Arms Dealers Reportedly Suggested Hostage Swap

After months of frustrating attempts to buy U.S.-made warplanes from Chile, Iran apparently endorsed a deal this year that involved pledges to help win the release of American hostages held in Lebanon in exchange for U.S. approval of the arms purchases, State Department sources said Tuesday.

U.S. government sources said the scheme, relayed to Administration officials through third parties, apparently died before it got off the ground. And they said that this arms-for-hostages swap apparently was not initiated by Iran, but by middlemen.

“All we had were these hints from arms dealers. Obviously the attempt died and (Secretary of State George P.) Shultz was not going to have anything to do with this,” one official said.

Officials said the $170-million deal, first reported by ABC News, took shape because Iran was desperate to buy warplanes to beef up its decimated air force last year, just as Chile was putting 16 F-5s on the market.

The Chilean government of President Augusto Pinochet was unable to purchase spare parts for the aircraft from the United States because of a 1978 Senate measure that restricts the sale of American military equipment to countries accused of human rights abuses.

Thus, Chile opted to sell the planes, and Iran readily showed interest in buying them, officials said.

But resales of American-made weapons must be approved by the United States, which, under a program code-named “Operation Staunch,” has blocked delivery of such materiel to Iran.

By last spring, both Chile and Iran, as well as various arms dealers, recognized that the U.S. restrictions made any legal sale impossible, official said. U.S. sources suggested that various arms merchants, reluctant to give up the deal, began looking for ways to entice the United States to change its position.

Moreover, U.S. officials suggested, the arms dealers and middlemen initiated the idea of promising the release of hostages held by pro-Iranian groups in Lebanon if the United States would permit Tehran to purchase the Chilean planes.

The key dealers and middlemen, according to ABC, included Israelis, Argentines, Chileans, Iranians in Europe and a Cuban-American, Raymond Molina of Key Biscayne, Fla. Molina was also involved in the 1961 U.S.-supported Bay of Pigs invasion of Cuba.