First Restoration,

The Pieces Arrayed

excerpted from the book

Secrecy & Privilege

Rise of the Bush Dynasty from Watergate to Iraq

by Robert Parry

The Media Consortium Inc., 2004, paper

First Restoration

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[March 23, 1979, late on a Friday afternoon, Chase Manhattan Bank Chairman David Rockefeller and his longtime aide Joseph Verner Reed arrived at a town house in the exclusive Beekham Place neighborhood on New York's East Side. They were met inside by a small, intense and deeply worried woman who had seen her life turned upside down in the last two months. Iran's Princess Ashraf, the strong-willed twin sister of the Iran's

long-time ruler, had gone from wielding immense behind-the-scenes clout in the ancient nation of Persia to living in exile - albeit a luxurious one.

With hostile Islamic fundamentalists running her homeland, Ashraf also was troubled by the plight of her ailing brother, the ousted Shah of Iran, who had fled into exile, first to Egypt and then Morocco. Now, she was turning for help to the man who ran one of the leading U.S. banks, one which had made a fortune serving as the Shah's banker for a quarter century and handling billions of dollars in Iran's assets. Ashraf's message was straightforward. She wanted Rockefeller to intercede with Jimmy Carter and ask the President to relent on his decision against granting the Shah refuge in the United States.

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Later on March 23 ... Rockefeller attended a dinner with Happy Rockefeller, the widow of his brother Nelson who had died two months earlier. Also at the dinner was former Secretary of State Henry Kissinger, a long-time associate of the Rockefeller family. Discussing the Shah's plight, Happy Rockefeller described her late husband's close friendship with the Shah, which had included a weekend stay with the Shah and his wife in Teheran in 1977. Happy said that when Nelson learned that the Shah would be forced to leave Iran, Nelson offered to pick out a new home for the Shah in the United States. The dinner conversation also turned to the dangerous precedent that President Carter was setting by turning his back on a prominent U.S. ally. What message of American timidity was being sent to other pro-U.S. leaders in the Middle East?

The dinner led to a public campaign by Rockefeller - along with Kissinger and former Chase Manhattan Bank Chairman John McCloy - to find a suitable home in exile for the Shah. Country after country closed their doors to the Shah as he began a humiliating odyssey as what Kissinger would call a modern-day "Flying Dutchman," wandering in search of a safe harbor. Rockefeller assigned his aide, Joseph Reed, "to help [the Shah] in any way he could," including serving as the Shah's liaison to the U.S. government. McCloy, one of the so-called Wise Men of the post-World War II era, was representing Chase Manhattan as an attorney with Milbank, Tweed, Hadley and McCloy. One of his duties was to devise a financial strategy for staving off Iran's withdrawal of assets from the bank.

Rockefeller also pressed the Shah's case personally with Carter when the opportunity presented itself. On April 9, 1979, at the end of an Oval Office meeting on another topic, Rockefeller handed Carter a one-page memo describing the views of many foreign leaders disturbed by recent U.S. foreign policy actions, including Carter's treatment of the Shah. "With virtually no exceptions, the heads of state and other government leaders I saw expressed concern about United States foreign policy which they perceived to be vacillating and lacking in an understandable global approach," Rockefeller's memo read. "They have questions about the dependability of the United States as a friend." An irritated Carter abruptly ended the meeting.

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When the Shah's medical condition took a turn for the worse in October, however, Carter relented and agreed to let the Shah fly to New York for emergency treatment. Celebrating Carter's reversal, Rockefeller's aide Joseph Reed wrote in a memo, "our 'mission impossible' is completed.

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Rockefeller was just one of many powerful people who felt that Jimmy Carter had fallen down on the job and that a new direction was needed from Washington. With the hostage crisis started, a countdown of 365 days began toward the 1980 elections. Though he may have been only dimly aware of his predicament, Carter faced a remarkable coalition of enemies and adversaries both inside and outside the United States.

In the Persian Gulf, the Saudi royal family and other Arab oil sheiks blamed Carter for forsaking the Shah and feared their own playboy life styles might be next on the list for the Islamic fundamentalists. The Israeli government saw Carter as too cozy with the Palestinians and too eager to cut a peace deal that would force Israel to surrender land won in the 1967 war. European anti-communists believed Carter was too soft on the Soviet Union and was risking the security of Europe. Dictators in the Third World - from the Philippines and South Korea to Argentina and El Salvador - were bristling at Carter's human rights lectures.

Inside the United States, the Carter administration had made enemies at the CIA by purging many of the Old Boys who saw themselves as protectors of America's deepest national interests. Many CIA veterans, including some still within the government, were disgruntled. And, of course, the Republicans were determined to win back the White House, which many felt had been unjustly taken from their control after Nixon's landslide victory in 1972.

This subterranean struggle between Carter, trying desperately to free the hostages before the 1980 election, and those who stood to benefit by thwarting him became known popularly as the "October Surprise" controversy. The nickname referred to the possibility that Carter might have ensured his reelection by arranging the hostage return the month before the presidential election as an October Surprise, although it came ultimately to refer to clandestine efforts to stop Carter from pulling off his October Surprise.

But the question of whether George H.W. Bush and other Republicans, in fact, did conspire with Iranians and international operatives to block Carter's October Surprise would become not only a political mystery but a test of whether it is possible to determine the truth when many powerful interests are threatened by it. Given the complexity of the mystery and the questionable credibility of some witnesses, the October Surprise case also their the limits of how much the American people ever get to know about [r nation's secret history.

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The first major recounting of Nixon's sabotage of Johnson's Paris peace talks - by offering South Vietnam's President Nguyen van Thieu a better deal from Republicans than was available from the Democrats - came 15 years after the actual events, in Seymour Hersh's 1983 political biography of Henry Kissinger, The Price of Power. According to Hersh's book, Kissinger learned of Johnson's peace plans and warned Nixon's campaign. "It is certain" Hersh wrote "that the Nixon campaign alerted by Kissinger to the impending success of [Vietnam] peace talks, was able to get a series of messages to the Thieu government making it clear that a Nixon Presidency would have different views on the peace negotiations.

Nixon's chief emissary was Anna Chennault, an anti-communist Chinese leader who was working with the Nixon campaign. Hersh quoted one former official in President Lyndon Johnson's Cabinet as stating that the U.S. intelligence "agencies had caught on that Chennault was the go-between between Nixon and his people, and President Thieu in Saigon . ... The idea was to bring things to a stop in Paris and prevent any show of progress."

In her memoirs, The Education of Anna, Chennault acknowledged that she was the courier. She quoted Nixon campaign manager John Mitchell as calling her a few days before the 1968 election and telling her: "I'm speaking on behalf of Mr. Nixon. It's very important that our Vietnamese friends understand our Republican position and I hope you have made that clear to them. ,

On November 2, four days before the U.S. election, Thieu withdrew from his tentative agreement to sit down with the Viet Cong at the Paris peace talks, killing Johnson's last hope for a settlement of the war. A late Humphrey surge fell short and Nixon won a narrow election victory.

In The Price of Power, Hersh quoted Chennault as saying that after the election, in 1969, Mitchell and Nixon urged her to keep quiet about her mission, which could have implicated them in an act close to treason. 14 As the Vietnam War dragged on for another four years, tens of thousands of U.S. soldiers died, as did hundreds of thousands of Indochinese. When the allegations of the secret deal surfaced, survivors of the Nixon administration denied them, depicting Chennault as a freelance operative working on her own initiative.

Over the years, more historical pieces fell into place, however. In his 1991 memoirs, Counsel to the President, Clark Clifford, Johnson's Secretary of Defense, wrote that as the peace initiative advanced in October 1968, the Johnson administration was stunned by "our discovery, through intelligence channels, of a plot - there is no other word for it - to help Nixon win the election by a flagrant interference in the negotiations."

Four years after Clifford's book, Daniel Schorr, the former CBS News correspondent, added more details to the story in a Washington Post article. Schorr cited decoded cables that U.S. intelligence had intercepted from the South Vietnamese embassy in Washington. On October 23, 1968, Ambassador Bui Diem cabled Saigon with the message that "many Republican friends have contacted me and encouraged me to stand firm," according to Schorr's article. On October 27, 1968, the Ambassador wrote, "The longer the present situation continues, the more favorable for us . ... I am regularly in touch with the Nixon entourage."

Perhaps the fullest account of Nixon's 1968 gambit appeared in 2000 in Anthony Summers's The Arrogance of Power. "This is a story that has long hung between the shadows of Nixon's past and the disgrace of his Presidency, half reported on partial evidence, often exploited by partisan sources, yet never fully resolved," Summers wrote. "He escaped full opprobrium for his behavior while he was alive, yet the evidence implies a sin and a cynicism worse than any of the offenses that would later make headlines."

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In 2002, former South Vietnamese Vice President Nguyen Cao Ky described the Republican initiative from the Saigon government's point of view in his memoirs Buddha's Child. Chennault, Ky wrote, "told us that Nixon was far more anticommunist than Humphrey and that if he was elected he would make sure that U.S. aid continued until the war was won. But, Madame Chennault explained, first he needed our help. We could help by not going to the Paris peace conference until after the election. If we refused to participate in negotiations, she explained, Nixon would be able to condemn the Democratic Party and Humphrey as weaklings. There would be no light at the end of the tunnel, no hope for a quick peace. Anna Chennault may have been right in her observation that "power overpowers all reason."

*****

The Pieces Arrayed

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After years of performing what might be called clean-up duty for Nixon and the CIA, Bush would emerge as a principal in the October Surprise case. Bush would serve as both a coordinator of a Republican intelligence operation about President Carter's Iranian initiatives and an alleged intermediary to the Iranians seeking their cooperation with the Reagan-Bush campaign.

What is not in doubt is that Bush - first as a Republican presidential candidate and then as the party's vice presidential nominee - served as a ringleader for a host of disgruntled former CIA officials, who had worked for Bush when he was CIA director. Tie-se ex-intelligence officers were so distraught over Carter's handling of the spy agency and his conduct of foreign policy that they cast off their traditional cloak of anonymity and joined the effort to oust the sitting President.

In Bush's campaign for the Republican nomination, ex-covert CIA officers volunteered as public foot soldiers. One joke making the rounds about Bush's announcement of his presidential candidacy on May 1, 1979, was that "half the audience was wearing raincoats." Bill Colby, Bush's predecessor as CIA director, said Bush "had a flood of people from the CIA who joined his supporters. They were retirees devoted to him for what he had done" at the spy agency.

All told, at least two dozen former CIA officials went to work for their former boss. Among them was the CIA's director of security, Robert Gambino, who left the CIA immediately before joining the Bush campaign, causing concern within the Carter administration because of Gambino's knowledge about security investigations of senior officials and the personal information that must be divulged in those inquiries.'

Beyond the ex-CIA personnel who joined the Bush campaign were other intelligence officers who remained in the CIA but still made clear their choice for President. "The seventh floor of Langley was plastered with 'Bush for President' signs," George Carver, a senior CIA analyst, told me.

Carter administration officials also worried about the personal relationships between some former CIA officers in Bush's campaign and active-duty CIA personnel who continued to hold sensitive jobs inside the Democratic administration. For instance, Gambino, a 25-year CIA veteran and CIA officer Donald Gregg, who served as a CIA representative o Carter's National Security Council, "are good friends who knew each other from the CIA," according to an unpublished section of a report by a House Task Force, which investigated the October Surprise issue in 1992.*

Still, Jimmy Carter never appreciated how much he was surrounded by enemies. He was the proverbial babe in the woods. Out of necessity or naively, Carter and his administration also turned to people he believed might help resolve the hostage crisis while not knowing their full connections to some of his most dedicated adversaries.

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former CIA Director William Casey's personal reflections:

"Everyone [in Reagan's camp] agreed that Jimmy Carter had to be removed from office in order to save the nation from economic ruin and international humiliation," Casey wrote. He also recognized the pivotal role played by the Iranian hostage crisis in highlighting Carter's shortcomings. "The Iranian hostage crisis was the focal point of the failure of Carter's foreign policy," Casey wrote.

... As the hostage crisis dragged on, the attention of many CIA Old Boys also turned toward the American humiliation in Iran, which they found doubly hard to take since it had been the site of the agency's first major victory, the restoration of the Shah to the Peacock Throne in 1953. A number of veterans from that operation were still alive in 1980. Archibald Roosevelt was one of the Old Boys from the Iranian operation. He had moved on to become an adviser to David Rockefeller at Chase Manhattan Bank. Another was Miles Copeland, who had served the CIA as an intermediary to Arab leaders, including Egyptian President Gamal Abdul Nasser. In his autobiography, The Game Player, Copeland claimed that he and his CIA chums prepared their own Iranian hostage rescue plan in March 1980.

... "Let me say first that we liked President Carter," Copeland told me "He read, unlike President Reagan later, he read everything. He knew what he was about. He understood the situation throughout the Middle East, even these tenuous, difficult problems such as Arabs and Israel. But the way we saw Washington at that time was that the struggle was really not between the Left and the Right, the liberals and the conservatives, as between the Utopians and the realists, the pragmatists. Carter was a Utopian. He believed, honestly, that you must do the right thing and take your chance on the consequences. He told me that. He literally believed that."

Copeland's deep Southern accent spit out the words with a mixture of amazement and disgust. To Copeland and his CIA friends, Carter deserved respect for a first-rate intellect but contempt for his idealism.

"Most of the things that were done [by the United States] about Iran had -, been on a basis of stark realism, with possibly the exception of letting the Shah down," Copeland said. "There are plenty of forces in the country we could have marshaled . ... We could have sabotaged [the revolution]. I think in the long run we'd have had a hard time to do it because Islam is the march of the future. But, yes, we could have done something about it. But we had to do it early. We had to establish what the Quakers call 'the spirit of the meeting' in the country, where everybody was thinking just one way. The Iranians were really like sheep, as they are now."

But Carter, troubled by the Shah's human rights record, delayed taking decisive action and missed the moment of opportunity, Copeland said. Infuriating the CIA's Old Boys, Carter had sacrificed an ally on the altar of idealism. "Carter really believed in all the principles that we talk about in the ' West," Copeland said, shaking his mane of white hair. "As smart as Carter is, he did believe in Mom, apple pie and the corner drug store. And those things that are good in America are good everywhere else."

Veterans of the CIA and Republicans from the Nixon-Ford administrations judged that Carter simply didn't measure up to the demands of a harsh world. "There were many of us - myself along with Henry \ Kissinger, David Rockefeller, Archie Roosevelt in the CIA at the time - we believed very strongly that we were showing a kind of weakness, which people in Iran and elsewhere in the world hold in great contempt," Copeland said. "The fact that we're being pushed around, and being afraid of the Ayatollah Khomeini, so we were going to let a friend down, which was horrifying to us. That's the sort of thing that was frightening to our friends in Saudi Arabia, in Egypt and other places."

But Carter also was susceptible to bending to the moral suasions of the Shah's friends, who argued on humanitarian grounds that the ailing Shah deserved admission to the United States for medical treatment. "Carter, I say, was not a stupid man," Copeland said. Carter had even a greater flaw: "He was a principled man." So, Carter decided that the moral act was to allow the Shah to enter the United States for treatment, leading to the result Carter had feared: the seizure of the U.S. Embassy.

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The Israeli government was another deeply interested player in the Iran crisis. For decades, Israel had cultivated covert ties with the Shah's regime as part of a Periphery Strategy of forming alliances with non-Arab states in the region to prevent Israel's Arab enemies from focusing all their might against Israel. Though losing an ally when the Shah fell and offended by the anti-Israeli rhetoric from the Khomeini regime, Israel had gone about quietly rebuilding relations with the Iranian government. One of the young Israeli intelligence agents assigned to this task was an Iranian-born Jew named An Ben-Menashe, who had immigrated to Israel as a teen-ager and was valuable because he spoke fluent Farsi and still had friends in Iran, some of whom were rising within the new revolutionary bureaucracy.

In his own 1992 memoirs, Profits of War, Ben-Menashe said the view of Israel's Likud leaders, including Prime Minister Menachem Begin, was one of contempt for Jimmy Carter in the late 1970s. "Begin loathed Carter for the peace agreement forced upon him at Camp David," Ben-Menashe Wrote. "As Begin saw it, the agreement took away Sinai from Israel, did not create a comprehensive peace, and left the Palestinian issue hanging on Israel's back."°

After the Shah fell, Begin grew even more dissatisfied with Carter's handling of the crisis and alarmed over the growing likelihood of an Iraqi attack on Iran's oil-rich Khuzistan province. Israel saw Iraq's Saddam Hussein as a far greater threat to Israel than Iran's Khomeini. Ben-Menashe wrote that Begin, recognizing the realpolitik needs of Israel, authorized shipments to Iran of small arms and some spare parts, via South Africa, as early as September 1979.

After the U.S. hostages were taken in November 1979, the Israelis came to agree with Copeland's hard-headed skepticism about Carter's approach to the hostage issue, Ben-Menashe wrote. Even though Copeland was generally regarded as a CIA "Arabist" who had opposed Israeli interests in the past, he was admired for his analytical skills, Ben-Menashe wrote.

"A meeting between Miles Copeland and Israeli intelligence officers was held at a Georgetown house in Washington, D.C.," Ben-Menashe wrote. "The Israelis were happy to deal with any initiative but Carter's. David Kimche, chief of Tevel, the foreign relations unit of Mossad, was the senior Israeli at the meeting . ... The Israelis and the Copeland group came up with a two-pronged plan to use quiet diplomacy with the Iranians and to draw up a scheme for military action against Iran that would not jeopardize the lives of the hostages."

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Questioned by congressional investigators a dozen years later, Carter I said he felt that by April, "Israel cast their lot with Reagan," according to notes I found among the unpublished documents in the House Task Force files. Carter traced the Israeli opposition to his reelection to a "lingering concern [among] Jewish leaders that I was too friendly with Arabs." Carter's National Security Adviser Zbigniew Brzezinski also recognized the Israeli hostility. In an interview, Brzezinski told me that the Carter White House was well aware that the Begin government had "an obvious preference for a Reagan victory."

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Palestinian leader Yasir Arafat is another Middle Eastern figure who claimed to have received a Republican overture in summer 1980.

... "There is something I want to tell you," Arafat said, addressing Carter at a meeting in Arafat's bunker. "You should know that in 1980 the Republicans approached me with an arms deal [for the PLO] if I could / arrange to keep the hostages in Iran until after the [U.S. presidential] ( election."

Arafat insisted that he rebuffed the offer, but he supplied Carter with few other details, no name of the Republican representative nor exactly when and where the approach was made. But the conversation was recounted by historian Douglas Brinkley who was present when Carter and Arafat spoke. Brinkley included the exchange in an article for the fall 1996 issue of Diplomatic History, a scholarly quarterly. Later, through a spokesman, Carter confirmed to me the conversation with Arafat had occurred as described by Brinkley.

Arafat's statement to Carter did not stand alone. Since the late 1980s, one of Arafat's senior aides, Bassam Abu Sharif, had given journalists a similar account of a Republican approach to the PLO in July 1980 when the PLO was maintaining close ties to the Islamic government in Iran. In 1990, during an interview in Tunisia, Bassam Abu Sharif told me that a senior figure in the Reagan campaign had contacted Arafat and the PLO in Beirut about engineering a delay in the hostage release.

"It was important for Reagan not to have any of the hostages released during the remaining days of President Carter," Bassam said. "The offer was, 'if you block the release of hostages, then the White House would be open for the PLO.' In spite of that, we turned that down . ...1 guess the same offer was given to others, and I believe that some accepted to do it and managed to block the release of hostages." Other PLO sources said Arafat discovered during a September 1980 trip to Iran that his intervention was superfluous since the Republicans already had established other back channels to the radical Islamic mullahs.

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On July 14, the Republican National Convention opened in Detroit. After a brief flirtation with the possibility of enlisting former President Ford as the vice presidential nominee, Reagan settled on George H.W. Bush.

After accepting the No. 2 spot, Bush began merging his CIA-heavy campaign apparatus with Reagan's. The united Reagan-Bush campaign created a strategy group, known as the "October Surprise Group," to prepare for "any last-minute foreign policy or defense-related event, including the release of the hostages, that might favorably impact President Carter in the November election," according to a draft section of the House Task Force report.

... Deleted from the final [October Surprise Group] report also was a section describing how the exCIA personnel who had worked for Bush's campaign became the nucleus of the Republican intelligence operation that monitored Carter's Iran-hostage negotiations for the Reagan-Bush team.

"The Reagan-Bush campaign maintained a 24-hour Operations Center, which monitored press wires and reports, gave daily press briefings and maintained telephone and telefax contact with the candidate's plane," the draft report read. "Many of the staff members were former CIA employees who had previously worked on the Bush campaign or were otherwise loyal to George Bush.

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