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PROFITS OF WAR -- INSIDE THE SECRET U.S.-ISRAELI ARMS NETWORK

18.  Coup D'Etat

THE CHILEAN GOVERNMENT was furious with the Israelis over the ban on arms, and in early November, after the plebiscite, I spent two weeks in Israel with my family. I then headed off for a meeting in South Africa with Gen. Van Der Westhuizen.

The South Africans wanted to appear to be cooperating with us. At our meeting, the general was most gracious and told me that in that month South Africa had put an outright stop to all the technology flow to Iraq. He pointed out that CIA cutouts, such as Gamma of Massachusetts, had been providing materiel and technology that had been smuggled by the CIA through South Africa before being shipped on to Iraq.

I asked for a list of companies that Cardoen used, and the general provided it. He also gave me the names of Iraqi agents and the identity of a Texas company owned by Mark Thatcher that was moving equipment to Iraq directly from Britain. Another name that came up was John Knight, of the Dynavest company in London, which was providing parts to Iraq. Knight was familiar to us, having worked with the Tony Pearson-Nick Davies group since the late I970s. But I was given other company names in Britain, Belgium, and Luxembourg that were new to Israel. All of them were financed by the CIA through Cardoen, and all of them were supplying Iraq with equipment to be used for nuclear and chemical warfare capability.

Gen. Van Der Westhuizen then dropped a shocker: The Scud missiles the Iraqis had were being used in experiments with dud nuclear warheads.

"We would like Israel to know that we South Africans have nothing to do with all this," said the general.

He also confirmed that Mark Thatcher did business with South Africa, and had been doing so for a long time.

In my Pretoria hotel room I met my Israeli counterpart in South Africa. He told me that the South Africans really had made the decision to stop the flow of technology to Iraq because they were interested in going back to nuclear cooperation with Israel. Basically, he said, they were pulling the rug from under the feet of those who were helping the Iraqis. The South African government, he said, was considering dismissing Van Der Westhuizen from all official positions.

"We see an honest attempt to stop the flow to Iraq," said my Israeli colleague. "But I'm afraid it's too late. Saddam Hussein has enough technology and scientists, especially German, working in Iraq on developing nuclear warheads. The CIA has actually used South Africa's ARMSCOR to do this. The chemicals are coming from Chile, and the nuclear technology has come from South Africa. As for the personnel, that's being provided to the Iraqis through European firms."

***

I returned to Israel with my colleague for a top-level meeting in the Prime Minister's Office with the heads of Mossad Tsomet and Mossad Operations. It was agreed the "problem" had to be dealt with in a very personal way. We were asked to draw up lists of people involved in the whole situation -- Chileans, Americans, Australians, Germans, and Britons.

In the following weeks, eight German scientists hired by Ihsan Barbouti's company in Miami who were traveling back and forth to Iraq were eliminated. Also killed were two Pakistani scientists, who happened to be in Europe. Then another German was killed in a bad car "accident" outside Munich while on a visit. His name was Hans Mayers, the man I had met at Cardoen's "insecticide" plant in Paraguay. In Britain, four Iraqi businessmen died. Three Egyptians and a Frenchman followed -- a total of 19.

All were eliminated in late 1988. Four Mossad hit squads were assigned to carry out the executions. The squads were something of a novelty-- they were all made up of Palestinians. Unwitting, they thought they were carrying out the killings for a Sicilian don, who was actually someone working for Mossad. Israel used unsuspecting Palestinians for one compelling reason -- if any of them were killed or caught, it would be obvious they were not Israelis.

The deaths of the 19 were the start of a hit campaign by my government. Their masters had been warned.

***

In late November 1988, with a team of bodyguards, I traveled to see Gerald Bull again. By now the killings in Europe had already started. In fact, two of the Germans who had already been killed were working for Bull. I met him this time in his well-appointed apartment in Brussels. His face was grey. He had heard the news. I offered him $5 million to scrap his supergun project.

He said, "I'll think about it. Let's talk tomorrow."

I returned the following day. "I'm not going to accept your money," he said.

"I'm sorry to hear it," I told him. "As you know, Israel is very concerned that many of its people are going to die unless drastic action is taken. Warnings are being given. By the way, have you heard about all the terrible accidents that are happening to various people?"

"Yes," he said, "I've heard."

Then he showed me to the door.

***

I flew to London and visited Amiram Nir, Shimon Peres's former antiterrorist adviser, who had been involved with Oliver North in the Iran-contra affair. A man of about my age, in his late 30s or early 40s, he was due to be a major witness in North's forthcoming trial, and his testimony was expected to embarrass both former Prime Minister Peres and President Reagan. Because Nir knew a great deal about Barbouti's chemical operation in Miami, I wanted to find out more from him.

A shock was in store for me when I visited his St. John's Wood apartment, not far from my sister's. Having left his millionaire wife behind in Israel, he was now living with an attractive, dark-haired woman. I stared at her. Nir introduced her to me as a Canadian, Adriana Stanton, but I knew her from before -- and though Nir didn't know it, Adriana Stanton wasn't her real name.

"Have we met somewhere?" I asked.

"I don't think so," she said and made an excuse to leave the apartment.

"Be very careful of that woman," I warned Nir. He laughed and said she posed no danger to him. He promised to come to see me in Chile. He knew Cardoen and Barbouti well and would be more than happy to help me.

***

Accompanied by two bodyguards, I returned to Chile late in November. Although they weren't armed during the flight, the watchdogs drew two Berettas from the Israeli Embassy in Santiago. I was well aware that the government I represented posed a big threat to the powerbrokers in this city. I also knew that word would have gotten back to Cardoen about the deaths of his scientists and that he would have little doubt who had killed them.

On November 30, four days before my 37th birthday in 1988, Amiram Nir was due to arrive in Chile to meet me as arranged. The phone rang in the apartment, and I thought it was Nir, telling me his flight arrival time. Instead, it was Ora, calling from Jerusalem.

"Ari, there's terrible news," she said. "Amiram Nir was killed yesterday in a plane crash in Mexico."

I felt my blood run cold.

Nir had reportedly been flying in a chartered Cessna T210 to inspect an avocado investment when the plane went down 110 miles west of Mexico City. There have been various inaccurate reports about the incident. According to some newspaper accounts, Nir and the pilot were killed, but three other passengers, including the woman I had met in his flat, had escaped with slight injuries.

One widely accepted report claimed he had chartered the plane under the alias Pat Weber and had died when the plane crashed. The report said that a mysterious Argentinean who worked for Nir had identified the body and obtained custody of it.

Prime Minister Shamir ordered an investigation by Israeli intelligence, which reported back to him with a very different version of Nir's death. According to their report, it is certain Nir was shot by his woman friend. His body was never recovered by his family.

Who was behind it? Israeli intelligence has always believed it was a well-executed CIA operation. Nir's death ensured there would be no embarrassment for Peres, Reagan, or Bush at the North trial. In fact, while in London, Nir was getting bored and unhappy. He had started talking about writing a book. He even sounded out a journalist and told him some of his conversations with U.S. officials.

On December 2, just three days after Nir's death, I was leaving the post office when a window I was walking past shattered. Then something smashed into the metal custom-built briefcase I was carrying. The two bodyguards and I dived to the floor, realizing that someone was shooting at us.

The police pounced on two men. Although I was asked to go to headquarters to make a statement, I heard nothing more of the matter. I was left guessing whether it was a serious attempt on my life, or an effort to scare me -- and wondering who was behind it.

Since Gen. Pinochet had lost the plebiscite, elections were to be called in Chile. In the meantime two members of the ruling junta, Gen. Stange and Gen. Fernando Matthei Aubel, chief of the air force, made it known to Israel that they were willing to come to an "arrangement" on the question of future sales to Iraq. Gen. Matthei had seen Pinochet's defeat in the plebiscite as an opportunity to further his own career, and he was already running for president.

I met Gen. Stange in his office at the Carabineros headquarters in Santiago. "We will help you put a permanent stop to this craziness and all exports, just as the South Africans did," he said. "But we need some help. We want the arms supplies from Israel to Chile to resume, and we also need to sell some of our equipment to Iran."

"Are you putting forward a proposal to stop your sales of weapons to Iraq?" I asked.

"Exactly," he said. "We have old American equipment, which we'd like you to sell to the Iranians. In exchange, we'd like to buy new equipment for Chile from Israel. As a result of the plebiscite, which was clean and fair, there are other governments that are now selling equipment to us, including the British. In addition, we promise to do all we can to stop future military exports to Iraq. We will do all in our power to stop the contraband."

I promised to relay everything back to Israel. Two days later a meeting was arranged with Gen. Stange, Gen. Matthei, and his chief of staff, Col. Mario Vila Godoy. They told me they had a number of old Northrop F-5E Tiger-2 aircraft that they wanted to sell. They didn't know where they would end up, but they had to go.

I turned to Stange. "I was under the impression that you didn't mind them going to Iran."

"Yes, yes," he said. "We've talked to Robert Gates, and he has authorized the sale to Iran. But we cannot be seen by the U.S. Congress to be making this sale. What we could do, though, is sell them to Singapore. Where they go from there is not our business. But we're aware that you could refurbish them in Israel before they are sent on to Singapore."

Details of the deal, he said, would have to be worked out with Gen. Vega, deputy commander of the Chilean Air Force, and Gen. Clark, the chief of logistics of the Chilean Air Force. Stange said he would convey to everyone involved that the American government had given the okay to the deal. (We found out later that the Chileans were lying about the U.S. government's okay. At this time the U.S. was selling to Iraq but not Iran.)

"We will assure you," said Gen. Stange, "that if we can offload these planes to Iran through Singapore, and Israel then sells us new equipment, none of the chemicals from Cardoen's plant will go to Iraq -- even though the Chilean government isn't involved in this trade."

***

My next step was to call Joseph O'Toole, a former U.S. Air Force colonel, whose last job had been in procurement, which included much liaison with the CIA. Some years after his retirement in 1978, he became managing director of the aircraft sales division of a company called FXC International in Santa Ana, California.

FXC had produced parachutes for civilian purposes until Frank Chevrier, a French-Canadian who had arrived in California virtually penniless, came onto the scene. He started working as a laborer in this company, and the original proprietor, who had no children, liked Frank and made him director. Slowly but surely Chevrier took control of the company, and when the proprietor died, he willed the whole company to him. On taking over, Chevrier was approached by the Israeli government, as a result of which he started manufacturing, with Israeli technology, parachutes for military purposes.

The company had associates in Singapore, Australia, and other parts of the world. After Chevrier's fortunes changed and FXC became a big company, he was approached by the CIA with the idea of opening an aircraft division, through which FXC could broker secret sales of aircraft around the world on behalf of the U.S. government. Since the Israelis already had relations with FXC, it was one of the companies used to paper American equipment in what might have been perceived as illegal sales. Israeli intelligence presumed that one of the reasons the American government became involved with FXC was to keep an eye on Israel's dealings. Any sales of U.S. equipment through FXC could be closely monitored.

I explained to O'Toole that the Chilean government was interested in selling the F-5Es to Iran through Singapore and, believing the Chileans at the time, I said such a sale had authorization from the U.S. government, meaning Robert Gates himself had assured the Chileans it was all right. I told O'Toole that I wanted FXC to act as broker and buy the planes from Chile on behalf of Israel. This would put an American stamp of approval on the deal. O'Toole said it sounded good to him.

Next I called Avi Pazner and sounded him out on the sale of Israeli Kfir jet fighters to Chile as a tit-for-tat for the stopping of the sale of arms and chemicals to Iraq. The Kfir was originally developed by Israel Aircraft Industries as a copy of the Mirage jet fighter. In 1968 and 1969, blueprints of the Mirage-III were stolen from its Swiss manufacturers by Alfred Frauenknecht, a senior engineer, who received several hundred thousand dollars for his year-long efforts. The operation was exposed near its conclusion, and Frauenknecht was arrested. He spent only about two and a half years in a Swiss prison, partly because of an Israeli request for leniency. In fact, he was released in time to visit Israel for the maiden flight of the Kfir, which he had made possible.

Since Pazner had no objections to the sale of the Kfirs to Chile, I followed this call with separate meetings with Gen. Vega and Gen. Clark, the two officers designated to handle the details for Chile. Present at the meeting with Vega was Col. Guillermo Aird, who was Vega's chief of staff. They basically asked me to draw up a proposal on the deals.

Gen. Clark also agreed on the deal, but for the time being there were reports coming from our informants in Cardoen's company that the sales of chemicals to Iraq were resuming without any indication they were going to stop. It was a troubling situation, but I could only hope that once I had the F-5E deal worked out, the sales would halt.

Gen. Clark had one further request in addition to the Kfir jets from Israel -- he desperately needed spare-part kits for T37s, small spotter aircraft. I felt at this point we were going forward very well and that the Israelis would be happy to negotiate this deal. After the conversations with Stange, Matthei, Vega, Clark, and their chiefs of staff, I decided not to talk to Cardoen. President Stroessner had promised the Mossad officer and me that he would close the Cardoen plant in Paraguay by the end of February 1989. It was reasonable to believe that the Americans would not interfere because President-elect Bush and others were extremely sensitive to congressional criticism.

In mid-December 1988, I decided to fly to Israel to lay out the whole scenario to Pazner. He in turn arranged for papering the sale of the F-5Es with the Singapore government through his contact, Gen. Winston Choo, who was chief of staff of the Singapore Armed Forces. I was to meet in Europe with the Iranian defense minister, and another Israeli representative would go out to Southeast Asia and sew up a deal with Singapore, which was acting as a conduit and would have to produce an end-user certificate for the Chilean government. But as for the sale of Kfir aircraft to Chile, the subject had to be taken up with the director general of the Ministry of Defense, Maj. Gen. David Ivry.

On being called to the Prime Minister's Office, Ivry pointed out that the advanced Kfirs had U.S. engines, and we would risk upsetting Congress if they were sold to the Chileans. The Israelis decided to offer the advanced Kfir to Chile, but with engines that had been developed by Bet Shemesh Engines, with the aid of South African money before the row with Pretoria over Iraq.

***

I spent most of the rest of December in Israel with Ora and our five-month-old daughter, Shira. But the respite was brief. Accompanied by my two bodyguards, I flew to Frankfurt on January 5, 1989, and greeted the Iranian defense minister in his suite in the airport hotel that evening. It was a warm meeting, but the first thing Col. Jalali pointed out was that he would not talk about the three C-130s. It was simply expected they would come to Iran despite Shamir's earlier refusal, and the money involved with them was a separate issue from the planes which would be coming from Chile. Jalali asked for a price for these F-5Es.

In the late 1960s when they were manufactured, they would have been worth $8 million each, but they would have been "stripped down" -- without any electronics, such as bomb control and infra-red "night scope" equipment. They would just have had standard take-off and landing radar.

Israel was going to pay the Chileans $6 million apiece, although they were now not worth more than half a million dollars each. The Iranians, on the other hand, would pay $14 million for each plane. This included the price Israel had to pay, refurbishing costs of close to $1 million each, transport, insurance, parking in Singapore, and unseen additional costs.

The discussions with Col. Jalali continued in his suite at ten o'clock the following morning. While it was worked out that the total that Iran had to pay for each plane was $14 million, Tehran had to pay $6 million each to the Chileans in advance. The rest of the money would be cash on delivery.

Col. Jalali shrugged. "Whatever the cost, we need this stuff. We have to defend ourselves." He was quick to point out that although the war with Iraq was now over, they could not afford to take any chances.

I pushed him to agree to the payment to Chile and also asked him to send a representative to Santiago because we wanted to leak to the press that Iran was now in business with Santiago. He was happy to go along because he was very much in favor of what we were doing against the Iraqis.

I was doing all this in the hope of arranging a meeting in Chile for an Iranian representative with Israeli Maj. Gen. Ivry, Chilean Gens. Vega and Clark, and, perhaps, Matthei, as well as Joseph O'Toole, and -- with any luck -- Robert Gates thrown in for good measure. The more the merrier, because word would certainly get back to Iraq and cause concern to Saddam Hussein.

I flew to Santiago on January 6, 1989, and asked for a meeting with Gen. Matthei. But I was told he was on holiday in Switzerland, and Gen. Vega was standing in for him. Vega received me, and I asked him if he would meet an Iranian emissary, as well as Ivry and Gates. He agreed if Gates did.

I called Gates from Chile and asked if he would come to discuss the sale of the F-5Es. He politely said that he knew nothing about any F-5Es, and he had never okayed any sale.

Ivry came to Santiago. By this time Matthei was back in town. We met him, Vega, and Clark, and an agreement was signed between the parties that Israel would sell to Chile 12 advanced Kfirs with Israeli-made engines for the price of $14 million each. An agreement was also signed that Israel would purchase 13 F-5Es from Chile in their present condition at a price of $6 million each, to be refurbished and sent onward without specifying the final destination. Letters were provided, however, that Singapore was interested in purchasing these aircraft. Israel would buy these aircraft through the U.S. company FXC, which would act as broker. FXC would also be used to forward the aircraft after their refurbishment in Israel.

For their part, FXC was to receive $200,000 for the purchase of each aircraft and another $200,000 for each sale. It was also made clear there would be no exports of military equipment from Chile to Iraq. It was also emphasized by the Chileans that the United States government had given its approval for the sale of the F-5Es to Iran -- something we knew to be untrue -- and that the person who had given the okay was Robert Gates, also untrue. Gen. Stange was not at this meeting, even though he was invited. He had tendered an apology.

Ivry left Chile after these meetings, and a day later Dr. Ahmed Omshei, the Iranian arms negotiator, was sent to Santiago after the sale had been coordinated by my London contact, Nick Davies. Omshei was the aide to the Iranian Ministry of Defense who had been present at the 1980 Paris meetings to discuss the delay in the release of the U.S. hostages.

After meeting with Vega, Omshei opened a letter of credit, good for 90 days, for the Chilean government with the Bank of Luxembourg for the amount of $78 million, the total that Israel had to pay Chile for the F-5Es. The conditions for the release of this letter of credit were that the 13 F-5Es would leave Chile and be shipped to Israel by FXC. The Chilean government was to pay $1,300,000 to FXC, half its fee. The Israelis agreed to pay the other $1,300,000. The Chilean government also promised to open a letter of credit for the Israeli government in the amount of $168 million for the Kfir fighters.

***

The call from the Mossad chief of station in Buenos Aires was urgent. "The situation in Paraguay is grave," he said. "We have to meet immediately." He arrived in Santiago later that same day in late January 1989 and came straight to the apartment.

"We have intelligence information that Gen. Rodriguez is about to stage a coup d'etat against Gen. Stroessner," he said. "The Americans are involved too. Earl Brian, a close associate of Gates, and Clair George, the assistant deputy for operations in the CIA, have been visiting Paraguay recently and meeting with Gen. Rodriguez."

Would the CIA go as far as overthrowing a government in order to keep Cardoen in business? President Stroessner had promised to close down the plant -- and Rodriguez was power-hungry. It all seemed to fit. Nevertheless, it was incredible. I asked how reliable the information was.

"The best," he said. "Rodriguez has been spotted at the U.S. ambassador's residence several times, and there's word from colonels who are friendly with Israel that there's about to be a coup with the military taking over. The closing of the Cardoen plant is one of the issues, and it's being used as the catalyst to bring the power struggle between Rodriguez and Stroessner to a head."

I called Israel, where Pazner was very unhappy. He had already heard about the plotted coup, which was due to take place during the evening of February 2.

"Our man in Buenos Aires has told me the Americans are stabbing us in the back. There will be no Kfir deal, there will be no F-5E deal, and the chemicals to Iraq will continue. They're going as far as helping Rodriguez in planning the coup. From what we've established, there are some 10 to 15 new CIA officers in the U.S. Embassy in Paraguay."

I hung up and managed to get a call through to Stroessner himself. I guessed he already knew about the impending coup, but it wouldn't hurt to be sure.

"Yes, I know about it," he said.

I gathered from our conversation that the Presidential Guard, which, as opposed to the military, was completely loyal to Stroessner, had been put on full alert around the president. Stroessner was trying to negotiate with Rodriguez, but I couldn't see what hope he had. The Americans were clearly determined to see him overthrown.

It had been decided that I should stay where I was while the Mossad man immediately flew to Paraguay. But on February 1, he called me from Asuncion. "You'd better come here, Ari. There's a possibility that Gen. Stroessner might survive because he's pulled two generals on to his side. And if he does pull through, you have to be here to massage his ego and make sure he closes the Cardoen plant right away."

I left Santiago for Asuncion on February 2, arriving in the early afternoon. My colleague was waiting for me in the airport, and we drove to see Stroessner. Life was continuing in its own hectic way in the city. No one, it seemed, had got wind of the trouble, even though the guard around the palace had been strengthened.

Stroessner looked worried when he received us in his office, but he assured us he had "neutralized" Rodriguez and that there would be no move that night against him. By the morning, Rodriguez would be arrested.

"That's good news, Your Excellency," I said. "If Rodriguez had won this power struggle, it would mean big trouble for Israel. But what we'd like is your assurance that the Cardoen plant will be closed this week."

"You can take it from me it will be done," said President Stroessner. "I have already received $12 million worth of small arms since our first meeting, out of the $30 million in credits I was promised."

I seized on this to emphasize that Israel was completing its part of the bargain, and that it was now up to him to carry through his.

He smiled and raised a hand of acknowledgment. "Gentlemen," he" said, "please come and see me at six o'clock tomorrow evening, when it is all over with Rodriguez." There was confidence in his voice, but I read worry in his eyes.

We were staying at the Excelsior Hotel, where guests are mainly Europeans and Americans. We each made calls to Israel and to the Israeli ambassador, who had not been fed the Mossad information. He was warned that "something was cooking" and that he should make sure his staff was in a safe place.

"If this is the case, do you need any protection?" he asked me.

"No, thank you," I said. "I have my two 'boys' with me." They weren't carrying weapons, but they knew how to take care of us and themselves.

The four of us set out for an early dinner about six that evening, planning to eat at an Arab restaurant within walking distance of the hotel. As we walked, we saw trucks of soldiers moving into the city and taking up positions on street corners. I wondered where their loyalty lay. People stopped to stare in astonishment. A buzz of conversation was in the air, but no panic.

On our way back to the hotel after dinner, the scene had changed dramatically. The city was now full of soldiers, and the streets had emptied of civilians. Soldiers were standing in the hotel lobby, but guests were free to come and go. Rich locals mingled among the guests, ordering drinks from the lobby bar. We sat in the lobby, too, waiting for the action that now seemed inevitable. But was it Stroessner's action against Rodriguez -- or vice versa? Whatever happened here tonight, we realized, also affected the security of Israel.

At about 11 :00 P.M. the boom of artillery shook the hotel. We went up to my room and stared out the window at a deadly display. From the army tank base in the middle of Asuncion, artillery was being fired toward the presidential palace. At least we knew whose side they were on.

The sight and sound of battle went on all night. It wasn't until we ventured out into the street in the silence of dawn and saw the bodies lying around that we were able to find out what had happened.

The military generals had assured Stroessner they would back him, but Rodriguez, who was commander of the military school, together with the commander of the tank unit, had decided to make the coup attempt anyway. All 2,000 soldiers in the military school had been trucked into Asuncion. Command had been given to fire on the palace -- the six tanks kept at a small base downtown were used to take over the city. When Stroessner had given orders for other military units to come to his aid, they refused, unwilling to come face to face with the tanks and units holding the central part of the city.

Stroessner had held out with the Presidential Guard, also totaling some 2,000. As a response, 1,000 Presidential Guard with Israeli Uzi machine guns were trucked into the city. A fierce gun battle had erupted around the tank base. Six hundred Presidential Guard were mowed down from machine-gun towers around the tank base. At 2:00 A.M., Stroessner had given up.

"Well, that's the end of that," said my friend as we walked among the mangled bodies. It was a horrifying sight. "We tried to tell him what would happen."

"And we still have our problem with Cardoen," I said. "This means, of course, that all deals are off. We're back to square one."

On returning to the hotel, we were met by military officers, who assumed we were tourists and told us not to worry. We sat in the lobby and watched them bring down Stroessner's big portrait.

The phones from the hotel were working, and I called Ora to assure her I was all right.

"What the hell are you doing there?" she demanded. "I've been watching it all on TV. I called yesterday, and they told me you were in Paraguay, and now I see there's a coup. Wherever there's trouble, you seem to be in the thick of it."

* * *

That afternoon, we decided to make contact with Gen. Rodriguez to congratulate him. We had nothing to lose. We phoned the palace. I explained I was a special emissary from Prime Minister Shamir and I would like to speak to Gen. Rodriguez.

They told me he was very busy, but they would pass on the message. Half an hour later, I had a phone call from Rodriguez's chief of staff. He was very polite, saying he did not realize we were in the city.

"We hope you were not inconvenienced by last night's events," he said, as someone might explain away a noisy party.

I asked if it was possible to see the general. "You mean the president," he said. Of course.

Half an hour later he called back again. He said the president was concerned about my personal safety and that if I was not accredited diplomatically to Paraguay, it was better for my own well-being to try to leave the country as soon as the airport was opened again that evening. Meaning, "Get your ass out of here, troublemaker."

The Mossad man and I agreed that Rodriguez wasn't going to close the plant and that it was probably wise to take the new president's advice. As the day went by and we waited for the airport to open, into the lobby of the hotel came a number of Americans. One of them I knew from before -- a white-haired, distinguished-looking man, smartly dressed in a suit. His name was George Cave, the very same man who had been right in the middle of the Iran-contra affair.

I marched straight up to him. "Hello, George," I said. "How're you doing?"

He stared at me in astonishment. "What are you doing here?" he finally asked.

"I'm on government business."

"I didn't know you fellows were involved."

"I guess we're on opposing sides."

"I'm not on any side. I was here on personal business, and I got caught up in the coup."

"Sure," I said. "And what about Earl Brian? I haven't seen him, but doesn't he go everywhere with you?"

He produced a nervous laugh. "Earl should be here. UPI would be interested in all of this."

I didn't bother to reply. I was so sick about the whole damn business that I didn't know whether to laugh or cry.

As he moved away, my words seemed to sink in. He found some adrenaline, and turned on me. "Let me say that if anyone tries to interfere with what we're doing, we'll stop them."

At noon the next day, I flew out of Paraguay. There was nothing more I could do. I looked down over the city. At the cluster of houses, at the military vehicles I could still make out. We'd failed. The whole thing stank. I closed my eyes and wondered what I did from here.

***

I was met at the airport in Santiago by Joseph O'Toole, the man from FXC, who'd flown in shortly before I left for Paraguay. On February 6, two days later, we had a meeting with Gen. Clark. We hoped to press on with the aircraft deal, despite the fact that it had been made clear to us the Americans were not going to sanction it. Joe O'Toole was now acting as a private businessman, and did not care about his U.S. government masters.

Gen. Clark's message confirmed our fears. "The Chilean government has decided it will not sell its F-5Es and will not break international law at the urging of the Israeli government," he said. "We don't want Kfir aircraft -- we're going to go for Mirage 2000s. We won't be opening a letter of credit for Israel, and the letter of credit opened by Dr. Omshei for the Chilean government will be left to expire."

I sensed by his firmness that a power struggle was building up among factions in the Chilean ruling junta. Pinochet was pitted against Matthei and Stange, each of whom had his own presidential aspirations. As chief of logistics in the air force, Gen. Clark should have been on the side of his commanding officer, Gen. Matthei. But Clark was a Pinochet appointee, and he was more loyal to Pinochet than to Matthei or Stange.

At an opportune moment, I asked for a meeting with Matthei, without O'Toole present. It was quickly arranged, and Matthei was able to explain the background, pointing out that he did not "agree with the politics."

It was clear to him now, he said, that the Americans weren't going to support him in his ambitions to become president of Chile following Pinochet's defeat in the plebiscite. So he had tried to oppose the U.S.'s policies. With the backing of Adm. Jose Merino Castro, head of the navy, Gen. Matthei was going to try to stop the arms sales to Iraq and win over the U.S. Congress. He was attempting to hire as a consultant Edmund Muskie, a Democrat who had served as secretary of state. Muskie later turned him down, and someone in his office leaked word of Matthei's plan, but at the time, Matthei said they were still negotiating with him in the hope of setting up a Chilean lobby in the U.S. Congress.

I was encouraged by his words. He was still hoping to push the F-5E deal through and also stop the chemical trade to Iraq. It was unclear who would prevail in the Chilean political battle ahead, but if Matthei emerged the victor, perhaps our mission could still be accomplished.

My happiness was to be short-lived.

***

It was Robert Gates himself who telephoned Nachum Admoni, the Mossad chief, [1] early in February 1989, and told him the U.S. was not happy about the trouble the Israelis were stirring up in Chile. Word of Matthei's plans had apparently leaked out to the Bush administration, and Gates had been designated to take care of the potential problem. Gates asked Admoni if he was aware of what had happened in Paraguay and reminded him that the U.S. could protect its interests in whatever way it liked. Gates was also angry about my activities. He complained to Admoni that I'd arranged for accusations to be made about Cardoen in the Financial Times.

This was quite true. To help get world opinion on our side, I had been the source for Barbara Durr's story in the Financial Times exposing Cardoen's sales of chemical weapons to Iraq. Published on November 11, 1988, it was the first of such stories to make it into print. Subsequently, exposes of Cardoen's illegal activities were published in the Times and the Independent in London, and over the international wire services. But at the time, Barbara's was the only story published, and Gates didn't like it one bit. Even if what it said was true, he told Admoni, it had nothing to do with the Americans.

Admoni told me later that his reply to Gates was cool. The article was about Cardoen's chemical sales to Iraq, but didn't mention U.S. involvement. Admoni quoted a Hebrew saying that translates, "The hat on the thief's head is burning." He meant, more or less, that the Americans had a guilty conscience.

Gates replied that the Chileans -- meaning the faction led by Gen. Matthei -- were listening too much to Israel and would have to be taught a lesson.

The threatened lesson came shortly, when three grapes, out of the whole Chilean fruit harvest exported to the U.S., worth $850 million to $900 million annually, were found to be laced with cyanide. Three tiny grapes out of millions upon millions. It was an astonishing example of diligence by the U.S. Food and Drug Administration.

The FDA announced that all Chilean food imports into the United States -- potentially lethal foodstuffs -- would be banned. Shops and supermarkets across the nation withdrew Chilean foods. Empty shelves carried explanations that because of the danger of contamination of Chilean imports, certain articles had been removed for customers' safety.

The impact was catastrophic for Chile's economy. I was still in Chile when the effect was felt. It was tragic to watch tearful Chilean farmers trucking their grapes into Santiago and giving away carton-loads of grapes to the population. It was a demonstration of anger and frustration directed against the United States -- and their own government. They were so frustrated they didn't know what to do. It was a bizarre change of scene in the streets. Instead of the Carabineros throwing gas canisters to break up demonstrations against Pinochet, it was peasants and farmers throwing grapes everywhere. Supermarkets were giving away boxes of them -- in contrast to the empty shelves in the U.S. Food prices in Chile crashed, threatening to send the whole economy over the cliff. And all because of three grapes.

The American FDA tried to convince the Europeans to put a ban on Chilean exports, but it did not catch on.

Adm. Merino, one of the four members of the ruling junta, with responsibility for economics, made a nationwide telecast and calmed the Chileans down, assuring them the government would try to find the cause of the problem. He added it had not been Chile's fault -- the country did not produce contaminated food, particularly fruits laced with poison.

I got an emergency call to come to Matthei's office, and he asked me what I knew about it. I gave him a full rundown of the Gates-Admoni conversation. He smiled wistfully. "I thought so," he said. Clearly, he had lost the power struggle.

Chile immediately announced to the Americans that they would not be selling their F-5Es to Iran. This meant, of course, that they would go along with the Americans and continue the trade with Iraq. The effect was almost instantaneous. Suddenly there was no problem with Chilean food in the U.S. All bans were lifted. Chilean foodstuffs appeared back on the supermarket shelves.

One for the CIA. And for Carlos Cardoen.

***

I called Jerusalem and said, "What do you want me to do? Go on a one-man campaign and blow up Cardoen's plants?"

"Come on home, Ari," said Pazner.

"I've failed completely," I told him.

"You've got some very useful addresses of people who are dealing with Cardoen," said Pazner. "And let's not forget that the South Africans have stopped dealing with Iraq."

I shook my head. There was something I hadn't told him over the phone. After returning to Santiago in the wake of the coup in Paraguay, I had wandered into the pool area of the Sheraton San Cristobal Hotel and spotted two men sitting together: Gen. Van Der Westhuizen and Mark Thatcher. They were at a white metal table next to the bar with a couple of glasses in front of them. I was left in little doubt by the way they were laughing that they were the best of friends.

My suspicions were to be proved correct. While the South Africans were not dealing with Iraq, they were involved with Chile, which was just as bad. Israeli intelligence reports and assessments from other intelligence agencies confirmed that Mark Thatcher was continuing to provide military equipment through Cardoen to the Iraqis. All the nuclear missile projects that were continuing in Iraq were going through the Cardoen network, which had a joint venture with Ihsan Barbouti's projects in that country. Thatcher was very well connected with Barbouti. Working with Barbouti was Sarcis Sargalian, an American arms dealer of Lebanese-Armenian extraction. Also on the project for the U.S. government was the Armenian-Iranian, Richard Babayan, my old schoolmate. Based in Washington, D.C., Babayan controlled a large network of people providing equipment for Iraq. "I'm an Iranian patriot trying to get rid of the Khomeini regime," he often used to tell me.

The Israeli government was extremely concerned about the continued trade. What could we do? Pazner said I would have to make a presentation at a meeting of present and former chiefs of intelligence organizations in Israel. They operated as a committee, with the power to deliberate and set down guidelines for execution of cabinet decisions with respect to intelligence affairs. A watchdog group of professionals, the committee also had the power of life and death. It was this secret group that decided which individuals posed a threat to the State of Israel -- and decided who should live and who should die.

At these high-level meetings, who says what is not recorded. Only the final decision of the whole committee is recorded in top-secret form. In this manner, no one person can be held responsible for the decision to execute anyone. This committee included all the former and present heads of SHABAK, Mossad, Military Intelligence, and Police Intelligence. They are not all present at all times, but they need a quorum of six.

In March 1989, I made my presentation about the situation in Chile at a committee meeting at the Mossad villa near the Tel Aviv Country Club. Although we had not coordinated our reports, a Mossad analyst who was also present had drawn the same conclusions about Cardoen and Iraq.

Among the people named as enemies of the state was as prominent a figure as Robert Gates. There were also Richard Babayan, Gerald Bull, Ihsan Barbouti, Carlos Cardoen, Rodolfo Stange, Clair George, Earl Brian, George Cave, Andres Rodriguez, Bruce Rappaport, a number of Cardoen bankers in the United States, and a group of German scientists working with Bull in Iraq. Some of these Germans were new on the scene, others were the "survivors" from the first rampage in Europe.

I was not a party to the life-and-death decision-making. I had simply been asked to make a presentation. When the final deliberations took place, the other analysts and I were asked to leave.

Two days later I was called back to a reconvened meeting of the committee at the Mossad villa, for a more detailed presentation. It was later decided by the committee that the Egyptian-born U.S. resident, Ihsan Barbouti, and Gerald Bull, the supergun developer who was still living in Belgium, would be on the execution list, along with 12 others, mostly European scientists. It had been decided to go to the heart of the technology, as well as to some of the merchants. Carlos Cardoen was spared, however, presumably because of his closeness to the Chilean junta, and because his death would have created an uproar.

Although the committee agreed to go ahead with the executions right away, Prime Minister Shamir, fearing reprisals from the U.S., intervened. He wanted them put on hold -- and he was horrified when told that Gates and Rappaport had been originally listed as enemies of the state.

***

In early April 1989 I made a final trip to Chile to wrap up my affairs. While I was there, Joseph O'Toole called from Santa Ana, California, to say that the three C-130s could still be sold to Tehran. An Iranian agent, explained O'Toole, had been brought into the deal by Richard St. Francis, who worked for TransCapital, a Connecticut firm licensed to sell computer hardware used for the Promis program, and by Mike Timpani, who by now was no longer working for GMT.

I said there would be no deal. Because the Iranians had not been able to secure the release of the three Israeli soldiers, Prime Minister Shamir was not going to release the aircraft, even if the Iranians had paid money up front for them.

The planes were being held by Israel, but the U.S. was claiming jurisdiction over them because they were fitted with U.S. technology. The Israeli government, of course, had discretion on resale of U.S. equipment more than 20 years old. U.S. jurisdiction was not clear in this case, because Israel had bought 85 of the planes -- war booty -- from Vietnam in 1985 and 1986, paying $200,000 each for them.

O'Toole also wanted to buy 12 more C-130s parked in Canada, but owned by the Israeli government. They were being refurbished by Northwest Industries in Edmonton, Alberta. At first he didn't make it clear which customer wanted them. Finally he mentioned a person called Lettner, who was apparently very keen to make the purchase on behalf of Iran. There would be no harm, said O'Toole, at least in my talking to Lettner. I told O'Toole that I doubted that Prime Minister Shamir was going to allow the sale -- and we knew of no Iranian representative called Lettner.

O'Toole continued to urge me to meet this man, saying that the U.S. had given the nod for the sale of the planes. I phoned Israel, and a senior official in the Ministry of Defense told me that O'Toole had been in Israel in December 1988 talking to "the other side" -- to the Labor Party people -- and to the Defense Ministry. This was a surprise to me. In fact, I smelled a rat.

I called Iranian Defense Minister Jalali from Santiago to ask whether he knew anything about Lettner or about any deal with the U.S. No, Jalali had never heard of the man and knew nothing about a plan to sell C-130s to Tehran apart from those that Iran was trying to buy from Israel through me.

On the afternoon of April 20, 1989, I was scheduled to meet Robert Gates at a house in Paramus, New Jersey. This was arranged through the Prime Minister's Office to make a last-ditch plea about the Iraqi sales. On the suggestion of Pazner, who said he was intrigued to know what was going on, I also arranged with O'Toole to meet the mystery man Lettner at Kennedy Airport at 10:30 A.M., shortly after my arrival from Chile with my two bodyguards.

At the appointed time, I was approached in the main terminal by a grey-haired man in his late 40s, dressed in an elegant European-cut suit. I'd never met him before, but he introduced himself as the Connecticut businessman Richard St. Francis. He asked me to go to the upstairs coffee shop where we would soon be joined by Lettner, supposedly representing the Iranians. Sure enough, after we ordered coffee in the crowded shop, a huge man came over. He held out a hand that could have crushed an iron bar. This guy was no Sunday school teacher.

I looked him straight in the eyes. "Fine," I said. "But who are you really? And what do you want? I've called the Iranian defense minister, and he's never heard of you."

"That's crazy," he said. "I've just returned from visiting him in Tehran."

I told him that if there were to be a sale of C-130s to Iran, the U.S. and the Israeli governments each had to authorize it. Not only that, Israel didn't need any false end-user certificates. I told him that the governments would authorize the final use of the planes.

I was convinced this man was an undercover agent and that I was being taped. [2] It was obvious he was here to set me up. My activities in South America had clearly upset too many people, including Robert Gates. I was careful to make the comment that I was going to see Gates later that day. [3]

I told "Lettner" that if he was a representative of another country and he was lying, he had better watch out. If he wanted this deal to go through to Iran, he had to prove his identity, and the prime minister of Israel also had to approve the deal.

I stood up and left the coffeeshop. I took a limousine to Newark Airport and left the two bodyguards and my luggage there. It wasn't far to Paramus. I took a taxi, arriving at the house as arranged at two in the afternoon. It was a regular middle- class home with a small flower garden in front and a larger garden at the rear.

I rang the bell, and Robert Gates opened the door. It was a warm spring day, and he was dressed in a white short-sleeved shirt, open neck, blue trousers. Over his shirt he wore a light-brown vest. He ushered me into the living room. A smell of freshly made coffee wafted from the kitchen. He poured us a cup each. It didn't seem to be his home, but he was comfortable enough in it. I started talking about the man I had met that morning and my suspicions about him.

"Oh, don't worry about it," he said.

"But I do worry about it. It smelled of an attempt to set me up trying to get me to agree on tape to the illegal sale of aircraft to Iran."

He brushed my comment aside with a wave of his hand, giving me the impression that it was an irrelevant incident that had already been forgotten. I decided to drop the subject. But I wasn't going to forget the purpose of this meeting and once again raised the topic of the chemical sales to Iraq.

I talked to Robert Gates for more than two hours, recounting for him what we knew about Cardoen, and the threat that Iraq held for Israel. He had heard it all before, of course. He sat patiently listening, but remained noncommittal. At 4:30 P.M. I told him I had to leave. I knew I had gotten nowhere. He called a taxi for me, and I went back to Newark Airport.

The only flight to London was on Virgin Atlantic. We had made reservations, but when we got to the counter two hours ahead of time, we were told that somebody had canceled them. It was looking as if we weren't expected to take that flight to London. I pointed out we had okayed tickets. The supervisor was called, and we were able to get our seats. I spent a few days in London and returned to Israel.

The Chile chapter in my life was over. At the time, I felt I had failed. Still, if it hadn't been for the pressure Israel applied, the Iraqi arsenal would have been much deadlier.

As it was, Iraq's Scuds used during the Gulf War of 1991 were unable to carry heavy payloads of chemicals precisely because the scientists who could have helped Saddam Hussein to that end had been eliminated before they could finish their mission. Among them was Gerald Bull, killed by the Israelis; his body had been found at his Brussels apartment in March 1990.

_______________

1. In 1989, Admoni left Mossad. He was the first chief of the intelligence agency whose resignation was reported in the international press, which happened because of misunderstandings with the Prime Minister's Office. Despite an argument with Shamir over the disposal of the arms-sales profits and his vehement opposition to Robert Maxwell's role as a money- launderer, he remained an unofficial adviser to Shamir, while taking a management position in a public company.

2.  As he was later to admit in court, he was actually a U.S. Customs Service undercover agent, John Lisica.

3. This comment was not in the tapes played at my trial. There was, Lettner admitted, a gap in the recording, which he said was due to his inability, at a certain point, to flip the tape over without being observed.

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