and Taiwan, did not contain similar kickbacks for their contra proteges.

But aid for the contras was only one part of a covert Reagan grand design for Central America in which Argentina would play the active role. This involved, among other things, ...the training of more than 200 Guatemalan officers in 'interrogation techniques' (torture) and repressive methods...participation in the training at U.S. military bases of officers and elite troops of the Salvadorean army...training and combat leadership for incursions by Somocista bands based in Honduras...logistic and economic support for the...plot to overthrow the Sandinista regime...the despatch of at least fifty more officers to Honduras as para-military troops to intervene in counter-revolutionary activities throughout the region, particularly against Nicaragua ...the supply of arms and ammunition to the Guatemalan regime...direct participation in torture sessions in Guatemala, and-together with Israeli officers-the creation of an 'intelligence center' in that country.

Argentina eventually became one of the two principal reasons why Reagan's first Secretary of State, Alexander Haig, resigned on June 25, 1982. (The other area of disagreement was over Israel's invasion of Lebanon.) Haig later charged that his official policy of siding with Britain against Argentina (supported by Reagan, whose closest personal ally abroad was Margaret Thatcher) had been seriously undercut, not just by Ambassador Jeane Kirkpatrick, but by someone above her in the White House.

There were contacts made with Argentinian officials by the White House which were neither discussed with me nor cleared with me and which had the practical effect of confusing the issue...This helped confirm that the outcome [the Falkland Islands war] would be inevitable.

William Clark, Reagan's official national security adviser, purported to refute this charge by saying that all of his contacts with foreign officials had been cleared with Haig. However it was Deaver, not Clark, whom Haig suspected of offsetting his tilt against Argentina. "At an NSC session...Haig had observed Kirkpatrick passing Deaver a note. Concluding that Kirkpatrick was using Deaver to prime Reagan...Haig told Clark that a 'conspiracy' was afoot to outflank him." Haig's paranoia may have been justified. Soon Deaver (allied with Clark, whom Deaver had selected as Allen's replacement) was to play a principal role in dropping Haig, as he had earlier in dropping Allen.

What reason could anyone in the White House have for putting U.S. relations with Argentina ahead of relations with the United Kingdom? It is hard to think of any reason more urgent than that of agreement for covert Argentinian support of the contras, "which was broken by U.S. support for Britain in the 1982 Falklands War." Although some Argentine advisers remained in Honduras, the pull-out of the Argentine government produced a temporary setback in contra operations, followed in December 1982 by a major shake-up in the contras' nominal political leadership.


Restoring arms deliveries to Guatemala proved a little more difficult than to Argentina. "The election of Reagan coincided with the bloodiest outbreak of Guatemalan death squad actions in history. Almost five hundred deaths a month, almost all attributed to the right, were being reported by the American Embassy, but even that figure was considered low by most other monitoring groups. Piles of mutilated bodies were being discovered every morning throughout the country." President Lucas Garcia, alleged to have personally raised half a million dollars from Deaver's Guatemala businessmen for the Reagan campaign, was said in February 1981 by the New York Times (citing Amnesty International) to be directly supervising the security agency in charge of the death squads.

The May 4 hearing of the Senate Foreign Relations Committee, in which the administration announced that it was disposed to give aid to Guatemala, followed two days of hard-hitting stories in the press about that country's increasing violence, including the murders of 76 leaders of the moderate Christian Democratic Party. When Congress balked at certifying that Guatemala was not violating human rights, the administration acted unilaterally, by simply taking the items Guatemala wanted off the restricted list.


On the issue of restoring arms sales to Argentina and Guatemala there was no dissent within the Reagan administration, all of whom were eager to repudiate Carter's human rights policies as quickly as possible. The arguments against arms sales to Taiwan, however, were geopolitical as well as ideological. The more seriously one chose to believe in a Soviet threat, the more important it seemed not to threaten the growing strategic relationship between Washington and Peking.

Reagan was confronted with this geopolitical consensus as soon as he took office. After a year of fumbling, Haig (State), Weinberger (Defense) and Casey (CIA) united on a recommendation to Reagan: Taiwan should not receive the new weapons it was asking for. In August 1982 the State Department, after another visit to Peking by George Bush, announced a joint communique with China, in which the United States undertook to "reduce gradually its [weapons] sales [to Taiwan]...leading over a period of time to a final resolution."

This result appeared to experts to represent a victory of "Geopolitics over Ideology." But while the communique called for a reduction, arms sales to Taiwan in fact increased, to new levels of $530 million in 1983, and $ l,085 million in 1984. Each new arms sales announcement was greeted with loud protests from Peking, and with increasing rumors and reports of Sino-Soviet rapprochement. Once again, we now know that on the issue of Taiwan arms sales Haig at the State Department was being over-ruled by the Reagan White House staff.

Deaver, WACL, and the Contras

The lobbying for increased U.S. arms sales came of course from at home as well as from abroad; and primarily from the American Security Council, the chief real-life incarnation of that military-industrial complex which President Eisenhower warned the country about a quarter of a century ago. Two prominent backers of the ASC (oilmen A.C. Rubel and Henry Salvatori) were also part of the trio of Los Angeles millionaires who had launched Reagan into politics after the Goldwater debacle of 1964.

The third, Holmes Tuttle, lent his weight to the small meeting of May 1974 in Reagan's home where the decision was made for Reagan to begin his drive for the presidency. Four of Reagan's top aides attended that meeting: Meese, Nofziger, Deaver, and Hannaford. The Deaver and Hannaford agency was launched in 1974 as part of that presidential strategy.

The international clients taken on by Deaver and Hannaford- Taiwan, Guatemala, and Argentina-were longtime causes of the ASC as well. More importantly, the ASC helped out Taiwan's foreign policy creation, the World Anti-Communist League, by setting up an American affiliate for it, the American Council for World Freedom (ACWF). The young executive secretary of the ACWF, Lee Edwards, was by 1980 the registered lobbyist for WACL's Taiwan chapter, and also of Argentina. Edwards also wrote a Reagan biography.

In 1976 Edwards' ACWF pulled out of WACL, on the grounds that it was becoming racist. The new U.S. WACL chapter, the Council on American Affairs (CAA), was however also headed by an ASC man: Roger Pearson of ASC's editorial board. By 1980, WACL had been largely taken over by former Nazis, SS men, Nazi collaborators, and outspoken anti-Semites. Most embarrassing, from the point of view of a "law and order" candidate like Reagan, was the presence at WACL conferences of wanted right-wing terrorist murderers, and, perhaps worse, bank-robbers.

The Reagan team, both before and after the 1980 election, appears to have adopted a two-fold approach to the problem of right-wing WACL terrorism. On the one hand they fostered a careful program to improve WACL's image, badly tarnished after British and American WACL members had protested WACL's penetration by anti-Semites. On the other, they moved through Deaver's clients in Guatemala to make selected terrorists the Iynchpins of the Reagan administration's policies in Central America.

Two men appear to have been central in this double policy: General John Singlaub, who after Reagan's election became WACL's new world chairman, and Mario Sandoval Alarcon, the Guatemalan godfather and WACL leader who got to dance at Reagan's inaugural ball. The public relations work for both men, at least prior to the election, was in the hands of Mike Deaver.

Singlaub was a long-time veteran of CIA and DOD "unconventional warfare" operations, which he once explained as including "terrorism, subversion and guerrilla warfare ...sabotage...support to resistance groups ...black and gray psychological operations." Singlaub was little-known until 1978, when he was transferred from his Army Command in South Korea for publicly denouncing Carter's announced plans to withdraw U.S. troops from that area. A spirited defense of Singlaub and his position was promptly prepared for one of Reagan's 1978 broadcasts by Deaver and Hannaford.

Little noticed at the time was the fact that ten days before his retirement, in May 1978, Singlaub attended a meeting of right-wingers who "didn't think the country was being run properly and were interested in doing something about it." The meeting was hosted by Mitch WerBell, a conspiratorial colleague of Singlaub from their OSS days together at Kunming in China. As we have seen, Singlaub then began a series of co-ordinated visits to Central America, with Generals Graham and Sumner, laying the basis for Reagan's current support of the contras in Nicaragua. Singlaub's visits focused on Guatemala, where in 1982 WerBell would support a coup attempt by the National Liberation Movement (MLN) of Mario Sandoval Alarcon and Lionel Sisniega Otero.

Singlaub's link-up with Sumner in 1980 was particularly significant to the Guatemalans, since for a year Sumner had been one of the most prominent contra contacts in Washington who was "looking for some way to help Nicaraguans who wanted to fight" the Sandinistas. After the election that most prominent supporter would become Singlaub himself, by a series of events which seem to have been pre-arranged.

The most important event was the creation of a new United States chapter of WACL, to replace one which had been taken over by crackpots and racists. Singlaub did this on November 22, 1981, four days after a secret approval by Reagan of a CIA plan to begin direct assistance to the contras.

The weeks after Reagan's election had seen a number of rapid developments. Some of Sandoval's contra group, headed by Colonel Enrique Bermudez who had been Sumner's contact, departed for training in Argentina. (This was training in terrorism; and one of the trainers is now wanted for his leadership of a cell attempting, by bombings and kidnappings, to destabilize the new Argentine civilian government.) The Salvadorean death squad leader, Major Roberto d'Aubuisson, entered the United States illegally (the Carter administration refused to issue him a visa), and had conferences "with members of the Reagan transition team and with members of the staff of...Senator Jesse Helms."

Meanwhile Singlaub flew to Australia to address WACL's Asian contingent, the Asian People's Anti-Communist League (APACL). He correctly predicted that there would be closer relations between the U.S. and WACL countries, and hinted that he himself would be helpful even though he would not be a member of the new administration. This public healing of the rift between WACL and the United States had begun the previous July in Geneva, when the nominal head of WACL's U.S. chapter (a white racist who had once urged his state of Mississippi to secede from the Union) was upstaged by the presence at the WACL Conference of Singlaub's close friend Ray Cline. Cline was another strong Reagan supporter and a foreign policy adviser; he flew to Taiwan after the election to convey the message that "the new Reagan Administration will enhance U.S. relations with Taipei without damaging ties with Peiping [sic]."

Singlaub, WACL, and LaRouche

In the light of WACL's subsequent importance to the Reagan policy of supporting the contras, it is significant that the approaches of Cline and Singlaub to WACL began before the 1980 election. Singlaub and Cline were the logical team to consolidate the Reagan-WACL alliance, since their acquaintance with WACL's members and drug-financed intrigues went back to the 1950s, if not earlier. Singlaub had first met Cline, along with four future backers of CIA-Cuban operations (Howard Hunt, Paul Helliwell, Lucien Conein and Mitch WerBell) in a small OSS mission at Kunming in China, at the very center of the World War II KMT drug traffic. According to the Wall Street Journal, OSS payments at this base were frequently made with five-pound shipments of opium. The sixth and most mysterious of these men, Mitch WerBell, would himself be indicted on drug smuggling charges in 1976, two years before he began an extended and little-noticed relationship with John Singlaub and Lyndon LaRouche.

The other five men from the OSS Kunming mission went on into the CIA, and in the 1950s served in or supported CIA covert operations in Asia. Helliwell, from his law office in Miami, organized the arms supply to General Li Mi's drug-growing KMT troops in Burma, as he would later organize support for the ClA's Cuban sabotage teams in Miami. Lucien Conein went on to be the CIA's liaison with the Corsican gangsters of Saigon; and, according to Alfred McCoy, "did not pass on" to Washington the information he learned about the large shipments of drugs these Corsicans were making to Europe, while they gave the 1965 Saigon government "a fixed percentage of the profits." Howard Hunt was in 1954 assigned to a black propaganda psychological warfare operation based in Tokyo.

More directly impinging on what became WACL were the activities of Cline as CIA station chief in Taiwan (1958-62), and Singlaub as deputy CIA station chief in South Korea (1950-52). Cline is said to have helped Taiwan found its Political Warfare Cadres Academy at Peitou, which has through its training program developed a conspiratorial Latin American fraternity of thousands of military and security officers, including Roberto d'Aubuisson. In this way the Kuomintang created in Latin America "carbon copies of what they had created in Taiwan: a politicized military whose first loyalty was to the party, then to the military, and finally to the nation."

All of this was in fulfilment of recommendations drafted in 1959 by General Richard Stilwell for a special Presidential Committee under General William Draper reporting to President Eisenhower: that the U.S. help develop "higher level military schools" with political-economic curricula in the Third World, to encourage local armies to become "internal motors" for "socio-political transformation."

Former U.S. intelligence officers have also suggested that the funding of APACL, and of the initial preparatory meetings in 1958 for WACL, came from U.S. Embassy Counterpart funds in Taiwan to which Cline had access. As CIA deputy chief in South Korea during the Korean War, Singlaub is also said to have had a hand in developing what eventually became the Korean Central Intelligence Agency, the other chief partner in setting up APACL

In 1954, when APACL was founded in Taiwan, its first Latin American affiliate was founded in Mexico City by Howard Hunt. Hunt did so in his capacity as political and propaganda chief of the CIA operation in Guatemala; but his creation (the Interamerican Council for the Defense of the Continent, or CIADC) would survive to be involved in other CIA-backed coups as well, notably the Brazil coup in 1964. The CIADC soon became a vehicle for the international plotting of two of Hunt's young Guatemalan proteges: Lionel Sisniega Otero, who in 1954 was employed on clandestine radio operations by Hunt's assistant David Phillips, and Sisniega's mentor, the future "Godfather," Mario Sandoval Alarcon.

By accident or by design, the simultaneous creation of APACL and CIADC in 1954 also had the effect of creating a conspiratorial China Lobby for Taiwan overseas, at precisely the time that the activities of the old conspiratorial China Lobby in Washington were being exposed and neutralized. When the first provisional steering committee for a combined WACL was announced from Mexico City in 1958, its General Secretary was veteran China Lobbyist Marvin Liebman, who earlier had organized Washington's "Committee of One Million" in support of Taiwan. Lee Edwards, Liebman's successor at the Committee of One Million, organized the first U.S. Chapter of WACL, with officers from the leadership of the American Security Council.

From the China Lobby bribes of the early 1 950s to the contra raids of the 1980s, there have been continuing reports linking Taiwan's and WACL's activities to profits from the international narcotics traffic (see Chapter III). The situation was aggravated by the evolution of the 1 950s China Lobby into the 1960s Cuban exile-Somoza Lobby, particularly when ex-CIA CORU Cubans like Orlando Bosch, dropped from the CIA for their terrorist and/or drug trafficking activities, were simply picked up by Somoza.

It made sense that Somoza, when his long-time backers were abandoning him in 1979, should have tried to hire Shackley's associate Tom Clines to work for him, along with Bosch. Shackley and Clines, by coincidence or not, personified the CIA-mafia connection that successive CIA Directors found impossible to eliminate. When Richard Helms closed down anti-Castro operations in Miami, dispersed its U.S. and Cuban personnel, and sent Shackley and Clines to manage the covert war in Laos, the two men were moving from a local drug-linked operation to a more distant one. Significantly, the Florida mob went with them. Two years after they were transferred to Laos in July 1966, Santos Trafficante, a key figure in the ClA-mafia assassination plots against Castro, was seen contacting local gangsters in Hong Kong and Saigon.

But the Shackley-Clines links to Latin America increased as their former agents were dispersed there. One of these men was John Martino, an old mafia casino associate of Santos Trafficante in Havana. In 1970, posing as a mafia representative, John Martino became a business associate of President Arana, and the CIA control for Mario Sandoval Alarcon-two of the Guatemalans who attended Reagan's 1981 inaugural ball.

We see then that the Reagan-WACL alliance was forged by two men, Ray Cline and John Singlaub, whose connections to WACL's Asian patrons went back three decades or more. One's first assumption is that, as loyal Americans, they would be more likely to approach WACL on behalf of Reagan than the other way round. Singlaub, in particular, has a reputation of being a "straight arrow," a "boy scout," for whom subversive intrigue would be anathema.

There are nonetheless disturbing indications that Singlaub, at least, may have been working for a hidden agenda that went far beyond naive loyalty to a Republican presidential candidate. It is hard to explain his dealings in the same period 1978-82 with his former Kunming OSS colleague Mitch WerBell, and more importantly with WerBell's employer since 1977, Lyndon LaRouche. About his political activities with the LaRouche movement Singlaub has at the very least been less than candid. What makes this disturbing is that the LaRouche movement was then suspected of looking for a dissident general to lead a military coup.

We have already seen that in May 1978, ten days before his retirement, Singlaub attended a meeting of right-wingers who "didn't think the country was being run properly and were interested in doing something about it." The meeting was hosted by Mitch WerBell, who in 1982 would travel to Central America in support of an attempted Guatemalan coup on behalf of WACL leaders Mario Sandoval Alarcon and Lionel Sisniega Otero. WerBell's career of covert activities in the Caribbean also involved work for Cuban dictator Batista in 1959, Dominican Republic dictator Imbert in 1965, and a coup operation (said by Hinckle and Turner to have had possible Mafia backing) against Haitian dictator Duvalier in 1966.

WerBell, when Singlaub visited him in 1978, had recently evaded separate indictments for arms smuggling and for narcotics trafficking. WerBell was also in touch with "Secret Team" members such as Ted Shackley and Richard Secord, and allegedly was paid once through the drug-linked Nugan Hand Bank when he conducted "operations for U.S. intelligence." More importantly he was also in touch with Cuban Bay of Pigs veterans suspected of involvement in the CORU assassination of Orlando Letelier.

WerBell, when Singlaub visited him in 1978, was employed as the "personal security adviser" to Lyndon H. LaRouche, then the leader of the so-called National Caucus of Labor Committees (NCLC), a group which previously had posed as left-wing but in fact harassed anti-nuclear and other left-wing demonstrations with the help of the right-wing domestic intelligence group known since 1979 as Western Goals (backed primarily by WACL donor and Texan millionaire Nelson Bunker Hunt). Singlaub and another leader of his U.S. WACL chapter (Anthony Kubek) joined the advisory board of Western Goals. Though Singlaub left Western Goals in 1984, the organization is controlled today by Carl Spitz Channell, who in 1986 met with Oliver North "five or ten times" about his TV advertising campaigns against political candidates opposed to contra aid.

In 1979 General Singlaub conceded to the New York Times that he had met with two of LaRouche's party officials at the home of WerBell, but claimed that he had ...since rejected the organization. "It was so clear to me after the first three or four contacts that they wanted something from me," the general said. "They hounded me for months, they flooded me with documents, they showed up at places where I spoke."

"I think they're a bunch of kooks of the worst form, General Singlaub went on. "I've been telling WerBell that if they're not Marxists in disguise, they're the worst group of anti-Semitic Jews [sic!] I've encountered. I'm really worried about these guys; they seem to get some people."

The general was asked if any mention was made in his talks of the possibility of a military coup in the United States-an idea that has recently received currency in the party as a way to put Mr. LaRouche in power. "Well, it didn't come up in that form, but it was suggested that the military ought to in some way lead the country out of its problems," General Singlaub replied. "

guess I stepped on them pretty hard on that, and it never came up again. It was one of the first things that made me realize they're a bunch of kooks."

Singlaub's worries about a LaRouchean military solution to America's problems, although expressed so strongly in this interview, do not appear to have been very profound or long-lived. According to Scott and Jon Lee Anderson, in 1982 Singlaub returned to WerBell's counterterrorist training camp in Powder Springs, Georgia, to lecture WerBell's trainees. Many of these were security forces for the organization of Lyndon LaRouche, then the anti-Semitic leader of the so-called U.S. Labor Party, whose security director was WerBell.

The Strategy of Tension: CAL, P-2, Drugs, and the Mafia

Reports linking WACL to drugs became particularly flagrant in the period 1976-80, as the rift between WACL and Carter's CIA widened, and as a new Argentine-dominated affiliate of WACL in Latin America (the Confederacion Anticomunista Latina, or CAL) plotted to extirpate radical Roman Catholic priests and prelates fostering liberation theology.

A high-point or low-point of the CAL plotting was reached in 1980, when Argentine officers, bankrolled by the lords of Bolivia's cocaine traffic, installed the Bolivian drug dictatorship of Luis Garcia Meza. Two of the Argentine officers involved turned out to be wanted Italian terrorists, Stefano delle Chiaie and Pierluigi Pagliai; together with the veteran Nazi fugitive and drug trafficker Klaus Barbie, the neo-fascists seized the radio station as a signal to launch the coup.

Barbie and delle Chiaie were both deeply involved in the CAL project to identify and exterminate leftists and radical priests. Through this project delle Chiaie had advised d'Aubuisson by 1979; and at the September 1980 meeting of CAL in Argentina, delle Chiaie and d'Aubuisson met and arranged for weapons and money to be sent to d'Aubuisson in El Salvador.

That 1980 CAL Conference was presided over by Argentine General Suarez Mason, today a fugitive wanted on charges arising from the Argentine junta's death squads. In attendance were Bolivia's dictator, Garcia Meza, wanted by U.S. drug authorities for his involvement in cocaine trafficking, and Argentine President Videla, today serving a life sentence for his policies of mass murder and torture. A featured speaker at the conference was Mario Sandoval Alarcon, who had brought his protege d'Aubuisson and arranged for him to be put in touch with delle Chiaie.

What was being brokered at the September 1980 CAL Conference was nothing less than an "Argentine solution" of death squad dictatorships from Buenos Aires to Guatemala City. The inspiration and direction of this scheme was however not just Argentine, but truly international, involving the Italo-Argentine secret Masonic Lodge P-2 (of which General Suarez Mason was a member), and possibly through them the financial manipulations by insiders of the Milan Banco Ambrosiano and Vatican Bank.

P-2 has come under considerable scrutiny in Italy, where it began, because of its on-going involvement in intelligence-tolerated coup attempts, bank manipulations, and terrorist bombings. All of this has contributed to a right-wing "strategy of tension," a tactic of developing a popular case for right-wing order, by fomenting violence and disruption, and blaming this when possible on the left. Stefano delle Chiaie was perhaps the master activist for P-2's strategy of tension, assisted by a group of French intelligence veterans working out of Portugal as the so-called press agency Aginter-Presse. The Aginter group had their own connections to WACL in Latin America before delle Chiaie did, especially to the Mexican chapter (the so-called "Tecos") and to Sandoval's WACL chapter in Guatemala.

According to the Italian Parliamentary Report on P-2:

P-2 contributed to the strategy of tension, that was pursued by right-wing extremist groups in Italy during those years when the purpose was to destabilize Italian politics, creating a situation that such groups might be able to exploit in their own interest to bring about an authoritarian solution to Italy's problems.

Del'e Chiaie was a principal organizer for three of the most famous of these incidents, the 1969 bomb in the crowded Piazza Fontana of Milan (16 deaths, 90 injuries), the 1970 coup attempt of Prince Valerio Borghese (a CIA client since 1945), and the Bologna station bombing of August 2, 1980 (85 deaths, 200 injuries). In December 1985 magistrates in Bologna issued 16 arrest warrants, including at least three to P-2 members, accusing members of the Italian intelligence service SISMI of first planning and then covering up the Bologna bombing. One of these 16 was P-2's leader Licio Gelli, who had spent most of the post-war years in Argentina.

A small group of anarchists, penetrated by delle Chiaie's man Mario Merlino, were blamed at first for the Piazza Fontana bombing, even though Sismi knew within six days that delle Chiaie was responsible, and Merlino had planted the bomb.

After 1974, when the right-wing "strategists of tension" lost critical support with the ending of the Greek, Portuguese, and Spanish dictatorships, they appear to have looked increasingly for new friendly governments in Latin America. Delle Chiaie began to work for Chile's service DINA in 1975, the first contacts having been made through Aginter by Michael Townley, who would later murder Letelier with the help of CORU Cubans for DINA. (Delle Chiaie is said to have come from South America to Miami in 1982, with a Turkish leader of the fascist Grey Wolves who was a friend of the Pope's assassin Mehmet Agca.)

The P-2's support for Latin American terror seems to have been in part a matter of internal Roman Catholic politics: an attempt by one faction to use right-wing death squads to eliminate the Church's liberation theologians and moderate Christian Democrats. Both the contras and Mario Sandoval Alarcon were part of the anti-liberationist campaign: the contra radio maintained a steady propaganda campaign against the Maryknoll Sisters in Nicaragua; Lau of the contras murdered Archbishop Romero of El Salvador; and Lau's patron Sandoval, at the 11th WACL Conference in 1978, denounced the "intense Marxist penetration...acting within the highest echelons of the Catholic hierarchy." During the two years after the CAL adopted the Banzer Plan in 1978, "at least twenty-eight bishops, priests, and lay persons were killed in Latin America; most of their murders were attributed to government security forces or rightist death squads. That number multiplied after 1980 as civil war spread through Guatemala and El Salvador." We have already seen how Reagan's termination of the Carter "human rights" policies was followed by the decimation of the Guatemalan Christian Democrats.

The CAL/P-2 connection was and remains a drug connection as well. The terrorist delle Chiaie has been accused of ties to some of the French Connection heroin merchants who had relocated to Italy; while CAL Chairman Suarez Mason, according to the Italian magazine Panorama, became "one of Latin America's chief drug traffickers."

This Latin American WACL drug connection appears to have been originally put together by former Argentine Interior Minister Jose Lopez Rega, a P-2 member and Gelli intimate who was responsible for restoring Peron to power in 1973 and arranging for European experts in "dirty war" tactics to launch death squad tactics against the terrorist left. Lopez-Rega was later said to have been directly involved with other P-2 members in the Argentine-Paraguayan cocaine traffic, and to have used French members of the Ricord drug network as terrorists for his underground AAA (Alianza Argentina Anticomunista). Ex-CIA Cuban exile terrorists involved in the drug traffic also worked with the AAA, as well as for Somoza.

Paraguayan Intelligence Chief Pastor Coronel, a CAL participant and death squad co-ordinator, was also a smuggling partner of the Corsican drug kingpin in Latin America, Auguste Ricord, whose network trafficked with the Gambino Mafia family in New York. Michele Sindona, the author of the Ambrosiano-Vatican Bank connection to P-2, had his own connections to the Gambino family, which surfaced when in 1979 he used them to stage his own "abduction" to avoid a New York court appearance. According to Penny Lernoux, "the P-2 crowd obtained money from the kidnappings of well-to-do businessmen in Europe and from the drug traffic in South America. Sindona's bank laundered money from the notorious [Italian] Mafia kidnappers of Anonima Sequestri, who worked with ... Ordine Nuovo." Significantly, Mario Sandoval Alarcon has also been accused of resorting to the kidnapping of rich coffee-growers in Guatemala to get financing for his political faction. Since the fall of the Argentine junta and Suarez Mason in 1982-83, the AAA, abetted by delle Chiaie, has also taken to bank robberies and kidnapping.

P-2, the Republicans, and Ledeen

But P-2 had equally strong links to both the CIA and the Republican Party. Under President Nixon, the CIA allocated X 10 million for centrist and right-wing parties in the 1972 Italian elections. The U.S. Embassy in Rome was acutely divided over whether the money should go through Sindona, who appeared to have "a direct line to the [Nixon] White House," or Italian Intelligence Chief Vito Miceli, implicated in a 1970 CIA-financed coup attempt with delle Chiaie. Both Sindona and Miceli, as it happened, were part of the P-2 connection.

Sindona's U.S. investments were partnered by the Continental Illinois bank headed by Nixon's first Treasury Secretary, David Kennedy, and his interests were represented by the law firm of Nixon and his Attorney General John Mitchell. "In Italy, Sindona orchestrated the efforts of the neo-Fascist deputy Luigi Turchi to garner support for Nixon's election campaign. Sindona even offered S I million, on condition of anonymity, to CREEP treasurer Maurice Stans. The offer was refused." Turchi's efforts were co-ordinated by Philip Guarino of the Republican National Committee, a P-2 associate later implicated in the plotting to help Sindona escape prosecution.

We have seen how in 1980 Cline's associate, Michael Ledeen, published an article (at the beginning of the 1980 election campaign) "savaging Admiral Stansfield Turner for forcing Ted Shackley [one of Edwin P. Wilson's senior CIA contacts, a veteran of the anti-Allende operation] out of the agency. A year later Michael Ledeen, in his new capacity as the Reagan State Department's expert on terrorism, was now in a position to help close off the investigation of those (specifically Shackley and von Marbod) who were being investigated along with Edwin Wilson, perhaps the world's most notorious ex-CIA terrorist.

Ledeen's efforts in 1980 on behalf of Shackley were paralleled by a dirty tricks campaign on behalf of Reagan in alliance with P-2 members of the Italian intelligence service SISMI. The chief of these, Francesco Pazienza, was a financial consultant of Roberto Calvi at the Banco Ambrosiano. Pazienza was ultimately indicted in an Italian court (with Ledeen as an unindicted co-conspirator) for luring President Carter's brother Billy into a compromising relationship with Qaddafi during the 1980 presidential campaign. According to Edward Herman and Frank Brodhead, the prosecuting judge ...had evidence that "SISMI was the architect of the scandal over

Billy Carter," and that the material in this case was gathered mostly by Pazienza and by his American friend Michael Ledeen...." Pazienza availed himself of SISMI both for the use of some secret agents and for the expenses of organizing the scandalous plan. It seems that the organizers got a huge payoff for 'Billygate.' Moreover, [SISMI chief] Santovito [a P-2 member] and Pazienza got great advantages in return from American officials."

Ledeen published his Billygate stories in three pro-Israeli publications: the New Republic of Martin Peretz, and two journals controlled by Sir James Goldsmith, the chairman of the Banco Ambrosiano-linked oil company BRISA, and later one of the multimillionaires consulted by Reagan in his Project Democracy.

In 1980 Ledeen was also in high gear, allegedly again with assistance from Pazienza, as a propagandist for the notion of a terrorist threat requiring a beefed-up U.S. intelligence response. Given access in 1980 to a Czech defector from twelve years earlier (Jan Seina), Ledeen elicited from him the information, which Seina had never volunteered in his extensive CIA debriefing, that the Soviet Union maintained a network of terrorist training camps as part of its plan for global domination. According to Herman and Brodhead, Ledeen had Seina reaffirm the contents of a purported document on Soviet sponsorship of terrorism which Seina had willingly claimed to be authentic a decade earlier, and which was in fact a CIA forgery shown to Seina for the purposes of testing his credibility.

This document and corroboration then became central to the case built by Ledeen and his friend Claire Sterling to show that the KGB and Bulgarian drug traffickers had plotted to have the Turkish fascist Mehmet Agca kill the Pope. This story was of course augmented by the "confession" of the assassin, whose testimony was later discounted as not credible. This confession now appears to have been generated by P-2 SISMI agents linked to Ledeen, among whom may or may not have been Pazienza.'

What inspired Michael Ledeen's zeal on behalf of Reagan and the shadow network? European journalists have suggested that an unspecified "huge payoff" to the SISMI P-2 organizers of Billygate was followed by a payment of at least $120,000 plus expenses from SISMI to Ledeen in 1980-81, after Ledeen "sold old U.S. intelligence reports to SISMI at stiff prices." But there are indications that Ledeen had an affiliation, not just with SISMI, but (like his ally Pazienza) with P-2. There are unexplained stories that "Ledeen had links with Gelli...and that Ledeen, on behalf of the State Department, had tried to buy 480 P-2 files photocopied by the Uruguayan interior ministry" after a raid provoked by the P-2 scandal revealed by the investigation of Sindona.

It is obviously a convenient arrangement when P-2 contributions and favors to a right-wing U.S. President can be followed by the release of S 10 million in unvouchered CIA funds for political use by P-2. No doubt their knowledge of such arrangements must have fuelled the zeal of Carter and Turner to cut back on the CIA's clandestine services. Conversely, the CIA's cutback on clandestine operations and subventions spelled both political and financial disaster for parallel operations, such as Wilson's and Sindona's, which had fattened on CIA handouts. The end of U.S. intelligence subsidies to Wilson's company Consultants International is clearly responsible for Wilson's move into the illegal Libyan deals for which he was eventually jailed. The same drying up of the CIA cash flow to right-wing assets appears to have contributed to the failure of Calvi's Banco Ambrosiano; and of another intelligence-related bank whose operations interlocked heavily with Wilson's: the drug-linked Nugan Hand Bank of Australia. Thus CIA reforms had the effect of building a powerful coalition of both Americans (ousted CIA clandestine operators, the Taiwan-Somoza lobby, the ASC) and foreigners (WACL, P-2), determined to restore the clandestine operations which had been cut back by four different directors of central intelligence (Helms, Schlesinger, Colby, and Turner).

Whatever the details, it appears that the P-2 Republican connection remained as healthy in 1980 as it had been in 1972. Licio Gelli, the head of P-2, was invited by Republican bigwig Phil Guarino to Reagan's inaugural ball.

P-2, the Calvi Scam, and Nicaragua

By 1980 the fate of Calvi's Banco Ambrosiano (and hence indirectly of P-2) depended largely on an anti-Communist turnaround in Central America. In 1977 Calvi had developed close relations with the increasingly isolated Nicaraguan dictator Anastasio Somoza, and opened a subsidiary (the Ambrosiano Group Banco Comercial) in Managua. Through another of his Ambrosiano-controlled companies, Central American Service, Calvi began prospecting for minerals and oil. As the Nicaraguan situation deteriorated in 1978-79, Calvi's Managua subsidiary received a steady flow of funds from Calvi's Bahamas subsidiary, which had come under the scrutiny of Italian government investigators. By 1979,

Calvi (probably with Gelli's intercession) was on good terms not only with the then dictator Anastasio Somoza, but also with the ever more menacing Sandinista opposition. To the end of his life [in 1982] he retained a Nicaraguan diplomatic passport, and in 1979 Calvi attempted to lobby the Rome government for an increase in coffee imports from Nicaragua...[O]f the foreign banks in Managua at the time of the left-wing takeover in...1979, Ambrosiano's subsidiary was the only one not to be nationalized by the new revolutionary regime.

Calvi had obviously established a bridge to the Sandinista junta's bankers, Alfredo Cesar and Arturo Cruz, and their allies such as Alfonso Robelo. By 1982 both Cruz and Robelo were working with the contras. In every account of the P-2/Banco Ambrosiano billion-dollar scam, the role of Somoza's Nicaragua is prominent. According to one source, it was Gelli who "smoothed the way" for Calvi's use of Somoza's offer of bank secrecy, "after several million dollars had been dropped into the dictator's pocket. In this period the Italian construction magnate Mario Genghini (whose name was also on Gelli's P2 lists) "was one of the biggest foreign investors in Nicaragua. In 1978, to avoid an investigation by the Bank of Italy, Calvi "moved the axis of [his international] fraud to Nicaragua"; one year later, as Somoza's position worsened, the fraud was moved to Peru.

In 1981 Bishop Paul Marcinkus of the Vatican Bank "held a number of secret meetings with the convicted Calvi, which resulted in the Vatican Bank officially admitting an increase in its outstanding debts of nearly $1 billion. This was the sum that was owed to the Calvi banks in Peru and Nicaragua as a result of their having loaned, on Calvi's instructions, hundreds of millions of dollars" to companies allegedly under Marcinkus's control. Just one of these companies, Bellatrix, received $184 million for P-2's political purposes, which included Gelli's purchase of Exocet missiles for Argentina during the Falkland Islands War.

P-2's political purposes also clearly involved the election of Ronald Reagan in 1980:

On April 8,1980, Gelli wrote from Italy to Phillip Guarino...

"If you think it might be useful for something favorable to your presidential candidate to be published in Italy, send me some material and I'll get it published in one of the papers here."...The favorable comments about Ronald Reagan, carefully placed by Licio Gelli, duly appeared in Italy. In January 1981, Licio Gelli was an honored guest at the presidential inauguration. Guarino later ruefully observed, "He had a better seat than I did."

In 1981, the period of its Argentine grand design for Central America, the Reagan administration appears in turn to have been exploiting P-2 pathways. One of its first envoys to Argentina and Guatemala for the grand design was General Vernon Walters, a major figure in the Brazilian military coup of 1964, and reportedly a prime architect in the blending of the various contra forces into a united FDN under Enrigue Bermudez in 1981. In May 1981 General Vernon Walters...visited Guatemala as a 'goodwill ambassador' of the Reagan Administration. At the same time, though, he was representing BRISA [Basic Resources International SA], which was seeking permission to export more oil. The Guatemalan military granted the request.

The fate of Calvi and his allies, by then ominous, was tied up with the fortunes of BRISA, whose chairman, as previously mentioned, was Sir James Goldsmith. In 1977 the Guatemalan government (with Mario Sandoval Alarcon as Vice-President) had awarded an oil concession to BRISA, one of whose board members was Calvi's representative Antonio Tonello. In March 1981, as the Italian investigation of Sindona led to Gelli's files and Calvi's name, the Calvi case was nearing its denouement. On May 20,1981, exactly one week after Walters' visit to Guatemala for Reagan and BRISA, both Calvi and Tonello were arrested (and soon convicted).

The CAL-Reagan-Helms Triangle

In 1980 the incoming Reagan administration had links to the Latin American chapters of WACL, not just through P-2, but even more directly through Republican Senator Jesse Helms. Indeed Helms became a focal point for U.S. intelligence and Republican connections to CAL in Latin America, following a visit in 1975 to WACL headquarters in Taiwan. Helms also travelled to Argentina (via a WACL Conference in Rio) in April 1975; and at least two of his aides, Ramon Molina and Nat Hamrick returned, along with Daniel Graham, in early 1976, shortly before the Argentine generals' coup of March 24. Helms, according to Ramon Molina, "actually encouraged the military to move in and depose President Peron.

The president in question was not Juan Peron, who had died in June 1974, but his widow, Isabelita, who was deposed in March 1976. This event followed from the more significant ouster in July 1975 of her mentor Jose Lopez Rega, the original fascist architect of the P-2/Italian terrorist presence in Argentina. The Argentinian army was responsible for both ousters, each of which followed a visit by Helms or his aides.

The presence on the 1975 Helms delegation of two other associates (Victor Fediay and J. Evetts Haley), and the subsequent involvement of Daniel Graham, may help explain why the relatively inexperienced Senator from North Carolina (he had been elected in 1972) would involve himself in an Argentinian military takeover. In 1975 Fediay (a Russian emigre and prewar Polish fascist) and Haley (a Texas rancher) had just helped with Richard Allen to broker a request (which was eventually turned down) for U.S. backing behind a Eurofascist secessionist coup in the Azores (sponsored by the so-called Aginter-Presse intelligence service, with which delle Chiaie was affiliated). One can imagine that the message to the Argentine military was similar: the U.S. could support a military take-over, perhaps even death squads and terrorists like delle Chiaie, but only if the Lopez Rega connection to the newly forming Fascist International in 1975 was eliminated.

This U.S.-Argentine connection in 1975-76 (Helms, Molina, Hamrick, Richard Stone, and Daniel Graham) would become the hard core Reagan-Sandoval-contra connection after 1980. We have seen how Graham and Singlaub assured Guatemalans in 1979 that "Mr. Reagan recognizes that a good deal of dirty work needs to be done.

It was Helms who (after his aide John Carbaugh met d'Aubuisson at the September 1980 CAL Conference) received Sandoval's protege d'Aubuisson on an illegal visit in December 1980. (Since that time Carbaugh has worked closely with Mario Sandoval Alarcon's nephew, Carlos Midence Pivaral, to fashion a more marketable and "Republican" image for d'Aubuisson's new party, ARENA.) Stone, a lobbyist for Guatemala in 1980, became Reagan's special ambassador to Central America. In 1981-82, Hamrick, while on Helms' staff, would lobby, together with the head of the Costa Rica WACL chapter, for a friendly base for the contras in that country.

But the most significant member of the Helms Argentine connection may have been Ramon Molina, a Cuban-American Bay of Pigs veteran who in 1976 was the apparent point of contact between his two employers, Nicaraguan dictator Somoza and Senator Helms. In 1975-76 Molina appears to have been Somoza's connection to renegade ex-CIA Cubans, like Orlando Bosch, whose CORU assassination activities extended to Argentina by August 1976. It would appear that, just as in the 1972 election Manuel Artime (another ex-CIA Cuban accused of drug trafficking) emerged as the connection between Nixon, Somoza, and the Watergate burglars, so in the 1980 election Ramon Molina emerged as the connection between Reagan and Somoza.

The Helms camp has been very much of a right-wing embarrassment to the Reagan administration since it took office: in 1984 Helms put the life of Reagan's Ambassador to El Salvador at risk by leaking secret CIA data. In 1976 and in 1980, however, candidate Reagan was very much dependent on winning the support of Helms and his international WACL network. In 1976 the Reagan campaign appointed David Keene, an old Liebman sidekick and WACL participant, to be chief delegate hunter in the southern states. In 1980 a campaign aide, Belden Bell, travelled to Latin America and met both Deaver's Amigos and Ramon Molinad. What may have interested the Reagan campaign in Molina was his capacity as a representative of Somoza's personal fortune, in whose employ he used his CIA training as a strong-arm man and enforcer (he allegedly once broke the jaw of a South Carolina concrete businessman). Somoza, until his assassination in September 1980, was said to be funding terrorist activities through CAL as a way of building an international neofascist coalition for his return.

Reagan, the Contras, and Narcotics

Such then was the state of WACL when Singlaub began his missionary activities to it on behalf of Reagan in 1979-80. It might be said in defense of their policies that WACL represented an old U.S. intelligence project out of control; and that Singlaub has worked to bring it back under control. Alternatively, the WACL collaboration might be seen as a kind of "constructive engagement" with neofascism, offering right-wing governments equipment and support services, in exchange for their renunciation of death squad politics that would never play well in Peoria.

It is clear that the Reagan administration has since backed away from many of its old CAL proteges, usually after revelations linking them to the drug traffic. It has relegated d'Aubuisson to the background, after a plane belonging to one of his financial supporters was detained in Texas with a cargo of $5.9 million in cash. It has helped extradite Pagliai (the younger of the two Italian terrorists) from Bolivia, after Pagliai was detected by the DEA at a high-level drug-traffic meeting in 1981.

Eventually the Reagan administration helped ease both the Bolivian and the Argentine dictatorships out of power. After the failure in 1982 of a Guatemalan coup plot by Sandoval's associate Lionel Sisniega Otero (plotting with WerBell, the OSS colleague of Singlaub and Cline), the U.S. eventually accepted a civilian government headed by a Christian Democrat, of the party targeted by Sandoval and Sisniega for extermination.

In marked contrast, the Reagan commitment to the contras has been unswerving. Modifications to its policy have been limited to a search for better personnel, as Congressional opposition mounted to the contra record of raping peasants and torturing social workers to death. In September 1982 the CIA reorganized the contra directorate, and sent a new station chief to Honduras, with the task "of getting the Argentines out and getting the war back under control." In late 1983 the CIA began its own covert operations against Nicaragua, cutting out the contras, and reorganizing their FDN directorate yet again.

However the CIA, inevitably, was faced with a disposal problem. A handful of contra field officers were executed for various crimes, chiefly the murder of one of their peers. But the CIA was reluctant to send Argentine terrorists back to their home country at a time when the civilian government was barely establishing itself. Ricardo Lau, the murderer of Archbishop Romero, was detached from the contra hierarchy, but remained in Honduras to be the mastermind of the death squad operation of the CIA's and CAL's Honduran protege, General Gustavo Alvarez Martinez. Alvarez was the point-man for the CIA-contra presence in Honduras, and even the godfather to the adopted daughter of the new CIA chief. When he was ousted in 1984 the CIA changed its station chief yet again, and Lau reportedly left for another country.

These cosmetic changes of personnel do not appear to have reached to the level of eliminating the old CAL presence in the contras. Enrique Bermudez, the link between Sandoval's Guardia proteges and Washington, has remained through each successive FDN shake-up. As for the international drug traffickers, their interest in maintaining the contra status quo in Honduras was revealed when the FBI broke up a drug-financed plot in Miami to assassinate the elected Honduran president and restore Alvarez to power.

Since December 1985 it has become clear that the CIA contra operation has become as intermingled with drug trafficking as the old CIA Cuban exile operations which had had to be closed down in Miami (see Chapter III). In December 1985, ...the Associated Press cited a CIA report alleging that a "top commander" of the Costa Rica-based guerrillas had "used cocaine profits to buy a S250,000 arms shipment and a helicopter."...Two Nicaraguan smugglers convicted in the largest cocaine seizure in West Coast history-430 pounds- admitted that they passed drug profits on to the contras...A leading Bay Area fund-raiser for the Honduras-based Nicaraguan Democratic Force, the largest contra group, was identified in 1984 by the Drug Enforcement Administration as "the apparent head of a criminal organization responsible for smuggling kilogram quantities of cocaine into the United States.

The possibility that the contra operation serves as a cover for the Latin American drug connection does not seem to have occurred to the Reagan administration. On the contrary, its pressures to resume Congressional aid to the contras this year were not deterred by the revelation that the FBI was "examining assertions that cocaine was smuggled [into the United States] to help finance the rebels' war effort." Since then former Ambassador Robert White has charged that the Administration has attempted to kill this FBI inquiry. The stage has been set for a potentially explosive Senate investigation.

Watergate, Contragate, and Foreign Campaign Contributions

Why would the Reagan administration, whose ideology is supposed to be one of patriotism mellowed by pragmatism, have such a huge investment in a cause that is so controversial here as well as in Latin America? The Reagan response is to point to the alleged human rights violations by their opponents, and to the Caribbean basin's proximity and strategic importance. But it has been said in response to both arguments that the contras, by their excesses and sheer incompetence, are weakening rather than strengthening support for the U.S. in the area.

A different question is whether the funds from Guatemala, P-2, Somoza, and other WACL sources, helped generate the private "verbal agreements" that Sandoval Alarcon referred to. The recycling of profits and AID funds from foreign countries back into American elections is perhaps one of the largest and least discussed scandals of the last three decades. WACL countries in particular, whose survival and affluence so often depend on U.S. support, have repeatedly been at the center of such rumors.

This would seem to be an appropriate topic for any Senate investigation into any illegal contra activities and cover-ups. But Congress in the past has proven most reluctant to pursue the question of illegal foreign funding in electoral campaigns. Renata Adler has described how the Congressional inquiry into Watergate faded at the point when traces were uncovered of large funds pumped into the Nixon campaign from the Far East. Nor did Republicans pursue similar allegations that dogged the campaign of even that cleanest of candidates, Senator George McGovern. Silence on such matters serves the interests of both parties.

Some of the points made by Renata Adler, a member of the staff investigating Nixon for the House impeachment inquiry, bear closely on the Reagan-WACL connection. She referred to theories "that Nixon was driven from office by a conspiracy within government itself-more specifically, within the CIA." And she drew attention to the inability of the CIA "to give any satisfactory account" of its involvement in the Southeast Asian narcotics traffic (where its airline Air America collaborated with members of Taiwan's WACL Chapter in supplying the opium growers of the Golden Triangle).

Adler did not refer specifically to the very efficient sabotaging of the Nixon White House by Howard Hunt, nor to the fact that Hunt's White House services went into their disastrous high gear after the June 1971 departure of Kissinger for Peking. But she specifically named Anna Chan Chennault, perhaps Taiwan's top lobbyist in Washington, as someone who had raised campaign funds for Nixon from the Philippines, Hong Kong, Japan, and South Korea. Citing evidence too complex to review here, she concluded that "the South Vietnamese administration, not wanting peace to be at hand just yet, used some of the enormous amounts of money we were pouring in there to bribe our Administration to stay in."

The bribes were in the form of illicit foreign campaign contributions- possibly in 1968, and more clearly in 1972. Though she refers to him only as a Nixon "White House official," Adler refers to two distinct sub-plots where in each case a principal suspect was Richard Allen, the man who in 1980 became Reagan's principal foreign policy adviser. In the 1968 case, Mrs. Chennault's activities had aroused the suspicions of the Washington intelligence community, and a plethora of agencies seemed to be watching her closely. According to published reports, the FBI tapped her telephone and put her under physical surveillance; the CIA tapped the phones at the South Vietnamese embassy and conducted a covert investigation of Richard Allen. Then, a few days before the election, the National Security Agency...intercepted a cable from the Vietnamese embassy to Saigon urging delay in South Vietnam's participation in the Paris peace talks until after the [U.S.] elections. Indeed, on November I, her efforts seemed to have paid off when President Nguyen Van Thieu reneged on his promise to Lyndon Johnson... and announced he would not take part in the exploratory Paris talks.

There are enough similarities between Allen's career and Deaver's (both men having gone on from the post of White House official to become the registered foreign lobbyist of Asian countries) to suggest that Adler's hypothesis for the origins of Watergate (bribery by illicit foreign campaign contributions, and the potential for blackmail thus created) might help explain the workings of the Contragate mystery as well. In 1980 as in 1968 the WACL coalition apparently decided to conspire against an American Democratic incumbent, the main difference being that in 1980 the role both of illicit foreign funds and of American intelligence veterans appears to have been more overt.

Congress should certainly investigate this possibility. But there is also a chance of a searching and objective inquiry in the special prosecutor's examination of the affairs of Mike Deaver. Deaver is already under scrutiny for his lobbying activities in South Korea. Some of these involve the U.S. Ambassador in Seoul, Richard Walker, a WACL participant since as far back as 1970.

Deaver's connections with South Korea go back at least to February 1981, when he "ushered President Chun Doo Hwan of South Korea into the Oval Office to meet Reagan." Chun was in fact the first of the WACL dictators, shunned by Carter, to be received into the Oval Office. In a sense his visit, like Sandoval's, was a trial balloon for Reagan's new policy of tilting towards WACL and away from Carter's support of "human rights.

Chun's visit to Reagan is said to have followed a period of intense involvement in Latin American WACL intrigue by CAUSA, the political arm of the South Korean Unification (Moonie) Church. (The links between Moon's church and the South Korean Central Intelligence Agency are so overt that a decade ago they provoked a U.S. Senate investigation.) CAUSA officials are reported to have offered $4 million for the Garcia Meza Bolivian coup of July 17,1980; and one of them is said to have had worked directly with Klaus Barbie in organizing the coup. When Congress ordered a cutoff of military aid to the contras in 1984, CAUSA worked with Refugee Relief International, a creation of Singlaub and of WACL, to ferry non-military supplies to the same contra camps. An informed observer said that "the 'big three' countries that were expected to aid the contras [militarily] were Israel, South Korea, and Taiwan." Robert Owen, said to have served with Singlaub as a cut-out contact between the National Security Council and the contras, is a former registered lobbyist for South Korea.

It is unlikely that Deaver's lobbying activities were more than a small part of the apparatus securing the Reagan-WACL connection. The full story, if it could be told, would probably lead to grey intelligence-political alliances that were already in place when Deaver was a young boy. Undoubtedly Cline and Singlaub, not to mention Reagan himself, would know more about such matters.

Singlaub, at least, probably faces a Congressional investigation in the months ahead. But Contragate is not a narrowly bureaucratic or administrative scandal. Deaver's post-1984 lobbying activities have already suggested to federal investigators that he may have violated U.S. statutes. Thus he too can be made to talk about how these connections were forged. Under oath.

Part 3 - Israel and the Contras

It is no accident that Israel, rather than, for example, South Korea, which has also sold its share of arms to Iran, was caught in the thick of things when the two-legged Irangate scheme was exposed in November 1986. For Israel was almost certainly the intellectual author of the plot to make Iran pay for the war against Nicaragua and Israel had already been selling arms to the contras, training them, and otherwise helping Reagan to circumvent Congressional restrictions on the contra program. To find the roots of this behavior we must return to Israel's earliest days.

Surrounded by Arab states whose hostility endured from the rout of their armies and uprooting of the Palestinian population as the Jewish state established itself, Israel has from its outset sought international contact beyond its confinement in the Eastern Mediterranean. Its Labor Zionist government propounded a doctrine calling for the establishment of good relations with the peripheral, non-Arab states of the region: Ethiopia, Turkey, and, of course Iran.

Looking farther afield, in the mid-1950s Prime Minister David Ben Gurion attempted to involve Israel in what would later become the Nonaligned Movement, but was at the time a loose gathering of nations emerging from colonialism. Israel was barred from the now-historic 1955 meeting at Bandung, Indonesia, because it was seen as an outpost of European colonialism.

Israel next turned to Africa, where, after some vigorous behind the scenes wooing of Ghana's founding leader Kwame Nkrumah,' Israel's anticolonialist credentials (based on having fought the British when they ruled Palestine) were accepted. As African nations were granted independence, Israel commenced a program of development assistance on the continent that was nothing short of spectacular, given Israel's size, its resources and its own recent establishment.

In Africa, and in part of Asia as well, Israeli technicians set up experimental farms, taught agricultural methods, established medical programs and "workers banks," helped develop infrastructure including roads, harbors and, for Ghana, a shipping line, and undertook youth training, labor union leadership training, and cooperative formation. Israel also established courses for foreign students in many of these subjects so that by the end of 1970 15,000 foreign students had been to Israel to study.

Development programs run by Israel were successful because the Israelis technicians came from a small country rather than recent colonial masters, and because the Israelis made it a practice to work alongside their students.

However there was also a less savory side to these programs. "For many years...the United States sent millions of dollars in covert aid to Israel for operations in Africa that included training several African intelligence services." During the tenure of the Labor government (until 1977) European Social Democratic regimes also supported Israeli development activities. Understandably, Israel amassed an enormous intelligence capability in sub-Saharan Africa. The big powers often consulted or coordinated with Israeli operatives. Military training and arms sales were also a part of Israel's outreach to Africa, along with its humanitarian gestures. As a result of all this, by 1968 32 African nations had established diplomatic relations with Israel.

In the mid-1960s Israel expanded the programs which had been so successful in Africa (and in parts of Asia as well) to Latin America, a region which needed little courting as its already established governments had provided an important bloc of supporting UN votes in 1947 when that body was considering the partition of Palestine into Palestinian and Jewish states.

After Israel's 1973 war the Organization of African Unity called for a diplomatic embargo of Israel, and all but three African governments- Malawi, Swaziland and Lesotho, all within the tight embrace of South Africa-either already had or shortly thereafter severed diplomatic relations. Israel was then left with little choice but to focus on the Asian nations with which it had relations and on Latin America.

Following the 1973 war, which in turn had followed the 1967 war during which Israel had occupied territory belonging to Jordan, Syria and Egypt, the perception of Israel as an underdog beset by rapacious neighbors was wearing out. In much of the world Israel was criticized for its occupation of Arab territory, its oppression of Palestinians in that territory, its intransigence in the face of all opportunities for peace, and, increasingly, its close links with South Africa. Also around this time, Israel's focus was shifting from development to military power. By 1980 Israel would be railing at the "petro-power" of the Arab governments of the Gulf-which, it claimed had turned Africa against it, with promises of funding for major infrastructural projects-and selling $1 billion worth of arms to a curious assortment of customers, including some of its former African friends. While clinging to as much as it could of the old patina of the days when it was a "light unto the nations," Israel had redefined itself into an arms merchant.

The Dictates of Israel's Arms Industry

Well before there was a state, there was an arms industry, producing small arms which the Jewish settlers in Palestine used against the Arab inhabitants they found there."

In the late 1930s and early 1940s arms acquisition by unconventional means, including smuggling war surplus from the U.S., became a preoccupation of Zionist leaders. After the United Nations approved the partition plan establishing a Jewish national homeland in Mandatory Palestine, great energy was expended securing weapons from a mostly unwilling world for the fight that was expected, following the withdrawal of the British colonialists.

The difficulty experienced in obtaining weaponry, when combined with the legacy of the recently abated Holocaust, seems to have produced a certain mindset in the leaders of the new state of Israel. To call it determined would be to understate it.

The Holocaust reconfirms the perspective that there are those who seek the destruction of the Jews and that Jewish survival should not depend on the guarantees or efforts of others. Thus, Israel sees that it must rely on its own defense capacity to ensure its survival and protect its people.

Emblematic of this grim determination was the decision in 1952 to commit the fledgling nation to the expensive and politically risky development of nuclear weapons.

A similarly far-reaching commitment to establish an arms industry was made in 1967, when France, at the time Israel's major source of weapons (and nuclear technology), canceled contracts for major weapons systems. French President de Gaulle was angered by Israel's decision to go to war. Always resistant to political pressure, Israeli leaders determined to become self-sufficient in arms.

The investment was a political one, without a thought to economies of scale-which would have shown it to be foolish. Actually Israel had had the beginnings of a parastatal military industry from 1948, built up around the secret munitions workshops of the pre-state period. i7 In the late 1960s and through the 1970s new companies were founded and major weapons systems produced. Much of the technology for the weapons Israel manufactured came from abroad, first from France, then from the United States. Investment also was needed from abroad, most notably from U.S. firms establishing joint ventures or subsidiaries and from the government of South Africa which agreed in 1976 to subsidize research and development on major Israeli weapons systems.

Israel's army is ranked among the best in the world, and it is very large in proportion to the country's tiny population, but no major arms-producing state manufactures weapons solely for its own military. In order to lower the unit cost of weapons, they produce more than they need and try to export the difference. In Israel's case the problem was compounded because Israel's possible markets were severely limited. NATO countries for the most part produce for themselves and each other, and likewise for members of the Warsaw Pact. With some notable exceptions (Ethiopia, Indonesia, and recently the Peoples Republic of China) the socialist and Islamic countries shun Israel. Since the 1973 break, most African nations have also kept their contacts with Israel to a minimum. What remained were the ASEAN nations, the pro-Western Asian grouping, Latin America, and the pariah, or untouchable, nations such as South Africa, Taiwan, Chile, and Guatemala. Latin America, where many countries fall into none of these categories and most of the rest fall into the pariah category, became Israel's premier market, although recently Israel has picked up some sales in Europe.

The typical Israeli customer, wrote one leading analyst of Israeli arms exports,
...is most likely to be a non-western country with a defense conscious government, rightist in orientation, in which the military is either the actual or proximate locus of power. It is confronted by a security threat originating either domestically or from a neighboring country.... [L]ike Israel, it, too, is isolated diplomatically and under international criticism, and therefore encounters problems in meeting military requirements from other sources of supply.

Israel never managed to produce even half of its own military gear. But it did become hooked on arms exports, which represented 31 percent of industrial exports in 1975,23 and are now thought to comprise 30 to 40 percent of Israel's industrial output.. Twenty percent of the industrial labor force works in arms production. By aggressively marketing its products where it could, by 1980 Israel had managed to boost its exports to over the $1 billion mark. With the possible exception of 1983, they have remained at that level, and are now above $l.25 billion. Moreover, since these numbers are estimates based on observations and accounts of transactions in the international media-the Israeli government releases no information on its arms sales-if anything, they are too low.

Yet these sales were never enough, especially after 1985, when Israel's defense budget began to suffer regular cuts and orders from the military dropped as part of an anti-inflationary program. The military industries were faced with the necessity of increasing exports to save jobs.

The export statistics do not begin to describe the power wielded by the arms producers, much less the "pro-arms lobby," a wider group including top ranks of the Israeli military, directors of various industries, unions whose members depend on incoming weapons orders for their livelihood, and several Israeli leaders with close ties to arms industries including Shimon Peres, who as a protege of Ben-Gurion at the defense ministry, is credited with being the architect of Israel's arms producing sector, and Moshe Arens, a former president of Israeli Aircraft Industries.

Some critics even charge that the defense ministry, at the apex of the arms producing sector, has taken over Israeli foreign policy. That policy is directed, they say, for short term objectives which often foreclose the possibility of longer term diplomatic aims which might bring Israel out of its isolation. Under the sway of this system, Israel's overall "conduct of external affairs...tends to be unsystematic, with a strong emphasis upon short-term contingency planning and crisis management." "Because of the feeling which has taken root that weapons must be sold at almost any price, countries described as 'dirty' are attracted to us as to a magnet," lamented the military columnist for Israel's leading daily. "The irony is that many of these countries are even ashamed to publicize the fact that they purchase weapons from Israel, as though we were lepers."

Compounding this situation is the process by which sales are approved. It is conducted in secrecy by four men-the prime minister, the defense minister, the foreign minister, and the minister of trade and industry-who convene as the Ministerial Committee on Weapons Transfers. As with Israel s part in Irangate, other cabinet ministers are kept in the dark and, similarly, the Knesset, Israel's parliament has neither the authority nor the will to veto arms sales.

None of this has been without its effect on Israel's mainstay, the United States, which has played a crucial role in Israeli arms marketing in several respects. Much of what Israel has to sell contains U.S. technology and thus needs Washington's permission before it can be exported, or, as was the case with some of the sales to Iran, came to Israel through its U.S. military assistance grants. As the Jerusalem Post reported in March of 1985, its economy m serious enough trouble to warrant a supplementary U.S. aid package of $1.5 billion, Israel targeted the United States as an untapped market for its weapons exports.

An interesting intersection with the U.S., and one with much bearing on Israel's relationship with the contras, is the search for markets. Israel has asked the U.S. to set aside certain markets for exclusive Israeli exploitation. It has requested help in marketing, and it has requested U.S. financing for its weapons sales to impoverished governments. It has also asked that recipients of U.S. military aid be allowed to purchase Israeli weapons, an unprecedented break with the traditional "buy American" practice, considered to be the underpinning of U.S. military assistance.

None of these elements were operative when Israel first began marketing its military wares in Central America in 1973. Israel simply pushed into the market itself, introducing its new products at fairs and with a shipboard showroom. Aided by contacts developed during the previous decade when it had conducted technical assistance programs in the region, Israel sold lts castoff French combat jet aircraft to El Salvador and in 1975 to Honduras-these were the region's first jet fighters and first supersonic jets, respectively, and the buyers had not yet made peace following a shooting war in 1969-and a variety of armored vehicles, patrol boats, counterinsurgency aircraft and small arms to these two nations and to Nicaragua and Guatemala. Before very long, however, Israeli sales would increase and that increase would be thanks to events in the U.S., which created sales opportunities for Israel.

Opportunity in Central America

The same Carter human rights doctrine that brought campaign contributions from wealthy Guatemalans to Ronald Reagan brought orders to the Israeli arms industries. By 1978 Nicaragua, El Salvador and Guatemala were found guilty of human rights violations connected with insurgencies arising from longstanding social and political inequities. U.S. military aid was terminated and all three of these nations then turned to Israel to fill the gaps left by withdrawal of U.S. aid.

As part of this windfall Israel supplied the military regime of El Salvador with over 80% of its weaponry for the next several years, including napalm for use against the Salvadoran civilian population. Israeli advisers trained the Salvadorans in counterinsurgency and installed a computerized intelligence system able to track insurgents and, by monitoring Utility usage, pinpoint safe houses.

It is almost certain that these advisers remained after 1981 when Washington made the cause of the Salvadoran landowning oligarchy its own and resumed military aid. The Israelis thus helped the U.S. exceed the congressional limitation of U.S. advisers in El Salvador at any one time. According to a member of El Salvador's short-lived First Junta (1979-80), Israeli advisers who came to train officers of ANSESAL, the Salvadoran secret police originally established by the CIA and closely linked to the infamous death squads, remained in El Salvador as late as 1983.

Although increasing U.S. military assistance cut into the amount of business available to Israel, Israel continued its relationship with the Salvadoran military, most recently providing a sophisticated "pacification" plan which involves the forcible resettlement of civilians into communities under military control. Following the failure of confidently announced U.S. plans to "win the hearts and minds" of the long suffering Salvadoran populace, the Israeli program (funded by the World Bank, the U.S. and West Germany) is a quid pro quo for El Salvador's decision to move its embassy in Israel from Tel Aviv to Jerusalem.

If Salvadoran "model villages" follow the pattern of those Israel has helped establish in Guatemala, their "citizens" will soon be growing fancy vegetables for export in exchange for barely enough food for their families, turning a profit for their military "guardians." The agricultural operations under Israeli advisement are likely to order Israeli high tech farming equipment and Israelis have invested heavily in Guatemala's agricultural sector. Already some Salvadoran officers are trying to imitate Guatemala's involuntary "self defense" forces, an integral part of its "pacification" program.

Since 1977 the Guatemalan military has relied heavily on Israel for each phase of its anti-insurgency campaign. Israeli advisers appeared on the scene when the military government was engaged in killing and dispossessing the largely Mayan highland communities in an effort to squash the Indians' support for a revolutionary movement inspired by the incredible inequality of land ownership. Over the following eight years, Israeli weapons and advisers helped the Guatemalan military halt the growth of the insurgency-by a mass carnage of at least 10,000 which some observers have not hesitated to call genocide.

Israel, according to Benedicto Lucas Garcia, brother of head of state (1978-1982) Romeo Lucas Garcia, and former chief of staff of the Guatemalan Army, "did not provide us with large amounts, but it was the only [state] which provided us with military support so that we could deal with the guerrillas." The arms might not have been numerous enough to please Lucas, but in 1983 a Time reporter marveled that "the Israelis have sold the government everything from anti-terrorism equipment to transport planes. Army outposts in the jungle have become near replicas of Israeli army field camps."

Moreover, Israel also provided Guatemala with two computer centers, one of which, located in an annex to the Presidential Palace, was used to monitor dissidents and compile and disseminate death lists. Israel has also been instrumental in providing advice and direction for Guatemala's audacious program of long term social control: four "poles of development" with dozens of "model villages" in which are interned indigenous peasants driven off their land or captured by the army. Wrested from their corn-oriented culture and under direct military control, the peasants grow export crops. This social experiment-the Guatemalan officer who directs the program compared the model villages to Israeli kibbutzim-has enjoyed support from the U.S. religious right. South Africa is also known to be assisting with the "resettlement" program.

Nicaragua escaped the same fate, but not for want of Israel's attention. In the late 1970s, dictator Anastasio Somoza Debayle, last of a dynasty that had run Nicaragua as a family fiefdom since 1933, was faced by an insurrection of virtually the entire population, and in 1978, at the latter stages of events, the Carter Administration finally cut off U.S. assistance. Somoza was then faced with a fairly rigorous informal embargo; no country seemed willing to sell him weapons.

The Israelis were quick to take up the slack, and from September of that year until the following July when he was ousted, Israel sold Somoza 98 percent of the weapons he used against the Nicaraguan population. Those included not only Uzi submachine guns and "thousands" of Israeli-made Galil assault rifles, but large quantities of ammunition, surface-to-air missiles (the FSLN, the Sandinistas, had no air force), nine combat-armed Cessna aircraft and two Sikorsky helicopters, which Somoza's Guard used as platforms for machine gun strafing. Sometimes they rolled 500 pound bombs out the helicopter doors.

With the tacit permission of the Carter Administration, the Israelis continued to ship arms to Somoza until the end of June 1979. Three weeks before the dictator was forced to flee, Washington said "enough," and Israel recalled supplies (including two patrol boats) that were then on their way to Nicaragua. From exile, Somoza fretted about the ship that was recalled to Israel: "Somewhere in Israel there is a large consignment of arms and ammunition which could have saved Nicaragua." Someday, his men would reclaim that cargo, but killed in Paraguay in 1981, Somoza would not live to see that, nor would he see how hard Ronald Reagan would work to restore Nicaragua to his National Guard.

In response to criticism occasionally leveled at it in subsequent years, Israel has always insisted that it stood by Somoza because of a debt dating back to the 1930s. At that time, and again following World War II, Anastasio Somoza Garcia, the father of the toppled dictator, vouched for weapons purchased in Europe by the pre-state Zionist military forces, the Haganah. The Zionists who dealt with him paid Somoza extremely well at the time, so it is somewhat ludicrous for the Israelis to argue that they were honor bound to help his son murder thousands of Nicaraguans decades later. However, they have gotten by with this line of defense, since no one with any leverage over Israel has challenged it, and the arms sales were very lucrative, probably amounting to $250 million.

Israel, the White House Junta and the Contras

The lack of criticism from where it mattered-the U.S. Congress and influential liberal and progressive constituencies in the U.S.-to any of its arms dealings in Central America emboldened Israel to cooperate with the Reagan Administration in supporting the contras in the early days of the program. But there came a time, as early as the summer of 1983, when the administration wanted more from Israel than Israel was willing to risk. The tension that arose then persisted and almost certainly set the course for the scheme which would become known as Iran-Contra affair.

Whatever else the story demonstrates, it shows clearly that Israel might cooperate extensively with the administration or its covert agents in many parts of the world, but it is far from the supine proxy that such a role suggests. The dickering back and forth which went on over what Israel could do for the contras was never completely resolved: when the federal furniture is rearranged following the investigations of the affair, there will be even greater pressure on Israel to stand up in public with the contras. But much money and many weapons changed hands while the relationship grew up around that point of contention. The participants' divergent wishes about Israel's role with the contras resulted in the linking of two operations, which were eventually exposed as the Iran-Contra scandal.

''Strategic'' Cooperation

Until the U.S.-approved Iran arms sales began, U.S.-Israeli collaboration in the war against Nicaragua appears to have been carried out in the framework of a series of agreements. Israel's Likud government, which took office in 1977, had always pursued concessions from the U.S. to help it develop and market weapons. Some elements of what Israel desired were incorporated in a Memorandum of Agreement signed by the two countries in March 1979. Four months after the Reagan Administration was sworn in, Secretary of State Alexander Haig signed a commitment extending the privileges of the 1979 pact.

On November 30,1981 the administration signed a Memorandum of Understanding (MOU) on Strategic Cooperation with Israel. In addition to provisions aimed at boosting Israel's weapons industry, the MOU bound the two countries into a loose mutual defense pact (aimed, as quickly became de rigeuer in the Reagan years, at the USSR) and covered cooperation in Africa and very likely other areas of the developing world. Although this agreement was suspended almost immediately when Israel angered Washington with its surprise annexation of the Golan Heights, "its spirit and some of its initiatives continue under the 1979 MOA." (Defense Minister Ariel Sharon said the suspension of the MOU did not hurt Israel as the U.S. would pay interest for the delay in its implementation.)

The cooperation was unspecified in the MOU, but an Israeli official said it was left to be evolved. The Israelis wanted-and until David Kimche took his leave from the Foreign Ministry shortly before the Iran-contra scandal broke, continued to want-U.S. funding to entice African nations to reestablish diplomatic relations with them. Defense Minister Ariel Sharon said that Washington had promised Israel money for its activities in Africa. (Sharon arrived in Washington to sign the MOU for Israel immediately after having traveled through Africa. He urged the Reagan Administration to sell arms to South Africa so it too could help in the fight against communism.)

Israel was also eager for the formal pact because it believed that the connection would boost public perception of Israel as a "strategic asset" of the United States, rather than Washington's biggest foreign aid client- although the goal of the perception engineering was in part to obtain more U.S. aid.

Judging from the way the Israelis would keep seeking it, Washington never put a great deal of money into Israel's Africa operations. And whatever spirit of the 1979 Memorandum survived Israel's 1982 invasion of Lebanon and, in the aftermath, Prime Minister Begin's arrogant rejection of the timid peace plan proffered by President Reagan, was quite withered.

Moreover, with the resignation of Secretary of State Haig and his replacement by George Shultz, a longtime employee of the giant Bechtel construction firm with close business ties to Arab governments, Israel and its U.S. backers expected relations to get worse. Instead, then Deputy Secretary of Defense Frank Carlucci-he has since been appointed national security adviser-persuaded Shultz to work with Robert C. Ames, the CIA senior officer for the Middle East. Moshe Arens, Israel's ambassador at the time and his aide Benjamin Netanyahu (since Israel's ambassador to the UN) made the reeducation of Shultz their personal project, building a personal relationship with the Secretary of State. The "real turning point" came at the end of 1982, when Shultz tried to block a S200 million addition to Israel's U.S. assistance, proposed by Congress at the behest of AIPAC (the American Israel Public Affairs Committee, Israel's registered lobby in the U.S.). He lost and acknowledged the lobby's power-and Israel has regarded him as a firm friend ever since.

That summer four Shultz assistants began to press the secretary to establish closer links with Israel. One of the four was Undersecretary of State Lawrence Eagleburger, who would later be assigned to act as U.S. Iiaison on bilateral covert activities. When the group had completed their position papers arguing for "strategic cooperation" with Israel, Shultz and Robert McFarlane, at the time national security adviser, went to see the President and sold him the new policy, over the opposition of CIA Director Casey and Secretary of Defense Weinberger. They argued that it would help contain Soviet expansion in the Middle East.

The political correspondent for Israel's military radio credited Robert McFarlane with the breakthrough. "It is stressed in Jerusalem that even before the massacre [the October bombing of marine headquarters] in Beirut, a tendency had emerged in Washington toward increasing cooperation with Israel in the wake of deliberations in the U.S. capital after Robert McFarlane became the new national security adviser."

In late October 1983 President Reagan signed National Security Decision Directive 111, establishing strategic cooperation with Israel. Israel's Prime Minister Yitzhak Shamir arrived in Washington the following month to discuss the pact-he described it as, in part, "a dialogue on coordinating activity in the third world"-and it was formally signed the following March.

Largely unknown in this country, in Israel the new pact was leaked before it was even signed, much less discussed, after a visit to Israel by Under Secretary of State Lawrence Eagleburger. The conservative Israeli paper Ma'ariv, said that early in November Eagleburger told Prime Minister Shamir that "the president would like to meet with a personality or personalities from the most senior echelons in Israel."

Ma'ariv pointed out that what the White House wanted was "substantive, and not just intended to shut Israel up and justify the AWACS deal with Saudi Arabia," and that it finally recognized Israel "as a real asset." The paper speculated that Eagleburger, Secretary of State Shultz, "and the members of the National Security Council advocating a pro-Israeli line are currently enjoying Reagan's support," over those aligned with Defense Secretary Weinberger.

Ma'ariv said that the Reagan Administration admitted that it had dealt harshly with Israel over Lebanon and, "during the invasion of Grenada, when the United States used all the explanations Israel used to explain its invasion of Lebanon within the framework of the Peace for Galilee Operation, which the United States did not find satisfactory."

Shamir left Washington with promises of increased U.S. aid, short term economic credits, concessions on the sales of Israeli weapons systems to the U.S., and an administration commitment to a Free Trade Agreement. Shortly thereafter, the Defense Department relented in an ongoing standoff and released technology packages for the Lavi aircraft Israel was developing. To the media, Secretary of State Shultz acknowledged that there was "no quid pro quo in the new arrangement with Israel, that the United States received no major concessions in return." Clearly the administration was propitiating Israel and there was only one conceivable reason it could have been doing so: it wanted Israeli help with the contras.

Well before the U.S. invasion of Grenada, and while the State Department was still fashioning its new pro-Israeli policy, a bilateral committee spearheaded by Robert McFarlane began what would become twice-yearly meetings. In 1982, as an aide to Secretary of State Alexander Haig, McFarlane had been sent to Israel to discuss Haig's vision of a conservative Middle East alliance. McFarlane's interlocutor had been David Kimche, director-general of the Israeli foreign ministry. When McFarlane moved over to the White House he established links between Kimche and senior State Department officials, launching what came to be known as the U.S.-Israel Political Military Committee. The committee 'which would meet every spring and fall (alternately in Washington and Jerusalem)' was set up "to look at the big picture," meaning everything but what is euphemistically known as the Middle East "peace process." It would later be subsumed under the 1984 strategic agreement.

At the first meeting of the group, in June 1983, discussion was mainly on cooperation in the developing world, centered especially on Central America-on "the intention of the U.S. Administration to get Israel to supply the armies of the pro-American regimes there," with funds "the U.S. cannot directly transfer to its allies in the region...paid to Israel directly from the United States."

During the same time frame the White House was starting to appreciate Israel for what it could do to promote administration aims in Central America and Israel's willingness to "assist" the U.S., administration officials had said, helped to improve strained relations between the two countries. An Israeli account said that such cooperation was the only "aspect of cooperation...to be energetically pursued during the last two years."

Israel had allowed S2 I million to be reprogrammed from its foreign assistance to El Salvador in 1981, before Congress had had an opportunity to cave in to the new Reagan Administration's demands for major military aid for the Salvadoran regime. Israel already had the Guatemalan situation well in hand, and it had reinforced the words of UN Ambassador Jeane Kirkpatrick to debt-ridden Costa Rica: if you want aid you must create an army.' And it was involved in a low-key way with the contras.


An Evolving Modus Operandi

In early 1985 both Reagan Administration officials and members of Congress said that Israel had again stepped up aid to the contras, but denied that U.S. foreign aid was funneled through Tel Aviv, El Salvador or Honduras. The denial came as the Reagan Administration began signaling its desire to find a legal way to send aid through third countries. In March 1985 it said it was considering asking "friendly" Asian countries to support the contras. Taiwan and Thailand were mentioned, and it was never made clear whether-U.S. aid or the friendly countries' own resources would be used. An administration official said both U.S. aid recipients and non-recipients were under consideration.

Ominously, an administration official said "Right now there is a proscription from any third country providing assistance. Well, might the Congress not wish to reconsider that ?"

After a few such feelers on this score produced negative reactions from Congress, the pronouncements ceased. The White House announced that it had "rejected a series of proposals for indirect financing of the Nicaraguan rebels." But the conniving continued.

In July 1985 the Reagan Administration not only got S27 million "non-lethal" aid out of Congress for the contras, it also figured out a way to "legalize" shaking down U.S. aid recipients for contributions to the mercenaries. (Incidental but not unrelated to this process, the $12.6 billion foreign aid bill containing contra aid-the first foreign aid bill since 1981 to stand on its own rather than skulk in a continuing resolution-won the votes of a number of liberals because it also contained S4.6 billion in U.S. aid for Israel. Rep. Howard Berman (D-CA) called it "critical assistance. " ~ 77 The House leadership either did not try to separate the contra aid from the aid to Israel or was unable to do so.)

The president signed the foreign aid bill containing the S2 7 million on August 8.'79 Before he signed it, however, while the bill was in a House-Senate conference the White House ordered surgery on one of its amendments. Named for Senator Claiborne Pell (D-RI), the offending language forbid the Reagan Administration from making a formal or informal arrangement with U.S. aid recipients to aid the contras. Unless the Pell Amendment was removed, it was threatened that the president would veto the entire bill. The State Department explained that the amendment might prevent the president from soliciting "nonlethal" aid from Israel, Taiwan, South Korea, and other such allies, some of which had already spoken to the White House about donations.

In a highly unusual move, Sen. Pell, Foreign Relations Chairman Richard Lugar (R-IN) and White House and congressional staff sat down together and rewrote the amendment. The new language read:

...the U.S. shall not enter into any arrangement conditioning expressly or impliedly the provision of assistance under this act...upon provision of assistance by a recipient to persons or groups engaging in an insurgency...against the government of


Both houses of Congress passed this language before they adjourned for the summer. Henceforth the administration was allowed to put the arm on aid clients-just not to the point of threatening to cut off their aid!

The following week it became evident that the heat was off Israel, as contra boss Adolfo Calero catalogued contributions for reporters: "A lot of people help on weapons. Gen. Singlaub, some Germans, some French. The people who help us are not government people, but governments can give leaves of absence or it can be a retired person. We have no Israeli dealings. They have not given or sold us anything." Earlier that year a reporter for National Public Radio had seen Israeli-made artillery pieces at the FDN's main camp in southern Honduras.

Although information is now coming to light about arms shipments made by the Secord-Hakim-North junta through Portugal and France, there have been very few reports of weapons coming from Europeans for the contras. As to financial contributions that might have been used to purchase weapons, Edgar Chamorro insists that the occasional reports of such money from Europe are a "smokescreen." "Money only goes through Europe to be laundered," he says."

In 1986, in a scenario at least as ironic as the forcing of Iran to finance the war against Nicaragua, Richard Secord shook down the government of Saudi Arabia for funds for the contras. The Saudis gave in after being reminded that the administration had stuck its neck out and "defied the powerful pro-lsraeli lobby" to get the AWACs sale through Congress. Secord himself had lobbied for the sale. Secord then used the Saudi money "to acquire Soviet-made weapons from Egypt, from Israeli-held stocks captured in Lebanon, and from international arms dealers."

During the years Congress limited funding for the contras, CIA Director Casey and UN Ambassador Vernon Walters traveled to a number of U.S. clients and urged contributions. Both Israel and Egypt donated money in response to these pleas "when reminded of the substantial U.S. aid they receive."

It was not all giving though. While some of the money that Israel volunteered is said to have been passed through Oliver North, it is more than likely that the money Israel gave was immediately recycled in Israel for weapons, a pattern that was to be repeated when the siphoning off of the Iran profits commenced. (The same pattern which ensures that much of U.S. foreign aid is spent on U.S. weapons or civilian imports.) Former contra leader Edgar Chamorro has pointed out that arms dealers do not seek out the contras, nor do the mercenaries often make purchases on the open market. He explained that "a very few people, close to the White House, tell the FDN how to get weapons...Calero is told by the people in charge where to go to buy weapons. They even make the connections."

Massive Israeli Arms Shipments

... An arms expert estimated that the Israelis had sent the contras "thousands" of AK-47s. Seventy AK-47s and 100,000 rounds of AK-47 ammunition were among other items on the plane shot down by Nicaragua on October 5, 1986.

During the 1985-86 period Israel sent at least 6 shiploads of East bloc assault rifles, grenade launchers and ammunition to Honduras for the contras. Some of the 400 tons of weapons shipped by Southern Air Transport to Ilopango Air Base in El Salvador came from Israel, via Portugal. One shipment, a "significant quantity" of East bloc arms (interestingly, the only Israeli arms shipment to the contras to be mentioned in the Senate Intelligence Committee's report) was offered by Israeli Defense Minister Yitzhak Rabin on September 12, 1986. They were to be picked up during the following week and taken on a foreign-flag vessel to Central America. Admiral Poindexter had corresponded with Oliver North about the Israeli shipment and wrote North a note characterizing the deal as a "private deal between Dick [Secord] and Rabin that we bless," and telling North to "go ahead and make it happen."

An Israeli source confirmed that the shipload of weapons had indeed been on the way to Central America. He said that it had been recalled after the scandal broke.

In a briefing he prepared for President Reagan in advance of a scheduled September 15 meeting with Prime Minister Shimon Peres, Poindexter advised Reagan to thank Peres for the shipment "because the Israelis held considerable stores of bloc ordnance compatible with arms used by the [contras]." Such shipments might have been a regular feature of the "strategic" relationship between the U.S. and Israel, or that blessed deal might have been a unique occasion. Many, if not most of the Israeli shipments went through private Israeli dealers, who exist for just such business.

The Attractions of Obscurity

Over the many hearings, investigations, and other dissections of Iran-contra affair, Israel's purposes are likely to remain obscure to the public. Israeli citizens, be they officials, arms dealers, or civilian witnesses are not bound by U.S. Iaw to testify or cooperate in investigations. Israel has already made it clear that it will shield its citizens who were involved in the affair behind its national sovereignty and will only cooperate to the extent necessary to placate public opinion.

And that, given the well-oiled media machinery of Israeli loyalists in the U.S., is a very limited proposition. As was seen during the invasion of Lebanon, when the cameras focus in too close a vast cry will go up, charging media imbalance and probably also anti-Semitism.

The Congress, which had many opportunities to examine Israel's activities in Central America and to discourage them, understands the problems attached to those activities all too well but members of Congress would be the first to admit (if only they dared) that they are powerless to restrain Israel. Organizations dedicated to reversing the post war trends in U.S. foreign policy are also unlikely to depart from their ingrained tendency to avoid confrontation with Israel.

Israel's immunity to U.S. Iaw and the silence it has created around itself by years of methodical intimidation will protect it through the bloodletting ahead. These built-in attractions are also likely to make Israel the vehicle of choice for the next tragic and avoidable essay in covert foreign policy.

Part 4 - Irangate: The Israel Connection

The Israeli Interest in Iran

... Israeli interests in non-Arab Iran became prominent as early as the 1 950s, when Mossad, Israel's foreign intelligence agency, cooperated with the CIA in establishing the Shah's secret police, SAVAK. A 1979 CIA report on Mossad notes that:

The main purpose of the Israeli relationship with Iran was the development of a pro-Israel and anti-Arab policy on the part of Iranian officials. Mossad has engaged in joint operations with SAVAK over the years since the late 1950s. Mossad aided SAVAK activities and supported the Kurds in Iraq. The Israelis also regularly transmitted to the Iranians intelligence reports on Egypt's activities in the Arab countries, trends and developments in Iraq, and Communist activities affecting Iran."

Cooperation between Israel and Iran touched many fields, including oil, trade, air transport, and various forms of technical assistance. But their most important mutual interest was in the military sphere.

Like the United States, Israel cemented its relationship with Iran by the exchange of arms for oil, which both sides kept alive through the worst of the OPEC oil embargo. The Iranian arms market was worth at least $500 million a year to Israel. The Shah bought everything from Gabriel anti-ship missiles to advanced communications equipment. In 1977, Israel arranged a $1 billion arms-for-oil deal around Operation Flower, a joint Israeli-Iranian project to build a nuclear-capable surface-to-surface missile. And like their American counterparts, certain Israelis also seem to have been part of the corrupt nexus through which top Iranian political and military leaders were enriched through arms sale commissions. "When the Israelis decide to change their policy," one top State Department official told a reporter in the mid- 1 970s, "the first place the Israeli jet touches down is Tehran. Moshe Dayan is in and out of there quite frequently."

No Israeli representative in Iran during the Shah's reign was more significant or influential than Ya'acov Nimrodi, Israel's military attaché. He reportedly helped organize and encourage the rebellion of Kurdish tribesmen against Iraq, the Shah's main political and military rival in the region. As the chief government agent for Israel's burgeoning arms industry, known as an all-purpose "fixer," Nimrodi was intimate with the Shah and his generals. "I was in partnership with the Shah," he told friends. (Among other coups, Nimrodi sold the Iranian army on the Uzi submachine gun.) And as the Mossad agent who could properly boast of having "built" SAVAK into an efficient if brutal intelligence service, he was no less intimate with the keepers of the Shah's secrets. With the arrival of the Khomeini regime, Nimrodi kept open his lines of communication as a private arms dealer who would become central to the Reagan arms-for-hostage talks.

Though Israel, along with the United States, suffered a grievous loss with the fall of the Shah, its leaders concluded that lasting geo-political interests would eventually triumph over religious ideology and produce an accommodation between Tel Aviv and Tehran. The onset of the Iran-Iraq war in 1980 gave Israeli leaders a special incentive to keep their door open to the Islamic rulers in Iran: the two non-Arab countries now shared a common Arab enemy. As Israeli Defense Minister Ariel Sharon told the Washington Post in May 1982, justifying Israeli arms sales to Tehran, "Iraq is Israel's enemy and we hope that diplomatic relations between us and Iran will be renewed as in the past." Four months later he told a Paris press conference, "Israel has a vital interest in the continuing of the war in the Persian Gulf, and in Iran's victory." Such views were not Sharon's alone; Prime Ministers Itzhak Shamir (Likud) and Shimon Peres (Labor) shared them too.

To this day, prominent Israelis still argue that strategic calculus unashamedly. Retired Gen. Aharon Yariv, former head of military intelligence, told a conference at Tel Aviv University in late 1986 that "it would be good if the Iran-Iraq war ended in a tie, but it would be even better if it continued." Otherwise, Iraq might open an "eastern front" against Israel. 19 The carnage of human life didn't figure in the equation at all. Uri Lubrani, Israel's chief representative in Iran under the Shah and Nimrodi's superior in Mossad, recently justified continued arms sales because "Khomeinism will disappear and Israel and the United States will again have influence in Iran."

One other consideration, rarely articulated, also swayed successive Israeli leaders: money. According to Gary Sick, an expert on Iran who served on the NSC under Presidents Ford, Carter and Reagan, "Israel acknowledged that arms sales were good business. One out of 10 Israeli workers is employed in arms-related production; military items constitute more than a quarter of Israel's industrial exports." The distinguished Israeli defense correspondent Ze'ev Schiff states that Israel's pro-lran policy has been "guided by a ravenous hunger for profit rather than by strategic considerations..."

This hunger was all the more acute in view of severe unemployment that hit the Israeli arms industry in 1979 after the Iran market shriveled. Nimrodi, the Mossad-agent-turned-arms-dealer, recalled that when he reported to the Israeli government on the millions of dollars to be had from arms sales to Khomeini's Iran, "people's eyes lit up here. They have been laying people off in the defense industry, and this meant jobs."

The Arms Channel Opens

Israel lost no time supplying the new Khomeini regime with small quantities of arms, even after the seizure of the U.S. embassy. The first sales included spare parts for U.S.-made F-4 Phantom jets; a later deal in October 1980 included parts for U.S.-made tanks. Israel informed Washington, only "after the fact, when they were far down the line and right into the middle of the thing," according to a former State Department official. To Begin's ex post facto request for approval, "the answer was instant, unequivocal and negative," writes Gary Sick, the Iran expert on Carter's NSC.

The White House was in fact aghast to find that its embargo had been flatly violated. "We learned much to our dismay," Brzezinski noted later, "that the Israelis had been secretly supplying American spare parts to the Iranians without much concern for the negative impact this was having on our leverage with the Iranians on the hostage issue." Secretary of State Edmund Muskie demanded that Israel cease its shipments; Prime Minister Begin promised to comply. In fact, however, the supply line stayed open without Washington's approval, carrying tank parts and ammunition.

Why didn't the administration crack down? One reason is simply that no president since Eisenhower has ever really punished Israel for acting against U.S. interests. Prime Minister Begin bombed the Iraqi nuclear reactor, invaded Lebanon, annexed the Golan heights and speeded up the settlement of the occupied West Bank much to the Reagan administration's embarrassment, but considerations of military strategy and Israel's political clout in Congress always gave the client state the upper hand.

Moreover, the administration could rarely prove what it suspected. Israel did its best to disguise these shipments by using layers of foreign brokers to cloak their source. Notes Ha'aretz correspondent Yo'av Karny "The cloak of secrecy that surrounds Israeli arms exports is so tight that one can compare it to the technique for smuggling hard drugs." When caught in the act, Israeli officials maintained they were simply selling domestic arms, not embargoed U.S. weapons. "Whenever we would get word of shipments," one American official explained, "the State Department would raise the issue with Israel, and we would get the standard lecture and promises that there were no U.S. weapons involved."

That standard lecture was clearly false, though Washington may have lacked usable evidence to prove it. U.S.-made weapons were very much for sale. On 24 July 1981, Israeli arms dealer Ya'acov Nimrodi-later to play a vital role in the arms-for-hostages negotiations-apparently signed a deal with Iran's Ministry of National Defense to sell $135,842,000 worth of arms, including Lance missiles, Copperhead shells and Hawk missiles. A sale of such magnitude must have had Israeli government acquiescence. Nimrodi's close personal friend Ariel Sharon, a wartime comrade from the 1948 struggle, likely kept tabs on, if he did not direct, the private dealer's sales with Iran.

Sometime the same year, David Kimche, director general of Israel's foreign ministry, apparently approached Secretary of State Alexander Haig and his counselor Robert McFarlane to discuss proposed Israeli shipments of $10 million to $15 million in spare parts to "moderates" in Iran. Kimche may have been referring to a contract to supply 360 tons of tank spares and ammunition-worth about $28 million, twice his estimate-to Iran by air via Cyprus. But Haig denies that he ever approved any such shipments, a claim strengthened by the admission of Israeli officials that they went ahead based only on Haig's alleged failure to disapprove. In any case, the shipments in question paled beside what Nimrodi was then arranging.

In November 1981, Israeli Defense Minister Sharon visited Washington, shopping for approval of similar arms sales. His U S. counterpart Caspar Weinberger, flatly turned him down. Sharon then went to Haig, hoping for acquiescence from the State Department. Again, McFarlane handled many of the discussions with Sharon and Kimche; this time Haig unequivocally opposed any violation of the embargo.

In numerous discussions with Israeli officials thereafter, administration decision makers flatly refused requests for permits to ship U.S. arms to Iran, and strenuously discouraged Israel from sending its own weapons to the radical Khomeini regime. Undersecretary of State Lawrence Eagleburger at one point summoned the Israeli ambassador to protest his country's continued sales-only to be assured that they had been stopped. And officials who ran Operation Staunch, the project to block Iran's access to the world arms market, were never discouraged from extending their efforts to Israeli-linked deals.

Yet as in 1979-80, Israel pursued its policy anyway, in flat violation of its arms re-export agreements with the Pentagon. In a May 1982 interview with the Washington Post, Sharon claimed that Israeli shipments had been cleared "with our American colleagues" months earlier and that details of all the shipments were supplied to the administration. Later that year, Israel's ambassador Moshe Arens declared that Israel's arms sales were cleared at "almost the highest levels" in Washington, "inconsequential" in size, and designed to undermine the Khomeini regime. Both times the State Department flatly contradicted the Israelis' claims. At least Sharon and Arens were more credible than Foreign Minister Shimon Peres, who declared after the Irangate scandal broke in 1986 that "Israel's policy is not to sell arms to Iran."

All the standard propaganda themes and practices were in place. Israel would continue seeking approval for arms sales on the basis of their potential political leverage, but would ship arms willy-nilly while falsely claiming Washington's sanction.

And those shipments would continue to be enormous in size, estimated by experts at the Jaffee Institute for Strategic Studies in Tel Aviv at $500 million in value from 1980-83. Other arms market experts have put the total value at more than S500 million a year, including aircraft parts, artillery and ammunition.

Anecdotes abound in the world press relating to Israeli sales to Iran:

* In March 1982, the New York Times cited documents indicating that Israel had supplied half or more of all arms reaching Tehran in the previous 18 months, amounting to at least $100 million in sales.

* Foreign intelligence sources told Aerospace Daily in August 1982 that Israel's support was "crucial" to keeping Iran's air force flying against Iraq.

* An alleged former CIA agent reportedly visited Israel in 1982, met with the chief of staff of the Israeli Defense Forces and head of military intelligence, and "struck a deal with them involving the transfer of weapons and equipment, captured by Israel during the Lebanon war, to Iran."

* Israeli sources told Newsweek that "they sold the Iranians much of the light weaponry and ammunition that the Israeli army had captured during its invasion of Lebanon; subsequently, they sold overhauled jet engines, spare parts for American-made M-48 tanks, ammunition and other hardware-S100 million worth in 1983 alone."

* Newsweek also reported that after an Iranian defector landed his F-4 Phantom jet in Saudi Arabia in 1984, intelligence experts determined that many of its parts had originally been sold to Israel, and had then been re-exported to Tehran in violation of U.S. Iaw.

* In 1984 and early 1985, a single one of Israel's many European brokers, based in Sweden, reportedly shipped hundreds of tons of TNT and other explosives to Iran, often by way of Argentina, worth 500 million kroner.

* The Milan weekly Panorama reported that Israel had sold the Khomeini regime 45,000 Uzi submachine guns, antitank missile launchers, missiles, howitzers and aircraft replacement parts. "A large part of the booty from the PLO during the 1982 Lebanon campaign wound up in Tehran," the magazine claimed.

* Manila newspapers have reported since the Irangate scandal broke that former armed forces chief of staff Gen. Fabian Ver, a crony of Ferdinand Marcos, supplied phony end user certificates to allow Israeli intermediaries to divert U.S. arms to Iran in 1984.

Part 5 - The Deeper Malady: From Terrorism to Covert Action

The Price of Covert Operations

Congress as a whole has never admitted what both champions and critics of the CIA have long maintained: covert actions cannot be both truly accountable and effective at the same time. When closely regulated, scrutinized, debated and second-guessed, covert actions remain secret only a short time. This logic has persuaded every administration since Harry Truman's to choose secrecy over accountability, in the name of national security. And it has persuaded every Congress since then to bow to presidential authority in the final showdown. Irangate was merely the latest product of that syndrome.

The temptations of power and secrecy overcame law and constitutional authority from the CIA's founding by the National Security Act of 1947. The agency's first general counsel, Lawrence Houston, was quickly called upon to interpret the meaning of the act's phrase assigning the CIA "such other duties and functions related to intelligence affecting the national security as the National Security Council may from time to time direct." Houston concluded that "taken out of context and without knowledge of [the act's] history, these Sections could bear almost unlimited interpretation. In our opinion, however, either [propaganda or commando type] activity would be an unwarranted extension of the functions authorized by" the act. "We do not believe that there was any thought in the minds of Congress that the Central Intelligence Agency under this authority would take positive action for subversion and sabotage." Any such missions would necessitate going to Congress "for authority and funds."

A mere three months later, the NSC directed the CIA to initiate psychological warfare operations against the USSR. Six months after that, the NSC added paramilitary, economic warfare and political action operations to the list. Covert action was officially born. Future administrations would justify such authority on the basis of the president's inherent powers in foreign affairs and the willingness of Congress to appropriate money for the CIA. In effect, covert operations gave successive presidents the power to legislate as well as execute foreign policy with secret resources. Not until the 1980 Intelligence Oversight Act did Congress supply clear authority for covert operations.

On the other hand, Congress never showed the courage to rein in what had become a routine usurpation of authority. The closest it ever came to making fundamental reforms was in the mid-1970s, when House and Senate investigations of intelligence abuses uncovered evidence of assassination plots, illegal mail opening, illicit drug testing, massive domestic spying and sabotage of domestic political movements. The Senate committee, named after its chairman Frank Church of Idaho, also looked at several covert operations, including the destabilization of Chilean President Salvador Allende, that had blackened America's image throughout the world.

The Church Committee warned that covert operations had developed a dangerous "bureaucratic momentum." Numbering some 900 between 1960 and 1975, such operations were becoming "increasingly costly to America's interest and reputation," the committee concluded. But instead of proposing truly meaningful reforms-other than the creation of permanent oversight committees-the panel merely implored that covert operations be reserved for "grave threats to American security" and be "consistent with publicly defined U.S. foreign policy goals." New York Times columnist Anthony Lewis called its recommendations "a gamble that the American system of checks and balances can work even in the powerful secret world of intelligence."

America is losing that gamble. It is losing because the public's sense of concern did not survive the immediate scandals uncovered by the investigations. Covert operations only dimly affect the average citizen- until they trigger a foreign or domestic crisis. General indifference finally greeted Church's report on intelligence abuses. "It all lasted too long and the media, the Congress and the people lost interest," observed Rep. Otis Pike (D-NY), who headed the House investigation. His committee's report was never officially published and its conclusions were ignored.

The ascendancy of a Democratic administration changed little. President Carter still withheld from Congress advance notice of covert operations, despite the promise of his 1978 Executive Order 12036 Attorney General Griffin Bell held that guarantees of "prior" notice really meant "timely" notice. Carter sought further reductions in congressional reporting requirements and a "revitalization" of the CIA in the wake of the Soviet invasion of Afghanistan and political turmoil in Iran. And he asked for sweeping exemptions from the Freedom of Information Act for the CIA, FBI, National Security Agency "and other intelligence agency components."

And when legislators tried to write a new CIA charter to limit presidential powers and check abuses, Carter's people fought every inch of the way. Exhausted liberals caved in. To complaints from the American Civil Liberties Union that the proposed charter was too permissive Senator Joseph Biden (D-Del) said, "Let me tell you something, fellas. The folks don't care. The average American could care less right now about any of this...You keep talking about public concern. There ain't none.'

In the end, in any event, the 1980 Intelligence Oversight Act required advance reporting of covert operations except under unusual circumstances (the loophole that permitted President Reagan to conduct the Iran arms deal without notifying Congress), but cut the number of oversight committees from eight to two to satisfy complaints from the intelligence community that leaks from Capitol Hill undercut the CIA's effectiveness and access to foreign intelligence sources. That year, Congress made it illegal to reveal the names of agents.

Yet the "reforms" accomplished little because they did not touch the underlying incentives for political abuses inherent in covert operations. "When Congress collapsed from eight to two committees, many of us believed there would be a new day of openness and trust," complained Rep. Charlie Rose (D-NC), former head of House intelligence committee. "That day never came. It was foot-dragging and obfuscation as usual.''

The Reagan administration took such foot-dragging to new extremes. It understood "oversight" to mean Congress should overlook rather than review CIA practices. Its spirit was summed up in the declaration of the 1980 transition team report on intelligence: "Decisive action at the CIA is the keystone in achieving a reversal of the unwise policies of the past decade.'' Congressional meddling could not be permitted to stand in the way of that reversal.

Perhaps the most blatant example of this contempt of Congress was the CIA's failure to notify the proper committees of the mining of harbors in Nicaragua, a violation of international law protested not only by the Managua regime, but by most of its Western European trading partners. (Such violations of the rights of foreigners figure nowhere in any official investigation to date of the Iran-contra connection.) The Nicaraguan government itself announced the mining on January 3,1984, but the CIA first mentioned it in passing to the House intelligence committee on January 31. The Senate committee first heard of it in March. The CIA released major details only on March 27, to the House committee. CIA Director William Casey made it clear that what Congress didn't ask for explicitly, he would not tell them. The Republican Senator David Durenberger admitted, "We have to share, as a committee, some responsibility for the situation.''

Only two months later, the CIA reportedly failed to inform the House committee of its covert intervention in El Salvador's election on behalf of Jose Napoleon Duarte, the Christian Democratic candidate for president. New York Times reporter Martin Tolchin noted at the time that "members of Congress rotate on and off the intelligence committees, so that the intelligence community knows that it can out-wait its severest critic."

Surely the most significant breakdown of oversight, however, came in the fall of 1985. Reporters from Associated Press and major newspapers had broken the story that an obscure NSC official, Oliver North, was advising and raising funds for the contras in apparent violation of the Boland amendment. Rep. Lee Hamilton (D-IN), chairman of the House Intelligence Committee, vowed to hold hearings to get to the bottom of the matter. Rep. Michael Barnes (D-MD) demanded that the White House produce records of North's activities for his Western Hemisphere subcommittee. Barnes came away empty handed. Hamilton was unable even to convene a hearing; all he could get was an informal briefing by Robert McFarlane and the national security adviser's "assurance" that North and others in the NSC were respecting the law. Ultimately, Hamilton and Barnes were stymied because Congress was politically divided; those members favoring aid to the contras didn't want to know the truth. The impasse led a despondent Rep. George Brown Jr. (D-CA) to declare that the oversight law "is not working."

What little information the committees did pry out of the CIA convinced some members that covert action was out of control. "The planning is being handled sloppily," Vermont Sen. Patrick Leahy said with uncanny prescience. "Sooner or later they're going to get caught with their pants down and we'll all read about it in the newspapers."

As serious as the inadequacy of oversight has been the legitimacy lent to covert operations by the appearance of oversight. Congress appears to grant its stamp of approval to operations it does not halt. Knowledgeable critics on the oversight committees suffer a special handicap: they cannot speak freely about what they know. "We become the buffer for the CIA to do whatever they want," observed Rep. Norman Mineta (D-CA). "They tell us, but we can't tell anybody, and they hide behind our skirts."

Even when it has the facts, Congress rarely blocks covert projects. Most members are content to let the president take the heat if something goes wrong and unwilling to face responsibility for making foreign policy.

A Blank Check for "Counterterrorism"

But that predisposition has been heavily conditioned by historical circumstances. In particular, successive presidents have manipulated popular fears to argue convincingly for centralizing power and excluding

Congress from the making of national security policy. Over time the specific "threats" have changed, but the reliance of presidents on the public's unquestioning reaction to them has not.

Since World War II, the most important ideological prop to presidential power has been anticommunism. More often than not, the charge was false and the intervention counter-productive, not to mention an exercise in imperial power. Having defined the Soviet Union as the preeminent threat to American security, Washington argued by extension that Soviet manipulation lay behind everything from turmoil in the developing world to political challenges from the left in Western Europe. Thus nearly any form of foreign intervention could be justified in the name of anticommunism. The CIA's overthrow of Iranian Prime Minister Mossadegh in 1953 installed the Shah on the throne and sowed the seeds of the radical Khomeini revolution. Its 1954 coup against the Arbenz regime in Guatemala spawned an ongoing guerrilla war there and hardened the Marxist, revolutionary left elsewhere in Central America with results that haunt the Reagan administration today. Although Washington claimed otherwise, those CIA targets-and many others-were nationalists, not Soviet surrogates.

With the advent of "detente" and the visit of arch-anticommunist Richard Nixon to the People's Republic of China, anticommunism lost much of its emotive appeal and thus its effectiveness in mobilizing Congress behind unquestioned acceptance of covert operations. The Nixon administration discovered a new and seemingly uglier menace to take its place: drugs. Nixon's "war on drugs" opened loopholes in congressional restrictions on foreign police training, provided cover for counterinsurgency campaigns from Burma to Mexico and even justified plots to assassinate foreign political leaders. All were programs picked up from the CIA in the guise of narcotics enforcement.

Ronald Reagan's contribution was to fully develop the potential of the ultimate bogeyman: terrorism. His predecessors, Presidents Ford and Carter, had identified drugs and terrorism as two foreign intelligence targets of such unquestioned importance and sensitivity as to justify barring congressional supervision. But the Reagan White House mastered the exploitation of public fears aroused by highly publicized terrorist acts as

means of restoring covert operations to their central role in presidential foreign policy. (The seizure of the American embassy in Tehran had dramatized the issue like no other event.) By defining terrorism sweepingly to include even guerrilla wars and insurgencies against uniformed armies- but never anything the U.S. or its allies do-the administration expanded the rationale for anti-terrorist interventions. By inventing a new category of "narco-terrorism" with which to brand certain rebel groups, the administration conjured up even more nightmarish images. And by defining diverse terrorist outrages as "Soviet sponsored," the administration dealt the final blow to detente.

The terrorist threat provides the perfect rationale for secrecy and covert operations. Responding to terrorist attacks requires speedy intervention and absolute secrecy, not lengthy debate with Congress. And if anyone doubts the means, the end of stamping out terrorism justifies them as well as anything could.

Paradigm Shift

The intellectual genesis of Reagan's anti-terror revolution goes back to 1970s, when cold-war conservatives were looking for new mobilizing issues to replace detente and human rights. The concept of Soviet-sponsored international terrorism as new mode of warfare against the West was kicked off at the Jerusalem Conference on International Terrorism in July 1979. Led by a group of top Israeli intelligence officers and political leaders, the conference was also studded with those Americans most actively seeking a renewal of the clandestine approach to American foreign policy. The participants included former CIA director George Bush and former CIA deputy director Ray Cline; the hawkish former Air Force intelligence chief Major General George Keegan, who resigned from the Air Force in 1977 to protest the Carter administration's estimate of the Soviet threat; Harvard's Soviet scholar Richard Pipes, whom Bush had recruited to bring the CIA's strategic estimates of Soviet power more in line with worst-case military thinking; some prominent neoconservatives including Commentary magazine editor Norman Podhoretz; the newspaper columnist and Reagan's 1980 debating coach George Will; and reporter Claire Sterling, who two years later would publish this faction's bible, The Terror Network.

At the conference, Ray Cline developed the theme that terror was not a random response of frustrated minorities, but rather "a preferred instrument" of East bloc policy adopted after 1969 "when the KGB persuaded the Politburo of the Communist Party of the Soviet Union to accept the PLO as a major political instrument in the Mideast and to subsidize its terrorist policies by freely giving money, training, arms and co-ordinated communications." Terrorism, he maintained, had "hardened into a system-an international trouble-making system." The British propagandist Robert Moss extended the theory to Iran, where he charged that a Soviet-controlled PLO unit was functioning "as the nucleus of a secret police, a revolutionary SAVAK." And conference participants singled out the Sandinistas for their alleged international terrorist connections.

This formulation was as significant for what it ignored as for what it put in. Left out of the equation was any mention of terrorist acts by CIA-trained Cuban exiles, Israeli ties to Red Brigades or the function of death squads from Argentina to Guatemala. Soviet sponsorship, real or imagined, had become the defining characteristic of terrorism, not simply an explanation for its prevalence. Moreover, there was no inclination whatsoever to include under the rubric of terror bombings of civilians, for example, or any other acts carried out by government forces rather than small individual units.

The Heritage Foundation, a conservative, Washington-based think tank that rode Ronald Reagan's coat-tails to influence, saw these themes as a potent vehicle for reversing political reforms of the Watergate/Church committee era. Its master political blueprint, prepared before Reagan's inauguration to guide his transition team, urged "presidential emphasis on the nature of the threat, repeated speeches on the escalation of Soviet bloc intelligence activities, the nature of the terrorist threat and its international dimensions and the reality of subversion." Such tactics, the report hoped, would allow the CIA to regain authority to conduct "surreptitious entries," mail opening and other powers lost in the 1970s.

The Reagan team took the report to heart. The lead item on the agenda of the its first NSC meeting on January 26,1981 was terrorism. The next day, President Reagan declared, "Let terrorists be aware that when the rules of international behavior are violated, our policy will be one of swift and effective retribution."

At his first news conference as secretary of state, on January 28, Alexander Haig gave terrorism an address. He charged that the Kremlin was seeking to "foster, support and expand" terror around world and was "training, funding and equipping" terrorist armies. And he vowed that "international terrorism will take the place of human rights" as the new administration's top priority.

Jerusalem Conference alumna Claire Sterling was on hand to supply "massive proof that the Soviet Union and its surrogates, over the last decade, have provided the weapons, training and sanctuary for a worldwide terror network aimed at the destabilization of Western democratic society." Her book The Terror Network, excerpted that March in the New York Times Magazine and New Republic, branded the 1970s "Fright Decade I" and warned that Fright Decade II was at hand.

Sterling's book, with all its evidentiary and methodological weaknesses, was all that administration polemicists could cite to justify their claims. A CIA report drafted after Haig's outburst directly rebutted his claim that most terrorism found sponsorship from the Soviet Union. CIA Director William Casey sent the report back for further review. Casey also asked the more conservative Defense Intelligence Agency for a report, but found it inadequate as well. So a third report was prepared-but it, too, concluded that Soviets were not directly equipping or training terrorists, nor did they have a master plan for terrorism. What little evidence there was against the Soviets came from unverifiable claims of a Czech defector, Gen. Jan Sejna, whose credibility the CIA came to doubt.

"There's just no real evidence for it," one administration official said of the Haig thesis. Another high administration source lamented that such charges put "the American intelligence community in a terrible political bind. The CIA has been requested to look harder. When they come back and say it isn't true, that they don't see the hand of Russia everywhere, they're told, 'Goddamn it, you are either stupid or you aren't trying."'

FBI chief William Webster threw a little cold water of his own on official claims pointing out that the number of bombings had declined steadily in the United States, from 100 in 1977 to 20 in 1980. He added, "l can say that there is no real evidence of Soviet-sponsored terrorism within the United States."

The administration was on the defensive. Since the evidence wasn't good enough, officials fell back on altering the data. Statistics on terrorist incidents were changed to include not only acts but also "threats," thus at one swoop doubling the apparent numbers.

A more effective and subtle counter came from the private sector. Claire Sterling impugned the CIA as "the least informed and most timid of any intelligence service on this issue." Michael Ledeen, Sterling's longtime journalistic collaborator, who would later become the key emissary in the Iran arms plot, also accused the agency of incompetence. "They are scared in the [State Department and CIA] bureaucracy," Ledeen maintained, "because if Haig is right about the Russians, then they have failed in their jobs." In terms almost identical to Haig's, Ledeen called the Soviet Union "the fomenter, supporter and creator of terrorism" worldwide. In the late spring of 1981, Haig appointed him an adviser on international terrorism.

The Wall Street Journal editorial writers weighed in as well. They claimed-without having seen the analysis-that the CIA document's "underlying reasoning would not survive the light of public day." The editorial dismissed appeals to the evidence: "no one should be allowed to argue successfully that because there's evidence of the Soviet influence in some places but not in others, the whole Soviet-connection theory must be thrown out." And most important, the editorial insisted on the broadest possible definition of terrorism to justify a counter-revolutionary policy abroad: "no one should be allowed to say without challenge that Soviet support for national liberation movements is by definition different from Soviet support for terrorism."

The themes formulated by Sterling, Ledeen and the ]Journal served conservatives as a hammer with which to hit not only detente, but also the Carter-era CIA. Cold-war interventionists portrayed the CIA as crippled by excessive oversight, misplaced human rights concerns, a deplorable timidity toward covert action and the purge of experts in paramilitary war. The terrorism issue thus ignited demands for a sweeping bureaucratic upheaval in the intelligence community.

That February, for example, Senator Sam Nunn (D-GA) applauded Haig's speech and called for "a permanent, highly professional organization to plan and train on a continual basis" against terrorism. He stressed:

One of the most important ingredients must be a strong, revitalized intelligence community...No antiterrorist capability can be adequate without excellent intelligence, including covert capabilities which have largely been demolished...We must... repeal some laws and executive orders which go far beyond constitutional requirements or court decisions and which have resulted from a massive overreaction to the Watergate/Vietnam era.

Neo-conservative and intelligence-connected circles quickly mobilized public support for giving the administration and CIA a freer hand abroad. Writer Midge Dector (the wife of Norman Podhoretz) founded the Committee for the Free World in February 1981 to call attention to the terrorist threat and revive America's interventionist impulse. According to the New York Times, Dector
said the idea for the committee emerged almost two years ago after she and others attended a meeting in Jerusalem on international terrorism. She said she came away convinced of the need for action against those who kidnap and throw bombs, many of whom are trained in the Soviet Union and Cuba, but also concerned about a spreading practice of indulging in self-criticism to the point of condoning terrorism as being justified.

The members included Michael Ledeen; former CIA deputy director of plans Ray Cline; Leo Cherne, chairman of the President's Foreign Intelligence Advisory Board; and Paul Henze, former CIA station chief in Turkey, who would take the lead with Sterling in publicizing alleged Soviet-bloc complicity in the attempted assassination of Pope John Paul II.

Lest domestic dissent at home hamstring administration plans for a tougher foreign policy, the terrorism issue served to break down barriers to surveillance and intimidation of domestic critics. The new Republican Senate formed a special subcommittee on security and terrorism in February. Senator Strom Thurmond (R-SC), chairman of the parent Judiciary Committee, predicted it would be "one of the most important subcommittees of the entire Congress." The subcommittee's chief counsel, Joel Lisker, pledged that "we will do everything we can to modify and eliminate" restrictions on infiltration and surveillance of domestic groups. Members said they would strongly urge the administration to remove other restraints on the intelligence agencies. Witnesses at their first hearing included Claire Sterling and Michael Ledeen, who reiterated their warnings of the Soviet threat.

In March, the Reagan administration moved on the same front. It came up with a draft executive order that would allow sweeping additions to the CIA's authority, particularly in area of domestic operations previously ruled off-limits. Several months later, the administration also proposed amending the Freedom of Information Act to exempt files relating to organized crime, foreign counterintelligence and terrorism. "It isn't an accident that they picked terrorism and foreign counterintelligence," observed Jack Landau, director of Reporters Committee for Freedom of the Press. "That's the mandate that the FBI used to violate peoples' civil liberties."

The proposals naturally met opposition from civil libertarians and some members of Congress. Liberals who had not abandoned the Carterera commitment to human rights deplored Reagan's apparent double standard on terrorism. In March, for example, the administration announced its intention to lift the ban on arms sales to Argentina, imposed three years earlier by Carter because of the mass killing of civilians committed by the military. And the CIA was reported to be "considering the renewal of cooperation with anti-Castro Cuban exiles as part of a general expansion of its covert operations."

But Congress as a whole was in no mood to quibble over such inconsistencies. After the humiliation of the Tehran embassy crisis and the Reagan election sweep, it granted Reagan almost everything he wanted in the way of intelligence resources. The first three years of the Reagan presidency saw a 50 percent increase in CIA appropriations and a five-fold increase in the number of authorized covert operations. And after all the layoffs of the Nixon-through-Carter years, the CIA workforce grew by over a third. The White House now had the tools and the incentive to go undercover with the implementation of its foreign policy agenda.

Libya Bashing

This initial vote of confidence in the CIA was not enough. The administration redoubled its domestic propaganda campaign to persuade the nation of the virulent menace of foreign terrorism. If no one could find convincing evidence of Soviet-sponsored terror, they could of Libyan support for violent European and Middle Eastern groups. And the administration could magnify the evidence until Americans felt positively threatened by what was in fact a weak and ineffectual power-and one that, far from being a surrogate of the USSR, did not even let the Soviets base ships at its ports.

The campaign against Libya started at the New Republic, whose line on terrorism and foreign policy in general was shaped increasingly by editor Martin Peretz's strong political commitment to Israel. The once-liberal magazine had begun publishing regular articles by Michael Ledeen and former Newsweek correspondent Arnaud de Borchgrave, a Jerusalem conference participant and a vociferous exponent of the theory that Soviet disinformation had duped the American media. (De Borchgrave would later become editor of the Washington Times, owned by the Rev. Sun Myung Moon.) Now, in March, the New Republic excerpted a chapter from Claire Sterling's new book on terrorism. Entitled "Qaddafi Spells Chaos," the kicker read "A murder, a maniac-and Moscow's man."

On July 26, 1981 Newsweek reported that the administration was gearing up a major effort to topple Gadhafi, involving a "disinformation" campaign to erode the colonel's domestic support, formation of a "counter government" of Libyan exiles and a program of paramilitary and sabotage operations inside Libya to stir up discontent and expose Gadhafi's vulnerability.

The next month, provocative U.S. naval exercises off Libya's coast provoked a rash-and desired-response from Gadhafi. U.S. jets downed two Libyan fighters in a dogfight over Gulf of Sidra.

In September, columnist Jack Anderson confirmed that CIA director Casey had concocted a disinformation campaign to mislead the American press about Libya by planting false stories abroad. The stories accused Gadhafi of supporting the slave trade in Mauritania, mismanaging his country's petrodollar accounts and stirring up terrorism.

On October 19, Newsweek passed along a provocative leak that the administration was talking with Egypt about a possible invasion of Libya. After the August confrontation over the Gulf of Sidra, according to this account, Gadhafi hatched a scheme to kill the American ambassador in Rome, Maxwell Rabb. The plot "was aborted when Italian police deported ten suspected Libyan hit men," Newsweek reported. "Washington officials now believe Gadhafi has called off the assassination attempt, but they are not entirely certain." It also mentioned in passing that U.S. intelligence had "picked up evidence that Ghadafi had hatched yet another assassination plot-this time against President Reagan."

The plot continued to thicken-with numerous ominous leaks but no evidence. On October 2 5 the New York Times revived the Libyan plot to murder Rabb, reporting that he had been rushed out of the country "without even a change of clothes." (Other sources insisted he had simply left for Washington to lobby for the sale of AWACS to Saudi Arabia.) Gadhafi hotly denied the charge and noted correctly that to carry out such a plot would be suicidal.

November saw a positive flurry of reports linking Gadhafi to terrorist plots. Newsweek cited reports of Libyan plans to attack four U.S. embassies in Western Europe. Secretary of State Haig blamed Gadhafi for hiring a killer to target Christian Chapman, the U.S. charge d'affaires in Paris. Time magazine joined in with a report that National Security Advisor Richard Allen had discussed with French officials plans to assassinate Gadhafi. And in late November claims surfaced that Gadhafi planned to kill the president of Niger.

But the most significant theme in this strategy of tension surfaced with Newsweek. Its voluble U.S. intelligence sources tipped the magazine that "Gadhafi is plotting to assassinate the president and other top American officials," including Vice President Bush and Secretaries Haig and Weinberger. The average reader could sympathize with administration officials who were said to "openly admit that they would be delighted if someone else killed Gadhafi."

The notorious Reagan assassination plot story hit the front pages of the New York Times on December 4. "The government has received detailed reports that five terrorists trained in Libya entered the United States last weekend with plans to assassinate President Reagan or other senior officials," the paper revealed. A "huge nationwide search for the potential assassins" was underway. Later reports added lurid flourishes:
no less than Carlos "the Jackal," the infamous Venezuelan terrorist, was on his way to kill the president.

Fed a steady diet of Gadhafi rumors, the American public could be excused for believing President Reagan's dismissal of the Libyan's denials: "We have the evidence, and he knows it....l wouldn't believe a word he says if I were you."

A few skeptics raised questions. It seemed doubtful that any one informant (as reported) could supply so much detail on each member of the hit team, that Libya would send so large a squad and that the East bloc would have risked training the assassins. Government sources told the Washington Post that reports of the plot included "lots of speculation" based on "a plausible scenario" resting on "a limited amount of knowledge."

Haynes Johnson, a veteran Post correspondent, noted "lt's almost as if public opinion were being prepared for dramatic action-say a strike against Libya or Ghadhafi himself...lt is reminiscent of the talk about Castro in the days when the United States was planning the Bay of Pigs invasion, and in fact, commissioning assassination schemes against Castro."

Then, as mysteriously as they had appeared, the hit teams vanished. By late December, officials decided "the hit squads have become inactive." Indeed, "the information about the hit squads has been and still is mushy," sources told the Washington Post. "The United States still does not know for sure whether any members of the two hit squads ever left Libya."

Only in the context of the latest Iran arms scandal has the public finally learned that the source of the fanciful "hit squad" story was Manucher Ghorbanifar, a former Iranian SAVAK agent with close ties to Israeli intelligence. According to the Washington Post, the CIA believed he was a Iying schemer who "had made up the hit-squad story in order to cause problems for one of Israel's enemies."

These details confirm what the Los Angeles Times had learned in 1981: "Israeli intelligence, not the Reagan administration, was a major source of some of the most dramatic published reports about a Libyan assassination team allegedly sent to kill President Reagan and other top U.S. officials... Israel, which informed sources said has 'wanted an excuse to go in and bash Libya for a long time,' may be trying to build American public support for a strike against Libyan strongman Moammar Ghadhafi, these sources said."

In short, the whole story was an intelligence provocation from start to finish. So, it would now appear, was Israel's promotion of Ghorbanifar as a reliable go-between for Washington with Iran in 1985.

But if it served Israeli interests to discredit Gadhafi, it also served the Reagan administration. The deadly threat from Libya swept aside public objections to a sweeping expansion of CIA powers. Never mind that the reality, as evidenced by the 1986 bombing attack on Tripoli, that in fact it was Reagan who planned and attempted to assassinate Gadhafi, not the reverse.

Unleashing the CIA

On the very day the New York Times reported the existence of the Libyan hit squad, President Reagan announced his signing of Executive Order 12333, a controversial and long-awaited blueprint for the intelligence community's resurgence.

When first drafted in March 1981 under the supervision of an interagency task force led by CIA officials, the order provoked instant controversy. "The proposed order would recast Mr. Carter's [1978] decree in terms that authorize, rather than restrict, the collection of intelligence information and the use of such techniques as searches, surveillance and infiltration," the New York Times had noted that spring. "The existing order says that intelligence agencies may collect, store and disseminate information about a person who is 'reasonably believed' to be acting on behalf of a foreign power or engaging in international terrorist or narcotics activities. The draft order drops the requirement for a 'reasonable' belief." Significantly, the Times added that the revised order had grown out of a meeting held at the outset of the administration "in which intelligence officials discussed terrorism with President Reagan. The White House asked various agencies to suggest changes in intelligence regulations to improve antiterrorism capabilities and approved a suggestion by the CIA for a study group to make specific recommendations."

As Congress reviewed successive drafts, Republican Sen. David Durenberger warned the order would "give credence to many of the public's fears and worst-case scenarios of government misuse of power."

But the timing of Reagan's announcement of the final order ensured a minimum of protest. Coming on the heels of so much talk of Libyan plots, his stress on the dangers of terrorism sold the plan. "The American people are well aware that the security of their country-and in an age of terrorism, their personal safety as well-is tied to the strength and efficiency of our intelligence gathering organization," Reagan maintained. "An approach that emphasizes suspicion and mistrust of our own intelligence efforts can undermine this nation's ability to confront the increasing challenge of espionage and terrorism...We need to free ourselves from the negative attitudes of the past and look to meeting the needs of the country."

Aside from opening the door to a renewal of domestic espionage-a policy shift that may explain the rash of burglaries suffered by organizations critical of administration policy on Central America-the order also contained an obscure loophole through which the NSC's covert operators would later slip. The order directed that "No agency except the ClA...may conduct any special activity unless the President determines that another agency is more likely to achieve a particular objective."

Washington Becomes Militant

Ongoing political turmoil in the Middle East ensured that terrorism would continue to occupy center stage in the administration's foreign policy agenda.

The antiterrorist fervor reached a new plateau after the April 1983 bombing of the U.S. embassy in Beirut-wiping out the entire CIA station-and the devastating bombing of the Beirut Marine barracks in October 1983. Although the latter suicide attack targeted uniformed military personnel and not civilians, administration spokesmen and the media denounced it as the most brutal act of terrorism to date. In response, the Joint Chiefs that January formed the Joint Special Operations Agency to coordinate special operations against terrorists. And Congress would enthusiastically cooperate in promoting the buildup of SOF counterinsurgency forces in the name of fighting terrorism.

On April 3, 1984, President Reagan signed National Security Decision Directive 138, which guided 26 government agencies in drafting counter-terrorist measures. Deputy Assistant Secretary of Defense Noel Koch said it "represents a quantum leap in countering terrorism, from the reactive mode to recognition that pro-active steps are needed." Although it did not authorize U.S. "hit squads," as reportedly recommended by senior Pentagon officials and the NSC's Oliver North, the directive was said to permit "the use of force in other forms, such as by FBI and CIA paramilitary teams and Pentagon military squads." Administration sources called the aggressive plan an "effort to give the cloak and dagger back to the Central Intelligence Agency. The campaign will include pre-emptive strikes and direct reprisals" based on Israeli models. Officials admitted that the distinction between retaliation and assassination was mainly rhetorical.

Jeff McConnell observed:

This new policy on counterterrorism could not have come at a better time for the Reagan administration. Its effort to end the so-called 'Vietnam Syndrome' had blown up in Lebanon. Support in congress for war in Nicaragua was at an all-time Iow...Though the 1984 directive had been drafted with more limited purposes in mind, administration planners now saw in it a way to resuscitate its foreign adventures. Yet the policy lacked a rationale large enough to sustain so much. It was one thing to make a case for commando assaults against hijacked airliners, quite another to sell military action all over the world as counterterrorism. What was needed was an ideological framework for the new policy that would spell out terrorism's threat in a way clear enough to enlist popular sympathy and, at the same time, comprehensive enough to justify action against all the Third World nations that Washington opposed."

That framework was found in the concept of "state-sponsored terrorism," and more particularly, the presumption of Soviet sponsorship of terrorist cadre that Haig and other administration officials had pushed from the opening days of the administration. Secretary of State George Shultz recalled those old themes along with the new counter-terrorism stance in late June at a Washington conference sponsored by the Jonathan Institute. He blamed the Soviets for providing "financial, logistic and training support for terrorists worldwide." They "use terrorist groups for their own purposes, and their goal is always the same: to weaken liberal democracy and undermine world stability," he charged. The threat called for tougher countermeasures. "It is time to think long, hard and seriously about more active means of defense-about defense through appropriate preventive or pre-emptive actions against terrorist groups before they strike." Shultz added, "We will need to strengthen our capabilities in the area of intelligence and quick reaction." Those two areas encompassed the CIA and Pentagon special operations forces.

CIA Director Casey told an interviewer in the same month that "I think you will see more...retaliation against facilities connected with the country sponsoring the terrorists or retaliation that just hurts the interests of countries which sponsor terrorism"-an open-ended formula for aggression against any country that the administration labeled a sponsor of terrorism, with or without evidence.

Looking to the Future

The continued use of terrorism as an ideological rationale for expanded covert operations, foreign intervention and government secrecy still goes largely unchallenged in the wake of the Iran and contra scandals. Frank Carlucci, the former CIA deputy director brought to replace Admiral Poindexter as national security advisor and clean house on the NSC, has chosen to place responsibility for counterterrorism

under an expanded intelligence unit, as yet unnamed. 'Terrorism and intelligence are very closely related,' says Carlucci. 'The best way to stop a terrorist act is to know it's going to happen.' The head of the new section...will be Barry Kelly, who...had previously served in the CIA's clandestine service during Carlucci's tour as deputy director.

The new intelligence unit, according to James Bamford, will handle not only counterterrorism and all covert actions, but narcotics control as well- significantly the one other area where Congress has abdicated its oversight responsibilities. New officials have replaced old and discredited ones, but the potential for abuses may be greater than ever.

Accompanying this centralization of secret authority for covert operations is a massive expansion of the president's ability to intervene abroad. A new Special Operations command at the Pentagon will coordinate covert terrorism and insurgency, grouping together some 30,000 men from the Army Special Operations Command, the Rangers, SEALS, Delta Force and others. The command reportedly will be "very tightly controlled by the White House," so that it can carry out operations "closely tied to the national interest."

Finally, following the Tower Commission's recommendation, congressional conservatives are pushing for a merger of the House and Senate intelligence committees to further limit oversight of covert operations. Rep. Henry Hyde (R-IL) seeks a "lean, mean, small, very active committee with as few malcontents as possible " It would be ironic, but far from unprecedented, if a "reform" commission ended up grossly aggravating the problem by so fundamentally mis-identifying the cause.

Covert action embodies in its purest form the philosophy that ends (anticommunism, counterterrorism, democracy, economic gain) justify the means (political manipulation, disinformation, even support for death squads). Where such tools exist, abuses will follow whether the ends are good or not. The fact that the ends are so often verbal rationales themselves only makes the situation that much worse. Power corrupts, and secrecy is an essential element of unchecked power. Where secrecy is allowed to flourish, under the guise of protecting national security, fighting terrorism or combating narcotics traffickers, the conditions are ripe for presidential usurpation of power from the Congress and the cynical manipulation of public opinion.

Secrecy and covert policy making are not only undemocratic, they inevitably lead to bad policy. Secrecy breeds arrogance among policy makers who consider themselves uniquely "in the know" and thus less fallible in their judgments; at the same time it motivates the elite of "cleared" individuals to elevate their status by confining secrets (and thus policy advice) to an ever tighter circle. The consequences can be disastrous; the administration's failure to consult a wider group of experts or members of Congress surely contributed to its extraordinary blunders in Iran. Ignorant errors are compounded by the temptation to adopt covert means-to avoid messy public debates-where policy objectives are unclear and public support is lacking. Most damaging of all, covert operations usually become overt, discrediting not only the particular administration but the United States as a whole.

If the immorality of covert policies like the Iran and contra operations doesn't decide the case, these practical considerations should. Failure to curb the extraordinary power of presidents to wage covert foreign and military campaigns can only ensure a succession of similar policy disasters in the future.

Part 6 - Conclusion


Every crisis is also an opportunity. The Iran-Contra crisis is not one accidentally or gratuitously engaged upon, not the result of inadequate presidential attention or someone's misjudgments in the recruitment of White House personnel. It is deeply rooted in tensions which go back at least to the beginning of this century, if not earlier.

It would appear that, time after time, vanguard experiments in liberal democracy (Athens, Rome, Spain, England), have become, from the resultant liberation of expansive social energy, vanguard experiments in imperial expansion. Leaving aside the debatable example of Rome (which had no imperial competitors), one is struck by how brief has been the period of vanguard imperial hegemony (usually not more than a century), and how costly to the economic base of the mother country. Especially when set against the examples of Germany and Japan (two nations frustrated in their early drift towards empire), the depressing examples of modern England and Spain are memorials to empire's appalling erosion of both cultural dynamism and parliamentary institutions. They illustrate not only the crippling costs of maintaining a military hegemony, but also the ensuing flight of capital and entrepreneurship (and hence power) out of the home political economy. This calculus is unfavorable even before we take into account the overwhelming cost to the colonized peoples.

Crudely put, this is the background of the Iran-Contra affair: the unresolved conflict between the needs of hegemony and the needs of an open society. The strong executive essential to the pursuit of hegemony is fundamentally at odds with the constitutional system of checks and balances and the restraints afforded by public opinion. Covert operations inevitably shield activist administrations from public accountability and the law.

The striving for unilateral hegemony in a multi-polar world is, moreover, inevitably destabilizing, and dangerous to peace, world order, and international law. Indeed the sequence of illegal American covert and paramilitary interventions for at least the last three decades (by which even our closest allies have been increasingly alienated) has been a prime cause for the progressive erosion of America's professed commitment to international order. One does not have to romanticize that order to find it a more promising arena for global security, and our own, than the arena of the great-power adventurism we have long endured.

The mining of Nicaragua's harbors in 1984 by the CIA (without even involving the contras) triggered the immediate conflict between the Administration and Congress; on the international level, it also showed how the cost of hegemonic intrigue is a decline in international influence. The United States has isolated itself in world opinion to a degree unthinkable even a decade ago, to a low comparable to that of Britain, France and Israel after their futile Suez Canal attack of 1956.

Nicaragua's complaint to the World Court about the mining was sustained by that court by votes of twelve to three (On one issue the sole dissenting vote was cast by the judge from the United States.) After Washington announced that it would not consider itself bound by that court's ruling, Nicaragua appealed to the United Nations, where it won again. In the United Nations General Assembly the United States garnered a total of three votes, being supported by only its two client states, Israel and El Salvador. Even Canada, whose Conservative government had been elected on a Reaganite domestic platform, did not abstain, but voted against the United States.

The adventurism of Britain and France in the 1956 Suez fiasco was in part an effort at self-prolongation and self-justification by threatened hegemonic bureaucracies-the obsolete armies and navies of two post-imperial powers. To their credit, the Joint Chiefs of the U.S. armed forces have so far shown no appetite to risk the political future of the Pentagon on a similar venture in Central America, without Congressional or popular support. They know very well that Nicaragua, with its army of 75,000 troops, will not be another Grenada.

That the United States, in pursuit of its contra policy, should nonetheless show similar disregard for international law and global public opinion, is symptomatic of the way one small losing policy, essential to the survival of one small bureaucratic subset, can become a neurotic obsession when power is undemocratic.

In the eyes of its allies, the United States' role as a residual guarantor of world order and process has been superseded, even more than before, by its eagerness to display its capacity for unilateral intervention and violence.

Europeans, above all, find our preoccupation with violence and unilateralism especially unfortunate, at a time when a change of leadership in the Soviet Union has raised new hopes for a restoration of international understanding and possible breakthroughs in checking the arms race. As our country grows increasingly dependent on international support for its economy and currency, the mood in Washington for solipsistic defiance of global political opinion seems particularly short-sighted.

It is important however to remember that this conflict between the needs of hegemony and the needs of an open society cannot be blamed on any single U.S. administration or party. It had been building for decades before it burst open in the Watergate crisis. Unfortunately, in the ensuing debate over Nixon's impeachment, about which press, politicians, and pundits have been so self-congratulatory ("The system worked!"), the deep issues about the imperial presidency in an open society were almost entirely replaced by discussions of personal responsibilities. Questions of constitutional infractions (such as, for example, the undeclared "secret" wars in Laos and Cambodia) were replaced by questions of cover-ups.

We are not suggesting that the Watergate discussions and hearings were of no worth. Calling as they did for new levels of investigative journalism and Congressional inquiry, as well as of statesmanship and balanced citizen concern, the Watergate debate did perhaps as much as could be done at that time to rectify executive excess by democratic process as traditionally practiced in the United States.

But when Congress failed to resolve the deeper questions, especially those relating to the desirability or undesirability of the so-called "Vietnam syndrome," the re-emergence of a new crisis like the present one was virtually guaranteed. The present crisis is not only deeper than Watergate, it is more directly related to the on-going debate over a hegemony for which no one ever voted. At the center is not a break-in, a "third-rate burglary" (with its consequent flurry of shredded memos), but a well-elaborated scheme to deceive Congress and responsible parts of the national security bureaucracy, as well as the public, by using a secret network of parallel institutions to circumvent the law.

To understand the inevitability of this confrontation, we have to put ourselves in the position of those responsible for forcing it to happen. CIA Director Casey had a point: it is just not possible to run a lot of covert operations abroad, and also report on them (as the law now requires) to a gallery of Congressional critics and their staffs. In his own way Casey was verbalizing the dilemma of the need to choose between hegemony and democracy.

So, in a more theoretical way, was Michael Ledeen, one of the first architects of the Irangate arms deals, when he argued that we must learn to understand the need for occasional law-breaking and assassination. We should be grateful for his candor. Failure this time to respond to such arguments, with equal energy and conviction, would be tacitly to concede by default that the time for an open society has passed.

Thus the Iran-contra affair is an urgent challenge for all those who see hegemony, and not our open society, as the curse to be mitigated. A simple re-run of Watergate, in which the public are essentially spectators to a succession of sensationalist headlines and televised hearings, would almost surely degenerate, as the Watergate hearings did, into an elaborate public relations exercise in damage control: one in which the focus is transferred from systemic irregularities and basic policy questions to personal shortcomings.

There is no doubt that Nixon, as a person, was responsible for Watergate, in a way that Reagan with his Teflon, or remoteness from decision-making, could never be. Many commentators have turned this, remarkably, into an argument that Iran-Contragate is less important than its predecessor-as if we should think of Ollie North or of Albert Hakim as the problems, rather than the system of illegal covert intervention which needed them, and the hegemonic system which in turn depended on covert intervention.

Such punditry is not encouraging. It should remind us that the media and Congress, necessarily, are part of and beholden to the systemic process which they must now criticize. The press, for example, is not likely to expose the elaborate disinformation programs, such as Ghorbanifar's fictitious "Libyan hit-squads" in 1981, which played such an important role in re-mounting domestic CIA covert operations. Some of the media, to put it bluntly, were themselves too willing and active partners in such disinformation scenarios. Nor will Congress raise the even more sensitive and complex issues of pro-lsraeli lobbying and the incorporation of Israel as an adjunct to unauthorized foreign operations- even though Israel is now clearly and unambiguously defined as a prominent player at both the Iran and the Contra end of the current

Iran-contra controversy

The power of the intelligence apparatus and its corporate allies seems to have virtually silenced genuine Congressional opposition on the deep issues of covert operations. The Democrats in particular have flocked to show their support of the CIA and Pentagon, and for the most part have confined their criticisms to the behavior of members of the Reagan White House staff. As the New Yorker has observed,

The buzzwords the Democrats have put forth-"competitiveness," "excellence,"-are of singularly low voltage. They hardly buzz at all. Even in decline, Reagan seems more commanding than these opponents. His absence from the scene is larger than their presence on it. Reagan rose. Reagan fell. The Democrats seem to have had little to do with it.

In the last few years, unfortunately, members of Congress, much like Weinberger and Shultz, merely "distanced themselves" (to use the tactful rebuke of the Tower Report) from what was going on. In the fall of 1985, when the New York Times reported on the support of North and the National Security Council, both the House and the Senate Intelligence Committees received assurances from McFarlane that no one on the NSC staff had broken the law; and declined to investigate further. Press stories the same year that aid was reaching the contras from third countries, including Israel, led to initial legislative efforts to close any possible loopholes. After White House lobbying, however, the final language had the opposite effect-to legitimize the administration's collection of "donations" (including kickbacks) from third countries.

It remains to be seen whether the isolated voices of Congressional opposition in both parties can now begin belatedly to articulate the mood of alienation and activism that is beginning to be heard on the nation's campuses, and enlist the corrective participation of a citizenry grown cynical.