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Myth iraqgate { April 16 1994 }

Washington Post Archives: Article


Richard Harwood
April 16, 1994; Page a23

Bill Safire, a much respected (and often feared) New York Times pundit, has written 20 or so columns since early 1992 on what he believes to be one of the greatest scandals in the history of man. From a column published on Nov. 12, 1992:

"Iraqgate is the first global political scandal. The leaders of three major nations {United States, Italy and Britain} are implicated in a criminal conspiracy: first, to misuse taxpayer funds and public agencies in the clandestine buildup of a terrorist dictator {Saddam Hussein}; then to abuse the intelligence and banking services of these nations to conceal the dirty deed; finally to thwart the inexorable course of justice ... {These acts} ultimately cost the taxpayers $1.9 billion. "Iraqgate," said U.S. News & World Report, which invented the label, is a story of "how the Bush administration helped finance Saddam Hussein's war machine with American tax dollars." Safire claimed that "tax money" was "used to finance {Hussein's} secret nuclear buildup."

When the Clinton administration came to power last year, it produced no evidence of any global scandal, whereupon Safire on Sept. 9 suggested that Bill Clinton, his attorney general, Janet Reno, and a large cast of other Clinton appointees had become part of the "conspiracy." Under the Safire formulation, even the vice president, Al Gore, may have been drawn into the "coverup." During the campaign, he declared Iraqgate a greater scandal than Watergate but has since been silent. Under the headline "Is the Fix In?" Safire wrote: "George Bush privately assured Bill Clinton that he would not criticize the new President during the first year of his term. ... Mr. Bush has kept his word.

"In what may be an unspoken quid pro quo, the Clinton Administration has moved to quash any revelations about Bush's Iraqgate scandal. ... No wonder we hear not a peep of criticism about Clinton from Bush; the former President and his men are being well-protected {by Clinton's appointees in Justice}."

This is a tale Oliver Stone might have written and it may prove to be no less fictional than Stone's absurd movie "JFK." That is my reading of Kenneth Juster's persuasive rebuttal to the scandal and conspiracy claims of Safire and other journalists. He is a young Washington lawyer with the Arnold & Porter firm who served for a time as senior adviser to Lawrence Eagleburger, who was then the deputy secretary of state in the Bush administration. Juster left the government in 1989 and became a visiting fellow at the Council on Foreign Relations, where he studied this whole affair. His findings -- "The Myth of Iraqgate" -- appear in the spring issue of Foreign Policy magazine.

"The central tenet of the Iraqgate story, as charged by the press," he writes, "is that the Bush administration pursued a secret policy in co-operation with Iraq to pervert U.S. agricultural assistance programs in order to help ... Saddam Hussein obtain weapons."

U.S. News told its readers in October 1992 that through these programs "George Bush continued to provide billions of dollars in loans to Saddam Hussein after the war with Iran ended in 1988. ... Iraqi agents {stole} some of the money and used it to buy and build biological, chemical and nuclear weapons."

It's a nifty theory, picked up by journalists all over the country. There is, however, a little problem with that theory, as Juster explains. No government loans were ever made to Iraq in the 1980s or '90s -- not a penny, dime or dollar. Credits to buy food were guaranteed by the U.S. government through the Commodity Credit Corp. But a "credit" is not a transaction in which a lender hands over money to a borrower. Under the CCC food program, an exporter agrees with a foreign buyer to export specific quantities of American commodities -- sugar, rice, grains etc. The U.S. bank financing this sale pays the American exporter for the food. It is repaid -- in regular installments -- by the country receiving the credit, Iraq, for example. The

Maybe so, critics have said, but by obtaining credit for food purchases Iraq was able to use its hard currency to buy other things, weapons included. That could have happened, theoretically, when the first credits were extended in the early 1980s. But when payments came due under the three-year payback period required for CCC-guaranteed credits, Iraq had to pay up in hard currency or be disqualified from further food purchases. The long-term effect was to substantially deplete Iraq's hard currency reserves. It obtained $392 million in new food credits in fiscal 1990 while paying off old credits with $847 million in hard currency the same year. Far from freeing up hard currency for other purposes, the repayment burden grew year by year.

In August 1990 the United States imposed sanctions on Iraq for invading Kuwait. Payments by Iraq on $1.9 billion in outstanding food credits stopped at that point. That is what the Iraq food program has cost American taxpayers, according to Safire and others.

But hold on. All is not lost yet. The Federal Reserve System has frozen all Iraqi assets in the United States. They total $1.3 billion. Furthermore, according to Juster, "Iraq presumably would have to settle claims for all of its CCC related debts as part of any subsequent normalization of relations with the United States." So, in the end, the slate may be wiped clean.

The reputations of those accused of Iraqgate conspiracies and criminality may take longer to repair.

"There have been," Juster writes, "more than four years of hearings and investigations by various executive branch, congressional and judicial bodies during both the Bush and Clinton administrations. Some continue. But there is still no proof that the charges are true. Indeed, several government entities examining the charges have reached contrary conclusions. Nonetheless ... it is conventional wisdom that something deserving the name 'Iraqgate' occurred."

If Safire's theories of conspiracy are right and if, as he hints, the Clintonians may be part of the conspiratorial web, we may never clear the air on this one. But if journalists become as zealous in exploring the avenues opened up by Juster as they were in spreading the original tale, the truth may out one day

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