From Casi-news clippings originally from Salon. Sorry about the formatting, thats the way it came to me, but it seems a worthwhile article on Chalabi's background and machinations.
Cheers, Ken Hanly This is long.... How Ahmed Chalabi conned the neocons The hawks who launched the Iraq war believed the deal-making exile when he = promised to build a secular democracy with close ties to Israel. Now the Is= rael deal is dead, he's cozying up to Iran -- and his patrons look like the= y're on the way out. A Salon.com exclusive. - - - - - - - - - - - - By John Dizard May 4, 2004 | When the definitive history of the current Iraq war is finall= y written, wealthy exile Ahmed Chalabi will be among those judged most resp= onsible for the Bush administration's decision to invade Iraq and topple Sa= ddam Hussein. More than a decade ago Chalabi teamed up with American neocon= servatives to sell the war as the cornerstone of an energetic new policy to= bring democracy to the Middle East -- and after 9/11, as the crucial antid= ote to global terrorism. It was Chalabi who provided crucial intelligence o= n Iraqi weaponry to justify the invasion, almost all of which turned out to= be false, and laid out a rosy scenario about the country's readiness for a= n American strike against Saddam that led the nation's leaders to predict -= - and apparently even believe -- that they would be greeted as liberators. = Chalabi also promised his neoconservative patrons that as leader of Iraq he= would make peace with Israel, an issue of vital importance to them. A year= ago, Chalabi was riding high, after Saddam Hussein fell with even less trouble than expecte= d. Now his power is slipping away, and some of his old neoconservative allies = -- whose own political survival is looking increasingly shaky as the U.S. o= ccupation turns nightmarish -- are beginning to turn on him. The U.S. rever= sed its policy of excluding former Baathists from the Iraqi army -- a polic= y devised by Chalabi -- and Marine commanders even empowered former Republi= can Guard officers to run the pacification of Fallujah. Last week United Na= tions envoy Lakhdar Brahimi delivered a devastating blow to Chalabi's futur= e leadership hopes, recommending that the Iraqi Governing Council, of which= he is finance chair, be accorded no governance role after the June 30 tran= sition to sovereignty. Meanwhile, administration neoconservatives, once uni= ted behind Chalabi and the Iraqi National Congress he founded, are now spli= t, as new doubts about his long-stated commitment to a secular Iraqi democr= acy with ties to Israel, and fears that he is cozying up to his Shiite co-r= eligionists in Iran, begin to emerge. At least one key Pentagon neocon is said to be on his way= out, a casualty of the battle over Chalabi and the increasing chaos in Ira= q, and others could follow. "Ahmed Chalabi is a treacherous, spineless turncoat," says L. Marc Zell, a = former law partner of Douglas Feith, now the undersecretary of defense for = policy, and a former friend and supporter of Chalabi and his aspirations to= lead Iraq. "He had one set of friends before he was in power, and now he's= got another." While Zell's disaffection with Chalabi has been a long time = in the making, his remarks to Salon represent his first public break with t= he would-be Iraqi leader, and are likely to ripple throughout Washington in= the days to come. Zell, a Jerusalem attorney, continues to be a partner in the firm that Feit= h left in 2001 to take the Pentagon job. He also helped Ahmed Chalabi's nep= hew Salem set up a new law office in Baghdad in late 2003. Chalabi met with= Zell and other neoconservatives many times from the mid-1990s on in London= , Turkey, and the U.S. Zell outlines what Chalabi was promising the neocons= before the Iraq war: "He said he would end Iraq's boycott of trade with Is= rael, and would allow Israeli companies to do business there. He said [the = new Iraqi government] would agree to rebuild the pipeline from Mosul [in th= e northern Iraqi oil fields] to Haifa [the Israeli port, and the location o= f a major refinery]." But Chalabi, Zell says, has delivered on none of them= . The bitter ex-Chalabi backer believes his former friend's moves were a de= liberate bait and switch designed to win support for his designs to return = to Iraq and run the country. Chalabi's ties to Iran -- Israel's most dangerous enemy -- have also alarme= d both his allies and his enemies in the Bush administration. Those ties we= re highlighted on Monday, when Newsweek reported that "U.S. officials say t= hat electronic intercepts of discussions between Iranian leaders indicate t= hat Chalabi and his entourage told Iranian contacts about American politica= l plans in Iraq." According to one government source, some of the informati= on he gave Iran "could get people killed." A Chalabi aide denied the allega= tion. According to Newsweek, the State Department and the CIA -- Chalabi's = longtime enemies -- were behind the leak: "the State Department and the CIA= are using the intelligence about his Iran ties to persuade the president t= o cut him loose once and for all." But the neocons have bigger problems than Chalabi. As the intellectual arch= itects of an "easy" war gone bad, they stand to pay the price. The first to= go may be Zell's old partner Douglas Feith. Military sources say Feith wil= l resign his Defense Department post by mid-May. His removal was reportedly= a precondition imposed by Ambassador to the U.N. John Negroponte when he a= greed to take over from Paul Bremer as the top U.S. official in Iraq. "Feit= h is on the way out," Iraqi defense minister (and Chalabi nephew) Ali Allaw= i says confidently, and other sources confirm it. Feith's boss, Undersecret= ary of Defense Paul Wolfowitz, may follow. Bush political mastermind Karl R= ove is said to be determined that Wolfowitz move on before the November ele= ction, even if he comes back in a second Bush term. Sources say one of the = positions being suggested is the director of Central Intelligence. In part, the White House political crew is reacting to pressure from the un= iformed military, which is becoming a quiet but effective enemy of the neoc= ons. The White House seems to be performing triage to save the political ca= pital of Defense Secretary Donald Rumsfeld and Vice President Dick Cheney, = Iraq hawks who have close ties to the neocons. "Rumsfeld and Cheney stay," = says an Army officer. "Powell has his guy Negroponte in there. But the neoc= ons are losing power day by day." Why did the neocons put such enormous faith in Ahmed Chalabi, an exile with= a shady past and no standing with Iraqis? One word: Israel. They saw the i= nvasion of Iraq as the precondition for a reorganization of the Middle East= that would solve Israel's strategic problems, without the need for an acco= mmodation with either the Palestinians or the existing Arab states. Chalabi= assured them that the Iraqi democracy he would build would develop diploma= tic and trade ties with Israel, and eschew Arab nationalism. Now some influential allies believe those assurances were part of an elabor= ate con, and that Chalabi has betrayed his promises on Israel while cozying= up to Iranian Shia leaders. Whether because of intentional deception or a = realistic calculation of what the Iraqi people will accept, it's clear that= Chalabi won't be delivering on his bright promises to ally a democratic Ir= aq with Israel. Had the neocons not been deluded by gross ignorance of the = Arab world and blinded by wishful thinking, they would have realized that t= he chances that Chalabi or any other Iraqi leader could deliver on such pro= mises were always remote. In fact, they need have looked no further than th= e Israeli media: A long piece in Israel's Jerusalem Report magazine publish= ed nine days before the war began last year featured Israelis who dismissed= Chalabi's promises about Israel as a political ploy, "a means by which to = appeal to the Jewish lobby and, in turn, the administration." "Chalabi has no use for Israel. He knew all along that this was a nonstarte= r," says Robert Baer, a former CIA field officer who led covert U.S. operat= ions inside Iraq in the mid-1990s aimed at toppling Saddam. "Chalabi knows = exactly what Israel stands for in Iraq and in Iran, with or without Saddam.= The idea of building the pipeline to Haifa, or rapprochement with Iran ...= I'm sure he told [the neocons] these things could happen, that he played t= o their prejudices and said, 'This is the new Middle East,' but he didn't b= elieve any of it. That's the way Chalabi operates." "He was willing to ally with anyone to get where he is now, whether it was = the neocons, the Israelis or the Iranians," adds Baer. "He wanted back into= Iraq and nothing was going to stop him." It could have been predicted that Chalabi would want to deal with Israel's = enemies in Iran. He and his relatives have made that clear. As Iraq's defen= se minister, Ali Allawi, says, "We have a lot of problems in common with Ir= an. If we could involve them in a regional security agreement with us, that= would be very fruitful." Still, Chalabi's visit to Iran last December and = his repeated assertions that peace in Iraq requires peace with Iran first a= larmed, then embittered, his old friends. Chalabi's neoconservative friends, however, seem to have looked away from e= vidence that the businessman has always allied himself with whomever can he= lp him the most. In the 1980s, Chalabi's scandal-plagued Petra Bank funnele= d money to Amal, a Shia militia allied with Iran in Lebanon. And according = to a former CIA case officer who worked in Iraq, Chalabi had close ties to = the Iranian regime when he was in Kurdish Northern Iraq in the mid-1990s tr= ying to foment resistance to Saddam. He even dealt with Saddam himself when= the price was right, and initiated a method to finance the dictator's trad= e with Jordan in the 1980s through his Petra Bank. Chalabi's Arab admirers say they knew he'd never make good on his promises = to ally with Israel. "I was worried that he was going to do business with t= he Zionists," confesses Moh'd Asad, the managing director of the Amman, Jor= dan-based International Investment Arabian Group, an industrial and agricul= tural exporter, who is one of Chalabi's Palestinian friends and business pa= rtners. "He told me not to worry, that he just needed the Jews in order to = get what he wanted from Washington, and that he would turn on them after th= at." Ahmed Chalabi refused to speak to Salon. He has denounced U.N. envoy Brahim= i as an "Arab nationalist" and compared the U.S. decision to bring back som= e former Iraqi soldiers to "allowing Nazis into the German government immed= iately after World War II." Douglas Feith, Chalabi's longtime ally and spon= sor, also declined a request for an interview. Nevertheless, the outline of= the new conflict between the Shiite former exile and his erstwhile sponsor= s is clear, based on interviews with Iraqi officials, U.S. military personn= el and intelligence officers, and politically connected Israelis. The crux of the conflict is Iran, and whether the U.S. should try to make a= deal with the Islamic Republic to enlist its support for peace in Iraq. Be= fore and immediately after the war, the neoconservative position was that U= .S. empowerment of the long-disenfranchised Shia community would make possi= ble an Iraqi government that would make a "warm peace" with Israel. This in= turn would pressure the rest of the Arab world to make a similar peace, wi= thout the need to concede land to the Palestinians. This was, of course, a pipe dream: The Shia community in Iraq, like the Sun= ni community, is overwhelmingly anti-Israel, and the entire range of its le= adership has close ties with Iran. Belatedly realizing that Chalabi's promi= se to build a secular, pro-Israel Shiite government is not going to come tr= ue, in the past couple of months the neocons in the Defense Department have= tried to come up with a new plan. Feith, Wolfowitz and others are backing = away from the Shia, due to their ties to Iran as well as Chalabi's deceptio= ns. They are trying to cobble together a coalition of rehabilitated Sunni M= uslim Iraqi Army officers and Kurdish leaders backed by their militias that= would have Shia participation, but in a reduced role. For proponents of th= is strategy, the front-runner to be prime minister of the next version of t= he transitional government is Kurdish leader Jalal Talabani, the founder an= d leader of the Patriotic Union of Kurdistan. This policy has very little support. It's opposed by those neocons who stil= l back Ahmed Chalabi and his Shia allies -- including influential former De= fense Policy Board chair Richard Perle, along with neocon intellectuals Mic= hael Ledeen, Bernard Lewis and Barbara Lerner. Although they like Talabani,= they oppose the tilt toward the Sunnis, and some are still adamant that Ch= alabi play a role. "He's effective in bringing groups of Iraqis together, s= omething he's done for many years," Perle said on CNN on March 28. "He beli= eves in democracy. I have complete confidence in him, and I hope the people= of Iraq are wise enough to see his benefits." The shift in strategy toward Talabani is also being dismissed, for differen= t reasons, by National Security Advisor Condoleezza Rice, Secretary of Stat= e Colin Powell, John Negroponte, the new ambassador to Iraq, and the unifor= med military. They look at the Iraqi population statistics, which show a Sh= ia majority; a map of the country, which shows a long, hard-to-defend borde= r with Iran; and the U.S. military order of battle, which shows overstretch= ed armed forces, and conclude there cannot be a stable Iraqi government tha= t isn't led by the majority Shia. Even the Kurds have their doubts about the new rise in their standing with = the neocons. Richard Galustian, a British security contractor in Iraq who w= orks closely with the Kurdish authorities, says, "The political elevation o= f the Kurds within Iraq will be very unpopular with other Iraqis, and will = be treated with caution by the Kurdish leaders themselves. Many will be ske= ptical of the ability of the U.S. administration to sustain and remain cons= istent in any new relationships." If the Americans can turn on the Shia, th= e reasoning goes, why couldn't they later turn on the Kurds? President Bush's ability to impose order on this mess is not obvious, and h= e doesn't have more than a couple of weeks to figure out a solution. With p= hotographs of U.S. troops torturing and abusing Iraqi prisoners inflaming t= he Arab world, U.S. casualties soaring, the June 30 date to turn over sover= eignty looming and no exit strategy in sight, Bush's Iraq adventure has tur= ned into a deadly mess that seems certain to make the U.S. more at risk fro= m terrorism, not less. Bush brought this trouble on himself by buying into = the neocons' interpretation of the dynamics of the Middle East, and into Ah= med Chalabi's plans for Iraq -- maybe most disastrously by buying Chalabi's= assurances that a secular government dominated by Israel-friendly Shia was= possible. If Bush and the neocons wanted to know about Chalabi's real deal= -making nature, the signs were there for them to read. But they didn't want= to know. Chalabi appears to have recognized that the neocons, while ruthless, realis= tic and effective in bureaucratic politics, were remarkably ignorant about = the situation in Iraq, and willing to buy a fantasy of how the country's po= litics worked. So he sold it to them. Ahmed Chalabi's family, Shia Muslims from Kut in southern Iraq, has a tradi= tion of working with occupation governments, starting with the regime of th= e Ottoman Turks in 1638. Chalabi's father, Abdul Haydi Chalabi, was a membe= r of the council of ministers of King Faisal II, whose short-lived Hashemit= e dynasty was installed by the British in 1921. He was also president of th= e Iraqi Senate created by the Hashemites. The Hashemites are Sunni Muslim nobility, originally from a region in today= 's Saudi Arabia. While they lost their leading position in the Arabian peni= nsula to the Al Sa'ud family, they were successfully installed as monarchs = in both Jordan and Iraq with British support. The Jordanian Hashemites foun= d a base of support in the local Bedouin tribes, and retain power to this d= ay. The Iraqi Hashemite branch, though, was strongly opposed by the local S= hia Muslim ayatollahs from the beginning. So in 1922 the Iraqi Shia religio= us leaders in Najaf issued a fatwa, or decree, forbidding observant Shia fr= om supporting the Hashemites. The Chalabi family wasn't deterred, though. T= hey were among the few Shia to defy the fatwa and support the British-impos= ed dynasty. They were rewarded with royal patronage, and wound up controlli= ng the flour milling industry in Baghdad and Basra. The fatwa was finally l= ifted in 1937, and by then the Chalabis had made a fortune. Ahmed Chalabi was born in 1944. His family reached the peak of its wealth a= nd influence during his childhood. In 1958, though, the Hashemite royals we= re slaughtered during a military coup d'=E9tat, and the Chalabis fled, firs= t to Jordan, then to Britain. Chalabi reportedly still has a British passpo= rt. The highly intelligent Chalabi enrolled at MIT at 16, where he earned a deg= ree in mathematics. He then took a Ph.D. in math at the University of Chica= go in 1969. (His thesis was "On the Jacobson Radical of a Group Algebra.") = Despite these serious power-geek credentials, Chalabi has always been known= as charming, worldly, and a skilled networker. While at Chicago, Chalabi m= et Albert Wohlstetter, an applied mathematician and one of the founders of = the neoconservative movement. Wohlstetter introduced Chalabi to future move= ment leaders like Richard Perle and Paul Wolfowitz. After earning his doctorate, Chalabi returned to the Middle East and became= a math professor in Beirut. At the time Beirut was the peaceful financial = center of the region, and in 1963 Chalabi's family had, along with some loc= al partners, started Mebco, or the Middle East Banking Corp. It was run by = Chalabi's brother Jawad. They had also established a Swiss financial compan= y, Socofi, in 1954, as well as a Swiss subsidiary of MEBCO. As Ahmed Chalabi has told the story, the Jordanian Hashemite crown prince, = Hassan bin Talal, persuaded him to start the Petra Bank in Jordan in 1977. = Chalabi's associates say the family had given the Jordanian Hashemites some= of the assassinated Iraqi Hashemites' overseas assets after the 1958 coup,= which no doubt helped smooth the way. The Chalabi family's other banking a= nd financial companies provided further support. Just after the overthrow of the Shah of Iran, Chalabi seems to have first e= stablished his ties with the Iranian Shia theocracy. The new Islamic Republ= ic turned on the shah's former allies in Israel with a vengeance. The Irani= an regime set up a substantial intelligence and political apparatus in Leba= non, among the oppressed local Shia. One of the key Shia institutions in Lebanon was MEBCO in Beirut, which by t= he 1980s had become a banker for the Shia Amal militia. Amal and Hezbollah = were the principal private armies in Lebanon tied to the regime in Iran. Ch= alabi was placing Petra depositors' money with MEBCO in those years; by the= time Petra collapsed in 1989, bank auditors found, the equivalent of $41 m= illion in transactions with MEBCO were on the books. "All the Lebanese bank= s were divided between political parties and factions," says Hassan Abdul A= ziz, a former director at Petra Bank. "MEBCO bank was no different. All the= Shia were close to Iran emotionally or otherwise." A former CIA case offic= er in Lebanon has a less sympathetic view. "This was basically funding a ci= vil war, which meant murders, assassinations, and blowing up Israelis. MEBC= O was putting their chips on every square." Iran and the Shite militias wer= e not the only violent elements destabilizing Lebanon in the '70s and '80s,= of course. The bloody Israeli invasions of Lebanon, along with later punitive expeditions, infla= med the Shia and other Lebanese. But Lebanon was not the only venue for the Chalabi family's flexible and in= novative approach to international finance. This may come as a surprise to = some of Ahmed Chalabi's newer friends, but he helped finance Saddam Hussein= 's trade with Jordan during the 1980s. Specifically, Chalabi helped organiz= e a special trading account for Iraq at the Jordanian central bank. Due to = the problems created by the war with Iran, Saddam Hussein was unable to obt= ain credit on normal terms. The special account with the Jordanians allowed= him to swap oil for necessary imports -- at least Saddam thought they were= necessary -- without going through the international credit system. As Has= san Abdul Aziz explains, "Petra was the first to give letters of credit to = Iraq, which they did for 23 months before Banco del Lavoro did in 1984. (Th= e Banco del Lavoro scandal involved the provision of U.S. government commod= ities loans to buy arms for Saddam Hussein.) By 1986 Jordan had $1 billion = in annual trade with Iraq this way, and Petra Bank had 50% of the market." It makes the neocons= ' insistence that Saddam was behind Petra's fall -- and Chalabi's convictio= n for embezzling and fraud -- even less credible. After Petra was seized by the Jordanian authorities in August 1989, Chalabi= fled Jordan in the trunk of Crown Prince Hassan's car. Chalabi and his fam= ily were still wealthy, despite the collapse of their banking empire, but h= is career in Middle East banking was over. He was now a double exile, from = Jordan as well as Iraq, comfortably ensconced in London. Just a year after = his fall, though, Saddam Hussein invaded Kuwait. When the subsequent Gulf W= ar weakened but did not topple Saddam, a new possibility beckoned: the retu= rn of the Chalabi family to power in Iraq. Like many people in the Middle East, Ahmed Chalabi may have had the image o= f the CIA as an all-knowing organization of worldwide puppet masters. If so= , he soon learned otherwise. But in the early 1990s the CIA looked like a g= ood prospect to sponsor an anti-Saddam Iraqi exile movement. At the same ti= me, though, Chalabi was also looking to the Islamic regime in Iran for help= . Chalabi and some fellow exiles founded the Iraqi National Congress in 1992.= The INC was largely funded by the CIA, which provided part of its support = through the Rendon Group, a Washington public relations company that also d= oes international political work for the Department of Defense. The CIA's s= upport for the INC paid for two radio stations, various propaganda operatio= ns, and training camps in northern Iraq for Iraqi army defectors. (Northern= Iraq, controlled by various Kurdish factions and protected by U.S. air cov= er, was a safe haven for Iraqi dissidents along with U.S. and allied intell= igence operators.) While Chalabi was perfectly willing to take the CIA's money, he quickly lea= rned that it had become an ineffectual, self-obsessed bureaucracy. "He had = absolute, total disdain for D.C.," says one of his former case officers in = northern Iraq. "He looked at the Agency, and Rendon, and they flashed incom= petence." The case officer doesn't know precisely when Chalabi developed a deep relat= ionship with the Iranian clerical regime, but it was in place when Chalabi = was in northern Iraq in the early '90s. As the case officer recounts it, "H= e was given safe houses and cars in northern Iraq, and was letting them be = used by agents from the Iranian Ministry of Intelligence and Security [Veva= k], and the Iranian Revolutionary Guard Corps. At one point he tried to bro= ker a meeting between the CIA and the Iranians." The same officer says from time to time Chalabi would offer him "intelligen= ce," which the officer would turn down. "I knew it wasn't any good, and he = knew I knew. He took the refusal in good humor. We had a good relationship.= I like him." The CIA's relationship with Chalabi came to an end after a failed offensive= in March 1995 against Saddam's forces by the small group of INC exiles and= the militia of the Patriotic Union of Kurdistan. The CIA had withdrawn the= support it had initially offered for the offensive, in what looks like a c= lassic conflict between field officers and desk officers. Chalabi left nort= hern Iraq the next month, and the CIA cut off its funding for the INC. It w= as at this time that Chalabi turned his attention to the American neoconser= vatives. The neocons were deeply disturbed by the Israeli government's "lan= d for peace" negotiations with the Palestinians. The usefulness of the West= Bank for "defense in depth" was less important than it would have been fro= m the '40s to the '70s, given the increase in Israel's relative technologic= al and military advantage over the Arabs. However, the idea of giving up wh= at Israel's right-wing Likud leaders and some of the neocons themselves bel= ieved to be Israel's God-given lands on the West Bank of the Jordan River was anathema to them.= The solution to Israel's strategic dilemma, in their view, was to somehow = change the Arab governments. The neoconservative strategy for Israel was laid out in a 1996 paper called= "A Clean Break: A New Strategy for Securing the Realm," issued by the Inst= itute for Advanced Strategic and Political Studies in Jerusalem (but writte= n by Americans). The principal authors for the paper were Douglas Feith, th= en a lawyer with the Washington and Jerusalem firm of Feith and Zell, and R= ichard Perle, who until last year was the chairman of the Defense Policy Bo= ard, an advisory committee for Defense Secretary Rumsfeld In the section on Iraq, and the necessity of removing Saddam Hussein, there= was telltale "intelligence" from Chalabi and his old Jordanian Hashemite p= atron, Prince Hassan: "The predominantly Shi'a population of southern Leban= on has been tied for centuries to the Shi'a leadership in Najaf, Iraq, rath= er than Iran. Were the Hashemites to control Iraq, they could use their inf= luence over Najaf to help Israel wean the south Lebanese Shi'a away from Hi= zbollah, Iran, and Syria. Shi'a retain strong ties to the Hashemites." Of c= ourse the Shia with "strong ties to the Hashemites" was the family of Ahmed= Chalabi. Perle, Feith and other contributors to the "Clean Break" seemed n= ot to recall the 15-year fatwa the clerics of Najaf proclaimed against the = Iraqi Hashemites. Or the still more glaring fact, pointed out by Rashid Kha= lidi in his new book "Resurrecting Empire," that Shiites are loyal only to = descendants of the prophet Muhammad's son-in-law, Ali, and reject all other= lineages, including the Hashemites. As Khalidi caustically notes, "Perle and his colleagues we= re here proposing the complete restructuring of a region whose history and = religion their suggestions reveal they know hardly anything about." In shor= t, the Iraqi component of the neocons "new strategy" was based on an ignora= nt fantasy of prospective Shia support for ties with Israel. For Ahmed Chalabi, the neoconservatives' support was the key to getting Was= hington on his side. And Chalabi's leadership, in turn, was key to the neoc= ons' support for the INC. Perle and Feith, along with future Bush administr= ation officials Paul Wolfowitz and Donald Rumsfeld, signed the February 199= 8 "open letter" to President Clinton, in which they listed nine policy step= s that were in the "vital national interest" of the United States. The firs= t of these was "Recognize a provisional government of Iraq based on the pri= nciples and leaders of the Iraqi National Congress (INC) that is representa= tive of all the peoples of Iraq." In October 1998, under intense lobbying p= ressure from the neocons, Congress passed, and President Clinton signed, th= e "Iraqi Liberation Act," which provided money and U.S. legitimacy for Chal= abi's INC, along with six other exile groups. However, while Chalabi had proven himself as a lobbyist, if not a guerrilla= leader, he had a continuous uphill battle with U.S. intelligence agencies,= diplomats and the military, who never liked the INC's loose ways with the = facts and taxpayer money. This meant that Chalabi had to constantly reinfor= ce his countervailing support from the neoconservatives -- at least until t= hey took power in the Bush administration in 2001, and squashed all dissona= nt internal voices on Chalabi. That's when Chalabi and his allies stepped u= p their planning for an American overthrow of Saddam Hussein. Behind the sc= enes, Chalabi was also detailing for the neoconservatives and their Israeli= allies in the Likud party how the INC would take care of Israel. One of the key promises he made concerned the revival of the Iraq-Israel oi= l pipeline. The pipeline from the oilfields of Kirkuk and Mosul to Haifa ha= d been built by the British in the late 1920s, and was one of the main targ= ets of the Palestinian Arab revolt in 1936-38. The 8-inch line was finally = cut after Israel's independence in 1948. The sections in Arab territory hav= e mostly rusted away or been carted off for scrap. The Israeli section is u= sed as an irrigation pipe. The fully surveyed right of way, though, remains= . It could handle a modern, 42-inch pipe, sufficient to supply the Haifa re= finery. With Chalabi's encouragement, the Israeli Ministry of National Infrastructu= re, which is responsible for oil pipelines, dusted off and updated plans fo= r a new pipeline from Iraq. "The pipeline would be a dream," says Joseph Pa= ritzky, the minister of national infrastructures. "We'd have an additional = source of supply, and could even export some of the crude through Haifa. If= we could build it, a pipeline would give us stable transport prices. Compa= re that to tankers; this year their price has almost tripled. We could also= avoid problems such as strikes in our ports, which I've had to deal with. = But we'd need a treaty with Iraq, and a treaty with Jordan to build the pip= eline." With Chalabi in power in Iraq, either in front or behind the scenes, L. Mar= c Zell confirms, the neocons were told there would be such a treaty with Ir= aq. "He promised that. He promised a lot of things." Just after the U.S. takeover of Iraq, but before the establishment of the G= overning Council of which Chalabi would be finance chair, Paritzky was lobb= ied by INC representatives in a meeting at the Dead Sea Marriott Hotel reso= rt in Jordan. "We had a chitchat about it with the Iraqis, and with the Jor= danians. But we couldn't go to the market and raise funds based on chitchat= . We would have needed more to go on." Nevertheless, shortly afterward, on = April 9, 2003, Paritzky announced a new technical appraisal of the pipeline= . The neocons in the Defense Department, such as Undersecretary of Defense fo= r Policy Douglas Feith, were more optimistic about the pipeline project tha= n Paritzky, who knew too much about the Middle East to be easily enthused b= y Chalabi's promises. The DOD neocons sent a telegram directly to the Israe= li Foreign Ministry, violating protocol in bypassing the State Department, = expressing interest and support for the pipeline project. The State Departm= ent had been told by the Jordanians that there would be no pipeline unless = the Israelis reached a settlement with the Palestinians. The neocons didn't= want to hear that. "If the government agreed to a pipeline without a Pales= tinian settlement," says a Jordanian official, "the monarchy would fall." In the meantime, having used the neocons to get himself on the Governing Co= uncil, Chalabi appointed friends and relatives to key positions in the gove= rnment. His nephew Salem (Sam) Chalabi, a lawyer, did much of the drafting = of the interim constitution. Another nephew, Ali Allawi, was made minister = of trade, with responsibility over foreign trade and investment in Iraq (he= was later also named defense minister). Other Chalabi nominees went into t= he Central Bank, the Finance Ministry and the Oil Ministry. But Chalabi had his eye on the bigger picture. The wealthy exile had visite= d Tehran before the war, in August 2002 and January 2003. On those trips he= met with senior Iranian officials, and with Mohammed Bakr Al-Hakim, the le= ader of the Supreme Council for the Islamic Revolution in Iraq, the main Sh= ia opposition group. The neoconservatives chose to overlook these visits to= a member of the "Axis of Evil." It could be argued that there was no other= way to liaise with Iraqi Shia leaders. Then in December 2003, Chalabi went to Tehran to meet with Hasan Rohani, th= e head of Iran's Supreme National Security Council. At that meeting, Chalab= i said, "The role of the Islamic Republic of Iran in supporting and guiding= the opposition in their struggles against Saddam's regime in the past, and= its assistance toward the establishment of security and stability in Iraq = at present, are regarded highly by the people of Iraq." U.S. intelligence agencies, along with leading neocons, began to look again= at just who Chalabi's real friends might be, especially since Iranian inte= lligence agents from his old friends at Vevak were known to be active in Ir= aq. Also, the Israelis began to notice that Chalabi's old promises had been= forgotten. "I just got the bid papers for a $145 million highway project that were put= out by the Iraqis, and they had the Israeli boycott language in them," an = Israeli in Baghdad told me in March. "Chalabi promised the boycott would be= over." Ali Allawi, the Chalabi nephew in charge of the Ministry of Trade, and now = also the minister of defense, calls trade with Israel "a non-starter. We ar= en't plugged into that network, and as far as I'm concerned they sell thing= s we don't need. As for the boycott. I don't care. What's the matter with i= t? The U.S. boycotts Cuba, and nobody says anything about it. "Our future is more to the east, with Iran, and to the south, with the Gulf= states. Iran has natural geographic ties to Iraq. I'm not interested in wh= at those neoconservatives at the (Coalition Provisional Authority) have to = say about Iran. We don't have sufficient port capacity, for example. We sho= uld use the Iranian ports and roads. Iraq should have fundamental economic = and trade relations with Iran, and Turkey, as long as they reciprocate, and= I think they will." He dismissed the Mosul-Haifa pipeline with a wave of h= is hand. Nabil Al Moussa, the deputy minister of planning for the Oil Ministry, conf= irmed Allawi's position. Asked whether the ministry had any plans for rebui= lding the pipeline to Israel, his previous professional courtesy went out t= he window. "Absolutely not, and never! Don't ever ask us if we will sell oi= l to Israel, because we never will!" Told of Allawi's and Al Moussa's reaction, Joseph Paritzky was philosophica= l, and a little contemptuous of his would-be neocon benefactors. "How naive= can these Americans be? What, they thought they had a deal? Didn't they no= tice they were in the Middle East?" A neocon's reaction to Paritzky was cha= racteristic: "He's a populist asshole who should have kept his mouth shut."= But Paritzky obviously understood Middle Eastern politics far better than = the neocons. While the neocons felt they could ignore negative reports on Chalabi from t= he CIA, the State Department and other bureaucratic enemies, they have a ha= rder time dismissing what comrades like Marc Zell have to say. Nevertheless= , for the time being, many are sticking to the Bush strategy of staying on = message and never admitting to mistakes. For example, last week, Michael Le= deen, a leading neocon at the American Enterprise Institute, complained in = the National Review Online about "the cascade of anti-Chalabi leaks from hi= s many mortal enemies at the Department of State and the Central Intelligen= ce Agency." Changing the message is painful. As one neocon says: "The worst= part of all this [Chalabi's betrayal] is that it will be embarrassing to m= y friends in the Pentagon." Defense minister Allawi doubts that the neocons will be able to prevail in = their plan to replace Shia dominance in the new Iraq with the Sunni-Kurdish= coalition. "This is the last stand of the neocons, I think. The U.S. does = have a new policy, which is to find a way to leave. That plan isn't the way= to do it. I hear Condi Rice's office opposes the idea, and so does Ambassa= dor Negroponte." "We really don't have any choice," says a former intelligence officer and W= est Pointer in Iraq. "We have to make a deal, though we probably don't have= to deal with Iran directly. We can make it through the Shia clergy in Iraq= ." Allawi dismisses Feith and the neocons and what he calls "their grandiose s= chemes," but adds, "The neocons still have some influence, partly because t= hey have good ties with the Kurds. And Sharon is still the 840-pound gorill= a for U.S. policy." Clearly the neocons are now in the process of retreating and regrouping. Th= e consensus they'd forged among themselves on Iraq policy has dissolved. Th= e massive plans for the democratization of the Middle East are heading for = the recycling bin. Meanwhile, Chalabi's hopes for playing a leadership role= in Iraq appear to be gone, although the crafty businessman's ability to re= surrect himself from the dead should not be underestimated. It should also = be noted that Chalabi family members continue to wield power in Iraq, and w= ill likely continue to. For example, defense minister Allawi insists that h= e is not "in my uncle's entourage. Instead I travel alongside him." The rem= ark can be interpreted to mean that he doesn't take orders from his uncle, = and yet they are still close. Allawi has had a rather more conventional bus= iness career than that of his uncle, which has helped his political positio= n in Iraq. While an early investor in Petra Bank, he soon parted company wi= th his uncle and the other partners. He went on to become a successful and respectable portfoli= o manager in London before returning to Iraq last year. In the end, despite the neocons' best hopes, Iran has emerged as crucial to= the administration's desire for a political settlement in Iraq. Government= s in the neighboring countries have taken notice of the neocons' big blunde= r. "The Iranians have proven to be absolutely brilliant in all of this," sa= ys a well-connected Jordanian. "They're showing that they're going to be th= e ones to win this one, and they'll do it with American money and lives." For his part, Allawi praises what he sees as the U.S. military's new realis= m about the need for what he calls "a cold peace" with Iran. "There is no w= ay to have stability in Iraq without Iran," he insists. "The U.S. military = has been very correct in its contact with Iran at the border, and has never= violated the unwritten agreement." The neocons' Iraq triumph of last year has turned to ashes. Their Likud all= ies in Israel are bitterly split over Prime Minister Ariel Sharon's plans f= or the settlements in the territories. They have a coldly hostile Iraqi gov= ernment coming in the near future. The clerical regime they loathe in Iran = has dramatically improved its strategic position. Some of them must be ruei= ng the day they met Ahmed Chalabi, who told them the fairy tales they wante= d to hear. - - - - - - - - - - - - About the writer John Dizard is a columnist for the Financial Times.
