The Iran Deception : REAGAN’S GREATEST CRISIS : CHAPTER 4 : Threat of a Communist Iran Was the Stick

After six years of magic, President Reagan broke the spell. By deceiving the nation, he and those around him badly damaged his presidency. This traumatic tale is still unfolding, with no end in sight. This is how it developed.

Behind his back, some of his Israeli friends called him “The Wig.” As he sat in the office of President Reagan’s national security adviser early in July of 1985--at about the time arms merchants Khashoggi, Hashemi and Ghorbanifar were meeting in Hamburg--his old friend Bud McFarlane could see why. David Kimche’s copper-colored toupee was perched a few inches above his glasses.

Kimche, a career government official who was serving the government of Shimon Peres as director general of the Foreign Ministry, had just flown from Jerusalem to Washington. A former Mossad agent who made no secret of his ambition to become director of that intelligence agency, he had come to see McFarlane on orders of the Israeli prime minister.

In a proper British accent, Israeli sources said, Kimche spelled out Peres’ concern: Israel wanted to know whether American consultant Michael Ledeen had borne the weight of the White House behind him when he had come to Jerusalem earlier in the spring to broach the idea of renewing ties with Iran. If so, Kimche had been told to deliver to McFarlane a document and a message--both, he thought, of great importance to Israel and to its ally.

The message was the one that Israeli arms merchant Nimrodi had gotten a few weeks before from a leader in the Iranian government, who would go unnamed: Unless the United States could reach some sort of rapprochement with Tehran before the death of Ayatollah Khomeini, Iran was doomed. And the Ayatollah was becoming frail.

“It (Iran) will become a second Lebanon, in larger and more dangerous dimensions” once Khomeini is gone, Nimrodi later wrote that the Iranian had told him. “Or in a few months--two years at most--Iran will become part of communist Russia.”

That was the stick.

Having waved it, Israeli sources said, Kimche offered McFarlane a carrot--a list supplied by another arms merchant, Ghorbanifar, of moderate-minded Iranian leaders. These “moderates,” Kimche said, longed for closer ties to the United States--and could move the Iranian government toward their view.

Moreover, McFarlane later testified, there was the prospect of another prize: To earn America’s trust, the moderates “would use their influence with radical elements within Lebanon” to free the American hostages who weighed so heavily on the President’s mind.

Ghorbanifar, Kimche said, was the key: He knew the “moderate” mullahs on this list; he could speak for them. He had Israel’s trust, too.

McFarlane shipped the list to Casey at the CIA for checking. Ghorbanifar, however, merited some additional steps.

The CIA knew Ghorbanifar by reputation--and perhaps by personal dealings, as well. And what dispassionate analysts saw was an Iranian Barnum who hardly fit the call for an honest middleman in a sensitive arrangement. CIA agents tracked Ghorbanifar down and asked him to submit to a lie-detector test.

Certainly, he replied.

The CIA wired Ghorbanifar to a polygraph--not once, but several times. The results were astonishing. On one of these tests, investigators later were told, Ghorbanifar was asked 15 questions--and was rated truthful on just one: his name.

“He broke the box,” one official said later. Added another, “The agency considered him a chronic liar.”

This news left Casey undeterred. The Israelis, after all, said Ghorbanifar was a miracle man. Moreover, Casey’s analysts tore apart and reassembled the rest of Kimche’s arguments, ran down the names on the list of moderates, and apparently found them solid.

The CIA chief, according to his subsequent testimony to congressional committees, ordered Ghorbanifar placed under surveillance and told the National Security Agency to send to his desk any intercepts involving Ghorbanifar and Iranian leaders. And Casey directed that the State Department, which usually received all National Security Agency intercepts, be cut out.

In late July, McFarlane took the matter of renewing ties with Iran to the President. The Israelis, he said, were ready to move ahead, if the President agreed.

There was more work to be done. Kimche met with the Iranians and returned to Washington in early August.

The “moderates,” Kimche told McFarlane at that meeting, now needed a beachhead with their radical brethren. Supplying “modest quantities of military hardware,” McFarlane later said he was told, might bolster the moderates’ case. How, Kimche asked, would the White House feel about that?

Diplomatic romancing was one matter; this suggestion was altogether different. Iran was a terrorist nation--legally, morally, and most of all, politically. The President’s signature was on a White House order barring the shipment of any U.S.-made arms to Iran. Congress had outlawed most military sales to the Ayatollah. To most Americans, Iran was the incarnation of ruthless evil.

McFarlane told Kimche that he would ask the President.

It was a signal moment in Ronald Reagan’s first five years in the presidency. And 16 months later, it would be in describing this moment that the explanations of his advisers and global thinkers--explanations usually seamless in their unanimity and self-assurance--would start to unravel and rip asunder.

By McFarlane’s account:

“The President decided that if these persons or factions in Iran were truly opposed to terrorism and committed to seeking change in Iranian policies . . . to help them would not represent a violation of U.S. policy.” So let the Israelis ship some American arms from Israeli stockpiles--”nothing that would alter the military balance with Iraq or that could be used for terrorist purposes,” McFarlane says the President commanded--and the Pentagon could secretly resupply Jerusalem later.

By the account of Donald T. Regan, the President’s chief of staff:

“To the best of my recollection, the President was against the shipment at that time. . . . To the best of my knowledge, we did not approve of it.” And when the President learned of Israel’s arms shipments to Iran months later, Regan says, the White House kept quiet for fear of endangering U.S. hostages. “It happened,” he says. “It was water over the dam. We didn’t want to reopen it” and expose the Iran courtship, even if Israel had carried the wooing beyond U.S. orders.

Officially, the White House states that the President explicitly rejected the proposal to ship arms to Iran.

Israeli officials disagree. According to high-level Israeli sources, Kimche, on instructions from Jerusalem, pressed McFarlane repeatedly to be sure the plan had the President’s backing, and McFarlane assured him that everything was being done with Reagan’s knowledge.

Kimche also sought and received assurance that Secretary of State Shultz was informed, the Israeli sources added. According to one authoritative account, McFarlane first said the President preferred that Shultz not know but, after Israel pressed the point, finally reported that Reagan had instructed that Shultz be involved.

McFarlane had another, sobering message for Jerusalem, according to Israeli officials. If the arms shipments were ever discovered, he reportedly said, the United States would deny any involvement. Kimche, when asked about this report in an Israeli television interview on Dec. 12, his only public statement to date on the affair, replied: “I prefer not to answer.”

There is one other possibility. By one account of Atty. Gen. Edwin Meese III’s testimony behind closed doors to the House Intelligence Committee, the President--who had recently undergone major abdominal surgery for colon cancer--might have approved the shipment of arms when he was groggy from medication and then forgotten the action.

Whatever the circumstances, the Israeli press reported later that Ghorbanifar had struck a deal on the behalf of “moderate” Iranians to release hostage William Buckley as a good-faith gesture in return for the right to purchase a shipment of Israeli-made weapons. The arms merchant was reported to have visited a warehouse to pick out the materiel: “It was as if he was shopping in a supermarket--’Give me 50 of this, 25 of that,’ ” one observer said.

But according to that account, said to be Nimrodi’s version, Ghorbanifar stunned the Israelis and Americans shortly before the scheduled swap. The Iranians had changed their mind: Now, he said, they wanted 500 U.S. anti-tank missiles.

Nimrodi suggested first a “trial” shipment of 100 missiles. Israeli Defense Minister Yitzhak Rabin assented, and financing was arranged. In mid-August, an unmarked Boeing 707 lumbered down an unidentified Israeli airstrip, struggled aloft and began a deceptively aimless round of puddle-jumping flights.

On Aug. 20, according to Israeli press accounts, the last of the short hops ended at Mehrabad Airport, about four miles west of haze-shrouded downtown Tehran. Iranians opened up the 707’s belly and found dozens of wooden crates. Inside the crates, in clusters of six, were tube-launched, optically tracked, wire-guided missiles--TOWS, made by Hughes Missile Systems in Canoga Park, sold to Israel and now shipped to Iran.

In all, the Iranians would receive 84 crates, or 504 missiles, by the end of September, 1985. By arms merchant Nimrodi’s account in the Israeli press--and since repeated in the United States--these were stormy transactions.

At one point, after the first shipment of 102 American-made TOW missiles, an outraged Ghorbanifar is said to have shouted at the Israelis: “What do you want? We agreed on 500 and you sent 100! Do you want the Iranians to send an arm and a leg of Buckley’s as an advance?”

So another shipment of roughly 400 TOWs was dispatched, arriving Sept. 14. On that very day, a hostage was freed. But it was not Buckley.

It was the Rev. Benjamin F. Weir, gaunt and broken after 16 long months in the hands of the Islamic Jihad.

The White House kept Weir’s release secret for half a week before announcing it Sept. 18. The reason, a Reagan spokesman said that day, was that “we hoped (for) the release of the remaining six hostages.” The Jihad, a bitter White House would shortly learn, likely could not have freed Buckley had they so desired, for Buckley probably was dead.

The Americans apparently had been duped. It would not be the last time.

The 504 TOWs cost the Iranians $5 million. The financing, aimed at preserving secrecy while maintaining everyone’s trust, was a lesson in obfuscation.

It began when Khashoggi posted $5 million in a Swiss bank account as a kind of escrow for the deal, guaranteeing that the sellers of the arms would be paid. The Israelis shipped the weapons. The Iranians then paid Ghorbanifar $5 million in two installments. Ghorbanifar says he shipped the money to Khashoggi.

In the end, the Israeli Defense Ministry received $3 million to $4 million. Nimrodi, who arranged the delicate secret transfer, took slightly more than $1 million to cover costs and incidentals. Khashoggi is reported to have kept $250,000 for his troubles.

To considerable skepticism, Ghorbanifar has said he took no slice of the money for himself.