Official Asked Kuwait to Free 17 Prisoners, Source Says : U.S. Pressure on Behalf of Iran Told

Despite the Reagan Administration’s avowed policy against yielding to terrorist demands, a U.S. official pressured Kuwait to free 17 Shia Muslim prisoners whose release was demanded by Iran as part of the effort to win the freedom of Americans held in Lebanon, a congressional source said Thursday.

Secretary of State George P. Shultz told the House Foreign Affairs Committee about the incident behind closed doors Wednesday. He was said to have learned of the apparent contradiction of the Administration’s official policy after State Department and CIA officials met with Iranian representatives in early December.

Shultz “had to go to the Kuwaitis and undo the pressure. He had to tell them we really don’t believe you should deal with terrorists,” the source said.

Poindexter Identified

The New York Times identified Vice Adm. John M. Poindexter, President Reagan’s former national security adviser, as the official who had urged the Kuwaitis to release the prisoners.

Shultz’s testimony, which disclosed several recent and startling developments in U.S. dealings with Iran, has raised new questions about Reagan’s control of Iranian policy and led to criticism of Shultz’s own vigor in attempting to take control of U.S. initiatives toward the Tehran regime.

As earlier reported, Shultz also had told the House panel that the Administration had continued to negotiate with Tehran well into December, more than a month after controversy erupted over secret sales of U.S. arms to Iran.

Disclosure of the sales in early November--followed a few weeks later by a revelation that profits from the deal may have been diverted to Nicaragua’s contras --has plunged the Reagan Administration into its worst crisis.

Iran’s List of Demands

The State Department had participated with the CIA in one discussion with Iranian representatives on Dec. 6 but insisted that the talks be cut off when Iran pressed for additional weapons, sources said. Release of the Muslim prisoners also was said to be on Iran’s list of demands.

The 17 prisoners in Kuwait were convicted of a series of terrorist attacks, including the Dec. 12, 1983, bombing of the U.S. Embassy there, which killed five people and injured 62. The Islamic Jihad terrorist group kidnaped several Americans and Europeans in Beirut after the 17 were jailed, saying that its chief demand was release of the prisoners.

Publicly, the Administration has said it did not want Kuwait to release the convicted terrorists and promised not to exert any pressure on the emirate. But Kuwaiti newspapers charged in 1985 that the Administration had attempted to persuade the Kuwait government to release the 17 prisoners.

Last Dec. 6, the same day that U.S. officials had met in Europe with the Iranians, Reagan had said in his weekly radio address that the Administration had ended its “effort to establish a relationship with responsible moderates in Iran.”

CIA Met Iranians

Despite his instructions to terminate the talks, Shultz told the committee, the CIA met at least once more with Iranian representatives. The secretary said he had been stunned to learn of the additional bargaining and complained directly to the President.

One member of the committee said that Shultz had described Reagan as “shocked and outraged” to learn of the CIA action.

Although the secretary was said to have repeatedly described his anger over the CIA’s dealings behind his back, and has publicly criticized Administration dealings with Iran, Democrats on the Foreign Affairs Committee charged that Shultz had made what appeared to be a conscious effort not to keep informed on the arms-and-hostages dealings.

“As far as the secretary of state was concerned, if they were going to go about with this hare-brained scheme, he’d just as soon not know about it. . . . He allowed them to roll over him,” Rep. Ted Weiss (D-N.Y.) said.

‘Far-Fetched Proposition’

As the investigation has proceeded, “we’re being asked to believe that all the players--the President, the vice president, the chief of staff (Donald T. Regan), the secretary of state, the secretary of defense (Caspar W. Weinberger) and the director of central intelligence (William J. Casey)--all had no idea of what was going on,” Rep. Sam Gejdenson (D-Conn.) said.

“I find that a far-fetched proposition,” he added. “If they didn’t know, they didn’t want to know.”

White House spokesman Larry Speakes said no meetings are taking place with the Iranians and that no new covert activity involving the sale of weapons has been authorized by Reagan.

“The President issued instructions that there would be no covert activities on the part of the NSC (National Security Council). There have been none,” he said.

However, he said, efforts to maintain contacts with “moderate” Iranians would be addressed “on a case-by-case basis.”

‘Goal Remains Unchanged’

“If the opportunity presented itself consistent with U.S. policy as it now exists and has been enunciated by the President, certainly the U.S. would follow any opening that appeared to be appropriate,” Speakes said. “The goal remains unchanged that we would try to open contacts with important elements in Iran because it’s a strategic country in a strategic region of the world.”

State Department spokesman Charles Redman added, however, that “we will not discuss further arms shipments to Iran, and we are exerting all our influence to discourage arms sales to Iran by other countries.”

He also reaffirmed an order by Reagan that put Shultz in sole charge of U.S. policy toward Iran. Apparently referring to the report that Shultz had reacted angrily when he learned of an additional CIA contact with the Iranians, Redman said: “We’ve taken steps to ensure that the only official contacts will be those which are authorized.”

Redman refused to comment on reports that Shultz told the committee the Administration had asked four countries to help the contras, but he also said he could not reaffirm Shultz’s earlier statements that only one country--identified by other officials as Brunei--had been approached.

Question of Conflict

Asked whether the two reports conflicted, Redman said: “As more information comes to light, as he hears other information, he will continue to develop his testimony. . . . That’s what he’s been doing.”

Reagan and White House counsel Peter J. Wallison are expected to review details of the affair before Reagan meets Monday with the special presidential commission, headed by former Sen. John G. Tower (R-Tex.), which is reviewing the workings of the National Security Council.

The meeting will take place in the Oval Office, Speakes said, and no transcript will be made.

Speakes said one of the White House aides taking part in the meeting could take notes during the approximately one-hour session. Among the most likely White House participants in the session are Wallison and David M. Abshire, the presidential assistant appointed to handle Iran arms issues.

Times staff writer Doyle McManus contributed to this story.