The Reagan and Bush Administrations' Policies Towards Iraq

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Iraqgate is the scandal by which the Reagan and the first Bush administration and government of then PM John Major of Britain sent the Iraqi regime of Saddam Hussein in the 1980's and 1990's weapons and material that were used for Saddam's programs to develop chemical, nuclear, and chemical weapons.

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"The chairman of the House Banking Committee said today that a Paramus, N.J., company had served as part of the network that Saddam Hussein used in his efforts to build a nuclear arsenal. 'Representative Henry Gonzalez, a Texas Democrat, said the company, Express Resources, had served as the United States branch of Euromac, a European company that was identified in the 1980's in court and intelligence documents as a front for the Iraqi government. 'Euromac, which was based in London, was the target of an investigation by the United States Customs Service and British law enforcement authorities in 1988. The investigation led to the arrests and convictions of the company's top officers for trying to ship nuclear triggers to Iraq. Executive Denies Involvement..."

"In September of 1990, Customs Service agents padlocked the doors of an Iraqi front company in a Cleveland suburb and, in response to a presidential order, froze its $2 million in assets. Customs Commissioner Carol Hallett said the action against Matrix Churchill Corp. came after agents learned that Iraq, which had invaded Kuwait one month earlier, had bought the firm "for the specific purpose of illegally acquiring critical weapons technology." But, unknown to Customs officials, government intelligence agencies had been aware of Matrix Churchill's role in Baghdad's arms procurement network for more than a year and had warned Bush Administration policy-makers, according to newly obtained documents and sources interviewed by The Times. The Administration, however, allowed Matrix Churchill to continue operations, in keeping with President Bush's decision to try to influence Iraqi President Saddam Hussein through favorable policy on high-tech exports and economic incentives. Administration officials maintain that any military assistance to Iraq was an inadvertent consequence of the attempt to moderate Iraqi actions. They said that they were unaware of the extent of the network's operations in this country and that top officials were distracted by other foreign policy concerns. But Rep. Henry B. Gonzalez (D-Tex.), whose House Banking, Finance and Urban Affairs Committee has been investigating Matrix Churchill and the Administration's policies toward Iraq, said: "The Administration knew a great deal about Saddam Hussein's military procurement program and made a conscious decision to tolerate it, and in many cases facilitated the effort." As early as June, 1989, a top-secret U.S. intelligence report had identified Matrix Churchill's British parent company as a key component of the Iraqi network, according to a newly disclosed document. And two months later, Defense Department analysts discovered that the Cleveland operation had funneled tens of millions of dollars worth of U.S. technology to Iraq's nuclear weapons and ballistic missile programs, according to sources. Recently declassified State Department documents show that after Iraq's invasion of Kuwait, Administration officials calculated that the Iraqi regime spent $10 billion to $20 billion acquiring nuclear weapons and missile technology in the 1980s. Most of the buying took place through a series of front companies and shadowy agents operating in Europe, but some occurred in the United States."

"In the spring of 1989, a CIA officer approached the president of a small engineering firm in Alabama and quizzed him about a carbide-tool manufacturing facility the company was building at an Iraqi government installation southwest of Baghdad. In the fall of that year, a Customs Service agent and an Agriculture Department criminal investigator visited the firm, XYZ Options Inc. in Tuscaloosa, and posed a similar set of questions to its president, William H. Muscarella. "In both instances, I told the government what we were doing," said Muscarella. "I gave them blueprints and told them everything about the plant. They knew everything." By the fall of 1989, U.S. authorities suspected that Iraq intended to use the plant as part of its ambitious weapons program, according to newly obtained records. Yet, while the government blocked the export of a key piece of machinery, it apparently did nothing to discourage construction of the $14-million plant by withholding export licenses for other components, which were shipped to Iraq. When Iraq invaded Kuwait in August, 1990, the plant was virtually complete and capable of turning out military goods as well as consumer products, according to Muscarella. After the Gulf War, the military use was confirmed. U.N. inspectors hunting for Iraqi weapons facilities discovered the carbide factory was part of Iraq's main nuclear-weapons complex. After determining that the factory had been used in the effort to develop a bomb, the inspectors blew up the plant, U.N. documents show...

The Times reported previously that U.S. intelligence agencies warned high-level Administration officials as early as June, 1989, that a company outside Cleveland named Matrix Churchill was a front in Iraq's worldwide arms-procurement network. However, the Administration rejected efforts to restrict sales of U.S. technology to Baghdad as late as May, 1990. The XYZ Options deal is a clear example of how the Iraqi network operated. Described as a commercial transaction, the arrangement was set up by Matrix Churchill and financed by the Atlanta branch of Italy's Banca Nazionale del Lavoro."

press coverage of the Iraqgate scandal:

"ABC News Nightline opened last June 9 with words to make the heart stop. "It is becoming increasingly clear," said a grave Ted Koppel, "that George Bush, operating largely behind the scenes throughout the 1980s, initiated and supported much of the financing, intelligence, and military help that built Saddam's Iraq into the aggressive power that the United States ultimately had to destroy.

"Is this accurate? Just about every reporter following the story thinks so. Most say that the so-called Iraqgate scandal is far more significant then either Watergate or Iran-contra, both in its scope and its consequences. And all believe that, with investigations continuing, it is bound to get bigger.

"Why, then, have some of our top papers provided so little coverage? Certainly, if you watched Nightline or read the London Financial Times or the Los Angeles Times, you saw this monster grow. But if you studied the news columns of The Washington Post or, especially, The New York Times, you practically missed the whole thing. Those two papers were very slow to come to the story and, when they finally did get to it, their pieces all too frequently were boring, complicated,and short of the analysis readers required to fathom just what was going on. More to the point, they often ignored revelations by competitors.

"Eight months ago, the Los Angeles Times published the first in a continuing series of articles charging that the Bush Administration had secretly funneled several billion dollars worth of loan guarantees and military technology to Saddam Hussein from 1986 to 1990. Directly and indirectly, the stories said, this money and materiel gave Hussein the very weapons he later used against American and allied forces in the Persian Gulf War.

"The Times stories--many based on previously secret papers prepared by the Bush Administration--also alleged that the Administration tried to cover up what it had done by altering documents it supplied to Congress and by attempting to obstruct official investigations of aid to Iraq.

"The Times has now published more than 100 stories, totaling more than 90,000 words, on the scandal known as Iraqgate. Almost half these stories have appeared on Page 1. Although The Times "got a good chunk of the story first," as William Safire wrote in a New York Times column, many other news organizations--print and broadcast--have also pursued it. But even though 1992 is an election year and President Bush has proven vulnerable on other grounds, Iraqgate has had negligible impact on the national political scene.

"Shortly after The Times stories began running, Rep. Henry B. Gonzalez (D-Tex.), chairman of the House Banking Committee, cited them in calling for congressional hearings on Iraqgate. Gonzalez, who had been investigating the role in Iraqgate of the Atlanta branch of the Italian government-owned Banca Nazionale del Lavoro for more than a year, also read dozens of classified documents on Iraqgate into the Congressional Record.

"But the House was often near-empty when Gonzalez was reading, and Gonzalez was dismissed by many as "an amiable blowhard, a colorful character, and not as a serious exposer of wrongdoing, which is what he is," Safire says.

"There was no public outcry over Iraqgate similar to that which triggered the Watergate and Iran-Contra investigations. When U.S. Atty. Gen. William P. Barr announced in August that he would not appoint a special prosecutor to investigate whether any laws were broken, the reaction, especially outside Washington, was barely perceptible. Only in recent weeks has the story spurred appreciable political activity, and even now, it does not seem to have had substantial impact on the general public.

"Why not?

"The myriad answers to that question make for an intriguing and revealing case study of both the journalistic and political processes..."

"While the O.J. Simpson trial gobbled up endless TV hours and countless news pages, a concurrent criminal trial in Miami went almost unnoticed by the national media, even though it called into question the judgment of three U.S. presidents.

"President Clinton's Justice Department had put on trial Teledyne Industries, a major military contractor, and two of its mid-level employees, on charges of selling cluster-bomb parts to a Chilean arms manufacturer, Carlos Cardoen. Cardoen, in turn, allegedly shipped finished bombs to Iraq.

"Defense attorneys for the Teledyne employees argued that the CIA, as part of a secret operation that has come to be known as "Iraqgate," had authorized the shipments--a claim that the Reagan/Bush administration had long denied. Since taking office in 1993, the Clinton team has continued that GOP position, stating as recently as Jan. 16 that the administration "did not find evidence that U.S. agencies or officials illegally armed Iraq."

"But on Jan. 31, this bipartisan dike finally sprang a leak. Howard Teicher, who served on Reagan's National Security Council staff, offered an affidavit in the Teledyne case that declared that CIA director William J. Casey and his deputy, Robert M. Gates, "authorized, approved and assisted" delivery of cluster bombs to Iraq through Cardoen (In These Times, 3/6/95).

"Teicher also described a still-secret National Security Decision Directive signed by President Reagan in June 1982 that set forth a U.S. policy of preventing Iraq from losing its war with Iran. "CIA Director Casey personally spearheaded the effort to ensure that Iraq had sufficient military weapons, ammunition and vehicles to avoid losing the Iran-Iraq war," Teicher stated..."

Related Sourcewatch Pages:

Matrix Churchill

Gerald Bull


Safa al Habobi

Origins of First Iraq War

Paul Henderson

prewar intelligence

Scott Inquiry

The U.S. Arming of Saddam Hussein