Like many people in the Middle East, Ahmed Chalabi may have had the image of the CIA as an all-knowing organization of worldwide puppet masters. If so, he soon learned otherwise. But in the early 1990s the CIA looked like a good prospect to sponsor an anti-Saddam Iraqi exile movement. At the same time, though, Chalabi was also looking to the Islamic regime in Iran for help.

Chalabi and some fellow exiles founded the Iraqi National Congress in 1992. The INC was largely funded by the CIA, which provided part of its support through the Rendon Group, a Washington public relations company that also does international political work for the Department of Defense. The CIA's support for the INC paid for two radio stations, various propaganda operations, and training camps in northern Iraq for Iraqi army defectors. (Northern Iraq, controlled by various Kurdish factions and protected by U.S. air cover, was a safe haven for Iraqi dissidents along with U.S. and allied intelligence operators.)

While Chalabi was perfectly willing to take the CIA's money, he quickly learned that it had become an ineffectual, self-obsessed bureaucracy. "He had absolute, total disdain for D.C.," says one of his former case officers in northern Iraq. "He looked at the Agency, and Rendon, and they flashed incompetence."

The case officer doesn't know precisely when Chalabi developed a deep relationship with the Iranian clerical regime, but it was in place when Chalabi was in northern Iraq in the early '90s. As the case officer recounts it, "He was given safe houses and cars in northern Iraq, and was letting them be used by agents from the Iranian Ministry of Intelligence and Security [Vevak], and the Iranian Revolutionary Guard Corps. At one point he tried to broker a meeting between the CIA and the Iranians."

The same officer says from time to time Chalabi would offer him "intelligence," which the officer would turn down. "I knew it wasn't any good, and he knew I knew. He took the refusal in good humor. We had a good relationship. I like him."

The CIA's relationship with Chalabi came to an end after a failed offensive in March 1995 against Saddam's forces by the small group of INC exiles and the militia of the Patriotic Union of Kurdistan. The CIA had withdrawn the support it had initially offered for the offensive, in what looks like a classic conflict between field officers and desk officers. Chalabi left northern Iraq the next month, and the CIA cut off its funding for the INC. It was at this time that Chalabi turned his attention to the American neoconservatives. The neocons were deeply disturbed by the Israeli government's "land for peace" negotiations with the Palestinians. The usefulness of the West Bank for "defense in depth" was less important than it would have been from the '40s to the '70s, given the increase in Israel's relative technological and military advantage over the Arabs. However, the idea of giving up what Israel's right-wing Likud leaders and some of the neocons themselves believed to be Israel's God-given lands on the West Bank of the Jordan River was anathema to them. The solution to Israel's strategic dilemma, in their view, was to somehow change the Arab governments.

The neoconservative strategy for Israel was laid out in a 1996 paper called "A Clean Break: A New Strategy for Securing the Realm," issued by the Institute for Advanced Strategic and Political Studies in Jerusalem (but written by Americans). The principal authors for the paper were Douglas Feith, then a lawyer with the Washington and Jerusalem firm of Feith and Zell, and Richard Perle, who until last year was the chairman of the Defense Policy Board, an advisory committee for Defense Secretary Rumsfeld

In the section on Iraq, and the necessity of removing Saddam Hussein, there was telltale "intelligence" from Chalabi and his old Jordanian Hashemite patron, Prince Hassan: "The predominantly Shi'a population of southern Lebanon has been tied for centuries to the Shi'a leadership in Najaf, Iraq, rather than Iran. Were the Hashemites to control Iraq, they could use their influence over Najaf to help Israel wean the south Lebanese Shi'a away from Hizbollah, Iran, and Syria. Shi'a retain strong ties to the Hashemites." Of course the Shia with "strong ties to the Hashemites" was the family of Ahmed Chalabi. Perle, Feith and other contributors to the "Clean Break" seemed not to recall the 15-year fatwa the clerics of Najaf proclaimed against the Iraqi Hashemites. Or the still more glaring fact, pointed out by Rashid Khalidi in his new book "Resurrecting Empire," that Shiites are loyal only to descendants of the prophet Muhammad's son-in-law, Ali, and reject all other lineages, including the Hashemites. As Khalidi caustically notes, "Perle and his colleagues were here proposing the complete restructuring of a region whose history and religion their suggestions reveal they know hardly anything about." In short, the Iraqi component of the neocons "new strategy" was based on an ignorant fantasy of prospective Shia support for ties with Israel.

For Ahmed Chalabi, the neoconservatives' support was the key to getting Washington on his side. And Chalabi's leadership, in turn, was key to the neocons' support for the INC. Perle and Feith, along with future Bush administration officials Paul Wolfowitz and Donald Rumsfeld, signed the February 1998 "open letter" to President Clinton, in which they listed nine policy steps that were in the "vital national interest" of the United States. The first of these was "Recognize a provisional government of Iraq based on the principles and leaders of the Iraqi National Congress (INC) that is representative of all the peoples of Iraq." In October 1998, under intense lobbying pressure from the neocons, Congress passed, and President Clinton signed, the "Iraqi Liberation Act," which provided money and U.S. legitimacy for Chalabi's INC, along with six other exile groups.

However, while Chalabi had proven himself as a lobbyist, if not a guerrilla leader, he had a continuous uphill battle with U.S. intelligence agencies, diplomats and the military, who never liked the INC's loose ways with the facts and taxpayer money. This meant that Chalabi had to constantly reinforce his countervailing support from the neoconservatives -- at least until they took power in the Bush administration in 2001, and squashed all dissonant internal voices on Chalabi. That's when Chalabi and his allies stepped up their planning for an American overthrow of Saddam Hussein. Behind the scenes, Chalabi was also detailing for the neoconservatives and their Israeli allies in the Likud party how the INC would take care of Israel.

One of the key promises he made concerned the revival of the Iraq-Israel oil pipeline. The pipeline from the oilfields of Kirkuk and Mosul to Haifa had been built by the British in the late 1920s, and was one of the main targets of the Palestinian Arab revolt in 1936-38. The 8-inch line was finally cut after Israel's independence in 1948. The sections in Arab territory have mostly rusted away or been carted off for scrap. The Israeli section is used as an irrigation pipe. The fully surveyed right of way, though, remains. It could handle a modern, 42-inch pipe, sufficient to supply the Haifa refinery.

With Chalabi's encouragement, the Israeli Ministry of National Infrastructure, which is responsible for oil pipelines, dusted off and updated plans for a new pipeline from Iraq. "The pipeline would be a dream," says Joseph Paritzky, the minister of national infrastructures. "We'd have an additional source of supply, and could even export some of the crude through Haifa. If we could build it, a pipeline would give us stable transport prices. Compare that to tankers; this year their price has almost tripled. We could also avoid problems such as strikes in our ports, which I've had to deal with. But we'd need a treaty with Iraq, and a treaty with Jordan to build the pipeline."

With Chalabi in power in Iraq, either in front or behind the scenes, L. Marc Zell confirms, the neocons were told there would be such a treaty with Iraq. "He promised that. He promised a lot of things."

Just after the U.S. takeover of Iraq, but before the establishment of the Governing Council of which Chalabi would be finance chair, Paritzky was lobbied by INC representatives in a meeting at the Dead Sea Marriott Hotel resort in Jordan. "We had a chitchat about it with the Iraqis, and with the Jordanians. But we couldn't go to the market and raise funds based on chitchat. We would have needed more to go on." Nevertheless, shortly afterward, on April 9, 2003, Paritzky announced a new technical appraisal of the pipeline.

The neocons in the Defense Department, such as Undersecretary of Defense for Policy Douglas Feith, were more optimistic about the pipeline project than Paritzky, who knew too much about the Middle East to be easily enthused by Chalabi's promises. The DOD neocons sent a telegram directly to the Israeli Foreign Ministry, violating protocol in bypassing the State Department, expressing interest and support for the pipeline project. The State Department had been told by the Jordanians that there would be no pipeline unless the Israelis reached a settlement with the Palestinians. The neocons didn't want to hear that. "If the government agreed to a pipeline without a Palestinian settlement," says a Jordanian official, "the monarchy would fall."

In the meantime, having used the neocons to get himself on the Governing Council, Chalabi appointed friends and relatives to key positions in the government. His nephew Salem (Sam) Chalabi, a lawyer, did much of the drafting of the interim constitution. Another nephew, Ali Allawi, was made minister of trade, with responsibility over foreign trade and investment in Iraq (he was later also named defense minister). Other Chalabi nominees went into the Central Bank, the Finance Ministry and the Oil Ministry.

But Chalabi had his eye on the bigger picture. The wealthy exile had visited Tehran before the war, in August 2002 and January 2003. On those trips he met with senior Iranian officials, and with Mohammed Bakr Al-Hakim, the leader of the Supreme Council for the Islamic Revolution in Iraq, the main Shia opposition group. The neoconservatives chose to overlook these visits to a member of the "Axis of Evil." It could be argued that there was no other way to liaise with Iraqi Shia leaders.

Then in December 2003, Chalabi went to Tehran to meet with Hasan Rohani, the head of Iran's Supreme National Security Council. At that meeting, Chalabi said, "The role of the Islamic Republic of Iran in supporting and guiding the opposition in their struggles against Saddam's regime in the past, and its assistance toward the establishment of security and stability in Iraq at present, are regarded highly by the people of Iraq."

U.S. intelligence agencies, along with leading neocons, began to look again at just who Chalabi's real friends might be, especially since Iranian intelligence agents from his old friends at Vevak were known to be active in Iraq. Also, the Israelis began to notice that Chalabi's old promises had been forgotten.

"I just got the bid papers for a $145 million highway project that were put out by the Iraqis, and they had the Israeli boycott language in them," an Israeli in Baghdad told me in March. "Chalabi promised the boycott would be over."

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