Contra Arms Plan Is Laid to Israelis : Reagan Officials Say Peres Started Sales to Iran Also

Reagan Administration officials have told the Senate Intelligence Committee that former Prime Minister Shimon Peres and other Israeli officials were responsible not only for initiating the shipment of U.S. arms to Iran, but also for conceiving the plan to divert profits from the arms sale to the Nicaraguan rebels, congressional sources said Saturday.

The committee’s unpublished report, according to sources, indicates that Israeli officials acted repeatedly to prevent President Reagan from abandoning the Iranian arms sales; that the diversion of funds to the contras was an idea advanced by Peres’ counterterrorism adviser, Amiram Nir, and that the Israelis themselves shipped arms to the contras.

“I think the Israelis played us like a fine violin,” said a congressional source familiar with the report.

Story Later Confirmed

This account of Israel’s purported leadership in the Iran-contra affair first came to light in a broadcast report by Israel radio’s Washington correspondent, Shimon Shiffer, who claims to have read the complete findings of the Senate Intelligence Committee. His story was later confirmed by congressional sources who also have read the lengthy document.

The strong emphasis on the Israeli role helps to explain why some Democrats who support Israel have argued so strenuously against publication of the report, which was prepared two weeks ago in the the final days of Republican control over the Senate Intelligence Committee.

Most of the committee’s information came from closed testimony by Administration officials who have reason to shift blame for the Iranian-contra initiative away from Reagan. Israeli officials were not interviewed by the committee, and many key witnesses such as former White House aides Oliver L. North and John M. Poindexter refused to testify.

In Jerusalem, Prime Minister Yitzhak Shamir called the report “not accurate, without foundation, and a distortion of the truth.” Likewise, Sen. Dennis DiConcini (D-Ariz.), a committee member who attended the hearings, disagreed that the Israelis were responsible for compelling U.S. involvement in the Iran-contra affair.

“That is really a new twist on it,” he said. “My reaction is that Israel was a friend of the United States and willing to assist in almost any way, but not a driving force.”

Meese Testimony Cited

According to sources who refused to be identified, Atty. Gen. Edwin Meese III testified before the committee that he was told by North, the former deputy national security adviser, that the idea for diverting proceeds from the Iranian arms sales to the Nicaraguan resistance was advocated by Nir during a meeting with North and then-National Security Council chief Poindexter in early January, 1986.

Nir had been sent by Peres to Washington on Jan. 2, 1986, according to sources, to persuade Administration officials to reconsider their decision to withdraw support from earlier Israeli shipments of arms to Iran. His mission was successful, resulting in the President’s decision to allow direct U.S. arms shipments to Tehran.

According to the sources, Meese testified that North told him the Israeli emissary proposed three optional methods for helping the contras: (1) use Israel as a conduit to funnel money from other sources, (2) use Israeli money and (3) overcharge the Iranians and divert the profits to the contras.

Selected Third Option

North told Meese he selected the third option because he thought it would be the least likely to violate a law prohibiting direct or indirect U.S. military aid to the contras, sources said.

But it was not until early April, according to sources, that North wrote a memo to Poindexter that endorsed the idea of diverting the profits from the Iranian arms sales to the contras. The memo is understood to be part of the committee’s report.

Nir apparently was not the only person to suggest the diversion of funds to the contras. Sources said the committee was told that the idea also was proposed by Manucher Ghorbanifar, the Iranian arms dealer who was acting as a middleman in the weapons sale.

Although Nir could not be reached for comment, an Israeli government spokesman noted that he previously has denied having “any knowledge of the whole contras thing.”

A Balky Administration

It was not known why the Israelis might have suggested ways to help the contras, but sources said the Senate Intelligence Committee details a number of instances in which it said that Israel prodded a balky Reagan Administration into proceeding with the arms sales to Iran.

It appears that the contra connection was raised as a further inducement since the President was known to be displeased by Congress’ unwillingness to provide direct aid to the Nicaraguan rebels.

On Feb. 28, 1986, according to the report, Peres wrote a letter to Reagan to convince him not to curtail the program of arms shipments to Iran. The letter, originally contained in the report, was deleted at the request of the State Department, sources said. Also cut from the report was an account of Nir’s meeting with Vice President George Bush last July 7.

Nir returned to Washington last September, according to the Senate report, and told Poindexter and North that Peres wanted the United States to continue the shipments--even though it had not succeeded in winning release of all the U.S. hostages being held in Lebanon.

The direct U.S. arms shipments to Iran were an outgrowth of earlier Israeli shipments carried out in 1985, some with the supportof the Reagan Administration. According to the sources, a CIA intelligence report dated April 17, 1985, obtained by the Senate committee indicates that, even before the United States approved it, Israel already was shipping Iran a variety of weapons including spare parts for Phantom jets.

Renewed Political Contacts

Before the United States became involved, the sources said, Israeli government emissary David Kimche told then-White House national security chief Robert C. McFarlane in July, 1985, that Iranian officials had asked Jerusalem to check Washington’s attitude toward renewed political contacts. Among the Iranians named by Kimche were Speaker of Parliament Hashemi Rafsanjani, Prime Minister Hussein Moussavi and President Ali Khamenei.

When McFarlane reported that to Secretary of State George P. Shultz, according to the Senate report, the secretary did not flatly reject the idea. Sources said he advised McFarlane to “display a certain amount of interest, though with no commitment.”

Release of Hostages

The report quotes Shultz as saying the United States could not justify “turning our backs on the prospects of gaining the release of the other seven hostages and perhaps developing an ability to renew ties with Iran under a more sensible regime, especially when (the initiative is) presented to us through the prime minister of Israel.”

According to sources, the Senate Intelligence Committee also heard from one witness who confirmed reports that the U.S. delegation that flew to Tehran last May carried a Bible signed by President Reagan and a chocolate cake with a key baked inside that was supposed to symbolize the opening of a new relationship with Iran. McFarlane, a member of the delegation, frequently has refused to confirm that story.

Despite the close cooperation between Washington and Jerusalem reflected in the committee report, sources said the senators learned that the United States by last September had secretly developed its own Iranian contact--replacing Ghorbanifar, who was recommended by the Israelis. The new contact is never named in the committee report.

‘New Iranian Channel’

According to Shiffer, the report states that on Sept. 17, 1986, North arranged a secret visit for the “new Iranian channel” to the United States and that a meeting in Europe followed during the next month. During the European meeting, he said, the new contact provided information on the situation in Afghanistan that George Cave, a retired CIA agent and Iranian expert, described as “excellent.”

U.S. officials had long been wary of Ghorbanifar, who had previously failed three CIA lie detector tests, and were eager to make separate contacts with Iran--a step that Israeli officials felt might weaken what had been a joint effort to win freedom for Israeli soldiers held captive by pro-Iranian elements in Lebanon as well as the American hostages.

According to Shiffer, the Senate report cites a disappointing meeting between McFarlane and Ghorbanifar, in London in December, 1985, that caused McFarlane to question whether the United States should proceed with the arms deal. Kimche, who was also present and counseled McFarlane to have patience, confirmed the account in a telephone interview Saturday.

He said that McFarlane and Ghorbanifar “didn’t hit it off very well,” but he advised the President’s aide: “Look, don’t just jump to a quick conclusion. It’s the wrong way of doing this sort of thing.”

Sara Fritz reported from Washington and Dan Fisher from Jerusalem.