Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 23, 1992 TAG: 9202230111
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: DOUGLAS FRANTZ and MURRAY WAAS
DATELINE: WASHINGTON LENGTH: Long
BUSH GAVE SECRET AID TO SADDAM
In the fall of 1989 - at a time when Iraq's invasion of Kuwait was only nine months away and Saddam Hussein was desperate for money to buy arms - President Bush signed a top-secret national security directive ordering closer ties with Baghdad and opening the way for $1 billion in new aid, according to classified documents and interviews.The $1 billion commitment, in the form of loan guarantees for the purchase of U.S. farm commodities, enabled Saddam to buy needed food on credit and to spend his scarce reserves of hard currency on the massive arms buildup that brought war to the Persian Gulf.
Getting new aid from Washington was critical for Iraq in the waning months of 1989 and the early months of 1990 because international bankers had cut off virtually all loans to Baghdad. They were alarmed that the country was falling behind in repaying its debts but continuing to pour millions of dollars into arms purchases, even though the Iran-Iraq War had ended in the summer of 1988.
In addition to clearing the way for new financial aid, senior Bush aides as late as the spring of 1990 overrode concern among other government officials and insisted that Saddam continue to be allowed to buy so-called "dual use" technology - advanced equipment that could be used for both civilian and military purposes. The Iraqis were given continued access to such equipment, despite emerging evidence that they were working on nuclear arms and other weapons of mass destruction.
"Iraq is not to be singled out," National Security Council official Richard Haas declared at a high-level meeting in April 1990, according to participants' notes, when the Department of Commerce proposed curbing Iraqi purchases of militarily sensitive technology.
Evoking Bush's personal authority, Robert Kimmitt, undersecretary of state for political affairs, added: "The president doesn't want to single out Iraq."
And the pressure in 1989 and 1990 to give Saddam crucial financial assistance and maintain his access to sophisticated U.S. technology were not isolated incidents.
Classified documents obtained by the Los Angeles Times show that they reflected a long-secret pattern of personal efforts by Bush - both as president and as vice president - to support and placate the Iraqi dictator. Repeatedly, when serious objections to helping Saddam arose within the government, Bush and aides following his directives intervened to suppress the resistance.
In the case of the $1 billion in commodity loan guarantees, for instance, senior Bush aides, armed with the presidential order - National Security Decision No. 26 - insisted that the credits be approved despite objections by officials in three government agencies. These officials warned that aid was being diverted to buy weapons in violation of American law, that the loans would not be repaid and that earlier assistance efforts were plagued by financial irregularities.
Creating a monster
Bush's involvement began in the early 1980s as part of the so-called "tilt" toward Iraq initiated by then-President Reagan to prop up Saddam in his war with Iran. Saddam's survival was seen as vital to U.S. efforts to contain the spread of Islamic fundamentalism and thwart Iran's bid for dominance in the Middle East.
Many in the American government, including Bush and Reagan, also hoped that U.S. aid would gradually cause Saddam to moderate his ways and even play a positive role in the Middle East peace process.
But classified records show that Bush's efforts on Saddam's behalf continued well beyond the end of the Iran-Iraq War and persisted in the face of increasingly widespread warnings from inside the American government that the overall policy had become misdirected.
Moreover, it appears that instead of merely keeping Saddam afloat as a counterweight to Iran, the U.S. aid program helped him become a dangerous military power in his own right, able to threaten the very U.S. interests that the program originally was designed to protect.
Clearly, U.S. aid did not lead Saddam to become a force for peace in the volatile region. In the spring of 1990, as senior Bush administration officials worked to give him more financial aid, the Iraqi leader bragged that Iraq possessed chemical weapons and threatened to "burn half of Israel." Nor did he change his savagely repressive methods. In the summer of 1988, for example, he shocked the world by killing several thousand Kurds with poison gas.
Missed cues
What drove Bush to champion the Iraqi cause so ardently and so long is not clear. But some evidence suggests that it may have been a case of single-minded pursuit of a policy after its original purpose had been overtaken by events - and a failure to understand the true nature of Saddam himself.
"When the Iran-Iraq War ended and Iran was really flat on its back, there should have been some immediate kind of repositioning of U.S. policy so you wouldn't give Saddam this signal that we were backing him as the big shot in the region," said William B. Quandt, a Middle East expert at the Brookings Institution.
"We missed so many cues. Saddam wasn't behaving as you might expect an exhausted, war-weary leader to behave. He was showing that he had just won a war and he was a power to be reckoned with and he concluded that the Americans were not too upset about that," Quandt said.
Much of the blame for failing to perceive Saddam's expansionist ambitions and the dangers of building him up has fallen on mid-level officials and on agencies such as the Department of Commerce, which approved the sale to Iraq of $1.5 billion worth of American technology, and the Department of Agriculture, which authorized a total of $5 billion in loan guarantees.
However, classified documents from several agencies and interviews over the last two months demonstrate that it was foreign-policy initiatives from the White House and State Department that guided relations with Iraq from the early 1980s to the eve of the Persian Gulf war - and that Bush and officials working under him played a prominent role in those initiatives.
For example:
In 1987, Vice President Bush successfully pressed the federal Export-Import Bank to provide hundreds of millions of dollars in aid for Iraq, the documents show, despite staff objections that the loans were not likely to be repaid as required by law.
After Bush became president in 1989, documents show that senior officials in his administration lobbied the bank and the Department of Agriculture to finance billions in new Iraqi projects.
As vice president in 1987, Bush met personally with Nizar Hamdoon, Iraq's ambassador to the United States, to assure him that Iraq could buy more dual-use technology. It was three years later that National Security Council officials blocked the attempt by the Department of Commerce and other agencies to restrict such exports.
After Bush signed NSD 26 in October 1989, Secretary of State James Baker personally intervened with Secretary of Agriculture Clayton Yeutter to drop opposition to the $1 billion in food credits. Yeutter, now a senior White House official, agreed and the first half of the $1 billion was made available to Iraq at the beginning of 1990.
As late as July 1990, one month before Iraqi troops stormed into Kuwait City, officials at the National Security Council and the State Department were pushing to deliver the second installment of the $1 billion in loan guarantees, despite the looming crisis in the region and evidence that Iraq had used the aid illegally to help finance a secret arms procurement network to obtain technology for its nuclear weapons and ballistic-missile program.
A Department of Agriculture official cautioned in a February 1990 internal memo that, when all the facts were known about loan guarantees to Iraq, the program could be viewed as another "HUD or savings-and-loan scandal."
Of the $5 billion in economic aid provided to Iraq over an eight-year period, American taxpayers have now been stuck for $2 billion in defaulted loans.
Arms to Baghdad
Throughout much of the period from 1982 to the end of the Reagan administration, efforts were made to funnel arms as well as economic aid to Baghdad - sometimes through the Pentagon and sometimes through U.S. allies in the Middle East. Some of the specific arms plans failed to work but government sources said that significant quantities of arms did reach Baghdad as a result of U.S. efforts.
In a recent interview, former Secretary of Defense Caspar Weinberger acknowledged being part of a faction in the Reagan administration that favored Iraq over Iran. "Many of us thought it would be better if Iraq won," said Weinberger, now a lawyer in private practice.
Classified State Department cables also describe proposals in 1982 and 1983 by William Eagleton, the senior U.S. diplomat in Baghdad, to funnel arms to Iraq through allies in the Middle East. "We can selectively lift restrictions on third-party transfers of U.S.-license military equipment to Iraq," he said in an October 1983 cable.
Although initially rejected, other documents and interviews with former U.S. officials indicate that the policy was pursued on a covert basis with Egypt, Jordan and Kuwait and that arms were transferred to Iraq.
"There was a conscious effort to encourage third countries to ship U.S. arms or acquiesce in shipments after the fact," said Howard Teicher, who monitored Middle East policy at the National Security Council in the Reagan administration. "It was a policy of nods and winks."
While the American rationale was that Saddam was a buffer against Iran, classified records show that U.S. support for his regime continued unabated after the official cease-fire in the Iran-Iraq War was signed in August 1988 and after Iraq's chemical weapons attack on the Kurdish villages July 19, 1988.
In fact, in August 1988, Deputy Secretary of State John Whitehead recommended in a secret policy memo that "there should be no radical policy changes now regarding Iraq."
The pro-Iraq strategy was embraced by Bush when he became president. His administration continued to encourage the transfer of U.S.-supplied arms to Iraq from Arab allies, according to interviews and classified documents.
Unauthorized loans
As the agriculture guarantees increased, so did concerns. The primary forum for airing these anxieties was a little-known interagency organization called the National Advisory Council.
Advisory Council documents show that beginning in 1985, members representing the Federal Reserve Board, Department of the Treasury and the Export-Import Bank counseled or voted at different times against increases of aid to Iraq. They feared that Iraq was not credit-worthy and would not be able to repay the billions owed.
Their concerns intensified when on Aug. 4, 1989, FBI and Customs Service agents raided the Atlanta branch of an Italian bank, Banca Nazionale del Lavoro, and uncovered $4 billion in unauthorized loans to Iraq, including $900 million guaranteed by the Department of Agriculture program.
Nevertheless, top Bush administration officials, including Baker, discounted the protests in the interagency group and sought another $1 billion in loan guarantees for Iraq in the fall of 1989, to be given in two installments.
By early 1990, Iraq had used the first $500 million and was asking for the second installment. The National Security Council and the Department of State pressed to have the aid released.
"In the worst-case scenario, investigators would find a direct link to financing Iraqi military expenditures, particularly the Condor missile," Paul Dickerson, head of the Department of Agriculture program that aided the Iraqis, wrote in a Feb. 23, 1990, memo to his superior.
Condor was an Iraqi effort to develop an intercontinental missile capable of delivering a nuclear warhead. While Dickerson later told a congressional committee that he was only speculating about the Condor, his warning reflected growing evidence that the Department of Agriculture aid had gone for military uses.
As late as July 9, 1990, April Glaspie, the U.S. ambassador to Iraq, assured Iraqi officials that the Bush administration still was trying to get the second $500 million released, according to a classified cable.
Only on Aug. 2, 1990, did the Department of Agriculture officially suspend the guarantees to Iraq - the same day Saddam's tanks and troops swept into Kuwait.