Copyright The Los Angeles Times

November 6, 1986

HEADLINE: U.S. SENT IRAN ARMS FOR HOSTAGE RELEASES; WEAPONS WERE SUPPLIED FOR AID IN FREEING 3 IN LEBANON, GOVERNMENT SOURCES SAY

BYLINE: By MICHAEL WINES and DOYLE McMANUS, Times Staff Writers

DATELINE: WASHINGTON

BODY:

The Reagan Administration, using an Israeli-operated supply line set up through highly secret negotiations with the regime of the Ayatollah Ruhollah Khomeini, last year began supplying U.S.-made missiles and weapons parts to Iran in exchange for Iran's aid in freeing Americans held hostage in Lebanon, government sources said Wednesday.

The arrangement, in which the Tehran government received planeloads of military equipment critical to Iran in its lengthy war against Iraq, led to freedom for three hostages held by pro-Iranian extremists and, until this week, appeared to promise further releases, sources said.

The arms shipments, begun last year with the personal approval of President Reagan after secret meetings between two top-level White House officials and Iranian representatives, led to the release last Sunday in Beirut of American University Hospital director David P. Jacobsen, who had been held by Islamic Jihad (Islamic Holy War), a group of Shia Muslim fundamentalists allied with Iran.

At least one earlier weapons shipment spurred the terrorists to release the Rev. Benjamin Weir, a Presbyterian minister, in September, 1985, and Father Lawrence M. Jenco, Beirut chief of Catholic Relief Services, last July.

Brainchild of McFarlane

One source who refused to be named said that the operation was the brainchild of former national security adviser Robert C. McFarlane -- who traveled secretly to Iran several times in the process of negotiating the arrangement -- and a top aide, Lt. Col. Oliver L. North, the National Security Council's deputy director of political and military affairs.

The operation was supervised by North and Reagan's current national security adviser, John M. Poindexter, after McFarlane left the government in December, 1985.

Since early 1985, one source said, McFarlane and North reportedly have undertaken a string of secret missions to London, Geneva and other foreign capitals, as well as to Iran, to work out the shipments and exchanges, one source said.

The operation, handled almost entirely from within the White House, had been kept secret from virtually all of the highest officials in the U.S. government -- including top congressional, Pentagon and State Department officials -- at least until recent months, when some officials apparently began to pick up hints of what was going on.

Regan Concerned Over Leaks

News leaks about the operation surfaced last weekend in the Middle East and mushroomed in Britain and the United States this week. On Wednesday, White House Chief of Staff Donald T. Regan expressed public concern that the reports were endangering American hostages, warning in a broadcast interview that "there are lives at stake here" and that "opportunities can be lost by premature disclosure."

U.S. officials concluded Wednesday that the publicity, and the resulting uproar in Iran, have dashed all hopes that two other Americans still held in Lebanon by Islamic Jihad might be freed soon, an official said.

The secret dealings between the United States and Iran stand in marked contrast with the stated position of the Reagan Administration, which has frequently denounced Iran as one of the world's leading sponsors of state-supported terrorism. Indeed, while the secret exchanges were taking place, the President said repeatedly that the United States would not negotiate with terrorists or pay ransom for the release of American hostages.

In addition, the United States has maintained an arms embargo against Iran since 1979, when Khomeini's followers seized the U.S. Embassy and held 52 Americans hostage for 14 months.

Storm of Controversy Due

Disclosure of the arrangement thus raises far-reaching questions about American policy on terrorism, the Middle East and a host of other issues. And a storm of controversy is likely to ensue, both in and outside the Administration.

Secretary of State George P. Shultz, a leading Administration advocate of a hard-line approach to terrorism and the man whose department has been actively enforcing the ban on weapons shipments to Iran, was "completely cut out" of the hostage negotiations. His aides are said to be deeply angered by the arrangement.

Secretary of Defense Caspar W. Weinberger, a fierce advocate of American support for Iraq in its long-running war with Iran, was said to have "hit the roof" when news of the shipments reached his desk.

One government official who refused to be identified called the Administration's decision to aid Iran in its war with Iraq "a major policy shift" that had been undertaken without the usual discussions within the executive branch and with intelligence and military experts in Congress.

Approved by Reagan

The shipments were personally approved by Reagan in apparent contravention of the Export Administration Act, which prohibits the sale of U.S.-made arms to countries that support terrorism. Reagan himself put Iran on the "terrorist" list in 1981, and it has remained there.

"The President approved it," one official said, "and whatever documents were required, the President signed them privately and, like the Pope, kept it in his heart."

The Times learned of the secret arms shipments to Iran in late October. To avoid endangering the hostages or jeopardizing their chances for freedom, The Times agreed to withhold news of the operation until all the remaining hostages had been set free or details of the story appeared elsewhere.

U.S. sources say that the secret link to Iran has supplied that nation with what were described as ground-to-ground missiles as well as spare parts for F-4 Phantom jets, American-made radar systems and C-130 transport planes and other war materiel.

Weapons From China

The military value of the shipments to the Iranians could not be estimated, but Iran's air force consists entirely of American-made jets seized from Shah Mohammed Reza Pahlavi during Khomeini's rise to power, and its ground equipment was largely U.S.-made until China began supplying weapons in recent years.

The shipments were authorized by the White House, but were carried out by private American carriers under the top-secret direction of the Israeli government, one source said. Israeli officials involved in the operation in 1985 were identified by sources as then-Prime Minister Shimon Peres and Defense Minister Yitzhak Rabin.

Israel, a supporter of Iran in its war with Iraq, frequently has been accused of -- and has heatedly denied -- that it was illegally exporting U.S. arms to Iran. Rabin told The Times in a September interview that "Israel is committed not to resell any American arms or even American components of Israeli-made arms without explicit U.S. permission.

"And we have kept this commitment through the years," he said. "If you can give me one example through the history of our relations that Israel sold (even) a wing that was produced in the United States without American approval, I'll swallow everything."

Israeli Shipments Approved

In fact, the United States had approved such Israeli shipments, and at least one was in progress at roughly the time Rabin talked with a Times reporter, sources said.

Israel's motivation for serving as an intermediary is not clear. However, according to court records in a federal arms smuggling case in New York, Israeli officials early this year sought Iranian help in freeing Israeli soldiers believed held in Lebanon.

In January, the names of Zecharya Baumel, Zvi Feldman and Yehuda Katz, all missing since a battle near Sultan Yaakoub on June 11, 1982, and Samir Asad, reported captured near Sidon in April, 1983, were turned over to a cousin of Hashemi Rafsanjani, the Speaker of the Iranian Parliament.

The cousin, Cyrus Hashemi, was posing as a prospective Iranian buyer of U.S.-made arms from Israel. In fact, he was a acting as an undercover informant in a U.S. Customs Service conspiracy investigation that ultimately led to the arrest of retired Israeli Gen. Avraham Bar-Am and 10 others on charges of violating U.S. export laws. The case, widely criticized in Israel, is awaiting trial.

No Markings on Aircraft

Former Iranian President Abolhassan Bani-Sadr, now exiled in Paris, said on ABC's "Night Line" program Wednesday that in early September he learned through his own sources that "an American airplane with no markings did in fact deliver spare parts to Iran." A similar delivery took place in August of this year, Bani-Sadr claimed.

In September, the Danish Sailors Union claimed that a ship from Denmark had carried at least 3,600 tons of American-made weapons to Iran from Israel between May and August of this year.

Union spokesman Henrik Berlau said that the Danish freighter Ilse TH had carried four 900-ton shipments from the Israeli port of Eilat to the Iranian port of Bandar Abbas.

"We have the documentation, the log and the testimony of the sailors on board. We have the exact dates. There is absolutely no doubt," Berlau said.

Shipments Began in 1985

The arms shipments apparently began at least a year earlier. On Sept. 15, 1985, a DC-8 cargo jet took off from Iran after delivering weapons to the Khomeini regime and landed in Israel -- just a day after Shia terrorists released Weir.

Israeli officials denied for two days that the plane was there, then acknowledged that the jet had landed. Air traffic controllers in Ankara, Turkey, and Beirut told reporters that the plane had reported its destination as Malaga, Spain, but then reported communications problems and headed for Tel Aviv.

The plane, identified by Turkish officials as U.S.-owned, carried the markings of International Airlines Support Group, Inc., of Miami. Richard Wellman, a spokesman for the company, told the Associated Press that the company had sold the plane to a firm called International Air Tourism of Nigeria.

That plane is now believed to have carried a weapons shipment to Iran that had originated in Israel. It was presumed, but could not be confirmed, that a similar planeload of arms earlier in544499813Jenco last July.

Helped Resolve Hijacking

It is not clear whether other shipments have been made in exchange for Iranian aid in stemming the tide of Shia-backed terrorism. However, the Iranian government played a role in ending the hostage crisis of June 14, 1985, when pro-Iranian Lebanese Muslim terrorists seized a Trans World Airways jet en route from Athens to Rome that was later diverted to Beirut.

The United States had asked Syria to intercede to free the hostages but only when Iran made its views known were the hostages freed. Since that incident, Shultz has said several times that the United States has maintained informal contacts with the Iranians.

The decision to create a secret "back channel" for dealings with the Khomeini government, however, appears to have been undertaken without Shultz's knowledge and outside the usual interagency consultations that accompany major foreign-policy shifts.

State, Defense, Treasury and other Cabinet-level departments were totally unaware of the operation until hints of the shipments began to circulate at high levels shortly after McFarlane left the White House last December. It could not be learned when Shultz and Weinberger were informed of the secret channel with Iran.

One senior State Department official who deals with Iranian issues told The Times on Wednesday that "we've had a sense that some of this might have been going on, but we were informed of none of it.

"Our job was to enforce the (arms) embargo as best we could and we believed we were doing a good job of it. We believed the policy was showing increasing success."

Comments From Speakes

White House spokesman Larry Speakes maintained the facade of that policy Tuesday, saying that "as long as Iran advocates the use of terrorism, the U.S. arms embargo will continue." Asked whether the Administration believes Iran now has reduced its support for terrorism, Speakes replied: "There has been no manifestation of a definitive change."

One U.S. official said, however, that the arms shipments carry "fairly enormous implications" for an American policy that has castigated other nations for dealing with known terrorists.

Times staff writer William C. Rempel contributed to this story from Los Angeles.