UNUUWMHUE W2 or ignite aosuots'xn 3mm Background In June 1983 private American and Israeli citizens commence an Operation to eefect the release of the American hoetagee in heirut in exchange or providing certain factions in Iran with U s -oriqin Iaraeli military materiel By Septeabcr v 3 and Igraeli Government oziiciaia became involved in this endeavor in order to ensure that the use would 2 -- got object to the Israeli traneier of entarqoedigg a kel to ran -- sell replacement items to Israel as replenisheent for like itena sold to Iran by Inrael On September 13 the Israeli Government with the endorsement of the use transferred $08 baaic row to Iran Portyoeiqht hours later Reverend Benjamin hair was released in Beirut Subsequent eitorte by both government to continue this process have met with frustration due to the need to communicate our intentions through an Iranian expatriate are dealer in Europe In January 1986 under the provisions of a new Covert action Finding the use demande a meeting with responsible Iranian government officials PM 62 ii- 31 the first direct 0 5 oIranian contact in over five years - this meeting the u s side node an eitort to refocus Irenien attention on the threat posed by the Soviet Union and the need to establish a longer term relationship between our two coentrien based on more than eras trenoactiona It was emphasized that the hostage issue can 3 hurdle which meet be crossed beiore this inproved relationship could prosper During the meeting it also became apparent that our conditions demands had not been accurately transmitted to the Iranian Government by the intermediary and it was agreed that The 086 would establish its good faith and bone tides by immediately-providing 1 000 TOW tor sale to Iran This transaction nae covertly completed on #ebruary 21 using a privete a s sire and the Israelis an intermediaries A eub eouent meeting would be held in Iran with senior 0 5 and Iranian oiticiale during which the 0 8 hostages would be released -- Immediately cite the hostages were safely in our hands the 6 5 would cell to edoitionai 3 000 tow missiles to Iran using the same procedures employed during the September 1585 tranater eld-P a is it maiz gcag x0 -5 - 4 r 5335mm f- tame i i i - mom were Saturn Count magnum 50953 In early March the Iranian expatriate intermedie 4 Iranian conditions for release or the hostages prior sale or 200 Paorxrx nisoileo and an unspecified number or annroou oileilee in addition to the 3 000 row which would he _delivered after the hostages were released A subsequent meeting was held with the intermediary in Peril on Herch I wherein it wee explained that the roguirenent for prior deliveries violated the understandings reeche in Frankfurt on rohruery_20 end were therefore unacceptable It was further noted thee the Iranian aircraft and ship launchers for these missiles were in such disrepair that the could not he launched even it provided from March 9 until March 30 there was no further effort undertaken on our behalf to_contect the Iranian Governnent or the intermediary en men 26 made an unsolicited call to the 95939f4393 in Mary and vh o vo hed established tor this purpose yrr ma esked why we had not been in contact and urged that we proceed expeditiously since the eituetion in heirut wee deteriorating repioly He was inferred by our tersi-rpooking interpreter that the conditions requiring additional materiel beyond the 3 000 rows were unacceptable and that we could in no mcese_frovide anything else prior to the release of our horthgee art - rtggobserved that we were correct in our or their asil ty to use Prornzx end EARPOON ens that the host urgent requirement that Iran had was to place their current EAHK missile inventory in working condition In a subsequent thone call we agreed to discuss this matter with him and he indicated that he would prepare an inventory of ports requireo to mete their hh z systems operational This ports list wer rooeive on Herch 28 and veriried by CIA Current Situation On April 3 Ari Gorbenitnhr the lrenion intermoaiary arrived in Washington D c with instructions from consummate final errenqenente for the return or the hostages Gorbenifohr was reportedly entranchiled to negotiate the types quantities one oelivery procedures tor arterial tho 0 8 would tell to Iran ough Israel The rooting looted nearly all nit I 75 ene_involred numerous calls to E- 3 if able to verify the substance or hie cells to Tehran during the meeting Subject to approval it who agreed to proceed as follows -- By Sendai April 1 the frnnien Government will treneier $17 hill on to on Israeli account in Switzerland The Israelis will in turn transfer to private v 5 corporation account in witzerlend the run of $15 million -- On Tuesday April I or an soon as the transactions gee verified tho private v 5 corporation will transgeg 83 651 million to a CIA account in Switzorland CIA 3111 than this sum to a covort Departaont of the Army account in the v 3 -- On Hodnosday April 9 the ClA vill coaconce grocurinq $3 651 million worth of missile parts 240 separate Eylvr 1 121 2 4- gum $112331 9866888 V estimated to take raven work no ffya - On Friday April in a private 0 3 aircraft 7073 will pick-up the aiqsilo pcrta at HID and fly than to a EL covert Icraoli airfield for propositioainq this field was used for the earlier delivery of the 1000 TONI At this fiold the parts will be tronsrorrod to an Israeli corona Forces zor aircraft with also markings A sarcoa capability will be positioned at this locction 39 11 19 Hcrarlano North Trichsr Cave and a SAECOK communicator will - aircrafi enrouto tg fctran -- On Sunday Aoril 20 the following series of events will occur 6 5 party arrives Tehran labour -- not by Rafsanjani as head or the lraniac delegation - At hours the 0 5 hostage will bc released in Beirut - At hols hourr the aircraft with the HAWK missile parts aboard will land at Sandi Abbas Iran Discussion The following points arc relevant to this transaciiaa tho diaculrionl in Iran and the establishment or a broador relationshig bctwaen the United States and trio a The lrahitno have been told that our presence in lran is a 'holy commitaant on the part of the 088 that we are sincere and can be trusted fhorc is great distrust of the 0 3 among tho various Iranian parties involved without our presence on the ground in Iran they will not believe that we will fulfill our and o the bargain after the hostages are released SENSITIVE UNEtAssmw 9 953 an Gothan gum specifically nont oncd that ' oitoxta to '393' 33 399339 3 ld 3 the near future further tho Iranians 80 W11 also that the situation in acirut is S8F1419 and that the chili o2 tho race to defect tho toloaao at tho hostage ll bocono inccoacinqu not difficult ova tinn- - uh have convinced the inaniann o a significant nae tam- long tango thxoat tron tho Soviet Union in have coal and dcceptivo intelligence to this throat during tho viait fhoy have expressed considerable intotont in this matte as can oi the lonqo ton relationship -- rho Iznnians havo'bccn told that thai ptcviaion o9 assistance to icaigzun is unacceptable to do and thcy havo nqrood to discuna natta in -- So have indicated to the Iranian that an wish to discuss stops loadi to a cessation c hoatilitica hotyaon_ The Iraninna arc well aware that their most inn-dint needs are so tachnical in maintaining thci dis tosca and navy so should expect that they will raise this issue duxing the discussions in Tehran ruxthc convoxaation with Gorhcnitah on agtll do indicatca that they will want to rains the latte of the original 39000 TOW no a significant tc n yotontial Soviet nova against Izan rho ham ciao tad that ii dreamt in -- The leanicnn have been told and agreed that they'cill ocoivo noithc _blcno no credit to the coinage zolsasc o the -- The residuel funds from this transaction are allocated as tollows - $2 million will be used to purchase replacement rows for the original 508 sold by Israel to Iran or the release of Benjamin eir rhie is the only way that we hgvektound to meet our commitaent to replenish these 8 oc e - $12 million will be used to purchase critically needed supplies tor the icare en Democratic Resistance torcee This materiel essential to cover shortages in resistance inventories resulting tram their current and Sandiniete counter-attache end to 'bridge the period between now end whoa approved lethal assistance beyond the $25 million in 'deieneive' arms can be delivered The ultimate objective in the trip to Tehran is to comence the process or improving 0 8 olrenian relations Both sides are aware that the Iran-Iraq war is a major factor that must be discussed we ehould not however view this meeting as a session which will result in immediate lrenien agreement to proceed with settlement with tree Rather this meeting the first high-level U S -Iranian contact in five years should be seen as chance to move in this direction these discussions or well as follow-on talks should be governed by the Terms or Raierence TOR Tab A with the recognition that this is hopefully the first of many meetings and that the hostage issue once behind us improves the opportunities tor this relationship Finally we should recognize that the Iranians will undoubtedly went to discuss additional arms and commercial transactions on 'quids' for end lreq Our empheeie on oe Soviet r rery end subversive threat useiul mecheniea in bringing them to agreement on the hostage issue has also served to increase their desire tor means to protect themselves egeinet deter the Soviets Thet the President approve the structure depicted above under 0Current Situetion' and the Terms or Reference et rah A Approve misapprove Attachment - rah A - 0 5 Iranian Terms of Reference SENSITIVE This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu