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James Baker are oilmen, and the U.S. oil states
price rise in the Organization of Petroleum Exporting Hussein crucial financial assistance and maintain his
Louisiana, Arizona, Alaska and even Texas were in
Countries (OPEC). access to sophisticated U.S. technology were not isolated
financial trouble. The U.S. produces half the oil it
Transcripts leaked of discussions between the U.S. incidents. Rather, classified documents obtained by the
consumes, so higher prices were an incentive for
LA. Times reflected a long, secret pattern by Bush-both
and Hussein in the days around the invasion confirm that continued-U.S. production.
as President and Vice-President-to support the Iraqi
the Bush Administration supported Saddam™s oil price In 1986, the U.S. had already acted to raise prices.
dictator. When objections arose, Bush and his aides
rise. The U.S. Administration instigated a meeting The oil prices had collapsed to $8.90 and production
between an American former ambassador, a member of declined. As Vice-President, Bush traveled to Saudi. suppressed the resistance.
the Council on Foreign Relations (CFR) still used by The White House declined to comment.
Arabia to persuade King Fahd to pressure OPEC to raise
Bush on missions, and one of Saddam™s top ministers to As to the $1 billion in commodity loan guarantees,
prices. Fahd agreed. OPEC went back to its quota
senior Bush aides armed with Presidential Order NSD
push this strategy. allowances and prices rose to $18. Saudi Oil Minister
26, insisted the credits be approved, despite objections
The timing of this is significant. In January 1990, She&h Yamani, who had favored lower prices to obtain
Saddam Hussein was a bankrupt dictator fiating for by three government agencies. These officials warned
an increased market share for OPEC, was fired. Further,
survival. Iraq, as a result of the long Iran-Iraq War and that aid violated American law, that the loans would not
there was U.S. unease at becoming overly dependent on
of Saddam™s military spending, was broke. be repaid and that earlier assistance efforts were
Middle East oil. An increase in oil prices was also a
Oil income of $12- 13 billion couldn™t cover basic irregular.
means of coping with security not just for Iraq, but in the
needs. Civilian imports exceeded $11 billion in 1990, Bush™s involvement began in the early 1980s as part
Gulf generally, including Saudi Arabia.
The Bush Administration™s deal with Saddam to of the so-called “tilt” toward Iraq initiated by President
$3 billion of that for food. Military imports exceeded $7
billion and other foreign expenditures were estimated at Reagan to prop up Hussein in his war against Iran.
raise oil prices can be tied down. First, it is significant
about $1 billion. An extra $7 billion was needed to Hussein™s survival was seen as vital to U.S. efforts to
that when Sadoun Hammadi, Iraq™s Vice Prime Minister,
paraded Iraq™s new views on oil prices around the Gulf contain the spread of Islamic Fundamentalism and thwart
cover current expenditures. Iraq™s foreign debt, about $1
billion in 1979, had risen to about $100 billion. states in early July, he demanded Schuler™s $25 a barrel. Iran™s bid for dominance in the Middle East.
Many in the American government, including
At the same time, Saddam had an army of 700,000 This figure also reappears in two transcripts of U.S./Iraqi
to demobilize with no jobs and a mutinous officer corps diplomatic exchanges leaked by Saddam to U.S. Presidents Bush and Reagan, felt that U.S. aid would
plotting against him. On January 6, a military coup push Hussein to moderate and help the Middle East
television.
nearly killed him. Politically, he was under siege. War- - American neutrality must have encouraged Saddam, peace process.
Classified records show that Bush™s efforts on
weary Iraqis expected, and had been promised, for in the previous months there had been warnings of
constitutional and democratic reforms. But in reality his violent ambitions which had not elicited any U.S. Hussein™s behalf continued past the Iran-Iraq War and
persisted despite widespread warnings from inside the
Saddam, who could not survive political liberalization, In February, to raise oil prices,, Saddam
response.
American government that the policy was misdirected.
was tightening the screws on his regime. At the end of pursued anti-imperialist, radical Arab nationalist
the year, he appointed his son and half brother to head rhetoric-historically, the Arab sense of injustice at As it turned out, U.S. aid did not lead Hussein to
the security forces. become a force for peace. In the spring of 1990, as
Israeli aggression towards Palestine and an oil price
senior Administration officials pushed for more financial
Although eclipsed by events in Eastern Europe, deemed unfair to Arabs.
demands for democratic reforms were beginning to shake In the fall of 1989, at a time when Iraq™s invasion of aid, the Iraqi leader bragged that Iraq possessed chemical
weapons and threatened to “burn half of Israel”. Nor did
the Middle East, including Gulf oil states. Kuwaitis Kuwait was nine months away and Saddam Hussein was
were agitating, for a return to their vigorous parliament he change his savage methods. In the summer of 1988,
desperate for money to buy arms, President Bush signed
of the 1970s. Yemen, the most populous country in the a Top-Secret National Security Decision Directive for example, he shocked the world by poisoning several
Gulf, was working on a democratic draft. Jordan was ordering closer ties with Baghdad and opening the way thousand Kurds with gas.
The Palestinian intifada was
hesitantly liberalizing. Even today, the Iraqi nuclear and chemical weapons
for $1 billion in aid, according to classified documents
programs-with the help of American technology-
smoldering on. and interviews.
The $1 billion commitment, in the form of loan haunt U.S. and United Nations officials, as they root out
In these critical circumstances, the former American
elements that have survived the “allied victory” in the
Ambassador proposed an oil price increase to Saddam. guarantees for the purchase of U.S. farm commodities,
In January 1990 the oil was $21 a barrel, but analysts Persian Gulf War.
enabled Hussein to buy needed food on credit and to
What drove George Bush to champion the Iraqis is
expected that in the second quarter prices would fall to spend his scarce hard currency on the arms buildup that
not clear. It may have been single-minded pursuit of a
about $15 (as they did). Saddam could be in even brought war to the Persian Gulf.
policy after its original purpose had been accomplished
deeper financial trouble by summer. New aid from Washington was critical for Iraq in
the last months of 1989 and early 1990 because and a failure to understand the nature of Hussein.
To meet the danger, Saddam was advised to
William B. Quandt, a Middle East expert at the
commission a study on oil policy from the Washington international bankers had cut off all loans to Baghdad.
told the u. T&es in February of
Brookings I@ution,
Center for Strategic and International Studies, a They were alarmed that it was falling behind in repaying
˜.
its debts but continuing to pour millions into arms 1992 that *˜when the Iran-Iraq War ended and Iran was
foundation with links to Iraq.
really flat on ˜its back, there should have been some
Details have been kept secret, but it appears to purchases, even though the Iran-Iraq War had ended in
immediate kind of repositioning of U.S. policy so you
advocate an aggressive oil policy for Arab producers. 1988.
Page 18 CONTACT: THE PHOENIX JOURNAL JANUARY 3,200O

wouldn™t give Saddam this signal that we were backing some within the Administration. Four former officials Cut off funding of the 1988 Dukakis presidential
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him as the big shot in the region. We missed so many said there was no evidence that Iraq™s terrorism had campaign by shutting down the Chicago BCCI branch;
cues. Saddam-wasn™t behaving as you might expect an waned. l Blocked an investigation into drug-money laundering
exhausted, war-weary leader to behave. He was showing “All the intelligence I saw indicated that the Iraqis
through Robert Gates, a former U.S. Customs
that he had just won a war and he was a power to be continued to support terrorism to much the same Commissioner, former CIA Deputy Director and now,
reckoned with; and he concluded that the Americans degree as they had in the past,” said Noel Koch, then Director of Central Intelligence.
were not too upset about that.“] in charge of the Pentagon™s counter-terrorism While testifying before Senate investigators in his
Much blame for failing to perceive Hussein™s program. “We took Iraq off the list and shouldn™t capacity as Customs Commissioner, Gates nicknamed
ambitions and building him up has fallen on mid-level have.... We did it for political reasons.” BCCI “the Bank of Crooks and Criminals International”.
officials and on the Commerce Department, which This was supported by a secret 1988 memo in BCCI was set up in the early 1970s by Arab and
approved the sale to Iraq of $1.5 billion worth of which Deputy Secretary of State John Whitehead Asian financiers and staffed largely by Pakistani
American technology, as well as the Agriculture wrote, “Even though it was removed from the
managers. So-called private banking, that is,
Department, which. authorized $5 billion in loan terrorism list six years ago, [Iraq] had provided departments of special financial services designed to
guarantees. sanctuary to known terrorists, including Abul Abbas avoid taxation and hide the assets of wealthy clients, was
However, classified documents from several agencies of Achille Lauro fame.” fast emerging as the most profitable business of the
and interviews prove it was directives from the White After Iraq was dropped from the list, Washington leading international megabanks, both on Wall Street and
House and State Department that guided relations with provided loan guarantees so it could buy rice and in England.
Iraq from the early 1980s through the Persian Gulf War wheat through the Agriculture Department™s From the outset, BCCI was primarily a “private”
and that Bush and officials played a prominent role in Commodity Credit Corp. bank, serving Gulf oil magnates and other
those initiatives. Two years later, in 1984, Bush pressed the federal multimillionaire speculators who had something to
For example: Export-Import Bank to guarantee $500 million in conceal from authorities. BCCI™s conspiratorial and far-
In 1987, Vice President Bush pressed the federal loans so Iraq could build a controversial pipeline,
flung financial network seemed custom-made for the CIA
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Export-Import Bank to provide hundreds-of-millions of according to classified government documents. and the Mossad, Israel™s Secret Service. They used
dollars in aid for Iraq, the documents show, despite staff Throughout most of the Reagan Administration, BCCI to finance such major covert operations as the
objections that the loans were not likely to be repaid as efforts were made to funnel arms as well as economic Afghan Civil War, the secret arms deal with Iran,
required by law. aid to Baghdad, sometimes through the Pentagon and “black” subsidies to European political fronts via
After Bush became President in 1989, documents sometimes through allies in the Middle East. Some Switzerland, disinformation programs in Latin America
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show that senior officials in his Administration lobbied plans failed to work, but government sources said that and [support of] the Contra forces in Latin America.
the bank and the Agriculture Department to finance lots .of arms reached Baghdad. Did shadowy Arab terrorists, such as the Abu Nidal
billions in Iraqi projects. At one point in 1982, a trade of four American- group, also end up managing money through BCCI
As Vice President in 1987, Bush met with Nizar made howitzers to Iraq for a Soviet T-72 tank was branches? “If they did, it was a set-up,” said a veteran
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Hamdoon, Iraq™s Ambassador to the United States, to proposed, according to classified documents. The T- Customs investigator. “Any Arab militant who banked
assure him that Iraq could buy more dual-use technology. 72 was important, according to the Defense with BCCI was under CIA and Mossad surveillance and
Three years later, National Security Council officials Intelligence Agency, because it was protected by a probably knew it. In Britain, the Mossad has become
blocked attempts by the Commerce Department and new type of armor which might prove invulnerable to notorious for double operations during the 1980s with
other agencies to restrict such imports. A second plan in 1983 would
American firepower. agents of Middle Eastern descent who pretended to be
After Bush signed NSD 26 in October 1989, have allowed Iraq to buy $45 million worth of 175- ˜Arab terrorists™. We need more evidence to know the
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Secretary of State James A. Baker III intervened with millimeter long-range guns and ammunition for a score on this.”
Agriculture Secretary Clayton K. Yeutter to drop What U.S. law-enforcement officials do know is that
Soviet tank.
Agriculture™s opposition to the $1 billion in food credits. BCCI was used to finance murderous terrorist operations
Yeutter, now a senior White House official, agreed and As a textbook case, these
FOOTNOTES: for the Mossad.
the first half of the $1 billion was made available to Iraq knowledgeable sources cite Israeli arms and advice sold
back in 1990. ™ Douglas Prantz & Murray Waas Bush, “Bush to the death squads of the Colombian cocaine cartel.
As late as July 1990, one month before Iraqi Secret Effort Helped Iraq Build Its War Machine”, In 1990, the Justice Department sought to keep the
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Los Angeles Times, February 23, 1992
troops stormed into Kuwait City, officials at the National Bank of Credit and Commerce International operating in
Security Council pushed the second installment of the $1 Florida for undercover operations, according to
billion in loan guarantees, despite the looming crisis in CHAPTER 9 congressional documents.
the region and evidence that Iraq used the money for House Banking Committee Chairman Henry
technology for its nuclear weapons and ballistic-missile BCCI: BUSH™S BANK OF CROOKS. CRIMINALS Gonzalez, D-Texas, said he found it “incredible” that the
program. AND INTELLIGENCE AGENCIES department would pressure Florida Comptroller Gerald
An Agriculture Department official cautioned in Lewis “to keep open a crime-infested financial
a
February 1990 that, when all the facts were known about As research for this book has shown, the dark institution”.
loan guarantees to Iraq, the program could be another shadow of George Bush has lurked in or about every The attempt was unsuccessful. Lewis ordered BCCI
“HUD or sgvings and loan scandal”. Of the $5 billion important domestic or international event of the past to close its Florida operations in March 1990 and seized
given Iraq over an eight-year period, American taxpayers thirty years. $15 million in assets after the institution admitted
have been stuck for $2 billion in defaulted loans. The Bank of Commerce and Credit International laundering drug money through its Tampa office.
Washington™s support of Iraq began in 1982. scandal is no exception. Inevitably, Bush or some iink The banking committee released copies of three
Hussein was in the second year of his war with Iran to him would pop up unexpectedly in what could be the letters, two written to Lewis by Charles Saphos, Chief of
and the conflict was not going well for Baghdad. The most widespread international banking scandal of the the Narcotic and Dangerous Drug section of the Justice
Reagan Administration, while officially neutral, helped century. Department™s Criminal Division. The third letter was a
Iraq to contain the Ayatollah Khomeini. For years, U.S. law-enforcement officials knew that Lewis response. In the first letter, dated February 13,
U.S. relations with Iraq were severed in 1967 the BCCI was involved in money laundering and other 1990, Saphos asked that BCCI™s license be renewed in
after the Arab-Israeli War, but the biggest obstacle to illegal transactions. part because BCCI had agreed in a plea bargain to
renewed ties was the fact that Iraq was on Evidence has emerged that the Reagan-Bush and cooperate “in certain investigations”.
Washington™s list of countries supporting international Bush-Quayle Administrations: Saphos wrote that the undercover investigations were
terrorism. That meant that most U.S. aid-was Funneled money to Saddam Hussein without part of an agreement reached with the bank when it
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prohibited by law. congressional approval through BCCI; pleaded guilty the previous month to about 30 charges.
Yet, the State -Department removed Iraq from the l Maintained a commercial business venture with Gen. Lewis said that the bank™s license to operate in Florida
terrorism list in February 1982, an action opposed by Noriega through BCCI; would expire on March 14, 1990, and added, “Because
CONTACT: THE PHOENIX JOURNAL
JANUARY 3,200O 19 .
Page

BCCI has pled guilty to felony charges, the ultimate who knew of the illegal diversion. “What Fiers is saying transactions. These are private transactions between .
decision of renewal becomes a difficult one.” Lewis is that the committee was systematically lied to and Bush as an individual and Saddam as an individual-
requested a meeting with Saphos to learn more about the people in the Agency took part in the cover-up,” said transactions amounting to billions of dollars. The
department™s request. another committee source. House Banking Committee under its Chairman, Rep.
Saphos replied that he was not requesting Florida to Fiers agreed to plead guilty to two misdemeanor Henry Gonzalez (D-Texas), has already stated that
renew the bank™s license. He told Lewis that under the counts of withholding information from Congress. In BCCI worked with Banca Nazionale de1 Lavoro
plea bargain agreement, BCCI might be asked to open or late summer 1986, Fiers says, Oliver North told him the (BNL). BNL is the largest bank in Italy. It has five
continue accounts for people who were under United States was selling arms to Iran and using the branches in the United States. The Bush-Saddam
investigation by the Justice Department. proceeds to aid the Contras. Fiers says he told the head transactions went through these two banks.”
The President was seething. Gates, his nominee to Skolnick reported that he attended a hearing
of the Agency™s Latin American Division, who ordered
be Director of the CIA, was caught up in an old scandal, him to report it to Clair George, Deputy Director of involving federal litigation that touches directly on the
and the Senate Intelligence Committee put his Operations. BCCI scandal and which included documents that
confirmation hearings on hold. George served directly under Gates. “Now you are implicate Bush and Saddam in private business deals.
The case in question is case No.90 C 6863, The
Standing outside his vacation home in one of a handful of people who knows,” George told
People of the State of Illinois ex rel Willis C. Harris
Kennebunkport, Bush wagged his finger at reporters and Fiers, according to Fiers. Both Fiers and George later
vs the Board of Governors of the Federal Reserve
railed against politicians, “They ought not to accept a told Congress they knew nothing of the diversion until
System, in the U.S. Court of Appeals for the Seventh
rumor. They ought not to panic and run like a covey of Attorney General Edwin Meese III made it public on
quail because somebody has made an allegation against Circuit in Chicago.
November 25, 1986.
a man whose word I trust,” Bush said, his voice rising. The Senate Intelligence Committee has no evidence According to Skolnick:
“What have we come to in this country where a man that Fiers or George told Gates of the diversion. Gates [QUOTING Sherman Skolnick:]
has to-prove his innocence against some fluid, movable The case involves records of BNL™s [Banco
has said that Casey cut him out of the loop on the Latin
charge? I just don™t think it™s the American way to Nazionale de1 Lavoro, the largest bank in Italy]
American operations and that he didn™t pry.
bring a good man down by rumor and insinuation.” He admits he picked up some hints of the diversion Chicago unit which the House Banking Committee is
before it became public but says he ignored them trying to get, and which were also in the possession
It may not be the American way, but in Washington,
press exposure is often the beginning of the end for high- of the Federal Reserve Board.
because he considered the evidence “flimsy”.
profile presidential appointees. The records demonstrate private transactions
That was the accepted explanation until Fiers
Gates has been done in once before. In 1987, when revealed that Casey wasn™t the only one at the CIA involving $250 billion in oil-money kickbacks from
“Now you have a situation the entire Gulf region paid to Saddam Hussein. The
he was Deputy Director of the CIA, Gates was forced to aware of the diversion.
withdraw his nomination to be Chief because of where the man above Gates and the men below him Federal Reserve Board wanted Congressman
unanswered questions about his role in the Iran-Contra knew what was going on,” says Sen. Howard Gonzalez to agree to never use these records in any
scandal. Metzenbaum (D-Ohio). “You have to wonder how come of his congressional reports. He was only to be
For the next four years he rehabilitated himself, he didn™t know.” .allowed to look at the records. But the Congressman
cultivating Congress and the press from his Deputy post Former U.S. Customs Commissioner William von refused to ˜sign the secrecy oath that the Fed
at the CIA and then as George Bush™s Deputy National Raab and at least one other senior law-enforcement demanded.
Security Adviser. Following the May 10 hearing, I told the attorneys
investigator reportedly told investigators that in 1988,
Iran-Contra faded off the front pages. So when while serving as Deputy Director, Gates obstructed an that I had heard what the records were about. I
Gates was again nominated in May to replace retiring investigation into drug-money laundering at™BCC1. The spelled out these huge private transactions between
CIA Chief William Webster, the White House hoped the CIA is known to have used BCCI™s global network to Bush and Saddam. The attorneys said, “Mr.
scandal was finally behind him. They guessed wrong. funnel funds to the Mossad, not just from its own Skolnick, you are absolutely correct.”
The lengthy investigation by Independent Counsel The attorneys said that because Congressman
“black” accounts but from oil-rich Arab states that
Lawrence Walsh finally produced a breakthrough. wanted to leave no paper trail or public record of Gonzalez would not sign the secrecy oath, the truth
Former CIA official Alan Fiers, who once ran the payoffs. would come out regarding the secret arrangements
Agency™s Central American Task Force, admitted that he Under pressure from Bush, Gates eventually involving those deals [between Bush and Saddam].
and other senior CIA officials had known of the withdrew his nomination a second time, hoping to curtail One of the lawyers said, “Well, that™s true. I
diversion of funds to the Contras-and that they had want you to know that what is involved here are non-
further revelations about Bush-BCCI connections.
withheld this from Congress. Members of the Senate Some of the millions obtained by the Israeli Secret bank records that the Justice Department [doesn™t
Intelligence Committee were angry that they had been Service from Saudi slush funds and other Gulf sources want released].”
misled by the Agency they are supposed to oversee. [END QUOTING]
were laundered through BCCI and moved to CenTrust
It is not certain whether Gates was among the Bank, Miami™s largest and most freewheeling savings “Non-bank records” is a euphemism for bank
deceivers. But the Senate delayed confirmation hearings records that a bank doesn™t want released. This
and loan center, sources revealed.
to gather more information, leaving Gates to twist as CenTrust, seized by federal regulators, was headed involves monumental amounts of a joint business deal
ABC™s Nightline
damaging press stories started. by David Paul, a billionaire speculator now under between Bush and Saddam that they don™t want
charged that the CIA failed to .tell Congress about a criminal investigation for alleged financial irregularities. released. For 10 years Saddam Hussein was the bully
covert operation, which the report claimed Gates The secret funds transferred to CenTrust via BCCI of the Persian Gulf. The OPEC oil producers in the
supervised, that funneled arms to Iraq in the mid-80s. went to the Mossad, which drew on them in early 1987 Gulf had to kick back 25 percent of the amount from
At the time, the U.S. was backing Iraq against Iran by to finance its covert stations in Latin America, including the Western oil companies to Saddam, and the money
providing intelligence information and-according to the went through the bank. There was upwards of a

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