Reagan and Bush's Not-so-Secret War: Part 5

Provisioning the Nicaraguan Contras

Supplying the Nicaraguan Contras was a major priority for C.I.A. Director William Casey, who sometimes carried out his own foreign policy. Casey essentially carried out his own foreign policy and was repeatedly successful in blocking George Schultz’s arms control efforts. Casey and the NSA also undermined Schultz’s position on bargaining to retrieve hostages. The C.I.A. and NSA dealt not only with Iran but terrorists who held Father Lawrence Jenko and other hostages. On the other hand, Schultz unsuccessfully tried field as peace plan for Nicaragua, thus attempting to end Casey and North’s secret war there.

Casey did all he could to assist Oliver North carry on support for the Nicaraguan contras, while barely staying within the law. After the Boland Amendment became law, Casey was very careful what he did about Nicaragua and he told potential Contra donors they would have to talk to Ollie North. He even signed a document for the Senate intelligence Committee promising he would remain within the law. While some in the C.I.A. approved of Casey’s aggressive policies, others dreaded another round of Congressional investigations and new restrictions and tried to circumscribe some of his most risky policies.

Disgusted with Congressional restrictions, he dreamed of the day when the C.I.A. would be a self-financing, “full-service agency.” To reach self-financing status, he accelerated efforts of the agency to enter private business. There is no way of knowing if he knew of C.I.A. involvement in the drug grade.1


Much of the supply effort was coordinated by Lt. Colonel Oliver North, a deputy in the office of the National Security Advisor. A number of former C.I.A. agents played important roles, as did C.I.A. contractors in central America. At first, it appeared that the C.I.A. was permitting the Contras to bring cocaine into the United States to pay for weapons.

The agency and Justice Department repeatedly shielded US drug dealers who were acting as distributors for the Contras.2 The C.I.A.’s Inspector General testified much later that between 1982 and 1995, the agency had an agreement with Justice hat it did not have to report drug dealing on the part of its assets. Janet Reno classified as top secret the department’s investigation of C.I.A. drig trading/ 3
By late 1985 or 1986, it was clear that the drug trade was being coordinated out of Washington. The operation had become so large that elaborate money laundering schemes in the US had become necessary. Many of those involved in this drug trade were Cuban ex-patriots who were timed to US intelligence work since the Bay of Pigs invasion. There is significant evidence that it also became necessary to share profits with some politicians, mostly Republicans. 4

Of far greater importance was the elaborate executive infrastructure, answerable to Vice President George H.W. Bush, to secretly supply the right-wing Contras. Congress cut legitimate aid to a trickle with the two Boland Amendments, making all other assistance of any sort, including the use of US personnel illegal. Another breach of the law occurred in the Reagan-Bush, Sr., years. The NSC and C.I.A. violated the law by advising and provisioning the Contras in Nicaragua.

They used US military personnel in some operations against Nicaragua, a violation of the Neutrality Act, which forbids use of force against nation with whom the US is at peace. Later, the violation of the law was compounded when Congress legislated against supplying the contra rebels in Nicaragua. Almost certainly, Bush was deeply involved in operational problems. The complexity of this mechanism was necessary in order to give as many people as possible deniability and to circumvent laws requiring the C.I.A. to report its covert operations to Congress –

A year later, a subgroup was created to deal with terrorism (NSDD-30). It was called the Terrorist Incident Working Group. The agencies involved were Department of Defense, F.B.I., C.I.A., and NSC staff. In 1984, Reagan signed NSDD-138, which gave TIWG greater power and the ability to form subgroups. It formed Operations Sub-Group-1 under Ted Shackley; it was the “anti-narcotics group.” OSG-2 was headed by Lt. Colonel Oliver North and was concerned with anti-terrorism. OSG-3 was “our ‘alignment’ group,” under General Richard Secord. It dealt with troublesome agents and others.

At its peak, there were 80 operatives from the US, Israel, Turkey, Britain, and Denmark. It predates the Reagan administration, but what is unique about it is that it is now directly controlled by the Vice President. . In 1987, the Iran/Contra scandal made it necessary for him to step aside. Secord took over his group, and Gene “Chip” Tatum took over the alignment group. From the beginning of SSG, Bush drew upon the advice of his assistant Donald Gregg and representatives of British and Israeli intelligence. In 1984, Dewey Claridge, who had been running C.I.A. operations in Central America, was transferred to Europe. This was also the year a second and tougher Boland Amendment was passed. The first amendment passed the House December 8, 2002, 411-0.5 It is very there would have been no dissent on this kind of vote in subsequent years, when the New Right became a major force in the Republican party.


It is likely in the 1980s that many secret black operations were coordinated by entities under the control of Vice President George H..W. Bush. He chaired the Task Force on Combatting Terrorism, why served as that launching pad for many illegal activities of Lt. Colonel Oliver North and others in Central America. In 1981, President Ronald Reagan signed National Security Decision Directive-3( -3), entitled “Crisis Management,” which established a Special Situation Group headed by the vice president to deal with terrorism and other matters. Secretary of State George Schultz made it clear he did not agree with this directive. The SSG essentially stood between Reagan and the Secretary of State, ranking far above other interagency groups.

This and subsequent NSDDs effectively placed Vice President George H.W. Bush in charge of US intelligence operations. Moreover, they erected an asbestos wall between Bush, Donald Gregg, his national security advisor and secret and illegal activities being carried out in Central America in the name of the United States. By employing National Security Decision Directives , Reagan effectively kept secret a large part of American foreign policy as NSDDs do not have to be revealed to Congress. 6

The covert war in Central America in some ways laid the foundations for America’s future imperial adventures in the Middle East. Some intelligence was cooked, and administration actions ere covered by the claim that the Communists and their allies were resorting to terrorism. Otto Reich, Elliot Abrams, and Ambassador Jean Kirkpatrick gave the public buckets of misinformation about the murders of unarmed men, nuns—more than twenty of whom were thrown out of helicopters-- women, and children. John Negroponte, then ambassador to Honduras, deceived Congress about all this while playing a major role in the Central American black operations Ambassador Negroponte hid and protected the grisly crimes of General Gustavo Alvarez Martinez, army chief who had promised to employ the same bloody tactics used by neo-Nazis in Argentina.

Indeed, Negroponte played a role in establishing Battalion 3-16, which carried out many barbaric crimes. Negroponte said Alvarez for his “dedication to democracy,” and Ronald Reagan gave the general the Legion of Merit medal. During Negroponte’s term there, civilian deaths reached into the tens of thousands as “special intelligence units” or death squads roamed the land. 7

These clandestine operations involved very serious breaches of the law in the Reagan-Bush,Sr., years. The NSC and C.I.A. violated the law by advising and provisioning the Contras in Nicaragua. They used US military personnel in some operations against Nicaragua, a violation of the Neutrality Act, which forbids use of force against nation with whom the US is at peace. Later, the violation of the law was compounded when Congress legislated against supplying the contra rebels in Nicaragua.

Almost certainly, Bush was deeply involved in operational problems. It is also abundantly clear that the NSC and C.I.A. helped and protected the Contras to bring drugs into the United States as a way of financing their operations. There is considerable evidence that the C.I.A. itself did more than watch and help these operations. The irony is that after moving tons of drugs into the United States to finance the contras, the problem in Nicaragua was solved by threatening Sandanista leader Daniel Ortega" family. He was told that his second cousin, a very close friend, would -be killed on a certain day if Ortega did not announce free elections. After his cousin was murdered, he backed down. It is difficult to understand what those involved in these activities thought democracy demanded of them. Perhaps Lt. Colonel Oliver North’s secretary, Fawn Hall, spoke for them when she said they were obeying a “ higher law.” Two decades later, those who took a similar view of the rights of the executive branch of government were talking about inherent powers of the president which exceeded those concretely spelled out in legislation or the constitution.

There does not seem to be any clear evidence about exactly when the C.I.A. started to use drugs to pay for weapons in Central America. It is clear that Argentine-trained right-wing forces in Central America were financing their operations through the sale of drugs by 1980. But the evidence is unmistakable that the C.I.A. eventually sold or permitted to be sold drugs to support the Contras. In time, it became clear to some White House operatives that the contra leaders saw their activities as essentially a business, yet nothing was done to reign them in make them more accountable.

In the 1997 Senate hearings, memos of General Paul F. Gorman , head of Southern Command, were read. In one, he said, : “There is not a single group in unconventional warfare that does not use narcotics to fund itself.” 8 In a civil case deposition, it was revealed that the C.I.A. laundered some drug money through the Republic National Bank and relied on one of its officers, Nan Morabia. When Oliver North needed cash, Morabia's husband and son would deliver bags with hundreds of thousands of dollars to North operatives in New York hotel rooms. These cash drops were carried out to circumvent federal currency laws. North also moved money through Swiss accounts and a Costa Rican seafood company, Figorificos de Pntarenas. 9

Reagan and Bush's Not-So-Secret War: Part Two

Only months after the Reagan administration took power, theNew York Times reported “Intelligence Groups Seek Power to Gain Data on U.S. Citizens.” Bill Casey, the new DCI, had given C.I.A. lawyers the task of drafting an executive order that would set aside most restraints on the agency’s domestic operations. As soon as it was finished, he signed a recommendation to the White House for its implementation, and he had the strong backing of another right-winger, Richard Allen, the National Security Advisor. In addition to opening the door to spying in the United States and on USD citizens, it deprived the Justice Department of its role in approving some covert operations. The story broke while Casey was out of the country, and Deputy Director Bobby Inman quickly disavowed the proposed executive order and had the backing of Ed Meese, a top Reagan advisor. However, right wing extremists within the administration would seek other means of accomplishing some of these goals. 1

The Reagan administration also laid plans to use FEMA to act against its political opponents. FEMA is a federal agency created by Executive Order 12148 (April 1, 1979). In the beginning FEMA was not funded by Congressional appropriations. There are all sorts of “conspiracy theories” about where the money came from. Some think that it is so loosely drafted that the agency could suspend the fedral constitution.

In the early years of the administration, Major Oliver North established a Crisis Management Center in the basement of the White House. That basement was where George H.W. Bush woulds manage intelligence operations during the Reagan years. North, NSC liason oto FEMA, assisted retired General Louis Giuffrida, FEMA director, 1982-1985 in developing a contingency plan for FEMA called”REX 84” for the surveillance of leftists, the declaration of a state of emergency, suspension of the constitution, and the governance of the united States. Giuffrida had been Reagan’s emergency planning chief in California, where he and Edwin Meese drafted plans for rounding up Black militants and peace advocates. Their plan was called “Operation Cable Splicere” and was a variant of the Army’s “Garden Plot.” As a graduate student in 1970, he wrote a detailed plan for incarcerating radicals and blacks in detention camps. He developed the California Specialized Training Institute for military commandos and police. A bit of a cowboy, he got himself deputized so he could carry a gun to work in Washington.

North and FEMA director Giuffrida also revised Operation Garden Plot, which dealt with civil disobedience and riots. Giuffrida had developed it initially to deal with an uprising of black militants, and it considered the possibility of rounding up 21,000,000 African Americans. .The revised Operation Garden Plot was actually implemented in Los Angeles during the civil unrest accompanying the Rodney King riots in 1987 and during some more recent anti-globalization riots . There was also “Operation Lasso,” a C.I.A. operation, designed to distribute guns among whites before an expected black riot.

The general installed a new telephone system at FEMA and forbade any personal calls. A record was kept of every number dialed. He seemed obsessed with terrorists and “radical environmentalists.” Henry Hyde, a ranking Republican on the House Judiciary Committee, worked with North in developing the martial law governance plan. Major General Richard Secord had also spent some time at FEMA and had worked with these people on the martial law scheme.

In essence, the North plan would place government in the hands of FEMA and the president. The president received power to take over legislative and judi C.I.A.l functions. The North Plan called for FEMA to report directly to the president, but it had power to appoint military commanders and take over state governments. (Executive Order 11490). The plan was predicated upon Frank Carlucci ‘s NSC directive in 1981 that stated: “ Normally a state of martial law will be proclaimed by the President. However in the absence of such action by the President, a senior military commander may impose martial law in an area of his command where there had been a complete breakdown in the exercise of government functions by local authorities.'"

By then, FEMA already possessed many relocation centers where people could be kept, and the federal government has continued to build more up to the time of this writing. North thought it necessary to be ready to detain as many as 400,000 people. These facilities could also be used in the event of uncontrolled population movements across the Mexican border into the United States.

John Brinkerhoff, Giuffrida’s deputy, made the case for using troops in civil disturbanced and played a key role in planning for African-American disturbances. Today, he is with the Anser Institute for Homeland Security. Brinkerhoff told PBS in 2002: “The United States itself is now for the first time since the War of 1812 a theater of war. That means that we should apply, in my view, the same kind of command structure in the United States that we apply in other theaters of war.”

The "Shadow CIA" and the Revenge of the Spooks: The October Surprise, Part Two

Casey was able to get in touch with the Iranians with the help of the French intelligence service, Count Alexandre de Marenches. Carter had unwittingly sealed his own fate by refusing to trade arms for hostages. However, there is strong evidence that the Israeli’s played a major role in opening dialog between the Republicans and the Iranian government. The Israelis had been asked to sell a limited number of arms to Iran, and they wanted a green light from potentially the next American government to sell more. For that reason, Israeli intelligence sent an Arab merchant with Iranian ties to negotiate with Republican operatives at the L" Enfante Hotel in Washington. He proposed the kind of deal Casey negotiated, except that Israel would immediately begin unlimited arms sales The main Iranian spokesman was Ayatollah Mohanned Baheshti, an aid to Speaker Ransanjani and assistant to Ayatollah Khomeini.

Casey was a hard-bitten capitalistic high-roller with intelligence experience. He knew how possession of power would have positive economic consequences for himself and his friends. Others may have been driven more by ideology. Carrying on diplomatic negotiations with a foreign enemy is a violation of the law, as was coordinating arms shipments to Iran, before and after Reagan took power. One would think that patriots would want the hostages returned as soon as possible and would support the nation’s foreign policy in a time of crisis, even if the president was a Democrat. What led these people to violate the law overcame any patriotic impulses to carry on their own destructive foreign policy.

The best answer is that they were so convinced by their own ideology and attacks on the Democrats that they felt justified in doing anything necessary to restore Republican control of the White House. It was as though elected Democrats automatically lack legitimacy, except when they co-operate in enacting and carrying out Republican policy. There was an op-ed piece and a PBS special outlining the facts in this matter in 1991.

Not one Republican politician or pundit expressed any interest in the possibility that this may have happened. So-called liberal politicians and journalists showed little interest when it became clear that there was not overwhelming evidence that President George Bush was involved. The Secret Service records for Bush at that time were only partially made available to Congress. Because they were redacted, Bush’s claims to have been in Washington could not be proven.

One agent claimed to have been with the Bushes much of that day, but it was later proven thqat the agent was jogging along the C and O Canal that day and not on duty. Years later, Yasir Arafat told Jimmy Carter that the Republicans had asked them to help with the arms deal used to keep the hostages captive until after the election. In 1993, Russia Supreme Soviet agreed to give Congressional investigators files that showed that Casey met with the Iranians in 1980 and that Robert Gates and George H.W. Bush were involved in the deal with Iran.

The Russian report added that Robert Gates, then a Carter NSC staffer, was in Paris negotiating on behalf of Reagan and that Casey attended meetings at the Ritz Hotel in Madrid and Paris. The Russians saw a bidding war between Carter and Reagan for control of release of the hostages, with the Republicans able to disrupt the Carter operation and make a deal with the Iranians.

A Congressional task force had just concluded that the Republicans did not interfere in the hostage crisis before the Russian report arrived, and nothing was done to change the Congressional report. Some of the Russian report was based on allegations of former Israeli intelligence official Ari Ben-Menashe. Israel said he had never been a government employee until he produced documents. Then the Israelis simply said he was lying about the October Surprise. The Russian Report was ignored, and ended up in a box of documents in a former ladies room in the Rayburn Building.1

Among other things, Casey promised that Israel would sell some arms and parts to Iran immediately and that they would sell many more after Ronald Reagan became president. The Republicans promised to provide about $5 billion worth of arms. Much later, in May, 1986, McCarlane visited Iran and was taped saying that up until then the Reagan administration had provided 1.3 billion in arms and add3ed that it would provide trhe rest. The Iranians were also promised the return of $12 billion in blocked funds. Prime Minister Menachin Begin, who had promised not to sell so much as a shoelace to Iran, cooperated with the Republicans" efforts to undermine the Carter position. These activities thoroughly undermined the activities of the legitimately elected government of the United States and weakened the U.S. position in bargaining for the return of the hostages. Former Iranian president Bani-Sadr was ale to provide investigators with details of the money transferred to Iranians , along with bank account numbers. 2

Italian journalists believe that Licio Gelli, Grand Master of “Raggruppamento Gelli-P2.” Was present at one of the meetings. “P” meant Propaganda 2. Gelli has essentially taken over a defunct Italian Masonic Lodge to use as the superstructure of his criminal and political network. By the 1970s, P-2 practically ran Italy and even had important people posted in the Vatican. Members were very conservative and were dedicated to accumulating power and personal wealth as well as fighting Communism. The C.I.A. assisted P-2 in Italy, and it worked closely with the C.I.A. in Latin America. 3 Gelli took to using the password “Luciano” after the death of Pope John Paul I, suggesting he had something to do with the late pontiff’s death. Gelli eventually took up residence in Uruguay and his influence spread through much of Latin America, and his operatives were deeply involved in the activities of the right-wing death squads.

European journalists claim to have evidence that P-2 eliminated Swedish prime minister Olf Palme because he showed too much interest in the secret deal. Their informant said the C.I.A. used P-2 to help bring drugs into the USA and also to create terrorist incidents in Europe and Italy. 4 The story was circulated all over Europe, but a government inquiry turned up nothing. Often tales like this are linked to real events to discourage interest in the larger occurrence.

Covert Finances: Transition to Afghan Drugs

In 1984 Peter Jennings of ABC aired agent Scott Barnes, who said he asked two fellow agents in Honolulu to kill Ronald Rewald, an agent and officer of the BBRDW bank. William Casey demanded that ABC muzzle Jennings, whjo refused to back off. Then the SEC gave Capital Cities, a firm tied to Casey, permission to purchase ABC. Jennings was silenced and some started calling it the “ C.I.A. Network.” Rewald was not killed. Rather he was sent to prison with an 80 year sentence.

In 1986, a team lead by much-decorated Lt. Colonel James “Bo” Gritz went to Burma to interview warlord General Khun Sa real name was Chang Chi-fu. The general was supposed to have information about missing POWs, but did not. Gritz asked him to cooperate in the US war on drugs, and the general replied that the US was his biggest drug customer. He said he could produce aq long list ofofficials he dealt with over twenty years, After being told in Washington that the general was lying, Gritz returned to interview the general. Khun Sa refused to name some current contacts but he did name Shackley and Armitage. Subsequently, the US indicted Khun Sa, so he could not come to the US and testify, and an effort was made to destroy the good name of Gritz, probably America’s most decorated officer at that time. Gritz also had to defend himself from charges of passport abuse. William Maddox, the US attorney who unsuccessfully prosecuted Gritz, said “”George Bush called me up and told me to get Bo Gritz.”

Nugan Hand was succeeded by Household International, and its general counsel was former C.I.A. director William Colby. He became somewhat outspoken in retirement and died in a strange boating accident in 1996.

The beginnings of American interest in Afghan opium seem to be in the 1970s, when the USAID –funded Helmand-Arghandab Valley authority constructed the Kajaki Dam, which made possible irrigation efforts that permitted opium production to reach new levels. It was handled by the St. Joe Company, a firm tied to the Bush family and Jeb’s Bushb’s Codina Firm. The St. Joe Company was founded in 1936 by the Alfred I. Du Pont Testamentary Trust. It used its Florida National Bank to move drug profits to Switzerland, and it also cooperated with the Lanksy/Trafficante Miami National in moving illicit money. MucSt. Joe Company, Peter Jennings, drugs, Bill Casey, CIAh of the money eventually ended up in Citibank. In 2002, Karl Rove managed to purchase a magnificient beach tract in Florida from the St. Joe Company for a mere $165,000.


Codina and the St. Joe Company had links to th e now disgraced financier Sir Allen Stanford, who was investigated for laundering C.I.A. drug money in his off-shore banks. The Soviets claimed that the C.I.A. allied in 1979 with mujahedeen drug dealers. By 1989, the Times of London reported that half the heroin getting to the United States came from Afghanistan. In July 2000, trhe Taliban shut down poppy production. Production resumed after the Taliban was overthrown. One impediment to even more opium reaching the west is the determination of Ayatolah Khatami to prevent its movement from Iran. However, he has relatively weak border forces.