Excerpts from testimony by Marine Lt. Col. Oliver L. North in response to Arthur L. Liman, the Senate select committee's chief counsel:

. . . Do you recall telling the president . . . that, if the Iranian venture was discontinued . . . that the lives of the hostages might be taken?

I recall, certainly very clearly, putting that kind of message forward. I don't necessarily recall saying it point-blank to the president that morning . . . . Our concern was that having started the route, wisely or unwisely . . . and having a disaster on our hands . . . as a consequence of what the Iranians clearly saw as a double-cross that we had indeed increased the jeopardy to the hostages . . . .

. . . Part of your role was to point out to the president or his national security adviser the opportunities and the risks, correct?

That's correct.

And you were pointing out the risk of abandoning further arms sales to Iran in terms of saying that they might take out reprisals on the hostages, isn't that so?

. . . Correct . . . . .

. . . Was there any discussion . . . that having started down the road of dealing with Iran on arms, we were now becoming hostage to that very process.

I always felt that way . . . .

Was there any discussion . . . if we started selling them arms, that once we stopped, we were going to run the risk that more hostages would be taken?

Yes . . . . I believed then, and I still believe today that, had we been able to get to a point where we would have had a meeting with, for example, the vice president {Bush} and {Hojatoleslam Ali Akbar Hashemi} Rafsanjani {Iranian parliament speaker}. . . that we could get beyond that risk . . . . One of my purposes for taking the second channel, . . . a brave young man and . . . soldier in his country, through the White House was to show him the Nobel Prize that was won by Teddy Roosevelt . . . . It was given to a president who saw that it was to the advantage of our country and to world peace to sit down in Portsmouth and have a conference with two adversaries, the Russians and the Japanese, who were fighting a war thousands of miles away . . . that had no immediate impact on America, and we solved it. And, that's what I was talking to the young Iranian about, and that's the kind of thing that I was proposing that {would} help us get beyond arms . . . for hostages.

. . . There's a saying that "failure is an orphan." The committee has heard testimony . . . that Secretary {of State George P.} Shultz was opposed to this venture, the secretary of defense {Caspar W. Weinberger} was opposed . . . . Mr. {Robert C.} McFarlane {then national security adviser} said that, when he returned from London, he was opposed to it . . . . Had you become the principal advocate of having this program go forward?

I don't believe {so} . . . . Certainly director {of central intelligence William J.} Casey was always a supporter because he saw several objectives that could be achieved . . . . Like some of my other activities, the opposition that I heard was far more muted while we were doing it than it ever was after it failed or . . . was exposed. And I . . . get the feeling that . . . a lot of people . . . {were} willing to let it go along, hoping against hope that it would succeed and willing to walk away when it failed . . . . This was a high-risk venture, we had an established person to take the spear, and we had hoped we had established plausible deniability of a direct connection with the U.S. government . . . . It's understandable that people don't complain too loudly . . . as long as they can be assured of protection if it goes wrong.

When you said "there was an established person to take the spear" . . . you're referring to yourself . . . .

Yes.

. . . Did you tell Mr. {Noel} Koch of the Defense Department . . . that the president was, quote, "driving him nuts," end of quote, to get the hostages back by Christmas?

I don't recall that conversation . . . . It was very clear that the president wanted . . . all of them home as fast as possible.

. . . Mr. {Albert A.} Hakim {Iranian-born businessman} testified . . . that you told him that the president was exerting pressure on you to get the hostages back . . . in time for the elections in November of 1986.

The president . . . never told me that, nor did any other person. I may have said that to Mr. Hakim to entice him to greater effort . . . . I can assure you that the president's concerns for the hostages outweighed his political ambitions or political concerns. They were truly humanitarian . . . . The president was willing to take great political risk in pursuing this initiative.

Did you, when you told Hakim this, think it was right to attribute that to the president?

. . . I said a lot of things that weren't true . . . .

. . . Did you regard yourself as having a political objective?

I have absolutely no political ambitions . . . . I'm not running for anything, and I'm certainly not running from anything . . . . Everything . . . done on the National Security Council staff ought to have some recognition that there are political concerns.

. . . You also discussed the use of the residuals . . . for the contras with {Rear} Adm. {John M.} Poindexter, correct?

Correct . . . . My normal modus operandi on making a proposal such as that would be to . . . talk to him. And, normally, the admiral would like to think about it . . . . .

. . . Prudent? . . . . Plays by the book?

. . . Exactly . . . . There's a long history of rivalry between the services. And he and I are both part of the same naval service. And, even though some of my Marine colleagues might not like to hear this: That is an admiral I would follow up any hill, anywhere . . . . I think he also saw the necessity of taking risks, and he was willing to do so himself. And he placed himself in jeopardy, and he was the kind of person who recognized the risks, weighed the benefits and made decisions.

And he discussed the risks of using the funds for the contras with you?

Yes.

What did he say?

This had better never come out. And I took steps to ensure that it didn't, and they failed.

. . . You testified that one reason that Mr. Casey was excited about the plan for use of the residuals was that he wanted to have a funded organization that he could pull off the shelf to do other operations. Is that what, in essence, his view was?

. . . Yes . . . . {he} had in mind . . . an overseas entity . . . capable of conducting operations or activities of assistance to the U.S. foreign policy goals that was a "stand-alone" . . . self-financing, independent of appropriated monies and capable of conducting activities similar to the ones that we had conducted here. There were other countries . . . suggested that might be the beneficiaries of that kind of support, other activities to include counterterrorism.

. . . Casey was in charge of the CIA and had at his disposal an operations directorate, correct?

Certainly.

. . . Director Casey was proposing to you that a CIA outside of the CIA be created. Fair?

No.

Wasn't this an organization that would be able to do covert policy to advance U.S. foreign policy interests?

Not necessarily all covert. The director was interested in . . . an existing, as he put it, off-the-shelf, self-sustaining, stand-alone entity that could perform certain activities on behalf of the United States . . . . Several of these activities were discussed with . . . Casey and . . . Poindexter. Some of those were to be conducted jointly by other friendly intelligence services, but they needed money.

. . . You understood that the CIA is funded by the United States government, correct?

{Yes}.

You understood that the United States government put certain limitations on what the CIA could do, correct?

{Yes}.

. . . After all you've gone through, are you not shocked that the director of central intelligence is proposing to you the creation of an organization to do these kinds of things outside of his own organization?

. . . I am not shocked. I don't see that it was necessarily inconsistent with the laws, regulations, statutes and all that obtain . . . . And if, indeed, the director had chosen to use one of these entities . . . and an appropriate finding were done and the activities were authorized by the commander in chief . . . . I don't see what would be wrong with that.

Remarks by Sen. William S. Cohen (R-Maine):

Shortly before we broke for lunch. . . there was an indication that perhaps our counsel should cut short his questioning . . . . For the record . . . no member of the Senate interrupted House counsel . . . . There were no time limits imposed upon House counsel. It took 2 1/2 days, and I reject the notion that somehow because the members don't like either Mr. Liman's tone or style that he should be forced to cut short his questioning . . . . Oliver North has demonstrated he's . . . a superb witness. And I think he's had a lot tougher things thrown at him during his lifetime than questions by Arthur Liman and . . . {is} fully capable of handling those questions without the able assistance of members of Congress.

The final point . . . perhaps the most serious revelation . . . during . . . these proceedings is that of a plan . . . to create a contingency fund for the intended purpose of carrying out other covert operations . . . with or without presidential findings, with or without notice to Congress . . . if members of Congress are not disturbed about that revelation, then I think the American people should be and, if it takes more time to discuss this in depth and other related issues, I am perfectly happy to yield whatever time I have allocated to me so that Mr. Liman might continue. But I strongly object to the notion raised by House members of trying to impose a gag rule upon Mr. Liman.

Further responses by North to Liman:

Did there come a time when the pricing of the arms to Iran, which were yielding the profits, began to cause a problem?

I'm not quite certain whether it was the pricing or simply the person we were arranging it through. But there was some difficulty . . . .

In fact, did there come a time when you were advised that Mr. {Manucher} Ghorbanifar {Iranian arms dealer} was saying that the Iranian government had concluded that it had been substantially overcharged?

Yes . . . .

He reported that the Iranian government had gotten hold of some microfiche of Defense Department prices?

. . . To be more explicit, the Iranian government was apparently still on the mailing list for those microfiches.

And he said that, looking at those microfiches and what Ghorbanifar had charged, there was a 600 percent markup, or something like that?

I'm not sure of the percentage . . . but he did indicate that they had been overcharged.

When you first got deeply involved . . . one of the problems you had encountered was that the Iranians were claiming that they had been cheated by {Israeli arms dealer Yaacov} Nimrodi . . . ?

The cheating in that case was the delivery of a system that did not fulfill their expectations . . . . It was not, as I understood it, an issue of price but more of capability.

. . . Did you present to the second channel the so-called "seven-point plan"?

. . . I suppose I wrote seven or six or eight or whatever number of points on a piece of paper. I didn't refer to it at the time, I don't think, as the "seven-point plan."

Can you look at Exhibit 308? Is that your writing . . . ?

That is . . . .

And it's headed "United States Proposal"?

That's what it says.

Is that a proposal that you presented to the second channel?

I'm sure it was. I don't recall whether . . . at the meeting in Washington or . . . Europe, but I'm sure that this is one of many proposals, all of which I had tape-recorded by the Central Intelligence Agency or by myself . . . so there would never, ever be any doubt as to what I was saying or obligating or committing to.

Before . . . your proposals . . . did you get authority from anyone as to what you would . . . present . . . ?

In general terms, yes . . . . One . . . {was} "all American hostages released" right up at the top.

. . . Did you have any conversations with State Department representatives before you made the various proposals that you were making during these negotiations?

No.

. . . In these negotiations, it was necessary for you to make representations that weren't accurate. . . .

No, they were blatantly false.

Among other things that you would describe {that way} . . . were the statements that the head of state of Iraq had to go, that the president of the United States regarded him in an unfavorable way. . .

Sure . . . .

The following is North's testimony in response to Rep. Ed Jenkins (D-Ga.):

. . . Not a single official elected by the people . . . had any knowledge about the use of that fund {"off-the-shelf" account}. Is that correct . . . ?

. . . It was my view then, and it continues to be my view now, that we were not breaking the law . . . . that I had assumed that the president . . . was aware of it . . . . I believe that the president ought to be able to carry out his foreign policy and, if one goes back to 1984 when this activity began . . . that they are within the bounds of the executive.

I understand that and . . . where you were because you assumed that the president knew . . . .I hope you understand what I am disturbed about . . . that there is not a single official elected by the people . . . that had any knowledge of that . . . . Correct?

That is correct . . . . I said earlier . . . having made the assumption that the president was aware . . . . this whole thing represented to me was an indication of a broader problem . . . . I had proposed a solution for being able to consult discreetly with members of Congress to get the kinds of appropriations to carry out these activities. I think there was fault to be found on both sides.

The following is North's testimony in response to House select committee Vice Chairman Dick Cheney (R-Wyo.):

. . . One of the London newspapers . . . is headlined that the kidnaping and videotaped torture of William Buckley, the CIA's head of station in Beirut, shocked his superiors in Washington and led the Reagan administration to reverse its policy on negotiating for hostages and selling arms to Iran. Is that too strong a statement, or do you think it has some truth . . . ?

One of the most difficult things that I experienced in this rather lengthy ordeal, and I'm sure it was the same for . . . McFarlane and Adm. Poindexter and the president, was to see the pictures . . . the videotapes, particularly of Bill Buckley as he died, over time. To see him slowly but surely being wasted away . . . . It was awful . . . .