Robert Parry: The Original October Surprise

As the United States heads toward a pivotal election on Nov. 7, both Republicans and Democrats are worried about the prospect of an "October Surprise" that could alter the political dynamic in the next two weeks.

Though last-minute campaign surprises are probably as old as democracy itself, the phrase in its modern usage dates back just over a quarter century to 1980 when President Jimmy Carter was seeking the freedom of 52 American hostages in Iran. Then-vice presidential candidate George H.W. Bush fretted publicly that a hostage release might be an "October Surprise" that would catapult Carter to reelection.

Ironically, however, the 1980 "October Surprise" controversy came to refer to an alleged dirty trick by Bush and other Republicans that thwarted Carter from gaining the hostages' freedom. Carter's failure propelled Ronald Reagan and George Bush Sr. to a landslide victory.

Arguably, the "October Surprise" of 1980 ushered in the modern era of GOP dominance, with the 12 years of the Reagan-Bush administrations. Arguably, too, the Democrats' failure in December 1992 to get the truth out about the Republican chicanery set the stage for the Right's congressional resurgence in 1994 and for today's George W. Bush Era.

So, given the importance of the 1980 election in shaping today's political terrain - and given the current interest in what might happen in the days ahead - we are publishing a series about the original October Surprise adapted from Robert Parry's Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq:

History turned in December 1992 when the truth about what happened in the pivotal 1980 presidential election might finally have been revealed to the American people. Just a month after Bill Clinton defeated George H.W. Bush, the dam that had held back the 12-year-old secrets finally gave way.

An investigative House Task Force was putting the finishing touches on a report intended to debunk the longstanding October Surprise allegations of Republican interference with the Iranian hostage crisis in 1980. The bipartisan Task Force planned to treat the story as a conspiracy theory run wild.

But suddenly the Task Force found itself inundated by a flood of new evidence going the other way, indicating that the long-whispered suspicions of a grotesque Republican dirty trick a dozen years earlier were true.

Task Force chief counsel Lawrence Barcella, who had been onboard for the debunking, was stunned by the late surge of new evidence. He concluded that it couldn't be ignored and that it justified extending the investigation at least a few more months.

Years later, Barcella told me that he recommended a three-month extension to the Task Force chairman, Rep. Lee Hamilton, but the Indiana Democrat rejected the idea of taking the extra time to check out the new evidence. An extension would have required getting approval from the new Congress being seated in 1993.

Plus, Hamilton, who was about to ascend to the chairmanship of the House International Affairs Committee, had other priorities. He treasured perhaps more than anything his reputation as a respected centrist figure in a capital city torn by partisanship.

Hamilton, with his no-nonsense butch haircut and home-spun eloquence, was a candidate for one of Washington's highest unofficial honors, the title of Wise Man. Indeed, Hamilton's passion for bipartisanship had made him the Democrat that the Republicans most wanted to run an investigation into Republican wrongdoing.

When Hamilton was chosen in late 1991 to chair the October Surprise Task Force, Republicans hailed his selection. Hamilton then selected investigators who weren't inclined to press too hard, even as Hamilton's GOP counterpart, Rep. Henry Hyde, staffed his side with tough-minded partisans.

At one point, in a gesture of bipartisanship, Hamilton even granted Republicans veto power over the choice of a Democratic staff investigator. Hyde exercised this extraordinary offer by blocking the appointment of House International Affairs Committee chief counsel Spencer Oliver because Oliver suspected the October Surprise allegations might just be true.

Debunking Bias

So, as the investigation proceeded in 1992, there was a powerful inclination inside the Task Force to dismiss the allegations that had dribbled out over the years, depicting a kind of a prequel to the Iran-Contra scandal, which broke in 1986 with disclosures of other secret arms-for-hostages deals between the Reagan administration and Iran's radical Islamic government.

Despite exposure of the lies that had surrounded the Iran-Contra Affair, Hamilton's Task Force didn't want to believe that George H.W. Bush and other Republicans had begun those contacts six years earlier by undercutting President Jimmy Carter's negotiations to free 52 Americans held hostage in Iran in 1980.

By the early 1990s, the climate in Washington also was extremely hostile to the 1980 October Surprise allegations. They had been denounced by Republicans and attacked by influential journals, such as the neoconservative New Republic. The very idea that then-President Bush would exploit the national humiliation of that earlier hostage crisis for political gain was unthinkable to many Washington insiders.

Plus, in December 1992, after Clinton had defeated George Bush Sr., the Democrats saw little reason to pursue divisive allegations dating back a dozen years that also would tarnish the legacy of the well-liked Ronald Reagan. It was feared, too, that exposing these old crimes might engender more partisan bitterness and poison the political climate as a new President, Bill Clinton, was taking office.

At that naïve moment - 14 years ago - Democrats felt it made sense to bargain away a few seemingly unimportant historical facts for a chance at better cooperation with Republicans on domestic issues that Clinton held dear, like the budget and health care.

The House October Surprise Task Force, therefore, turned a deaf ear and a blind eye to the late-arriving evidence that tended to corroborate the October Surprise allegations, which had emerged over the years from a variety of intelligence operatives and foreign officials.

But in late 1992, the newly arriving evidence left chief counsel Barcella not entirely comfortable with a definitive conclusion rejecting the October Surprise allegations. On Dec. 8, 1992, he instructed his deputies "to put some language in, as a trap door" in case later disclosures disproved parts of the report or if complaints arose about selective omission of evidence.

"This report does not and could not reflect every single lead that was investigated, every single phone call that was made, every single contact that was established," Barcella suggested as "trap door" wording. "Similarly, the Task Force did not resolve every single one of the scores of 'curiosities,' 'coincidences,' sub-allegations or question marks that have been raised over the years and become part of the October Surprise story."

But some of the information that would arrive during the investigation's final month would deal not just with "curiosities," but with central questions behind the mystery of why the American hostages were freed immediately after Reagan and Bush were sworn in on Jan. 20, 1981.

Iranian Testimony

On Dec. 17, 1992, former Iranian President Abolhassan Bani-Sadr sent a letter describing the internal battles of the Iranian government over the Republican intervention in the 1980 hostage crisis. Bani-Sadr recounted how he threatened to expose the secret deal between Reagan-Bush campaign officials and Islamic radicals close to Ayatollah Ruhollah Khomeini if it weren't stopped.

Bani-Sadr said he first learned of the Republican "secret deal" with Iranian radicals in July 1980 after Reza Passendideh, a nephew of Ayatollah Khomeini, attended a meeting with Iranian financier Cyrus Hashemi and Republican lawyer Stanley Pottinger in Madrid on July 2, 1980.

Though Passendideh was expected to return with a proposal from the Carter administration, Bani-Sadr said Passendideh instead carried a plan "from the Reagan camp."

"Passendideh told me that if I do not accept this proposal, they [the Republicans] would make the same offer to my [radical Iranian] rivals. He further said that they [the Republicans] have enormous influence in the CIA," Bani-Sadr wrote. "Lastly, he told me my refusal of their offer would result in my elimination."

Bani-Sadr said he resisted the threats and sought an immediate release of the American hostages, but it was clear to him that the wily Khomeini was playing both sides of the U.S. political street.

This secret Republican plan to block release of the hostages until after the U.S. elections remained a point of tension between Bani-Sadr and Khomeini, according to Bani-Sadr's letter. Bani-Sadr said his trump card was a threat to tell the Iranian people about the secret deal that the Khomeini forces had struck with the Republicans.

"On Sept. 8, 1980, I invited the people of Teheran to gather in Martyrs Square so that I can tell them the truth," Bani-Sadr wrote. "Khomeini insisted that I must not do so at this time.... Two days later, again, I decided to expose everything. Ahmad Khomeini [the ayatollah's son] came to see me and told me, 'Imam [Khomeini] absolutely promises'" to reopen talks with Carter if Bani-Sadr would relent and not go public.

Bani-Sadr said the dispute led Khomeini to pass on a new hostage proposal to the U.S. government through his son-in-law, Sadegh Tabatabai. Though Tabatabai did deliver a new peace plan to U.S. officials in West Germany, the initiative unraveled when Iraq's Saddam Hussein invaded Iran in mid-September 1980.

Meanwhile, high-level contacts between Republicans and Khomeini representatives allegedly continued, often using Israeli and European intelligence operatives as the intermediaries. On the outs with Khomeini, Bani-Sadr saw his political position deteriorate and he was soon forced to flee into exile.

Bani-Sadr's detailed account meshed with previous statements made by two other senior Iranian officials, former Defense Minister Ahmad Madani and the former acting Foreign Minister Sadegh Ghotbzadeh.

Madani had lost to Bani-Sadr in the 1980 presidential race despite covert CIA assistance funneled to his campaign through Cyrus Hashemi. Madani also discovered that Hashemi was double-dealing with the Republicans.

In an interview with PBS Frontline in the early 1990s, Madani said Hashemi brought up the name of Reagan's campaign chief William Casey in connection with these back-channel negotiations over the U.S. hostages. Madani said Hashemi had urged Madani to meet with Casey, earning a rebuke from Madani that "we are not here to play politics."

Ghotbzadeh made his comments about the Republican interference contemporaneously to the events, telling Agence France Press on Sept. 6, 1980, that he had information that Reagan was "trying to block a solution" to the hostage impasse. (Ghotbzadeh was later executed by Iranian hardliners.)

Despite Bani-Sadr's claims of first-hand knowledge and these corroborating statements by two other senior Iranian officials, the House Task Force dismissed Bani-Sadr's account as "hearsay" that lacked probative value.

French Account

Soon, however, there was more evidence to explain away. On Dec. 18, 1992, a day after Bani-Sadr's letter, David Andelman, the biographer of French intelligence chief Alexandre deMarenches, gave sworn testimony to the Task Force about the Republican-Iranian contacts.

Andelman, an ex-New York Times and CBS News correspondent, said that while he ghost-wrote deMarenches's biography, the arch-conservative spymaster admitted arranging meetings between Republicans and Iranians about the hostage issue in the summer and fall of 1980, with one meeting held in Paris in October.

Andelman said deMarenches ordered that the secret meetings be kept out of his memoirs because the story could otherwise damage the reputation of his friends, William Casey and George H.W. Bush. At the time of Andelman's work on the book, Bush was running for re-election as President of the United States.

Andelman's testimony corroborated longstanding claims from a variety of international intelligence operatives about a Paris meeting involving Casey and Bush. But the Task Force brushed this testimony aside, too, paradoxically terming it "credible" but then claiming it was "insufficiently probative."

The Task Force's reasoning went that Andelman could not "rule out the possibility that deMarenches had told him he was aware of and involved in the Casey meetings because he, deMarenches, could not risk telling his biographer he had no knowledge of these allegations."

Yet, besides corroborative testimony from intelligence operatives, including Israeli intelligence officer Ari Ben-Menashe, the Task Force was aware of contemporaneous knowledge of the alleged Bush-to-Paris trip by Chicago Tribune reporter John Maclean.

Maclean, the son of author Norman Maclean who wrote A River Runs Through It, said a well-placed Republican source told him in mid-October 1980 about Bush's secret trip to Paris to meet with Iranians on the U.S. hostage issue.

Maclean passed on that information to David Henderson, a State Department Foreign Service officer. Henderson recalled the date as Oct. 18, 1980, when the two met at Henderson's Washington home to discuss another matter, the Carter administration's handling of Cuban refugees who had been arriving in the Mariel boat lift.

For his part, Maclean never wrote about the Bush-to-Paris leak because, he told me later, a Reagan-Bush campaign spokesman subsequently denied it. As the years passed, the memory of the leak faded for both Henderson and Maclean, until the October Surprise allegations bubbled to the surface again in the early 1990s.

Henderson mentioned the meeting in a 1991 letter to a U.S. senator that was forwarded to me while I was working for PBS Frontline. In the letter, Henderson recalled the conversation about Bush's trip to Paris but not the name of the reporter.

A Frontline producer searched some newspaper archives to find a story about Henderson and the Mariel boat lift as a way to identify Maclean as the journalist who had interviewed Henderson.

Though not eager to become part of the October Surprise story in 1991, Maclean confirmed that he had received the Republican leak. He also agreed with Henderson's recollection that their conversation occurred on or about Oct. 18, 1980. But Maclean still declined to identify his source.

The significance of the Maclean-Henderson conversation was that it was a piece of information locked in a kind of historical amber, untainted by subsequent claims by intelligence operatives whose credibility had been challenged.

One could not accuse Maclean of concocting the Bush-to-Paris allegation for some ulterior motive, since he hadn't used it in 1980, nor had he volunteered it a decade later. He only confirmed it when approached by Frontline and even then wasn't particularly eager to talk about it.

State of Denial

Despite the mounting evidence that the Republicans indeed had made secret contacts with Iranian radicals in 1980, the House Task Force kept refusing to rethink its conclusions or to extend its investigation.

For its debunking, the Task Force relied on supposed alibis for Casey and Bush, but the investigators knew how shaky and uncorroborated those alibis were.

Meanwhile, the incriminating evidence kept on coming.

On Dec. 21, 1992, former CIA officer Charles Cogan recounted a remark in early 1981 from banker David Rockefeller's aide Joseph Reed to then-CIA Director William Casey about their success in blocking Carter's "October Surprise."

Reed had been Rockefeller's point man in helping the Shah of Iran after his 1979 ouster, which led the Khomeini regime to seek the withdrawal of billions of dollars from the Shah's accounts at Rockefeller's Chase Manhattan Bank.

Ironically, the Iranian hostage crisis worked to the bank's advantage because the U.S. government - as retaliation for the hostage-taking - froze those accounts. If the crisis were resolved quickly and the money suddenly unfrozen, Chase Manhattan's financial viability would be put in doubt.

After Reagan and Bush took office - and the Chase accounts remained frozen - Reed was appointed ambassador to Morocco, which led him to visit Casey at CIA headquarters, as Cogan lingered at the door to Casey's office.

"Joseph Reed said, 'we' and then the verb [and then] something about Carter's October Surprise," Cogan testified in a "secret" deposition. "The implication was we did something about Carter's October Surprise."

Task Force investigators understood the full quote to have been, "We fucked Carter's October Surprise," a claim that was at the heart of what the Task Force was assigned to investigate. But the Task Force left Cogan's recollection out of its report altogether.

The pattern of the Task Force's selective judgments began to grate on some of the Democratic congressmen assigned to the investigation.

Though the October Surprise allegations supposedly were a myth, the information developed by the Task Force staff was kept under tight security. Congressmen were only allowed to review the evidence in a secure room under guard.

The restrictions meant that many members were forced to rely on the Task Force staff that had been assembled largely by excluding anyone who thought the allegations might actually be true.

On Jan. 3, 1993, Congressman Mervyn Dymally, a California Democrat and Task Force member, submitted a dissent to the impending Task Force debunking of the October Surprise allegations. Dymally's dissent complained about selective handling of evidence to clear the Reagan-Bush campaign.

Dymally, who was retiring from Congress, cited the investigation's reliance on shaky circumstantial data for exonerating the Republicans and the uncritical acceptance of accounts from Casey's associates.

In reviewing the Task Force report, Dymally's staff aide, Marwan Burgan, quickly spotted some of the report's absurd alibis, including the claim that because someone wrote down Casey's home phone number on one day that proved Casey was home, or that because a plane flew from San Francisco directly to London on another important date that Casey must have been onboard.

Sources who saw Dymally's dissent said it argued that "just because phones ring and planes fly doesn't mean that someone is there to answer the phone or is on the plane." But Dymally's reasonable observations were fiercely opposed by Barcella, who enlisted Task Force chairman, Lee Hamilton, to pressure Dymally into withdrawing the dissent.

Dymally told me that the day his dissent was submitted, he received a call from Hamilton warning him that if the dissent was not withdrawn, "I will have to come down hard on you."

The next day, Hamilton, who was becoming chairman of the House International Affairs Committee, fired the staff of the Africa subcommittee that Dymally had headed. The firings were billed as routine, and Hamilton told me that "the two things came along at the same time, but they were not connected in my mind."

Hamilton said his warning to Dymally referred to a toughly worded response that Hamilton would have fired off at Dymally if the dissent had stood. However, hoping to salvage the jobs of some of his staff, Dymally agreed to withdraw the dissent.

Russian Complication

So the House Task Force's report was shipped off to the printers with its conclusion that there was "no credible evidence" of Republican double-dealing with Iran over the 52 U.S. hostages in 1980.

The report was scheduled for release on Jan. 13, 1993, just one week before George H.W. Bush's Presidency officially would come to an end. But there was still one more surprise for the October Surprise Task Force.

On Jan. 11, 1993, Hamilton received a response to a query he had sent to the Russian government on Oct. 21, 1992, requesting any information that Moscow might have about the October Surprise case.

The Russian response came from Sergey V. Stepashin, chairman of the Supreme Soviet's Committee on Defense and Security Issues, a job roughly equivalent to chairman of the Senate Intelligence Committee.

In what might have been an unprecedented act of cooperation between the two longtime enemies, Stepashin provided a summary of what Russian intelligence files showed about the October Surprise charges and other secret U.S. dealings with Iran.

In the 1980s, after all, the Soviet KGB was not without its own sources on a topic as important to Moscow as developments in neighboring Iran. The KGB had penetrated or maintained close relations with many of the intelligence services linked to the October Surprise allegations, including those of France, Spain, Germany, Iran and Israel.

History had shown, too, that the KGB had spies inside the CIA and other U.S. intelligence agencies. So, Soviet intelligence certainly was in a position to know a great deal about what had or had not happened in 1980.

The Supreme Soviet's response was delivered to the U.S. Embassy in Moscow by Nikolay Kuznetsov, secretary of the subcommittee on state security. Kuznetsov apologized for the "lengthy preparation of the response." It was quickly translated by the U.S. embassy and forwarded to Hamilton.

To the shock of the Task Force, the six-page Russian report stated, as fact, that Casey, Bush, CIA officials and other Republicans had met secretly with Iranian officials in Europe during the 1980 presidential campaign.

The Russians depicted the hostage negotiations that year as a two-way competition between the Carter White House and the Reagan-Bush campaign to outbid one another for Iran's cooperation on the hostages.

The Russians asserted that the Reagan-Bush team indeed had disrupted Carter's hostage negotiations, the exact opposite of the Task Force's conclusion.

As described by the Russians, the Carter administration offered the Iranians supplies of arms and unfreezing of assets for a pre-election release of the hostages. One important meeting occurred in Athens in July 1980 with Pentagon representatives agreeing "in principle" to deliver "a significant quantity of spare parts for F-4 and F-5 aircraft and also M-60 tanks ... via Turkey," the Russian report said.

The Iranians "discussed a possible step-by-step normalization of Iranian-American relations [and] the provision of support for President Carter in the election campaign via the release of American hostages."

But the Republicans were making their own overtures to the Iranians, also in Europe, the Russian report said. "William Casey, in 1980, met three times with representatives of the Iranian leadership," the report said. "The meetings took place in Madrid and Paris."

At the Paris meeting in October 1980, "R[obert] Gates, at that time a staffer of the National Security Council in the administration of Jimmy Carter and former CIA Director George Bush also took part," the Russian report said. "In Madrid and Paris, the representatives of Ronald Reagan and the Iranian leadership discussed the question of possibly delaying the release of 52 hostages from the staff of the U.S. Embassy in Teheran."

Both the Reagan-Bush Republicans and the Carter Democrats "started from the proposition that Imam Khomeini, having announced a policy of 'neither the West nor the East,' and cursing the 'American devil,' imperialism and Zionism, was forced to acquire American weapons, spares and military supplies by any and all possible means," the Russian report said. The Republicans just won the bidding war.

"After the victory of R. Reagan in the election, in early 1981, a secret agreement was reached in London in accord with which Iran released the American hostages, and the U.S. continued to supply arms, spares and military supplies for the Iranian army," the Russian report continued.

The deliveries were carried out by Israel, often through private arms dealers, the Russian report said. Spares for F-14 fighters and other military equipment went to Iran from Israel in March-April 1981 and the arms pipeline kept flowing into the mid-1980s.

"Through the Israeli conduit, Iran in 1983 bought surface-to-surface missiles of the 'Lance' class plus artillery of a total value of $135 million," the Russian report said. "In July 1983, a group of specialists from the firm, Lockheed, went to Iran on English passports to repair the navigation systems and other electronic components on American-produced planes."

In 1985, the weapons tap opened wider, into the Iran-Contra shipments.

The matter-of-fact Russian report was stunning. It also matched other information the Task Force had. The Task Force had discovered that the Israelis, for example, had shipped U.S. military spares to Iran in 1981, with the secret acquiescence of senior Reagan-Bush administration officials.

After receiving the Russian report, a U.S. Embassy political officer went back to the Russians seeking more details. But the Russians would state only that the data came from the Committee on Defense and Security Issues.

The embassy political officer then speculated that Moscow's report might have been "based largely on material that has previously appeared in the Western media." But there was no serious follow-up by the House Task Force or the U.S. government - even though Moscow, the communist enemy in the 1980s, claimed to possess incriminating evidence about two CIA directors (Casey and Gates) and two U.S. Presidents (Reagan and Bush).

Though the Russian claims about Carter's negotiations with Iran might cause embarrassment for Democrats, Carter, as President, possessed the constitutional authority to negotiate with a foreign power. The Republicans did not.

Hamilton's Quandary

The Task Force faced its own quandary about what to do with the explosive Russian report, which - if accurate - made the Task Force report, which was then at the printers, not worth the paper it was being printed on.

Reputations, including Hamilton's, could have been severely damaged. During his days as House Intelligence Committee chairman in the mid-1980s, Hamilton had come under criticism for dismissing early evidence about Oliver North's secret contra-supply operations and getting blindsided by the covert military shipments to Iran in 1985-86.

When the Iran-Contra scandal finally broke in late 1986, Hamilton was named chairman of the investigative committee and quickly bought into White House cover stories that were later shattered by Iran-Contra special prosecutor Lawrence Walsh.

If Hamilton had to renounce his own October Surprise report, he might have been left with a tattered reputation as the Republicans' favorite chump. He might not have built a glittering post-congressional career as a well-regarded senior statesman invited to sit on important panels like the 9/11 Commission and now a task force with former Secretary of State James Baker to recommend future strategy in the Iraq War.

So, in January 1993, the decision was made to bury the Russian report.

"We got the stuff from the Russians just a few days before" the Task Force's own report was set for release, Barcella told me in an interview in 2004. "We weren't going to be able to look into it, whether it was new information, disinformation or whatever it was."

When I asked him why the Task Force didn't just release the Russian report along with the Task Force report, Barcella responded that the Russian report was classified, precluding its disclosure to the public. There was no interest in pressing for its declassification, though Hamilton would have been in a strong position to do so.

So the extraordinary Russian report was simply boxed up and filed away with other unpublished information that the Task Force had collected in its year-long investigation. Barcella said he envisioned the Task Force material ending up in some vast warehouse, "like in the movie 'Raiders of the Lost Ark.'"

Actually, the Russian report found an even less elegant resting place. In late 1994, I discovered the documents, including the Russian report, in boxes that had been piled up in a former Ladies Room in an obscure office off the Rayburn House Office Building's parking garage.

[To examine the key "Ladies Room" documents, click here. To obtain a copy of Secrecy & Privilege, click here.]

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It's also available at Amazon.com, as is his 1999 book, Lost History: Contras, Cocaine, the Press & 'Project Truth.'

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