WASHINGTON — The Reagan Administration, using an Israeli-operated supply line set up through highly secret negotiations with the regime of the Ayatollah Ruhollah Khomeini, last year began supplying U.S.-made missiles and weapons parts to Iran in exchange for Iran's aid in freeing Americans held hostage in Lebanon, government sources said Wednesday.
The arrangement, in which the Tehran government received planeloads of military equipment critical to Iran in its lengthy war against Iraq, led to freedom for three hostages held by pro-Iranian extremists and, until this week, appeared to promise further releases, sources said.
The arms shipments, begun last year with the personal approval of President Reagan after secret meetings between two top-level White House officials and Iranian representatives, led to the release last Sunday in Beirut of American University Hospital director David P. Jacobsen, who had been held by Islamic Jihad (Islamic Holy War), a group of Shia Muslim fundamentalists allied with Iran.
At least one earlier weapons shipment spurred the terrorists to release the Rev. Benjamin Weir, a Presbyterian minister, in September, 1985, and Father Lawrence M. Jenco, Beirut chief of Catholic Relief Services, last July.
Brainchild of McFarlane
One source who refused to be named said that the operation was the brainchild of former national security adviser Robert C. McFarlane--who traveled secretly to Iran several times in the process of negotiating the arrangement--and a top aide, Lt. Col. Oliver L. North, the National Security Council's deputy director of political and military affairs.
The operation was supervised by North and Reagan's current national security adviser, John M. Poindexter, after McFarlane left the government in December, 1985.
Since early 1985, one source said, McFarlane and North reportedly have undertaken a string of secret missions to London, Geneva and other foreign capitals, as well as to Iran, to work out the shipments and exchanges, one source said.
The operation, handled almost entirely from within the White House, had been kept secret from virtually all of the highest officials in the U.S. government--including top congressional, Pentagon and State Department officials--at least until recent months, when some officials apparently began to pick up hints of what was going on.
Regan Concerned Over Leaks
News leaks about the operation surfaced last weekend in the Middle East and mushroomed in Britain and the United States this week. On Wednesday, White House Chief of Staff Donald T. Regan expressed public concern that the reports were endangering American hostages, warning in a broadcast interview that "there are lives at stake here" and that "opportunities can be lost by premature disclosure."
U.S. officials concluded Wednesday that the publicity, and the resulting uproar in Iran, have dashed all hopes that two other Americans still held in Lebanon by Islamic Jihad might be freed soon, an official said.
The secret dealings between the United States and Iran stand in marked contrast with the stated position of the Reagan Administration, which has frequently denounced Iran as one of the world's leading sponsors of state-supported terrorism. Indeed, while the secret exchanges were taking place, the President said repeatedly that the United States would not negotiate with terrorists or pay ransom for the release of American hostages.
In addition, the United States has maintained an arms embargo against Iran since 1979, when Khomeini's followers seized the U.S. Embassy and held 52 Americans hostage for 14 months.
Storm of Controversy Due
Disclosure of the arrangement thus raises far-reaching questions about American policy on terrorism, the Middle East and a host of other issues. And a storm of controversy is likely to ensue, both in and outside the Administration.
Secretary of State George P. Shultz, a leading Administration advocate of a hard-line approach to terrorism and the man whose department has been actively enforcing the ban on weapons shipments to Iran, was "completely cut out" of the hostage negotiations. His aides are said to be deeply angered by the arrangement.
Secretary of Defense Caspar W. Weinberger, a fierce advocate of American support for Iraq in its long-running war with Iran, was said to have "hit the roof" when news of the shipments reached his desk.
One government official who refused to be identified called the Administration's decision to aid Iran in its war with Iraq "a major policy shift" that had been undertaken without the usual discussions within the executive branch and with intelligence and military experts in Congress.
Approved by Reagan
The shipments were personally approved by Reagan in apparent contravention of the Export Administration Act, which prohibits the sale of U.S.-made arms to countries that support terrorism. Reagan himself put Iran on the "terrorist" list in 1981, and it has remained there.