Mr. BELNICK: What did it really mean to say that a channel that you had insisted and thought would be used now only for intelligence was going to be a channel that would be used for both intelligence and policy?

Secretary SHULTZ: I meant that the battle to get intelligence separated from policy and control over the policy was very much in play and the Director of Central Intelligence wanted to keep himself very heavily involved in this policy which he had been involved in apparently all along. That's what it meant. To me that's what it meant.

Mr. BELNICK: Mr. Secretary, did it indicate to you that State had not-that your belief that State had now been- given control over the policy towards-Iran might not, in fact, be the case, and that, in fact, nothing had changed?

Secretary SHULTZ: Well, a lot had changed by this time. It wasn't that nothing had changed, but as you well know, or maybe you don't-you are not a Washingtonian-nothing ever gets settled in this town. You have to keep fighting, every inch of the way.

Mr. BELNICK: But at least on that point, it occurred to you that what might not have changed was that State was still not firmly in the driver's seat when it came to Iran policy?

Secretary SHULTZ: Well, I felt that we were in the driver's seat all right. On the other hand, obviously Director Casey had managed to go, after having agreed to something, and not calling-he didn't call John Whitehead back and say John, you know we agreed on that, but I think we ought to change it. He went to basically to the President and got it changed, and used a rather, I think, deceptive way of letting us find out that it had been changed.

Mr. BELNICK: It occurred to you in connection with that and with the revelation about the nine-point accord that the deception that you feared had been in progress before was continuing even after November 25?

Secretary SHULTZ: Well, I was worried about it. Of course, I got back after this message went out, and I was sitting in Washington when the meeting that Mr. Cave and Mr. Dunbar had with the Iranian took place. I was in Washington then. And still, you know, trying to struggle, keep track of all this.

Mr. BELNICK: But nobody had told you as they informed you that State could now take over the policy, and ground rules would be developed, that there was still a proposal on the table to sell arms to Iran and on top of that, to release terrorist prisoners, to prepare for possible intervention in a war, to undertake opposition to the Government of Iraq, nobody had informed the Secretary of State of that? Correct?

Secretary SHULTZ: Nobody had informed me of this so-called 9- point agenda. But as far as I was concerned, our policy was clear. No more arms sales under these circumstances.

Mr. BELNICK: As you testified earlier, and will be gone into later, you reported your discovery to the President On December 14, and based on his reaction, you felt that now at last you had gotten through?

Secretary SHULTZ: The President was stunned, and he was furious, as I have said before, and this just had a big impact on him. He had no idea of this at all, I am sure.

Mr. BELNICK: At that point, Mr. Secretary, the argument which had begun in 1985 was finally over?

Secretary SHULTZ: I hope so.

Mr. BELNICK: So do 1.