Growth of Reagan's Contra Commitment

excerpted from the book

The Iran-Contra Connection

Secret Teams and Covert Operations in the Reagan Era

by Jonathan Marshall, Peter Dale Scott , Jane Hunter

South End Press, 1987, paper

Introduction: Private and Official Decision-Making

By any accounting, Washington's decision to create and support contras was a consensual one, reached in the heart of the Reagan administration's professional bureaucratic apparatus. The relative weight of outside "shadow networks" and inside bureaucrats in generating the formal contra commitment is neatly summarized in an excellent book by Christopher Dickey, With the Contras:

Before any hard and fast decisions on the Secret War were taken, several CIA 'old-timers,' released from service during the cutbacks of the 1970s, were in contact with anti-Sandinista forces, acting as private citizens to reassure them that once Reagan was elected, their lot would improve...But while some of these men eventually served as contract agents in the Secret War, their importance in creating it is, I believe, overstated. The paramilitary operation against Nicaragua ultimately was not just an out-of-control creation of conspiratorial ex-spies and right-wing ideologues but a conscious decision by senior administration officials who consider themselves pragmatic policymakers.

Like other authors, Dickey locates this conscious decision making in the Senior Interagency Group on Central America set up under National Security Council guidelines and precedents, and initially responsible to CIA Director William Casey and Robert McFarlane (then Secretary of State Haig's counselor). Two names from this initial "Core Group" set up in 1981 would figure in the later Contragate story: Nestor Sanchez, a New Mexico-born CIA veteran of the Guatemalan "death squad" operations in 1967-68, (later representing the Pentagon), and Colonel Oliver North from the NSC staff.

Dickey's account, however, stresses the discontinuity between the "pragmatic" bureaucratic consensus of 1981, and the consensus of a year earlier under Jimmy Carter, when the message to Central American governments was not counter-revolution so much as "reform":

Despite years of experience and seniority in the foreign service, most of the veterans associated with the Carter policy [in Central America] were fired, forced out or moved to obscure and distant posts. Carter's last assistant secretary was sacked. His principal deputy for Central America was transferred to Katmandu...[The men] brought in to replace them were, as one put it, 'action-oriented.

Clearly, then, the change in policy was not bureaucratic so much as political. The 1981 purge of those State Department hands who allegedly "lost Nicaragua," like the 1953 purge of those who allegedly "lost China," was undertaken to fulfill a campaign pledge, made in response to allegedly massive and illicit campaign contributions from the interested region. Those who acted to generate the change in policy were not just the self-important CIA "old-timers" to whom Dickey refers. The agents included these men's "anti-Sandinista" allies-most notably the deposed dictator Anastasio Somoza of Nicaragua, and after Somoza's murder in 1980, the Guatemalan death squad impresario, Mario Sandoval Alarcon.

In the late 1970s ... three of the foreign forces who would eventually back the contras (the governments of Taiwan and Argentina, and right-wing forces in Guatemala), had taken an important step to ensure themselves a voice in Washington for a new U.S. foreign policy in Latin America to replace President Carter's. All three moved to hire as their Washington lobbyist Michael Deaver, the man then managing the campaign of future presidential candidate Ronald Reagan.

After this, Deaver's Guatemalan clients, following visits from Reagan campaign representatives such as Richard Allen, Roger Fontaine and John Singlaub (the CIA "old-timer" and future WACL Chairman), began to raise funds for the Reagan campaign. On a BBC broadcast, these funds were estimated by former Guatemalan Vice-President Villagran Kramer as amounting to perhaps ten million dollars.


Reagan, Deaver's Amigos, and the Death Squads

The group that Deaver represented in Guatemala, the Amigos del Pais (Friends of the Country), is not known to have included Mario Sandoval Alarcon personally. But ten to fifteen of its members were accused by former Guatemalan Vice-President Villagran Kramer on the BBC of being "directly linked with organized terror." One such person, not named by Villagran, was the Texas lawyer John Trotter, the owner of the Coca-Cola bottling plant in Guatemala City. Coca-Cola agreed in 1980 to terminate Trotter's franchise, after the Atlantic Monthly reported that several workers and trade union leaders trying to organize his plant had been murdered by death squads.

One year earlier, in 1979, Trotter had traveled to Washington as part of a five-man public relations mission from the Amigos. At least two members of that mission, Roberto Alejos Arzu and Manuel F. Ayau, are known to have met Ronald Reagan. (Reagan later described Ayau as "one of the few people...who understands what is going on down there.")

Roberto Alejos Arzu, the head of Deaver's Amigos and the principal organizer of Guatemala's "Reagan for President" bandwagon, was an old CIA contact; in 1960 his plantation had been used to train Cuban exiles for the Bay of Pigs invasion. Before the 1980 election Alejos complained that "most of the elements in the State Department are probably proCommunist...Either Mr. Carter is a totally incapable president or he is definitely a pro-communist element." (In 1954, Alejos' friend Sandoval had been one of the CIA's leading political proteges in its overthrow of Guatemala's President Arbenz.)

When asked by the BBC how ten million dollars from Guatemala could have reached the Reagan campaign, Villagran named no names: "The only way that I can feel it would get there would be that some North American residing in Guatemala, living in Guatemala, would more or less be requesting money over there or accepting contributions and then transmitting them to his Republican Party as contributions of his own."

Trotter was the only U.S. businessman in Guatemala whom Alan Nairn could find in the list of Reagan donors disclosed to the Federal Election Commission. Others, who said specifically that they had contributed, were not so listed. Nairn heard from one businessman who had been solicited that "explicit instructions were given repeatedly: 'Do not give to Mr. Reagan's campaign directly.' Monies were instead to be directed to an undisclosed committee in California."

Trotter admitted in 1980 that he was actively fundraising in this period in Guatemala. The money he spoke of, half a million dollars, was however not directly for the Reagan campaign, but for a documentary film in support of Reagan's Latin American policies, being made by one of the groups supporting Reagan, the American Security Council (ASC). The film argued that the survival of the United States depended on defeat of the Sandinistas in Nicaragua: "Tomorrow: Honduras...Venezuela, the Dominican Republic, Mexico...the United States."

Deaver's Amigos and Trotter were in extended contact with the ASC over this project. In December 1979, and again in 1980, the ASC sent retired Army General John Singlaub to meet Guatemalan President Lucas Garcia and other officials. According to one of Singlaub's 1979 contacts, the clear message was that " Mr. Reagan recognizes that a good deal of dirty work has to be done." On his return to the United States, according to Pearce, Singlaub called for "sympathetic understanding of the death squads. " In 1980 Singlaub returned to Guatemala with another apologist for death squads, General Gordon Sumner of the Council for InterAmerican Security. Again the message to Lucas was that "help was on the way in the form of Ronald Reagan."

Jenny Pearce has noted that Singlaub's first ASC visit to Guatemalan President Lucas took place shortly after Lucas's meeting with Guatemalan businessmen, where he is "alleged to have raised half a million dollars in contributions to the [Reagan] campaign." Since the 1984 Congressional cutoff of aid to the contras, Singlaub, as world chairman of the World Anti-Communist League, has been the most visible source of private support to the contras. He did this in liaison with both William Casey of the CIA and Col. Oliver North of the National Security Council staff.

But Singlaub's contacts with the World Anti-Communist League go back at least to 1980, when he was also purporting to speak abroad in the name of Reagan. Did the help from Reagan which Singlaub promised Guatemalans in 1980, like the "verbal agreements" which Sandoval referred to at Reagan's Inaugural, involve commitments even then from Reagan to that fledgling WACL project, the contras?

Mike Deaver should be asked that question, since in 1980 he was a registered foreign lobbyist for three of the contras most important WACL backers: Guatemala, Taiwan, and Argentina.


Deaver, Taiwan, and WACL

Through his CIA contacts, Sandoval had also become the leader of the Guatemala chapter of the World Anti-Communist League. This chapter, partly organized by Howard Hunt, was a lasting spinoff of the 1954 CIA operation. WACL as a world organization however was principally the creation of two Asian governments which owed their survival to their well-organized lobbies in Washington. These two governments are Taiwan, which was represented in 1980 by Deaver; and South Korea, which is represented by Deaver today.

Through his long-time participation in WACL meetings, Sandoval has developed close relations with WACL's Taiwan organizers. It was largely through WACL that Taiwan picked up the task of training Central American police forces in "political warfare" (i.e. counter-terror), about the time that similar U.S. training programs were terminated by Congress in 1974. Today the Taiwanese embassy in Guatemala is second in size only to the American; and through Guatemala (and Sandoval) Taiwan has extended its influence to other Central American police forces. Deaver's double duty as a registered Taiwan agent and Reagan campaign organizer in 1980 helped generate one of the major controversies of that campaign. To understand it, one must go back to the origins of Deaver's public relations firm, Deaver and Hannaford, which he organized in 1974. Until that year both Deaver and Peter Hannaford had worked for Reagan in the California Governor's Office. In 1974, as Reagan retired to private life, the new firm undertook to book Reagan's public appearances, research and sell his radio program, and ghost-write his syndicated column. All this was arranged with an eye to Reagan's presidential aspirations, which Deaver and Hannaford helped organize from the outset.

Nothing about this arrangement was especially remarkable until 1977, when Deaver and Hannaford registered with the Justice Department as foreign agents receiving $5000 a month from the government of Taiwan. This sum was not particularly large, and notably less than the $11,000 a month which the firm would receive in 1980 from Guatemala's Amigos. The fact remains that funds from three closely allied WACL countries, Guatemala, Taiwan, and Argentina, helped pay for the Deaver and Hannaford offices, which became Reagan's initial campaign headquarters in Beverly Hills and his Washington office.

Questions of conflicting interest were raised when a Reagan column, said to have been written by Hannaford, argued that normalized relations with the People's Republic of China "could prove disastrous, not only for Taiwan, but for the United States itself." When Carter, undaunted, established full relations in late 1978, Reagan became one of the loudest critics of this action. In 1980 Reagan stumped the country with the catchphrase, "No more Taiwans, no more Vietnams, no more betrayals."

As Reagan's California team was melded into a national one, by the infusion of old Nixon supporters like William Casey and Richard Allen, Reagan's position on Taiwan appeared to soften. It was Allen's task at the Republican national convention to assure reporters that Reagan did not intend to "turn the clock back."

However the more balanced position which Allen projected, and which the Eastern establishment press was eager to hear, was misleading. In May 1980 in Cleveland, almost three months after Casey had become Reagan's campaign chairman, Reagan said in reply to a question that "One of the things I look forward to most if I am successful in this re-election is to re-establish official relations between the United States Government and Taiwan." Although Reagan did not spell this out, such a step would have involved a repudiation of Carter's 1978 agreement which recognized that "Taiwan is part of China."

Though the national press generally ignored Reagan's Taiwan position in May, they could not when on August 16 he repeated his pledge to establish "an official governmental relationship" with Taiwan. The occasion could not have been calculated to receive better press attention: Reagan's remarks were made as he was bidding bon voyage to his running mate George Bush, as he left on an image-building mission to Peking. As Time observed disapprovingly, Reagan's remarks "managed to infuriate Peking," and "create the impression of a rift between Reagan and Bush." When an embarrassed Bush tried to assure Peking officials that Reagan was not talking of relations "in a diplomatic sense," Reagan (in Time's words) "undercut" Bush by telling a reporter he still stood by his Taiwan statement. In the end Reagan grudgingly backed off ("I misstated"), while an embarrassed Casey tried to dismiss the whole episode as "semantic mishmash."

Reflecting the concern of the Eastern Republican establishment, Time analyzed the problem as one of divisions between Reagan's "uncoordinated" staff. It claimed that the top echelon of California insiders (among whom it specifically named Deaver) was "insensitive," with "little Washington or national campaign experience. The outsiders-like Campaign Director Casey...-do have that valuable experience but exercise less influence over the candidate."

On the crunch level of foreign policy decision-making, the lack of coordination appears to have been primarily between Richard Allen, who carried the title of Foreign Policy Advisor, and Deaver. There was some irony in this, since Deaver and Hannaford were busy projecting images of Reagan and themselves as pragmatists, while Allen had once been under CIA surveillance for his links to Taiwan's Vietnam allies, and had subsequently been relegated by Nixon to a minor role. On the issue of Taiwan, however, Deaver and Hannaford were the ideologues, and Allen relatively a pragmatist.

Though he had originated with the ideological right, by 1981 Allen had acquired far more experience as a registered foreign agent than Deaver and Hannaford; and underlying Reagan's Taiwan flap was the further irony that the great American patriot's foreign policy formulation was at this stage almost exclusively in the hands of registered foreign lobbyists. But Allen had more varied and mainstream clients to worry about than Deaver-notably Japan, which had every interest in preventing Carter's China policy from being derailed. Twice Reagan's California team would use the pretext of Allen's Japan business profits to drop him-once five days before the election, and again permanently a year later. Little noticed at the time was the fact that the key architect in the plans for Allen's permanent removal was Deaver.


The Restoration of Arms Sales to WACL Countries

Deaver's double duty as Taiwan agent and deputy campaign director was reported in the U.S. press, while his lobbying for Guatemalan businessmen has been noticed by radical Latin America watchers. No one has ever noted that through the 1980 campaign Deaver and Hannaford had one other international account: the military dictatorship of Argentina, by far the most notorious of Latin America's death squad regimes.


Argentina's image problem in America was even more acute than Guatemala's. How to put a constructive face on the disappearance and presumed murder of between 6000 and 15,000 persons? The response of Deaver and Hannaford was to bring to the United States as apologist the junta's leading civilian, Economy Minister Martinez de Hoz, and allow him to address the United States through Reagan's radio broadcasts. Here is a sample of their description of what they called "one of the most remarkable economic recoveries in modern history."

Today, Argentina is at peace, the terrorist threat nearly

eliminated. Though Martinez de Hoz, in his U.S. talks, concentrates on economics, he does not shy from discussing human rights. He points out that in the process of bringing stability to a terrorized nation of 25 million, a small number were caught in the cross-fire, among them a few innocents...If you ask the average Argentine-in-the-street what he thinks about the state of his country's economy, chances are you'll find him pleased, not seething, about the way things are going.

Distasteful as this Deaver-Hannaford apologetics for murder may seem today, the real issue goes far beyond rhetoric. Though Deaver and Hannaford's three international clients-Guatemala, Taiwan, and Argentina-all badly wanted a better image in America, what they wanted even more urgently were American armaments. Under Carter arms sales and deliveries to Taiwan had been scaled back for diplomatic reasons, and cut off to Guatemala and Argentina because of human rights violations.

When Reagan became President, all three of Deaver's international clients, despite considerable opposition within the Administration, began to receive arms. This under-reported fact goes against the public image of Deaver as an open-minded pragmatist, marginal to the foreign policy disputes of the first Reagan administration, so that his pre- 1981 lobbying activities had little bearing on foreign policy. The details suggest a different story.

Argentina could hardly have had a worse press in the United States then when Reagan took office. The revelations of Adolfo Perez Esquivel and of Jacobo Timmerman had been for some time front page news. This did not deter the new Administration from asking Congress to lift the embargo on arms sales to Argentina on March 19, 1981, less than two months after coming to office. General Roberto Viola, one of the junta members responsible for the death squads, was welcomed to Washington in the spring of 1981. Today he is serving a 17-year sentence for his role in the "dirty war."

Though the American public did not know it, the arrangements for U.S. aid to Argentina included a quid pro quo: Argentina would expand its support and training for the Contras, as there was as yet no authorization for the United States to do so directly. "Thus aid and training were provided to the Contras through the Argentinian defense forces in exchange for other forms of aid from the U.S. to Argentina." Congressional investigators should determine whether the contemporary arms deals with Deaver's other clients, Guatemala and Taiwan, did not contain similar kickbacks for their contra proteges.

But aid for the contras was only one part of a covert Reagan grand design for Central America in which Argentina would play the active role. This involved, among other things, ...the training of more than 200 Guatemalan officers in 'interrogation techniques' (torture) and repressive methods...participation in the training at U.S. military bases of officers and elite troops of the Salvadorean and combat leadership for incursions by Somocista bands based in Honduras...logistic and economic support for the...plot to overthrow the Sandinista regime...the despatch of at least fifty more officers to Honduras as para-military troops to intervene in counter-revolutionary activities throughout the region, particularly against Nicaragua ...the supply of arms and ammunition to the Guatemalan participation in torture sessions in Guatemala, and-together with Israeli officers-the creation of an 'intelligence center' in that country.

Argentina eventually became one of the two principal reasons why Reagan's first Secretary of State, Alexander Haig, resigned on June 25, 1982. (The other area of disagreement was over Israel's invasion of Lebanon.) Haig later charged that his official policy of siding with Britain against Argentina (supported by Reagan, whose closest personal ally abroad was Margaret Thatcher) had been seriously undercut, not just by Ambassador Jeane Kirkpatrick, but by someone above her in the White House.

There were contacts made with Argentinian officials by the White House which were neither discussed with me nor cleared with me and which had the practical effect of confusing the issue...This helped confirm that the outcome [the Falkland Islands war] would be inevitable.

William Clark, Reagan's official national security adviser, purported to refute this charge by saying that all of his contacts with foreign officials had been cleared with Haig. However it was Deaver, not Clark, whom Haig suspected of offsetting his tilt against Argentina. "At an NSC session...Haig had observed Kirkpatrick passing Deaver a note. Concluding that Kirkpatrick was using Deaver to prime Reagan...Haig told Clark that a 'conspiracy' was afoot to outflank him." Haig's paranoia may have been justified. Soon Deaver (allied with Clark, whom Deaver had selected as Allen's replacement) was to play a principal role in dropping Haig, as he had earlier in dropping Allen.

What reason could anyone in the White House have for putting U.S. relations with Argentina ahead of relations with the United Kingdom? It is hard to think of any reason more urgent than that of agreement for covert Argentinian support of the contras, "which was broken by U.S. support for Britain in the 1982 Falklands War." Although some Argentine advisers remained in Honduras, the pull-out of the Argentine government produced a temporary setback in contra operations, followed in December 1982 by a major shake-up in the contras' nominal political leadership.


Restoring arms deliveries to Guatemala proved a little more difficult than to Argentina. "The election of Reagan coincided with the bloodiest outbreak of Guatemalan death squad actions in history. Almost five hundred deaths a month, almost all attributed to the right, were being reported by the American Embassy, but even that figure was considered low by most other monitoring groups. Piles of mutilated bodies were being discovered every morning throughout the country." President Lucas Garcia, alleged to have personally raised half a million dollars from Deaver's Guatemala businessmen for the Reagan campaign, was said in February 1981 by the New York Times (citing Amnesty International) to be directly supervising the security agency in charge of the death squads.

The May 4 hearing of the Senate Foreign Relations Committee, in which the administration announced that it was disposed to give aid to Guatemala, followed two days of hard-hitting stories in the press about that country's increasing violence, including the murders of 76 leaders of the moderate Christian Democratic Party. When Congress balked at certifying that Guatemala was not violating human rights, the administration acted unilaterally, by simply taking the items Guatemala wanted off the restricted list.


On the issue of restoring arms sales to Argentina and Guatemala there was no dissent within the Reagan administration, all of whom were eager to repudiate Carter's human rights policies as quickly as possible. The arguments against arms sales to Taiwan, however, were geopolitical as well as ideological. The more seriously one chose to believe in a Soviet threat, the more important it seemed not to threaten the growing strategic relationship between Washington and Peking.

Reagan was confronted with this geopolitical consensus as soon as he took office. After a year of fumbling, Haig (State), Weinberger (Defense) and Casey (CIA) united on a recommendation to Reagan: Taiwan should not receive the new weapons it was asking for. In August 1982 the State Department, after another visit to Peking by George Bush, announced a joint communique with China, in which the United States undertook to "reduce gradually its [weapons] sales [to Taiwan]...leading over a period of time to a final resolution."

This result appeared to experts to represent a victory of "Geopolitics over Ideology." But while the communique called for a reduction, arms sales to Taiwan in fact increased, to new levels of $530 million in 1983, and $ l,085 million in 1984. Each new arms sales announcement was greeted with loud protests from Peking, and with increasing rumors and reports of Sino-Soviet rapprochement. Once again, we now know that on the issue of Taiwan arms sales Haig at the State Department was being over-ruled by the Reagan White House staff.


Deaver, WACL, and the Contras

The lobbying for increased U.S. arms sales came of course from at home as well as from abroad; and primarily from the American Security Council, the chief real-life incarnation of that military-industrial complex which President Eisenhower warned the country about a quarter of a century ago. Two prominent backers of the ASC (oilmen A.C. Rubel and Henry Salvatori) were also part of the trio of Los Angeles millionaires who had launched Reagan into politics after the Goldwater debacle of 1964.

The third, Holmes Tuttle, lent his weight to the small meeting of May 1974 in Reagan's home where the decision was made for Reagan to begin his drive for the presidency. Four of Reagan's top aides attended that meeting: Meese, Nofziger, Deaver, and Hannaford. The Deaver and Hannaford agency was launched in 1974 as part of that presidential strategy.

The international clients taken on by Deaver and Hannaford- Taiwan, Guatemala, and Argentina-were longtime causes of the ASC as well. More importantly, the ASC helped out Taiwan's foreign policy creation, the World Anti-Communist League, by setting up an American affiliate for it, the American Council for World Freedom (ACWF). The young executive secretary of the ACWF, Lee Edwards, was by 1980 the registered lobbyist for WACL's Taiwan chapter, and also of Argentina. Edwards also wrote a Reagan biography.

In 1976 Edwards' ACWF pulled out of WACL, on the grounds that it was becoming racist. The new U.S. WACL chapter, the Council on American Affairs (CAA), was however also headed by an ASC man: Roger Pearson of ASC's editorial board. By 1980, WACL had been largely taken over by former Nazis, SS men, Nazi collaborators, and outspoken anti-Semites. Most embarrassing, from the point of view of a "law and order" candidate like Reagan, was the presence at WACL conferences of wanted right-wing terrorist murderers, and, perhaps worse, bank-robbers.

The Reagan team, both before and after the 1980 election, appears to have adopted a two-fold approach to the problem of right-wing WACL terrorism. On the one hand they fostered a careful program to improve WACL's image, badly tarnished after British and American WACL members had protested WACL's penetration by anti-Semites. On the other, they moved through Deaver's clients in Guatemala to make selected terrorists the Iynchpins of the Reagan administration's policies in Central America.

Two men appear to have been central in this double policy: General John Singlaub, who after Reagan's election became WACL's new world chairman, and Mario Sandoval Alarcon, the Guatemalan godfather and WACL leader who got to dance at Reagan's inaugural ball. The public relations work for both men, at least prior to the election, was in the hands of Mike Deaver.

Singlaub was a long-time veteran of CIA and DOD "unconventional warfare" operations, which he once explained as including "terrorism, subversion and guerrilla warfare to resistance groups and gray psychological operations." Singlaub was little-known until 1978, when he was transferred from his Army Command in South Korea for publicly denouncing Carter's announced plans to withdraw U.S. troops from that area. A spirited defense of Singlaub and his position was promptly prepared for one of Reagan's 1978 broadcasts by Deaver and Hannaford.

Little noticed at the time was the fact that ten days before his retirement, in May 1978, Singlaub attended a meeting of right-wingers who "didn't think the country was being run properly and were interested in doing something about it." The meeting was hosted by Mitch WerBell, a conspiratorial colleague of Singlaub from their OSS days together at Kunming in China. As we have seen, Singlaub then began a series of co-ordinated visits to Central America, with Generals Graham and Sumner, laying the basis for Reagan's current support of the contras in Nicaragua. Singlaub's visits focused on Guatemala, where in 1982 WerBell would support a coup attempt by the National Liberation Movement (MLN) of Mario Sandoval Alarcon and Lionel Sisniega Otero.

Singlaub's link-up with Sumner in 1980 was particularly significant to the Guatemalans, since for a year Sumner had been one of the most prominent contra contacts in Washington who was "looking for some way to help Nicaraguans who wanted to fight" the Sandinistas. After the election that most prominent supporter would become Singlaub himself, by a series of events which seem to have been pre-arranged.

The most important event was the creation of a new United States chapter of WACL, to replace one which had been taken over by crackpots and racists. Singlaub did this on November 22, 1981, four days after a secret approval by Reagan of a CIA plan to begin direct assistance to the contras.

The weeks after Reagan's election had seen a number of rapid developments. Some of Sandoval's contra group, headed by Colonel Enrique Bermudez who had been Sumner's contact, departed for training in Argentina. (This was training in terrorism; and one of the trainers is now wanted for his leadership of a cell attempting, by bombings and kidnappings, to destabilize the new Argentine civilian government.) The Salvadorean death squad leader, Major Roberto d'Aubuisson, entered the United States illegally (the Carter administration refused to issue him a visa), and had conferences "with members of the Reagan transition team and with members of the staff of...Senator Jesse Helms."

Meanwhile Singlaub flew to Australia to address WACL's Asian contingent, the Asian People's Anti-Communist League (APACL). He correctly predicted that there would be closer relations between the U.S. and WACL countries, and hinted that he himself would be helpful even though he would not be a member of the new administration. This public healing of the rift between WACL and the United States had begun the previous July in Geneva, when the nominal head of WACL's U.S. chapter (a white racist who had once urged his state of Mississippi to secede from the Union) was upstaged by the presence at the WACL Conference of Singlaub's close friend Ray Cline. Cline was another strong Reagan supporter and a foreign policy adviser; he flew to Taiwan after the election to convey the message that "the new Reagan Administration will enhance U.S. relations with Taipei without damaging ties with Peiping [sic]."


Singlaub, WACL, and LaRouche

In the light of WACL's subsequent importance to the Reagan policy of supporting the contras, it is significant that the approaches of Cline and Singlaub to WACL began before the 1980 election. Singlaub and Cline were the logical team to consolidate the Reagan-WACL alliance, since their acquaintance with WACL's members and drug-financed intrigues went back to the 1950s, if not earlier. Singlaub had first met Cline, along with four future backers of CIA-Cuban operations (Howard Hunt, Paul Helliwell, Lucien Conein and Mitch WerBell) in a small OSS mission at Kunming in China, at the very center of the World War II KMT drug traffic. According to the Wall Street Journal, OSS payments at this base were frequently made with five-pound shipments of opium. The sixth and most mysterious of these men, Mitch WerBell, would himself be indicted on drug smuggling charges in 1976, two years before he began an extended and little-noticed relationship with John Singlaub and Lyndon LaRouche.

The other five men from the OSS Kunming mission went on into the CIA, and in the 1950s served in or supported CIA covert operations in Asia. Helliwell, from his law office in Miami, organized the arms supply to General Li Mi's drug-growing KMT troops in Burma, as he would later organize support for the ClA's Cuban sabotage teams in Miami. Lucien Conein went on to be the CIA's liaison with the Corsican gangsters of Saigon; and, according to Alfred McCoy, "did not pass on" to Washington the information he learned about the large shipments of drugs these Corsicans were making to Europe, while they gave the 1965 Saigon government "a fixed percentage of the profits." Howard Hunt was in 1954 assigned to a black propaganda psychological warfare operation based in Tokyo.

More directly impinging on what became WACL were the activities of Cline as CIA station chief in Taiwan (1958-62), and Singlaub as deputy CIA station chief in South Korea (1950-52). Cline is said to have helped Taiwan found its Political Warfare Cadres Academy at Peitou, which has through its training program developed a conspiratorial Latin American fraternity of thousands of military and security officers, including Roberto d'Aubuisson. In this way the Kuomintang created in Latin America "carbon copies of what they had created in Taiwan: a politicized military whose first loyalty was to the party, then to the military, and finally to the nation."

All of this was in fulfilment of recommendations drafted in 1959 by General Richard Stilwell for a special Presidential Committee under General William Draper reporting to President Eisenhower: that the U.S. help develop "higher level military schools" with political-economic curricula in the Third World, to encourage local armies to become "internal motors" for "socio-political transformation."

Former U.S. intelligence officers have also suggested that the funding of APACL, and of the initial preparatory meetings in 1958 for WACL, came from U.S. Embassy Counterpart funds in Taiwan to which Cline had access. As CIA deputy chief in South Korea during the Korean War, Singlaub is also said to have had a hand in developing what eventually became the Korean Central Intelligence Agency, the other chief partner in setting up APACL

In 1954, when APACL was founded in Taiwan, its first Latin American affiliate was founded in Mexico City by Howard Hunt. Hunt did so in his capacity as political and propaganda chief of the CIA operation in Guatemala; but his creation (the Interamerican Council for the Defense of the Continent, or CIADC) would survive to be involved in other CIA-backed coups as well, notably the Brazil coup in 1964. The CIADC soon became a vehicle for the international plotting of two of Hunt's young Guatemalan proteges: Lionel Sisniega Otero, who in 1954 was employed on clandestine radio operations by Hunt's assistant David Phillips, and Sisniega's mentor, the future "Godfather," Mario Sandoval Alarcon.

By accident or by design, the simultaneous creation of APACL and CIADC in 1954 also had the effect of creating a conspiratorial China Lobby for Taiwan overseas, at precisely the time that the activities of the old conspiratorial China Lobby in Washington were being exposed and neutralized. When the first provisional steering committee for a combined WACL was announced from Mexico City in 1958, its General Secretary was veteran China Lobbyist Marvin Liebman, who earlier had organized Washington's "Committee of One Million" in support of Taiwan. Lee Edwards, Liebman's successor at the Committee of One Million, organized the first U.S. Chapter of WACL, with officers from the leadership of the American Security Council.

From the China Lobby bribes of the early 1 950s to the contra raids of the 1980s, there have been continuing reports linking Taiwan's and WACL's activities to profits from the international narcotics traffic (see Chapter III). The situation was aggravated by the evolution of the 1 950s China Lobby into the 1960s Cuban exile-Somoza Lobby, particularly when ex-CIA CORU Cubans like Orlando Bosch, dropped from the CIA for their terrorist and/or drug trafficking activities, were simply picked up by Somoza.

It made sense that Somoza, when his long-time backers were abandoning him in 1979, should have tried to hire Shackley's associate Tom Clines to work for him, along with Bosch. Shackley and Clines, by coincidence or not, personified the CIA-mafia connection that successive CIA Directors found impossible to eliminate. When Richard Helms closed down anti-Castro operations in Miami, dispersed its U.S. and Cuban personnel, and sent Shackley and Clines to manage the covert war in Laos, the two men were moving from a local drug-linked operation to a more distant one. Significantly, the Florida mob went with them. Two years after they were transferred to Laos in July 1966, Santos Trafficante, a key figure in the ClA-mafia assassination plots against Castro, was seen contacting local gangsters in Hong Kong and Saigon.

But the Shackley-Clines links to Latin America increased as their former agents were dispersed there. One of these men was John Martino, an old mafia casino associate of Santos Trafficante in Havana. In 1970, posing as a mafia representative, John Martino became a business associate of President Arana, and the CIA control for Mario Sandoval Alarcon-two of the Guatemalans who attended Reagan's 1981 inaugural ball.

We see then that the Reagan-WACL alliance was forged by two men, Ray Cline and John Singlaub, whose connections to WACL's Asian patrons went back three decades or more. One's first assumption is that, as loyal Americans, they would be more likely to approach WACL on behalf of Reagan than the other way round. Singlaub, in particular, has a reputation of being a "straight arrow," a "boy scout," for whom subversive intrigue would be anathema.

There are nonetheless disturbing indications that Singlaub, at least, may have been working for a hidden agenda that went far beyond naive loyalty to a Republican presidential candidate. It is hard to explain his dealings in the same period 1978-82 with his former Kunming OSS colleague Mitch WerBell, and more importantly with WerBell's employer since 1977, Lyndon LaRouche. About his political activities with the LaRouche movement Singlaub has at the very least been less than candid. What makes this disturbing is that the LaRouche movement was then suspected of looking for a dissident general to lead a military coup.

We have already seen that in May 1978, ten days before his retirement, Singlaub attended a meeting of right-wingers who "didn't think the country was being run properly and were interested in doing something about it." The meeting was hosted by Mitch WerBell, who in 1982 would travel to Central America in support of an attempted Guatemalan coup on behalf of WACL leaders Mario Sandoval Alarcon and Lionel Sisniega Otero. WerBell's career of covert activities in the Caribbean also involved work for Cuban dictator Batista in 1959, Dominican Republic dictator Imbert in 1965, and a coup operation (said by Hinckle and Turner to have had possible Mafia backing) against Haitian dictator Duvalier in 1966.

WerBell, when Singlaub visited him in 1978, had recently evaded separate indictments for arms smuggling and for narcotics trafficking. WerBell was also in touch with "Secret Team" members such as Ted Shackley and Richard Secord, and allegedly was paid once through the drug-linked Nugan Hand Bank when he conducted "operations for U.S. intelligence." More importantly he was also in touch with Cuban Bay of Pigs veterans suspected of involvement in the CORU assassination of Orlando Letelier.

WerBell, when Singlaub visited him in 1978, was employed as the "personal security adviser" to Lyndon H. LaRouche, then the leader of the so-called National Caucus of Labor Committees (NCLC), a group which previously had posed as left-wing but in fact harassed anti-nuclear and other left-wing demonstrations with the help of the right-wing domestic intelligence group known since 1979 as Western Goals (backed primarily by WACL donor and Texan millionaire Nelson Bunker Hunt). Singlaub and another leader of his U.S. WACL chapter (Anthony Kubek) joined the advisory board of Western Goals. Though Singlaub left Western Goals in 1984, the organization is controlled today by Carl Spitz Channell, who in 1986 met with Oliver North "five or ten times" about his TV advertising campaigns against political candidates opposed to contra aid.

In 1979 General Singlaub conceded to the New York Times that he had met with two of LaRouche's party officials at the home of WerBell, but claimed that he had ...since rejected the organization. "It was so clear to me after the first three or four contacts that they wanted something from me," the general said. "They hounded me for months, they flooded me with documents, they showed up at places where I spoke."

"I think they're a bunch of kooks of the worst form, General Singlaub went on. "I've been telling WerBell that if they're not Marxists in disguise, they're the worst group of anti-Semitic Jews [sic!] I've encountered. I'm really worried about these guys; they seem to get some people."

The general was asked if any mention was made in his talks of the possibility of a military coup in the United States-an idea that has recently received currency in the party as a way to put Mr. LaRouche in power. "Well, it didn't come up in that form, but it was suggested that the military ought to in some way lead the country out of its problems," General Singlaub replied. "

guess I stepped on them pretty hard on that, and it never came up again. It was one of the first things that made me realize they're a bunch of kooks."

Singlaub's worries about a LaRouchean military solution to America's problems, although expressed so strongly in this interview, do not appear to have been very profound or long-lived. According to Scott and Jon Lee Anderson, in 1982 Singlaub returned to WerBell's counterterrorist training camp in Powder Springs, Georgia, to lecture WerBell's trainees. Many of these were security forces for the organization of Lyndon LaRouche, then the anti-Semitic leader of the so-called U.S. Labor Party, whose security director was WerBell.


The Strategy of Tension: CAL, P-2, Drugs, and the Mafia

Reports linking WACL to drugs became particularly flagrant in the period 1976-80, as the rift between WACL and Carter's CIA widened, and as a new Argentine-dominated affiliate of WACL in Latin America (the Confederacion Anticomunista Latina, or CAL) plotted to extirpate radical Roman Catholic priests and prelates fostering liberation theology.

A high-point or low-point of the CAL plotting was reached in 1980, when Argentine officers, bankrolled by the lords of Bolivia's cocaine traffic, installed the Bolivian drug dictatorship of Luis Garcia Meza. Two of the Argentine officers involved turned out to be wanted Italian terrorists, Stefano delle Chiaie and Pierluigi Pagliai; together with the veteran Nazi fugitive and drug trafficker Klaus Barbie, the neo-fascists seized the radio station as a signal to launch the coup.

Barbie and delle Chiaie were both deeply involved in the CAL project to identify and exterminate leftists and radical priests. Through this project delle Chiaie had advised d'Aubuisson by 1979; and at the September 1980 meeting of CAL in Argentina, delle Chiaie and d'Aubuisson met and arranged for weapons and money to be sent to d'Aubuisson in El Salvador.

That 1980 CAL Conference was presided over by Argentine General Suarez Mason, today a fugitive wanted on charges arising from the Argentine junta's death squads. In attendance were Bolivia's dictator, Garcia Meza, wanted by U.S. drug authorities for his involvement in cocaine trafficking, and Argentine President Videla, today serving a life sentence for his policies of mass murder and torture. A featured speaker at the conference was Mario Sandoval Alarcon, who had brought his protege d'Aubuisson and arranged for him to be put in touch with delle Chiaie.

What was being brokered at the September 1980 CAL Conference was nothing less than an "Argentine solution" of death squad dictatorships from Buenos Aires to Guatemala City. The inspiration and direction of this scheme was however not just Argentine, but truly international, involving the Italo-Argentine secret Masonic Lodge P-2 (of which General Suarez Mason was a member), and possibly through them the financial manipulations by insiders of the Milan Banco Ambrosiano and Vatican Bank.

P-2 has come under considerable scrutiny in Italy, where it began, because of its on-going involvement in intelligence-tolerated coup attempts, bank manipulations, and terrorist bombings. All of this has contributed to a right-wing "strategy of tension," a tactic of developing a popular case for right-wing order, by fomenting violence and disruption, and blaming this when possible on the left. Stefano delle Chiaie was perhaps the master activist for P-2's strategy of tension, assisted by a group of French intelligence veterans working out of Portugal as the so-called press agency Aginter-Presse. The Aginter group had their own connections to WACL in Latin America before delle Chiaie did, especially to the Mexican chapter (the so-called "Tecos") and to Sandoval's WACL chapter in Guatemala.

According to the Italian Parliamentary Report on P-2:

P-2 contributed to the strategy of tension, that was pursued by right-wing extremist groups in Italy during those years when the purpose was to destabilize Italian politics, creating a situation that such groups might be able to exploit in their own interest to bring about an authoritarian solution to Italy's problems.

Del'e Chiaie was a principal organizer for three of the most famous of these incidents, the 1969 bomb in the crowded Piazza Fontana of Milan (16 deaths, 90 injuries), the 1970 coup attempt of Prince Valerio Borghese (a CIA client since 1945), and the Bologna station bombing of August 2, 1980 (85 deaths, 200 injuries). In December 1985 magistrates in Bologna issued 16 arrest warrants, including at least three to P-2 members, accusing members of the Italian intelligence service SISMI of first planning and then covering up the Bologna bombing. One of these 16 was P-2's leader Licio Gelli, who had spent most of the post-war years in Argentina.

A small group of anarchists, penetrated by delle Chiaie's man Mario Merlino, were blamed at first for the Piazza Fontana bombing, even though Sismi knew within six days that delle Chiaie was responsible, and Merlino had planted the bomb.

After 1974, when the right-wing "strategists of tension" lost critical support with the ending of the Greek, Portuguese, and Spanish dictatorships, they appear to have looked increasingly for new friendly governments in Latin America. Delle Chiaie began to work for Chile's service DINA in 1975, the first contacts having been made through Aginter by Michael Townley, who would later murder Letelier with the help of CORU Cubans for DINA. (Delle Chiaie is said to have come from South America to Miami in 1982, with a Turkish leader of the fascist Grey Wolves who was a friend of the Pope's assassin Mehmet Agca.)

The P-2's support for Latin American terror seems to have been in part a matter of internal Roman Catholic politics: an attempt by one faction to use right-wing death squads to eliminate the Church's liberation theologians and moderate Christian Democrats. Both the contras and Mario Sandoval Alarcon were part of the anti-liberationist campaign: the contra radio maintained a steady propaganda campaign against the Maryknoll Sisters in Nicaragua; Lau of the contras murdered Archbishop Romero of El Salvador; and Lau's patron Sandoval, at the 11th WACL Conference in 1978, denounced the "intense Marxist penetration...acting within the highest echelons of the Catholic hierarchy." During the two years after the CAL adopted the Banzer Plan in 1978, "at least twenty-eight bishops, priests, and lay persons were killed in Latin America; most of their murders were attributed to government security forces or rightist death squads. That number multiplied after 1980 as civil war spread through Guatemala and El Salvador." We have already seen how Reagan's termination of the Carter "human rights" policies was followed by the decimation of the Guatemalan Christian Democrats.

The CAL/P-2 connection was and remains a drug connection as well. The terrorist delle Chiaie has been accused of ties to some of the French Connection heroin merchants who had relocated to Italy; while CAL Chairman Suarez Mason, according to the Italian magazine Panorama, became "one of Latin America's chief drug traffickers."

This Latin American WACL drug connection appears to have been originally put together by former Argentine Interior Minister Jose Lopez Rega, a P-2 member and Gelli intimate who was responsible for restoring Peron to power in 1973 and arranging for European experts in "dirty war" tactics to launch death squad tactics against the terrorist left. Lopez-Rega was later said to have been directly involved with other P-2 members in the Argentine-Paraguayan cocaine traffic, and to have used French members of the Ricord drug network as terrorists for his underground AAA (Alianza Argentina Anticomunista). Ex-CIA Cuban exile terrorists involved in the drug traffic also worked with the AAA, as well as for Somoza.

Paraguayan Intelligence Chief Pastor Coronel, a CAL participant and death squad co-ordinator, was also a smuggling partner of the Corsican drug kingpin in Latin America, Auguste Ricord, whose network trafficked with the Gambino Mafia family in New York. Michele Sindona, the author of the Ambrosiano-Vatican Bank connection to P-2, had his own connections to the Gambino family, which surfaced when in 1979 he used them to stage his own "abduction" to avoid a New York court appearance. According to Penny Lernoux, "the P-2 crowd obtained money from the kidnappings of well-to-do businessmen in Europe and from the drug traffic in South America. Sindona's bank laundered money from the notorious [Italian] Mafia kidnappers of Anonima Sequestri, who worked with ... Ordine Nuovo." Significantly, Mario Sandoval Alarcon has also been accused of resorting to the kidnapping of rich coffee-growers in Guatemala to get financing for his political faction. Since the fall of the Argentine junta and Suarez Mason in 1982-83, the AAA, abetted by delle Chiaie, has also taken to bank robberies and kidnapping.


P-2, the Republicans, and Ledeen

But P-2 had equally strong links to both the CIA and the Republican Party. Under President Nixon, the CIA allocated X 10 million for centrist and right-wing parties in the 1972 Italian elections. The U.S. Embassy in Rome was acutely divided over whether the money should go through Sindona, who appeared to have "a direct line to the [Nixon] White House," or Italian Intelligence Chief Vito Miceli, implicated in a 1970 CIA-financed coup attempt with delle Chiaie. Both Sindona and Miceli, as it happened, were part of the P-2 connection.

Sindona's U.S. investments were partnered by the Continental Illinois bank headed by Nixon's first Treasury Secretary, David Kennedy, and his interests were represented by the law firm of Nixon and his Attorney General John Mitchell. "In Italy, Sindona orchestrated the efforts of the neo-Fascist deputy Luigi Turchi to garner support for Nixon's election campaign. Sindona even offered S I million, on condition of anonymity, to CREEP treasurer Maurice Stans. The offer was refused." Turchi's efforts were co-ordinated by Philip Guarino of the Republican National Committee, a P-2 associate later implicated in the plotting to help Sindona escape prosecution.

We have seen how in 1980 Cline's associate, Michael Ledeen, published an article (at the beginning of the 1980 election campaign) "savaging Admiral Stansfield Turner for forcing Ted Shackley [one of Edwin P. Wilson's senior CIA contacts, a veteran of the anti-Allende operation] out of the agency. A year later Michael Ledeen, in his new capacity as the Reagan State Department's expert on terrorism, was now in a position to help close off the investigation of those (specifically Shackley and von Marbod) who were being investigated along with Edwin Wilson, perhaps the world's most notorious ex-CIA terrorist.

Ledeen's efforts in 1980 on behalf of Shackley were paralleled by a dirty tricks campaign on behalf of Reagan in alliance with P-2 members of the Italian intelligence service SISMI. The chief of these, Francesco Pazienza, was a financial consultant of Roberto Calvi at the Banco Ambrosiano. Pazienza was ultimately indicted in an Italian court (with Ledeen as an unindicted co-conspirator) for luring President Carter's brother Billy into a compromising relationship with Qaddafi during the 1980 presidential campaign. According to Edward Herman and Frank Brodhead, the prosecuting judge ...had evidence that "SISMI was the architect of the scandal over

Billy Carter," and that the material in this case was gathered mostly by Pazienza and by his American friend Michael Ledeen...." Pazienza availed himself of SISMI both for the use of some secret agents and for the expenses of organizing the scandalous plan. It seems that the organizers got a huge payoff for 'Billygate.' Moreover, [SISMI chief] Santovito [a P-2 member] and Pazienza got great advantages in return from American officials."

Ledeen published his Billygate stories in three pro-Israeli publications: the New Republic of Martin Peretz, and two journals controlled by Sir James Goldsmith, the chairman of the Banco Ambrosiano-linked oil company BRISA, and later one of the multimillionaires consulted by Reagan in his Project Democracy.

In 1980 Ledeen was also in high gear, allegedly again with assistance from Pazienza, as a propagandist for the notion of a terrorist threat requiring a beefed-up U.S. intelligence response. Given access in 1980 to a Czech defector from twelve years earlier (Jan Seina), Ledeen elicited from him the information, which Seina had never volunteered in his extensive CIA debriefing, that the Soviet Union maintained a network of terrorist training camps as part of its plan for global domination. According to Herman and Brodhead, Ledeen had Seina reaffirm the contents of a purported document on Soviet sponsorship of terrorism which Seina had willingly claimed to be authentic a decade earlier, and which was in fact a CIA forgery shown to Seina for the purposes of testing his credibility.

This document and corroboration then became central to the case built by Ledeen and his friend Claire Sterling to show that the KGB and Bulgarian drug traffickers had plotted to have the Turkish fascist Mehmet Agca kill the Pope. This story was of course augmented by the "confession" of the assassin, whose testimony was later discounted as not credible. This confession now appears to have been generated by P-2 SISMI agents linked to Ledeen, among whom may or may not have been Pazienza.'

What inspired Michael Ledeen's zeal on behalf of Reagan and the shadow network? European journalists have suggested that an unspecified "huge payoff" to the SISMI P-2 organizers of Billygate was followed by a payment of at least $120,000 plus expenses from SISMI to Ledeen in 1980-81, after Ledeen "sold old U.S. intelligence reports to SISMI at stiff prices." But there are indications that Ledeen had an affiliation, not just with SISMI, but (like his ally Pazienza) with P-2. There are unexplained stories that "Ledeen had links with Gelli...and that Ledeen, on behalf of the State Department, had tried to buy 480 P-2 files photocopied by the Uruguayan interior ministry" after a raid provoked by the P-2 scandal revealed by the investigation of Sindona.

It is obviously a convenient arrangement when P-2 contributions and favors to a right-wing U.S. President can be followed by the release of S 10 million in unvouchered CIA funds for political use by P-2. No doubt their knowledge of such arrangements must have fuelled the zeal of Carter and Turner to cut back on the CIA's clandestine services. Conversely, the CIA's cutback on clandestine operations and subventions spelled both political and financial disaster for parallel operations, such as Wilson's and Sindona's, which had fattened on CIA handouts. The end of U.S. intelligence subsidies to Wilson's company Consultants International is clearly responsible for Wilson's move into the illegal Libyan deals for which he was eventually jailed. The same drying up of the CIA cash flow to right-wing assets appears to have contributed to the failure of Calvi's Banco Ambrosiano; and of another intelligence-related bank whose operations interlocked heavily with Wilson's: the drug-linked Nugan Hand Bank of Australia. Thus CIA reforms had the effect of building a powerful coalition of both Americans (ousted CIA clandestine operators, the Taiwan-Somoza lobby, the ASC) and foreigners (WACL, P-2), determined to restore the clandestine operations which had been cut back by four different directors of central intelligence (Helms, Schlesinger, Colby, and Turner).

Whatever the details, it appears that the P-2 Republican connection remained as healthy in 1980 as it had been in 1972. Licio Gelli, the head of P-2, was invited by Republican bigwig Phil Guarino to Reagan's inaugural ball.


P-2, the Calvi Scam, and Nicaragua

By 1980 the fate of Calvi's Banco Ambrosiano (and hence indirectly of P-2) depended largely on an anti-Communist turnaround in Central America. In 1977 Calvi had developed close relations with the increasingly isolated Nicaraguan dictator Anastasio Somoza, and opened a subsidiary (the Ambrosiano Group Banco Comercial) in Managua. Through another of his Ambrosiano-controlled companies, Central American Service, Calvi began prospecting for minerals and oil. As the Nicaraguan situation deteriorated in 1978-79, Calvi's Managua subsidiary received a steady flow of funds from Calvi's Bahamas subsidiary, which had come under the scrutiny of Italian government investigators. By 1979,

Calvi (probably with Gelli's intercession) was on good terms not only with the then dictator Anastasio Somoza, but also with the ever more menacing Sandinista opposition. To the end of his life [in 1982] he retained a Nicaraguan diplomatic passport, and in 1979 Calvi attempted to lobby the Rome government for an increase in coffee imports from Nicaragua...[O]f the foreign banks in Managua at the time of the left-wing takeover in...1979, Ambrosiano's subsidiary was the only one not to be nationalized by the new revolutionary regime.

Calvi had obviously established a bridge to the Sandinista junta's bankers, Alfredo Cesar and Arturo Cruz, and their allies such as Alfonso Robelo. By 1982 both Cruz and Robelo were working with the contras. In every account of the P-2/Banco Ambrosiano billion-dollar scam, the role of Somoza's Nicaragua is prominent. According to one source, it was Gelli who "smoothed the way" for Calvi's use of Somoza's offer of bank secrecy, "after several million dollars had been dropped into the dictator's pocket. In this period the Italian construction magnate Mario Genghini (whose name was also on Gelli's P2 lists) "was one of the biggest foreign investors in Nicaragua. In 1978, to avoid an investigation by the Bank of Italy, Calvi "moved the axis of [his international] fraud to Nicaragua"; one year later, as Somoza's position worsened, the fraud was moved to Peru.

In 1981 Bishop Paul Marcinkus of the Vatican Bank "held a number of secret meetings with the convicted Calvi, which resulted in the Vatican Bank officially admitting an increase in its outstanding debts of nearly $1 billion. This was the sum that was owed to the Calvi banks in Peru and Nicaragua as a result of their having loaned, on Calvi's instructions, hundreds of millions of dollars" to companies allegedly under Marcinkus's control. Just one of these companies, Bellatrix, received $184 million for P-2's political purposes, which included Gelli's purchase of Exocet missiles for Argentina during the Falkland Islands War.

P-2's political purposes also clearly involved the election of Ronald Reagan in 1980:

On April 8,1980, Gelli wrote from Italy to Phillip Guarino...

"If you think it might be useful for something favorable to your presidential candidate to be published in Italy, send me some material and I'll get it published in one of the papers here."...The favorable comments about Ronald Reagan, carefully placed by Licio Gelli, duly appeared in Italy. In January 1981, Licio Gelli was an honored guest at the presidential inauguration. Guarino later ruefully observed, "He had a better seat than I did."

In 1981, the period of its Argentine grand design for Central America, the Reagan administration appears in turn to have been exploiting P-2 pathways. One of its first envoys to Argentina and Guatemala for the grand design was General Vernon Walters, a major figure in the Brazilian military coup of 1964, and reportedly a prime architect in the blending of the various contra forces into a united FDN under Enrigue Bermudez in 1981. In May 1981 General Vernon Walters...visited Guatemala as a 'goodwill ambassador' of the Reagan Administration. At the same time, though, he was representing BRISA [Basic Resources International SA], which was seeking permission to export more oil. The Guatemalan military granted the request.

The fate of Calvi and his allies, by then ominous, was tied up with the fortunes of BRISA, whose chairman, as previously mentioned, was Sir James Goldsmith. In 1977 the Guatemalan government (with Mario Sandoval Alarcon as Vice-President) had awarded an oil concession to BRISA, one of whose board members was Calvi's representative Antonio Tonello. In March 1981, as the Italian investigation of Sindona led to Gelli's files and Calvi's name, the Calvi case was nearing its denouement. On May 20,1981, exactly one week after Walters' visit to Guatemala for Reagan and BRISA, both Calvi and Tonello were arrested (and soon convicted).


The CAL-Reagan-Helms Triangle

In 1980 the incoming Reagan administration had links to the Latin American chapters of WACL, not just through P-2, but even more directly through Republican Senator Jesse Helms. Indeed Helms became a focal point for U.S. intelligence and Republican connections to CAL in Latin America, following a visit in 1975 to WACL headquarters in Taiwan. Helms also travelled to Argentina (via a WACL Conference in Rio) in April 1975; and at least two of his aides, Ramon Molina and Nat Hamrick returned, along with Daniel Graham, in early 1976, shortly before the Argentine generals' coup of March 24. Helms, according to Ramon Molina, "actually encouraged the military to move in and depose President Peron.

The president in question was not Juan Peron, who had died in June 1974, but his widow, Isabelita, who was deposed in March 1976. This event followed from the more significant ouster in July 1975 of her mentor Jose Lopez Rega, the original fascist architect of the P-2/Italian terrorist presence in Argentina. The Argentinian army was responsible for both ousters, each of which followed a visit by Helms or his aides.

The presence on the 1975 Helms delegation of two other associates (Victor Fediay and J. Evetts Haley), and the subsequent involvement of Daniel Graham, may help explain why the relatively inexperienced Senator from North Carolina (he had been elected in 1972) would involve himself in an Argentinian military takeover. In 1975 Fediay (a Russian emigre and prewar Polish fascist) and Haley (a Texas rancher) had just helped with Richard Allen to broker a request (which was eventually turned down) for U.S. backing behind a Eurofascist secessionist coup in the Azores (sponsored by the so-called Aginter-Presse intelligence service, with which delle Chiaie was affiliated). One can imagine that the message to the Argentine military was similar: the U.S. could support a military take-over, perhaps even death squads and terrorists like delle Chiaie, but only if the Lopez Rega connection to the newly forming Fascist International in 1975 was eliminated.

This U.S.-Argentine connection in 1975-76 (Helms, Molina, Hamrick, Richard Stone, and Daniel Graham) would become the hard core Reagan-Sandoval-contra connection after 1980. We have seen how Graham and Singlaub assured Guatemalans in 1979 that "Mr. Reagan recognizes that a good deal of dirty work needs to be done.

It was Helms who (after his aide John Carbaugh met d'Aubuisson at the September 1980 CAL Conference) received Sandoval's protege d'Aubuisson on an illegal visit in December 1980. (Since that time Carbaugh has worked closely with Mario Sandoval Alarcon's nephew, Carlos Midence Pivaral, to fashion a more marketable and "Republican" image for d'Aubuisson's new party, ARENA.) Stone, a lobbyist for Guatemala in 1980, became Reagan's special ambassador to Central America. In 1981-82, Hamrick, while on Helms' staff, would lobby, together with the head of the Costa Rica WACL chapter, for a friendly base for the contras in that country.

But the most significant member of the Helms Argentine connection may have been Ramon Molina, a Cuban-American Bay of Pigs veteran who in 1976 was the apparent point of contact between his two employers, Nicaraguan dictator Somoza and Senator Helms. In 1975-76 Molina appears to have been Somoza's connection to renegade ex-CIA Cubans, like Orlando Bosch, whose CORU assassination activities extended to Argentina by August 1976. It would appear that, just as in the 1972 election Manuel Artime (another ex-CIA Cuban accused of drug trafficking) emerged as the connection between Nixon, Somoza, and the Watergate burglars, so in the 1980 election Ramon Molina emerged as the connection between Reagan and Somoza.

The Helms camp has been very much of a right-wing embarrassment to the Reagan administration since it took office: in 1984 Helms put the life of Reagan's Ambassador to El Salvador at risk by leaking secret CIA data. In 1976 and in 1980, however, candidate Reagan was very much dependent on winning the support of Helms and his international WACL network. In 1976 the Reagan campaign appointed David Keene, an old Liebman sidekick and WACL participant, to be chief delegate hunter in the southern states. In 1980 a campaign aide, Belden Bell, travelled to Latin America and met both Deaver's Amigos and Ramon Molinad. What may have interested the Reagan campaign in Molina was his capacity as a representative of Somoza's personal fortune, in whose employ he used his CIA training as a strong-arm man and enforcer (he allegedly once broke the jaw of a South Carolina concrete businessman). Somoza, until his assassination in September 1980, was said to be funding terrorist activities through CAL as a way of building an international neofascist coalition for his return.


Reagan, the Contras, and Narcotics

Such then was the state of WACL when Singlaub began his missionary activities to it on behalf of Reagan in 1979-80. It might be said in defense of their policies that WACL represented an old U.S. intelligence project out of control; and that Singlaub has worked to bring it back under control. Alternatively, the WACL collaboration might be seen as a kind of "constructive engagement" with neofascism, offering right-wing governments equipment and support services, in exchange for their renunciation of death squad politics that would never play well in Peoria.

It is clear that the Reagan administration has since backed away from many of its old CAL proteges, usually after revelations linking them to the drug traffic. It has relegated d'Aubuisson to the background, after a plane belonging to one of his financial supporters was detained in Texas with a cargo of $5.9 million in cash. It has helped extradite Pagliai (the younger of the two Italian terrorists) from Bolivia, after Pagliai was detected by the DEA at a high-level drug-traffic meeting in 1981.

Eventually the Reagan administration helped ease both the Bolivian and the Argentine dictatorships out of power. After the failure in 1982 of a Guatemalan coup plot by Sandoval's associate Lionel Sisniega Otero (plotting with WerBell, the OSS colleague of Singlaub and Cline), the U.S. eventually accepted a civilian government headed by a Christian Democrat, of the party targeted by Sandoval and Sisniega for extermination.

In marked contrast, the Reagan commitment to the contras has been unswerving. Modifications to its policy have been limited to a search for better personnel, as Congressional opposition mounted to the contra record of raping peasants and torturing social workers to death. In September 1982 the CIA reorganized the contra directorate, and sent a new station chief to Honduras, with the task "of getting the Argentines out and getting the war back under control." In late 1983 the CIA began its own covert operations against Nicaragua, cutting out the contras, and reorganizing their FDN directorate yet again.

However the CIA, inevitably, was faced with a disposal problem. A handful of contra field officers were executed for various crimes, chiefly the murder of one of their peers. But the CIA was reluctant to send Argentine terrorists back to their home country at a time when the civilian government was barely establishing itself. Ricardo Lau, the murderer of Archbishop Romero, was detached from the contra hierarchy, but remained in Honduras to be the mastermind of the death squad operation of the CIA's and CAL's Honduran protege, General Gustavo Alvarez Martinez. Alvarez was the point-man for the CIA-contra presence in Honduras, and even the godfather to the adopted daughter of the new CIA chief. When he was ousted in 1984 the CIA changed its station chief yet again, and Lau reportedly left for another country.

These cosmetic changes of personnel do not appear to have reached to the level of eliminating the old CAL presence in the contras. Enrique Bermudez, the link between Sandoval's Guardia proteges and Washington, has remained through each successive FDN shake-up. As for the international drug traffickers, their interest in maintaining the contra status quo in Honduras was revealed when the FBI broke up a drug-financed plot in Miami to assassinate the elected Honduran president and restore Alvarez to power.

Since December 1985 it has become clear that the CIA contra operation has become as intermingled with drug trafficking as the old CIA Cuban exile operations which had had to be closed down in Miami (see Chapter III). In December 1985, ...the Associated Press cited a CIA report alleging that a "top commander" of the Costa Rica-based guerrillas had "used cocaine profits to buy a S250,000 arms shipment and a helicopter."...Two Nicaraguan smugglers convicted in the largest cocaine seizure in West Coast history-430 pounds- admitted that they passed drug profits on to the contras...A leading Bay Area fund-raiser for the Honduras-based Nicaraguan Democratic Force, the largest contra group, was identified in 1984 by the Drug Enforcement Administration as "the apparent head of a criminal organization responsible for smuggling kilogram quantities of cocaine into the United States.

The possibility that the contra operation serves as a cover for the Latin American drug connection does not seem to have occurred to the Reagan administration. On the contrary, its pressures to resume Congressional aid to the contras this year were not deterred by the revelation that the FBI was "examining assertions that cocaine was smuggled [into the United States] to help finance the rebels' war effort." Since then former Ambassador Robert White has charged that the Administration has attempted to kill this FBI inquiry. The stage has been set for a potentially explosive Senate investigation.


Watergate, Contragate, and Foreign Campaign Contributions

Why would the Reagan administration, whose ideology is supposed to be one of patriotism mellowed by pragmatism, have such a huge investment in a cause that is so controversial here as well as in Latin America? The Reagan response is to point to the alleged human rights violations by their opponents, and to the Caribbean basin's proximity and strategic importance. But it has been said in response to both arguments that the contras, by their excesses and sheer incompetence, are weakening rather than strengthening support for the U.S. in the area.

A different question is whether the funds from Guatemala, P-2, Somoza, and other WACL sources, helped generate the private "verbal agreements" that Sandoval Alarcon referred to. The recycling of profits and AID funds from foreign countries back into American elections is perhaps one of the largest and least discussed scandals of the last three decades. WACL countries in particular, whose survival and affluence so often depend on U.S. support, have repeatedly been at the center of such rumors.

This would seem to be an appropriate topic for any Senate investigation into any illegal contra activities and cover-ups. But Congress in the past has proven most reluctant to pursue the question of illegal foreign funding in electoral campaigns. Renata Adler has described how the Congressional inquiry into Watergate faded at the point when traces were uncovered of large funds pumped into the Nixon campaign from the Far East. Nor did Republicans pursue similar allegations that dogged the campaign of even that cleanest of candidates, Senator George McGovern. Silence on such matters serves the interests of both parties.

Some of the points made by Renata Adler, a member of the staff investigating Nixon for the House impeachment inquiry, bear closely on the Reagan-WACL connection. She referred to theories "that Nixon was driven from office by a conspiracy within government itself-more specifically, within the CIA." And she drew attention to the inability of the CIA "to give any satisfactory account" of its involvement in the Southeast Asian narcotics traffic (where its airline Air America collaborated with members of Taiwan's WACL Chapter in supplying the opium growers of the Golden Triangle).

Adler did not refer specifically to the very efficient sabotaging of the Nixon White House by Howard Hunt, nor to the fact that Hunt's White House services went into their disastrous high gear after the June 1971 departure of Kissinger for Peking. But she specifically named Anna Chan Chennault, perhaps Taiwan's top lobbyist in Washington, as someone who had raised campaign funds for Nixon from the Philippines, Hong Kong, Japan, and South Korea. Citing evidence too complex to review here, she concluded that "the South Vietnamese administration, not wanting peace to be at hand just yet, used some of the enormous amounts of money we were pouring in there to bribe our Administration to stay in."

The bribes were in the form of illicit foreign campaign contributions- possibly in 1968, and more clearly in 1972. Though she refers to him only as a Nixon "White House official," Adler refers to two distinct sub-plots where in each case a principal suspect was Richard Allen, the man who in 1980 became Reagan's principal foreign policy adviser. In the 1968 case, Mrs. Chennault's activities had aroused the suspicions of the Washington intelligence community, and a plethora of agencies seemed to be watching her closely. According to published reports, the FBI tapped her telephone and put her under physical surveillance; the CIA tapped the phones at the South Vietnamese embassy and conducted a covert investigation of Richard Allen. Then, a few days before the election, the National Security Agency...intercepted a cable from the Vietnamese embassy to Saigon urging delay in South Vietnam's participation in the Paris peace talks until after the [U.S.] elections. Indeed, on November I, her efforts seemed to have paid off when President Nguyen Van Thieu reneged on his promise to Lyndon Johnson... and announced he would not take part in the exploratory Paris talks.

There are enough similarities between Allen's career and Deaver's (both men having gone on from the post of White House official to become the registered foreign lobbyist of Asian countries) to suggest that Adler's hypothesis for the origins of Watergate (bribery by illicit foreign campaign contributions, and the potential for blackmail thus created) might help explain the workings of the Contragate mystery as well. In 1980 as in 1968 the WACL coalition apparently decided to conspire against an American Democratic incumbent, the main difference being that in 1980 the role both of illicit foreign funds and of American intelligence veterans appears to have been more overt.

Congress should certainly investigate this possibility. But there is also a chance of a searching and objective inquiry in the special prosecutor's examination of the affairs of Mike Deaver. Deaver is already under scrutiny for his lobbying activities in South Korea. Some of these involve the U.S. Ambassador in Seoul, Richard Walker, a WACL participant since as far back as 1970.

Deaver's connections with South Korea go back at least to February 1981, when he "ushered President Chun Doo Hwan of South Korea into the Oval Office to meet Reagan." Chun was in fact the first of the WACL dictators, shunned by Carter, to be received into the Oval Office. In a sense his visit, like Sandoval's, was a trial balloon for Reagan's new policy of tilting towards WACL and away from Carter's support of "human rights.

Chun's visit to Reagan is said to have followed a period of intense involvement in Latin American WACL intrigue by CAUSA, the political arm of the South Korean Unification (Moonie) Church. (The links between Moon's church and the South Korean Central Intelligence Agency are so overt that a decade ago they provoked a U.S. Senate investigation.) CAUSA officials are reported to have offered $4 million for the Garcia Meza Bolivian coup of July 17,1980; and one of them is said to have had worked directly with Klaus Barbie in organizing the coup. When Congress ordered a cutoff of military aid to the contras in 1984, CAUSA worked with Refugee Relief International, a creation of Singlaub and of WACL, to ferry non-military supplies to the same contra camps. An informed observer said that "the 'big three' countries that were expected to aid the contras [militarily] were Israel, South Korea, and Taiwan." Robert Owen, said to have served with Singlaub as a cut-out contact between the National Security Council and the contras, is a former registered lobbyist for South Korea.

It is unlikely that Deaver's lobbying activities were more than a small part of the apparatus securing the Reagan-WACL connection. The full story, if it could be told, would probably lead to grey intelligence-political alliances that were already in place when Deaver was a young boy. Undoubtedly Cline and Singlaub, not to mention Reagan himself, would know more about such matters.

Singlaub, at least, probably faces a Congressional investigation in the months ahead. But Contragate is not a narrowly bureaucratic or administrative scandal. Deaver's post-1984 lobbying activities have already suggested to federal investigators that he may have violated U.S. statutes. Thus he too can be made to talk about how these connections were forged. Under oath.

The Iran Contra Connection

Index of Website

Home Page