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http://www.prospect.org/print/V13/21/dreyfuss-r.html Volume 13, Issue 21. November 18, 2002. Print-Friendly Version Tinker, Banker, NeoCon, Spy Ahmed Chalabi's long and winding road from (and to?) Baghdad Robert Dreyfuss If T.E. Lawrence ("of Arabia") had been a 21st-century neoconservative operative instead of a British imperial spy, he'd be Ahmed Chalabi's best friend. Chalabi, the London-based leader of the Iraqi National Congress (INC), is front man for the latest incarnation of a long- time neoconservative strategy to redraw the map of the oil-rich Middle East, put American troops -- and American oil companies -- in full control of the Persian Gulf's reserves and use the Gulf as a fulcrum for enhancing America's global strategic hegemony. Just as Lawrence's escapades in World War I-era Arabia helped Britain remake the disintegrating Ottoman Empire, the U.S. sponsors of Chalabi's INC hope to do their own nation building. "The removal of [Saddam Hussein] presents the United States in particular with a historic opportunity that I believe is going to prove to be as large as anything that has happened in the Middle East since the fall of the Ottoman Empire and the entry of British troops into Iraq in 1917," says Kanan Makiya, an INC strategist and author of Republic of Fear. Chalabi would hand over Iraq's oil to U.S. multinationals, and his allies in conservative think tanks are already drawing up the blueprints. "What they have in mind is denationalization, and then parceling Iraqi oil out to American oil companies," says James E. Akins, former U.S. ambassador to Saudi Arabia. Even more broadly, once an occupying U.S. army seizes Baghdad, Chalabi's INC and its American backers are spinning scenarios about dismantling Saudi Arabia, seizing its oil and collapsing the Organization of the Petroleum Exporting Countries (OPEC). It's a breathtaking agenda, one that goes far beyond "regime change" and on to the start of a New New World Order. What's also startling about these plans is that Chalabi is scorned by most of America's national- security establishment, including much of the Department of State, the CIA and the Joint Chiefs of Staff. He is shunned by all Western powers save the United Kingdom, ostracized in the Arab world and disdained even by many of his erstwhile comrades in the Iraqi opposition. Among his few friends, however, are the men running the Bush administration's willy-nilly war on Iraq. And with their backing, it's not inconceivable that this hapless, exiled Iraqi aristocrat and London- Washington playboy might end up atop the smoking heap of what's left of Iraq next year. The Chalabi Lobby Almost to a man, Washington's hawks lavishly praise Chalabi. "He's a rare find," says Max Singer, a trustee and co-founder of the Hudson Institute. "He's deep in the Arab world and at the same time he is fundamentally a man of the West." In Washington, Team Chalabi is led by Deputy Secretary of Defense Paul Wolfowitz and Richard Perle, the neoconservative strategist who heads the Pentagon's Defense Policy Board. Chalabi's partisans run the gamut from far right to extremely far right, with key supporters in most of the Pentagon's Middle-East policy offices -- such as Peter Rodman, Douglas Feith, David Wurmser and Michael Rubin. Also included are key staffers in Vice President Dick Cheney's office, not to mention Defense Secretary Donald Rumsfeld and former CIA Director Jim Woolsey. The Washington partisans who want to install Chalabi in Arab Iraq are also those associated with the staunchest backers of Israel, particularly those aligned with the hard- right faction of Prime Minister Ariel Sharon and former Prime Minister Benjamin Netanyahu. Chalabi's cheerleaders include the Washington Institute for Near East Policy (WINEP) and the Jewish Institute for National Security Affairs (JINSA). "Chalabi is the one that we know the best," says Shoshana Bryen, director of special projects for JINSA, where Chalabi has been a frequent guest at board meetings, symposia and other events since 1997. "He could be Iraq's national leader," says Patrick Clawson, deputy director of WINEP, whose board of advisers includes pro-Israeli luminaries such as Perle, Wolfowitz and Martin Peretz of The New Republic. What makes Chalabi so attractive to the Washington war party? Most importantly, he's a co- thinker: a mathematician trained at the Massachusetts Institute of Technology and the University of Chicago and a banker (who years ago hit it off with Albert Wohlstetter, the theorist who was a godfather of the neoconservative movement), a fellow mathematician and a University of Chicago strategist. In 1985, Wohlstetter (who died in 1997) introduced Chalabi to Perle, then the undersecretary of defense for international-security policy under President Reagan and one of Wohlstetter's leading acolytes. The two have been close ever since. In early October, Perle and Chalabi shared a podium at an American Enterprise Institute conference called "The Day After: Planning for a Post-Saddam Iraq," which was held, appropriately enough, in AEI's 12th-floor Wohlstetter Conference Center. "The Iraqi National Congress has been the philosophical voice of free Iraq for a dozen years," Perle told me. Philosophical or not, since its founding in 1992, Chalabi's INC has been trying to drag the United States into war with Iraq. By its very nature, the INC's strategy -- building a paramilitary presence inside Iraq, creating a provisional government, launching attacks on Iraqi cities -- was intended to create inexorable momentum for a war in which in the United States would be compelled to support the INC. But American policy in the 1990s was focused primarily on containing Saddam Hussein and depriving him of weapons of mass destruction, so the INC's efforts were sidetracked during the Clinton administration. At the time, most of the national-security establishment saw the INC as weak and ineffectual. Retired Marine Gen. Anthony Zinni, former head of Central Command for U.S. forces in the Middle East, famously ridiculed Chalabi and company as "silk-suited, Rolex- wearing guys in London," adding, "I don't see any opposition group that has the viability to overthrow Saddam." Supporting the INC, he warned, meant that "the Bay of Pigs could turn into the Bay of Goats." And a widely cited 1999 Foreign Affairs article titled "The Rollback Fantasy," lambasted the INC's strategy for a gusano-style offensive by a ragtag army operating out of the so-called no- fly zones in northern and southern Iraq, saying it was "militarily ludicrous and would almost certainly end in either direct American intervention or a massive bloodbath." Indeed, in 1996 an ill-organized INC offensive in northern Iraq, where Chalabi had assembled about 1,000 fighters, was half-heartedly backed by the CIA. Not only did Saddam Hussein's troops not defect en masse, as predicted by Chalabi, but one of the INC's key allies, the Kurdistan Democratic Party, chose to ally itself with Baghdad, inviting the Iraqi army back into northern Iraq's Kurdish areas for a mop-up exercise. Another of the INC's allies, the Iraqi National Accord, apparently blew up the INC's main offices in an act of bloody fratricide. These tragic failures only increased the distaste for Chalabi at the CIA and among the U.S. military. Still, Chalabi is a survivor. Since the 1996 fiasco, he's managed a precarious balance atop a fractious and quarrelsome constellation of Iraqi opposition factions, from Kurds and Shi'a tribal leaders to Islamic fundamentalists, monarchists and military officers. Our Man in Baghdad Born in 1945, Chalabi is the scion of a wealthy, oligarchic Shi'a family with close ties to the Hashemite monarchy that was installed in Iraq after World War I by Lawrence, Gertrude Bell and the British imperial authorities. Chalabi's grandfather served in nine various Iraqi cabinet positions, his father was a cabinet officer and president of the figurehead Iraqi senate, and his mother ran political salons that catered to Iraq's elite. In 1958 that all came to a crashing end when a coalition of army officers and the Iraqi Communist Party led a revolution that toppled King Faisal II. The Chalabis scattered. As a young man Chalabi lived in Jordan, Lebanon, the United Kingdom and the United States, where he attended MIT before earning a doctorate in mathematics at the University of Chicago. He took a position teaching math at the American University of Beirut. In 1977, Crown Prince Hassan of Jordan invited Chalabi to Amman to establish the Petra Bank, a financial institution that would soon become the second-largest commercial bank in Jordan. In an August 1989 episode still surrounded by controversy, however, the government of Jordan seized the Petra Bank under martial law, arresting its chief currency trader and using Jordan's central bank to pump $164 million into the Petra Bank and its allied institutions to keep them liquid. To avoid arrest, Chalabi fled the country "under mysterious circumstances," according to a 1989 article in the Financial Times. The Hudson Institute's Max Singer says that Prince Hassan personally drove Chalabi to the Jordanian border, helping him escape. (According to one account, Chalabi was in the trunk of the car.) Chalabi eventually was tried in absentia by a Jordanian court and sentenced to 22 years of hard labor for embezzlement, fraud and currency-trading irregularities. He reportedly got away with more than $70 million. The INC offers a different version. According to Zaab Sethna, an INC spokesman, King Hussein of Jordan executed a politically motivated coup against Chalabi in coordination with Iraq because Chalabi was "using the bank to fund [Iraqi] opposition groups and learning a lot about illegal arms transfers to Saddam." Because the Petra Bank had inside information about Jordanian- Iraqi trade, Chalabi used his position in a freelance, cloak-and-dagger operation to feed intelligence about Iraq's trade deals to the CIA. Because Chalabi was already active in anti-Iraq opposition groups and had a connection with Perle, it's possible that Chalabi's account is true. Further evidence of political motives behind the seizure of the Petra Bank and Chalabi's intelligence connections: The American lawyer who represented the Petra Bank's Washington, D.C., subsidiary was former Secretary of Defense Caspar Weinberger. And when Chalabi fled the country, anonymous leaflets reportedly circulated linking Chalabi to an alliance with Iraq's Shi'a and with (mostly Shi'a) Iran, all in a vague conspiracy against Iraq and Jordan. (During the Iran-Iraq war and Iraq's invasion of Kuwait in 1990, Jordan -- always delicately balanced between "Iraq and a hard place," as King Hussein was wont to say -- tilted toward Iraq. Afterward, King Hussein distanced himself from Baghdad and eventually reconciled with Chalabi. The jail sentence for bank fraud stands but reportedly might be lifted soon by Jordan's King Abdullah.) Of course, the fact that Chalabi may have been prosecuted for political reasons does not mean that he is innocent of embezzlement and fraud. In any case, allegations of self- dealing have followed him everywhere since. Puppet Theater Soon after fleeing Jordan, Chalabi began making the contacts with the CIA that would eventually lead to the INC's founding in 1992. Meeting first in Vienna, Austria, and then in Salahuddin in northern Iraq, the INC emerged as an umbrella group for the many factions of Iraqi opposition in exile. In the early 1990s, the CIA spent about $100 million through the INC and its Kurdish allies in the north -- until the fiasco of 1996. Though the CIA cut off the INC after that, Chalabi was undeterred and went about working with congressional Republicans to pass the Iraq Liberation Act. That law set up a pool of funds and in-kind contributions for the INC and other opposition forces. In its implementation, however, the INC has been embroiled in repeated disputes with the State Department over its accounting for funds received. (In 1999, when asked about secrecy in accounting for certain INC expenditures, Chalabi blurted: "Damn right! It was covert money.") "He's a criminal banker," says Akins, the former ambassador to Saudi Arabia. "He's a swindler. He's interested in getting money, and I suspect it's all gone into his bank accounts and those of his friends." Earlier this year, the State Department and the INC were deadlocked over payments to the INC, and the dispute was resolved only when the Pentagon, with its pro-Chalabi group, agreed to take over payments to the INC for the latter's intelligence-gathering work inside Iraq. Even after 1996, Chalabi continued to insist that Saddam Hussein's government would crumble if the INC, with only limited American backing, were to launch its planned offensive. In June 1997, Chalabi spoke to JINSA's board, which includes, not surprisingly, Perle, Woolsey and key hard-line backers of Israel such as Jeane Kirkpatrick, Max Kampelman, Eugene Rostow and former Rep. Steve Solarz (D-N.Y.). "The INC plan for Saddam's overthrow is simple," Chalabi told JINSA. From its base in northern Iraq, the INC would begin to confront Iraqi forces with only political and logistical support from the United States, including U.S. efforts to "feed, house and otherwise provide for the Iraqi army as it abandons Saddam." Then, Chalabi concluded, "With U.S. political backing and regional support for a process of gradual encirclement, Saddam can be driven into hiding in Takrit and eventually removed." That's it. The idea that ridding Iraq of Saddam Hussein is as easy as that was, of course, ridiculed by virtually all CIA, military and State Department strategists. But without the ability to commit hundreds of thousands of American troops and a relentless wave of bombing sorties, it was all that Chalabi and his allies had -- until September 11. Effectively capitalizing on the impact of 9-11, Perle, Woolsey and company began beating the drums for a full-scale war against Iraq. With President Bush in tow and railing against "the guy who tried to kill my dad," the war party got the upper hand. According to the latest leaks about U.S. strategy, a war against Iraq now could involve up to 250,000 U.S. troops and would result in an open-ended military occupation of Iraq modeled on the post-World War II occupations of Germany and Japan. The INC, meanwhile, hopes to ride into Baghdad on American tanks. Weeks ago the Pentagon began a program to train INC combatants for a coming conflict in Iraq, but its effort fooled no one. Ousting Saddam Hussein, if it happens, will be the work of U.S. troops, not the INC. But a Big Brother-style public-relations offensive is being readied, aimed at creating the myth that Iraq has been liberated by an alliance of the United States and the INC. "I want to create the national story that Iraqis liberated themselves," says WINEP's Clawson. "It may have no more truth than the idea that the French liberated themselves in World War II." But, insists Clawson, it's a fiction that will resonate with Iraqis. Almost no one, not even the INC itself, thinks that Chalabi has any cachet inside Iraq. Entifadh Qanbar, the earnest, young ex-Iraqi officer who heads the INC's office in Washington, says that Chalabi represents Iraq's "silent majority." Asked whether people in Baghdad have even heard of Chalabi, Qanbar says: "They may not know the man. But he represents their views." Others scoff at even that notion. "It's a formula for setting up a puppet regime," says David Mack, vice president of the Middle East Institute, a former U.S. ambassador to the United Arab Emirates and ex-deputy assistant secretary of state for Near Eastern affairs who's dealt extensively with Iraqi opposition politicians and military officers. "And we will have responsibility for propping them up for a long, long time to come, possibly with the blood of American soldiers." But indefinitely propping up an INC-style quisling regime might be exactly what the United States wants, as it would mean that U.S. troops would be occupying Iraq's oil fields for years to come. Striking Oil It's hard to overstate the importance of Iraqi oil. With proven reserves of 112 billion barrels (and many analysts saying that its true reserves are double that), Iraq sits above the second largest supply of oil in the world. Its crippled industry can produce only 2 million barrels of oil a day at present, but with a modest effort, Iraq's output could soar to as high as 7 million to 8 million barrels per day by decade's end. Controlling that much oil would give the United States enormous leverage over Europe and Japan, which depend heavily on Gulf oil; over Russia, whose economy is hinged to the price of its oil exports, which could be manipulated by an American-run Iraq; and over Saudi Arabia, whose regime's survival is linked to oil. "The American oil companies are going to be the main beneficiaries of this war," says Akins. "We take over Iraq, install our regime, produce oil at the maximum rate and tell Saudi Arabia to go to hell." "It's probably going to spell the end of OPEC," says JINSA's Bryen. The INC is quietly courting the American oil companies. In mid-October, Chalabi had a series of meetings with three major U.S. oil firms in Washington. "The oil people are naturally nervous," says INC spokesman Zaab Sethna, who took part in the meetings between Chalabi and the oil executives. "We've had discussions with them, but they're not in the habit of going around talking about them." That's true. In interviews, oil company officials speak cautiously and only on background about Iraq, laughing nervously at the idea of being quoted. They are extremely wary of associating themselves with the INC or with U.S. war plans for fear of angering Saudi Arabia and other oil-producing countries in the Persian Gulf. Asked about talks with the INC, one U.S. oil executive blanched, saying, "I can't discuss that, even on background." But the untold riches that lie beneath the soil of Iraq are a powerful lure for multinational oil companies. "I would say that especially the U.S. oil companies ... look forward to the idea that Iraq will be open for business," says an executive from one of the world's largest oil companies, adding that the companies are trying hard not to be noticed. "We don't have a stake in Iraq now," says another oil industry executive. "One of the frustrations that U.S. oil companies have is that the Russians, the French and the Chinese already have existing relations with Iraq. And the question is: How much of that will be sanctified by the people who succeed Saddam?" The INC and its backers make no bones about the fact that the American forces gathering to attack Iraq will be liberating Iraq's oil. Unable to restrain himself, Chalabi blurted to The Washington Post that the INC intends to reward its American friends. "American companies will have a big shot at Iraqi oil," he proclaimed. Meanwhile, economists allied with the INC -- including strategists at the Heritage Foundation, the AEI and JINSA -- are abuzz with plans to "denationalize" the Iraqi oil industry and then distribute it to Western, mostly American, companies. In late September, in "The Future of a Post- Saddam Iraq: A Blueprint for American Involvement," the Heritage Foundation's Ariel Cohen put forward a nearly complete scheme for the privatization of Iraq's oil, creating three separate companies for southern Iraq, the region around Baghdad and the Kirkuk fields in northern Iraq, with additional companies to operate pipelines and refineries and to develop Iraq's natural gas. In an interview, Cohen warned that France, Russia and China might find that their existing oil contracts with Iraq won't be honored by the INC. "It will be up to the next government of Iraq to examine the legal validity of the deals signed by the Saddam regime," says Cohen. "From a realpolitik point of view, these governments should try to get in early with the Iraqi National Congress and abandon Saddam. The window of opportunity is closing." It's hard to imagine that a regime that denationalized Iraq's oil would be very popular with Iraqis. The nationalization, which took place between 1972 and 1974, electrified Iraqis and stunned the industry worldwide. It also set dominoes falling throughout the Persian Gulf and the OPEC nations, as other countries ousted the multinationals and created state-owned enterprises. Eventually, even Saudi Arabia seized control of all-powerful Aramco, the consortium of Exxon, Mobil, Texaco and Chevron that had long been the colossus of the Persian Gulf. Now, cautiously, the oil industry sees a war in Iraq as a way to win back what's been lost. "Even in Saudi Arabia, all we can do is buy their oil," says an American oil company official. U.S. companies, this executive confirmed, want to return to greater direct control, perhaps through so-called production-sharing agreements that would give them both a direct stake in the oil fields and a greater share of the profits. It's also clear that the INC, the neoconservatives and oil executives are thinking beyond Iraq to Saudi Arabia. Ever since Robert W. Tucker wrote an article in Commentary in the 1970s proposing a U.S. occupation of Saudi Arabia's oil fields, such a scenario has been a cherished vision for a small but growing circle of strategists. (Last summer Perle invited a RAND Corporation analyst to speak to the Defense Policy Board on exactly that topic.) Earlier this year, in an article titled "Free the Eastern Province of Saudi Arabia," Singer suggested that the United States should help create a Muslim Republic of East Arabia. "I meant it seriously," says Singer. "Saudi Arabia is vulnerable not only to a U.S. seizure of their land but to U.S. unofficial participation in a rebellion by minority Shi'a in the Eastern Province." The Eastern Province, which is largely Shi'a, happens to include the vast bulk of Saudi Arabia's oil fields. One other problem is that the INC does not represent the entire Iraqi opposition movement. The two main Kurdish parties, the Kurdistan Democratic Party and the Patriotic Union of Kurdistan, though long-time bloody rivals, have momentarily patched things up. They've allied, in turn, with the Iraqi National Accord, a CIA-backed group of former Iraqi military officers, and with the Supreme Council for the Islamic Revolution in Iraq to form the Group of Four, an alternative to the INC that, they hope, will attract further American support. There is even a monarchist group trying to restore T.E. Lawrence's Hashemite kingdom in Baghdad that, some say, could promote a kingship in Iraq for Prince Hassan of Jordan, a Hashemite himself. Do these strategic realities, and the wide ridicule of Chalabi among Middle East experts, matter? "I don't think their point of view is relevant to the debate any longer," says Danielle Pletka, vice president of the American Enterprise Institute. "Sor-ry!" Thanks to the "entire vast army [of neoconservatives]" who've successfully won over Bush and Cheney, she observes, the INC has something that the other groups lack: the support of the president of the United States. Robert Dreyfuss Copyright � 2002 by The American Prospect, Inc. Preferred Citation: Robert Dreyfuss, "Tinker, Banker, NeoCon, Spy," The American Prospect vol. 13 no. 21, November 18, 2002. This article may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission from the author. 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