PRES. As result of media, etc must have statement coming out of here

We have not dealt directly w/ terrorists, no bargaining, no ransom. Some things we can't discuss because of long term considerations of people with whom we have been talking about the future of Iran. Likened inability to talk to Church Comm. on CIA. {The Senate, under a committee headed by former Senator Frank Church of Idaho, conducted investigations of the CIA in the mid-1970s.} JOHN P -- reviewed what has transpired.

1. Major objective- long term-Iran policy; contact more moderate elements looking to future. Anti-Soviet

2. stop Iran export of terrorism

3. hostage release.

Jan '86 finding reviewed: not to report to Congress, authorized CIA to cooperate in above 3 activities.

Initial channel -- Israel -- stumbled on this tracking down its shipments to Iran. Confronted

Begin, Peres, Shamir {top Israeli officials}. {deleted} Also long range relations key and keep Iran/Iraq war going as long as possible.

Used Israel arms contact. Gobanifar {sic} inside, {deleted} intermediate level.

Bud {former national security adviser Robert C. McFarlane} to Tehran in May '86 not productive. So turned to {deleted} of Rasanjali (?) {Hashemi Rafsanjani} speaker of Majlis. {deleted}

Demand -- release of 17 Dawa prisoners in Kuwait. President said no. no dealing, will not put any request to Emir of K {Kuwait} -- .

Bud in Tehran in May '86-- only trip. Sold to Iranians by Israel for cash 1000 TOW missiles, 240 Hawk missiles

battery spare parts (small Shipment)

1st 500 TOW shipped by Israelis to Iran. We told after the fact Pres did agree to replenish those for Israel. We were paid by Israeli who we

Battery parts shipped to Israel then to Iran. Iran pd Is. who paid us.

500 more TOWs sent last week from Israel; we OKd in advance -- Will replenish

All are defensive weapons, are miniscule amts. Good faith shown by us.

One meeting in U.S. by Rafsanjani's {deleted} to show legitimacy of operation

Results:

Buckley, Weir, Anderson, Sutherland, Jacobson, & Jenko {American hostages}.

After these 6, no more hostages for a year at our insistence.

solid contact with Rafs -- made case on Soviet threat to Iran, made case Soviets will not permit Iran to win over Iraq made point hostages must be returned. In fact 3 have been Weir, Jenko, and Jacobsen.

In Tehran. there are factions today. Hard to sort out. Three groups

1. Conservative group --

2. Middle -- Rafsanjani leader (he a survivor, & politician interested in some relationship with U.S. {deleted} Keeping unrest down.

3. Radicals. supporting war, terrorism, internal strife. {deleted}

contact w/ Libya. and faction that took last 3 hostages, Reed, Cicippio, & ?

The Radical group leaked info of Bud's visit in a pamphlet in Beirut.

Rafsanjani made speech -- factually incorrect, as a signal we think, he wishes to keep contact, said Bud was prisoner. etc.

Over weekend Ollie North met with Raf's {deleted} in Geneva. May get more hostages. Indicated Iranians happy with our no comment. Raf will have to speak out due to world press comments. {deleted}

Where do we go from here?

Will work in operational channels

Giving wider dist to our info. After CIA sanitizes. {deleted}

In Washington

Too much talk in Exec branch of Gov't. Too much speculation. JP has talked to 10 or more. Most are OK., only Byrd {Senate Majority Leader Robert C. Byrd} has problems.

Nunn {Sen. Sam Nunn} seems to be going public

Can continue to work in Iran

Can continue to get hostages ou SHULTZ. How did 500 TOWs get to Iran last week. An Iranians sent by Israelis as result of meeting in Frankfurt around Oct 20/25 between North & CIA, with Iranians.

Tried this one more time even tho we said no more because of hostage release imminent. Various questions about hostages, who holds, where, etc. Cap, Ed, George, John answering. Bill occasionally.

Iranians are not holding hostages can influence those holding at times, and not quickly. SHULTZ -- be careful of linkage between hostages and defense equipment. MEESE -- we have not dealt directly with terrorists. PRES -- Terrorists have not profited. We let Iranians buy supplies & they influenced. No benefits to terrorists. We working with moderates hoping in future to be able to influence Iran after Khomeni {sic} dies. SHULTZ. It is ransom. But we have made more good contacts in Iran than he was aware of. Should pursue. But must not gild lily. Some undesirable effects of these actions. We are paying a high price.

Afraid of technically correct statements that are not fully descriptive -- could get us into trouble. CAP -- Q. on reliability of Rafsanjani. His statements blew us out of water in one way. Ans we are not relying on him as being "our man". But our CIA experts have been participating, {deleted} It's clear they are trying to find a way out. BILL -- All of people are convinced these are best to work with -- but don't go all out to rely on Raf -- We are feeling him out. BILL --

We have a good public position if we put it out in a simple way.

He read a prepared statement putting emphasis on long range relationships with Iran as reason for contacts. deemphasize hostage. deny arms sales that tip balance between Iran/Iraq. PRES We should put out statement show we do want to get hostages back. but Iranian contacts were for long range. won't deal with terrorists, nor ransom

But cannot get into q & a re hostages so as not to endanger them. SHULTZ -- agree our responsibility to look after citizens

Don't deal with hostage so as not to expose others to kidnapping.

juxtaposition of hostages and arms shipments must not be shown. Don't know exact linkage.

Caution in over assertion that arms shipments were small and inconsequential. Can't keep others in line if we OK. sale. Thinks Israeli suckered us into this so we can't complain of their sales.

Thinks statement should be issued, & is a good one.

Use Daniloff {Nicholas Daniloff, who was arrested by the Soviets and exchanged for a Soviet held here} as an example of non linkage. MEESE -- each of these is a set of complex incidents, not related no ransom, no money to Hizballah trying to help moderates in Iran who also tried to help us. PRES we must say something but not much JOHN If we go with this we end our Iranian contacts DTR Must get a statement out now, we are being attacked, and we are being hurt. Losing credibility. JP -- no statement needed. News has peaked. no hearings until Jan. so should not say anything. PRES -- Must say something because I'm being held out to dry. Have not dealt with terrorists, don't know who they are. This is long range Iranian policy.

No further speculation or answers so as not to endanger hostages. We won't pay any money, or give anything to terrorists JP Say less about what we are doing, more about what we are not doing CAP. Be careful of Raf. & Israel & blackmail. What we say will be repudiated. ED -- We are saying only what we did and know has happened. No violations of laws & policy VP -- Is NY case a private or public endeavor to sell arms to Iran. ans probably private with gov't knowledge. VP Israel may try to squeeze us. SHULTZ -- Finding was not known to me from Jan to Nov -- amazing. JP: came as result of meeting in Quarters in Jan. Everyone gave his opinion. Drawn up by NSC, CIA, DOJ {Department of Justice} thru John, Bill, & Ed & their lawyers.

Sent to Pres & signed in Jan. (DTR found out last week in conv. w/ JP GEO -- asked question about what if they ask for more than what they have received. JP -- Cannot tie hands that way. DTR -- should answer Geo's question later in week. GEO -- no debriefing -- what to say. PRES Support Pres' s policy but say nothing else due to danger to hostages GEO Support Iran long range policy of contact

Know support for weapons for hostages. PRES Side with mil superiority will win. We want to have things even. This helps Iran which was weaker. GEO Keep things in these channels that are more or less official and keep secret. DTR Lets face it -- we kept secret. Iranians released info.

All Try to get statement to face as many facts as possible.adjourned 1:05 p.m. Later in afternoon.

John, & Ed went over Bill's paper. A lot of info cut out by Ollie & others at NSC due to their conversations w/Iranians in Geneva over weekend (possible release of 2, maybe all 5; we arguing Cong inquiries demand a speedup, or we have to withdraw)

John got signoffs Cap, Ed, Bill & Pres.; unable to contact Geo enroute to S.A.

Told John he should proceed for evening news release --