By Chuck Strouse
By Scott Fishman
By Terrence McCoy
By Ryan Yousefi
By Ciara LaVelle, Kat Bein, Carolina Del Busto, and Liz Tracy
By Pepe Billete
By Ryan Yousefi
By Kyle Swenson
Before Ronald Reagan became president, relations between the United States and Iraq were virtually nonexistent. Saddam's rule of terror, which officially began in July of 1979, required foreign enemies, and America was one. In l980 he stated that Americans "were the enemies of the Arab nation and the enemies of Iraq" and vowed that someday he would destroy them.
But the U.S. relationship with Iraq was soon to undergo a dramatic transformation. In the early l980s, Iraq was facing serious reverses in its war against Iran. By l982, with major oil facilities destroyed and with Iran aggressively on the attack, Saddam needed new allies if his regime were to survive.
The possibility that the Ayatollah Khomeini might win the war frightened the Reagan Administration. If that happened, the Ayatollah might be able to spread his fundamentalist Islamic revolution throughout the Gulf, threatening Saudi Arabia, Kuwait, and the other oil-rich nations. America's archenemy might very well end up in control of the Gulf's vast oil reserves. An assessment by the Senate Foreign Relations Committee would conclude: "In the worst-case scenario, the United States would face the choice between permitting Iran to dominate the West's oil supply...or direct U.S. military intervention." So when Saddam approached the U.S., he was met with a receptive audience among those in the Reagan Administration who viewed him as a buffer against Iranian domination of the Gulf.
In rapid succession, U.S. officials launched a number of initiatives designed to aid Iraq. In 1982 the country was removed from the government's list of nations sponsoring terrorism, despite clear evidence from U.S. intelligence agencies that Saddam never changed his practice of aiding notorious terrorists such as Abu Nidal and Abu Abbas. (Soon after Saddam's invasion of Kuwait, President Bush reinstated Iraq on the list of terrorist countries.)
Then came financial aid, in the form of credits and loan guarantees from such U.S. institutions as the Commodity Credit Corporation and the Export-Import Bank. Suddenly tens of millions of dollars were available to Iraq for the purchase of American agricultural and manufactured goods.
In August of 1988, just five days after a cease-fire ended Iraq's eight-year war with Iran, Saddam turned his chemical arsenal on his own citizens, the Kurds of northern Iraq. The U.S. Congress reacted by attempting to impose trade sanctions, but administration officials successfully blocked the move.
When George Bush took office, he expanded on Reagan's enthusiastic embrace of Saddam. Bush ignored indisputable evidence of severe human rights abuses, and even attempted to derail a United Nations investigation of Saddam's use of chemical weapons. Instead he pushed harder still to increase economic aid and establish stronger trade ties to Iraq, and he met with tremendous success. After only a few days in office, he doubled the amount of credit from the Commodity Credit Corporation to about one billion dollars per year. Trade soon reached record highs. Department of Commerce figures, for example, show that from January to September of 1989, imports and exports between the U.S. and Iraq totaled nearly three billion dollars.
With the help these infusions of cash and guaranteed loans provided, Saddam was able to build one of the most powerful military machines in the world. In the past decade, he has spent an estimated $50 billion acquiring a sophisticated arsenal of weapons, much of it provided by Western nations whose armies now watch and wait from across the Saudi border. A significant portion of that build-up has been arranged by a single man: Sarkis Soghanalian.
The U.S. arms embargo against Iraq made direct American sales illegal, but after the Reagan Administration adopted its secret policy of supporting Saddam in the Iran-Iraq war, the embargo had little effect. Administration officials simply encouraged other nations, and private brokers such as Soghanalian, to send arms to Saddam. "The billions upon billions of dollars of shipments from Europe," recalls a former high-level intelligence official, "would not have been possible without the approval and acquiescence of the Reagan Administration."
Opportunities for direct U.S. business, however, were not completely closed. The Iraqis were able to receive hundreds of millions of dollars of American military equipment due to a loophole in the arms embargo. Between l985 and l990, Saddam legally purchased from the U.S. some $782 million in "dual use" goods, materials supposedly meant for civilian uses, but which also have military applications. Many of the sales were allowed by the Reagan and Bush administrations over the objections of the Pentagon, which warned that they would be used for military purposes. Commerce Department records indicate that between l985 and l990, the agency approved 273 licenses of "dual use" material to Iraq. But such sales were also common before 1985.
In l982, for instance, Iraq purchased 60 Hughes helicopters, which Saddam promised would be used only for civilian purposes. But an eyewitness account appearing in Aviation Week and Space Technology reported that at least 30 of the helicopters were being used to train military pilots. The Reagan Administration did not even do so much as mount a diplomatic protest.
Sources in the defense industry familiar with that sale say Sarkis Soghanalian brokered the deal for Hughes and received a hefty commission for his role.