Finally, a classified report from the Russian government regarding what its intelligence files showed about the October Surprise issue stated matter-of-factly that Republicans held a series of meetings with Iranians in Europe, including one in Paris in October 1980. "William Casey, in 1980, met three times with representatives of the Iranian leadership," the Russian 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."
(The Russian report had been requested by Rep. Lee Hamilton, D-Indiana, as part of the 1992 task force investigation of the October Surprise case. It arrived on Jan. 11, 1993, just two days before the task force was to release its own report rejecting the October Surprise suspicions.
(According to Hamilton and task force chief counsel Lawrence Barcella, the startling Russian report may never have been shown to Hamilton, until I sent him a copy in spring 2010. In interviews, Hamilton told me, "I don't recall seeing it," and Barcella said in an e-mail that he didn't "recall whether I showed [Hamilton] the Russian report or not."[See Consortiumnews.com's "Key October Surprise Evidence Hidden."])
Whatever the reasons, Carter failed to get the hostages out. The coincidence that the anniversary of the hostage-taking fell on Election Day 1980 further damaged Carter's hopes as Americans were forced to relive the humiliations of the previous year.
Reagan romped to victory in a landslide, winning 44 states and bringing with him a Republican Senate. Among the Democratic casualties were key figures in efforts to rein in the powers of the imperial presidency -- and of the CIA -- including Frank Church of Idaho, Birch Bayh of Indiana and George McGovern of South Dakota.
In retrospect, some of Carter's negotiators felt they should have been much more attentive to the possibility of Republican sabotage. "Looking back, the Carter administration appears to have been far too trusting and particularly blind to the intrigue swirling around it," said former NSC official Gary Sick.
As the Inauguration neared, Republicans talked tough, making clear that Ronald Reagan wouldn't stand for the humiliation that the nation endured under Jimmy Carter. The Reagan-Bush team intimated that Reagan would deal harshly with Iran if it didn't surrender the hostages.
A joke making the rounds of Washington went: "What's three feet deep and glows in the dark? Tehran ten minutes after Ronald Reagan becomes President."
On Inauguration Day, Jan. 20, 1981, just as Reagan was beginning his inaugural address, word came from Iran that the hostages were freed. The American people were overjoyed.
Privately, some Reagan insiders laughed about their October Surprise success. For instance, Charles Cogan, a high-ranking CIA officer, told the House task force in 1992 that he attended a 1981 meeting at CIA headquarters between Casey and one of David Rockefeller's top aides, Joseph V. Reed, who had just been appointed to be Ambassador to Morocco.
Cogan testified that Reed joked about having blocked Carter's hostage release. A task force investigator, who spoke with Cogan in a less formal setting, told me that Reed's wording was, "We fucked Carter's October Surprise."
In the months and the years that followed, many of the key figures in the October Surprise mystery saw their career paths veer steeply upward. Casey was appointed to head the CIA; Gregg became Vice President Bush's national security adviser; Robert McFarlane later became Reagan's NSC adviser; though relatively young, Robert Gates vaulted up the CIA's career ladder, becoming head of the analytical division and then deputy director. (He later served as Secretary of Defense for George W. Bush and Barack Obama.)
As for Israel and Iran, the arms network flowed with weapons to Iran and millions of dollars in profits back to Israel, with some of the money going to build new settlements in the West Bank. In summer 1981, this hidden Israeli-Iranian arms pipeline slipped briefly into public view.
On July 18, 1981, an Israeli-chartered plane was shot down after straying over the Soviet Union. In a PBS interview nearly a decade later, Nicholas Veliotes, Reagan's assistant secretary of state for the Middle East, said he looked into the incident by talking to top administration officials.