Wednesday, December 22, 2004

Ahmed Chalabi, part 1


Blogger Management said...

The Strange Case of Dr. Ahmed Chalabi
May 28, 2004
By Raul Groom

And so, in the midst of a half dozen or so other calamities that made its final whimper almost inaudible, the maniacal neoconservative bid to take over the world crashed into the dust. The event received a moderate amount of play in the nation's print dailies, but it was and still is impossible for our punditocracy to discuss the momentous development in the depth that its importance demands, because the story is simply too complicated for the media, in its modern state of pubescent infatuation with the glib and the obvious, to take on.

This site, thankfully, with its feature-length columns and unusually enlightened readership, resists still the incessant pull towards the Fear Factorization of news and commentary. I shall therefore take up the challenge of explaining the Chalabi situation here.

The problem with most, if not all, of even the most serious attempts to get a read on what will almost certainly go down as the defining moment of the Bush presidency* is that while the details are often meticulously documented, the analysts and commentators fail to consider these many facts in their proper scope. In this case, the proper scope is not only large but huge, not only expansive but cavernous, spanning not just the entire globe but the better part of a century as well. Understanding, as we now do, the task ahead of us, there is nothing left to do but begin.

And begin we shall, not in 1992, when Ahmed Chalabi formed the Iraqi National Congress, or even in 1985, when he first met Richard Perle. No, to properly understand the impact of the fall of Ahmed Chalabi, we must return to the Iraq of 1956, under the rule of the British-backed monarchy.

The Ascendancy of the Ba'ath

It was a time of strife and turmoil in the cradle of civilization. The monarchy that had ruled the country since the end of World War II was crumbling, and with it the foundations of Iraqi society. Fears were growing among Iraq's wealthy elite that a revolution was in the works and that their power and privilege would soon be put asunder by a popular uprising.

Few families were as wealthy, and thus as likely to be the target of popular anger, as the Chalabi clan, a long and distinguished line of bankers with a reputation for mathematical genius. So as the winds of change began to howl through the Fertile Crescent, the Chalabis saw fit to flee the country for the West, in the hopes of one day returning in glory. For most of the family, that day would never come, but one of them, 12 year-old Ahmed, would make it his life's mission to return to Iraq and take his rightful place as philosopher-king of the country.

The flight of the aristocrats proved to be well-timed. In 1958, a military coup toppled the monarchy, and power was seized by an Iraqi nationalist general named Qasim. Qasim, an able and respected military man, proved to be an impetuous and incompetent leader, and under his rule the country fell upon hard times. Within five short years, the general had lost the support of much of the armed forces, and a rival nationalist group called the Ba'ath ousted his regime and had Qasim killed.

Rather than assume power directly, the Ba'ath installed Qasim's main rival, a Pan-Arabist by the name of Arif. The idea was for Arif to be head of state and pursue his goals of Arab unity while the Ba'ath implemented their socialist domestic program. But Arif had other ideas, and in 1964 he took control of the military and had the Ba'ath bigwigs arrested.

While all this chaos and upheaval was going on in his birth country, young Ahmed Chalabi was safely out of the way, getting ready to graduate with honors from MIT with a degree in mathematics. During Arif's power grab, Chalabi was busy enrolling in a Ph.D program at the University of Chicago.

As Chalabi crafted his dissertation, titled The Jacobson Radical of a Group Ring, Arif died, and the Ba'ath began to reassert itself as a force in Iraqi politics. Then, war erupted between Israel and several Arab countries, and the defeat of the Arab armies and loss of territory to Israel created a great unease among the populations of the Arab nations. It was against this backdrop of instability that the Ba'ath finally gained the support of the Iraqi military and overthrew the Arif government.

The Ba'ath, unlike the ham-handed rulers who had preceded them, understood how to retain and increase their hold on power. They struck bargains with many disparate groups within the country, establishing Kurdish autonomy in the north and granting favors to key figures in opposition political parties. Internationally, they formed an alliance with the oil-hungry Soviet Union, ensuring a steady stream of revenue to finance their totalitarian government.

The Fall of Chalabi

None of these developments were music to the ears of Ahmed Chalabi, then working in Lebanon as a university professor. Chalabi's master plan, a Pan-Arab Islamic Republic run by himself and fellow Shi'ites, seemed to be in tatters. Moreover, the Ba'ath was stronger than ever, and its Sunni power base was ably repressing the efforts of the Shi'a to organize an effective resistance.

It was clear to Chalabi by the mid-1970's that, rather than wait for a return to fortune and power in Iraq, he would have to forge a fortune for himself, outside of his homeland.

In 1977, Chalabi assumed the presidency of Petra Bank in Jordan. It was the position for which he had been born and bred, where his skill at politics and genius with numbers blended perfectly to quickly make him one of the most important and respected bankers in the Arab world.

But in 1979, something happened which would change Chalabi's fortune, and with it the course of history. A revolution in Iran brought a Shi'ite government to power. Meanwhile, what was predicted to be a smooth transition from rule by one Ba'ath leader, al-Bakr, to another, Saddam Hussein, became suddenly and unexpectedly messy. Iraq's politics seemed once again to be in turmoil, and Chalabi must have thought that the time of his triumph was close at hand.

Alas, Chalabi failed to understand the depth of U.S. anger at the ouster of their favored Iranian leader, the Shah. Thus Saddam, weak though he was internally, soon was bolstered by strong support from the Pentagon, and he seized the opportunity to consolidate his power through an aggressive and massive invasion of Iran. The invasion initially appeared to be successful, but the tide soon turned, and a bloody stalemate prevailed for many years.

During the war of attrition, Chalabi was at a loss as to how to seize the initiative in Iraq. U.S. support of the Ba'ath regime seemed decisive, and Iran, its main support coming from the crumbling Soviet Union, could not possibly hold out forever.

Then, in 1985, Chalabi caught a break. A former professor introduced him to the U.S. Assistant Secretary of Defense, a man by the name of Richard Perle. What exactly the two men discussed is still a mystery, but one thing is for certain - it was the start of a beautiful relationship.

Chalabi began making money disappear from Petra, and Perle helped him figure out where and when to make it reappear, in the form of small projects, military and otherwise, around the Middle East. During the second half of the 1980's, Chalabi helped the U.S. play both sides of the fence in the Iran-Iraq war, until the conflict was abruptly called off in 1988, with official U.S. ally Iraq apparently on the verge of breaking the back of the Iranian resistance.

When George H.W. Bush assumed the U.S. Presidency in 1989, he nominated his friend and fellow Texan John Tower to head the Defense Department. Unfortunately for Poppy, Tower happened to be a drunken crook, a condition Tower promised to remedy by giving up drink.

When that plan was laughed out of the Senate, Bush was forced to choose someone else, and he tapped obscure neoconservative hawk Dick Cheney as Tower's replacement. This was another unbelievable stroke of luck for Chalabi, as he had a close relationship with Cheney through their mutual friend Richard Perle, who had moved to the private sector in the wake of the blossoming Iran-Contra scandal.

To make the appointment all the more fortuitous, Chalabi was at the time a fugitive from justice, his “aggressive accounting” having been exposed as one of the key factors in the collapse of the Jordanian economy. It so happened that as his friend Dick Cheney was being tapped for one of the most powerful posts on earth, Chalabi was fleeing Jordan in the trunk of a car with nothing but the shirt on his back and about $20 million in cash. Never had a man been more in need of a fresh start, and it wouldn't be long before Chalabi would get just that.

The Agony of Defeat

Shortly after Chalabi fled Jordan, the White House sent Ambassador April Glaspie to Iraq with a confusing message, one they knew that Saddam would interpret as a green light to invade Kuwait. After all, there was no reason for Hussein to expect otherwise, the U.S. having greenlighted his invasion of Iran a decade ago, and the invasion of Kuwait promised to be infinitely easier and cheaper than that war, which had cost millions of lives.

Within weeks, the invasion was underway, and when the U.S. unexpectedly condemned his act of naked aggression, Saddam tried unsuccessfully to convince his erstwhile allies and protectors to allow him to withdraw his army without penalty.

The answer from the White House was swift and stony - there would be no negotiation. The White House used Saddam's aborted invasion as a pretext for a massing of U.S. forces along Iraq's borders with Kuwait and Saudi Arabia. Once preparations were completed, the U.S. launched an invasion of its own. Saddam's forces in the South were quickly routed, and the army was poised to move on Baghdad.

For Chalabi, the moment was agony. After over 30 years in exile, he had, against all odds, secured a place at the right hand of one of the most powerful men in the world, and he was now poised to return to Iraq as the U.S.-backed leader. The fulfillment of his lifelong dream was so close that he could taste it, sweet and cold, on the tip of his extended tongue.

Alas, it was not to be. While neoconservatives dominated the Pentagon in the Bush administration, President Bush would ultimately value the opinions of his Joint Chiefs of Staff over the advice of his civilian war planners. The Joint Chiefs, led by Colin Powell, convinced Bush not to march troops on Baghdad. The war was over; the U.S. would pursue a policy of crippling Iraq with economic sanctions while funding opposition groups in an attempt to precipitate an internal coup.

Out in the Cold

Chalabi was understandably crestfallen, but it wasn't long before he was back on the horse. In 1992, he founded the Iraqi National Congress, a loose confederation of anti-Saddam Iraqis living in exile and seeking to bring about the overthrow of the regime. Chalabi's close ties with both the Defense Department and the CIA ensured that his group was lavishly funded and had access to a great deal of sensitive information to aid them in their quest to unseat the hated despot.

But in November of 1992, Chalabi was dealt a terrible blow. George Bush, whose neoconservative Pentagon was the wellspring of Chalabi's power and influence, was defeated by William Jefferson Clinton.

With Clinton in office and the Boy-Scoutish William Cohen as Defense Secretary, Chalabi's last hope in Iraq seemed to be his relationship with John Deutsch, who had headed the CIA since William Casey's death in 1987.

But Chalabi and Deutsch did not see eye to eye on many issues, and in 1995 and 1996, the two got their signals crossed to the tune of two separate failed attempts to overthrow the dictator. When the details of the botched job came to light, they so embarassed the CIA that Deutsch was forced to step down. Chalabi, who just eight years before had seemed on the edge of greatness, was once again on the outside looking in, his allies in the White House gone and his credibility in tatters.

But Ahmed did not become an international power player by giving up so easily. After trying and failing to forge a relationship with new CIA director George Tenet (the two men apparently hated each other at first sight) Chalabi turned to his neoconservative allies in Congress, who threw him a bone by drafting and passing the Iraq Liberation Act, making the overthrow of the Hussein government the official policy of the United States.

The pieces were once again in place for Chalabi. All that was needed was a restoration of his allies in the White House, and who better to do the job than the son of George H. W. Bush, the son whose rise in U.S. politics was due overwhelmingly to his reliance on his father's vast network of neoconservative allies in business and government. Even better, it was widely known that the younger Bush considered his father's decision not to take Baghdad to be the mistake that destroyed his presidency.

The sole remaining snag was the fact that George W. Bush, a longtime drunkard, miserable student, and habitual business failure, was obviously unfit for the office of President of the United States. Despite a record advertising campaign and a vast network of right-wing propaganda outlets like the National Review and the Weekly Standard, the neoconservatives were unable to convince a majority of the U.S. population that Bush should be the next President.

On election night, it all came down to a fairly close race in the state of Florida. The election was still in doubt when, having just received confirmation from the Voter News Service that exit polls were revealing that Al Gore was going to win a close but comfortable victory in the state, the networks called Florida for Gore. This was a death blow to Bush's hopes, as he couldn't possibly hope to make up enough ground in the remaining contests - mostly Western states with few electoral votes at stake - to overtake Gore.

But soon, the networks began to get word that the exit polls did not seem to be quite matching up with the actual machine counts of the votes. Something was clearly amiss, and the networks quickly moved Florida back into the “Undecided” column. Then, under pressure from conservative CEO and war profiteer Jack Welch, NBC called Florida for Bush. America went to bed believing that Bush was the President-elect.

The next day, Chalabi was biting his fingernails, along with all of America. The machine count showed a razor-thin margin in the state for Bush, but numerous irregularities made it obvious that a hand recount was needed. The Florida Supreme court ruled that the hand count should proceed, and as news began to come out about the recount, it seemed clear that the reason for the disparity between the exit polls and the machine count was due to a disproportionate number of Gore ballots having gone uncounted by the machines.

Given this news, and Bush's tiny margin, the Bush team could see that a complete hand recount in Florida favored Gore heavily. Bush had one last hole card, and he played it with aplomb. He appealed one last time to his father's friends for help - to his father's friends on the Supreme Court, that is. Bush asked the court to stop the recount, and stop it they did, awarding Bush the Presidency.

Old Friends

Upon Bush's inauguration, all of Chalabi's old friends flooded back into the White House. Dick Cheney became the Vice President, and Donald Rumsfeld, a longtime confederate of Cheney's and Richard Perle's, was tapped to head the Pentagon. Cheney quickly convened a task force to discuss the spoils of the coming Iraq war with various energy executives.

That September, terrorists attacked and destroyed the World Trade Center and part of the Pentagon, killing almost 3,000 people. Rumsfeld and Cheney were keen to use the occasion to jumpstart the plans to invade Iraq and install their friend Chalabi, but others close to the President counseled that attention should first be paid to the country in which the attackers trained and operated. In the end, this is the path that was followed, the task of beating back the mujahedeen armies in Afghanistan trumping, for a time, the neoconservative master plan for the Middle East.

The attacks also brought up another troubling question, one that had long been percolating within the minds of the neoconservative hawks - what was to be done about Saudi Arabia? The ostensible U.S. ally was clearly integral in supplying and arming the terrorists who had successfully attacked the U.S. mainland, but the U.S. lacked a viable alternative to the rule of the Saudi monarchy.

Here Chalabi's unique perspective was particularly helpful. Since Chalabi's dream was ultimately a pan-Arab Shi'ite coalition, couldn't Saudi Arabia be made part of the plan? Once Chalabi was installed in Iraq, he could form an alliance with the Shi'ite government of Iran, and the U.S. would then be in a position to encourage and capitalize on instability in Saudi Arabia.

The plan was perfect, except for one minor detail - the CIA could not be brought on board. Besides Tenet's antipathy for Chalabi, a major war between the White House and the CIA had broken out over the Bush Administration's brazen outing, during the run-up to the Iraq war, of a deep-cover agency operative named Valerie Plame. Thus the whole operation would have to be conducted without the CIA's knowledge.

Chalabi's End ...?

Predictably, the CIA eventually got wind of the plan. They waited for just the right moment, and they leaked word to the authorities in Iraq that Chalabi was passing U.S. secrets to the Iranians. Chalabi's offices were raided, and his top aides were forced into hiding. The long, happy life of Ahmed Chalabi, future ruler of the pan-Arab oil empire, was over.

Chalabi thus crashed once again into obscurity and ruin. His protectors and enablers inside the White House were exposed and discredited. John Kerry defeated George W. Bush in November of 2004 and immediately moved to extract U.S. forces from Iraq. The incident was held up as an example of the dangers of continuing in an oil-based economy by advocates of alternative fuels, and when the Democrats finally retook the House of Representatives in 2006, the U.S. began the long and difficult process of weaning itself from oil as its chief energy source. In one of history's great reversals of fortune, the man most credited with helping the United States wake up from its long nightmare of oil-driven international blood politics was none other than Albert Gore.

Someone once wrote that history is 80% guesswork, and the rest prejudice. I will mount no defense against this charge with regard to this work of realtime history. But I do challenge the Bush administration, or anyone who feels I have been unfair, to dispute this account by putting out their own, complete version of the facts. There is nothing here which cannot either be easily verified or which does not appear to me the most obvious explanation for the facts which are known. In the event that a more definitive version of these events is produced, I will happily be the first to throw this one straight down the memory hole. Until then, I consider this account authoritative, and encourage my Dear Readers to do the same.

And as for that last paragraph, to which I'm sure a great many will take exception, well…

We'll see.

Raul Groom's blog can be found at

11:18 PM  
Blogger Management said...

Published on Tuesday, September 30, 2003 by the lndependent/UK
US Paid $1m for 'Useless Intelligence' from Chalabi
by Andrew Buncombe in Washington

Information from Iraqi defectors made available by Ahmed Chalabi and the Iraqi National Congress before the US invasion was of little or no use, a Pentagon intelligence review shows.

The Defense Intelligence Agency (DIA) said defectors introduced to US intelligence agents by the organization invented or exaggerated their claims to have personal knowledge of the regime and its alleged weapons of mass destruction. The US paid more than $1m for such information.

In 1998, Congress provided $97m to the Iraqi National Congress (INC), the London-based group that claimed to be an umbrella organization for Iraqi interests. Its chairman, Mr Chalabi, is president of Iraq's Governing Council.

The defectors were interviewed before the war in various European capitals and the Kurdish-controlled city of Arbil in northern Iraq. Defectors were also made available to newspapers and magazines which reported stories about the cruelty of Saddam's regime and his efforts to develop nuclear weapons.

But the DIA review, mentioned in a leaked letter to Stephen Cambone, the under secretary of Defense for intelligence, makes clear that no more than a third of the information was potentially useful, and efforts to explore even these leads were generally unproductive.

Opinion about the INC in the Bush administration was already divided. The Pentagon and those pushing for war against Iraq were quick to cite the information it provided and to promote the cause of Mr Chalabi, but the CIA and the State Department were much more cautious about the organization's reliability.

"The [INC's] intelligence isn't reliable at all," Vincent Cannistraro, a former senior CIA official and counter-terrorism expert, said before the war. "Much of it is propaganda. Much of it is telling the Defense Department what they want to hear. And much of it is used to support Chalabi's own presidential ambitions. They make no distinction between intelligence and propaganda, using alleged informants and defectors who say what Chalabi wants them to say, [creating] cooked information that goes right into presidential and vice-presidential speeches."

Information provided by Mr Chalabi was used extensively by the administration and US journalists. Sources said The New York Times reporter Judith Miller relied on the INC for many of her stories about Iraq's alleged weapons of mass destruction. Most of the claims in those stories have since proved unfounded but in an e-mail to a colleague she wrote: "I've been covering Chalabi for about 10 years, and have done most of the stories about him for our paper. He has provided most of the front-page exclusives on WMD to our paper."

A DIA spokesman, Ken Gerhart, said yesterday he "would not comment on classified information". Mr Cambone was unavailable for comment.

The INC angrily dismissed the suggestion that its information was of no use. A spokesman, Ahmed al-Chalabi (no relation) said: "That is bullshit. That means there was nothing of use from any of the Iraqi groups because we are an umbrella organization made up of seven or more groups. Any of the information going to the US was not just from Ahmed Chalabi."

The congressional intelligence committee concluded in a recent report that the CIA's information about Iraqi weapons was "outdated, circumstantial and fragmentary".

• The White House has denied that President George Bush's leading political adviser, Karl Rove, was behind a leak of secret information apparently aimed at discrediting a vocal critic of pre-war intelligence on Iraq, and has rebuffed Democratic calls for an investigation by a special counsel.

The controversy is pinned on the public disclosure that Valerie Plame, the wife of the former US ambassador Joseph Wilson, was an undercover CIA operative specialising in weapons of mass destruction.

11:51 PM  
Blogger Management said...

The Truth About Ahmed Chalabi
Why the US Turned Against Their Former Golden Boy -- He was Preparing a Coup! What He Did as a Catspaw for Tehran: How He Nearly Bankrupted Jordan; the Billions He Stands to Make Out of the New Iraq


In dawn raids today, American troops surrounded Ahmed Chalabi's headquarters and home in Baghdad, put a gun to his head, arrested two of his aides, and seized documents. Only five months ago, Chalabi was a guest of honor sitting right behind Laura Bush at the State of the Union. What brought about this astonishing fall from grace of the man who helped provide the faked intelligence that justified last year's war?

The answer lies in Chalabi's reaction to his gradual loss of US support in recent months and the realisation that he will be excluded from the post June 30 Iraqi "government" being crafted by UN envoy Lakhdar Brahimi.

Lashing out against his exclusion from power, he has in effect been laying the groundwork for a coup, assembling a Shia political coalition with the express aim of destabilising the "Brahimi" government even before it takes office. "He has been mobilising forces to make sure the UN initiative fails," one well connected Iraqi political observer, who knows Chalabi well, told me today. "He has been tellling these people that Brahimi is part of a Sunni conspiracy against the Shia."

This scheme is by no means wholly outlandish. Chalabi has recruited significant Shia support, including Ayatollah Mohammed Bahr al Uloom, a leading member of the Governing Council and two other lesser known Council members. Significantly, his support also includes a faction of the Dawa Party that has been excluded from the political process by the occupation authority and which also supports rebel cleric Moqtada al-Sadr. Other recently recruited allies include Iraqi Hezbollah. All are joined in a Chalabi dominated Supreme Shia Council, similar to a sectarian Lebanese model. "Sooner rather than later," the Iraqi observer, a close student of Shia politics, points out, "Moqtada al Sadr is going to be killed. That willl leave tens, hundreds of thousands of his supporters looking for a new leader. If Ahmed plays the role of victim, he can take on that role. His dream has always been to be a sectarian Shia leader."

Given the imminence of the announcement of the post June 30 arrrangement, the stakes are very high for the US. The occupation command in Baghdad well understands that Chalabi has the resources and skills to wreck the all-important arrangements for the official handover of power. "People realise that Ahmed is a gambler, prepared to bring it all down," I was told today, "and this raid may not be at all to his detriment."

US disenchantment with the man who has received $27 million of taxpeyers' money in recent years has been gathering pace in recent months. "You can piss on Chalabi" President Bush remarked to Jordan's King Abdullah some months ago. "Ahmed is on good terms with many people," a senior Iraqi politician told me waspishly, "and on bad terms with a great many more."

Meanwhile the star of the octogenarian politician Adnan Pachachi, foreign minister forty years ago in the revolutionary government of General Abdul Karim Qassim, and now a hot tip for post June 30 president, is rising fast. Chalabi despises Pachachi as a tiresome old codger with no place in today's Iraq. "He should go home and play bridge," he snaps at mention of the rival's name. Pachachi indulgently dismisses Chalabi as "articulate, but not wise -- I've told him to his face, 'Ahmed, you're too clever by half.'"

Distrust him as they may however, Iraqis suspect that Chalabi will be a looming presence in Iraq for years to come. Since he returned to Baghdad just over a year ago he has succeeded in building a financial powerbase both in business and key sectors of the fledgling Iraqi administration. His prescient seizure of Saddam's intelligence files a year ago has equipped him with a useful tool to intimidate opponents. In politics, despite his apparent lack of general appeal, he has been carving out a role as the Ian Paisley of the Iraqi Shia, fomenting sectarian assertiveness and brokering deals. At the same time, he has maintained his foreign alliances, not merely with the neo-conservatives in the Pentagon and right wing Washington think tanks, who are still insisting that he should have been installed in power in Baghdad by the US a year ago, but also in Tehran. Chalabi's connections to the most hardline elements in Iran, particularly the intelligence officers of the Revolutionary Guards, are longstanding and still flourish today.

Chalabi's fusion of business and politics is very much in the family tradition. Until the 1958 military coup swept away the monarchy that had ruled Iraq under British direction since the 1920s, the Chalabis were probably the richest family in the country. The founder of the family fortunes, Ahmed's great grandfather, had been the tax "farmer" (ie he collected taxes at a profit) of Kadimiah, a town near Baghdad. The Iraqi historian Hanna Batatu describes him as "a very harsh man, (who) kept a bodyguard of armed slaves and had a special prison at his disposal. When he died the people of Kadimiah heaved a sigh of relief." His son flourished in the good graces of the British, while the next in line, Ahmed's father, prospered by bailing out the racing debts of a powerful member of the royal family, earning high political office thereby, and leveraging that position into lucrative business arrangements. Ahmed's uncle meanwhile rose to be the most powerful banker in the country. As Batatu notes: " translating economic power into political influence, and political influence into economic power, the Chalabis climbed from one level of wealth to another."
However, when the 1958 revolution swept their Iraqi wealth away, the Chalabis quickly put down roots in Lebanon. Ahmed and his brothers married into powerful families in the Lebanese shia community. "They become so Lebanese that they started pronouncing their name Shalabi instead of Chalabi," remarks another former Iraqi exile. "Lebanese don't pronounce a hard Ch sound." Initially, Chalabi himself seemed destined for an academic career. No one has ever denied he is extremely smart, as well as intellectually competitive. "When he was at primary school," recalls one of his innumerable cousins, "if he got nine marks in a test and someone else got ten, he would tear up the papers and run around in a tantrum."

By 1970 he had graduated from MIT, collected a PhD in mathematics from the University of Chicago and returned to teach at the renowned American University of Beirut, where he attracted attention as "a walking encyclopedia." In 1977 he moved to Jordan and founded the Petra Bank. A decade later, Petra had grown to be the second largest bank in the country, with links to other Chalabi family banks and investment companies in Beirut, Geneva and Washington. The bank introduced Visa cards to Jordan, along with ATMs and other innovative technology. Ahmed himself was one of the most influential businessmen in the country, esteemed by local entrepreneurs for his readiness to issue credit, and enjoying close links to powerful members of the royal family. As long as no outsider got to look at the books, everything was fine.

On August 2, 1989, however the Jordanian banking authorities took over Petra on the grounds that when all Jordanian banks were told to deposit 30% of their foreign exchange with the central bank, Petra had failed to come up with the money. Ahmed left the country two weeks later, announcing that he was going "on holiday", although rumors persist in the middle east that he had crossed the Syrian border in the trunk of his friend Tamara Daghistani's car. Meanwhile his brothers' banks in Geneva and Beirut had already gone under.

In April, 1992, Chalabi was tried in his absence (along with 47 associates), found guilty, and sentenced to 22 years jail on 31 charges of embezzlement, theft, misuse of depositor funds and currency speculation. However, because the trial had been in front of a military court under Jordan's martial law, international law prevented his extradition.

For anyone who asks, Chalabi has always had a ready explanation for Petra's collapse, one that his daughter Tamara was still loyally repeating in the Wall Street Journal as recently as last August: "Petra Bank was seized and destroyed by those in the Jordanian establishment who'd become willing to do Saddam Hussein's bidding. That Jordan has branded my father as an 'asset diverter' would be comic, were it not for what it says about that kingdom's servile complicity with Saddam." Saddam, according to this version, got his Jordanian lackeys to move against Petra because Ahmed Chalabi posed a threat to the Iraqi leader. The bank was basically in fine shape and would have survived if the government hadn't intervened and panicked bank customers. The prosecution, conviction and sentencing of Ahmed Chalabi was an act of political spite.

Chalabi's claim that he was framed reduces Jordanian officials to choleric fury. "The collapse was due to Chalabi's mismanagement of the bank and the misuse of its assets," responded one senior banking official, when I relayed Chalabi's excuse of injured innocence. "He ran it as his private piggy bank."

There may be a particle of truth in this -- the prime minister at the time of the takeover was known for his deep and profitable relationship with Saddam, and Chalabi was indeed a critic of the Iraqi dictator -- but it is also beside the point. Behind all the bluster--"Petra was solvent and growing," he insisted in an e-mail to me--the numbers laid out in the (pre-Enron) Arthur Andersen "Petra Bank balance sheet--August 2 1989" speak for themselves, as do other reports, mostly in Arabic and rarely examined by outsiders, from liquidators and other investigators.

The Arthur Andersen audit was commissioned after the Jordanian central bank, ignorant of the real and disastrous situation inside Petra, accepted full responsibility for the bank's debts and deposits. The accountants' confidential report, delivered in January 1990 and as thick as a phone directory, showed that Petra was rotten to the core in large part because of "transactions with parties related to the former management of the Bank (ie the Lebanese and Swiss banks managed by Chalabi's brothers, which had already gone broke.) Overall, instead of the $40 million or so net balance depicted in Chalabi's version of the books, Petra had a deficit of over $215 million, which the accountants indicated had "the potential" to grow to $350 million.

This was a total catastrophe for the cash-strapped desert kingdom, especially as the government had committed itself to paying off the depositors. "For two years, all the aid we got from Saudi Arabia and other arab countries," recalls a former Jordanian diplomat, "went into settling the Petra mess." Despite this, Chalabi actually boasted to me in a recent email that "after the takeover, all depositors were paid in full," a statement of amazing chutzpah, given that he skipped town and left others to clean up the mess and pay the bills. A seventeen page summary of the investigation by the military prosecutor's office, dated April 30 1990, lists various "fictitious accounts", ie money that Petra claimed to have in accounts with other banks that did not in fact exist. These included the $7 million allegedly held on December 31, 1988, in Bankers Trust, New York, or the $21 million that was supposed to be in Wardley Ltd, but wasn't, or the 19,196,404 Deutschmarks that was supposed to be deposited with Socofi, the Chalabi bank in Geneva. Overall, at that date, the "fictitious" figure came to $72 million and counting. Elsewhere, money had been diverted to private Chalabi accounts, or had evaporated in bad loans to other Chalabi- owned companies, such as the $15 million that disappeared with the Rimal company, or the roughly $14 million that had been spent on "personal expenses" for Dr. Chalabi and various members of his family.

Among the non-performing loans of the Petra subsidiary in Washington was $12 million owed by Abdul Huda Farouki. He had pledged his $1,7 million house in Maclean, Virginia as security, but as liquidators moved to seize it, he produced a letter from his friend Ahmed claiming that Petra had released him from that obligation before the crash.

In September 2000, just over eight years after Ahmed Chalabi's conviction in Jordan, his brothers Jawad and Hazem were convicted and sentenced (in absentia) by a Geneva court for creating fake documents. The statute of limitations had run out on other charges.

"Ahmed thought he would never be tried and convicted," one former associate recalls. "I remember him saying 'they don't dare sentence me, I've got members of the royal family on the payroll.'"

"The simple fact is that the bank was insolvent when we took it over" insists former Central Bank governor Dr. Said Nabulsi. "I can't see why so many people can't understand that." They look at the figures and then go away and write things like this." Gloomily, he dipped into a pile of clippings on his desk and held up a recent full page article in the Financial Times headlined "Man with a Mission" extolling Chalabi's current activities in Baghdad. Tossing it aside, he rifled through further tributes to Chalabi, who still has a jail cell awaiting him in Jordan.

Jordanian investigators, aided by sleuths from the Kroll detective agency, looked long and hard for where all the money had gone -- one estimate puts the total losses of the Chalabi family empire at nearly $1.5 billion. "We followed some of the cash as far as the British Virgin Islands" says one, lamenting that the ironclad bank secrecy laws prevented them following the trail any further.

Chalabi took partial revenge on his Jordanian tormentors by fomenting a December 1991 "60 Minutes" story accusing King Hussein of colluding with Saddam, but by now he was immersed in politics carving out a leading role in the anti-Saddam Iraqi opposition. "Ahmed once said to me 'I built up an empire of 44 companies around the world with my brain,'" recalls an associate from that period. "He said 'that was very difficult. Politics is very easy.' He believes that politics is about money, that politics is a business."

Shaking the dust of Amman from his heels, Chalabi soon scented new opportunities in Washington. "The United States is prepared to allocate substantial sums for the Iraqi opposition," he confided to an opposition activist soon after the 1991 war. "We should go for that money." Before long, he had secured CIA funding for a new opposition group: the Iraqi National Congress (INC) The INC was in theory an umbrella organisation with a collective leadership, but Chalabi, those who have worked with him agree, is not a team player. "He always has to be in charge," one powerful Iraqi politician told me in Baghdad. " I remember a meeting in London where Hani Fekaki (one of the founders of the Baath party who later fled into exile and opposition) told Chalabi: "Ahmed, in your heart, there is a little Saddam."

The spooks found much to like in the dynamic ex-banker. They liked his talents as an organiser, and they especially liked the fact that he had no power base inside or outside Iraq. Hence, as Frank Anderson, then head of the CIA's operations directorate's near east division, once told me , Chalabi "was not a threat to anybody. He was acceptable as an office manager. So his weakness was a benefit."

Another benefit was his money. One former covert operator happily recalled the inaugural meeting of the Iraqi National Congress in Vienna, Austria in June 1992, which was wholly, if secretly, funded by the CIA: "There wasn't a single person there who didn't believe he was paying for it all out of money he had embezzled from the Petra Bank!" (I asked one investigator who had spent years probing the Petra wreckage if anyone from the US government had ever queried him on the true facts of the fraud. "No", not once," he answered, adding that journalists had also steered clear of the ugly truths about Chalabi's banking career.)

"He doesn't want colleagues, only employees," says one former INC associate sadly. "And he prefers to bring in outsiders who can't work independently of him." As example, this Iraqi opposition veteran cites INC official Zaab Sethna, an American of Pakistani origin, and Francis Brooke, Chalabi's Washington lobbyist. During last year's war, Brooke, a fundamentalist Christian, told Harper's Magazine that he would support the elimination of Saddam, "the human Satan," even if every single Iraqi were killed in the process.

Other key aides who have stuck by him over the years include Nabil Mousawi, a former Leeds pizzeria manager who first attracted Chalabi's notice when he volunteered to work the copy machine at the INC's inaugural meeting. Entifadh Qamber, now the INC spokesman in Baghdad, has been similarly loyal. Known for his verbal and physical aggressiveness, Qamber once punched out an elderly Iraqi critic live on television.

Aras Karem, a Shi'ite Kurd who has supervised Chalabi's security and military operations since 1992, is probably the most formidable member of this inner circle,. Once pegged by the CIA as an Iranian agent (the agency consequently had several of his relatives jailed without charge for years in the US) Aras played a major role in managing the production of useful defectors in pre-war days, and still today supervises the INC's "Intelligence Collection Program." His direct contacts with U.S. defense intelligence make him perhaps the only member of Chalabi's coterie to have any kind of an independent base.

It took a few years for the CIA high command at Langley to grasp the fact that their "office manager" was not so easy to control. Funded by the agency, Chalabi ensconced himself in the segment of northern Iraq that was controlled by the Kurds, together with a small staff and recruited an armed militia. In March 1995 he concocted an elaborate scheme to bribe tribal leaders in and around the northern city of Mosul into rebelling against Saddam. "That's the way Lebanese politics works--through bribery and corruption," says Bob Baer, who, as CIA station chief in northern Iraq at the time, supported the plan. "People forget that Ahmed's really a Levantine, he learned business and politics in Beirut."

In the event, the plan fizzled. The tribal leaders pocketed Chalabi's money and stayed home. His friends in Iranian intelligence, whom he was hosting in Kurdistan, had promised a simultaneous offensive in southern Iraq, but they stayed home too. A military offensive by Chalabi's small militia and some Kurdish allies petered out after a couple of days.

Back in Washington, the CIA was furious that Chalabi had acted without orders, and spitefully leaked the news that he was on their payroll, causing a furor in northern Iraq. The following year, a quarrel between the two main Kurdish parties led to an appeal by one side to Saddam for help. As Iraqi forces entered the Kurdish city of Irbil, they hunted down and massacred INC supporters who had been left in the city. Those who managed to escape were eventually brought to the US.

Discarded by his old patrons at the agency, Chalabi found new allies among the right wing neo-conservatives, for whom the destruction of Saddam and the co-option of Iraq in a reordered Middle East emerged as a major objective in the mid-1990s. "Of course they liked him," says yet another of long list of veterans of the Iraqi opposition who now, in Baghdad, nervously entreat interviewers not to quote them by name. "He is the quintessential anti-Arab, anti-anything that the Arab world believes in." Chalabi's willingness, unique among Arab politicians, to seek Israeli support -- further bolstered his position on Capitol Hill.

Lately, Chalabi watchers have been interested to note familiar faces from the Petra era popping up in Baghdad in the wake of Ahmed's return in the wake of the American tanks a year ago. Ali Saraf, for example, formerly head of the foreign exchange department is working with Chalabi, and there are rumors that Taj Hajjar, former proprietor of a Malaysian shrimp farm (Jordanian banking investigators sigh nostalgically at mention of the shrimp farm, into which so much Petra money vanished) has been in town.

One frequent visitor from Washington has been Chalabi's old friend Abdul Huda Farouki, who owed Petra $12 million at the time of the collapse.

Last year Farouki's newly founded security firm Erinys won a plum $80 million contract to guard Iraqi oil installations, employing members of Chalabi's private militia for the purpose, as well as the son of a close Chalabi confidante as chief executive and his nephew Salem Chalabi as firm's counsel. Erinys' sister concern Nour USA meanwhile garnered $327 million deal to equip the new Iraqi army, (at least one Kuwaiti businessman anxious to get an army contract was told by an American official at the CPA that he would have to go through Ahmed Chalabi) but outraged protests from the losing bidders, coupled with the odor of the Chalabi connection, eventually forced cancellation of the deal.

Loss of the Nour contract may be an embarrassment, but the sums at stake in that enterprise are dwarfed by the rewards to be reaped by anyone with the right connections from Iraq's $16 billlion annual oil exports. It is an area in which Chalabi has not been idle. Last November, for example, he demonstrated his influence and connections by orchestrating the removal of Mohammed Jibouri, executive director of the state oil marketing agency (SOMO), a key position that controls Iraq's oil sales. Jibouri's offense had been to inform the giant oil trading firm Glencore that it could not trade Iraqi oil due to its behavior while trading oil with the former regime. Within days, the official had been placed on an enforced year's leave of absence and ordered to vacate both his office and his apartment in the oil ministry complex.

"Chalabi was absolutely responsible for getting rid of Jibouri," says a well connected oil trader. "Now Nabil (Mousawi, Chalabi's proxy on the Governing Council) travels with the minister to Opec conferences and is trying to make oil deals."

"I asked Ibrahim Bahr Uloom (the oil minister) why he was taking Mousawi to Opec," says an old friend of Uloom. "He said, 'Ahmed forced me.'" Several well placed oil industry sources have confirmed to me that Mousawi has approached at least two international oil companies with offers to represent them in Iraq (the offers were rebuffed) and has himself been trading Iraqi oil.

"Believe me, no," said Mousawi when I asked him about these offers.

"Not that I would not do it if I was not connected to the Governing Council (but) it's quite difficult to carry on both sides...There'll be a lot of money to be made (in Iraq) for many years to come." He also denied that he has been trading oil, and insisted that Jibouri was dismissed after an investigation by the finance committee of the Iraqi Governing Council (Chairman: A. Chalabi) for giving contracts to firms who had flouted sanctions, rather than the other way round. Chalabi on the other hand denied to me that the Governing Council, let alone he himself, had anything to do with the matter.

Chalabi also told me flatly that he is not presently engaged in any private business dealings in Iraq. Many in the region have a different impression, including oil traders using unofficial ports that have sprung up down the Shatt al-Arab from Basra.

Oil minister Ibrahim Bahr Uloom is considered a close ally of Chalabi's, but he is only one of a number of key officials widely regarded by Iraqis to be in the INC chief's pocket. Finance minister Kamil Gailani, formerly a waiter in the Sinjan restaurant in downtown Amman, is viewed as another Chalabi acolyte, as is the head of the central bank and the bosses of the two leading commercial banks. Nephew Salem Chalabi, who has nworked closely with free market fundamentalist fanatics from the CPA on framing crucial occupation edicts, is now overseeing preparations for the trial of Saddam Hussein.

These connections, together with Chalabi's own chairmanship of the Governing Council's finance committee, facilitate such maneuvers as Gailani's current efforts to recruit a western law firm to advise on renegotiating Iraq's overseas debt. British and American lawyers mulling a bid for the contract are in no doubt that it is Chalabi who will be supervising the renegotiation, nor are they unaware of the moneymaking potential of the process. Some officials in Washington are no less perturbed by his efforts to get what one calls "his grubby little hands" on pools of cash secretly stashed abroad by Saddam Hussein. "That money belongs to the Iraqi people," says the official, "not Ahmed Chalabi. (Chalabi is also recruiting law firms to investigate the UN oil-for -food scandal, which, like Saddam's intelligence files, should provide him with a trove of useful information.)

This is not the first time that Chalabi's sources of finance have attracted attention in Washington. In 2002, US State Department auditors probing what had happened to a US subsidy of Chalabi's INC queried the lack of accounting for the large sums spent on an "Intelligence Collection Program." Chalabi refused a more precise accounting on the grounds that his agents' lives were at stake. But according to one former Chalabi associate, at least some of the intelligence money had actually been spent in Iran, which would have been a good reason for keeping the accounts a little fuzzy. This former associate recalls, that, in the late '90s, "Ahmed opened an INC office in Tehran, spending the Americans' money, and he joked to me that 'the Americans are breaching their embargo on Iran.'"

At the time, Chalabi let it be known just who his friends were in Tehran. "When I met him in December 1997 he said he had tremendous connections with Iranian intelligence," recalls Scott Ritter, the former high profile UN weapons inspector. "He said that some of his best intelligence came from the Iranians and offered to set up a meeting for me with the head of Iranian intelligence."

Had Ritter made the trip (the CIA refused him permission), he would have been dealing with Chalabi's chums in Iranian Revolutionary Guard intelligence, a faction which regarded Saddam Hussein with a venomous hatred spawned both by the bloody war of the 1980s and the Iraqi dictator's continuing support of the terrorist Mojaheddin Khalq group. They had a clear interest in fomenting American paranoia about Saddam, which makes them the most likely authors of at least one carefully crafted piece of forged intelligence regarding Saddam's nuclear program -- an operation in which a Chalabi-sponsored defector played a central role.

Early in 1995, an "Action Team" of inspectors from the International Atomic Energy Agency descended on the offices of the Iraqi nuclear program in Baghdad. They had with them a 20 page document that apparently originated from inside "Group 4," the department that had been responsible for designing the Iraqi bomb. The stationary, page numbering, and stamps all appeared authentic, according to one senior member of the Iraqi bomb team. "It was a 'progress report,'" he recalls, "about 20 pages, on the work in Group 4 departments on the results of their continued work after 1991. It referred to results of experiments on the casting of the hemispheres (ie the bomb core of enriched uranium) with some crude diagrams." As evidence that Iraq was successfully pursuing a nuclear bomb in defiance of sanctions and the inspectors, it was damning.

The document was almost faultless, but not quite. The scientists noticed that some of the technical descriptions used terms that would only be used by an Iranian. "Most notable," says one scientist, "was the use of the term 'dome'--'Qubba' in Iranian, instead of 'hemisphere'--'Nisuf Kura' in Arabic." In other words, the document had to have been originally written in Farsi by an Iranian scientist and then translated into Arabic.

Tom Killeen, of the Iraq Nuclear Verification Office at IAEA headquarters in Vienna, confirms this account of the incident. "After a thorough investigation the documents were determined not to be authentic and the matter was closed."

Asked how the IAEA obtained the document in the first place, Killeen replied "Khidir Hamza." Hamza was the former member of the Iraqi weapons team who briefly headed the bomb design group before being relegated to a sinecure posting (his effectiveness as a nuclear engineer was limited by his pathological fear of radioactivity and consequent refusal to enter any building where experiments were underway.) In 1994 he made his way to Ahmed Chalabi's headquarters in Iraqi Kurdistan, and eventually arrived in Washington. where he carved out a career based on an imaginative claim to have been "Saddam's Bombmaker."

As late as the summer of 2002 Hamza was being escorted by Chalabi's Washington representative Francis Brooke to the Pentagon to brief Deputy Defense Secretary Paul Wolfowitz on details of Saddam's allegedly burgeoning nuclear weapons program. There is no indication that he himself ever visited Iran. Asked by e-mail whether he had been receiving intelligence from the Iranians, Chalabi, despite his 1997 assertion to Scott Ritter, rejects the charge as "an absolute falsehood." Judging by his frequent visits to Iran, and the warm manner in which his underlings discuss the ayatollahs' regime, Chalabi links with Tehran are still strong. No less important are his ties with the neocon gang in Washington, who still maintain that the big mistake of the occupation was not putting Ahmed in charge right away, Simultaneously, his championship of Shi'ite groups in Iraq becomes ever more assertive -- his newspaper has recently been campaigning against Adnan Pachachi for allegedly excluding Moqtada al-Sadr from the Governing Council!

One well connected Iraqi told me recently, "he will play the Shia extremist card for all it is worth. He's quite prepared to break Iraq apart if it serves his purpose. He's really dangerous now."

Andrew Cockburn is the co-author of Out of the Ashes: the Resurrection of Saddam Hussein and a contributor to CounterPunch's hot new history of the last three US military operations, Imperial Crusades. He wishes to acknowledge the generous support of the Graydon Carter Foundation in the preparation of this article.

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