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Saudis Reportedly Played Key Financial Role In US Arms Sales To Iran

December 3, 1986

WASHINGTON (AP) _ Saudi Arabia played a leading role in U.S. arms shipments to Iran through Israel and paid for the most of the weapons, Congressional and other sources said Wednesday.

″They’ve got the money and they are very deeply into it,″ a well-placed Congressional aide told The Associated Press. He estimated the Saudi financial contribution at ″in the hundreds of millions of dollars.″ He spoke only on condition he not be identified.

The Saudi connection added a curious twist to a burgeoning affair. For several years, the oil-rich kingdom had been depicted as vulnerable to any spillover from Iran’s war with Iraq.

According to the congressional source, the Saudis also provided aid to anti-communist forces in Afghanistan, Nicaragua and Angola as a way of maintaining ″good relations″ with the United States.

Another source, who refused to be identified, estimated Saudi Arabia contributed a minimum of $60 million to $70 million, about 70 percent of the cost of the packages of anti-tank and anti-aircraft missiles, and other military supplies. Iran paid $10 million to $12 million.

″We did not know about the whole thing, the negotiation between Washington and Iran concerning the arms deal until it has become public,″ said Habib Shaheen, spokesman for the Saudi embassy here.

In fact, the State Department said Wednesday, ″We have no evidence that would suggest the Saudi government was involved in selling arms to Iran.″

But other sources tell a story of strange alliances that first took form with an unpublicized understanding between the United States and Riyadh in 1981 in which the Saudis promised to help anti-communist Moslem forces in Afghanistan.

The agreement was reached while the Reagan administration was pushing a controversial Saudi purchase of modern U.S. AWACS radar planes through a skeptical Congress. It was broadened in 1984 to include Central America, where U.S.-backed Contra rebels were locked in a guerrilla war with the Sandinista government.

As a result, when the Reagan administration decided a year later to provide American weapons to Iran through Israel, the U.S.-Saudi connection came into play.

According to the sources, who insisted on anonymity, a Saudi businessman and arms trader, Adnan Khashoggi, lined up Israeli dealers in the fall of 1985 with Manuchur Ghorbanifar, an Iranian weapons merchant with close ties to the Khomeini government.

Acting on a U.S. request for signs of moderation in Tehran, speeches marking the anniversary of the fundamentalist revolution took on a strident anti-Soviet tone but the usual anti-American rhetoric was absent.

The National Security Council, taking this as an indication of good will, then proceeded with the first shipment of American weapons and waited expectantly for the release of Americans held captive by the Islamic Jihad, an Iranian-backed group. One hostage, the Rev. Benjamin Weir, was set free.

While the U.S. arms flowed from the Pentagon to the Central Intelligence Agency and then to Israel for shipment to Iran, the Saudis made payments to banks in Switzerland.

The Pentagon was reimbursed, shipping costs were covered, the dealers reaped an undetermined profit and funds estimated by Attorney General Edwin Meese at $10 million to $30 million were deposited in an account for the Contra rebels. It is not clear whether they ever got the money.

Khashoggi said in a statement issued from New York, ″I have no official status with the government of Saudi Arabia nor have I acted in its behalf, directly or indirectly, in any matter relating to the sale or other transfer of arms to Iran, between the governments of Saudi Arabia and Iran, nor between the government of Saudi Arabia and the opposition forces in Nicaragua.″

The Saudis are not natural allies of the Khomeini government in Tehran. The royal family is at the conservative end of the Moslem spectrum. The ayatollahs are at the radical end.

The Iranians, in fact, had threatened to blow up Saudi oilfields while waging their six-year war with Saudi-supported Iraq. The Reagan administration fretted publicly about preserving the petroleum lifeline from the Persian Gulf and justified three major weapon sales to the Saudis on these concerns.

The Saudis, meanwhile, fearing attack, even assasination, from Iran and also out of friendship with Washington, participated in the unusual arrangement with the United States and Israel to help Tehran, the sources said.

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