Israel, Iran and the United States: What the Iran-Contra Report Left Out

By Jonathan Marshall Of the many players who populate the final report of the Iran-Contra investigating committees, one of the few to emerge unscathed is the Israeli government. After nervously awaiting the results of the long congressional investigation, "government sources" in Israel "expressed satisfaction" with the committees' verdict. "Government sources said the report points to the positive elements and the high level of cooperation between Israel and the congressional committee. . . . There are those in Israel who believe that Israel's image, which was damaged during the affair, was rehabilitated by the report." Even the arms dealer and former Israeli intelligence agent Ya'acov Nimrodi, one of the prime movers in the arms deals, said he was "happy that the State of Israel came out of it favorably."1 Israeli officials were right to feel gratified. The majority report devotes only five paragraphs out of 427 pages to assessing Israel's role in the Iran affair. While acknowledging that Israeli interests did not always coincide with those of the United States, the report offers no criticism of Israel. Instead it praises that government's "strong stand against international terrorism," the quality of its intelligence services, and its commitment to keeping the U.S. Secretary of State "fully informed."2 In arriving at these conclusions, the majority accepted without question details from a secret chronology that Israel made available to the committee. Only the minority report, drafted by several conservative Republicans, admits that "we have no way of knowing whether the Israeli chronology is accurate. . . . The Government of Israel made its chronology available to the Committees fairly late in our investigations, and consistently refused to let key Israeli participants give depositions to the Committees' counsel."3 And only the minority report draws any critical inferences from the behavior of Israeli officials during the Iran negotiations. It alone quotes Secretary of State George Shultz's provocative conclusion that "Much if not all of the incentive on the Israeli side of the project may well have been an Israeli `sting' operation. The Israelis used a number of justifications to draw us into the operation--intelligence gains, release of hostages, high strategic goals, . . . Israel obviously sees it in its national interest to cultivate ties with Iran, including arms shipments. Any American identification with that effort serves Israeli ends, even if American objectives and policies are compromised."4 Neither report, however, mentions the enormous Israeli arms deals with Iran that went on without Washington's apparent authorization before the White House initiated its secret opening to Tehran in 1985, or the thousands of tons of arms shipped without obvious American approval from Israel to Iran after those official contacts began. Such facts would have forced the committee to consider whether the White House-approved sales were, as Shultz (and Vice President George Bush) suspected, the green light Israel wanted for its own massive shipments. [Bush told the Tower Commission that he worried that U.S. policy was "in the grips of the Israelis" who might be using U.S. arms deals as a "cover" for their own secret initiatives and to keep the war dragging on forever (Jack Anderson, The Tribune (Oakland), 4-30-87).] A pattern of covert sales The final report mentions only in passing the existence of "reports" (of no particular veracity or origin) that prior to its authorized arms deals in 1985, Israel "supplied the Iranian military despite U.S. efforts to stop arms sales through Operation Staunch." [ICR, 159.] Some of those "reports" are a matter of public record. In 1982, Israeli Defense Minister Ariel Sharon and Ambassador Moshe Arens admitted that Israel was selling arms to Iran--though they claimed (despite official U.S. denials) that Washington approved. (The report makes no effort to assess their claim.) Experts at the Jaffee Institute for Strategic Studies in Tel Aviv estimated (on the low end) that Israeli arms exports to Iran amounted to $500 million between 1980 and 1983. Numerous other news leaks suggest the trade continued full bore into 1985. [Jonathan Marshall, Peter Dale Scott and Jane Hunter, The Iran-Contra

Connection (South End Press, 1987), 171-174; "Israel's Iran Connection," Israel and Palestine, January 1987.] For example, a Swedish government investigation has documented Israel's shipment of millions of dollars worth of explosives, artillery shells and other munitions to Iran from 1984-85 through a Swedish middleman, Karl-Erik Schmitz. A Swedish customs official told Reuters, "One of Schmitz's biggest suppliers when he was trying to find materiel for Iran was obviously Israel." Documents describe a meeting in February 1985 between Schmitz and the export director of Israel Military Industries in Israel. Schmitz's order came to $120 million. [Jerusalem Post, 12-3-87.] Schmitz arranged for some of his arms shipments to go aboard Boeing 707s owned by St. Lucia Airways, the CIA proprietary airline that handled the November 1985 US-sanctioned Israeli shipment of HAWK missiles to Iran. [Los Angeles Times 5-8-87, San Francisco Examiner 11-12-87; Latin America Weekly Report 2-19-87; New York Times 7-27-87.] But even if the congressional investigating committees considered such history beyond their purview, Israeli arms deals with Iran during the period of White House involvement were undeniably germane. Overwhelming evidence points to Israel's use of small, sanctioned deals as a cover for pursuing much larger military transactions with the ruling circles in Tehran. These, in turn, may have undercut whatever leverage Washington hoped to achieve through its provision of a few million dollars worth of TOW and HAWK missiles. For example, Gary Sick, a former National Security Council specialist on Iran, has estimated that Israel sent some 5,000 tons of weapons, worth as much as $1 billion, to Iran by freighter between May and November 1986. In September 1986, a spokesman for the Danish sailors union identified one ship that alone had carried four 900-ton shipments of U.S. arms from Eilat to Bandar Abbas in the May-to-August period. [San Francisco Examiner, 9-13-86.] More recent reports suggest that, beginning in August 1985, Israel sent a total of 18,000 tons of arms by as many as 40 Danish cargo ships. [Anthony Cordesman, "Arms to Iran: The Impact of U.S. and Other Arms Sales on the Iran-Iraq War," American-Arab Affairs, Spring 1987, 23.] None of these transactions show up in the report. Time magazine reported that accompanying the famous November 1985 cargo of HAWK missiles to Iran were "parts for American-made F-4 jets and helicopters" shipped to Israel from northern Italy. [Time, 12-886.] The report is credible in view of Iran's documented desire for F-4 Phantom jet parts [ICR, 194], the fact that U.S. experts had "fingered Israel" in 1984 "as a major source of crucial spare parts" for Iran's F-4 fleet [Newsweek, 1-28-85], and news reports that as late as the summer of 1987 Israel continued to supply Iran's Phantoms with vital replacement parts. [San Francisco Examiner, 8-18-87.] Israeli officials have explained that although orders went out to stop arms deals after the Iran affair became public, "several deals . . . were still in the final stages of implementation at the time when the directive was issued" and presumably were not stopped. [Ha'aretz, 11-16-87.] Still other arms loads reportedly went to Iran as part of a 3-way deal with China. The Paris weekly Le Journal de Dimanche reported that Israel has acted as an agent for Chinese weapons sales to Iran on "many occasions" and that China used this route to avoid "arousing America's ire." [Yedi'ot Aharonot, 7-27-87.] Anthony Cordesman, a noted arms expert and military commentator, adds that "Iran received significantly better equipment from the PRC because of a covert trade in technology between Israel and the PRC. Israel has sold many of its modifications of captured Soviet equipment to China, and an Israeli corporation, United Development Inc., acts as a major conduit between Israel and the PRC. Some technology transfer to the PRC also seems to have occurred because of sales by Israeli Aircraft Industries." [Cordesman, op. cit., 20n. This process is reminiscent of the John Singlaub/Barbara Studley proposal to William Casey in December 1985 for 3-way trade between Israel and China, which assumed the United States would send high technology to Israel, which would sent military equipment to China, which would deliver arms to the Reagan-doctrine countries (Afghanistan, Angola, Nicaragua, Cambodia). See ICR 269-70; Hearing Exhibit JKS-6.] Significantly, the proprietor of United Development Inc., Shaul Eisenberg, is reported to have engaged in arms business with the two private Israeli dealers who initiated the arms-for-hostage transactions in 1985,

Ya'acov Nimrodi and Al Schwimmer, the founder of Israel Aircraft Industries. [Davar, 11-29-85.] Eisenberg is also the current employer of David Kimche, the former Foreign Ministry official who persuaded White House officials to cultivate Iran's "moderates" with arms sales. [New York Times, 5-23-87.] The most controversial arms deals concerns a plot, broken up by Customs agents in April 1986, to ship $2.6 billion in U.S. weapons to Iran. The key participants included the Iranian Cyrus Hashemi, who had met Israel's Prime Minister Shimon Peres to discuss selling arms to Iran in June 1985; a lawyer to the Saudi arms dealer, Adnan Khashoggi, who brokered several Israeli arms sales to Iran in late 1985; Manucher Ghorbanifar, the Iranian middleman who worked closely with Israeli officials on the arms-for-hostage deal; and retired Israeli Gen. Abraham Bar-Am. [Ghorbanifar was arrested briefly by Swiss police for his role in April 86 (ICR 226).] Israel's government denied any part in this monumental arms conspiracy, which dwarfed the sales approved by the White House in 1985-86. But Khashoggi's lawyer told Hashemi that "I am told that this (deal) is right through to Peres and Rabin, and they are all watching this deal very, very, very closely." [Newsday, 8-20-86.] Bar-Am himself has said, "The defense establishment knows about this group of which I was an adviser." [Newsday, 8-21-86.] And Bar-Am placed his first post-arrest telephone call to Maj. Gen. Uri Simhoni, the Israeli defense attache in Washington who apparently met with Oliver North in December 1985 on arms-for-hostage business. [Chicago Tribune, 4-23-86; Tower Report, 206. On Simhoni's ties to North and Contra leader Adolfo Calero, see IFA, January 1987.] Although the Tower Commission did no better than the congressional committees in exploring these deals, its report at least supplied a framework for understanding their motivation: "Israel had longstanding interests in a relationship with Iran and in promoting its arms export industry. Arms sales to Iran could further both objectives. It also offered a means of strengthening Iran against Israel's old adversary, Iraq. Much of Israel's military equipment came originally from the United States, however. For both legal and political reasons, Israel felt a need for U.S. approval of, or at least acquiescence in, any arms sales to Iran. In addition, elements in Israel undoubtedly wanted the United States involved for its own sake so as to distance the United States from the Arab world and ultimately to establish Israel as the only real stategic partner of the United States in the region." [Tower, 23.] Genesis of the arms-for-hostage deals Rejecting Shultz's view that Israel suckered the United States into dealing with Iran, the committees conclude that the chain of events began when an expatriate Iranian arms dealer, Manucher Ghorbanifar, contacted first the Americans (through retired CIA official Theodore Shackley in November 1984) and later the Israelis with boasts of high-level political contacts in Tehran. The final report's chronology first notes Ghorbanifar making contact with the Israelis, and other private brokers who joined in the arms-for-hostage deals, in the spring of 1985, just as the White House was beginning to debate the merits of attempting a new approach to Iran. [ICR, 164-5.] The report misleads by ommission. For example, the Tower report has Ghorbanifar meeting Schwimmer, Nimrodi, Khashoggi and Amiram Nir, counterterrorism adviser to Prime Minister Peres, by January 1985. "They concluded that a plan to gain the release of the hostages and `open up a dialogue with Iran' was realistic if they could obtain American support." [Tower, 122.] And that was almost certainly not their first meeting. The Senate Intelligence Committee reported that Khashoggi, Ghorbanifar and other arms dealers had begun plotting as early as the summer of 1984 to win U.S. approval for arms sales to Iran. [Report of 1/29/87, p. 3.] Several reliable witness told the New York Times that these dealers actually met first in London in the spring of 1984 to plan "to sell United States arms to Iran. . . . These early 1984 discussions included three Iranian exiles involved in the arms trade, Mr. Ghorbanifar, Albert Hakim and Cyrus Hashemi." (Hakim does not enter the final report in connection with Iran until February 1986.) Hashemi told one participant in April 1984 that he and Ghorbanifar planned to "go and buy weapons through Albert Hakim in the U.S. and sell them to Iran." Hakim--later a partner in North's "Enterprise"-- explained that the Americans "are ready to sell arms to Iran, they're thinking of trying

to win some friends in Iran." The same account places Ghorbanifar, Nimrodi, Schwimmer and Kimche together in late 1984. [New York Times, 1-16-87.] The final report's suppression of these vital details seriously distorts the story. For one thing, the facts refute the widespread assumption that the Israeli team came together only after National Security Council emissary Michael Ledeen asked Peres for help with Iran in May 1985; [Ledeen himself has done much to foster this false impression. See Wall Street Journal, 8-10-87.] They had in fact been plotting by January 1985 at the latest to bring the United States in on arms deals. Thus when Ledeen asked Peres for help assembling intelligence on and political contacts in Iran, the Israeli prime minister turned not to his high-level intelligence officials, but to a former intelligence man (Shlomo Gazit), a political fixer (Kimche) and a prearranged team of trusted, private arms dealers (Schwimmer, Nimrodi, Khashoggi and Ghorbanifar). [According to Ledeen, Mossad officials actually opposed selling arms to Iran (New York Times, 9-29-87).] Second, all the Iranian plotters and Khashoggi, the Saudi, had distinct connections to Israeli intelligence, according to published accounts. [Hashemi: Davar, 11-24-86. Hakim: Wall Street Journal, 12-5-86. Khashoggi: Marshall, et. al., 178; cf. Tower Report, p. 23, which notes his "special relationship with key Israeli officials."] These connections suggest the arms plot may have been manipulated by Israeli officials through these foreign "cut-outs." [The strong possibility that Hakim, Ghorbanifar, Khashoggi, and Nir met secretly in Geneva in March 1987 heightens the likelihood of such a conspiracy (US News and World Report, 4-13-87).] The majority report admits only to unconfirmed "rumors" that Ghorbanifar, the key to the whole deal, "had a relationship with Israeli intelligence . . ." [ICR 163.] The minority report is less circumspect. "There is a dispute over Ghorbanifar's exact relationship with Israel," it notes, "but no one seems to think the relationship was new. North, Poindexter, (the CIA's Clair) George and Hakim have said they thought Ghorbanifar was an Israeli agent or asset. Hakim specifically said he thought someone working for Nimrodi had recruited Ghorbanifar years before in Tehran (under the shah) . . . Ghorbanifar and Nimrodi knew each other during Nimrodi's quarter century of service in Tehran. Schwimmer's alleged representation to Ledeen that he (Ghorbanifar) was a new source therefore seems disingenuous to say the least. So, Israel was more than a passive message bearer at the outset of the initiative." [ICR 527; cf Marshall et. al., 176.] In much the same vein, the Tower Report concluded there was "no doubt" that "it was Israel that pressed Mr. Ghorbanifar on the United States. U.S. officials accepted Israeli assurances that they had had for some time an extensive dialogue that involved high-level Iranians, as well as their assurances of Mr. Ghorbanifar's bona fides. Thereafter, at critical points in the initiative, when doubts were expressed by critical U.S. participants, an Israeli emissary would arrive with encouragement, often a specific proposal, and pressure to stay with the Ghorbanifar channel." [Tower, 83; for details, see ICR 527.] The CIA's Iran expert George Cave testified to the Iran-Contra committees: "The Israelis, particularly Nir, insisted on Ghorbanifar." [ICR 223.] The TWA hijack Also missing from the final report is any mention of the significance of the June 14, 1985 hijacking to Beirut of a TWA jet out of Athens, which created a window of opportunity for Ghorbanifar, Hashemi and other Israeli-connected arms dealers. In the words of the Tower report, this traumatic act of terrorism, in which one U.S. passenger was murdered, "formed part of the circumstances that seemed to have given life" to the policy one NSC staffer called "the Israel option." [Tower, 122, 116.] In particular, the hijacking prompted National Security Adviser Robert McFarlane to disregard Shultz's pointed warning against pursuing Israel's proposals for arms deals with Iran. [Marshall, et. al., p. 179.] Taking advantage of the administration's desperate search for leverage with the Shiite hijackers, McFarlane on June 17 began circulating a draft National Security Strategy Directive that would "encourage Western allies and friends" to provide Iran with "selected military equipment as determined on a case-by-case basis." [Tower, 117.]

In this context, certain events cited by the final report (and the Tower report) finally begin to make sense--in particular the flurry of activity by arms middlemen close to Israel in mid-June. On June 16 or 17, for example, New York oilman John Shaheen told his lawyer and former OSS buddy, CIA director Casey, that Shaheen's former business partner Cyrus Hashemi had discussed a deal with Iran's Foreign Ministry to free certain U.S. hostages (possibly those aboard the TWA jet) in exchange for arms, the release of Shiite prisoners in Kuwait and the dropping of charges against Hashemi for gunrunning. [ICR 171 (June 16); Tower, 126 (June 17).] Casey bit, ordering his Chief of Near East Division (Thomas Twetten) and Chief of Operations (Clair George) to pursue meet Iranian representatives in Europe and discuss Hashemi's arms-for hostage deal. [ICR 171. Casey also had an official of a third country--Israel?--meet with Hashemi. Two weeks later Hashemi and Khashoggi met with Peres himself (Los Angeles Times, 6-13-87).] One of Hashemi's Iranian contacts, the CIA would soon learn, was none other than Ghorbanifar. [ICR 171.] From the Tower report we learn that Ghorbanifar was working directly with the Israelis on the TWA matter through his contacts in Iran. On June 19, Iran sent a message to Washington saying it wanted to help resolve that crisis. [Tower, 126. Michael Ledeen writes, "The hijacking of the TWA plane in June 1985 could not have been resolved happily without Mr. Ghorbanifar" (Wall Street Journal, 8-10-87).] The very same day, Ghorbanifar and Roy Furmark, one of Shaheen's employees, a former law client of Casey and former business partner of both Hashemi and Khashoggi, met in Israel with the quasi-official team put together by Peres. Ghorbanifar "proposed that the Israelis sell 100 TOWs to Iran through him." [ICR, 166.] By August, at Israel's urging and with President Reagan's approval, Israel would begin doing just that. The diversion On the single most sensitive issue before them, the congressional investigating committees chose to disregard Oliver North's sworn testimony in favor of the Israeli government's unverifiable "chronology." According to that chronology, the initiator of the "diversion" of profits from the Iran arms deal was neither Ghorbanifar (as North testified) [ICR 271] nor Amiram Nir (as North told Attorney General Meese) [Tower 53] but North himself at a meeting with Israeli Defense Ministry officials on December 6, 1985. [ICR 270.] Yet if the "diversion" is defined broadly to include support for covert operations including but not limited to the war in Nicaragua, Israel's role reemerges as central. The diversion monies came out of profits representing the difference between the cost of arms to the various selling agents and the price paid by Iran. In the case of the 504 TOW missiles shipped in August and September 1985, Iran paid $12,000 per missile; Ghorbanifar paid $10,000; and the Israeli intermediaries (Schwimmer and Nimrodi) paid only $6,000 to Israel's Ministry of Defense. The intermediaries justified their huge profit as needed to cover "heavy shipping costs and other substantial expenses." [ICR 168.] The November HAWK shipment promised even greater profits. Until the deal fell apart and some of the funds had to be returned, Ghorbanifar stood to net at least $6 million. The Israeli intermediaries were to pick up a nearly equal sum "to cover shipping and other expenses for the rest of the operation," a euphemism for their profit and reserves. Once the dust settled, in fact, those intermediaries came away with about $5 million. [ICR 187.] By November at least, these participants were "diverting" the profits for covert operations. Ghorbanifar, for example, entrusted his $6 million profit from the HAWK deal to the Israelis. $5 million of that total was earmarked for political payoffs to leading political figures in Iran. And $1 million was transferred to Richard Secord's Lake Resources account to cover "transporation" expenses; Secord testified that he actually spent $800,000 of that sum on the Contras. [ICR 187, 550. North seems to have been aware that Israel was banking money for purposes other than arms replenishment, which was handled out of Foreign Military Sales accounts. In a memo of December 5 he noted, "The Israelis have identified a means of transferring the Iranian-provided funds to an Israeli Defense Force (IDF) account, which will be used for purchasing items not necessarily covered by FMS" (Tower, 181).]

Money for the contras may have been an ancillary and unexpected benefit, but the political bribes had been carefully planned by Israeli and U.S. officials. The genesis of that planning may have been in midNovember, when North and Nir met in Washington, D.C. to discuss joint covert operations. These would require a million dollars a month, the two agreed. North's notes raised such questions as "How to pay for," "How to raise $," and "Use Israelis as conduit?" North testified that he and Nir eventually decided the money would come from Iran arms profits. [ICR 176.] Support for the hypothesis that one of these joint operations involved political payoffs comes from a memo by North on December 9. It noted that "The Israelis have willingly consented to `kick-back' arrangement which allows Israeli control over Ghorbanifar and Ayatollah Karami. Israel believes strongly in using any means to bridge into Iran." [Tower, 194.] According to published accounts, $750,000 in arms profits were kicked back to Hojatolislam Mahdi Karrubi, head of the Martyrs Foundation that supports Lebanese terror groups. [New York Times, 3-18-87.] And another $600,000 went to Hassan Karoubi who had discussed with NSC representative Michael Ledeen and the Israelis the need for "small arms and training" to assassinate his rivals as part of what McFarlane called "the Israeli plan to move arms to certain elements of the Iranian military who are prepared to overthrow the government." [US News and World Report, 6-29-87; ICR 170, 176.] These diversions began at least two months before the first diversion of profits to the "Enterprise" on behalf of the Contras (and other special administration projects). In other words, they were not merely a favor to the White House by Israel but an integral part of North's planning with Nir for joint US-Israeli covert operations. Cooked intelligence Why did top administration officials go along with proposals by Israelis and their foreign cut-outs for the disastrous arms-for-hostage initiative? The lure of diversion profits may explain North's enthusiasm. But other officials may have been swayed by the lack of any independent American intelligence channel in Iran--owing to the bombing of the CIA station in Beirut and the kidnapping of station chief William Buckley--coupled with the Americans' strong faith in Israel's intelligence capabilities. [Marshall et. al., 186. Ledeen notes, "By the winter of 1984-85, we lacked even the basic elements of political intelligence . . . Since many of the best informed of our friends believed that Israel had good intelligence in the field, it seemed a reasonable idea to ask the Israelis to share their knowledge" (Wall Street Journal, 8-10-87).] The same faith is reflected in the majority report's assertion that "Israeli intelligence services are among the most respected in the world." [ICR 279. CIA professionals, on the other hand, have long viewed Israeli intelligence "as little more than a Mossad press release, designed to serve Israel's political goals," according to Bob Woodward (Veil, 161).] Intelligence--and faulty intelligence--played a pivotal role in President Reagan's decision in January, 1986 to approve a secret "finding" authorizing continued arms shipments to Iran. National Security Adviser John Poindexter informed the president on January 17, the day Reagan approved the finding, that Iran needed help to offset Iraq's advantage on the battlefield. As late as November 10, 1986, President Reagan repeated this assertion at a White House staff meeting to justify the covert arms sales program. [ICR 526.] Yet Poindexter's assessment ran totally contrary to the conclusions of the CIA and DIA. Shultz, Weinberger, and CIA operations chief Clair George rejected it. So did CIA deputy director John McMahon, who testified, "I don't have the vaguest idea where Poindexter got the idea that the Iraqis were about to take over Tehran. It just wasn't in the cards." [ICR 209.] The origin of Poindexter's claim is on record. As Oliver North noted in his original January 6 draft of the National Security Action Memorandum, "The Israelis are very concerned that Iran's deteriorating position in the war against Iraq" would require action "to at least preserve the balance of power in the region." The action recommended: selling arms to Iran. [Tower, 215.]

Back in the summer of 1985, Shultz had cautioned then-National Security Advisor McFarlane that depending on Israel for intelligence on the region "could seriously skew our own perception and analysis of the Iranian scene" since Israel's agenda was "not the same as ours." [Marshall et al, 179.] By early 1986, however, Shultz's found no audience in the White House for his warnings. The final report criticizes the quality of intelligence reaching the president without noting its source. The Tower Commission observed with greater insight that although the success of the Iran initiative depended almost entirely on Israel's claimed contacts in Iran, U.S. intelligence authorities made "no systematic assessment" of the reliability, motivation or objectives of those contacts. "Neither was any systematic assessment made of the motivation of the Israelis." [Tower, 68.] To that point must be added the fact that the administration made no assessment of Israel's intelligence offerings, either. What was Casey's role? In his testimony to Congress, Shultz blamed the "faulty" intelligence reaching Reagan on the difficulty of keeping "intelligence separated from policy and control over policy." In particular, he noted, "the Director of Central Intelligence wanted to keep himself very heavily involved in this policy which he had been involved in apparently all along." [ICR 383.] Director Casey must be distinguished from the CIA as an institution when it comes to assessing the source of pressures to pursue the Israeli option on Iran. Individual CIA officers put up resistance all along the way. Deputy Director McMahon insisted that the White House produce a finding to justify the November HAWK shipment to Iran. George Cave, one of the agency's top Iran experts, and Clair George, the director of operations, both put up a fuss at the use of Ghorbanifar, whom they considered an unreliable intermediary answerable to the Israelis. Other officials disputed the Israeli view that Iraq had the upper hand in the fighting. No wonder, then, that the Israelis (and especially Amiram Nir) sought whenever possible to keep the CIA in the dark as to progress on the Iran initiative. [Tower, 135, 150, 286.] But William Casey was a different story: He did not let the bureaucracy govern his policy. Thus Casey supported Poindexter's bogus claim of Iraqi military superiority against the overwhelming weight of expert opinion in the U.S. intelligence community. [ICR 383.] He was the only high official outside the NSC to endorse the draft National Security Decision Directive of June 1985, calling for arms sales to Iran. (Weinberger called the idea "too absurd to comment.") [ICR 165.] He supported the January 1986 finding against Shultz and Weinberger. [ICR 209.] And it was Casey, according to North, who came up with the idea of creating an "off-the-shelf, self-sustaining, stand-alone entity that could perform certain activities on behalf of the United States" in cooperation with "other friendly intelligence services" (read Israel). [North testimony, July 10, 1987.] Casey, again according to North, supported the diversion of Iran arms profits to this "Enterprise." In fact, Casey's fingerprints are all over the Iran affair. As we shall see, any of the key participants in the deal could have been one of his informants. If, as seems plausible, Casey opened secret intelligence channels to Iran as far back as 1980, in his role as head of Reagan's presidential campaign, he may have kept these sources in his hip pocket during the events of 1985-86. Albert Hakim, for instance, is said to have had a "sensitive intelligence" role in the 1980 hostage rescue mission. [New York Times, 1-16-87.] He reportedly approached the CIA in July 1983 with a plan to sell arms to Iran in exchange for political concessions. [Los Angeles Times 2-12-87; Washington Post 1-18-87.] At about the same time he used his influence with Casey to get U.S. citizenship. [Communication with Pete Carey.] His discussion of arms deals with Hashemi and Ghorbanifar in early 1984 may explain why Ghorbanifar chose to make his first approach to the Americans that November through retired CIA officer Theodore Shackley, a former consultant to Hakim. Shackley passed a report of his conversation on to former CIA deputy director Vernon Walters, then a roving ambassador for the State Department. Cyrus Hashemi also had CIA connections--going back as far as 1975, according to one account. [San Francisco Examiner 4-25-87.] He was in contact with both the CIA and White House (not to mention

Ghorbanifar) in 1980 in order to open communications with political figures in Tehran who could get the U.S. hostages released. [Chicago Tribune, 11-23-86; Boston Globe 12-14-86] In December 1984, Ghorbanifar introduced him to William Herrmann, an alleged CIA agent, to discuss an arms-for-hostage swap. [San Francisco Chronicle, 12-29-86.] Hashemi became deeply embroiled in discussions with Israeli representatives toward the same end in June and July of 1985, and contacted Casey in that period through his business associate John Shaheen. The likelihood is that Hashemi was in touch with the CIA while preparing the Bar-Am sting operation. At a White House meeting on November 10, 1986, White House Chief of Staff Don Regan noted the following exchange: Vice President George Bush: "Is NY case a private or public endeavor to sell arms to Iran? Ans: Probably private with gov't knowledge." [Los Angeles Times, 7-31-87. Did Bush know more than he let on? The mysterious John Delaroque told Hashemi on February 7, 1986, "My feeling is good right now. Now it's as far up as it (the proposal) can go, and the (unnamed U.S. official in West Germany) says it's good. He used to be the head of the CIA so he knows what he's doing. So I imagine that he feels that if it's good for him politically, he'll do it." (San Antonio Light, 11-13-86). Delaroque was almost certainly the source for Evans' assertion to Hashemi on the same day that "The green light has been given--that Bush is in favor, Shultz against--but nevertheless, they will proceed" (William Sherman, "The $2.6 Billion Question," Penthouse, March 1987). And the same Delaroque informed Evans on January 16, one day before President Reagan signed the finding in Bush's presence, that the United States was about to resume arms exports to Iran (St. Louis Post-Dispatch, 12-14-86; Washington Post, 1-6-87).] Casey's most reliable informant must have been his former law client Roy Furmark, a New York oil consultant whom the final report credits (almost certainly incorrectly) with introducing Ghorbanifar to Hashemi and Khashoggi in early 1985. [ICR 164.] Furmark had joined Shaheen in the oil business back in 1966; Shaheen then introduced Furmark to his attorney, William Casey. [Los Angeles Times, 12-17-86.] Furmark worked with Hashemi and the Shaheen family in the late 1970s on a scheme to import Iranian oil to the refinery in Come By Chance, Newfoundland. In April 1985 he formed the World Trade Group with Hashemi and Khashoggi to trade arms for Iranian oil. [New York Times, 12-13-86; Los Angeles Times, 1217-86, 12-18-86.] (Its attorney, Samuel Evans, became a prime mover in the Bar-Am arms conspiracy, according to the federal indictment.) [William Sherman, "The $2.6 Billion Question," Penthouse, March 1987.] And it was Furmark who warned Casey in October 1986 that disgruntled investors threatened to expose the sale of arms to Iran unless Khashoggi paid off his debts. [ICR 288-289.] Significantly, top Israeli officials apparently believed Furmark was a CIA agent. [Tower, 135.] As for Ghorbanifar himself, the evidence is much murkier. But readers of the final report cannot help suspecting that Casey and Ghorbanifar had a personal understanding, either as a result of a secret deal with Nir or perhaps going back to 1980 when the Iranian, like so many of his counterparts, played a shadowy role in US-Iran political contacts. [The final report notes that "Nir was promoting Ghorbanifar to the CIA" (ICR 224).] Despite the fact that every CIA expert on Iran viewed Ghorbanifar as a dangerously self-seeking liar and Israeli agent, Casey inexplicably insisted on using him. Even after Ghorbanifar failed a polygraph exam and the CIA Operations Directorate "disseminated a notice saying the CIA would do no more business with Ghorbanifar," Casey "found a way to deal with Ghorbanifar outside the normal Operations Directorate headed by (Clair) George," according to the final report. "Casey ordered Charles Allen, who was the CIA's senior antiterrorism analyst to meet with Ghorbanifar . . . In George's view, Allen virtually became the case officer for Ghorbanifar. To George, there could not have been a `better mismatch' between Allen--who had no experience managing an agent--and Ghorbanifar--who was especially `complex' and difficult to control." [ICR 205.] Casey may have picked Allen because he was particularly friendly toward Israel. [ICR 227.] The final report supplies no answer, however, merely calling Casey's "continued reliance" on Ghorbanifar "remarkable." [ICR 201.] The hypothesis that Casey had a strong affinity for Israel that swayed his judgment on the Iran affair is bolstered by the fact that he had approved an unprecedented sharing of nearly all U.S. satellite photography with Israel. [Woodward, Veil, 160. It may also be significant, as evidence of Casey's political sympathies, that he attended the Jabotinsky Centennial Dinner in honor of the Zionist Revisionist (Middle East Report,

January 1981).] In exchange for such handsome gifts of timely, tactical intelligence, Israel cooperated in aiding the Contras and other joint covert operations. [Ibid., 355-356.] According to Jack Anderson, "Casey went along with the secret diversion" of Iran arms profits for Israeli intelligence operations in Europe and the Middle East "because in the past Mossad has undertaken delicate intelligence jobs for the CIA on request." [Quoted in Marshall, et. al., 185.] From North's testimony to Congress, as noted above, it would appear that Casey's conception of the "Enterprise" involved just such cooperation with the Israelis. On one matter at least, one can agree with the conclusion of the majority report: "No foreign state can dictate the conduct of U.S. foreign policy. Superpowers make their own decisions. And the United States did so in this instance." [ICR 279.] But as for Israel's policy of secret arms sales to Iran, its manipulation of U.S. policy through cut-outs and its orchestration of the administration's debate through friends on the inside and through cooked intelligence, the report provides valuable clues but no analysis or answers.

Hadashot, 11-19-87 FBIS. ICR, 279. 3 ICR, 440. 4 ICR 527-528. Cf. Tower Report, 214 for a similar expression of Shultz's fears and Tower Report, 83 for the commission's own conclusion.
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