Reagan

by Bob Spitz

  CHAPTER FORTY-ONE

  “BACK ON THE ROLLER COASTER”

  “In time of war, the truth is so precious, it must be attended by a bodyguard of lies.”

  —WINSTON CHURCHILL

  In the wake of the Libya operation, the president’s team brought new energy to the exasperating Iran initiative. In early May 1986, Ronald Reagan approved a secret mission to send Bud McFarlane to Tehran, ostensibly to rendezvous with Ali Akbar Hashemi Rafsanjani, the speaker of Iran’s parliament, and Mohammed Ali Khamenei, the country’s president. Word had been passed by Manucher Ghorbanifar that these officials, alleged pragmatists, were willing to entertain the reestablishment of relations—or, at least, open a dialogue—with the United States. Inasmuch as there had been no communication between the countries since the Iranian revolution in 1979, any interaction, however modest, had the potential to affect the political dynamic of the Middle East.

  In fact, political dialogue was only a pretext for the trip. The primary objective was the release of American hostages. As an incentive, the plane carrying McFarlane and Oliver North contained a pallet of HAWK missile parts the Iranians had requested. Eleven more pallets of HAWK parts, along with sophisticated radar equipment, were loaded on a second plane, idling on the ground in Israel. Once the hostages were safely freed, and only then, would McFarlane order the second plane into the air.

  The whole operation was not only illegal but dangerous. The American diplomats had no idea whether they’d be welcomed—or detained and held hostages themselves. It was always possible they were walking into a trap. Another member of their delegation was Amiram Nir, Israel’s chief terrorism adviser, disguised as an American, which increased the risk significantly. They were all traveling on fake Irish passports and carried suicide pills should the operation go awry. As their plane touched down in Tehran, they noted a banner strung across the airport terminal, featuring an image of the Ayatollah with one of his favorite sayings: “America Cannot Do a Damn Thing.”

  McFarlane insists he was focused on diplomacy. “I was convinced that a meaningful dialogue could nurture an effective opposition to the clerics in Iran,” he says. He says he was oblivious to a parallel scheme North was running that would divert a considerable surplus from the Iranian missile deal to finance the Contra operation in Nicaragua. It was a classic bait and switch. The Iranians were prepared to pay an inflated price for the 236 HAWK parts, which would give Project Democracy an $8.6 million profit. Ghorbanifar would turn a cool $9.5 million for himself. The problem was, no one could deliver on the deal.

  The Iranians had no control over the hostages, who were in Lebanon in the hands of Hezbollah. The clerics hardly seemed interested in opening up ties to the West; Rafsanjani and Khamenei never appeared. What’s more, new terms were introduced: the Iranians demanded that before any hostages could be released, Israel had to withdraw from the Golan Heights and release fifteen Lebanese prisoners who had been convicted of a series of bomb attacks and were being held in a Kuwait jail. “They’re just stringing us along,” a disgusted McFarlane told North. “Let’s pack up and go.”

  Ronald Reagan was duly discouraged. “It was a heartbreaking disappointment for all of us,” he noted in his diary. But then, on July 25, Father Lawrence Jenco was freed in the Beqaa Valley in Eastern Lebanon after eighteen months in captivity and handed over to U.S. officials in Syria. As a result, the president was advised by Bill Casey and John Poindexter to deliver the eleven pallets of HAWK parts, still on the plane in Tel Aviv, to Iran as a gesture of goodwill. Inexplicably, he signed off on it, despite the fact that the Iranians had failed to honor an agreement on four separate occasions. “It gives us hope the rest of the plan will take place,” Reagan wrote in his diary. Yet the president acknowledged the uncertainty of it by saying, “Back on the rollercoaster.”

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  A few days later, Reagan faced a minor health scare. “I’ve been passing blood in my urine since last night,” he wrote on July 28, 1986. His doctor suspected that it was simply an inflamed prostate, but the president was unnerved. He feared he was “falling apart.” He was under enormous stress. The White House was in the throes of “a kind of low-level guerrilla warfare” between the conservatives and the pragmatists. They were divided about sanctions on South Africa and conventional weapons reductions with the Soviets. The intelligence agencies seemed to be operating independently of any oversight, often withholding or even distorting information. Bill Casey and John Poindexter pushed their own dark agendas. The chief of staff played personnel off one another, sowing an environment of dissention and discontent.

  George Shultz, for one, had had enough. On August 5, he submitted his third letter of resignation. Again the president refused it, but he got the message.

  While he was in Santa Barbara on a long-overdue vacation in late August, Reagan planned to address the disorganization, but events intruded. On August 30, 1986, he learned through the State Department that Nicholas Daniloff, the Moscow correspondent for U.S. News & World Report, had been arrested on charges of spying. Aides informed Reagan that Daniloff had been set up. Someone had handed him an envelope containing classified papers, and the minute it was in his hands the KGB swooped in and apprehended him. It was a clear case of retaliation. A week earlier, the FBI had caught Gennadi Zakharov, a Soviet attaché to the United Nations, at a subway stop in Queens, New York, red-handed in the act of exchanging cash for classified documents. It was a cut-and-dried case of espionage, which had embarrassed the Soviet Union.

  Reagan by his own account was “mad as hell.” “We catch a spy as we have this time and the Soviets grab an American—any American and frame him so they can demand a trade of prisoners,” he said. He immediately cabled Mikhail Gorbachev. “I can give you my personal assurance that Mr. Daniloff has no connections whatever with the U.S. government. If you have been informed otherwise, you have been misinformed.”

  Gorbachev promptly rejected the president’s message, announcing publicly that Daniloff was “a spy who was caught in the act.” He offered an immediate trade of the two detainees. The president refused to sanction it. That would be caving in to the bogus Cold War gambit. Then a new twist: it emerged that Daniloff had been compromised by the CIA. He’d never been on the agency’s payroll, but he’d occasionally passed on sensitive material to various American officials in Moscow. This changed the dynamic. Suddenly, Reagan was satisfied with a one-for-one trade, and on September 29, 1986, Daniloff and Zakharov were released simultaneously to their respective embassies. Reagan was criticized by the right-leaning media for, in essence, swapping a spy for a hostage. He consoled himself that he’d gotten the better end of the deal by securing the freedom of several Soviet dissidents, thrown into the exchange at the last minute. “In the final analysis,” he believed, “we stood our ground and the Soviets blinked.”

  The Soviets remained upset about the matter—they felt as though American authorities had fudged the facts and were “treating them as less than a superpower.” Eduard Shevardnadze stormed into the White House on September 19 to express Russia’s displeasure, carrying with him a letter from Mikhail Gorbachev to Ronald Reagan. It was six pages long, mostly a condemnation of the way the U.S. handled the Zakharov–Daniloff business, accusing the United States of using it to incite a “massive, hostile campaign” against the Soviet Union. There was also a rehash of the various proposals they’d discussed in Geneva concerning medium-range missiles in Europe and nuclear testing. “There has been no movement on these issues,” Gorbachev protested. “They will lead nowhere unless you and I intervene personally. I have an idea, Mr. President, that in the very near future and setting aside all other matters, we have a quick one-on-one meeting, let us say in Iceland or London, maybe just for one day, to engage in a strictly confidential, private and frank discussion.”

  Reykjavik or London—two NATO capitals. It seemed out of character coming from a Soviet leader. Reag
an accepted without hesitation. “I opt for Iceland,” he wrote in his diary that night. Iceland was out of the major-media glare and free of interference from the Thatcher government. Reagan was delighted by the prospect of a second summit. It played to his belief that if he could just talk to the Soviet leader face-to-face, man-to-man, they could resolve their basic differences. But before he could give his full attention to it, he had to deal with another matter that would have a lasting impact on his legacy: the composition of the Supreme Court.

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  He had already made quite a significant impact on the ideological balance of the federal court system and thus on the national legal agenda. He’d quietly and consistently appointed seventy-eight appeals court judges and 290 district court judges, determined to seat justices who “interpret the laws, not make them.” In the wake of Warren Burger’s resignation as chief justice in June 1986, Ronald Reagan got his chance to make his most meaningful maneuver to date. On Ed Meese’s advice, the president nominated William Rehnquist to replace Burger as chief justice. In Meese’s view, “Rehnquist would reshape the Court in a more constitutional manner,” meaning as per the framers’ original intentions as opposed to thinking of the Constitution as an evolving or “living” document. As an associate justice for fifteen years, Rehnquist had faithfully advanced the conservative viewpoint. He’d voted against laws extending the minimum wage; defended state-sanctioned prayer in public schools; supported warrantless searches; voted against school desegregation and the establishment of legalized abortion; argued against affirmative action and sex discrimination; and held that capital punishment was constitutionally permissible.

  When Rehnquist was eventually confirmed as chief justice on September 17, the president filled the vacancy his promotion created by appointing Antonin Scalia as associate justice. Scalia had been in consideration in 1981, when Potter Stewart retired, but he was passed over in favor of Sandra Day O’Connor. As a consolation prize, Reagan appointed him to an influential seat on the U.S. Court of Appeals in Washington, D.C. Scalia’s legal philosophies were, if anything, to the right of Ronald Reagan’s political philosophy. Scalia assailed what he called the “Imperial Judiciary” for deciding issues it had no business deciding—“social judgments that ought better be left to the democratic process.” As a practicing Catholic, he was especially vocal in his opposition to abortion and laws protecting the rights of homosexuals. There was a great hue and cry against his nomination from critics on the left. Nevertheless, Scalia was regarded as one of the smartest legal minds on an American bench, a sharp-tongued wit, and a frequent dinner guest of Republicans and Democrats alike. On September 26, he was confirmed by unanimous vote.

  With that neatly tucked away, the president gave his full attention to the upcoming summit in Reykjavik. This time around, there were no briefing books, no practice sessions or tutorials, little formal preparation. The whole thing had come up so suddenly. And Reagan had been otherwise engaged—on the road campaigning for Republican candidates in the midterm elections, which was only three weeks off. “Not having a lot of time to prepare was of no concern to him,” recalls John Poindexter. Reagan had an agenda—to rid the world of nuclear weapons, especially the intermediate-range missiles in Europe—but there was no alternative strategy covering anything else Gorbachev might propose.

  The president seemed distracted in the few briefings staged to bring him up-to-date. He resisted being stage-managed. He was more interested in the negotiation process, his power of persuasion. He felt he could wing it with Gorbachev and get his points across. Down to the wire, his handlers were concerned about his readiness. At a final meeting before leaving for Reykjavik, they felt the president had trouble following John Poindexter’s rundown of the various positions taken by the two superpowers. On the other hand, they observed, he was emotionally up for the confrontation. His mood said it all. “He was awfully excited.”

  On October 5, just days before the summit, the national security team was hit with an ominous distraction. White House officials were informed that a C-123K cargo plane belonging to Southern Air Transport had been shot down by a Sandinista patrol in the jungles of Nicaragua. What was the extent of American involvement? As far as anyone in the White House knew, none. But the phone wires began burning between Bob Dutton, Oliver North’s Project Democracy airlift coordinator, and Joe Fernandez, the CIA station chief in Costa Rica. “Situation requires we do necessary damage control.”

  How much damage no one realized until the next day, when Sandinistas revealed they’d captured the plane’s pilot, Eugene Hasenfus, a Wisconsin resident and veteran of Air America, the CIA airline used in the Vietnam War. Southern Air Transport was another CIA contrivance, a cover used in covert operations. Moreover, it became apparent the plane shot down was loaded with Contra supplies: rifles, grenade launchers, jungle knives, machine guns, ammunition, combat gear, and medicine.

  American officials were quick to deny American involvement. George Shultz insisted that, as far as he was aware, the plane “had no connection with the U.S. government at all.” As far as he was aware. But there were others working in the Old Executive Office Building who knew the airlift of supplies was one of Oliver North’s operations, and there were Americans involved from Washington, D.C., to Jinotega.

  The president wasn’t briefed until three days later, when John Poindexter laid out the still-sketchy details. “We don’t know exactly who [is responsible],” he said disingenuously. “But I think you should be careful about denying any U.S. role.”

  Later that day, Hasenfus appeared on TV in a news conference staged by the Nicaraguan government in Managua. He readily admitted that the supply flights to the Contras were supervised by the CIA. It was a well-known fact throughout Washington that the CIA was forbidden by Congress to deliver arms to the rebels, and when the press asked Reagan if his administration had any link to the flight, he responded categorically, “Absolutely none.” Assistant Secretary of State Elliot Abrams echoed his denial. “That would be illegal,” he said during an interview with Robert Novak on CNN. “It is not in any sense a U.S. operation.” But savvy observers knew—this was another fine mess you got us into, Ollie.

  It was time for Oliver North to start covering his tracks. Later that month, Bill Casey turned up the heat. “This whole thing is coming unraveled,” he warned North. There was too much collateral evidence—the Swiss bank accounts held by Lake Resources, the ledgers containing the financial transactions for Project Democracy and payments to Contra leaders, the incriminating PROFs and memos that outlined the diversion of funds. “Get rid of things,” Casey told him. “Clean things up.”

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  Ronald Reagan was only too happy to bolt for Reykjavik. Joan Quigley had signed off on the trip. October 14 yielded only favorable signs. But while the stars might have been aligned, not all the ducks were in a row.

  The American delegation was relatively small. Cap Weinberger had remained behind in Washington; the chairman of the joint chiefs sent an Army general instead. Gorbachev hadn’t advanced a specific agenda he wished to pursue. But watching the arrival of the Soviet premier on TV from an apartment in Reykjavik, the Americans saw that he was accompanied by a much larger staff. His principal military strategist, Marshal Sergei Akhromeyev, a sophisticated man with extensive arms-control experience, was at his side. And both men carried bulging briefcases. Perhaps the rumors that the Soviets would arrive with a blitz of proposals were true. Were they gearing up to discuss key nuclear issues? Reagan scowled at the image of his Soviet rival. “When you stop trying to take over the world,” he snarled at the screen, “then maybe we can do some business.”

  The grimace was gone on Saturday morning, October 11, 1986, when a smiling Ronald Reagan approached the clunky Russian sedan carrying Mikhail Gorbachev to their opening negotiating session. The weather was unkind—raw and piercing—but Gorbachev had learned his lesson in
Geneva; he emerged from the car in a well-tailored suit: no overcoat, no scarf, no fedora. Following a cordial handshake and photo op, the two leaders disappeared into Hofdi House, a rather bleak, boxy structure—the former residence of the British ambassador, who had sold it back to Iceland, claiming the place was haunted—perched on a barren edge of the Atlantic Ocean. As far as anyone could tell, the only spectral presence was the ghost of the unresolved Geneva summit, which both world leaders were hoping to dispel.

  Reagan and Gorbachev met alone for an hour. The exchange, according to Gorbachev, seemed disorganized, the president confused. He consulted note cards, shuffling them, looking for answers to Gorbachev’s arguments, thrown off that they didn’t seem to follow any script. When they were joined by their chief stewards, Shultz and Shevardnadze, Gorbachev suddenly became animated. Later he would say, “We believe the world wanted bold decisions,” and he now had a few he was eager to advance—sweeping proposals on strategic and intermediate-range arms, and nuclear testing. His approach was threefold: (1) a 50 percent reduction in the strategic offensive weapons of the Soviet Union and the United States; (2) the complete elimination of Soviet and U.S. medium-range missiles in Europe; and (3) a pledge not to withdraw from the Anti-Ballistic Missile Treaty for ten years, during which time the testing of all space-based elements of antiballistic missile defenses would be prohibited. Jack Matlock, who took notes in the meeting, scrawled: “Gorbachev indicated that . . . the mutual ultimate aim was total elimination of nuclear weapons.”

  “This is the best Soviet proposal we have received in twenty-five years,” said Paul Nitze, the special adviser to the president, during the lunchtime debriefing in the SCIF,* a bubble room that was acoustically isolated to prevent eavesdropping. Others in the delegation were similarly enthusiastic—surprised, even astonished. Gorbachev had come a long way toward meeting the Americans in their own objectives. There was optimism that some historic agreement might be reached over the weekend. Reagan was more subdued. “He’s got a lot of proposals,” the president said, “but I’m afraid he’s going after SDI.” If they were going to do business, SDI was untouchable.