Mixed Blessing

By Jacob V. Lamar Jr

For the first time in the short history of the labyrinthine White House scandal, a plausible version of events was taking shape, based on sworn testimony and Administration documents. According to the latest scenario, the Administration's weapons deals with Iran were a straightforward arms-for- hostages swap. Reagan's repeated claim that the transactions were an overture to moderate factions in the Iranian government was no more than a rationale concocted by CIA Director William Casey. Lieut. Colonel Oliver North was instrumental in persuading the President to proceed; North's boss, former National Security Adviser John Poindexter, was aware that Iran arms profits were being diverted to Nicaraguan contras. Casey, too, knew of the diversion weeks before he has claimed he was told. Yet Ronald Reagan seemed "surprised" to learn last November of the contra connection.

These were some of the disclosures in a Senate Intelligence Committee draft report based on the four weeks of hearings the panel held before Christmas. Although committee members voted last week against releasing their findings, an earlier version, like so many other important documents in Washington, was leaked before the week was out. Despite the report's damning implication that the President either did not know or did not comprehend fully what his staff was up to, the White House was eager for the document's release. The primary reason: the preliminary investigation found no evidence linking the President to the illegal rerouting of money to the contras.

Shortly after highlights of the document were broadcast on NBC Nightly News, the White House announced, "We believe that this report will underscore the fact that the President knew absolutely nothing about the diversion of funds from Iran to the contras and that no such policy was ever approved by the President." In the terminology of Watergate: no smoking gun. It was a curious vindication, proclaiming Reagan's innocence by revealing his ignorance.

The strategy seemed intended to distance the White House from the scandal's central players, North and Poindexter. Earlier in the week, White House officials said the Administration had unwittingly given misleading testimony to Congress about the Iran affair based on a falsified chronology that North had prepared with CIA assistance last November. "People are coming to grips with the fact that North just doesn't tell the truth very much," said one Reagan aide. But the tactic could backfire if the two rogue former NSC staffers, who have so far kept silent, decide to start talking. "So we're throwing Ollie over the side?" mused a White House official after watching the week's events. "That's not very smart."

Knowing that the report would exonerate Reagan of complicity in the contra connection, the Administration had been pressuring the Intelligence Committee to make its findings public. Taking their cue from the White House, many Republican lawmakers were demanding immediate disclosure. Democratic Senators contended that the current draft was still incomplete and full of inconsistencies. Moreover, 13 Administration officials -- including members of the CIA and the NSC -- had been allowed to inspect the text, deleting portions they deemed diplomatically sensitive or dangerous to national security. And since neither North nor Poindexter would testify, the findings were far from complete. Said New Jersey Democrat Bill Bradley: "It's like going to a movie without the stars. You only get to see the extras." Finally, the committee voted, 7 to 6, against releasing the report. Instead, the panel decided to work on the document and pass it on to the Senate select committee investigating the scandal.

% There are in fact contradictions and gaps in the draft version that was leaked. But the report does clarify some of the details of how the Iran- contra affair evolved. In December 1985, for instance, several of Reagan's top aides argued against sending U.S. arms to Iran. But, the report says, North may have won Reagan over with a memo warning, "If the program is terminated, then the hostages will die."

Another North memo, prepared for the President last January, also outlined the rationale for beginning direct U.S. arms shipments to Iran. Reagan evidently did not read the three-page document. Instead, Poindexter apparently gave him an oral briefing and then signed Reagan's initials at the bottom. The White House was at pains to point to the paper's justification of weapons deliveries as a way of fostering ties to Iran's moderate elements. Yet the Senate report says that Casey had devised this line of reasoning to cloud the true arms-for-hostages nature of the arrangement. The document claims that arms shipments "may well be our only way to achieve the release of the Americans held in Beirut."

The day after the Senate report was leaked, White House Counsel Peter Wallison released both the background memo and Reagan's secret intelligence "finding" authorizing the arms sales to Iran. "I don't want to argue whether this was in fact a swap of arms for hostages," a Reagan aide told reporters. He insisted the documents showed that the weapons deal "was part of a much broader initiative that would help stabilize the (Persian Gulf) region."

The Senate report states that last Oct. 1, Charles Allen, a national intelligence officer at the CIA, told Deputy CIA Director Robert Gates he suspected a diversion of Iran arms profits to the contras. Six days later they discussed the matter with Casey. On Oct. 9, Casey and Gates confronted North. The NSC aide denied there was any contra connection. This scenario contradicts Casey's claim that he did not learn of money being diverted to the rebels until just before Attorney General Edwin Meese announced it to the public on Nov. 25. Last week the CIA released a statement reiterating the director's earlier contention that he was informed only of "tenuous speculation" about the contra funding. Casey is recovering from surgery for a brain tumor, and reports circulated last week that he is having trouble speaking and cannot stand or walk. Few in Washington believe he will rejoin the CIA or give any further testimony on the arms scandal.

Reagan had nothing to say about the Iran affair. Returning to the White House after successful prostate surgery, the President exclaimed, "I feel great!," but he still planned on keeping a low profile and following an abbreviated work schedule until his State of the Union address at the end of the month.

It is questionable whether the White House emphasis on Reagan's lack of culpability will really help defuse the scandal. In a poll for TIME last week by Yankelovich Clancy Shulman, 58% of the respondents said that what bothered them most about the Iran-contra affair was that the public had not been told everything that happened. More than three-fourths of the public believe that Reagan is still holding back what he knows.

The President can be heartened by the fact that his overall job performance gets a 53% approval rating. Yet 47% of those surveyed say they have less confidence in him since the controversy began, and 61% disapprove of the way he has handled the crisis. As his aides scramble to protect Reagan, they should keep in mind that the key issue may not be the President's complicity but his credibility.

CHART: TEXT NOT AVAILABLE.

CREDIT: NO CREDIT

CAPTION: NO CAPTION

DESCRIPTION:Color illustration: Cartoon of plane, money and question mark over columns of questions and statistics indicating responses.

With reporting by David Beckwith and Barrett Seaman/Washington