Arms Shipments to Iran

This report provides background and examines key questions in regards to the shipments of arms to Iran and the subsequent diversion of funds to Nicaraguan guerrillas by the Reagan Administration.

O r d e r C o d e 1887022 A R H S S H I P M E N T S TO I R A N Updated April 3 , Richard M. 1987 Preece F o r e i g n A f f a i r s and National D e f e n s e D i v i s i o n C o n g r e s s i o n a l Research S e r v i c e CONTENTS SUMMARY ISSUE DEFINITION BACKGROUND AND ANALYSIS Surfacing of the Secret U.S. Overtures to Iran Administration Reaction Congressional Reaction Key Questions for Congress How will Congress and the American public get a full accounting of the relevant Facts surrounding the sales to Iran and diversion of funds to the Nicaraguan guerrillas? Did the Administration's action violate the law? What has been the effect of the ~dministration's actions on U.S. policy against international terrorism and military sales to belligerents in the Iran-Iraq war? What has been the effect of the ~dministration's action on U.S. relations with key U.S. allies, moderate Arab countries, the Soviet Union, and other adversary states? What kinds of legislative action are appropriate to restrict such covert operations? ISSUE DEFINITION C o n g r e s s i s i n t h e p r o c e s s of examining t h e l e g a l and f o r e i g n p o l i c y i m p l i c a t i o n s of t h e Reagan A d m i n i s t r a t i o n ' s s e c r e t arms s a l e s t o I r a n i n 1985 a n d 1986, and t h e d i v e r s i o n o f p r o c e e d s f r o m t h o s e s a l e s t o t h e Nicaraguan g u e r r i l l a s . Many i n C o n g r e s s a r e d e t e r m i n e d t o p u s h f o r c o m p r e h e n s i v e c o n g r e s s i o n a l i n v e s t i g a t i o n s and t o p r o p o s e l e g i s l a t i o n t h a t would r e s t r i c t s u c h c o v e r t o p e r a t i o n s i n t h e f u t u r e . C o n g r e s s i o n a l i n t e r e s t h a s f o c u s e d on t h e f o l l o w i n g m a j o r i s s u e s : 1. How w i l l C o n g r e s s a n d t h e A m e r i c a n p u b l i c g e t a f u l l a c c o u n t i n g o f t h e r e l e v a n t f a c t s s u r r o u n d i n g t h e s a l e s t o I r a n and d i v e r s i o n o f f u n d s t o t h e Nicaraguan g u e r r i l l a s ? 2. Did t h e A d m i n i s t r a t i o n ' s a c t i o n s v i o l a t e t h e l a w ? 3. What h a s b e e n t h e e f f e c t o f t h e A d m i n i s t r a t i o n ' s a c t i o n s o n U.S. p o l i c y a g a i n s t i n t e r n a t i o n a l t e r r o r i s m and m i l i t a r y s a l e s t o b e l l i g e r e n t s i n t h e I r a n - I r a q war? 4. What h a s b e e n t h e e f f e c t o f t h e A d m i n i s t r a t i o n ' s a c t i o n on U.S. r e l a t i o n s w i t h k e y U.S. a l l i e s , m o d e r a t e A r a b c o u n t r i e s , t h e S o v i e t U n i o n , and s u p p o r t e r s o f i n t e r n a t i o n a l t e r r o r i s m ? 5. What k i n d s o f l e g i s l a t i v e a c t i o n a r e a p p r o p r i a t e t o r e s t r i c t s u c h c o v e r t o p e r a t i o n s i n v o l v i n g c t h e . u s e of N a t i o n a l S e c u r i t y C o u n c i l s t a f f i n t h e c o n d u c t o f s e n s i t i v e U.S. f o r e i g n p o l i c y ? BACKGROUND AND ANALYSIS S u r f a c i n g o f t h e s e c r e t U.S. overtures t o Iran The f i r s t published account of s e c r e t n e g o t i a t i o n s between r e p r e s e n t a t i v e s of t h e Reagan A d m i n i s t r a t i o n , i n c l u d i n g f o r m e r N a t i o n a l S e c u r i t y A d v i s e r R o b e r t McFarLane, a n d r e p r e s e n t a t i v e s o f t h e I r a n i a n g o v e r n m e n t a p p e a r e d on November 3 , 1 9 8 6 , i n t h e p r o - S y r i a n L e b a n e s e magazine A l - S h i r a ' a . E l a b o r a t i o n on t h e n e g o t i a t i o n s f r o m a v e r y d i f f e r e n t p e r s p e c t i v e came o n November 4 i n a s p e e c h by I r a n i a n M a j l i s (See Library of ( P a r l i a m e n t ) S p e a k e r A l i Akbar H a s h e m i - R a f s a n j a n i . C o n g r e s s , C o n g r e s s i o n a l R e s e a r c h S e r v i c e , F o r e i g n A f f a i r s and N a t i o n a l Defense Division. Iran-U.S. negotiations: an a n a l y s i s of t h e M i d d l e E a s t e r n s o u r c e s t h a t " b r o k e t h e s t o r y " o n t h e McFarLane t r i p . By C l y d e R . Mark, Nov. 2 0 , 1 9 8 6 . ) The two a c c o u n t s i m p l i e d t h a t t h e n e g o t i a t i o n s i n v o l v e d t h e t r a n s f e r o f U.S. m i l i t a r y e q u i p m e n t t o I r a n b u t d i f f e r e d a s t o U.S. a n d I r a n i a n purposes. An i n i t i a l p e r i o d o f o f f i c i a l A d m i n i s t r a t i o n s i l e n c e on t h e a c t i o n s , t o g e t h e r w i t h e x h a u s t i v e c o v e r a g e i n A m e r i c a n a n d f o r e i g n news m e d i a , g e n e r a t e d s u b s t a n t i a l pub1 i c s p e c u l a t i o n a n d d e b a t e o v e r a n u m b e r of p o l i c y and l e g a l i s s u e s r e l a t e d t o t h e I r a n i n i t i a t i v e . Many o b s e r v e r s i n t e r p r e t e d t h e i n i t i a t i v e a s d e s i g n e d t o e x c h a n g e U.S. a r m s a n d s p a r e parts f o r Iranian intercession hostages. Others see broader initiative. i n Lebanon f o r t h e r e l e a s e of American p o l i c y p u r p o s e s a s u n d e r l y i n g t h e U.S. Administration reaction The d a y f o l l o w i n g t h e A l - S h i r a ' a s t o r y , White House spokesman L a r r y S p e a k e s a s s e r t e d t h a t as l o n g a s I r a n a d v o c a t e d t h e u s e of t e r r o r i s m , t h e U.S. a r m s e m b a r g o w o u l d c o n t i n u e . P r e s i d e n t R e a g a n , when q u e s t i o n e d b y r e p o r t e r s o n November 6 , n o t e d t h a t " t h e s p e c u l a t i o n , t h e c o m m e n t a r y o n a s t o r y t h a t came o u t o f t h e M i d d l e E a s t a n d t h a t , t o u s , h a s n o f o u n d a t i o n a l l o f t h a t i s m a k i n g i t more d i f f i c u l t t o g e t t h e o t h e r h o s t a g e s o u t . " And, o n November 7 , when a p p e a r i n g w i t h r e l e a s e d h o s t a g e D a v i d J a c o b s e n i n t h e Rose G a r d e n , h e r e f u s e d t o r e s p o n d t o q u e s t i o n s c o n c e r n i n g t h e n e g o t i a t i o n s on t h e b a s i s of " e n d a n g e r i n g t h e p e o p l e w e ' r e t r y i n g t o rescue." W h i t e House s p o k e s m a n S p e a k e s , a t a p r e s s b r i e f i n g on November 10, r e p o r t e d t h a t t h e P r e s i d e n t h a d met w i t h h i s n a t i o n a l s e c u r i t y a d v i s e r s on t h e s t a t u s o f American h o s t a g e s i n Lebanon, a n d t h a t h e had r e v i e w e d b r o a d p o l i c y c o n c e r n s i n t h e P e r s i a n Gulf r e g i o n . Speakes s t a t e d t h a t t h e P r e s i d e n t h a d e m p h a s i z e d t h a t "no U.S. l a w s h a v e b e e n o r w i l l b e v i o l a t e d , ' ' a n d t h a t t h e U.S. p o l i c y of n o t m a k i n g c o n c e s s i o n s t o t e r r o r i s m remained i n t a c t -- . A s p u b l i c s p e c u l a t i o n mounted, P r e s i d e n t Reagan, i n a t e l e v i s e d a d d r e s s o n November 1 3 , a c k n o w l e d g e d a n 18-month e f f o r t t o e s t a b l i s h contacts with Iran. He j u s t i f i e d t h e i n i t i a t i v e t h r o u g h h i s d e c l a r e d objectives of: ( 1 ) r e s t o r i n g r e l a t i o n s with a s t r a t e g i c a l l y s i g n i f i c a n t Gulf s t a t e ; ( 2 ) s e e k i n g an h o n o r a b l e end t o t h e I r a n - I r a q c o n f l i c t ; ( 3 ) e l i m i n a t i n g s t a t e - s p o n s o r e d t e r r o r i s m i n t h e r e g i o n ; and ( 4 ) s e c u r i n g t h e r e l e a s e of American h o s t a g e s h e l d i n Lebanon. The P r e s i d e n t c o n f i r m e d t h a t " m o d e s t d e l i v e r i e s " of " d e f e n s i v e w e a p o n s a n d s p a r e p a r t s " h a d b e e n made t o I r a n a s a s i g n a l o f U.S. p r e p a r e d n e s s t o e f f e c t a new relationship. He d e f e n d e d t h e a c t i o n s , a s s e r t i n g t h a t a m p l e p r e c e d e n t e x i s t e d f o r s u c h s e c r e t a n d h i g h l y s e n s i t i v e d i p l o m a c y , t h a t no F e d e r a l l a w s h a d b e e n v i o l a t e d , a n d t h a t no c o n c e s s i o n s h a d b e e n made t o terrorism. He a l s o d e c l a r e d t h a t o f f i c i a l s i l e n c e o n t h e i n i t i a t i v e h a d b e e n i n h o p e o f o b t a i n i n g t h e r e l e a s e of A m e r i c a n s s t i l l h e l d i n L e b a n o n . P r e s i d e n t Reagan a g a i n defended h i s a c t i o n s a t a n a t i o n a l l y t e l e v i s e d news c o n f e r e n c e on November 1 9 , r e j e c t i n g c o n t e n t i o n s t h a t t h e s e c r e t a r m s t r a n s f e r s t o I r a n had been a m i s t a k e . He s a i d t h a t t h e y w e r e i n t e n d e d t o s i g n a l A m e r i c a n good f a i t h t o m o d e r a t e s i n I r a n who m i g h t s u c c e e d t h e r a d i c a l r e g i m e o f A y a t o l l a h Khomeini. The P r e s i d e n t d e s c r i b e d t h e s h i p m e n t s a s " m i n u s c u l e " o n e s t h a t would n o t a l t e r t h e m i l i t a r y b a l a n c e i n t h e ongoing I r a n - I r a q war. He a g a i n d e n i e d t h e y w e r e r a n s o m p a y m e n t s f o r American h o s t a g e s . With r e s p e c t t o t h e I r a n o p e r a t i o n s , t h e P r e s i d e n t d e c l a r e d t h a t t h e r e s p o n s i b i l i t y f o r t h e d e c i s i o n was "mine a n d m i n e a 1 o n e . I' On November 2 5 , A t t o r n e y G e n e r a l Edwin Meese a n n o u n c e d t h a t N a t i o n a l S e c u r i t y Council a i d e , Lt.-Col. O l i v e r L. N o r t h , had o r g a n i z e d t h e d i v e r s i o n of $ 1 0 t o $ 3 0 m i l l i o n i n p r o f i t s f r o m U.S. a r m s s a l e s v i a I s r a e l t o I r a n , t o anti-communist g u e r r i l l a s i n Nicaragua, and t h a t N a t i o n a l S e c u r i t y A d v i s o r , V i c e Adm. J o h n M . P o i n d e x t e r , h a d k n o w l e d g e o f t h e p l a n . P r e s i d e n t Reagan, c l a i m i n g t h a t he had been unaware of t h e t r a n s a c t i o n s , s t a t e d t h a t Adm. P o i n d e x t e r h a d r e s i g n e d a n d L t . - C o l . North had been r e l i e v e d of h i s d u t i e s . The P r e s i d e n t r e i t e r a t e d h i s b e l i e f t h a t p o l i c y g o a l s toward I r a n were well-founded, but t h a t one a s p e c t in the implementation of that p o l i c y w a s II f l a w e d . " He d e c l a r e d t h a t i m p l e m e n t a t i o n of a l l f u t u r e f o r e i g n and n a t i o n a l s e c u r i t y p o l i c y i n i t i a t i v e s would p r o c e e d o n l y i n a c c o r d a n c e w i t h h i s a u t h o r i z a t i o n . On November 2 6 , t h e J u s t i c e D e p a r t m e n t a n n o u n c e d a " f u l l - s c a l e " i n v e s t i g a t i o n of t h e I r a n i a n arms d e a l , w i t h t h e F e d e r a l Bureau of I n v e s t i g a t i o n c a l l e d into the inquiry. On December 1 , P r e s i d e n t R e a g a n , i n a p p o i n t i n g a s p e c i a l r e v i e w b o a r d t o i n v e s t i g a t e t h e a c t i v i t i e s of t h e N a t i o n a l S e c u r i t y C o u n c i l , d e n i e d t h a t h e h a d had a d v a n c e k n o w l e d g e of f u n d s f r o m I r a n i a n a r m s s a l e s b e i n g d i v e r t e d t o Nicaraguan contras. He s t a t e d t h a t h e w o u l d welcome t h e appointment of a s p e c i a l independent prosecutor t o i n v e s t i g a t e t h e c l a n d e s t i n e o p e r a t i o n i f s u c h was deemed n e c e s s a r y by t h e J u s t i c e D e p a r t m e n t , c o m m e n t i n g t h a t t h e r e must be "a f u l l a n d c o m p l e t e a i r i n g o f t h e f a c t s " t o m a i n t a i n c o n f i d e n c e i n "our g o v e r n m e n t ' s f o r e i g n p o l i c y apparatus." On Dec. 2 , h e a n n o u n c e d t h e a p p o i n t m e n t o f F r a n k C. C a r l u c c i a s National Security Adviser. V i c e P r e s i d e n t George Bush, i n h i s f i r s t s p e e c h a d d r e s s i n g t h e c o n t r o v e r s y o n December 4 , d e f e n d e d t h e P r e s i d e n t ' s r a t i o n a l e f o r t h e s e c r e t i n i t i a t i v e , b u t s t a t e d t h a t " m i s t a k e s w e r e made" a n d t h a t U.S. c r e d i b i l i t y h a d b e e n damaged. P r e s i d e n t R e a g a n , i n a r a d i o a d d r e s s on December 6 , d e c l a r e d t h a t t h e U.S. e f f o r t t o e s t a b l i s h a r e l a t i o n s h i p w i t h " m o d e r a t e s i n I r a n " h a d b e e n t e r m i n a t e d , s t a t i n g t h a t i t had n o t been h i s i n t e n t t o t r a d e a r m s f o r hostages. The P r e s i d e n t , i n h i s S t a t e of t h e Union A d d r e s s o n J a n . 2 7 , 1 9 8 7 , a c k n o w l e d g e d t h a t t h e i n i t i a t i v e had n o t w o r k e d , d e c l a r i n g "and f o r that I take f u l l responsibility." Referring to the i n i t i a t i v e s o b j e c t i v e s , t h e P r e s i d e n t commented t h a t "we d i d n o t a c h i e v e w h a t we w i s h e d , a n d s e r i o u s m i s t a k e s w e r e made t r y i n g t o d o s o . " On F e b r u a r y 2 6 , t h e s p e c i a l p a n e l a p p o i n t e d by P r e s i d e n t R e a g a n t o i n v e s t i g a t e c h e r o l e o f t h e NSC i n t h e I r a n - c o n t r a c o n t r o v e r s y s u b m i t t e d a r e p o r t c o n c l u d i n g t h a t , from i t s i n c e p t i o n i n August 1985, t h e I r a n i n i t i a t i v e became " i n f a c t a s e r i e s o f a r m s - f o r - h o s t a g e s deals" that c o n t r a v e n e d o f f i c i a l U.S. p o l i c i e s t o w a r d t e r r o r i s m a n d a r m s t r a n s f e r s t o I t found t h a t v i r t u a l l y a l l s e n i o r o f f i c i a l s i n t h e A d m i n i s t r a t i o n , Iran. i n c l u d i n g t h e P r e s i d e n t , had d e m o n s t r a t e d a " f a i l u r e of r e s p o n s i b i l i t y ," t h a t t h e l e g a l i t y o f c e r t a i n a s p e c t s o f t h e i n i t i a t i v e was " a t b e s t h i g h l y q u e s t i o n a b l e , " a n d t h a t t h e r e had b e e n c o n c e r t e d e f f o r t s t o o b s c u r e t h e o p e r a t i o n by some o f f i c i a l s f o l l o w i n g t h e i n i t i a t i v e ' s d i s c l o s u r e i n November 1 9 8 6 . The r e p o r t i n d i c a t e d t h a t t h e P r e s i d e n t had n e v e r II i n s i s t e d upon a c c o u n t a b i l i t y a n d p e r f o r m a n c e r e v i e w , " t h a t h e h a d b e e n p o o r l y s e r v e d by h i s t o p a d v i s o r s , a n d had n o t seemed a w a r e o f t h e m a n n e r i n w h i c h h i s p o l i c y was b e i n g i m p l e m e n t e d . A s o n e p a n e l member s u m m a r i z e d , " t h e p r o b l e m a t t h e h e a r t was o n e o f p e o p l e , n o t o f p r o c e s s . I t was n o t t h a t t h e s t r u c t u r e was f a u l t y ; i t i s t h a t t h e s t r u c t u r e was n o t used ." P r e s i d e n t R e a g a n , i n a n a t i o n a l l y t e l e v i s e d s p e e c h on M a r c h 4 , s t a t e d t h a t h e a c c e p t e d t h e f i n d i n g s o f t h e Tower C o m m i s s i o n r e p o r t a n d a c k n o w l e d g e d t h a t "what b e g a n a s a s t r a t e g i c o p e n i n g t o I r a n d e t e r i o r a t e d i n i t s i m p l e m e n t a t i o n i n t o t r a d i n g a r m s f o r h o s t a g e s , " a n d t h a t t h e r e were 11 r e a s o n s why i t h a p p e n e d , b u t n o e x c u s e s . I t was a m i s t a k e . " The P r e s i d e n t assumed " f u l l r e s p o n s i b i l i t y " f o r what had o c c u r r e d . In his w e e k l y r a d i o a d d r e s s o n March 1 4 , t h e P r e s i d e n t s a i d t h a t S e c r e t a r y o f S t a t e G e o r g e P. S h u l t z a n d S e c r e t a r y o f D e f e n s e C a s p a r W e i n b e r g e r h a d a d v i s e d him s t r o n g l y n o t t o p u r s u e t h e I r a n i n i t i a t i v e , s t a t i n g t h a t h e w e i g h e d t h e i r a d v i c e b u t h a d d e c i d e d t h e i n i t i a t i v e was w o r t h t h e r i s k , a d d i n g : " a s we now know i t t u r n e d o u t t h e y w e r e r i g h t a n d I was w r o n g . " R e s p o n d i n g t o q u e s t i o n s d u r i n g a n a t i o n a l l y t e l e v i s e d news c o n f e r e n c e o n Mar. 1 9 , P r e s i d e n t Reagan s t a t e d t h a t t h e r e h a d b e e n no " t h o u g h t o f h o s t a g e s " when t h e I r a n i a n a r m s s a l e s i n i t i a t i v e h a d b e g u n . He d e n i e d a n y knowledge of t h e d i v e r s i o n of s a l e s proceeds t o t h e c o n t r a s . The P r e s i d e n t i n s i s t e d h e h a d made a " m i s s t a t e m e n t " d u r i n g h i s Nov. 1 9 , 1 9 8 6 , news c o n f e r e n c e when h e d e n i e d I s r a e l i i n v o l v e m e n t i n t h e arms s a l e s . And h e s a i d h e c o u l d n o t r e c a l l w h e t h e r h e had g i v e n a p p r o v a l f o r Israel t o s e l l U.S.-supplied arms t o I r a n b e f o r e o r a f t e r I s r a e l had s h i p p e d t h e weapons. On M a r . 31, P r e s i d e n t Reagan, i n a d i r e c t i v e implementing r e c o r n e n d a t i o n s o f t h e Tower C o m m i s s i o n , c a l l e d f o r a n NSC r e v i e w o f a l l c o v e r t a c t i o n programs t o be c o m p l e t e d by Apr. 3 0 , and f o r p r o p o s e d c h a n g e s i n p r o c e d u r e s f o r a p p r o v i n g and c o o r d i n a t i n g c o v e r t a c t i o n t o i n s u r e t h a t "The NSC s t a f f i t s e l f w i l l n o t u n d e r t a k e t h e c o n d u c t o f c o v e r t activities." Congressional Reaction C o n g r e s s i o n a l a n d p u b l i c c r i t i c i s m of t h e A d m i n i s t r a t i o n ' s h a n d l i n g of t h e c o n t r o v e r s y r o s e r a p i d l y . Early congressional reaction followed a s e r i e s o f h e a r i n g s a n d b r i e f i n g s i n mid-November w h e r e A d m i n i s t r a t i o n o f f i c i a l s u n d e r t o o k t o e x p l a i n t h e p o l i c y t o c o n g r e s s i o n a l Members w i t h o v e r s i g h t r e s p o n s i b i l i t y f o r c o v e r t o p e r a t i o n s and f o r e i g n a f f a i r s . Some Members c l a i m e d t h e y w e r e m i s l e d i n t h e b r i e f i n g s ; o t h e r s s u g g e s t e d A d m i n i s t r a t i o n w i t n e s s e s were withholding t h e f u l l d e t a i l s o f t h e d e a l i n g s with Iran. P e r s i s t e n t i n d i c a t i o n s of d i s a g r e e m e n t w i t h i n t h e A d m i n i s t r a t i o n o v e r t h e p o l i c y toward I r a n added t o c o n g r e s s i o n a l concerns. Even s u p p o r t e r s of t h e P r e s i d e n t ' s a c t i o n s , l i k e Senate Republican l e a d e r Robert Dole, s a i d t h a t i t was m o r e d i f f i c u l t f o r them t o w i n c o n g r e s s i o n a l s u p p o r t when k e y A d m i n i s t r a t i o n f i g u r e s l i k e S e c r e t a r y of S t a t e G e o r g e S h u l t z w e r e s e e n t o be r e l u c t a n t t o defend the policy. W i t h t h e r e v e l a t i o n o f t h e d i v e r s i o n of f u n d s f r o m t h e I r a n a r m s s a l e s t o t h e N i c a r a g u a n g u e r r i l l a s , Members of b o t h p a r t i e s p u s h e d f o r s t r o n g A d m i n i s t r a t i o n and c o n g r e s s i o n a l e f f o r t s t o i n v e s t i g a t e p a s t a c t i o n a n d s t r e n g t h e n U.S. d e c i s i o n m a k i n g a n d a c c o u n t a b i l i t y i n f o r e i g n a f f a i r s . Key Q u e s t i o n s f o r C o n g r e s s The 1 0 0 t h C o n g r e s s a p p e a r s l i k e l y t o f o c u s i t s a t t e n t i o n f o l l o w i n g key q u e s t i o n s concerning t h e arms sales t o I r a n : on the 1. How w i l l C o n g r e s s and t h e A m e r i c a n p u b l i c g e t a f u l l a c c o u n t i n g o f t h e r e l e v a n t f a c t s s u r r o u n d i n g t h e sales t o Iran a n d d i v e r s i o n o f f u n d s t o t h e Nicaraguan g u e r r i l l a s ? D e s p i t e widespread agreement t h a t a thorough i n v e s t i g a t i o n o f e v e n t s is r e q u i r e d t o a s c e r t a i n t h e f a c t s and resolve contradictions, c o n s i d e r a b l e c o n t r o v e r s y h a s e x i s t e d o n t h e b e s t way t o g e t t h e f a c t s . Some c o n c e r n e x i s t s o v e r p o s s i b l e damage t o U.S. f o r e i g n r e l a t i o n s a n d A number. o f i n t e l l i g e n c e a c t i v i t i e s from f u l l p u b l i c d i s c l o s u r e . d i f f e r e n t a p p r o a c h e s h a v e been u n d e r t a k e n . J u s t i c e Department. On November 2 1 , P r e s i d e n t R e a g a n d i r e c t e d A t t o r n e y G e n e r a l Edwin Meese I11 t o u n d e r t a k e a r e v i e w o f t h e m a t t e r . On November 2 6 , a f t e r t h e A t t o r n e y G e n e r a l a n n o u n c e d t h a t some f u n d s f r o m t h e arms s a l e s t o I r a n had been t r a n s f e r r e d t o t h e Nicaraguan c o n t r a s , P r e s i d e n t Reagan announced t h a t t h e J u s t i c e Department had b r o a d e n e d i t s i n v e s t i g a t i o n and t h e J u s t i c e Department announced t h a t i t s i n q u i r y had i n v e s t i g a t i o n by t h e F e d e r a l B u r e a u o f become a m a j o r c r i m i n a l Investigation. The J u s t i c e D e 2 a r t m e n t h a s b e e n i n v e s t i g a t i n g S w i s s b a n k accounts a l l e g e d l y used i n d i v e r t i n g funds t o Nicaraguan c o n t r a s . Special Prosecutor. Some Members o f C o n g r e s s a n d o t h e r s , h o w e v e r , f e l t t h a t A t t o r n e y G e n e r a l Meese s h o u l d n o t b e i n v o l v e d i n t h e c r i m i n a l c a s e because of h i s r o l e in providing l e g a l advice during t h e period of t h e arms s a l e s . On December 2 , P r e s i d e n t Reagan a n n o u n c e d a d e c i s i o n L O h a v e a n i n d e p e n d e n t c o u n s e l t o i n v e s t i g a t e t h e m a t t e r . The C o u n s e l w o u l d be a p p o i n t e d by a s p e c i a l p a n e l o f t h r e e F e d e r a l a p p e l l a t e j u d g e s , u n d e r t h e I n d e p e n d e n t C o u n s e l A c t . Most Members of C o n g r e s s c o n s i d e r e d t h e d e c i s i o n an i m p o r t a n t s t e p f o r w a r d , b u t a few e x p r e s s e d c o n c e r n t h a t i t m i g h t p r o v i d e a s c r e e n f o r t h e A d m i n i s t r a t i o n . Members g e n e r a l l y a g r e e d t h a t t h e c r e a t i o n o f a n i n d e p e n d e n t c o u n s e l would n o t r e d u c e t h e n e e d f o r a congressional investigation t o look into broader questions of policy a s w e l l a s v i o l a t i o n s of law. On Dec. 1 9 , L a w r e n c e E . Walsh was named by t h e s p e c i a l p a n e l a s i n d e p e n d e n t c o u n s e l a n d was i n s t r u c t e d , i n a d d i t i o n t o i n v e s t i g a t i n g t h e I r a n i a n arms s a l e s and d i v e r s i o n of f u n d s t o t h e c o n t r a s , t o examine t h e II p r o v i s i o n o r c o o r d i n a t i o n of s u p p o r t w f o r t h e c o n t r a s s i n c e 1984. Since J a n u a r y 1 9 8 7 , W a l s h h a s a p p o i n t e d 20 a s s o c i a t e c o u n s e l s . T h e FBI h a s a s s i g n e d a team of s p e c i a l a g e n t s t o work e x c l u s i v e l y w i t h t h e i n d e p e n d e n t counsel during the investigation. On J a n . 2 8 , W a l s h e m p a n e l e d a g r a n d j u r y t o h e a r e v i d e n c e of any i l l e g a l i t i e s t h a t might have b e e n c o m n i t t e d by A d m i n i s t r a t i o n o f f i c i a l s o r p r i v a t e i n d i v i d u a l s . The i n d e p e n d e n t c o u n s e l g r a n t e d i m m u n i t y t o Fawn H a l l , s e c r e t a r y t o f o r m e r NSC a i d e L t . C o l . O l i v e r L. N o r t h . ( H a l l r e f u s e d i n t e r v i e w s by t h e Tower c o m n i s s i o n b e c a u s e i t l a c k e d power t o g r a n t i m n u n i t y ; a n d h e r a t t o r n e y s a i d o n F e b . 23 s h e w i l l n o t t e s t i f y b e f o r e t h e s e l e c t c o r m i t t e e s u n t i l a l l immunity q u e s t i o n s were r e s o l v e d . ) I n r e s p o n s e t o a l a w s u i t f i l e d by N o r t h ' s a t t o r n e y on F e b . 24 c h a l l e n g i n g t h e c o n s t i t u t i o n a l i t y o f t h e i n d e p e n d e n t c o u n s e l , W a l s h s u b m i t t e d a memorandum t o t h e U.S. D i s t r i c t C o u r t s e e k i n g injure" the dismissal, s t a t i n g t h e 1i t i g a t i o n c o u l d " i r r e p a r a b l y investigation. On Mar. 5 , A t t o r n e y G e n e r a l Meese, i n a n e f f o r t t o circumvent t h e i s s u e , a p p o i n t e d t h e independent counsel a s head of a newly c r e a t e d o f f i c e w i t h i n t h e J u s t i c e D e p a r t m e n t , a move c h a l l e n g e d by N o r t h ' s a t t o r n e y o n March 6 . U.S. D i s t r i c t C o u r t J u d g e B a r r i n g t o n D . P a r k e r r e j e c t e d N o r t h ' s s u i t March 1 2 o n p r o c e d u r a l g r o u n d s , n o t i n g t h a t N o r t h c o u l d no6 show r e p a r a b l e h a r m a t t h e time f r o m t h e i n d e p e n d e n t c o u n s e l ' s i n v e s t i g a t i o n d t h a t i t was n o t a p p r o p r i a t e t o i n t e r f e r e w i t h a n o n g o i n g c r i m i n a l investigation. J u d g e P a r k e r i n d i c a t e d t h e r e was good r e a s o n t o b e l i e v e t h a t t h e i n d e p e n d e n t c o u n s e l p r o v i s i o n i n t h e 1978 E t h i c s i n Government A c t ( P . L . 9 5 - 5 2 1 ) was c o n s t i - t u t i o n a l . I n d e p e n d e n t c o u n s e l Walsh on March 10-11 met w i t h House a n d S e n a t e s e l e c t committee l e a d e r s , r e q u e s t i n g t h a t t h e p a n e l s postpone t h e g r a n t of i m m u n i t y t o R e a r Adm. P o i n d e x t e r a n d L t . C o l . N o r t h f o r 9 0 d a y s t o f a c i l i t a t e development of p o s s i b l e c r i m i n a l c a s e s . On November 26 P r e s i d e n t R e a g a n S p e c i a l p a n e l (Tower c o m n i s s i o n ) . panel t o i n v e s t i g a t e t h e r o l e of t h e a l s o a p p o i n t e d a three-member N a t i o n a l S e c u r i t y C o u n c i l a n d t o f o c u s on t h e I r a n - c o n t r a c o n t r o v e r s y . T h e p a n e l c o m p r i s e d o f Edmund S. M u s k i e , a f o r m e r D e m o c r a t i c S e n a t o r a n d S e c r e t a r y of S t a t e under President C a r t e r ; Brent Scowcroft, a former N a t i o n a l S e c u r i t y A d v i s e r under P r e s i d e n t Ford; and Chairman J o h n G. Tower, a f o r m e r R e p u b l i c a n S e n a t o r and more r e c e n t l y a n a r m s c o n t r o l negotiator. P r e s i d e n e R e a g a n was i n t e r v i e w e d t w i c e by t h e S p e c i a l p a n e l . T h e S p e c i a l p a n e l s u b m i t t e d i t s r e p o r t t o t h e P r e s i d e n t on F e b . 2 6 . S p e c i a l Counselor. On Dec. 2 6 , 1 9 8 6 , P r e s i d e n t Reagan a p p o i n t e d D a v i d M . A b s h i r e , r e t i r i n g NATO A m b a s s a d o r , a s a s p e c i a l c o u n s e l o r w i t h C a b i n e t r a n k t o c o o r d i n a t e W h i t e House a c t i v i t i e s on a l l a s p e c t s o f t h e Iran matter. Other Federal Action. Several agencies a r e conducting investigations on N i c a r a g u a n c o n t r a s a n d t h e i r American s u p p o r t e r s t h a t f o c u s o n a number of i s s u e s , i n c l u d i n g : a l l e g a t i o n s t h a t t h e c o n t r a s and t h e i r s u p p o r t e r s w i t h i n a n d o u t s i d e t h e A d m i n i s t r a t i o n l a u n d e r e d money, s m u g g l e d w e a p o n s , and v i o l a t e d t h e N e u t r a l i t y Act and t h e c o n g r e s s i o n a l ban a g a i n s t d i r e c t and i n d i r e c t m i l i t a r y a i d t o t h e c o n t r a s . Congressional Action. C o n g r e s s i o n a l a c t i o n h a d b e e n c o m p l i c a t e d by t h e f a c t t h a t t h e 9 9 t h C o n g r e s s had a d j o u r n e d a n d t h e S e n a t e d u r i n g t h e 1 0 0 t h C o n g r e s s would c h a n g e f r o m a R e p u b l i c a n m a j o r i t y t o a D e m o c r a t i c majority. S e n a t o r Robert Dole, t h e o u t g o i n g m a j o r i t y Leader, s u g g e s t e d t h a t t h e P r e s i d e n t should c a l l a s p e c i a l s e s s i o n of Congress t h a t c o u l d e s t a b l i s h a s p e c i a l committee t o i n v e s t i g a t e . S e n a t o r Robert Byrd, t h e incoming m a j o r i t y l e a d e r , s a i d h e favored a s p e c i a l committee but n o t a special session. Meanwhile, s e v e r a l committees, i n c l u d i n g t h e S e n a t e P e r m a n e n t C o m n i t t e e on I n t e l l i g e n c e , b e g a n i n v e s t i g a t i o n s . On J a n . 5 , 1 9 8 7 , i n r e s p o n s e t o a n A d m i n i s t r a t i o n r e q u e s t , t h e S e n a t e I n t e l l i g e n c e C o m m i t t e e v o t e d 7-6 a g a i n s t r e l e a s i n g a s a n i t i z e d v e r s i o n o f its report. I t a g r e e d , however, t o leave subsequent r e l e a s e of i n f o r m a t i o n c o n t a i n e d i n i t s r e p o r t t o t h e Committee's d i s c r e t i o n . On J a n . 2 9 , 1 9 8 7 , t h e Committee made p u b l i c a r e p o r t s u m m a r i z i n g i t s December h e a r i n g s a n d t r a n s m i t t i n g i t t o t h e S e n a t e S e l e c t C o m m i t t e e on S e c r e t M i l i t a r y A s s i s t a n c e t o I r a n and t h e Nicaraguan O p p o s i t i o n . Some Members of C o n g r e s s b e l i e v e d a s p e c i a l s e l e c t c o m m i t t e e s u c h a s h a d o p e r a t e d i n t h e W a t e r g a t e i n v e s t i g a t i o n would b e s t meet c u r r e n t requirements. I n t h e i r v i e w , a s p e c i a l c o m m i t t e e p r e v e n t s t h e same w i t n e s s e s f r o m b e i n g c a l l e d b e f o r e s e v e r a l House a n d S e n a t e c o m m i t t e e s a n d h e l p s c o o r d i n a t e t h e d i f f e r i n g i n t e r e s t s of c o m m i t t e e s w i t h j u r i s d i c t i o n o v e r v a r i o u s a s p e c t s o f t h e c a s e . O t h e r Members f a v o r e d p r o c e e d i n g w i t h i n t h e e s t a b l i s h e d system. Under t h e e x i s t i n g s y s t e m , e a c h c o m m i t t e e c o u l d e x p l o r e more t h o r o u g h l y t h e a s p e c t s of t h e c a s e w i t h i n i t s j u r i s d i c t i o n i n t h e c o n t e x t of t h e s u r r o u n d i n g i s s u e s ; f o r e x a m p l e , t h e i n t e l l i g e n c e c o m m i t t e e s m i g h t c o n c e n t r a t e on c o v e r t a c t i v i t i e s ; t h e f o r e i g n p o l i c y c o m m i t t e e s would l o o k more a t f o r e i g n p o l i c y o b j e c t i v e s a n d t h e j u d i c i a r y On December 4 , commit t e e s would l o o k i n t o p o s s i b l e c r i m i n a l v i o l a t i o n s . c o n g r e s s i o n a l l e a d e r s a g r e e d t o form a s p e c i a l committee i n b o t h t h e S e n a t e a n d t h e House t o i n v e s t i g a t e t h e c o n t r o v e r s y . S e n a t e S e l e c t Committee. On J a n , 6 , 1987, w i t h t h e c o n v e n i n g o f t h e 1 0 0 t h C o n g r e s s , t h e S e n a t e a g r e e d t o S.Res. 2 3 c r e a t i n g a n 11-member s e l e c t c o m m i t t e e w h i c h would a i m a t a f i n a l r e p o r t on Aug. 1, 1987. It r e s e r v e d t h e r i g h t , h o w e v e r , t o e x t e n d t h e d e a d l i n e t o O c t . 30 s h o u l d a m a j o r i t y o f t h e S e n a t e deem t h a t more t i m e would b e r e q u i r e d . On J a n . 2 2 , Limn in New York a t t o r n e y A r t h u r L . Liman was named c h i e f c o u n s e l . F e b r u a r y s a i d t h e c o m m i t t e e was b e g i n n i n g t h e p r o c e s s o f g r a n t i n g some w i t n e s s e s l i m i t e d i m m u n i t y , a n d was n e g o t i a t i n g w i t h t h e W h i t e House f o r He a l s o s t a t e d t h e g r e a t e r a c c e s s t o President Reagan's personal notes. c o m m i t t e e was f r e e t o b r o a d e n i t s i n q u i r y beyond t h e I r a n - c o n t r a m a t t e r t o examine o t h e r A d m i n i s t r a t i o n p o l i c i e s . On Mar. 1 9 , t h e S e n a t e , a t t h e c o r n i t t e e ' s r e q u e s t , a d o p t e d S . R e s . 1 7 0 a u t h o r i z i n g c i v i l l e g a l proceedings compelling Major General ( r e t i r e d ) R i c h a r d V. S e c o r d t o a l l o w a c c e s s t o r e c o r d s o f f o r e i g n b a n k a c c o u n t s under h i s c o n t r o l i n o r d e r t o answer " c r i t i c a l q u e s t i o n s " c o n c e r n i n g I r a n contra financial transactions. House S e l e c t Comnittee. On J a n . 7 , 1 9 8 7 , t h e House a g r e e d t o H.Res. 1 2 c r e a t i n g a 15-member s e l e c t c o m i t t e e w i t h a t e r m i n a t i o n d a t e o f O c t . 30, 1 9 8 7 . A 24-member s t a f f h a s been h i r e d u n d e r t h e d i r e c t i o n o f W a s h i n g t o n a t t o r n e y J o h n W . N i e l d s J r . On F e b r u a r y 2 6 , t h e c o m m i t t e e m e t i n e x e c u t i v e s e s s i o n a n d a u t h o r i z e d a p p l i c a t i o n f o r irmnunity f o r c e r t a i n I t a l s o d i s c u s s e d J u s t i c e Department-committee r e l a t i o n s and t h e persons. Tower c o m m i s s i o n r e p o r t . The House a n d S e n a t e s e l e c t c o m m i t t e e s v o t e d on March 18 t o c o n d u c t j o i n t h e a r i n g s b e g i n n i n g May 5 a n d t o f o c u s t h e h e a r i n g s i n i t i a l l y o n t h e f u n d i n g of t h e N i c a r a g u a n c o n t r a s , i n c l u d i n g t h e p o s s i b l e d i v e r s i o n of p r o c e e d s f r o m t h e s a l e o f arms t o I r a n . S u b s e q u e n t l y , t h e h e a r i n g s would e x a m i n e t h e I r a n i a n a r m s s a l e s t o d e t e r m i n e r e s p o n s i b i l i t y f o r what went w r o n g i n U.S. p o l i c y f o r m u l a t i o n a n d management. The c o m n i t t e e s a l s o v o t e d t o s e e k l i m i t e d immunity f o r s i x w i t n e s s e s l i n k e d t o o r g a n i z a t i o n s supporting the contras. I n a d d i t i o n under a n agreement w i t h t h e o f f i c e of t h e i n d e p e n d e n t c o u n s e l a n d a p p r o v e d by b o t h c o m m i t t e e s , C o n g r e s s w o u l d a p p l y f o r l i m i t e d i m m u n i t y f o r f o r m e r n a t i o n a l s e c u r i t y a d v i s e r Rear Adm. J o h n M. P o i n d e x t e r i n m i d - A p r i l w h i c h would f a c i l i t a t e h i s g i v i n g c l o s e d t e s t i m o n y i n e a r l y May a n d p u b l i c t e s t i m o n y i n m i d - J u n e . The c o m m i t t e e s a l s o e l e c e e d t o d e l a y a p p l i c a t i o n f o r l i m i t e d i m m u n i t y t o C o l . O l i v e r L. N o r t h , w i t h p r i v a t e t e s t i m o n y a f t e r J u n e 15 a n d p u b l i c t e s t i m o n y a f t e r J u n e 23. O t h e r C o n g r e s s i o n a l Action. The S e n a t e S e l e c t C o m m i t t e e on I n t e l l i g e n c e , S e n a t e F o r e i g n R e l a t i o n s Committee, S e n a t e Energy and N a t u r a l R e s o u r c e s C o r n i t t e e , House F o r e i g n A f f a i r s C o m m i t t e e , H o u s e J u d i c i a r y C o m m i t t e e h a v e e x a m i n e d v a r i o u s a s p e c t s of t h e I r a n - c o n t r a m a t t e r d u r i n g h e a r i n g s conducted s i n c e Congress convened i n J a n u a r y 1987. 2. D i d t h e ~ d m i n i s t r a t i o n ' s a c t i o n v i o l a t e t h e l a w ? Concern i n Congress and t h e A d m i n i s t r a t i o n o v e r p o s s i b l e v i o l a t i o n s o f l a w i n s e l l i n g a r m s t o I r a n g r e w w i t h t h e k n o w l e d g e t h a t some o f t h e proceeds were used t o a s s i s t .the Nicaraguan g u e r r i l l a s . The P r e s i d e n t s t a t e d on November 1 0 a n d 1 3 t h a t no l a w s had b e e n v i o l a t e d , b u t when t h e d e c i s i o n t o a p p o i n t a n i n d e p e n d e n t c o u n s e l was a n n o u n c e d o n December 2 , A t t o r n e y G e n e r a l Meese s a i d , "We t h i n k t h a t we h a v e a s t a t u t o r y b a s i s t o b e l i e v e t h a t a F e d e r a l Law may h a v e b e e n v i o l a t e d . " Members o f C o n g r e s s h a v e c i t e d many r e l e v a n t l a w s t h a t may h a v e b e e n v i o l a t e d , b u t j u d g m e n t s a r e d i f f i c u l t b e c a u s e o f many w a i v e r p r o v i s i o n s and l a c k of s p e c i f i c i n f o r m a t i o n . I n a d d i t i o n t o fundamental laws r e g a r d i n g t h e u s e of a p p r o p r i a t e d f u n d s o n l y f o r t h e o b j e c t s f o r which t h e a p p r o p r i a t i o n s w e r e made, c o n s p i r a c y , a n d t h e o b s t r u c t i o n o f j u s t i c e , r e l e v a n t l a w s t h a t h a v e been m e n t i o n e d i n c l u d e t h e f o l l o w i n g : N a t i o n a l S e c u r i t y A c t o f 1947 (P.L. 80-2531, as amended ( 5 0 USC 401413). S e c s . 5 0 1 a n d 502 r e q u i r e t h e D i r e c t o r o f t h e C e n t r a l I n t e l l i g e n c e Agency o r h e a d s o f o t h e r e n t i t i e s i n v o l v e d i n i n t e l l i g e n c e a c t i v i t i e s t o k e e p t h e S e n a t e and House I n t e l l i g e n c e C o m m i t t e e s f u l l y a n d c u r r e n t l y informed of a l l i n t e l l i g e n c e a c t i v i t i e s o r " s i g n i f i c a n t a n t i c i p a t e d " intelligence activities. N o t i f i c a t i o n s a f f e c t i n g " v i t a l i n t e r e s t s " may b e limited to the leadership. I n t e l l i g e n c e A u t h o r i z a t i o n A c t f o r FY86 (P.L. 99-169). Sec. 105 i s o n e o f a g r o u p o f p r o v i s i o n s known a s t h e B o l a n d Amendment w h i c h p r o h i b i t o r p l a c e s t r i c t r e s t r i c t i o n s o n t h e u s e of f u n d s t o a s s i s t N i c a r a g u a n resistance fighters in military or paramilitary operations. Under S e c . 3 ( d ) Arms E x p o r t C o n t r o l A c t (P.L. 90-6291, as amended. t h e P r e s i d e n t i s r e q u i r e d t o g i v e 30 d a y s p r i o r n o t i c e o f t h i r d c o u n t r y t r a n s f e r o f m a j o r d e f e n s e e q u i p m e n t w o r t h more t h a n $ 1 4 m i l l i o n . Under S e c . 40 ( i n e f f e c t s i n c e Aug. 2 7 , 1 9 8 6 ) i t e m s o n t h e U.S. M u n i t i o n s L i s t may n o t be e x p o r t e d t o a n y c o u n t r y t h a t h a s b e e n d e t e r m i n e d t o h a v e repeatedly provided support f o r a c t s of i n t e r n a t i o n a l t e r r o r i s m , u n l e s s t h e P r e s i d e n t w a i v e s t h e p r o v i s i o n and r e p o r t s t h e w a i v e r t o C o n g r e s s . Numerous o t h e r s e c t i o n s a r e a l s o r e l e v a n t , e s p e c i a l l y S e c . 3 ( f ) , and 38. 36(b), F o r e i g n A s s i s t a n c e A c t o f 1 9 6 1 , (P.L. 87-1951, as amended. Sec. 506 p r o v i d e s s p e c i a l a u t h o r i t y t o draw f r o m D e p a r t m e n t of D e f e n s e s t o c k s a n d r e q u i r e s p r i o r n o t i f i c a t i o n t o Congress of t r a n s f e r s t o f o r e i g n c o u n t r i e s from s u c h s t o c k s . 96-72), a s amended. Sec. 6 ( j ) E x p o r t A d m i n i s t r a t i o n A c t (P.L. r e q u i r e s 30 days p r i o r n o t i c e t o Congress before g r a n t i n g export l i c e n s e s f o r g o o d s w o r t h more t h a n $ 1 m i l l i o n bound f o r c o u n t r i e s s u p p o r t i n g terrorism. ( S e e Laws I m p l i c a t e d by S h i p m e n t s of M i l i t a r y M a t e r i a l s t o I r a n , by Raymond J . C e l a d a , CRS R e p o r t 86-1005A; and Compi l a t i o n of S e l e c t e d Laws R e l a t i n g t o t h e N a t i o n a l S e c u r i t y C o u n c i l , Arms T r a n s f e r s , I n t e l l i g e n c e ~ c t i v i t i e s ,Aid t o t h e C o n t r a s , a n d A p p r o p r i a t i o n s Laws a n d P r i n c i p l e s , by Unnumbered CRS R e p o r t . ) A m e r i c a n Law D i v i s i o n . 3. W h a t has b e e n t h e e f f e c t of the A d m i n i s t r a t i o n ' s a c t i o n s o n U.S. p o l i c y a g a i n s t i n t e r n a t i o n a l t e r r o r i s m a n d m i l i t a r y sales t o b e l l i g e r e n t s i n t h e I r a n - I r a q war? The Reagan A d m i n i s t r a t i o n f o r m a l l y c l a s s i f i e d I r a n a s a s u p p o r t e r o f i n t e r n a t i o n a l t e r r o r i s m on J a n u a r y 2 3 , 1 9 8 4 , o n t h e b a s i s , a s s t a t e d b y a S t a t e D e p a r t m e n t spokesman a t t h e t i m e , t h a t t h e U n i t e d S t a t e s had 1I c o n v i n c i n g e v i d e n c e o f a b r o a d I r a n i a n p o l i c y f u r t h e r i n g t e r r o r i s m beyond i t s b o r d e r s i n c l u d i n g s t a t e m e n t s by I r a n i a n o f f i c i a l s s u p p o r t i n g t h e s e An i m m e d i a t e c o n s e q u e n c e was t h e a p p l i c a t i o n of a n t i t e r r o r i s m acts." e x p o r t c o n t r o l s t o I r a n . A b a n on s h i p m e n t s o f m i l i t a r y e q u i p m e n t t o I r a n h a s b e e n i n e f f e c t s i n c e t h e o u t b r e a k of t h e I r a n - I r a q c o n f l i c t i n 1 9 8 0 a s a r e s u l t o f t h e o f f i c i a l U.S. p o s i t i o n of n e u t r a l i t y w i t h r e s p e c t t o t h e war. I n t e r n a t i o n a l Terrorism. C r i t i c s of t h e I r a n i n i t i a t i v e n o t e t h a t , s i n c e I r a n h a d b e e n p l a c e d on t h e l i s t of c o u n t r i e s s p o n s o r i n g i n t e r n a t i o n a l t e r r o r i s m i n J a n u a r y 1984, t h e a c t i o n c o n t r a d i c t s t h e f r e q u e n t l y a s s e r t e d U.S. p o l i c y o f n o t n e g o t i a t i n g w i t h s u c h c o u n t r i e s . They d i s p u t e t h e P r e s i d e n t ' s c o n t e n t i o n of November 19 t h a t s i n c e U.S. g o v e r n m e n t c o n t a c t b e g a n w i t h T e h r a n , " t h e r e h a s been no e v i d e n c e of I r a n i a n government c o m p l i c i t y i n a c t s of t e r r o r i s m a g a i n s t t h e United States." They a r g u e t h a t I r a n , i n r e c e n t y e a r s , h a s b e e n i n v o l v e d i n s p o n s o r i n g , i f n o t t e r r o r i s m i n g e n e r a l , t h e n c e r t a i n l y t h e movements w h i c h t a k e f o r e i g n e r s h o s t a g e i n Lebanon. They n o t e t h a t t h e P r e s i d e n t f a i l e d t o m e n t i o n t h e t h r e e A m e r i c a n s a b d u c t e d i n Lebanon s i n c e h e approved t h e I r a n o p e r a t i o n i n January. Others question whether, d e s p i t e t h e o f f i c i a l U.S. p o l i c y o f no c o n c e s s i o n s t o t e r r o r i s m , t h e P r e s i d e n t would h a v e a u t h o r i z e d arms t o I r a n had t h e r e b e e n no h o s t a g e s . Still o t h e r s p o i n t t o t h e t i m i n g o f arms s h i p m e n t s i n r e l a c i o n t o t h e r e l e a s e of A m e r i c a n h o s t a g e s h e l d by p r o - I r a n i a n f a c t i o n s i n Lebanon. I n any case, t h e p r o s p e c t o f s e c u r i n g m i l i t a r y s u p p l i e s c o u l d be a n i n c e n t i v e f o r f u r t h e r hostage-taking. S u p p o r t e r s of t h e I r a n i n i t i a t i v e c o n s i d e r t h a t t h e A d m i n i s t r a t i o n was m a k i n g a r a t i o n a l e f f o r t t o a f f e c t I r a n i a n p o l i c y i n t h e G u l f a n d influence t h e leadership evolution i n t h i s important country. In the c o u r s e o f t h e u n d e r t a k i n g , d e f e n d e r s a s s e r t , t h e A d m i n i s t r a t i o n made a h u m a n i t a r i a n a t t e m p t t o d e a l w i t h o p p o r t u n i t i e s o f f e r e d by e v e n t s by demanding t h a t I r a n c e a s e s u p p o r t i n g t e r r o r i s m and u s e i t s i n f l u e n c e t o r e l e a s e American h o s t a g e s i n Lebanon. They n o t e t h a t t h e i n t e r v e n t i o n o f I r a n i a n o f f i c i a l s r e p o r t e d l y had l e d t o t h e r e l e a s e of s e v e r a l p a s s e n g e r s h e l d by p r o - I r a n i a n g r o u p s d u r i n g t h e J u n e 1 9 8 5 h i j a c k i n g t o B e i r u t o f TWA 847. I n a n y c a s e , t h e i n i t i a t i v e a p p a r e n t l y r e s u l t e d i n t h e release o f t h r e e American h o s t a g e s i n Lebanon. Iran. P r o p o n e n t s of t h e i n i t i a t i v e a r g u e t h a t t h e arms s h i p m e n t s were i n t e n d e d t o b o l s t e r moderate e l e m e n t s w i t h i n t h e I r a n i a n government t o e n a b l e them t o i n f l u e n c e a c h a n g e i n t h e Khomeini r e g i m e ' s c o n t i n u e d r e f u s a l t o n e g o t i a t e a n e n d t o t h e 6-year-o.ld G u l f c o n f l i c t . Links with moderate f a c t i o n s c o u l d a l s o s e r v e a s a hedge a g a i n s t S o v i e t d e s i g n s on a s t r a t e g i c a l l y i m p o r t a n t G u l f s t a t e , p a r t i c u l a r l y when t h e time comes f o r a s u c c e s s o r t o A y a t o l l a h Khomeini. Some o b s e r v e r s i n d i c a t e c o n c e r n t h a t t h e A d m i n i s t r a t i o n m i g h t b e m a k i n g m i s t a k e s i n i t s a s s e s s m e n t s of I r a n s i m i l a r t o t h o s e made d u r i n g t h e p e r i o d s u r r o u n d i n g t h e o v e r t h r o w of t h e Shah. C r i t i c s t a k e i s s u e w i t h t h e b a s i c p r e m i s e of t h e i n i t i a t i v e t h a t t h e o p e n i n g o f c o n t a c t s c o u l d a f f e c t t h e p o l i t i c a l situatic-q i n Tehran. They q u e s t i o n w h e t h e r t h e a c t i o n w o u l d j e o p a r d i z e r a t h e r ~ h a nh e l p t h o s e t h e A d m i n i s t r a t i o n d e s i r e d t o e m e r g e a s l e a d e r s by t r y i n g t o i n f l u e n c e p o l i c y t h r o u g h m i l i t a r y transactions. They c o n t e n d t h a t whoever ends up i n c o n t r o l o f I r a n , v i r t u a l l y a l l o f t h e c o n t e n d e r s a r e a n t i - A m e r i c a n , a n d t h a t a n y power s t r u g g l e i s n o t b e t w e e n pro-U.S. a n d a n t i - U . S . f a c t i o n s . U.S. Neutrality i n the Iran-Iraq Conflict. C r i t i c s note, t h a t t h e n - S e c r e t a r y of S t a t e Alexander H a i g , i n t h e f i r s t Middle E a s t p o l i c y s t a t e m e n t o f t h e R e a g a n A d m i n i s t r a t i o n on May 2 6 , 1 9 8 2 , a s s e v r t e d t h a t t h e U n i t e d S t a t e s f r o m t h e b e g i n n i n g o f t h e I r a n - I r a q war h a d s t r e s s e d i t s neutrality. H a i g s a i d t h a t t h e U n i t e d S t a t e s had r e f u s e d a n d w o u l d c o n t i n u e t o r e f u s e " t o a l l o w m i l i t a r y e q u i p m e n t u n d e r U.S. c o n t r o l s t o b e provided t o e i t h e r party." They s t a t e t h a t t h i s p o l i c y h a s b e e n r e i t e r a t e d c o n s i s t e n t l y t o d a t e , i n c l u d i n g a s t a t e m e n t of May 6 , 1986, d e c l a r i n g t h e r e was n o c h a n g e i n U.S. n e u t r a l i t y p o l i c y i n t h e w a r , a n d t h a t n o U.S. arms o r m u n i t i o n s a r e l i c e n s e d f o r shipment t o e i t h e r belligerent. They c o n t e n d t h a t s h i p m e n t s o f U.S. a r m s a n d s p a r e p a r t s t o I r a n , w h e t h e r d i r e c t l y f r o m U.S. s t o c k s o r t h r o u g h t h i r d p a r t i e s s u c h a s I s r a e l , v i o l a t e t h e o f f i c i a l p o s i t i o n of n e u t r a l i t y . Others argue t h a t t h e a r m s s h i p m e n t s , w h i c h i n c l u d e d TOW a n t i - t a n k m i s s i l e s a n d s p a r e p a r t s f o r I m p r o v e d Hawk s u r f a c e - t o - a i r s y s t e m s , c a n h a r d l y be c l a s s i f i e d a s I1 d e f e n s i v e weapons," and c o u l d t i p t h e b a l a n c e i n t h e Gulf war i n I r a n ' s f a v o r -- a d e v e l o p m e n t n o t i n t h e s t r a t e g i c i n t e r e s t s o f t h e U n i t e d States. T h e y d i s p u t e t h e n o t i o n t h a t t h e U.S. s a l e s h a d n o s u b s t a n t i a l i m p a c t o n I r a n ' s a b i l i t y t o c a r r y o u t t h e war. They c i t e I r a q i c l a i m s o f improved I r a n i a n a i r d e f e n s e s , i n c r e a s e d I r a n i a n a i r f o r c e a c t i v i t y , and l o s s e s from improved I r a n i a n a n t i t a n k c a p a b i l i t i e s . I n a J a n u a r y 27 s t a t e m e n t b e f o r e t h e S e n a t e F o r e i g n R e l a t i o n s C o m m i t t e e , S e c r e t a r y o f S t a t e S h u l t z r e i t e r a t e d t h e U.S. p o s i t i o n o f n e u t r a l i t y a n d a s s e r t e d t h e r e would b e n o f u r t h e r " e x c e p t i o n s " to t r a n s f e r s of U.S.-origin m i l i t a r y equipment t o I r a n , e i t h e r d i r e c t l y o r through any t h i r d party. S h u l t z emphasized t h a t I r a n ' s r e j e c t i o n of " i t s b e l l i c o s e a n d t e r r o r i s t p o l i c i e s " would b e a n e c e s s a r y f i r s t s t e p t o a n y p r o g r e s s i n improved U.S.-Iranian relations. 4. W h a t has been t h e e f f e c t o f t h e ~ d m i n i s t r a t i o n ' s a c t i o n o n U.S. r e l a t i o n s w i t h k e y U.S. a l l i e s , m o d e r a t e A r a b c o u n t r i e s , t h e S o v i e t U n i o n , and o t h e r adversary s t a t e s ? . S i n c e 1983, t h e United S t a t e s h a s a c t i v e l y i n c r e a s e d e f f o r t s t o unilateral, counter i n t e r n a t i o n a 1 t e r r o r i s m t h r o u g h a v a r i e t y of bilateral, and m u l t i l a t e r a l s t e p s . These have i n c l u d e d d i p l o m a t i c i n i t i a t i v e s a i m e d a t a c h i e v i n g c o o r d i n a t i o n among U.S. a l l i e s a n d f r i e n d l y governments i n countermeasures a g a i n s t c o u n t r i e s supporting t e r r o r i s m , The Reagan A d m i n i s t r a t i o n i n O c t o b e r 1 9 8 3 such as Libya and I r a n . c o n c l u d e d t h a t U.S. i n t e r e s t s would n o t b e s e r v e d by a n I r a n i a n v i c t o r y o v e r I r a q a n d , s i n c e March 1 9 8 4 , h a s c o n t i n u e d t o c o n d u c t d i p l o m a t i c e f f o r t s w i t h t h e o b j e c t i v e of h a l t i n g t h e flow of f o r e i g n o r U.S.-supplied arms t o I r a n ( O p e r a t i o n S t a u n c h ) . A t t h e same time, f r i e n d l y r e g i o n a l A r a b s t a t e s h a v e been g i v e n a s s u r a n c e s t h a t t h e U n i t e d S t a t e s would c o n t i n u e s u c h e f f o r t s i n l i m i t i n g I r a n ' s c a p a b i l i t y t o wage war. Allies. West E u r o p e a n o f f i c i a l r e a c t i o n t o t h e I r a n i n i t i a t i v e h a s been s u b d u e d , b u t t h e r e i s a m p l e r e p o r t a g e o f s t r o n g c o n c e r n a b o u t t h e i m p l i c a t i o n s o f t h e U.S. move. With t h e e x c e p t i o n o f t h e U n i t e d Kingdom, W e s t e r n E u r o p e a n g o v e r n m e n t s had r e c e i v e d c o n s i d e r a b l e c r i t i c i s m a b o u t t h e i r r e s p o n s e t o t e r r o r i s m f r o m U.S. m e d i a f o l l o w i n g t h e U.S. s t r i k e a g a i n s t L i b y a e a r l i e r i n 1986. Now t h e y a r e w i t n e s s i n g , t h r o u g h d i r e c t A m e r i c a n a r m s t r a n s f e r s , t h e a p p e a r a n c e of e x c h a n g i n g a r m s f o r h o s t a g e s a n d d e a l i n g w i t h a t e r r o r i s t - s p o n s o r i n g c o u n t r y , a p p a r e n t U.S. d u p l i c i t y . C r i t i c s c o n t e n d t h e i n i t i a t i v e h a s s e v e r e l y damaged U.S. c r e d i b i l i t y l i k e l y t e s t t h e NATO a l l i a n c e a n d p r o v i d e c o n s i d e r a b l e that w i l l ammunition f o r anti-American forces. P r e s s r e p o r t s a n d commentary i n d i c a t e t h a t W e s t e r n European o f f i c i a l s w i l l l i k e l y q u e s t i o n t h e competence and c o h e s i o n o f t h e A d m i n i s t r a t i o n , i t s f o r m u l a t i o n and management of f o r e i g n p o l i c y , w i t h a p o t e n t i a l l o s s of c o n f i d e n c e i n t h e U.S. c a p a c i t y f o r l e a d e r s h i p . R e p o r t e d l y , many o f t h e s e o f f i c i a l s a l r e a d y h a d b e e n a l a r m e d b y t h e A d m i n i s t r a t i o n ' s h a n d l i n g of t h e R e y k j a v i k m e e t i n g b e t w e e n P r e s i d e n t Reagan a n d S o v i e t Chairman C o r b a c h e v . O t h e r s a r g u e t h a t t h e I r a n i n i t i a t i v e undermines p r o s p e c t s f o r a c o o r d i n a t e d and e f f e c t i v e a l l i e d s t r a t e g y t o combat t e r r o r i s m , a s had been a c h i e v e d a t t h e Tokyo Summit i n May 1 9 8 6 . The i n i t i a t i v e a l s o n e g a t e s , U . S . e f f o r t s i n p l a c i n g p r e s s u r e o n g o v e r n m e n t s s u p p l y i n g arms t o I r a n . Moderate Arab Countries. The ~ d m i n i s t r a t i o n ' s c o n f i r m a t i o n of m i l i t a r y s a l e s t o (non-Arab) I r a n , and t h e I s r a e l i r o l e i n t h e o p e r a t i o n , h a s f u r t h e r s t r a i n e d U.S. c r e d i b i l i t y w i t h m o d e r a t e Arab c o u n t r i e s . This s i t u a t i o n f o l l o w s U.S. p o l i c y r e v e r s e s i n Lebanon i n 1 9 8 3 , t h e s t a g n a t e d A r a b - I s r a e l i peace p r o c e s s , and f a i l e d A d m i n i s t r a t i o n e f f o r t s t o f u r n i s h U.S. weapons s y s t e m s t o J o r d a n , S a u d i A r a b i a a n d K u w a i t . From t h e i r p e r s p e c t i v e s , I r a n r e m a i n s a s t r a t e g i c t h r e a t , a n d t h e A r a b L e a g u e , m e e t i n g i n T u n i s on November 1 4 , d e s c r i b e d P r e s i d e n t R e a g a n ' s s p e e c h o f t h e p r e v i o u s d a y I Ia new a n d d a n g e r o u s " e l e m e n t i n U.S.-Arab relations. I n t h e f i r s t p l a c e , t h e a r m s d e l i v e r i e s t o I r a n v i o l a t e d U.S. n e u t r a l i t y i n t h e Gulf war; i n t h e second, t h e r e a l i n i t i a t i v e , s t a t e d by t h e P r e s i d e n t a s a i m i n g a t i m p r o v e d r e l a t i o n s w i t h I r a n , was n e i t h e r American n o r I r a n i a n , b u t r a t h e r I s r a e l i . They c o n s i d e r t h a t , s i n c e 1 9 8 0 , I s r a e l h a s p u r s u e d a s t r a t e g y o f s u p p l y i n g arms t o I r a n , and t h e U n i t e d S t a t e s , l a c k i n g i t s own s t r a t e g y t o w a r d I r a n , b o u g h t t h e I s r a e l i a p p r o a c h . T h e i n i t i a t i v e t h u s e n h a n c e s A r a b p e r c e p t i o n s t h a t U.S. p o l i c y i n t h e M i d d l e East i s d r i v e n by I s r a e l i i n t e r e s t a n d i s f u n d a m e n t a l l y a n t i - A r a b . S o v i e t Union. O f f i c i a l s t a t e m e n t s by S o v i e t l e a d e r s c o n c e r n i n g t h e i n i t i a t i v e h a v e been r e l a t i v e l y c o n s t r a i n e d . The S o v i e t news a g e n c y TASS on November 1 4 commented t h a t t h e p o i n t a t i s s u e was n o t a " s w a p H o f A m e r i c a n h o s t a g e s f o r U.S. arms, but r a t h e r a thoroughly planned, strategic, subversive operation against Iran. Some o b s e r v e r s c o n s i d e r t h e p o s s i b i l i t y of S o v i e t d o u b t o v e r t h e c a p a c i t y of t h e P r e s i d e n t t o c o n d u c t f o r e i g n p o l i c y i n t h e wake o f t h e I r a n i s s u e . Others contend t h a t t h e S o v i e t s a r e l i k e l y t o t a k e a d v a n t a g e o f o p p o r t u n i t i e s when t h e U n i t e d S t a t e s a p p e a r s weak a n d i n d e c i s i v e t h r o u g h s u c h m e a s u r e s a s c o n v i n c i n g neutral and f r i e n d l y governments t h a t Washington i s i n c a p a b l e o f S t i l l o t h e r s Look t o a n e s c a l a t i o n o f c o n s i s t e n c y and i s u n t r u s t w o r t h y . S o v i e t a n d Cuban a c t i v i t y i n T h i r d World t r o u b l e a r e a s . 5. What k i n d s o f covert operations? legislative action are a p p r o p r i a t e to restrict such Many c r i t i c s o f t h e A d m i n i s t r a t i o n ' s a c t i o n s a r g u e t h a t C o n g r e s s m u s t t a k e s p e c i f i c L e g i s l a t i v e a c t i o n i n o r d e r t o e n s u r e t h a t such misuse of e x e c u t i v e b r a n c h power d o e s n o t o c c u r i n t h e f u t u r e . Their proposals f o r a c t i o n i n c l u d e t h o s e t h a t would: a . h o l d m o r e a c c o u n t a b l e o r l i m i t t h e r o l e of t h e n a t i o n a l s e c u r i t y a d v i s e r a n d NSC s t a f f i n t h e c o n d u c t o f f o r e i g n a f f a i r s ; b . make t h e a p p o i n t m e n t o f S e n a t e a p p r o v a l ; and the national security adviser subject to c . s t r e n g t h e n e x i s t i n g s t a t u t o r y r e s t r i c t i o n s o n U.S. a r m s t r a n s f e r s , n o t i f i c a t i o n of covert operations, dealings with countries t h a t support t e r r o r i s m , and d e a l i n g s w i t h t h e Nicaraguan g u e r r i l l a s . O t h e r s i n C o n g r e s s a r e more c a u t i o u s . While t h e y f a v o r c a r e f u l e x e c u t i v e b r a n c h a n d c o n g r e s s i o n a l i n v e s t i g a t i o n s t o r o o t o u t a n y wrongd o i n g , t h e y s e e n o n e e d a t p r e s e n t a d o p t m e a s u r e s t h a t m i g h t weaken t h e President's powers i n f o r e i g n a f f a i r s w i t h a d d i t i o n a l l e g i s l a t i v e restrictions. The Tower c o m m i s s i o n r e p o r t recommended t h a t no s u b s t a n t i v e c h a n g e b e made i n p r o v i s i o n s o f t h e N a t i o n a l S e c u r i t y Act d e a l i n g w i t h t h e s t r u c t u r e a n d o p e r a t i o n s o f t h e NSC s t a f f ; u r g e d t h e C o n g r e s s n o t t o r e q u i r e S e n a t e c o n f i r m a t i o n o f t h e n a t i o n a l s e c u r i t y a d v i s e r ; recommended t h a t e a c h Administration formulate precise procedures for restricted consideration of covert action; recommended the establishment of a joint House-Senate intelligence committee with a restricted staff to oversee the intelligence community; and recommended against implementation and policy oversight dominated by intermediaries. ARMS SHIPMENTS TO IRAN Congress in the process of examining the legal and foreign policy implications of the Reagan Administration's secret arms sales to Iran in 1985 and 1986, and the diversion of proceeds from those sales to the Nicaraguan guerrillas. Congressional interest is focused on the following major issues: The failure of the Administration to notify Congress of this secret operation; Use of the National Security Council staff to carry out secret contacts that by-pass normal congressional oversight of foreign af fairs; Possible legal infractions in the Administration's transfers of arms to Iran without notification of the Congress and diversion of funds to the Nicaraguan guerrillas; The effect of the -:vert arms sales on U.S. policy against international terrorism and the impact of the sales on the IranIraq war; and Concern over the ability of the Reagan Administration to carry out a credible, coherent foreign policy on sensitive issues like relations with Iran.