The Death Lobby: How the West Armed Iraq

Chapter 12: The DoC Missile Caper

(pp198-224)

Dassault's chief salesman, Huygues de l'Estoile, was riding high by the time Christmas 1984 rolled around. He had just spent two weeks escorting General Amer Rashid al-Obeidi around Paris, to visit with defense contractors and government officials. General Amer, who headed an obscure body called the Scientific Research Council, was better known within the closed circles of the French defense lobby as "the father of Iraq's French Air Force." He was also, as the head of the French Foreign Ministry's Research & Intelligence bureau, Philippe Coste, would reveal a few years later, the "father of Iraq's first real military procurement plan, which introduced French weapons on a massive scale into Iraq's Soviet arsenal." The Iraqi General was not just an important guest: he was about the most important visitor Dassault, Matra, Aerospatiale, and the other big time arms manufacturers in France could hope to welcome. Huygues de l'Estoile had been awarded the special honor of taking him around. It was known as Dassault's "hands-on" approach, and it created resentment among the other arms sellers.

General Amer was short and slight of build, and always appeared dwarfed by the Western business suits he was obliged to wear during these arms-buying forays beyond Iraq's borders. But the Iraqi technician had the eyes of a hawk, and was quick to pierce through pretence and incompetence. When he was angry, his severe steel-rimmed glasses flashed. "In truth," said another Frenchman who had extensive dealings with the Iraqi, "we were terrified of him."

General Amer was accompanied by a team of Air Force technicians, who had come to evaluate a French proposal to sell Iraq its latest combat jet, the Mirage 2000. The 2000 had just gone into service with the French Air Force, and was so new it had yet to receive a multi-mode radar, which the French hoped would turn it into a strong competitor of the F-16 and the Soviet MiG-29 on the international arms market.

De l'Estoile didn't need to engage in any hard-selling, because General Amer was more than familiar with the aircraft's remarkable performance, and was already sold on the package Dassault had put together. Having learned the lesson from the first Mirage sales in the 1970s, Dassault had chosen to avoid potential conflict with the French Air Force, and so refrained from offering the Iraqis the same plane the Air Force was just then receiving. The Iraqi Mirage 2000 would not be equipped as a multi-role fighter, but as a low-level penetration bomber, as General Amer had requested. Iraq was interested in sixty planes. When munitions, spares, and training were thrown it, the deal could be worth up to $6 billion, company officials said.

De l'Estoile took the Iraqi around to visit his old boss, Henri Martre, who was now in charge of Aerospatiale. Martre could hardly refuse an Iraqi request, since his company was reaping exceptional profits from its business with Baghdad. Iraq was now buying roughly three out of every four Exocet missiles to come off the Aerospatiale assembly lines, and that order alone was grossing the company some $250 million every year. Added to that, Iraq was buying thousands of HOT and Milan anti-tank missiles, Roland-2 air defense systems, and Gazelle helicopters, making Iraq Aerospatiale's largest customer for defense products.

General Amer explained that he was ready to kick in sizeable funds to speed up development of Aerospatiale's latest strategic missile, an air-launched cruise missile with a nuclear warhead that could be launched from the Mirage 2000. The mock-up was called the ASMP (Air-Sol Moyen Portée), and would be able to hit targets some 200 km from wherever it was launched, skimming over treetops and sand dunes to escape detection. Of course, Iraq was not interested in the nuclear version, General Amer reassured Martre, perceiving how uncomfortable he was with the Iraqi demand. The new arms package, French arms sellers interviewed in Baghdad readily admitted, was "a highly offensive shopping list. It has not been put together with Iran in mind, but to attack Israel."

But there was a hitch. Several hitches, as it turned out. Amer Rashid had brought along a negotiating team from the Iraqi Finance Ministry, to hammer out the details of a new loan from the French government to cover virtually the entire arms package. Iraq would be pumping most of the money back into the French economy, General Amer pledged. Nonsense, replied French Finance Minister, Pierre Bérégovoy. Using French government loans to purchase French-made planes for Iraq was just a way of robbing Peter to pay Paul, and Bérégovoy wanted nothing of it.

Bérégovoy and his accountants argued that Iraq was just stalling for time. There was no need to rush into huge new financial commitments to Baghdad until Iraq's tie-in to the Saudi Petroline opened later that year, which would boost Iraqi oil exports (and revenues) by 500,000 barrels per day. Even then, France could only consume so much Iraqi oil. The last big Iraqi arms purchases the French socialists had agreed to underwrite were still being paid for with huge shipments of Iraqi oil. Better to digest the business already in the works than to bite off more than the Iraqi economy could chew, the accountants said.

Huygues de l'Estoile and the defense lobby came charging back. They argued that without the new sale, France would lose the privileged position on the Iraqi market it had earned through years of patient work. The dispute over the new Iraqi planes went all the way to the Elysée palace, and was the subject of a December 1984 meeting that brought together President Mitterrand's inner cabinet. Defense Minister Charles Hernu took up industry's cause, and crossed swords with the Finance Minister over the sale. Finally Prime Minister, Laurent Fabius, suggested they compromise by cutting the Iraqi order by half. In three years time, when the first planes arrived, the French government could always reconsider the rest.

A French Defense Ministry mission to Baghdad was scheduled for early February 1985. The compromise solution was to be delivered personally by the head of the Defense Ministry's International Sales Directorate, General Pierre-René Audran. But Audran missed the plane.

The French had their own Irangate scandal, although it never made the headlines in quite the same way, and certainly never packed the same political punch. At the same time French defense contractors were selling billions in advanced weaponry to Iraq, the French government was trying to open a discreet channel to Tehran through private intermediaries and government officials. This backdoor policy, which paralleled the beginnings of President Reagan's "Iran initiative," also included officially sanctioned grey market arms sales to Iran, primarily through the French munitions manufacturer, Luchaire.

It all began in June 1984 when Roland Dumas, a personal advisor to President Mitterrand, invited a secret Iranian government emissary for a discreet chat at the Elysée Palace. (The emissary was a well-known arms dealer, Sadegh Tabatabai, who also happened to be a nephew of Ayatollah Khomeini). A few months later Dumas, who had been promoted to Foreign Minister, made a "secret" stop-over to Tehran while on a State visit to Saudi Arabia. It wasn't long before the secret was out, and the pro-Iraq lobby jumped on it. Opposition leader Jacques Chirac wrote in a November 1984 article that France should not fail in its "moral and material support of Iraq." He criticized those who were building bridges toward Iran in the hope of better days. "Instead of dreaming about the post-Khomeini era," he wrote in Politique Internationale, they "would do better to worry first about Khomeini." Whether it was because the secret was out or not, the French "initiative" toward Iran soon turned to tragedy.

General Pierre-René Audran had played such a key role in the Paris-Baghdad saga that he had earned the nickname "Mr Iraq." But in the months that preceded his scheduled trip to Baghdad to deliver the French response on the Mirage 2000 deal, he also made three secret trips to Tehran as part of the "initiative." The subject he was ordered to discuss with Iranian leaders involved the ways and means of opening a discreet arms pipeline to Iran. In December 1984, however, the Socialist government decided to back out of the deal. When Audran's negotiating partner in Tehran, Mohsen Rafiq Doust, learned of this decision, he was furious. As head of Iran's Revolutionary Guards Corps, he not only commanded hundreds of thousands of soldiers on the battlefront with Iraq, but also a phalanx of terrorists spread across the globe. Doust told the French emissary who delivered the bad news to Tehran that he held Audran personally responsible for the double-dealing of the French government, and intended to "make him pay." On January 28, only days before he scheduled to leave for Baghdad, Audran was gunned down outside his home in the Paris suburbs as he was leaving for work.

The Audran assassination shook the French arms establishment to the core, and prompted President Mitterrand to suspend the Mirage 2000 negotiations with Iraq. That message was carried to Baghdad on February 9, 1985 by Audran's temporary replacement at the International Directorate, General Bernard Carlier, who spent three days holed up in room 1010 of the Rashid Hotel. When his presence in Baghdad was discovered, he cancelled invitations to the grand reception that had been planned in his honor at the French Embassy. He was terrified that the Iranians had understood the motive behind this top secret mission, and were following his every move.

Baghdad wasted no time in putting its new relationship with Washington to the test. Even before he had raised the Iraqi flag at the embassy up on Massachusetts Avenue, Nizar Hamdoon's operation shifted into top gear. The commercial section worked overtime to locate American companies willing to sell high technology goods to Iraq. Dozens of Silicon Valley computer firms signed up for a March 1985 computer trade fair in Baghdad to show off their wares. Business prospects would so good that Hewlett Packard soon opened a Baghdad office.

But there was a sinister underside to Iraq's commercial interest in the United States that should have been apparent from the start. After all, Iraq was a nation at war, and its leadership had never earned points for its trustworthiness in the past, or for its support of democratic values. On the contrary, Iraq was known for its enormous arms purchases, for its repeated use of chemical weapons, and for being the first Arab nation in history to have prompted an Israeli preemptive strike because of its nuclear weapons program.

Despite all these reasons for caution, in the early months of 1985 the Reagan Administration opened the doors wide to Iraqi purchases of U.S. high technology goods, selling equipment that could not be exported to the Soviet Union or the Eastern bloc .And it wasn't a few deals, a few contracts, but a veritable flood. The Iraqis came in droves, directly, through U.S. agents, through the Germans, via the Austrians, the French, through the U.S. Embassy in Baghdad--any and every way possible. They wanted the keys to the candy store; and they were willing to pay for them.

General Amer Rashid al Obeidi prepared the way. His newly-organized Scientific Research Council began applying to the U.S. Department of Commerce in August and September 1984 to obtain modest quantities of computers, oscilloscopes, and electronic test equipment. These initial export licensing requests were greeted with heavy skepticism by the various agencies responsible for reviewing them for national security reasons, or to ascertain whether they constituted a threat because they could contribute to a nuclear weapons program. A 104-page listing of the these licenses, released by the Commerce Department after months of tense negotiations, shows that the United States government was simply not approving high-tech sales to Iraq before March 1985; then, all of a sudden the licenses started to go through, as if someone had turned a switch. Overnight, from its previous status as a country to watch, Iraq became a legitimate market for the sale of high technology goods, despite the clear military applications of many of the products being sold. This is one of the immediate prizes the Iraqis collected by renewing diplomatic relations with the U.S.

In one case, General Amer's Scientific Research Council (SRC) applied for a $5,000 oscilloscope on September 20, 1984. It was finally approved on March 4, 1985. In another, he applied for $21,000 worth of advanced computers for use at the French-built Saad 13 electronics factory. This application was put in on July 13, 1984 but not approved until May 7 the following year. Case after case shows exactly the same pattern. The various reviewing agencies all trod warily when it came to high-tech sales to Iraq, delaying them if not rejecting them outright--until the early months of 1985, when the Commerce Department succeeded in overruling them. From then on, the Commerce Department simply stopped referring many Iraqi license requests to other agencies for review. When it did refer the cases, and other agencies objected to them, Commerce escalated the debate to a higher bureaucratic level, where the Reagan administration's ideological commitment to free trade and its political debts to American exporters outweighed mounting concern for Iraqi weapons programs. Amer Rashid's Scientific Research Council obtained 21 separate licenses for computer equipment during this period, and it was only one of many active Iraqi procurement fronts. Some $94 million worth of sophisticated American computer hardware was sold directly to Iraqi weapons plants with Commerce Department approval.

One of the staunchest advocates of the new "sell all" policy to Iraq in early 1985 was California Congressman, Ed Zschau. He lobbied hard to get the Defense Department disbarred from the export review process, former DoD officials and Congressional sources say, to open a new export market to his Silicon Valley constituency. His Congressional assistant at the time, James Lemunyon, went on to become Deputy Assistant Secretary of Commerce during the Bush Administration, where he was put in charge of export licensing at the Bureau of Export Administration. (At least one license which had been rejected by the Defense Department, DoC case number B119803, was approved four years later once Lemunyon took over this key position at DoC. Singled out by an inter-agency investigation, this case has apparently been erased from the Department of Commerce computer and can not be found on any of the DoC lists subpoenaed by Congress. It concerns a "computer designed for image enhancement," according to a confidential August 9, 1988 memo submitted to the Government Accounting Office. The computer was made by the Silicon Valley firm, International Imaging, and went to Iraq's ballistic missile research center, Saad 16).

Dr. Steven Bryen was serving as Deputy Undersecretary of Defense for Trade Security Policy when the alarm bells first went off. In mid-1985, he got wind of a Commerce Department decision to license the sale of a hybrid computer to Iraq, whose combined analog and digital functions would allow Iraqi engineers to plot ballistic missile trajectories with pinpoint accuracy. The computer in question was almost identical to one sold to the White Sands missile test range in Nevada. It was made by a West Longbranch, New Jersey firm called Electronic Associates, Inc. According to the license application submitted to the Commerce Department on May 8, 1985, the official purchaser was a West German company called Gildemeister Projecta, which was the prime contractor of Iraq's Saad 16 missile research and design center in Mosul.

The EAI computer was only one of a long series of export license applications filed that spring for the Saad 16 complex. In a letter dated February 27, 1985 that was appended to the applications, the Director General of the Saad General Establishment informed Gildemeister that the center was dedicated to "checking of basic materials such as ferrous, non-ferrous metals, plastics, etc and scientific instruments and apparatuses, development and modernization of scientific instruments and apparatuses" (sic). The complex had been under construction since February 1985, he stated, and would contain 76 laboratories and workshops. Gildemeister was to use his letter in export license applications.

The EAI application, Department of Commerce case number A897642, was approved at the peak of the 1985 summer holidays, August 26, despite a Defense Department recommendation two months earlier that it be refused because of the strategic implications. The documents submitted by EAI to the Commerce Department clearly stated that Gildemeister was serving as the prime contractor for Iraq.

Bryen and his Defense Technology Security Administration (DTSA) just across the beltway from the Pentagon, began taking a closer look at the license applications that were routinely getting approved for Iraq, and what he saw alarmed him. U.S. high-tech was going directly to Iraq's Atomic Energy Agency, to the Iraqi Air Force, and to suspected weapons establishments and research labs. DTSA recommended that dozens of applications be rejected outright, while others be returned without action. But the Pentagon was simply overruled. So on September 19, 1985, Bryen fired off a memo to his counterpart in charge of the Bureau of Export Administration, Undersecretary of Commerce Paul Freedenberg. "In light of U.S. policy toward Iran and Iraq regarding military end-use," Bryen wrote, "I am very concerned that Commerce has taken such a casual attitude toward providing such sophisticated equipment (to Iraq) for an end-use... with such military significance." More than thirty licenses for Saad 16 were approved for advanced computers, test instruments, microwave communications and manufacturing equipment, satellite mapping devices, image enhancement, radio scaler, spectrum analyzers, and telemetry equipment.

Freedenberg just shrugged it off, and today admits that Iraq "just wasn't a big issue" during his tenure at the Commerce Department (he resigned to go into business as a private trade consultant on May 1, 1989). As for the millions of dollars worth of computers and sophisticated test equipment that were going to Saad 16, Freedenberg lays the blame squarely on the intelligence community. "They raised no red flag on Saad 16. It was considered just one of many research centers." Freedenberg liked to remind his critics that the United States had a policy to forego many lucrative high-tech sales to the Soviet Union and Eastern Europe at the time, leaving its allies to snatch them up. In Iraq, American companies were competing against a multitude of potential suppliers. "So there was no reason to deny U.S. firms access to this new computer market," Freedenberg argues, by subjecting them to unreasonable licensing requirements.

But Saad 16 was no ordinary research center, and it took no particular technical expertise to understand why. In the seven-page description that Gildemeister sent to the Commerce Department at the very start of the Saad 16 licensing process, project director M.B. Namody detailed the "academic" research labs he was seeking to equip with U.S. high-tech instruments. The document shows that they included the following:

Laboratory Description supplied by Iraq

0101 Mechanical workshop

0102 Heat treatment shop

0103 Surface treatment shop

0108 Chemical analysis

0111 Laboratory for the rapid determination of carbon and sulphur content in metals

0112 Laboratory for fissure detection in metals

0113 Laboratory for hardness testing of metals

0302 Laboratory for measuring the dependance of acceleration on drive

0303 Laboratory for testing movement sequences under atmospheric conditions

0502 Laboratory for calometric testing of fuels

0504 Laboratory for testing storage properties in raised temperatures

0505 Laboratory for testing the behavior of materials during transport (vibration and friction)

0506 Laboratory for determining the speed with which fire spreads

0507 Laboratory for testing the chemical stability of compounds and mechanical mixtures

0510 Equipment for laboratory production of homogeneous fuels and additives

0513-1516 Laboratory for calometric testing of starting material and fuel mixtures

0517 Laboratory for spectrographic testing of fuels

0602 Fluid mechanics laboratory for measuring aerodynamic quantities on models, e.g. lift correction value, resistance value, etc

0603 Laboratory for measuring systems connected with the development and trials of vehicles, including data transmission ,etc

0608 Automatic control system simulation laboratory

0610-0612 Control system and navigation laboratory

0701-0711 Laboratory for examination of electro-optical aids, eg. the production of lenses, optical filters, glass laboratory equipment

0712 Laboratory for microwave engineering

0713 Laboratory for low and high frequency engineering, e.g., in the radio and television frequency band

0714 Laboratory and workshop for electronic measuring instruments

0716-0717 Laboratory for antennae and antennae parts, and assembly and testing

0718 Test laboratory for printed circuit board engineering

0721 Calibration laboratory

0902 Laboratory for measuring the dependence of acceleration on drive.

An analysis conducted by the Pentagon Office for Non-Proliferation Policy on August 9, 1988 concluded unequivocally that "almost all of the labs named deal with areas applicable to missile research and production, such as: fuel production, vibration and friction effects, the stability of mixtures, machine and vehicle construction, data transmission, automatic control, control and navigation, aerodynamic quantities, turbo machines, antennas, and microwaves. A lab for 'seismographic soil tests' is also listed, possibly indicating nuclear research."

The real purpose of the Saad 16 complex was clear, and proved that the Iraqis were into the missile game in a big way. Guided by the German and Austrian consultants who had designed and built Saad 16, U.S. companies were providing much of the technology the Iraqis needed. And they were doing it perfectly legally, with the knowledge and approval of the U.S. Department of Commerce. "When I look at the case list to Iraq," says Congressional investigator, Ted Jacobs, "I have to conclude that no one cared. The Iraqis didn't have to hide what they were doing, and still it got approved." For the Silicon Valley firms involved, it meant a few hundred million dollars worth of extra computer sales; but for those on the receiving end of the Iraqi missiles they helped to design, it was a matter of life or death.

The Commerce Department's attitude was inexplicable for another reason. Since 1982, in response to a National Security Decision Directive issued by President Reagan, the State Department had been hard at work negotiating a new international control regime, specifically tailored to slow the proliferation of ballistic missiles to the Third World. By March 1985, all the details of the Missile Technology Control Regime (MTCR) had been hammered out between the U.S. and six of its allies, Canada, France, Great Britain, Italy, Japan, and West Germany. The export of complete missile systems as well as major components was banned. A detailed list of missile technologies was put on an international watchlist. The key figures for the MTCR were 500 kilograms and 300 kilometers: missiles with smaller warheads, or with a shorter range, fell outside the scope of the agreement.

With the detailed technology list in hand, President Reagan instructed U.S. government agencies to enforce the MTCR as of March 1985. The spread of ballistic missiles was of such urgent concern that waiting for formal adoption of the control regime by the allies would be folly. (He was right: France and West Germany held up the formal announcement of the MTCR for another two years). So as of March 1985, export license requests for countries such as Iraq were supposed to be scrutinized for potential missile applications. More often than not, however, the Commerce Department failed to pass license applications to the appropriate technical review agencies. Instead, Commerce (and sometimes State) simply matched the items proposed for export with the new MTCR list, and unless they found a direct hit, they approved the license with the annotation: "Not restricted for MTCR, Chemical/Biological, or nuclear non-proliferation." The Iraqis loved it and kept coming back for more.

[insert p 283]

[But even this explanation falls short of the mark. In testimony before a subcommittee of the Joint Economic committee on April 23, 1991, Professor Gary Milhollin, who heads the Wisconsin Project on Nuclear Arms Control and has been investigating Iraqi weapons development programs, presented evidence showing that Commerce simply lied about many of the licenses for Nassr and other Iraqi weapons plants. Milhollin presented a dozen cases in which Commerce approved licenses by declaring the equipment was "not restricted" by the MTCR, when in fact the items did appear on the missile control list and should never have been exported to Iraq. "Commerce was simply not telling the truth," Milhollin concluded. To disguise its error, Commerce Department officials refused to share information on these cases with the Department of Defense and never passed them on for review.]

In addition to the high-tech purchases for their missile R&D center in Mosul, the Iraqis came to the U.S. in search of computer-assisted design equipment for a huge new weapons complex at Taji,an industrial suburb just to the north of Baghdad, on the road to Samarra. Work on Taji began in 1981, with a $81 million steel foundry built by the West German conglomerate, Thyssen Rheinstahl (the same company that was building a chemicals laboratory at nearby Salman Pak). The Thyssen foundry was completed three years later, and by early 1985 the site was turned over to the Nassr State Enterprise for Mechanical Engineering.

The head of Nassr was an enterprising Iraqi named Dr. Safa Habobi, who was to heavy engineering what Amer al-Saadi was to chemicals, and Amer Rashid was to Iraq's budding defense electronics industry. A specialist in machine-tools and the computerized numerical controllers needed to direct them, Habobi understood that no weapons industry could be complete without sophisticated machine-tools. They were necessary to make gun barrels, to make missile bodies, even to make ammunition. And he set about acquiring them wherever he could, primarily in West Germany, Great Britain, and in the United States.

The type of sophisticated machine-tools the Nassr State Enterprise was seeking to purchase in the United States in early 1985 were normally covered by COCOM controls. They could not be exported to the Soviet Union or to the Eastern bloc, because of their obvious, immediate application to weapons manufacturing. But since they did not figure on the MTCR list, nor were they considered applicable to atomic weapons development, the Commerce Department now says it had "no regulatory basis" on which to deny their export to Iraq. It was one of the many absurdities of the U.S. export control system that would occur repeatedly over the next five years. Nuclear materials and missile parts were banned from export, but the machine-tools needed to manufacture them were not.

Dr. Habobi had big hopes for the Taji complex. In early 1985, he signed a major new contract with a consortium of German companies led by Ferrostaal, to build a second foundry and a die forging plant. The initial 350,000 square foot plant at Taji was to be more than doubled. Contributing to the project were Jurgen Hippenstiel-Imhausen, the German chemicals manufacturer who was then building Libya's poison gas plant at Rabta, and the cream of German heavy industry: the state-owned Salzgitter AG, MAN, Hochtief, Klöckner Industrie, Mannesmann, Buderus, SMS Hasenclever, and West Germany's premier manufacturer of gunpowder and munitions, Rheinmetall, of Dusseldorf.

Rheinmetall's participation should have tipped off the German authorities as to the true nature of the Taji plant, but it did not. Eschborn approved the deal without batting an eye. Official German government documents refer to it as a "universal smelting plant" (Universalschmiede), but Taji was a gun factory from the word go. The Germans and the Americans were so easy going that the Iraqis dropped all pretense concerning this project, and in the license applications they declared that the sophisticated computers, machine tools, and machine-tool controllers were to be used "for general military applications such as jet engine repair, rocket cases, etc." The Commerce Department watchdogs thought such projects were appropriate markets for U.S. business. The U.S. relationship to Iraq was no longer a "tilt," but an alliance.

Francis Hurtut, First Secretary at the French Embassy in Baghdad, was worried. "The Americans are coming," he whispered to reporters over drinks at the Meridien Hotel, just around the corner from the Embassy. Short and trim, sporting a healthy tan, Hurtut repaired to the Meridien pool-deck during the stifling Baghdad summer afternoons, when the temperature often reached 110 degrees Fahrenheit. He liked to play a game with one female reporter from a Paris daily: spotting the American businessmen who were now flocking to Baghdad. "That one's from Bell Textron," he said, pointing to a leather-faced Texan wearing a loud shirt. "They just sold 48 combat helicopters to Iraq on the pretext they were for civilian transport. There's not a civilian helicopter in this country, and they know it."

With other reporters back in his office at the French embassy around the corner, Hurtut liked to take out a press book he had been putting together. "Over the past six months, there have been two articles on French technology in the local Iraqi press, one on nuclear research, and the other on the Paris metro system. Over the same period, there have been 45 articles on the United States and U.S. technology every month. When we hear Tarek Aziz saying that Iraq wants American technology, and for Iraqi students to attend American universities, we begin to wonder what crumbs from the table will be left for us. For a country such as France, which has done lots of favors for Iraq, we are certainly not getting any freebees," he concluded. "On the economic front, we are clearly competing with the U.S." And, he hastened to add, France was losing the competition.

There was more than just Gallic chagrin to Hurtut's complaint, and French businessmen in Baghdad echoed his refrain. The Americans were coming, alright. And they were coming in force. Countries such as France, which were shy to offer unlimited new credits to Iraq, could sit on the sidelines and watch as the commercial cake got divvied up between the Americans, the Germans, and the Japanese.

David Newton was the U.S. Chargé d'affaires in Baghdad who shepherded U.S.-Iraqi relations into the greener pastures of mutual profit. In 1985, he was elevated to Ambassador status. As one of the rare Kurdish speakers in the U.S. Foreign Service, Newton kept close tabs on internal repression, especially against the Kurds. Though he had no particular fondness for the Baathist regime, he believed that a change of heart had come over Saddam, which he conveyed in numerous cables back to his boss at Foggy Bottom, Richard Murphy.

"Iraq is a country with good development prospects," he noted. Having tasted the fruits of cooperation with the U.S., Newton believed, Saddam "would prefer to act as a member of the club. Terrorism is a policy of weak nations that have little say within the system. Saddam would rather use the power of the state instead of acting as a subversive."

Newton made no attempt to gloss over Saddam's ruthless, gangland rule, but he felt that Iraq would "loosen up" after the war with Iran came to an end, especially as commercial and cultural ties with the United States grew stronger. Many foreign policy experts in the U.S. and elsewhere agreed. "This is a regime which does not need to terrorize people on a daily level to prove it is in charge," Newton said. "Everyone knows who is in charge."

Newton believed that expanded trade with the U.S. was the best way to nudge Saddam into more civilized behavior. "We are working hard on getting business for U.S. companies," he said. "We want to bring U.S. technology to Iraq for mutual benefit. But we have been hampered by the low level of Exim Bank credits. Any U.S. company wanting to do business here must be able to offer their own complete credit package, and for some of them it's a tall order."

Given Iraq's need for credit, and the reluctance of U.S. construction and oil companies to build on air, Newton recommended that U.S. efforts in Iraq concentrate on high technology. "This is the only area where we can compete successfully," Newton said.

The Commerce Department seized on Newton's advice with a vengeance, sponsoring trade fairs and delegations of U.S. businessmen to Iraq, and relaxing the licensing requirements. In 1985, American companies even succeeded in selling $700,000 worth of high-tech gear to Iraq's French-built defense electronics factory, Saad 13, including one $161,550 order for high-speed capacitors, similar to Krytron nuclear triggers. Today, faced with their abysmal record on Iraq, Commerce Department officials hark back to David Newton's advice. "Commerce doesn't initiate policy," they say, "it merely implements policy." If the U.S. was selling too much high-tech to Iraq, they argued, it was all the State Department's fault.

On August 15, 1985, the Iraqi Air Force launched its first successful attack against Kharg Island, Iran's principal oil export terminal. It was a major accomplishment for the Iraqi flyers. Bomb damage assessment photographs made available at the time by Iraqi officials showed that the Mirage F1s had scored pinpoint hits against both the "T" and the "H" loading jetties on either side of the island, where super tankers had come to feed all through the war. Huge clouds of smoke were clearly visible, rising from the jetties after the attacks. After more than a year of threats and repeated warnings, the Iraqis had succeeded in piercing Iran's Hawk and Swiss-built Oerlikon air defense batteries. Iraqi pilots had not only honed their skills by practising on the Super Etendard (which were returned to France in 1985); they had also begun to take risks that never would have occurred to them two years earlier.

Such pinpoint accuracy could only be achieved by the most modern, laser-guided weapons. In fact, the Iraqis were the first to use these weapons in real combat, (well before American and British pilots would turn them with such striking effect against Iraq). They had obtained the new weapons from France.

Aerospatiale's AS-30L missile was so advanced that the French Air Force was just receiving its first deliveries by the time the Iraqis used it against Kharg Island. It soon became one of the most potent weapons in the Iraqi arsenal. The French missile rode to its target on a laser beam generated by a "laser designator" pod, which was carried by the launch aircraft or by a separate plane. Either way, the laser beam locks onto its target regardless of how the aircraft moves, leaving the pilot free to break away and take evasive action once he has launched the missile. "The AS-30L is so precise," Aerospatiale executives liked to boast, "it can knock out a command and control bunker by flying in through the window and exploding inside. It can destroy a bridge by knocking out the pylons holding it up." During the Iran-Iraq war, the command bunkers and the bridges happened to be Iranian. The AS30-L could also hit targets such as an oil loading jetty, no more than a few meters wide.

But the AS30-L was not purely a French creation. The sophisticated laser technology that went into the ATLIS (Auto Tracking Laser Illumination System) pod was developed by Martin Marietta in America for Thomson-CSF in France, in a $37 million contract signed in 1975. By 1978, the first successful flight tests on the laser designator were performed, and in 1979 the Atlis program was turned over to the French Air Force for final development. Thomson then turned around and resold the same technology to Iraq. Today, Martin Marietta insists it had "no knowledge" of the Thomson sales to Iraq. Transfer of U.S. laser technology to a third country was "restricted by the U.S. government," the company insists, because it mirrored the high-tech weapons then being developed for the U.S. Air Force. In other words, the Thomson sales to Iraq were probably illegal. But Thomson-CSF was a major supplier of defense equipment to the Pentagon, and may have been acting on tacit U.S. government approval, and not one word of official or even officious protest was ever uttered. According to senior American diplomats then stationed in France, the U.S. was actively following French arms deliveries to Iraq, and saw them as a means of preventing an Iraqi collapse. "The French deliveries helped Iraq remain strong enough to resist. So what did we do? We nodded to the French."

In later attacks on Kharg, the Iraqis used yet another sophisticated French missile, the Armat. This long-range Matra missile was specifically designed to detect and home in on enemy radar emissions, of the type used by Hawk or Patriot air defense missile batteries. Its specifications were so classified that Matra has never released a photograph of this missile, or its true range (believed to be upwards of 100 miles) to this day. In a classified inventory of Iraqi weaponry prepared by French military intelligence in August 1990, deliveries of the Armat were left blank. To further disguise the transfer of this strategic missile to Iraq, French intelligence identified it in the inventory under a code-name, the "Bazar." It was the type of missile that gave attacking fighters the combat edge, because it allowed them to knock out an enemy's air defenses before they could ever be used. Allied air forces used precisely this type of missile to disable Iraq's extensive network of air defense radars and missile batteries at the start of the air war in January 1991. In U.S. inventory it is called the HARM (High-Speed Anti-Radiation Missile), and is launched by F-4G "Wild Weasel" aircraft and the F-15E.

The Armat was not the only Iraqi Air Force system specifically tailored to counter American weaponry. In response to an Iraqi request, Thomson-CSF built specially designed electronic countermeasures (ECM) pods for the Iraqi Mirages, capable of jamming and deceiving NATO fighters. The Iraqis claimed they needed this equipment, which did not exist in France (since the French Air Force needed to jam Soviet Air Force planes, not American ones), to defend against future Israeli air attacks. "They could no longer pretend they needed to protect against Iranian air strikes," defense industry sources said, "since the Iranian Air Force had been grounded since late 1983 for lack of spares." Thomson designed an extensive array of sophisticated ECM pods for Iraq, capable of deceiving front-line American fighters such as the F-15 and F-16, and even claimed they could be used to counter US Air Force AWACS command and control planes. The only AWACS in the region were based in Saudi Arabia, where they were flown by the U.S. Air Force, and in Israel.

As the attacks on Kharg continued, they gave a much-needed boost to Iraqi morale. To reach Kharg safely, French technicians then in Iraq explained, the Iraqi planes took off from Mosul, in the north, then refueled and took on weapons at bases in the south. "From there, they launched attacks on the Gulf, against oil tankers and against Kharg."

Even if refueled and loaded at Iraq's southernmost Mirage base, Qalit Saleh, it was still a 750 kilometer round-trip flight to Kharg, stretching the outer limits of the French Mirage. One mistake, one extra maneuver, and the Iraqi planes would drop into the sea out of gas. It is doubtful that Iraqi pilots were up for such a tense mission, and Kuwait Air Force officers today admit that the Iraqis were using Kuwait's Ali al Salem Air Force base virtually at will throughout the Iran-Iraq war. This was where Kuwait based its own Mirage F1 fleet, and its location at the head of the Gulf shortened the missions against Kharg by nearly 200 kilometers, a welcome boost for Iraqi fliers. Colonel Jack Brenan, former Attorney General John Mitchell's partner in certain Iraq deals, recalls Iraqi officers boasting that they "owned the Kuwaiti Air Force" and had "an entire squadron in Kuwait" during the Iran-Iraq war. Suspicions of Kuwaiti collusion with Iraq prompted Iran to threaten the Emir with direct military intervention, and when that failed, to launch a spate of terrorist attacks on Kuwaiti soil. Iran considered Kuwait as a co-belligerant with Iraq, because of the military and financial support it extended to the Baathist regime.

On September 24, 1985, French aircraft magnate Marcel Dassault made his last appearance on the international stage. At a prescheduled press conference held at corporate offices on the Champs Elysée in Paris, the gnome-like patriarch, with his whiny nasal voice, announced the last good news his firm would hear for many years to come. Iraq had just agreed to purchase another 24 Mirage F1 fighter-bombers, in the latest EQ5 and EQ6 configuration. The sale was worth roughly $1.5 billion. This was not the last Mirage sale to Iraq, but it was certainly the last one that was ever announced. Dassault was 88, rich beyond imagination, and could afford to take the risk of a public announcement, to bolster confidence in his company's performance on the increasingly-difficult export market.

The fourth Mirage sale was as important for what it did not include, as for what it did. It was not a sale of the Mirage 2000. By this point, as the war continued to escalate and as oil prices dropped, the Mirage 2000 deal had been given the axe. The French government was not about to set up a $6 billion export credit facility for these planes, and there was no way Iraq could come up with the financing itself. There was never a discussion about the moral or even the political implications of selling a low-level penetration fighter to Iraq. For the French, it was purely a matter of financial realism.

The major reason for this has to do with the political structure in France. The French parliament certainly provided a premier forum for opponents to the government to express their dissatisfaction, but it was powerless to block the sale of sophisticated weaponry to dictators and repressive regimes across the globe. To this day, French deputies have no say in the whole arms export process. They hold no hearings, they call no witnesses; they don't even have the right to information. Everything is handled behind closed doors, in discreet discussions between the arms manufacturers and the government. The lack of public scrutiny certainly made it easier for Dassault to sell 133 Mirage fighters to Saddam Hussein, at an estimated cost of $5.2 billion. (The last of the French planes was ferried to Baghdad in July 1990, only days before the invasion of Kuwait). What the arms makers wanted, they usually obtained from the French government--with the help of the Communist trade unions who championed the fallacy that more arms exports meant more jobs.

From the first Mirage sale on, the French offered Iraq the "best and the brightest" of their defense industry, sending highly-trained technicians for maintenance, and dedicated instructors who would use the most advanced simulators and air mission computers to train their Iraqi pupils. The French commitment was sealed in blood in June 1985, when two French trainers demonstrating a 155 mm howitzer in southern Iraq lost their lives because of a faulty breach gasket, causing the gun to explode in their faces.

French companies were ready to take substantial commercial losses in order to please their Iraqi customers. In 1985, for instance, Thomson-CSF was approached on two separate occasions by Iranian buying teams, who came to the company's Paris headquarters to buy sophisticated frequency-hopping radios. "They claimed to be Iraqis," said one Thomson executive who met with the Iranians, "but their suitcases full of dollars made us suspicious." Finally, Thomson said they would check the request with the Iraqi military attaché in Paris. "We never heard from the phony buyers again."

Hassib Sabbagh, the Palestinian entrepreneur who helped revamp Iraq's entire higher education system in the 1970s, continued to wheel and deal with Saddam in the 1980s. In 1984, his Athens-based Consolidated Contractors Co. put together a major bid with the German technology and construction giant, Mannesmann, to build the Iraqi segment of the trans-Saudi pipeline. This $508 million contract would have made Sabbagh's fortune all over again, but the Iraqis gave the deal to an Italian consortium led by SAIPEM. Although CCC and Mannesmann underbid the Italians, SAIPEM offered complete financing guaranteed by future Iraqi oil deliveries. Sabbagh believes there was a political angle as well. "The Iraqis were very angry with [West German Foreign Minister] Genscher for receiving the Iranian Foreign Minister in Bonn," he says.

In order to patch things up, sources say Sabbagh arranged a secret meeting between Tarek Aziz, Genscher, and Mannesmann executives in Paris in 1985, which took place in the sumptuous dining room of the Renaissance palace that doubled as the residence of the Iraqi ambassador to France (at that time, Mohammed al Maschat). Genscher pleaded with Aziz to intercede with Saddam on behalf of the German firm. Surely if Iraq wanted to maintain its high technological standards, he argued, it should expand its business with West German companies. And yet, German exports to Iraq had plunged from $1.5 billion in 1983, to scarcely $860 million in 1984. Aziz listened to Genscher cooly, sure he could capitalize on the German's extraordinary eagerness to do business at any cost. "I'll see what I can do,"Aziz said finally.

Mannesmann did not win that contract, but they were rewarded with many other contracts in later years. Beyond the oil industry, which was their speciality, Mannesmann companies became major suppliers of the Taji military complex. The Iraqi ambassador's residence just off the posh Ranelagh Park in Paris became a favorite tryst for the two Foreign Ministers. Genscher and Tarek Aziz met there again on July 29, 1987, to discuss further contracts. It was more discreet for the two to meet in Paris than in Bonn or Baghdad, especially when they had particularly delicate business to discuss. And the German-Iraqi connection would become increasingly delicate as time went on.

Not all West German officials scoffed at the mounting evidence of German involvement in Iraqi strategic weapons programs. In 1985, the West German chargé d'affairs in Baghdad, Dr. Arndt, became suspicious of the activities of some of his compatriots, who were boasting in hotel bars of their work at a new, ultra-secret industrial center outside Baghdad. One afternoon, diplomats in Baghdad say, Dr. Arndt took an unmarked embassy car and set out for Samarra, travelling on back roads. Did the German diplomat learn the secret of the poison gas works and report back to Bonn? Perhaps not. But he learned enough that when the Iraqi police caught up with him in the vicinity of the Samarra complex they arrested him on the spot. He was expelled from the country within days, a fact the German Foreign Ministry has tried to keep quiet until now. The official story put out on Arndt's expulsion was that he was caught in black market currency trading.

By September 1985, the billion-dollar Aqaba pipeline project had run into political snags. At the suggestion of the Overseas Private Investment Corporation, a U.S. government agency that insures U.S. companies working abroad against political risks, the prime contractor, Bechtel, had been looking for ways to reassure Iraq that Israel would not interfere with the new pipeline, nor threaten it once it was built.

Fearing an Arab boycott if it got caught it in a direct business relationship with Israel, Bechtel worked out a deal with a Geneva-based businessman named Bruce Rappaport, to secure the Israeli government guarantees. Rappaport, whose Intermaritime Bank faced Geneva's Lac Leman, was a close personal friend of Prime Minister, Shimon Peres. He soon came back with a letter from Peres promising that Israel would leave the Iraqi pipeline alone. But the Iraqis wanted more than just pieces of paper. They wanted financial guarantees to the tune of $400 million if the Israelis attacked.

Bechtel then turned to a San Francisco lawyer named E. Robert Wallach, a close friend of Attorney General Edwin Meese, to get high-level U.S. government guarantees to back up the Israeli promises. On June 24, 1985, with a little help from Meese, Wallach and Rappaport were invited to the White House to meet with President Reagan's National Security Advisor, Robert McFarlane. McFarlane gave the project his whole-hearted support, and spoke with officials from the Overseas Private Investment Corporation three days later, informing them that the project was a matter of national security. The pipeline case was then handed over to David Whigg, a former business associate of CIA Director William Casey, who had been detailed to the NSC for the task. Casey had known Rappaport before coming to the CIA in 1981, and apparently supported his efforts to build a refinery in Aqaba to process Iraqi crude.

On September 25, 1985, Wallach sent Meese a "For Your Eyes Only" memo, informing the Attorney General of unusual developments on the Israeli side of the project. Ten days earlier, the Reverend Benjamin Weir had been released by his terrorist captors in Lebanon, the first success scored by McFarlane and the NSC in their top secret arms-for-hostage deal with Iran. Wallach wrote Meese that the Israelis had insisted on taking credit. In a meeting with Rappaport, Israeli Prime Minister Shimon Peres "emphatically indicated that the release of Weir was a result of the efforts of the state of Israel and no one else." Wallach went on to suggest that Peres was hoping the U.S. would return the favor by funnelling royalty payments from the Iraqi pipeline into the coffers of Peres' Labor Party. The payments could reach $650 million to $700 million over ten years, Wallach surmised. His memo to Meese was subsequently turned over to Iran-contra prosecutor, Lawrence Walsh.

That fall, the Iraqis grew increasingly wary, and government officials told a visiting American trade delegation in Baghdad that they now had serious reservations about the deal, as did Tarek Aziz during a trip to Washington in early October.

Hassib Sabbagh, the Palestinian entrepreneur, saw great business opportunities in the Aqaba pipeline deal. When he saw the deal going down the tubes, he says that his company "submitted a proposal to King Hussein that we own the pipeline, along with a group of Jordanian investors. We were ready to build it, and own it, and pay for it," Sabbagh says. Bechtel backed the idea, probably as a last resort, but the Iraqi government refused. By the end of the year, the deal was dead.

Marshall Wiley's career at the State Department peaked in 1979, when he was appointed U.S. Ambassador to Oman. While he served in Muscat, the U.S. negotiated military base agreements with the Omani government, and kept track of the Iranian revolution from listening posts at the Straits of Hormuz. Wiley retired from the Foreign Service in 1981 and became a trade consultant with Sidley and Austin, one of Washington's largest lobbying law firms. His speciality was the Arab world, and he maintained good contacts with former colleagues in the Near East bureau at State, who helped him keep abreast of new business opportunities in the Gulf. Once the U.S. renewed diplomatic relations with Iraq in November 1984, he became an empassioned, eminently reasonable advocate of expanded trade.

Having served in Baghdad from 1975-77, Wiley understood well the peculiar mentality of the Iraqi Baathists, and was quick to seize a golden opportunity when he saw one. "The Iraqis were not at ease working with the U.S. private sector," he said, "because their experience until then had been primarily with the central planning structures of Eastern Europe. So I thought we needed an organization to help to get to know each other better. That's how I got the idea for the Forum."

The "Forum" was the U.S.-Iraq Business Forum, which Wiley set up in May 1985. After finding two corporate sponsors--Westinghouse, and Mobil Oil--he took the idea to Ambassador Nizar Hamdoon, who knew a good deal when he saw one. Wiley was basically offering to run Iraq's public relations campaign free of charge. So even before the Forum officially opened its doors, he gave Wiley a letter of endorsement written on Embassy stationary. The letter advised "any United States company interested in doing business with Iraq" that it "would do well to join the Forum."

Hamdoon's letter was like a golden key to one of the most fabulous treasure chests in the world. Wiley wasted no time in putting it to use. He began contacting Fortune 500 companies and proposing his services. Before the year was out, he had enough clients to warrant a meeting in Baghdad with one of the most powerful of Saddam's cronies, Deputy Premier Taha Yassin Ramadan. "I told Ramadan we were not asking for money. But we needed his cooperation to sign up U.S. companies" for the Forum. By cooperation, what Wiley meant was access to Iraqi leaders, and to Iraqi markets. Ramadan agreed enthusiastically.

The access agreement worked both ways. "The Iraqis set up meetings for us when we brought trade missions to Baghdad," Wiley said. "In return, they would inform us ahead of time of their visits to Washington so we could set up meetings for them. All things being equal, the Iraqis preferred doing business with Forum members. They liked what we were doing." Iraqi officials made sure American companies got the message that it was the Forum, or Siberia.

Wiley never registered as a lobbyist, although he probably did more than any single individual in the U.S. to promote U.S.-Iraqi trade. "We were never a lobbying group," Wiley insists today. "Sure we kept our members informed in a timely manner of legislation that was pending up on the Hill. But they did the lobbying, not us."

Before long, the U.S.-Iraq Business Forum had attracted some of America's largest exporters as its members. The oil industry was widely represented by Amoco, Exxon, Hunt Oil, Mobil, Occidental and Texaco. But the Forum also signed up companies like AT&T, Bechtel, Brown & Root, Caterpillar, Bankers Trust, General Motors, Comet Rice, and defense contractors such as BMY, Bell Helicopter-Textron, Lockheed, and United Technologies Corporation. Former Senator Charles Percy also joined, under the aegis of his Charles Percy & Associates consulting firm. A former chairman of the Senate Foreign Relations Committee, Percy now worked as a well-paid consultant for U.S. firms eager to get business in the Middle East.

When taken together, Forum members represented a powerful, well-organized, and effective pro-Iraq lobby, capable of twisting arms in high places when the need arose. And they never hesitated to use their clout. One of the Forum's arch enemies soon became Steve Bryen's Defense Technology Security Administration, which was throwing cold water on many Iraqi requests for U.S. high-technology products. "People at the Department of Defense were trying to block everything to Iraq," Wiley recalls. "But unless you are not going to sell any capital goods at all, you can never tell what will end up in military factories." The only solution, Wiley argued, was to sell more. The sheer mass of U.S. equipment going into Iraq would dilute the relatively smaller amount that was actually fueling Saddam's military dreams. "The Middle East has lots of brutal people ruling countries," Wiley reasoned, "but that is not cause to stop all trade. If we limited our sales to countries that shared the same ideas of civil rights as we do, it would mean restricting our trade to North America, Europe, and a few other places."

The Commerce Department's record of export license applications shows that Wiley's friends and former colleagues at the State Department used their bureaucratic turf to push through high-tech sales to Iraq for Forum members. Among the licenses championed by the State Department's Near East Bureau were sales of Bell Helicopter-Textron 214 ST helicopters, General Motors military trucks, and the billion-dollar Aqaba oil pipeline that was to be built by another Forum member, Bechtel. Many of the companies who received funding from the Atlanta branch of the Banca Nazionale del Lavoro also joined the Forum. It always paid to have extra friends in high places.

Wiley performed direct services for the Iraqis as well. He wrote opinion columns in the Washington Post to oppose sanctions against Iraq, identifying himself as a former Ambassador to Oman but forgetting his present functions as President of the U.S.-Iraq Business Forum, an omission the Post should have spotted. He also introduced Iraqi ambassador Nizar Hamdoon to some of Washington's movers and shakers, so the Iraqi could work the hustings himself.

Hamdoon understood that the best way to ensure Iraqi access to the high-technology it sought was to lull the American Jewish community into believing that Saddam Hussein was far less of a threat to Israel than Ayatollah Khomeini. So he quietly began to court American Jewish leaders and friends of Israel on Capitol Hill, inviting them to discreet dinners at his private residence.

One unusual party organized in November 1985 with Wiley's help was thrown in honor of Representative Stephen Solarz. Wiley made sure there was high-level Administration presence. And there was. Seated in the blue and white imitation Louis XV chairs at Hamdoon's official residence were Peter Rodman, head of Policy Planning at State,.Howard Teicher, the top Middle East analyst at the NSC, and Robert Pelletreau, a Deputy Assistant Secretary of State for Near East and South Asian affairs. To round out the evening, there was Alfred H. Moses, a lawyer and former liaison to the Jewish community during the Carter administration, Judith Kipper, a Middle East specialist at the Brookings Institute, and three prominent journalists: Ken Wollack, co-editor of the Middle East Policy Survey, Don Oberdorfer of the Washington Post, and David Ignatius of the Wall Street Journal. "It was an amazing evening," said one guest. "Here's Steve Solarz, a Jewish congressman from New York, with pro-Israelis around him, talking with an Arab from Iraq." With Marshall Wiley to grease the skids in Washington, Baghdad had found one of the most effective advocates it could have possibly hoped to employ.

In September 1985, one of Wiley's former colleagues, Ambassador Richard Fairbanks, retired from the State Department to join the Washington and New York lobbying firm of Paul, Hastings, Janofsky & Walker. Like Wiley, he became a "trade consultant." Like Wiley, his specialty was the Arab world.

After two years of hard work on Operation Staunch, Fairbanks had succeeded in winning the confidence of the Iraqis and other Iraqi "friends" in the Middle East, Saudi Arabia, Egypt, and Kuwait. The U.S. was trying to limit the sale of major weapons systems to Iran, Fairbanks insisted, and he had been the one to organize that effort.

Fairbanks was also quick to capitalize on his role within the Reagan Administration, and like Wiley he knew he could count on the Iraqi Ambassador. "Hamdoon was impressive," Fairbanks recalls. "He was probably one of the most outstanding ambassadors from any Arab country we'd ever seen in this town. And his message was right to the point: Iraq wanted to expand trade with the West, and it wanted to start right here, with the U.S."

Unlike Wiley, Fairbanks went to work as a paid lobbyist for Nizar Hamdoon, and registered as a foreign agent. "The Iraqi Embassy paid me the royal sum of $5,000 a month," Fairbanks says, "until I fired them as a client in February 1990." Fairbanks says his role was limited to providing court documents on the Iran-contra case, and later, counselling Iraq on the USS Stark incident and the BNL affair. He also served as an unpaid advisor to the Board of the U.S.-Iraq Business Forum. "We were trying to wean Iraq back into the Middle East peace process, and I felt completely comfortable repping them," Fairbanks says now. "I am not ashamed of what I did. It is all on the public record. American policy was to try to draw Iraq back into reasonable concourse and the community of nations. I am convinced even now that it was better to try and to fail, than not to have tried at all."

Fairbanks was soon joined at the law office by James Placke, who had served as Deputy Chief of Mission in Riyadh under Richard Murphy and had risen to become Deputy Assistant Secretary of State for South West Asia and Northern Gulf Affairs by the time he retired. Placke was articulate and energetic, and had a keen business sense. He also knew how to maintain his contacts back at the State Department and in the intelligence community. Besides his friendship with Richard Murphy, Placke kept in touch almost daily with his successor in charge of Northern Gulf Affairs, Peter Burleigh.

If it hadn't been for the Iran-contra affair, which exposed another facet of the Reagan Administration foreign policy mess, the pro-Iraq lobby would have been the only game in town. Iraq was receiving active support from the Department of Commerce, the Department of State, the White House, and the CIA--virtually everyone who counted in the halls of power, except for Secretary of Defense Caspar Weinberger, whose high-tech watchdogs were the only ones keeping tabs on the Iraqi account. Dennis Kloske, who took over as Undersecretary of Commerce in May 1989, had another phrase to describe the Pentagon boys. He called them "ankle-biters."