Chalabi's Fall From Grace

By Johanna McGeary; Massimo Calabresi

Once upon a time, Ahmad Chalabi had friends in high places. The M.I.T.-educated Iraqi exile was the odds-on choice of a powerful coterie inside the Bush Administration to run Iraq once Saddam Hussein was gone. In the fall of 2002, well before the U.S. invaded, Under Secretary of Defense Douglas Feith was trying to get Congress to release $97 million earmarked for groups, like Chalabi's Iraqi National Congress (I.N.C.), that were agitating for regime change. The Administration was relying on Chalabi's sources to provide intelligence on Saddam's alleged arsenal of weapons of mass destruction (WMD). But the State Department and the CIA persuaded the Senate Appropriations Committee not to release the money, arguing that Chalabi's intelligence wasn't worth paying for.

Nevertheless, with help from the top, Chalabi got his share of the money. In October 2002, at a meeting of President Bush's top aides, according to a former senior National Security Council official familiar with the session, Vice President Dick Cheney pushed forcefully for the payout, saying, "We are nickel-and-diming the I.N.C. when they are providing critical intelligence" on Iraq's WMD. Oversight of Chalabi's information operation was shifted from the skeptics at State to the Pentagon, where his champions included Defense Secretary Donald Rumsfeld and Deputy Secretary Paul Wolfowitz.

For a while, those ties paid off. In April 2003, on the day Saddam's statue was toppled, the Pentagon flew Chalabi and his 600-man militia, dubbed the Free Iraqi Forces, into southern Iraq. Chalabi's operatives helped U.S. forces track down members of Saddam's regime and collect troves of valuable documents, and the U.S. rewarded him with a seat on the Iraqi Governing Council. But as U.S. stature in Iraq plummeted, so did Chalabi's fortunes. With Iraq's political future increasingly in the hands of the United Nations, Chalabi faces being cut out. U.N. representative Lakhdar Brahimi is said to dislike him, and U.N. sources say there will probably be no place for Chalabi in the appointed government taking control after June 30. Revelations that the I.N.C. provided the Administration with faulty prewar intelligence have forced even his former Pentagon pals to back away. Says a White House aide: "I'm not sure how many friends he has anymore."

Chalabi's fall from grace began the moment he arrived in Iraq. An exile for almost 46 of his 59 years, Chalabi, a secular Shi'ite, had no constituency inside the country. When the CIA refused to provide weapons to his ragtag band of mercenaries, the Pentagon armed them over the agency's objections. Within days of their arrival, some of Chalabi's forces claimed houses, buildings, document caches and vehicles in Baghdad that belonged to the former regime. Eventually the U.S. disarmed those members of the militia it could still track down. Among Iraqis, Chalabi, dogged by charges that he mishandled U.S. funds and convicted in absentia in 1991 of bank fraud in Jordan--he has always maintained his innocence--has failed to shake his image as a carpetbagger. Polls show that in spite of his efforts to ingratiate himself with powerful figures like Grand Ayatullah Ali Husaini Sistani, he remains the most mistrusted political figure in Iraq.

In Washington, Chalabi's light has dimmed as more and more experts like David Kay, former Bush chief weapons inspector, blame the I.N.C. for painting a bogus picture of Saddam's arsenal. Chalabi tells TIME, "It is unfair and astounding that I would be given such powers to affect a system. It's election season, and people want to seek scapegoats." But U.S. intelligence officials doubt the credibility of many of the sources provided by the I.N.C. An informant purported to have worked on underground storage sites for biochem weapons greatly "embroidered" his tales, a senior U.S. intelligence officer says. Another I.N.C. source provided corroborating reports that Saddam had mobile weapons labs, a charge Secretary of State Colin Powell presented before the U.N. in February 2003. Intelligence officials had red-flagged that source with a "fabricator notice," meaning the source was unreliable. The CIA says it missed the notice. Chalabi aides say he passed along the sources' information without vouching for it.

These days, Chalabi insists he harbors no grand political ambitions. "I have no desire to be a candidate for anything," he says. But Chalabi may try to make himself felt even if he is not named to the post-June government. He has positioned enough allies in Iraq's ministries to wield significant power behind the scenes. He is building a political machine for Iraq's elections, which are scheduled for next year. But if democracy does come, Chalabi's connections aren't likely to help him. "He's looking for a base of support," says Mahmoud Othman, a Kurd on the Governing Council. "But at this stage, anybody who wants to be elected needs to lobby for himself."

--By Johanna McGeary and Massimo Calabresi. With reporting by Brian Bennett, Hassan Fattah and Vivienne Walt/Baghdad

With reporting by Brian Bennett, Hassan Fattah and Vivienne Walt/Baghdad