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“Walking Close to the Edge of the Law” — Honduras and the Contras

In the early 1980s, Contra militant groups in Honduras engaged in guerrilla warfare in an attempt to overthrow the Sandinista National Liberation Front (FSLN) in Nicaragua. The United States saw the FSLN as a threat to America’s interests in the region, and in turn supported the Contras with financial aid and military training. However in 1982, Congress asserted that this direct military aid was illegal and passed the Boland Amendment to cut off any further U.S. military support to the Contras. When funding ran out in July 1984, members of the Reagan administration continued to secretly supply and train the Contras, with funds generated from illegal arm sales to Iran, in an operation nicknamed “the Enterprise.” It would eventually be called the Iran-Contra scandal.

John Arthur Ferch served as the Ambassador to Honduras from 1985 to 1986, shortly before the Iran-Contra affair became publicly known. Although he was not directly involved in the scandal, Ferch was dismissed from his post and eventually retired from the Foreign Service because of the perception among Elliot Abrams and others that he was not cooperating with members of the Administration’s secret agenda. Ferch was interviewed by William E. Knight in September 1991.

Go here to read about the Iran-Contra scandal. You can also read about how Ambassador Hume Horan did as the State Department instructed him but how he still ended up forced into retirement.


Oliver North: “I am walking very close to the edge of the law”

FERCH: I went to Honduras in August, 1985. Coincidentally, [Lt. Colonel, National Security Council] Oliver North, [Assistant Secretary of State for Inter-American Affairs] Elliott Abrams, and other people were just beginning the illegal program of supporting the Contras. We were at that time operating under the Boland Amendment, which has been amply discussed everywhere, which at that time (it had several incarnations) allowed us only to accept intelligence from the Contras. We could relate to the Contras and hear what they had to say about troop movements, etc., but we didn’t plan their war, we didn’t supply them….

Just before I went down Congress approved a package of $27 million for so-called humanitarian assistance, non-lethal assistance. The Contras could use that to buy beans, shoes, and things like that. The modalities of that had not been worked out.

I was not told, “John this is what you can and should do with the Contras, and this is what you can’t do….” Elliott Abrams [would have told me that].

But remember he at this time was also participating with North and working up something that became known as the “Enterprise”, or whatever they called it. He did not tell me, nor did anyone else.

I was partly to blame here. If I had not been so naive as I had been all through my career in areas that were less important, I would have demanded in writing up front before I went down there what is my responsibility.

As it was I went down there thinking that my responsibility was to keep my hands off the Contras in every way, shape and form and that the [CIA’s] Station Chief would perform the function of taking their information. I could meet them but I understood I had no reason to meet them. I understood that I had no operational role towards the Contras….

I was told before going down to go and call on Ollie North, which I did. I didn’t know who North was. I went over there and Fawn Hall [secretary to Lt. Colonel Oliver North] was there, Ollie was late. We talked and then Ollie came and went into his office. You could not fail to observe Fawn Hall. So I said something and Ollie said, “Yes, and she can type too.” It turned out she could also shred. (Photo by Ron Galella/WireImage)

Anyway we had a chat. I didn’t know why I was calling on this guy. It was all very vague why I was supposed to meet him. We didn’t talk about much of anything. He said something to the effect that he was the man responsible for the Contras in the U.S. government.

I will never forget because in the context of that part of the conversation he said, “And I am walking very close to the edge of the law.” Now I thought it was unusual for him to tell a stranger something like that….

“I didn’t understand how important this “covert” Contra program was. I didn’t realize it was the center of our policy in Central America.”

So I go down there to Honduras. I had that conversation with Abrams saying I was going to build up an image, change the Pro Consul image of the mission, and I set about consciously to do that. We visited Peace Corps projects, AID [U.S. Agency for International Development] projects, got involved in things like that and made sure that our PAO [Public Affairs Office] was getting it into the papers….

I didn’t realize, you see, how important the “open” Contra program was and certainly didn’t understand anything of how important this “covert” Contra program was. I didn’t realize it was the center of our policy in Central America.…

We were doing a lot of things that were supportive of the Salvadoran armed forces from the base in Honduras…. This is my fault that I didn’t sense that here was something so sensitive and so important. But bear in mind that I was totally unaware until well after the fact that there was a secret part to this program. Dealing with the open part where you have a liaison function, it didn’t seem that complicated to me.

Then the humanitarian assistance had just been approved.…When the modalities were worked out it was that the Contras bought the goods in the States and on their own were to get the stuff down to Honduras.

So we, the mission, had no involvement with the Contras taking the goods that they bought using our money down to Honduras. So I was not concerned about that either, even when it got started, until they screwed it up, which is another part of the story.

I go down there and create this image of openness. And within days I am invited by the President of Honduras, a man by the name of Roberto Suazo Cordova, a medical doctor, to a private dinner.…

It became very clear about a third of the way into the evening that what he wanted to feel me out on was his intention to stay in office. There were elections scheduled and eventually held in November.

Here he was feeling me out and I am replying early in the evening, that we think the political situation is pretty good, that the coming elections are pretty important to maintain that stability, that the transfer of power from one president to another will only strengthen your government and will strengthen our policy.

He keeps going on, thinking, I suppose, “Doesn’t this gringo hear what I am saying?”, and getting blunter and blunter.

By the end of the evening I said, “Mr. President, let me be as clear as I possibly can. We support the electoral process. We are very desirous that these elections come off and I will do everything in my power to insure that these elections come off.” He mumbled a lot and that was the end of the evening. That was also the end of my productive relationship with the President of Honduras….

“Around this time I am beginning to get rumors that Ferch is screwing up down there”

The next event is the Contras come into Honduras with their first load of beans, or whatever it is, and in their own fumbling style they invited the U.S. press on their plane. They land in Tegucigalpa, pull up to the military side of the airport. The press jumps out and starts filming the Contras on unloading their beans in Tegucigalpa.

A Honduran officer in charge looks at this and says, “Gee, what is going on here?” The Hondurans always maintained that the Contras weren’t even there. So he rushes out and stops the whole procedure and takes control of the goods.

Now, the Hondurans are sitting on the goods, the Contras want them and the United States Government is very agitated. But it is still legal. I am told to go in and persuade Suazo Cordova to give the beans to the Contras.

Now, just remember how Suazo thinks about John Ferch, who was just instrumental in thwarting his extralegal presidential ambitions. He thinks he finally has something on me. He has got some leverage that maybe he can use. So he mumbles when I call on him and doesn’t act. He says that all the military are pressuring him.

I said, “Look, I can guarantee that the Contras won’t do this again. They will be more discreet in the future. We have talked to the Contras in Washington and I am told that they will manage this better.”

Nothing happens. Washington is getting more and more agitated. President Suazo Cordova is getting more and more conniving. He thinks he has something here.

Then, coincidentally at the same time, we do not disburse the bulk of our foreign assistance because the Hondurans didn’t meet the conditions precedent — the details are important. He needed the money and we weren’t releasing that. So now he needed two things from us. He wanted the money released without complying with the conditions — they were all economic conditions, nothing to do with the Contras — and of course he wanted to stay in office.

He had the lever he thought would do it, which was Contra aid. Washington sent me back, I don’t know how many times, to try to persuade him. Now here is the guy who cut off his aid, in his mind because I was the Ambassador on the spot when the aid was cut off and I am the guy who did stand up and express those views about the electoral process.

He is not budging an inch. So Ollie North flies down to try to persuade him. He doesn’t budge him.

Around this time I am beginning to get rumors that Ferch is screwing up down there. He can’t keep his country in line. He can’t get anything moving. [NSC Advisor John] Poindexter comes down with a cast of thousands. He can’t sway him. Suazo is still sitting there. He has this one trump and the election is coming closer and closer. At the very end of the process he did something else again to try to stop the election.

Anyway the elections are held and Suazo knows his days as President are now numbered. Washington still doesn’t have the beans going to the Contras. And we can’t do anything with Suazo. Washington finally realizes that they are going to have to just wait this thing out.

Nevertheless, Washington in the form of Elliott Abrams, I guess, and a lot of other people are teed off at me now because this had happened on my watch and I somehow hadn’t been able to break the log jam notwithstanding that Poindexter and company couldn’t do it either….

The election is in late November.… [Jose] Azcona won, who was the next President, with less votes — his faction of the Liberal Party received less votes than the leading faction of the Conservative Party. So his election was legal but perceptively blemished….

“There is a perception in this town that you don’t support us”

I was building the ground for a good relationship with Azcona (pictured), and achieved it. But Washington was more concerned with another fact — two facts — that legal Contra aid was not flowing and that the illegal program was underway and they would have to get me on board….

I was informed by Walker to come to Washington in December, without an explanation other than that Elliott wanted to talk to me. I was feeling pretty proud of myself by this time, feeling pretty good. We had kept the electoral process going, we were off to a good start with Azcona, I felt my public relations program was paying dividends….

So I didn’t know what Abrams was up to but I wasn’t concerned about anything. I figured it was working with the new Administration or something. So I fly up to Washington….It was December 9…obviously these things are very clear in my memory because, as you will see, they were very traumatic.

I had an appointment with Elliott late in the evening. It was dark outside at that time of year. I walk in on Elliott in his office. He is alone. Walker is not there. I said, “Well, what do you want to talk about, Elliott?”

And right off without any preamble he said, “There is a perception in this town that you don’t support us.” (All this is written down. I wrote it up subsequently for the Foreign Service Journal.)

I was taken aback. I said, “What do you mean there is a perception that I don’t support you? Who?” He said, “There is just a perception.” I couldn’t pin him down. We went around and around on why or who. I was getting more and more emotionally agitated. I remember the thought crossed my mind that I was being McCarthyized here. I said, “Well, Elliott, do you share that perception?” He said, “If you say you support us, I will believe you.”

I said, “I am a career officer. I support the Administration. I have supported all administrations.”…I went back to Tegucigalpa and wondered what I was going to do. I had been put on the spot.

Elliott Abrams “was building a case” against me

They wanted me to take control of the Contras and do something with them. Who do I get advice from? I can’t get advice from my boss, Elliott Abrams, who is the guy that put me on the spot….

Finally it came to me that if they could say this in writing, it was probably okay. I realize that is a very bureaucratic approach to this problem, but it seemed to me if I could get my instruction in writing I could be confident that it was legitimate.…

So I send him this telegram in which I said, “I am the American Ambassador and am therefore responsible for all government programs in Honduras and therefore will be responsible for this program. But I will be much more comfortable if you will provide me with my instructions in writing and I will respond in kind.”

Knowing what we learned afterward [about Iran-Contra] and what happened in the development of this program, you can imagine what Elliott Abrams thought when he got that telegram. He is going to put this in writing? I never get an answer.

But I do start hearing all sorts of reports that people are dissatisfied with me. A reporter tells me this. The inauguration of Azcona comes off and I consider it to be a great success. The Vice President comes down. I get word back that the Vice President is totally irritated by the visit — it is no good. I have my DCM [Deputy Chief of Mission] check with the advance man who planned everything and he said it was a great visit. He didn’t know what they were talking about. They were building a case.

After Azcona was inaugurated, … the aid starts flowing, the legitimate aid. Washington didn’t acknowledge that at all. In fact Elliott was mad that I had dispersed the economic aid to Azcona. I had an AID [Agency for International Development] telegram authorizing me to disperse the aid. Once again he was building a case. He said I should have checked with him. I did not take my orders from AID. I had received enough of these complaints that I was beginning to be concerned.

So I sent him a letter saying, “Look, I am hearing all of these things. I think I am being discredited. I do not know what is going on here. I want to come up and talk to you. I am going to be in Washington in mid-March and want to talk to you and find out what is going on here. I can’t function if I am being undermined like this.” I tried to come to grips with him.

When I get up there he has Walker in the room with him. He won’t talk about it. I said finally, “I want to talk about that letter.” He said, “You talk to Bill.” And he walked out. He refused to talk to me about the issues that I had raised concerning reports that he was dissatisfied with me. And Walker professed not to know anything about most of those issues. So there was nothing.

That week, coincidentally, was when the first vote was held on the $100 million on so-called lethal assistance for the Contras and it was rejected by Congress, which was a surprise. Elliott gets it into his head that Hondurans are very upset that the vote was rejected. I hear Thursday, the vote was on Wednesday, that he is going to fly down to Honduras on Friday to reassure them.

“I called on Azcona and said, “I think you have to ask for this money”

Although I was getting the flu at that time, I said that I would go down with him, but he said that I should go down on my own, he would handle this. Now this was kind of strange.

I fly back commercially, sick as a dog; he flew down on a government flight without me and met the Hondurans — only my DCM was there.

According to my DCM, Abrams said to Azcona that he knew the Hondurans were very nervous because we didn’t get the money for the Contras. [To my knowledge the Hondurans had never expressed their view about the vote that failed to get the money, one way or the other.] Therefore we are going to give you your economic assistance up front. That will help you out and we will give you some more military assistance…. But [Abrams] had forgotten that the economic aid had already been given. That was the ironic part of it….

Coincidentally, that next Sunday morning there is fighting on the border. The Sandinistas actually pursued some Contras back into Honduras and the Hondurans were very concerned. They didn’t know what was going to happen. Whether this was going to evolve into a bigger fighting….

The Hondurans are very antsy about the fighting. This incursion is coincidental, you see, with the vote and Elliott’s trip. The incursion offers us an opportunity in that it publicizes the Sandinistas’ threat. It makes it possible, in Washington’s mind, for the Hondurans to ask for the military assistance.

So the Embassy gets instructions to tell the Hondurans to formally ask for the assistance that Elliott had promised on Friday. Azcona said, “No.” I was in bed with the flu and not at the meeting. My DCM did the demarche. Azcona had said no because he thought it would be an admission, in some convoluted way, that somehow the Contras were there.

Washington — and when I say Washington it is basically Abrams now — gets very antsy. Here he is out on a limb offering money and they won’t ask for it. I think probably that he found out that he needed them to ask for it legally. But anyway, he really wanted them to ask for the money he had promised for military assistance.

It gets into the press and Washington is depicted as agitated and the Hondurans appear calm. It even got out in the press erroneously that the Honduran Government went on vacation, as everyone does in Latin America on Holy Week. Monday and Tuesday went by and more agitation. I realized that I had to get off my sick bed and call in some more chips. This was just getting too much.

So Tuesday morning I called on the President and said, “Mr. President, let me speak as a friend. I think you are in over your head here. I don’t think you have any choice. I think you have to ask for this money. It is my judgment of the political dynamics of the situation…as a friend of yours and a professional here, I think you have to request it, you don’t have an option.”

He took my advice and said, “Okay.” He took out some paper and wrote a letter. I got it off in a cable and that was the end of that.

“I knew at that point my career was over”

Abrams subsequently blamed me that somehow the Embassy was not able to function well. He argued that we should function in a way that made the Hondurans snap to immediately.

He acknowledged that I was home in bed, but said if I had been running a good Embassy, the Embassy would have been able to persuade Azcona immediately, rather than go through that embarrassing delay of several days. He ignored totally the fact that he had offered the money and the Hondurans were totally bemused by this….

At the end of June, there is another vote in our Congress and the $100 million of legal assistance passes, so now the Contras are going to get guns as well as beans.

Two days after the vote, Elliott calls me up on the secure phone and says, “The Secretary wants you out of there. He is removing you.”

I said, “Why?”

He said, “You know, there is bad morale in the Embassy and it is going to be very tense now that the war is going to heat up and we need someone to calm down the Embassy.”

I said, “What do you mean ‘bad morale’?”

He said, “We have talked about that.” That is not true.

He mentioned the last time I had seen him that there was a report that some of the junior officers were unhappy about something. I had actually followed up on it and my DCM looked into it and wrote Elliott about the situation. He, Elliott, dismissed that. It was the only explanation he would give me.

He said, “When are you going to pack your bags?”

I said, “Look, Elliott, I am going to stay through the 4th of July” — I knew at that point my career was over. ”

I am going to tell Azcona myself, I don’t want you to do it.” (He said, “Okay,” but he called up Azcona himself before I was able to get to him. I subsequently heard that Azcona said to somebody that Elliott’s call was the cruelest thing he had ever heard of.)

“I am going out with my head held high. I am going to take all my leave and will come back and pack up in September.” Well, he couldn’t argue with that. They didn’t have a replacement for me….

So that is what I did. I wrote Secretary [George] Shultz that it was his right to remove me but I felt I deserved an explanation. By this time the press was filled with the story of my removal. This was a real hot spot at the time.

And people in Washington, like Bill Walker, in their own very gentle way said that I was screwing up down there. Really I was slandered. In the normal course of events, if this was not government service I could have sued for slander. The Secretary wrote apologizing that he had nothing to do with it. I should go on my leave, calm down and not give up on the Foreign Service to which I had given too many years of good service….

Elliott had built a case and presented all these things that I have just related in a twisted form to the Secretary. Such things like…he didn’t hold his country in line over the first shipment (beans); he screwed up the Vice President’s visit during the inauguration; he didn’t break the log jam quickly enough when the Sandinistas were coming across to get the Contras; and a few other things. He built this case on the flimsiest of evidence….

“They won’t give you anything”

[I went] to Brown as Diplomat in Residence….This was in late September, 1986.…A week after we arrived at Brown, [Richard] Secord’s Contra plane was shot down by the Sandinistas, but one man survived. He talked about the Enterprise, and the scandal began to unfold….

[Before that I had not known about the illegal shipments], nothing at all. Almost immediately upon my reaching Brown the scandal begins to unfold. I was now able to piece together the scandal and what had happened to me.…

Towards the end of the academic year…I thought I was being vindicated. I had done the right thing. Whatever Administration comes on board will probably view it that way and will want people like myself whose hands were evidently clean. So I decided to stay in the Service until the elections.

But my emotions were too raw to wait out the period in State. So I told Mike [Armacost, Under Secretary for Political Affairs], “I’m just too mad at this building to want to work here. So I will get myself a job and you pay for it.” I called up some friends on the Hill and said I wanted to work up there. So George crafted a program for me and got me lined up with [Senator] Bill Bradley.

After the election and the Bush victory, I approached Larry Eagleburger (pictured), the new Deputy Secretary, and asked him to find out if I was persona grata with the new White House.

One of his aides called me back and said, “No, they won’t give you anything.”

So I decided to retire and sent my letter in. There was no future for me, a man has to have a little pride. I was not going to stick around just to have a job. Fortunately I had enough years in so I could retire….

The best offer came from the Agency and that is how I ended up here at the National Intelligence Council. To my surprise my reputation with the Agency was very, very high. Over the years I had developed quite a reputation out here and they offered me this job.

Some people might find a little bit of irony in that, but so be it.