Reagan: The Life (96 page)

G
EORGE
S
HULTZ WASN
’
T
part of the good-news gang. He deemed Reagan’s press conference “
disastrous” and shuddered at being associated with the policies that had made it necessary. He groaned to read a devastating review of the administration’s actions in the typically supportive
Wall Street Journal
. “
If some malicious Merlin were trying to concoct a scheme that, with one stroke of a wizard’s wand, would undermine American principles, policies, people, interests and allies,” the
Journal
’s columnist declared, “it would be hard to conjure up anything more harmful and humiliating than secretly shipping supplies of American weaponry to the world’s primary terrorist state in exchange for a handful of hostages.” The columnist went on to say, “In the process, Mr. Reagan seems to have cuckolded his own secretaries of state and defense. Secretary of State George Shultz has staked his personal prestige on a global campaign against cooperation with terrorism. Only weeks ago, for example, Mr. Shultz was at the United Nations reassuring Arab ministers that the U.S. was determined to stem the flow of arms to Iran. About the same time Defense Secretary Caspar Weinberger was in Peking urging Chinese leaders to cease shipping arms to Tehran.”

Shultz phoned the president after the news conference and told him he had made “
a great many factual errors.” Shultz asked permission to come to the White House the next day and show Reagan where he had gone wrong. “He was shaken by what I said and agreed to listen to me,” Shultz recalled.

The president corrected one of the errors before the secretary arrived. “
There may be some misunderstanding of one of my answers tonight,” Reagan said in a written statement released less than an hour after the news conference. “There was a third country involved in our secret project with Iran.” Reagan didn’t name the third country, but after all the publicity, everyone interested understood it to be Israel. The president proceeded, however, to compound a separate error. “Taking this into account, all of the shipments of the token amounts of defensive arms and parts that I have authorized or condoned taken in total could be placed aboard a single cargo aircraft.” This was patently untrue, as anyone familiar with
the ordnance included in the transfers understood. But Reagan, who was not familiar with the ordnance, as had become clear at his news conference,
had been told this by
John Poindexter, and he believed it.

Reagan and Shultz met the following afternoon. Don Regan joined them. “
The content of our discussion was tough,” Shultz wrote later. “I had detailed material on statements the president had made that were wrong. He had accepted as accurate information provided him by the CIA and the NSC staff that was in fact laden with error—all coordinated, insofar as I could see, by Poindexter. For nearly an hour I went at it with the president. We argued back and forth, hot and heavy. I never thought I would talk to a president of the United States in such a direct and challenging way.”

Reagan seemed to accept Shultz’s good intentions. “But I didn’t shake him one bit,” Shultz recalled. “To him, the problem was with the press.” Shultz mentioned a telephone call from McFarlane a year earlier in which McFarlane described an arms-for-hostages trade. “Oh, I knew about that,” Reagan responded. “But that wasn’t arms for hostages.” Shultz rejoined that no one who saw the evidence would believe him. Reagan held fast. “George, I know what happened, and we were doing the right thing.”

Reagan thought Shultz was blowing things out of proportion. “
A touchy meeting with George S. and Don R.,” he wrote in his diary. “George is very upset about the Iran affair and I fear he may be getting ready to say ‘Either someone else is fired or I quit.’ ” The president remarked to himself, “I don’t like ultimatums.” Yet he agreed to Shultz’s demand for a showdown within the administration. “I’ve called a Monday afternoon meeting”—Reagan was writing on Thursday—“of him and Don, me and Cap W., Bill Casey, John P. and the V.P. to get everything about the Iran effort out on the table.”

Reagan continued to think the problem was primarily a misunderstanding. “
We had an NSC briefing,” he wrote the next day. “It seems there is a thing having to do with Israel and some Hawk missiles in the Iran mix that has to be straightened out.” His confidence remained unshaken. “Ed Meese assured us again that I’m in the clear legally on what we were doing.”

R
EAGAN
’
S CONFIDENCE WAS
tested anew at the start of the following week. “
Big thing of the day was two-hour meeting in the Situation Room on the Iran affair,” Reagan wrote on Monday night. “George S. is
still stubborn that we shouldn’t have sold the arms to Iran. I gave him an argument. All in all we got everything out on the table.”

Actually, not everything came out at the meeting, as Ed Meese soon revealed. The attorney general had been conducting a quiet investigation, quizzing Poindexter and others. He had more bad news for the president. “After meeting, Ed M. and Don R. told me of a smoking gun,” Reagan wrote in his diary. “On one of the arms shipments the Iranians paid Israel a higher purchase price than we were getting. The Israelis put the difference in a secret bank account. Then our Col. North (NSC) gave the money to the ‘Contras.’ ”

Don Regan recalled the moment the president learned of the contra connection. “
The president, in person, is a ruddy man, with bright red cheeks,” Regan wrote. “He blanched when he heard Meese’s words. The color drained from his face, leaving his skin pasty white. The president wore a stern, drawn expression that was new to me—and just as new, I suspect, to Meese, who has known him for more than twenty years.” Regan added, “Nobody who saw the president’s reaction that afternoon could believe for a moment that he knew about the diversion of funds before Meese told him about it. He was the picture of a man to whom the inconceivable had happened.”

“Get to the bottom of this, Ed,” Reagan told the attorney general. “We have to go public with what we already know as soon as we can.”

Regan suggested that the president appoint a bipartisan commission to investigate. Meese said that an independent counsel might have to get involved.

Reagan asked Meese and Regan what Poindexter had to say for himself. Meese explained that Poindexter admitted to knowing some of what North was doing. But he hadn’t wanted to look too closely for fear of what he might find.

“The president looked at Ed Meese in disbelief,” Regan recalled. “He shook his head in bewilderment. He was pale and unsmiling.” Meese left the room, and the president turned to Regan. “What went on in their minds?” he said. “Do you understand it, Don?”

Regan didn’t, but he knew what the consequence had to be. He told the president that Poindexter had to go. Reagan nodded.

Regan relayed the decision to Poindexter, who arrived at the Oval Office the next morning with resignation in hand. “
I’m sorry it’s come to this, Mr. President,” he said.

“So am I, John,” Reagan replied.

R
EAGAN
, M
EESE
,
AND
Regan agreed that the White House would call another news conference. The president would make a statement before letting Meese field the questions. Reagan told the reporters that he had asked Meese to review the Iran initiative and the allegations surrounding it. The attorney general had delivered his preliminary report. “
And this report led me to conclude that I was not fully informed on the nature of one of the activities undertaken in connection with this initiative,” Reagan said. “This action raises serious questions of propriety.” Without specifying the offending activity, the president said that Poindexter had resigned and Oliver North had been fired from the NSC staff. He said that the Justice Department would continue its investigation and that he would appoint a special review board to conduct its own probe. “I am deeply troubled that the implementation of a policy aimed at resolving a truly tragic situation in the Middle East has resulted in such controversy,” Reagan said. “As I’ve stated previously, I believe our policy goals toward Iran were well founded. However, the information brought to my attention yesterday convinced me that in one aspect implementation of that policy was seriously flawed.”

The first question from the first reporter was the obvious one: “What was the flaw?” A second reporter immediately asked, “Do you still maintain you didn’t make a mistake?”

“No, and I’m not taking any more questions,” Reagan said.

“Why won’t you say what the flaw is?” a third reporter demanded.

Reagan quickly exited the room, leaving Meese to clean up. The attorney general delivered his own opening statement. He explained that the president had asked him to examine the allegations surrounding the arms transfers to Iran. He cautioned that his findings were very preliminary. But the president had insisted that he reveal one important aspect of the Iran initiative. “
In the course of the arms transfers, which involved the United States providing the arms to Israel, and Israel in turn transferring the arms—in effect selling the arms—to representatives of Iran,” Meese said, “certain monies which were received in the transaction between representatives of Israel and representatives of Iran were taken and made available to the forces in Central America which are opposing the Sandinista government there.”

The reporters required a moment to absorb what Meese had said. Then
they began to shout questions. “How much money, sir, was involved?” one asked.

“We don’t know the exact amount yet,” Meese replied. “Our estimate is that it is somewhere between ten and thirty million dollars.”

“Why wasn’t the president told?”

“The president was told as soon as we found out about it. The president knew nothing about it until I reported it to him.”

Meese was asked who
did
know about the diversion of funds.

“The only persons in the United States government that knew precisely about this—the only person—was Lieutenant Colonel North. Admiral Poindexter did know that something of this nature was occurring but he did not look into it further.”

“What about CIA director Casey?”

“CIA director Casey, Secretary of State Shultz, Secretary of Defense Weinberger, myself, the other members of the NSC—none of us knew.”

Some of the reporters were openly skeptical. “What’s to prevent an increasingly cynical public from thinking that you went looking for a scapegoat and you came up with this whopper?” one asked.

“The only thing I can say is that we have been very careful to lay out the facts for you and for the American public just as rapidly as we’ve gotten them,” Meese said. “The president felt that in the interests of getting the full story out, that he should make the statement that he did today and that I should appear before you and answer questions. Which I think you will agree is doing everything we can to be sure that there is no hint that anything is trying to be concealed.”

The skepticism persisted. “Mr. Meese, how high does this go? In other words, do you believe, and are we being asked to believe, that a lieutenant colonel took this initiative and had these funds transferred and that only Admiral Poindexter knew about it? How high did it go?”

Meese stood by his explanation. “What you have just said is an accurate picture of what we know at this time,” he said. “And to the best of our knowledge, and we have checked this rather extensively, it did not go any higher than that.”

N
ANCY
R
EAGAN WAS
sometimes candid about her husband’s weaknesses. “
Ronnie can be too trusting of the people around him,” she told
Michael Deaver. To a reporter she once said, “
I think it’s the eternal optimist in him, his attitude that if you let something go, it will eventually work itself out. Well, that isn’t always so.”

It certainly wasn’t so in the autumn of 1986, and as the Iran scandal metastasized to include the contra diversion, Nancy grew increasingly distressed for her husband and angry at his staff. “
I’ll never forget the expression on Ronnie’s face after Ed Meese came to him on the afternoon of November 24 with astonishing and alarming news that although Iran had paid $30 million for American military equipment, less than half of that money had been accounted for,” she wrote later. “
Oliver North had admitted diverting at least some of the profits to Nicaraguan contras. The news was so shattering that everything just stopped. Ronnie came into our bedroom looking pale and absolutely crushed. ‘Honey,’ he said, ‘I’ve got some bad news. Ed Meese just came in and told me that money from the sale of arms to Iran went to the contras.’ Although I didn’t really understand it yet, I could tell from his voice that this was very serious.”

Nancy didn’t have to understand it completely to know how she felt about it. “If Ronnie was incredulous, I was furious,” she wrote. “Later that evening I called Don Regan from my office to let him know how upset I was. I felt very strongly that Ronnie had been badly served, and I wanted Don to know.” She also wanted Regan to know that she blamed him. She refused to accept his explanation that he hadn’t known what was going on. “He was the chief of staff, and if he didn’t know, I thought, he should have. A good chief of staff has sources everywhere. He should practically be able
to smell what’s going on.” She wasn’t the first or last to compare Regan’s tenure as chief of staff negatively with that of his predecessor. “I can’t imagine that this problem would have developed during Ronnie’s first term, when the ‘troika’ of Baker, Meese, and Deaver was in charge. The West Wing was far more open then, and if anything devious had been going on in the White House basement it would have come to light—and certainly to Ronnie’s attention. But now all the power of the troika was concentrated in one man.”

Nancy’s distress deepened during the following weeks. “I must have dropped ten pounds,” she said. “I tried to eat, but I couldn’t eat much. Every day when we turned on the television, we didn’t know what we were going to hear. It was crazy—I was relying on the media for information about what was going on in our own house.”