Scandal Did Not Stop Iran Talks : CIA, State Dept. Negotiated With Tehran in December, Shultz Says

More than a month after the Iran arms-for-hostages deal erupted in controversy in November, the CIA and the State Department continued to negotiate with the Tehran regime, congressional sources said Secretary of State George P. Shultz testified Wednesday.

Shultz appeared at a closed hearing of the House Foreign Affairs Committee. One committee member said it appeared from the secretary’s testimony that--even after President Reagan found himself embroiled in the worst crisis of his presidency--the CIA continued “pressing the same agenda” of selling weapons to Iran in hopes of obtaining freedom for U.S. hostages held by Middle Eastern factions sympathetic to Iran.

Broke Off Talks

According to congressional sources, Shultz testified that the State Department had participated in one negotiating session with Iran last month but broke off the talks when the Iranians continued to insist on receiving more arms.

Then, despite the secretary’s decision to end such contacts, and without his knowledge, CIA officials met at least once more in December with Iranian representatives in an effort to reach an agreement, the sources said Shultz told the panel.

On Nov. 19, the President had announced publicly that no more arms would be furnished to Iran.

Although Shultz had been promised in late November that henceforth the State Department would handle U.S. policy toward Iran, he “had to once again go to the President to regain control,” one member of the committee said.

Administration sources confirmed the congressional account of Shultz’s testimony.

The contacts with Iran continued while the Administration was reeling from the disclosure that proceeds from earlier arms sales to Tehran had been diverted to Nicaragua’s contras . But there was no indication that the renewed talks involved any effort to assist the rebels.

Disclosure of the CIA’s apparent effort to work without State Department knowledge--and even of the State Department’s initial participation in the revived contacts with Iran--raises questions about the President’s ultimate control over foreign policy.

Inability to Cooperate

Also, it casts doubt on the willingness of various Administration agencies to work together when their philosophies on foreign policy differ.

For example, at the Pentagon, where Defense Secretary Caspar W. Weinberger had criticized the arms sales, senior officials were said to have been made aware of the meetings but only after they took place.

“We didn’t like what was going on, but no deals were made and no arms were delivered,” one official said.

Although Shultz has argued publicly that the United States should continue to work toward a better relationship with the Tehran regime, he has strongly rejected the idea of selling arms to Iran.

“The question of further arms sales to Iran from the United States has been settled, and there won’t be any more under the present circumstances,” he said on Dec. 16. Nonetheless, a White House official said that Reagan’s Jan. 17, 1986, written authorization of arms sales to Iran is technically still in effect.

Even after the December episodes, some Administration officials wanted to reopen talks with Iran.

“The idea would be to make official inquiries to the Iranians on the possibility of a meeting--who would attend, what the agenda would be,” one said. “We have made it clear that there would be no discussion of arms. That doesn’t leave much to talk about that they’re interested in . . . . But Shultz is basically opposed.”

Meanwhile, Sen. Dave Durenberger (R-Minn.), under criticism for briefing the President secretly last month on the results of the Senate Intelligence Committee’s investigation of the Iran-contra affair, said that Reagan had asked only one question during the 45-minute session: “When are you going to get the committee report out?”

Briefing Questioned

Some senators questioned the propriety of Durenberger’s decision to secretly brief Reagan, especially because it is the President’s own aides who are under investigation. Other members of the committee, including then-Vice Chairman Patrick J. Leahy (R-Vt.), said they were unaware until Tuesday that Durenberger had briefed the President.

The briefing occurred at a time when the Senate Intelligence Committee was under heavy pressure from the White House to publish its findings.

Durenberger, former chairman of the Intelligence Committee, said that he gave the President a briefing on Dec. 19 at the request of the White House staff and that he thought it was “a very strange situation to be in” when he was asked to tell Reagan about acts of the President’s own staff.

‘20% of the Deck’

He said that he had the impression that the President was unaware of most of the facts of the case as they were developed by a three-week Intelligence Committee investigation. “The President of the United States clearly is dealing from 20% of the deck,” he said.

But Durenberger insisted that he did nothing wrong because he gave Reagan only a general summary of the findings.

A White House official, speaking on condition that he not be identified, said the meeting with Durenberger was not intended to delve into details but rather offered an opportunity for a “broad discussion” on the committee’s investigation.

White House spokesman Larry Speakes said Reagan will meet Monday with the presidential commission that is studying the work of the National Security Council staff. Officials had said earlier that the meeting would not take place until after the President delivers the State of the Union address next Tuesday.

The panel will extend its work into the middle of February, because it will not meet an earlier deadline of the end of January.

Reagan met for about 25 minutes Wednesday with David M. Abshire, his assistant who is coordinating the White House response to investigations of the Iran arms operation. A White House spokesman said that the discussion dealt with the investigatory process and Abshire’s meetings with members of the congressional committees conducting investigations.

Issue of Replacing Casey

In another development, a White House official, speaking on condition of anonymity, acknowledged that White House Chief of Staff Donald T. Regan is raising with others the question of replacing William J. Casey as director of the Central Intelligence Agency.

Casey, a central figure in the effort to determine which Administration officials were aware of the fund diversion, is hospitalized while recuperating from surgery last month for removal of a malignant brain tumor.

“Regan is talking with various people and, in the course of other conversations, the issue of what to do if Casey does not return may arise,” the source said. “That does not mean he’s contacting other candidates. There’s no search under way.”

Among those with whom the issue was raised was former Sen. Howard H. Baker (R-Tenn.), but Speakes said the job was not offered to Baker. In the meantime, officials have said, Casey retains the position of director, and his senior deputy, Robert M. Gates, is running the agency.

Staff writers Doyle McManus and Sara Fritz contributed to this story.