Iran-Contra was the subject of an informal “lessons learned” discussion two years ago among veterans of the scandal. Abrams led the discussion. One conclusion was that even though the program was eventually exposed, it had been possible to execute it without telling Congress. As to what the experience taught them, in terms of future covert operations, the participants found: “One, you can’t trust our friends. Two, the C.I.A. has got to be totally out of it. Three, you can’t trust the uniformed military, and four, it’s got to be run out of the Vice-President’s office”—a reference to Cheney’s role, the former senior intelligence official said.

I was subsequently told by the two government consultants and the former senior intelligence official that the echoes of Iran-Contra were a factor in Negroponte’s decision to resign from the National Intelligence directorship and accept a sub-Cabinet position of Deputy Secretary of State. (Negroponte declined to comment.) ...

The Pentagon consultant added that one difficulty, in terms of oversight, was accounting for covert funds. “There are many, many pots of black money, scattered in many places and used all over the world on a variety of missions,” he said. The budgetary chaos in Iraq, where billions of dollars are unaccounted for, has made it a vehicle for such transactions, according to the former senior intelligence official and the retired four-star general.

“This goes back to Iran-Contra,” a former National Security Council aide told me. “And much of what they’re doing is to keep the agency [the CIA] out of it.” He said that Congress was not being briefed on the full extent of the U.S.-Saudi operations. And, he said, “The C.I.A. is asking, ‘What’s going on?’ They’re concerned, because they think it’s amateur hour.” (my emphasis)

The key players behind the redirection [of policy] are Vice-President Dick Cheney, the deputy national-security adviser Elliott Abrams, the departing Ambassador to Iraq (and nominee for United Nations Ambassador), Zalmay Khalilzad, and Prince Bandar bin Sultan, the Saudi national-security adviser. While Rice has been deeply involved in shaping the public policy, former and current officials said that the clandestine side has been guided by Cheney. (Cheney’s office and the White House declined to comment for this story; the Pentagon did not respond to specific queries but said, “The United States is not planning to go to war with Iran.”)

The policy shift has brought Saudi Arabia and Israel into a new strategic embrace, largely because both countries see Iran as an existential threat. They have been involved in direct talks, and the Saudis, who believe that greater stability in Israel and Palestine will give Iran less leverage in the region, have become more involved in Arab-Israeli negotiations.

The new strategy “is a major shift in American policy—it’s a sea change,” a U.S. government consultant with close ties to Israel said. The Sunni states “were petrified of a Shiite resurgence, and there was growing resentment with our gambling on the moderate Shiites in Iraq,” he said. “We cannot reverse the Shiite gain in Iraq, but we can contain it.”

“It seems there has been a debate inside the government over what’s the biggest danger—Iran or Sunni radicals,” Vali Nasr, a senior fellow at the Council on Foreign Relations, who has written widely on Shiites, Iran, and Iraq, told me. “The Saudis and some in the Administration have been arguing that the biggest threat is Iran and the Sunni radicals are the lesser enemies. This is a victory for the Saudi line.” (my emphasis)

The U.S. military also has arrested and interrogated hundreds of Iranians in Iraq. “The word went out last August for the military to snatch as many Iranians in Iraq as they can,” a former senior intelligence official said. “They had five hundred locked up at one time. We’re working these guys and getting information from them. The White House goal is to build a case that the Iranians have been fomenting the insurgency and they’ve been doing it all along—that Iran is, in fact, supporting the killing of Americans.” The Pentagon consultant confirmed that hundreds of Iranians have been captured by American forces in recent months. But he told me that that total includes many Iranian humanitarian and aid workers who “get scooped up and released in a short time,” after they have been interrogated. (my emphasis)

What the Saudis would like to see come out of this meeting, they would like to see the United States not pull its troops out of Iraq because they believe that that will add to the unrest in Iraq, add to the war in Iraq and potentially spill over into Saudi Arabia.

Another of Saudi Arabia's very big concerns, at this time, is what they see as growing Iranian influence in the region. They see that in particular, they say in Iraq, they say they also see it in Lebanon where they say Iran, along with Syria, is helping rearm Hezbollah in Lebanon and undermine the pro-Western government, there. That, of course, something of concern for the United States as well.

What Dick Cheney could hope to get from the Saudis is for the Saudis to bring their influence to bear with the Sunni community in Iraq to help stabilize the situation there to help calm the tensions and passions down. But at this stage where the violence is so high and so strong in Iraq, any immediate agreement here today is very unlikely to see an immediate change on the ground in Iraq.

What I was told by one Saudi advisor was that the Saudis expect to be involved heavily with the United States in the region and in Iraq over the next two years, what exactly that involvement will be is unclear. The Saudi advisor also described this as a broad new initiative that will encompass not just Iran, not just Iraq, not just Syria and Lebanon, but will also deal with the militancy of Hamas. (my emphasis)

...[Hersh] reports that the administration has been working with the Saudis to bankroll Sunni insurgent efforts against Hezbollah inside Lebanon, and against Shiite militias and Iran inside Iraq. Nic Robertson already broke this story months ago for CNN.