tion about the fact that there was-have you had a chance to refresh your memory on that subject? Here was a report on the desk of the Director of the CIA which pointed out very clearly that Iran was using terrorism at the time of that report as a weapon, and yet that information was suppressed and not made available to you or anybody else in government as far as I know. Secretary SHULTZ. Well, I have a note that there was a statement made by a knowledgeable person in the State Department to the effect that there was an intelligence report having to do with Iranian terrorism which was being sat on. That is just a report that drifted in. There was issued in the end a report, a rather controversial one as I have stated here, on that subject. But the fact that there would be such, that kind of a fight about an intelligence Finding suggests an unwarranted connection of the Findings with policy, and that just gets us back to the subject that you were Mr. RUDMAN. Mr. Secretary, I don't blame you for being concerned and wary of the information that was being fed to you. I don't know how you could operate under those conditions. Thank you very much. Chairman HAMILTON. Mr. Secretary, so far as I know, we are at the end of questions now. Do you have a closing statement you would care to make? Secretary SHULTZ. I would appreciate a chance to make just a few comments, Mr. Chairman. Chairman HAMILTON. Please proceed. Secretary SHULTZ. First of all, I sense an instinct here in the committee that you need to go through all of the details and ins and outs of what has been brought before you, but what you really want to do is raise yourselves up out of these details and reflect on the meaning and what is to be done to make our wonderful system of government as good as it can possibly be. And I welcome that instinct. And I have offered you some thoughts about which we have discussed, about the separation of intelligence from policy, about the nature of the Cabinet and accountable government, as I see it, and the implications of that for staff operations of various kinds, including yours perhaps, and about the need, as you see it, to reflect together on what separation of powers means, about our separate functions that we have to discharge ourselves and about the implication of that obviously for the sharing of power and the obvious difficulty of sharing power, but the importance of sharing power in an effective way. I want to say to you and through you to the Members of the Congress that as you engage in this kind of reflection, or as we work together on this delicate and central problem, that I want very much to help and be a part of that constructive effort. And I pledge that to you. But this has to do with part of what you have been discussing. Another part of what you have been discussing has to do with our foreign policy and America's place in the world, and I would just like to offer a few thoughts about the future, looking ahead. Because it is my view that for the past few years, and right now things are going very much our way, that the basic idea of freedom is the revolutionary idea, whether you are talking about political organization or whether you are talking about economic organization, it is on a roll. I see the potential of big changes coming about in the future, a potential. Who knows? But I don't think it is out of the question that a different kind of relationship with the Soviet Union can be built if we go about it right, and obviously we have to go about it with our guard up, but we need to go about it. It seems to me clear, as you look to the future, as the world GNP grows, as it is dispersed around the world, we will see more and more countries that have genuine capability because they will have a size that will make our world different than it has ever been before. The notion of a bi-power world has long since gone, and we will have a diverse world where capability is widely dispersed. I think that is clear. It is also clear that just as capacity will be distributed, capability is distributed. There are smart people everywhere. And there are people all over this world that are working very hard, along with their smarts, so that this spread of capability and capacity is going to change the structure of the world economy and the strategic situation, and we have to try to understand it. There is a, I think, gigantic amount of change in technology to go with this. We can see processes replacing materials. The old notion that everything depended upon raw materials is beginning to fade. I think a clear and obvious example that everybody can see is the way in which fiber optics are substituting for copper, but that is just an example. So, we see this structure changing. I think we can see that advances in biotechnology are changing the ability to feed ourselves, and particularly when you combine that with obvious points of how economic activity can be organized to promote production of food. Malthus is being stood on his head. The capacity to produce food is not the limit on the population of the world. The capacity to produce food is very great. Our difficulty when we see pockets of hunger is in the distribution, and sometimes in natural disasters, but this can be faced up to. So, that is a change. Information technology in its generic sense is having a profound effect on everything. Financial markets are now worldwide, there is no other way to think about them. The production and trading of goods is worldwide. When people talk about a world car, that is exactly what it is, it has things from everywhere in it. I see all the lawyers here, I dare say that the way you practice law is to a certain extent profoundly affected by information technology, the way you do research about medicine and health is profoundly affected, the way you conduct diplomacy, the whole thing is different. And this change is a change that favors societies that are open. Because it is open societies that are accustomed to the free flow of information, and closed and compartmentalized societies have difficulty with it. So, it flows in our favor. It is a cliche to say it is a small world, but it is a small world. We are a big part of it. There is no way that we can once again, as we did after World War I, sort of remove ourselves from the world, it is impossible. The only question is: How effectively are we going to engage and how well our interests are served in our foreign policy will depend upon the nature of that engagement. And one of my fears right now is that somehow, as we look at all of the difficulties, and some of the things that you have brought out, that there will be a tendency for people to throw up their hands and say, stop the world, I want to get off. We can't get off. We have to be engaged. It is extremely important to do so. And when we do so, that future can be a wonderful future for America. So, we need to do everything we can to get our house in order and keep it in order, to recognize how fruitful and beneficial to the interests of the United States have been development in foreign policy around the world, and to try to sense what is out there in the future and understand it and debate it and talk about it, so that we can adapt our policies in a way to engage those great opportunities to the best possible advantage. And I believe if your hearings can produce those deeper reflections on how we proceed with respect to the kind of content that we must address, it will have been a very useful set of exercises, even though painful in many ways, difficult in many ways and certainly arduous for all of you. Mr. Chairman, I appreciate very much the courtesy with which you and your colleagues have treated me, and I appreciate the opportunity to appear before you. Thank you, Mr. Chairman. Chairman HAMILTON. Senator Inouye? Chairman INOUYE. Mr. Secretary, in behalf of the members of the Senate Select Committee, I wish to thank you for your most profound and meaningful testimony. In a few days, we will begin the process of drafting our final report, and I can assure you throughout this process, your wise words will be etched in our minds. Mr. Chairman, when the gavel is struck in a few moments to call this hearing in recess, it may very well be the last time you will be presiding over the hearing of the joint panel. Because next week we will be going to the Senate Caucus Room. And so, on this historic occasion, I wish to thank you for your leadership in this most difficult investigation. You have displayed throughout all the hearings an extraordinary patience. You have shown meticulous fairness, and each day and every moment, you have been a gentleman of good grace and much wisdom. For all of that, we thank you very much. Chairman HAMILTON. Thank you very much, Senator Inouye. I might give you a word of encouragement, and that is it is a lot easier in this chair when you don't have to contend with a defense lawyer out there. I do not view the fact that I will no longer be presiding as an altogether unhappy circumstance, I might say. Mr. Secretary, you have spent 2 full days with us. And I know that is a large hunk of time for a Secretary of State. And we deeply appreciate it. And I will not try to sum up. I simply want to say that I think the importance of your testimony for us is that you have really changed the focus of the committee's work. Up until your appearance, we really have been focusing on the question of what went wrong, and in a sense, that is the easy part of our work, though it hasn't been easy. And I think from now on, as you have said several times in the course of your testimony, we have to begin to focus on what needs to be done, what kinds of constructive suggestions we can come up with to make this system of ours work better, and I noted with particular appreciation your offer just a moment ago to work, to continue to work with this committee as we develop the recommendations for our report, and I want to assure you that we will call on you as we work through that report for additional advice from you. I suspect these 2 days have not been easy for you, even though you have had a vast amount of experience testifying before Congressional committees. And all of us appreciate that. So, we wish you a very pleasant weekend, and we wish you the continued opportunity to serve this country with distinction, as you have done, and with that, the joint hearings are recessed until Tuesday, July 28th at 9:00 a.m. in the Senate Caucus Room, when we will hear from the Attorney General. Senator Inouye will be presiding, and I ask unanimous consent that GPS-66 be made a part of the record. Without objection, so ordered. Chairman HAMILTON. And we stand in recess. [Whereupon, at 5:25 p.m., the Select Committees recessed, to reconvene at 9:00 a.m., Tuesday, July 28, 1987.] JOINT HEARINGS ON THE IRAN-CONTRA INVESTIGATION Testimony of Edwin Meese, III TUESDAY, JULY 28, 1987 SENATE SELECT COMMITTEE ON SECRET MILITARY AND HOUSE SELECT COMMITTEE TO INVESTIGAT COVERT ARMS TRANSACTIONS WITH IRAN, Washington, DC. The Select Committees met, pursuant to call, at 9:00 a.m., in room 325, Russell Senate Office Building, Hon. Daniel K. Inouye (chairman of the Senate Select Committee) and Hon. Lee H. Hamilton (chairman of the House Select Committee) presiding. Chairman INOUYE. The Select Committees will please come to order. Mr. Attorney General, welcome, sir. Attorney General MEESE. Thank you. Chairman INOUYE. Will you please rise and take the oath. TESTIMONY OF HON. EDWIN MEESE, III, ATTORNEY Chairman INOUYE. Mr. Nields. Mr. NIELDS. Good morning, Mr. Attorney General. Chairman INOUYE. Mr. Attorney General, do you have an opening statement? Attorney General MEESE. Thank you, Mr. Chairman, I do. And I believe copies have been distributed. With the permission of the chair, I would like to have the entire statement submitted as part of the record, but with your permission I will only read parts of it, in the interest of time. Chairman INOUYE. Without objection, so ordered. Attorney General MEESE. Chairman Inouye, Chairman Hamilton, members, and counsel of these committees: I welcome this opportunity to come before these committees and assist in your review of this administration's Iranian policy initiatives, as well as other activities that were aimed at providing funding for the freedom fighters in Nicaragua. A number of witnesses have preceded me and provided an accounting of the policy deci |