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Tales of the New Arabian Nights

Chalabi Baba and the 40 Thieves

by PAUL McGEOUGH

Sinbad, step aside. Aladdin and Ali Baba, off with your tawdry tales so we can hear a truly fantastic story from the land of the Arabian Nights.

You would have thought by this stage of this United States presidency, that there was little left to shock. But this is the news from Washington – the CIA has asked the FBI to investigate allegations that the Iraqi exile who almost single-handedly drove the American invasion of Iraq has all the time been a double agent for neighbouring Iran, which was secretly manipulating the US to topple its arch foe, Saddam Hussein.

It strains credulity that Iran, declared by the President George Bush to be an "axis-of-evil" enemy of the US, would set out to sandwich itself between US-dominated neighbours in Iraq and Afghanistan; but too often credulity has to be left at the front door during this Iraq crisis. And it’s not as though Bush needed an excuse to invade. As early as March 2002, according to Time magazine, the President told colleagues: "F— Saddam, we’re taking him out."

The FBI investigation of the exile Ahmad Chalabi and his Pentagon friends has opened in a week that began with a slightly wild-eyed Bush revealing his new winning plan for Iraq was his old floundering plan. It ended with a peace deal for the Shiite shrine cities of Najaf, Karbala and Kufa which was eerily similar to the deal the US accepted to end the battle of Falluja. Washington’s non-negotiable demands were forgotten and the "thugs" the US was after were allowed to get away.

Chalabi and his Iraqi National Congress were the source of much of the discredited US case for war against Saddam; claims of weapons of mass destruction and links to global terrorism. Always suspected by the State Department and the CIA, Chalabi nonetheless mesmerised the Pentagon and the White House and elements of the US media – a point dramatically underscored this week by The New York Times when it admitted just how wrong it was with much of its pre-war reporting on WMD, particularly the work of its Pulitzer Prize winner, Judith Miller, who made great use of – or was greatly used by – Chalabi.

Tension has been rising between Chalabi and Washington at the approach of June 30. That’s when Washington says it will hand sovereign power back to the Iraqis. It’s also the first time the music will stop in the post-invasion game of musical chairs and when it does, Chalabi is among those tipped to be without a seat.

But the tension exploded 10 days ago with joint US-Iraqi raiding parties searching Chalabi’s Baghdad headquarters, waving a bundle of arrest warrants for his associates and fuelling speculation about their role in blackmail, fraud and kidnapping. Chalabi, a disgraced former banker, is accused of positioning his associates to control virtually all the banks in postwar Iraq and of skimming $US22 million ($30.6 million) during the introduction of a new currency last year.

He was airlifted into "liberated" Iraq by the US and immediately appointed to the Iraqi Governing Council – a position from which he took control of the "de-Baathification" of Iraq. This was a process, insisted upon by the US, of stripping all former Baath Party members from public positions. Now it is alleged Chalabi’s teams have been running an extortion racket in which many former officials have been allowed to buy protection from public humiliation.

The investigation of Chalabi is based on CIA claims that it has irrefutable, "rock-solid" evidence that he passed classified US information to Tehran. There’s potential for the neo-conservative element in the Pentagon to be embarrassed here, because of the implication that it gave the tightly-held information to Chalabi in the first place.

The investigation will focus on Chalabi’s long-time intelligence chief, Aras Karim Habib, a Shia Kurd. Some in Washington claim he has been in Tehran’s pay for years and that he has gone underground since last week’s hit on Chalabi’s bunker.

Another former US intelligence chief was quoted: "The people investigating this aren’t sure yet … but the Defence Intelligence Agency is looking through its documents and realising they’ve been had. If it turns out to be true, it was certainly a genius operation – (the Iranians) created an anti-Saddam opposition to get rid of him and they got us to pay for it."

Chalabi and Tehran have denied the charges. But with the unravelling of the Bush case for war the picture emerging in Washington is of a conman, as opposed to a neo-con, who hounded susceptible officials and coached Iraqi defectors to tell Washington what it wanted to hear about Saddam.

Chalabi’s supporters have billed last week’s raid and the allegations against him as "the revenge of the CIA".

One of his stoutest defenders, The Wall Street Journal, editorialised on Thursday: "We think Mr Chalabi is a pawn in a much larger battle that is strategic, ideological and personal … he has long battled the CIA over the best way to topple Saddam … he is at odds with the UN special envoy (on the future governance of Iraq) … he is a blunt man who can seem arrogant, even to his friends."

But a gleeful former State Department counter-terrorism official told reporters: "When the story ultimately comes out, we’ll see that Iran has run one of the most masterful intelligence operations in history – it persuaded the US and Britain to dispose of its greatest enemy."

If Scheherazade had come up with stuff like this, we would never have had the stories of Sinbad, Aladdin and Ali Baba. She would have been clamped in irons.

PAUL McGEOUGH writes for the Sydney Morning Herald, where this essay originally appeared.