Reagan: The Life (85 page)

Yet Reagan refused to be deterred. He judged the Boland restrictions wrongheaded and dangerous to American security, and he mounted a counteroffensive. Regional negotiations begun on Contadora Island in
Panama had yielded little so far, but the administration watched them closely. The president’s stated desire for peace in Central America required him to express support for the Contadora negotiations, if only to mollify skeptics in Congress. But he and his team had serious reservations as to what the negotiations might produce. The last thing Reagan wanted was a regional agreement that afforded the
Sandinistas international legitimacy.

During the spring of 1985, Reagan publicly embraced the Contadora process as part of a strategy to secure new funding for the contras. “
In NSC we’re putting together an idea for trying to frame our spending request to Congress for the Contras in Nicaragua in connection with peace proposals,” Reagan wrote in his diary that April. “I don’t believe the Dem. House will vote us the money just on a straight up or down basis.”
He expected a struggle. “
Tip O’Neill and his cohorts are already bad-mouthing the idea,” Reagan continued. “Indeed Tip sounds irrational.” He thought the House speaker was waging a personal vendetta against him. “
Tip has engineered a partisan campaign to hand me a defeat—never mind if it helps make another Cuba on the American mainland.” Reagan chafed at the restrictions the legislature was putting on his ability to conduct diplomacy. He offered another plea for aid to the contras, couching their cause in terms of American obligation. “
The United States has a clear, undeniable moral imperative not to abandon those brave men and women in their fight to establish democracy and respect for human rights in Nicaragua,” he told the lawmakers. But O’Neill and the Democrats wouldn’t budge. “
Met with Repub. Leadership—House and Senate,” he wrote in May. “I got a little ticked off and told them I was tired of foreign policy by a committee of 535.”

Reagan’s frustration prompted him to look elsewhere for contra funding. “
Over to EOB”—the Executive Office Building—“to address about 150 presidents of major
Jewish organizations,” he wrote in his diary in March 1986. “Subject Nicaragua. Very well received.” A few days later he recounted, “
Over to EOB for a pitch on Nicaragua to an overflow crowd of leaders of a number of supporting organizations.” At first Reagan asked simply for political help: paid advertisements and other forms of pressure on Congress to reopen the funding pipeline. But when the legislature continued to balk, he requested aid for the contras themselves. “
Over to the Mayflower Hotel to the CSIS”—Center for Strategic and International Studies—“conference,” he wrote in June. “I made a strong pitch for aid to the Contras and was well received.” A week later: “
Over to EOB to speak to 200 reps of various groups who are all gung ho for our effort to help the Contras in Nicaragua.”

Meanwhile, the president solicited money for the contras from friendly foreign governments. King Fahd of Saudi Arabia visited Washington to discuss the Middle East; Reagan was happy to oblige, but he brought up another subject as well. “
We talked of our Mideast peace plan,” the president recorded. “He is agreeable to backing King Hussein and I think he sees merit in our proposals. He’s also going to increase the funding he is secretly giving the Contras in Nicaragua.”

The question of contra funding prompted a special meeting of the National Security Planning Group. Reagan expressed his concern about the Contadora negotiations and made clear he would oppose any settlement that left the
Sandinista status quo in place. “
We will not agree or settle for
any agreement which does not provide for democracy in Nicaragua,” the president told the planning group. “The main point of any settlement has to be to go back to the day the revolution against Somoza ended and enable the Nicaraguan people to decide what kind of government they want.”

John Poindexter observed that the administration trod a narrow line on the Contadora negotiations. “We have a dilemma,” he explained. “For there to be any chance of getting money for the contras, we need a negotiating track. But there is no guarantee we won’t get an agreement which we don’t want.”

Caspar Weinberger preferred to have nothing to do with any Contadora agreement, which would remove what little leverage the administration had with Congress. “We just have to make sure that the negotiations do not get out of our control,” Weinberger said. “We need to prevent them”—the Contadora negotiators—“signing an agreement or we will never get anything out of Congress.”

George Shultz remarked that the administration wasn’t getting anything from Congress as matters stood. The contras were at grave risk. “If we don’t get money for the freedom fighters, they will be out of business,” Shultz said. Some members of the administration were advocating efforts to persuade the relevant committees in Congress to redirect to the contras funds appropriated for other purposes. Shultz dismissed this idea as inane. “It’s breathtaking in improbability,” he said. “It would be better to go to other countries.”

Weinberger agreed that the administration should solicit funds from other countries, but he wasn’t ready to give up on Congress. “Try everything,” the defense secretary said. “We should try every country we can find, the committees and the people of the United States. If the contras are out of business in July, we will have to fight there ourselves some day.”

Oliver North attended this meeting as an aide to Poindexter and seconded Shultz’s suggestion. “The fiscal year 1986 intelligence authorization bill permits the State Department to approach other countries for non-military aid,” North said.

“Haven’t we approached other countries?” William Casey asked.

“We have, but not with much success,” Shultz replied.

“But until now we have not involved the president,” Casey answered. “The Saudis,
Israelis,
South Koreans,
Taiwanese all have some interest,” he said.

The meeting ended with nothing decided and nothing said about the support the Saudis had already provided to the contras.

Neither did North share that he had devised a separate method for funding the contras. After the February delivery of
TOW missiles to Iran,
North had taken between $3 million and $4 million from the proceeds and placed it in an account from which the contras could draw. Two months later he sought authorization to continue the diversion. He drafted a memo for Poindexter describing the Iran enterprise and explaining how the profits from the sale of weapons might be disbursed. “
$12 million will be used to purchase critically needed supplies for the Nicaraguan Democratic Resistance Forces,” North wrote. At the end of the memo North included a recommendation: “That the President approve the structure depicted above.”

Poindexter later testified that he couldn’t recall receiving this memo. He said he had directed North not to put anything in writing about the diversion of funds to the contras. North denied receiving this direction. Poindexter nonetheless admitted knowing about the scheme, if only in outline. “
I had a feeling that something bad was going on, but I didn’t investigate it and I didn’t do a thing about it,” he told
Donald Regan after the story broke, according to Regan’s recollection. “I really didn’t want to know. I was so damned mad at Tip O’Neill for the way he was dragging the contras around I didn’t want to know what, if anything, was going on. I should have, but I didn’t.” Poindexter told Ed Meese much the same thing. “He said that he did know about it,” Meese recounted. “Ollie North had given him enough hints that he knew what was going on, but he didn’t want to look further into it. But that he in fact did generally know that money had gone to the contras as a result of the Iran shipment.”

Still later Poindexter offered a fuller account. He said he had known about North’s diversion and approved it in good conscience. “
We didn’t see anything illegal about it,” he said. Indeed, he agreed with North that using the arms proceeds to keep the contras alive was a nice turn of policy. “They were like a gift from Iran, though Iran didn’t know that.” He said he had made a deliberate decision not to inform Reagan. “I didn’t tell the president about it so that he would have plausible deniability.” He understood that there was a political risk, but it was a risk worth taking. “It was more important that I take the risk than that the president take the risk,” he said.

So the diversion went forward. And Reagan never knew to inquire about it.

A
SIDE EFFECT OF
the otherwise successful bombing of
Libya was further postponement of action on arms control with the
Soviet Union. Gorbachev knew Qaddafi had been a thorn in America’s side for years; he asked himself why Reagan had chosen this moment to chastise him. He concluded that Washington was trying to prove a point. “
The United States attacked Libya in a show of its might and impunity,” he wrote later. Combined with the other provocations after Geneva, especially the breakout from SALT II and the resumption of nuclear testing, the strike on Libya suggested to Gorbachev that the Americans didn’t take the Soviet Union seriously. “Did the Americans think we would not notice how they used the fledgling Soviet-American dialogue as a cover for new weapon programs?” He blamed Reagan not for insincerity but for inability to rein in the powerful groups who benefited from an arms race. “
Détente or even a simple warming in Soviet-American relations did not conform to the interests of certain people in the West who would use any pretext to undermine the improvement in international relations initiated in Geneva.”

Additional complications arose. In August 1986 the FBI sent a request to the White House seeking approval of the arrest of
Gennadi Zakharov, a Soviet scientist employed by the
United Nations who evidently was doubling as an agent of the KGB. Had Zakharov been a diplomat and enjoyed immunity from arrest and prosecution, he would have been deported. An American diplomat in the Soviet Union might have been deported in a tit for tat, but the issue would have gone no further. Because he lacked immunity, however, he could be arrested and prosecuted.

The FBI was especially eager to make the arrest, as the bureau had been embarrassed by recent revelations of Soviet spying in the United
States. For similar reasons the CIA and the State Department supported the FBI request, and the White House gave its approval. Zakharov was seized in a sting operation.

A week later the Soviets retaliated by arresting
Nicholas Daniloff, an American journalist in Moscow, and charging him with espionage. “
It is of course a frame up,” Reagan told himself. The president wrote to Gorbachev asserting as much. “
I can give you my personal assurance that Mr. Daniloff has no connection whatever with the U.S. Government,” Reagan declared. The president added, “There are no grounds for Mr. Daniloff’s detention, nor for any attempt to link him to any other case. If he is not freed promptly, it can only have the most serious and far-reaching consequences for the relationship between our two countries.”

Gorbachev didn’t believe Reagan. “
Your letter of September 5 prompted me to ask for information regarding the question you raised,” Gorbachev replied. “As was reported to me by competent authorities, Daniloff, the Moscow correspondent of the U.S. News and World Report magazine, had for a long time been engaged in impermissible activities damaging to the state interests of the USSR. Now an investigation is being conducted by the results of which we shall be able to make a conclusive judgment about this entire case.”

Reagan didn’t anger easily, but he grew livid at having his personal word doubted. “Gorbachev response to my letter was arrogant and rejected my statement that Daniloff was no spy,” he wrote in his diary. “I’m mad as h--l.”

W
HAT
R
EAGAN DIDN
’
T
know was that the CIA wasn’t telling him the full story. Reagan had asked William Casey if Daniloff was a spy; Casey had assured him Daniloff was not. This was true, but it omitted pertinent information. George Shultz didn’t trust Casey or the CIA, and he demanded to learn whatever the agency knew about Daniloff. He was informed that Daniloff had received an envelope from a “
Father Potemkin” for transmission to the American embassy. Daniloff delivered the envelope, which contained a message that appeared to be from a source that had previously conveyed valuable information about the Soviet nuclear arsenal. The CIA tried to contact the source through Potemkin, in the process mentioning Daniloff. This likely came to the attention of the
KGB, and it might have been what Gorbachev was referring to in his letter to Reagan.

Shultz asked
Abraham Sofaer, legal adviser to the State Department, to look into the matter and give his opinion. “
The CIA has really reamed Daniloff,” Sofaer reported. “Based on my reading of his activities, Daniloff can credibly be prosecuted under Soviet law, and a Soviet journalist who became similarly involved with the KGB in the U.S. could credibly be prosecuted under our law.” Sofaer later commented, “
The Soviets had done a beautiful job of replicating what we had done to Zakharov.”

“
This put a whole new light on the case,” Shultz recalled. He phoned
John Poindexter at the White House and said he had some information to share with the president on the Daniloff case. The national security adviser didn’t seem eager to receive the information, for reasons Shultz couldn’t fathom, but he couldn’t turn away the secretary of state. “I found President Reagan poorly informed about the case,” Shultz remembered, “and I felt that Poindexter clearly did not want him well informed.”

Shultz had Sofaer tell Reagan what he knew. “
I went through the facts,” Sofaer said afterward. “I explained the situation.” He found Reagan to be an engaged listener. “He kept interrupting me. What about this? What about that?” Yet the president refused to alter his view of the Soviet handling of the affair. “His basic point was, these are the bad guys. They’ve concocted this record.”