On the evening of Oct. 10, a long-distance telephone call to Ronald Reagan by a senior adviser warned explicitly that President Carter was plotting an election-eve release of the American hostages and proposed immediate contingency plans to minimize political fallout.
Behind the warning were two sets of facts: first, campaign rhetoric by the president and his surrogates, an objective reading of which hinted at a pre-election breakthrough; second, substantiated reports from European capitals of agreement between Washington and Tehran on removing economic obstacles to the release of the hostages.
A Treasury team under Deputy Secretary Robert Carswell was putting final touches on the complex issue of unfreezing blocked Iranian assets. Simultaneously, agreement was being worked out for releasing military spare parts paid for by Iran before the shah's fall.
"It was all there for anyone to see," the Reagan adviser told us. If the president had not been assured one month before the election that his hostage ploy would work, there would have been no U.S. tilt toward Iran in the Iran-Iraq war.
The tilt was only one Carter signal that he was ready to deal on the hostage question. The administration's movement toward converting the hostages into a pre-election asset really began with Secretary of State Edmund Muskie's letter to Iranian Prime Minister Rajai in late August. Rajai quickly interpreted that letter as an "apology," which Muskie immediately denied.
Reagan's advisers began to ask themselves this question: was that letter a first step in the buildup to a pre-election political coup or simply a welcoming gesture to the recently formed Iranian "government"? They decided the former. In the opinion of the Reagan camp, the big Carter push for the dreaded "October surprise" had begun.
The memory was strong how Carter had manipulated national opinion when the hostages were seized one year ago, using it to revive his popularity. Carter's celebrated television interview from the White House early on the morning of the crucial Wisconsin primary had left its imprint: when it comes to politics, this president means business.
Carter's maneuver was made possible by the outbreak of war between Iraq and Iran Sept. 22. No longer were the hostages indispensable as a "unifying force" to keep together feuding factions of what passed for an Iranian government. The Iraqi war now substituted for the hostages. The hostages became a bargaining chip in Iran's wartime need for guns and gold.
Reagan's European agents began to pick up the scent of Soviet pressure on Ayatollah Khomeini through his closest political agent, Sadegh Ghotbzadeh, for speedy release of the hostages. Ghotbzadeh long has been known as one of the Kremlin's key allies in the maelstrom of Iranian politics.
The reason for Soviet pressure was Moscow's hope that release of the Americans would guarantee Carter's reelection and defeat Reagan, feared as a big-stick waronger. The importance of this Soviet factor in the poisoned politics of Iran became known when Ghotbzadeh himself made clear that the hostages should be released before Nov. 4 to help Carter.
The lingering problem facing Carter now became a show of good faith to persuade Khomeini that the United States would carry out its pre-election commitments: unleashing the spare parts and unfreezing Iranian assets.
In the leading role as Carter's agent for arranging to free Iranian assets was Deputy Treasury Secretary Carswell, one of the administration's shrewdest operatives (who learned the ropes as an aide to former Treasury secretary Douglas Dillon 20 years ago). "Carswell runs a very cozy operation," one top administration official told us.
Carswell's Treasury team dropped hints in the highest banking and financial levels: Carter would give Iran what it wanted on asset-freeing, with the U.S. government underwriting private claims against the Iranian government.
Elaborate clues were scattered to convince Iran that the United States really did to carry out its commitments. Israel's clandestine shipments to Iran from its own F4 stockpiles (denied by Israel when we first reported them) were not hindered by Washington; in the United States, warehoused and newly produced spare parts were moved to embarkation points ready for air freight to Tehran.
Little wonder, then, that Reagan got that phone call from a top adviser Oct. 10. But with the fix clearly in, Reagan decided he was powerless to intervene one way or the other. Saying nothing, he could only wait and see where Carter's hostage coup would take American voters on Nov. 4.