The Rise And Fall Of Chalabi: Bush's Mr. Wrong

Doomed by bureaucratic infighting and a notable lack of enthusiasm among the community of potential freedom fighters, the plan to build an Iraqi-exile force fizzled. Something like 100 Iraqi men showed up to be trained as soldiers at a camp in Hungary. Nonetheless, Chalabi and his INC entourage were airlifted into southern Iraq by the Pentagon shortly after the American invasion in April 2003.

As soon as Saddam's statue was toppled, Chalabi moved into Baghdad to become, in effect, the new nation's first warlord. He set up office in the Baghdad Hunting Club, a comfortable, vaguely colonial-sounding establishment in a posh neighborhood, and then moved his operation into an edifice with outlandish pagoda-style turrets and vast corridors, known as "the Chinese House." Through associates, he took over the old Finance Ministry and later his clan set up one-stop shopping for foreign companies that wanted to do business in the new Iraq.

Chalabi was not universally endorsed in the upper echelons of the Bush administration. True, when President Bush went to the United Nations last September to proclaim a free Iraq, the man sitting in Iraq's seat at the General Assembly was Ahmad Chalabi. But when Chalabi was first flown into Iraq by the Defense Department, national-security adviser Condoleezza Rice was visibly startled when reporters gave her the news that Chalabi was on the ground and had rounded up a 700-man local army. Even Rumsfeld was less than a totally committed Chalabi partisan. "Why do people keep saying that Chalabi is my candidate?" Rumsfeld would wonder aloud at meetings of the Defense Advisory Board, according to Perle, who was a member. But a quick and sure Chalabi takeover offered Rumsfeld the one thing above all he wanted: a fast way to get American troops out of Iraq. No fan of "nation-building," Rumsfeld wanted a new Iraqi government that could take over and run the place.

It is not clear what role Chalabi played in the Bush administration's decision to suddenly and totally "de-Baathify" Iraq, including the decision (now regretted) to disband the Iraqi Army. A senior Defense Department official deeply involved in the decision to purge Saddam's Baath Party members says that Chalabi was not consulted. Nonetheless, when the 25-member Iraqi Governing Council was formed by Bremer that spring, it was Chalabi who took over the so-called De-Baathification Commission.

Chalabi set about his business with a vengeance. He acquired (he claims with American encouragement) vast stores of Baath Party records, including memberships and records of payments made and services rendered. With those tools, U.S. investigators now believe, Chalabi's outfit was able to extort and blackmail to get his way. By threatening to expose old ties to Saddam, Chalabi could be very persuasive with Iraq's new rulers and get rid of the ones he didn't like. (Chalabi and his lawyers specifically deny the blackmail charge.)

A certain amount of corruption is to be expected when new governments arise out of old dictatorships. But, according to Iraqi investigators who raided Chalabi's house and headquarters last week, Chalabi's empire pushed the boundaries of brazenness. Today his extensive network of cousins and nephews runs almost every major bank. The minister of Finance, Kamel Gailani, is regarded as a weak Chalabi crony. "He was put in that position as a button for Chalabi," says a Coalition Provisional Authority official who works in the financial sector.