Iran-Contra II? Fresh scrutiny on a rogue Pentagon operation.

On Aug. 27, CBS News reported that the FBI is investigating a suspected mole in the Department of Defense who allegedly passed to Israel, via a pro-Israeli lobbying organization, classified American intelligence about Iran. The focus of the investigation, according to U.S. government officials, is Larry Franklin, a veteran Defense Intelligence Agency Iran analyst now working in the office of the Pentagon's number three civilian official, Undersecretary of Defense for Policy Douglas Feith.

The investigation of Franklin is now shining a bright light on a shadowy struggle within the Bush administration over the direction Of U.S. policy toward Iran. In particular, the FBI is looking with renewed interest at an unauthorized back-channel between Iranian dissidents and advisers in Feith's office, which more-senior administration officials first tried in vain to shut down and then later attempted to cover up.

Franklin, along with another colleague from Feith's office, a polyglot Middle East expert named Harold Rhode, were the two officials involved in the back-channel, which involved on-going meetings and contacts with Iranian arms dealer Manucher Ghorbanifar and other Iranian exiles, dissidents and government officials. Ghorbanifar is a storied figure who played a key role in embroiling the Reagan administration in the Iran-Contra affair. The meetings were both a conduit for intelligence about Iran and Iraq and part of a bitter administration power struggle pitting officials at DoD who have been pushing for a hard-line policy of "regime change" in Iran against other officials at the State Department and the CIA who have been counseling a more cautious approach.

Reports of two of these meetings first surfaced a year ago in Newsday, and have since been the subject of ongoing investigation by the Senate Select Committee on Intelligence. Whether or how the meetings are connected to the alleged espionage remains unknown. But the FBI is now closely scrutinizing them.

While the FBI is looking at the meetings as part of its criminal investigation, to congressional investigators the Ghorbanifar back-channel exemplifies the out-of-control bureaucratic turf wars that have characterized and often hobbled Bush administration policy-making. An investigation by The Washington Monthly--including a rare interview with Ghorbanifar--adds weight to those concerns. The meetings turn out to have been far more extensive and much less under White House control than originally reported. One of the meetings, which Pentagon officials have long characterized as merely a "chance encounter," seems in fact to have been planned long in advance by Rhode and Ghorbanifar. Another has never been reported in the American press. The administration's reluctance to disclose these details seems clear: the DoD-Ghorbanifar meetings suggest the possibility that a rogue faction at the Pentagon was trying to work outside normal U.S. foreign policy channels to advance a "regime-change" agenda not approved by the president's foreign policy principals or even the president himself.

The Italian Job

The first meeting occurred in Rome in December 2001. It included Franklin, Rhode, and another American, the neoconservative writer and operative Michael Ledeen, who organized the meeting. (According to UPI, Ledeen was then working for Feith as a consultant). Also in attendance was Ghorbanifar and a number of other Iranians. One of the Iranians, according to two sources familiar with the meeting, was a former senior member of the Iranian Revolutionary Guard who claimed to have information about dissident ranks within the Iranian security services. The Washington Monthly has also learned from U.S. government sources that Nicolo Pollari, the head of Italy's military intelligence agency, SISMI, attended the meetings, as did Italian Minister of Defense Antonio Martino, who is well-known in neoconservative circles in Washington.

Alarm bells about the December 2001 meeting began going off in U.S. government channels only days after it occurred. On Dec. 12, 2001, at the U.S. embassy in Rome, America's newly-installed ambassador, Mel Sembler, sat down for a private dinner with Ledeen, an old friend of his from Republican Party politics, and Martino, the Italian defense minister. The conversation quickly turned to the meeting. The problem was that this was the first that Ambassador Sembler had heard about it.

According to U.S. government sources, Sembler almost immediately set about trying to determine what he could about the meeting and how it had happened. Since U.S. government contact with foreign government intelligence agencies is supposed to be overseen by the CIA, Sembler first spoke to the CIA station chief in Rome to find out what if anything he knew about the meeting with the Iranians. But that only raised more questions because the station chief had been left in the dark as well. Soon, both Sembler and the Rome station chief were sending anxious queries back to the State Department and CIA Headquarters in Langley; Va., respectively; raising alarms on both sides of the Potomac.

The meeting was a source of concern for a series of overlapping reasons. Since the late 1980s, Ghorbanifar has been the subject of two CIA "burn notices." The agency believes Ghorbanifar is a serial "fabricator" and forbids its officers from having anything to do with him. Moreover, why were midlevel Pentagon officials organizing meetings with a foreign intelligence agency behind the CIA's back--a clear breach of U.S. government protocol? There was aim a matter of personal chagrin for Sembler: At State Department direction, he had just been cautioning the Italians to restrain their contacts with bad-acting states like Ivan (with which Italy has extensive trade ties).

According to U.S. government sources, both the State Department and the CIA eventually brought the matter to the attention of the White House--specifically, to Condoleezza Rice's chief deputy on the National Security Council, Stephen J. Hadley. Later, Italian spy chief Pollari raised the matter privately with Tenet, who himself went to Hadley in early February 2002. Goaded by Tenet, Hadley sent word to the officials in Feith's office and to Ledeen to cease all such activities. Hadley then contacted Sembler, assuring him it wouldn't happen again and to report back if it did.

The orders, however, seem to have had little effect, for a second meeting was soon underway; According to a story published this rammer in Corriere della Sera, a leading Italian daily, this second meeting took place in Rome in June 2002. Ghorbanifar tells The Washington Monthly that he arranged that meeting after a flurry of faxes between himself and DoD official Harold Rhode. Though he did not attend it himself, Ghorbanifar says the meeting consisted of an Egyptian, an Iraqi, and a high-level U.S. government official, whose name he declined to reveal. The first two briefed the American official about the general situation in Iraq and the Middle East, and what would happen in Iraq, "and it's happened word for word since," says Ghorbanifar. Spokesmen for the NSC, which declined to comment on this and other meetings, referred The Washington Monthly to the Defense Department, which did not respond to repeated inquiries. Ledeen also refused to comment.

No one at the U.S. embassy in Rome seems to have known about this second Rome meeting. But the back-channel's continuing existence became apparent the following month--July 2002--when Ledeen again contacted Sembler and told him that he'd be back in Rome in September to continue "his work" with the Iranians (This time Ledeen made no mention of any involvement by Pentagon officials; later he told Sembler it would be August rather than September.) An exasperated Sembler again sent word back to Washington, and Hadley again went into motion telling Ledeen, in no uncertain terms, to back off.

Once again, however, Hadley's orders seem to have gone unheeded. Almost a year later in June 2003, there were still further meetings in Paris involving Rhode and Ghorbanifar. Ghorbanifar says the purpose of the meeting was for Rhode to get more information on the situation in Iraq and the Middle East. "In those meetings we met, we gave him the scenario, what would happen in the coming days in Iraq. And everything has happened word for word as we told him," Ghorbanifar repeats. "We met in several different places in Paris," he says. "Rhode met several other people--he didn't only meet me."

Not a "chance encounter"

By the summer of 2003, the Senate Select Committee on Intelligence had begun to get wind of the Ghorbanifar-Ledeen-DOD back-channel and to make inquiries at the CIA. A month later, Newsday broke the original story about the secret Ghorbanifar channel. Faced with the disclosure, Secretary of Defense Rumsfeld acknowledged the December 2001 meeting but dismissed it as routine and unimportant.

"The information has moved around the interagency process to all the departments and agencies," he told reporters in Craw ford, Texas, after a meeting with Bush. "As I understand it, there wasn't anything there that was of substance or of value that needed to be pursued further." Later that day, another senior Defense official acknowledged the second meeting in Paris in June 2003, but insisted that it was the reset of a "chance encounter" between Ghorbanifar and a Pentagon official. The administration has kept to the "chance encounter" story to this day.

Ghorbanifar, however, laughs off that idea. "Run into each other? We had a prior arrangement," the Iranian told The Washington Monthly. "It involved a lot of discussion and a lot of people."

Over the last year, the Senate Intelligence Committee has conducted limited inquiries into the meetings, including interviews with Feith and Ledeen. But under terms of a compromise agreed to by both parties, a full investigation into the matter was put off until after the November election. Republicans on the committee, many of whom sympathize with the "regime-change" agenda at DoD, have been resistant to such investigations, calling them as election-year fishing expedition. Democrats, by contrast, see inch investigations as vital to understanding the central role Feith's office may have played in a range of dubious intelligence enterprises, from pushing claims about a supposed Saddam-al Qaeda partnership and overblown estimates of alleged Iraqi stocks of WMD to what the committee's ranking minority member Sen. Jay Rockefeller (D-W.Va.) calls "the Chalabi factor" (Rhode and others in Feith's office have been major sponsors of the Iraqi exile leader, who is under investigation for passing" U.S. intelligence to Ivan). With the FBI now adding potential espionage charges to the mix, the long-simmering questions about the activities of Feith's operation now seem certain to come under renewed scrutiny.

Joshua Micah Marshall is a Washington Monthly contributing writer and the editor of TalkingPointsMemo.com. Laura Rozen reports on national security issues from Washington DC and for her weblog WarandPiece.com. She can be reached at [e-mail]. Paul Glastris is editor in chief of The Washington Monthly.