RAY SUAREZ: As recently as January, Ahmad Chalabi held a place of honor at President Bush's State of the Union address. The former Iraqi exile was seated just behind the first lady. But it's been a rapid fall from grace for Chalabi over the past five months, with today's headlines reporting the FBI is investigating whether Chalabi revealed U.S. secrets to Iran .
In the run up to the Iraq War, Chalabi and his exile group, the Iraqi National Congress, were based in London . He and the INC, which had lobbied for years for the U.S. to topple Saddam Hussein, were viewed by many top Bush administration officials as the likely post-Saddam government. Congress approved payments of $33 million to the INC between March 2000 and September 2003, some for establishing an exile army. In a NewsHour interview last June, Chalabi said his group provided intelligence from several defectors to the U.S.
AHMAD CHALABI: The second defector we introduced to the U.S. , He was the man who described the mobile biological labs, biological weapons labs, and those are the only thing that has been found so far.
RAY SUAREZ: Information about the biological weapons labs was a key part of the administration's case pressing for war. Deputy Defense Secretary Paul Wolfowitz in January 2003.
PAUL WOLFOWITZ: The whole purpose, if you think about it, for Iraq, constructing mobile units to produce biological weapons could only have been to be able to hide them. We know about that capability from defectors and other sources.
RAY SUAREZ: And Secretary of State Colin Powell at the United Nations in February 2003.
COLIN POWELL: We have first-hand descriptions of biological weapons factories on wheels and on rails. The trucks and train cars are easily moved and are designed to evade detection by inspectors.
RAY SUAREZ: Powell now says he regrets making that allegation and was reported today to be demanding an explanation of what went awry from CIA Director George Tenet. After the war, U.S. weapons inspectors concluded the mobile labs were used for making hydrogen, for target practice and weather balloons.
Just days after the U.S.-led invasion, the Pentagon flew Chalabi into southern Iraq. He was then moved to Baghdad, where a post-war administration was being created. The U.S. administrator named Chalabi and several other exiles to the interim Iraqi Governing Council.
As the U.S. occupation wore on, Chalabi's relationship with the Bush administration deteriorated. In May, he stepped up criticism of the American occupation for not turning over power to Iraqis quickly enough and for dealing with former members of the Saddam regime. Late last month, the Pentagon announced it was cutting off the monthly funding for Chalabi's INC. Days later, U.S. troops and Iraqi police raided Chalabi's home and offices in Baghdad. Then came leaks, mostly attributed to U.S. intelligence sources, suggesting Chalabi may have deceived the U.S. and was used by the Iranians to goad the U.S. into attacking Saddam. It was a charge Chalabi denied on Meet the Press ten days ago.
AHMAD CHALABI: Indeed, we have had many meetings with the Iranian government, but we have passed no secret information, no classified documents to them from the United States because, principally, we are allies of the United States and we do nothing to harm the United States .
RAY SUAREZ: Yesterday, President Bush was asked if Chalabi had provided false information.
PRESIDENT GEORGE W. BUSH: Chalabi? My meetings with him were very brief. I mean, I think I met with him at the state of the union and just kind of working through the rope line, and he might have come with a group leaders. But I haven't had any extensive conversations with him.
RAY SUAREZ: As Iraq's interim government was announced yesterday in Baghdad, Ahmad Chalabi was not among those chosen.
RAY SUAREZ: For the latest on the Chalabi investigation and an assessment of the U.S. Relationship with him, we're joined by: Jonathan Landay, national security correspondent for Knight Ridder newspapers in Washington . Flynt Leverett, who worked on Middle East issues at the CIA, State Department and on the National Security Council staff from 1992 until 2003. He's now a visiting fellow at the Brookings Institution and Randy Scheunemann, former president of the committee for the liberation of Iraq and former Iraq consultant to the Office of the Secretary of Defense. He's now a private consultant.
Jonathan Landay, what's the latest on the now two investigations into the recent activities of Ahmad Chalabi?
JONATHAN LANDAY: National security adviser to the president, Condoleezza Rice, was up on the Hill today, where she was asked what, by lawmakers what was going on in terms of the investigation. She assured them that there were investigations going on, that the CIA was involved in looking back at the allegations that Mr. Chalabi passed on or at least allowed, told the Iranians that the United States had broken the codes that they encoded their diplomatic and other messages with that allowed the United States to basically eavesdrop on Iranian classified communications.
RAY SUAREZ: And what's the FBI investigating?
JONATHAN LANDAY: The FBI is heading up this investigation. The question is where the targets are. Certainly, the investigation involves both aspects in Baghdad in Iraq as well as here.
There are some reports that targets of the investigation may be people at the Pentagon who had dealings with Mr. Chalabi.
RAY SUAREZ: So these would be the sources of the information that he allegedly passed on?
JONATHAN LANDAY: Allegedly passed on and whether on not there was any deliberate passing of information. The indications are that there wasn't anything deliberate.
RAY SUAREZ: In your reporting, has there been any indication that there was already some idea that this was going on or some conviction on somebody's part that this was going on when the raids happened in late may on the INC offices and on Chalabi's own home?
JONATHAN LANDAY: We were being told then that there were allegations that Mr. Chalabi's intelligence chief was suspected of being an Iranian intelligence asset. This is a suspicion, an allegation that has existed within the American intelligence community for quite some time, and the INC insists it's not true.
The INC insists this gentleman, Mr. Arras Habib, was in fact polygraphed by the CIA in 2002, asked specifically about the allegations that he was involved with the Iranian intelligence and actually passed that polygraph. My understanding is or I've been told by senior intelligence officials that that is not true, that there was no such polygraph.
RAY SUAREZ: Randy Scheunemann, what happened? How did Ahmad Chalabi go so quickly from a favorite to a target?
RANDY SCHEUNEMANN: Well, what I think you see is the culmination of a year's long campaign of character assassination against Chalabi because many in the U.S. Government don't like his message, don't want him involved in the Iraqi political scene and frankly were a little bit worried about the investigation that he was conducting, spearheading on behalf of the Iraqi Governing Council on the oil-for-food program and its abuses of billions of funds and also most sensitively on the development fund for Iraq, which is a $6 billion fund controlled with one signature only, and that's the proconsul Bremer.
I think what you saw is a culmination of the Defense Department weaken the traditional supporters of Chalabi, weakened by the Abu Ghraib prison scandal and the traditional opponents of Chalabi in the CIA and State Department and some Arab governments -- that are far from democratic and certainly don't want to see him in power -- strike.
As for the allegation this morning, let's be clear about what we know. The allegation that Chalabi passed on information to the Iranian station chief in Baghdad that his codes were being read and then according to the story the Iranian station chief then violated the most fundamental rules of trade craft and used the allegedly broken code to send back to Tehran that, guess what, Chalabi heard from an American drunk that they were reading our codes, I find it absolutely incredible that the station chief in Baghdad for the Iranian service would be so stupid and clumsy.
RAY SUAREZ: Flynt Leverett, you heard Mr. Scheunemann's description of Ahmad Chalabi's almost collateral damage in an interagency squabble and a score-settling victim now. Is there more to it than that in your view?
FLYNT LEVERETT: I believe so. At the time that this administration came to office, the U.S. government had had several years of experience dealing with Ahmad Chalabi, and those parts of the government that knew him best, namely the CIA and the Department of State, had serious reservations about Mr. Chalabi and our continuing relationship with him. Those reservations concerned issues of financial malfeasance, counter-intelligence concerns and also a sense that Mr. Chalabi simply wasn't going to be able to deliver in a meaningful way to support any real effort at regime change in Iraq.
In the run-up to the war, those concerns were voiced consistently by the State Department and the CIA to the Bush administration. The Bush administration decided to go with the line preferred by Chalabi's supporters in the secretary of defense's office and the vice president's office.
And what we've seen since the overthrow of Saddam is a gradual dispelling of the illusions that these people had about Chalabi, and I think it's a vindication for those who have been expressing concerns and serious reservations about him for years within the government.
RAY SUAREZ: Randy Scheunemann?
RANDY SCHEUNEMANN: Let's take some of the allegations against Chalabi. They were, let's see, he's an exile with very little political base and a lack of a successful track record in running operations in Iraq. But you know who that describes far better than Ahmad Chalabi, the new prime minister, Iyad Allawi. So if we had these concerns about Chalabi, one would think they might stretch to the new prime minister.
The reality is Chalabi scares people. He scares people that are afraid of a Shia-led democracy in Iraq . The reality is that neighbors in the region are very anti-Chalabi, whether it's Iran that hardly wanted to see 140,000 American troops occupying Iraq with the goal of building a democracy there with Shias like Ayatollah Sistani that have a very different view of the relationship between mosque and state.
So I have to question the premise in your lead-in that Iran somehow wanted to see an American invasion. Certainly the Saudi, Egyptian, Syrians and others don't want to see a Shia democracy, neither do the Jordanians in Iraq .
RAY SUAREZ: There are a couple narratives that have emerged about gaming Iraq and the region, one that Chalabi would be taking care of an irritant for the Iranians. They certainly had no love for Saddam Hussein or his government or represented the interests of those inside the Bush administration who were most anxious to bring that regime down. You find no appeal in either of those I guess?
RANDY SCHEUNEMANN: Well, I think if you look at what the Iranians are worried about, they're worried about American encirclement. They see American troops in Afghanistan.
They see American troops in Iraq. They see an American president that has rightly called the regime in Tehran part of an axis of evil, something that has been supported by Chalabi, as well as his supporters in the Pentagon, as well as his outside supporters, like myself. I think if you put that together, I find it quite implausible that Tehran was working with Chalabi to somehow engineer an American invasion right up to their own borders.
RAY SUAREZ: Did the United States, Flynt Leverett, get much of value in return for its millions of dollars of investment in the Iraqi National Congress? Did the scenarios played out by the defectors and the intelligence generated by the INC prove very valuable in prosecuting a war against Iraq ?
FLYNT LEVERETT: No. The intelligence that we received through INC channels in the run-up to the war was of questionable or no value in the end, and there were people within the system at the time raising serious questions about that intelligence. There were also serious questions raised about whether Chalabi could be, as the Defense Department preferred, the basis for essentially a provisional government in exile that would simply be installed in Baghdad after Saddam's overthrow.
The CIA's leading authority on the Iraqi opposition, including the INC, was seconded to the staff during this period, as I was. He had the temerity to tell these troops to power about Ahmad Chalabi, and for his trouble he was dismissed from the NSC staff because the Defense Department and the office of the vice president didn't want to hear that kind of message about someone on whom they were pinning so much.
RAY SUAREZ: So are you suggesting that the war and the way the war was run was shaped heavily by not only Ahmad Chalabi and the INC, but other favored sources from Iraqi exiles?
FLYNT LEVERETT: It's probably unfair or inaccurate to say that Chalabi drove the United States to war. Chalabi was extremely convenient for those in the administration who were determined to go to war and to go to war as early as possible after Sept. 11. He was convenient. He provided them with information that fit the views that they wanted to push. He provided them with someone that they could say could be a plausible future leader of Iraq after Saddam's overthrow.
RAY SUAREZ: Jonathan Landay, was this a precipitous thing or something that was slowly building up over time, the decision to cut out the funding, raid the offices and now pull him down this way?
JONATHAN LANDAY: I think this is something that's been building up over time. I think that as disclosures about the nature of the information that was coming from the defectors came out, that it was either fabricated, exaggerated or unsubstantiated. That started the ball rolling.
I think Chalabi's comments in an interview several months ago with a British newspaper that sounded dismissive of the fact that this information was of the character it was, I know that that set off alarm bells inside the administration.
That said, I think that there was, were efforts to try and continue the support, but then when these allegations started rolling around, I think that made it politically unfeasible. I also think there's a lot of politics involved in all of this, too.
If you look at some of the comments that were coming out of the Congress today, people who had previously been pretty staunch supporters of Mr. Chalabi and the INC have suddenly switched around, and that raises questions as to whether or not they're responding more to sort of the political fallout in the United States of what's going on in Iraq rather than anything else.
RAY SUAREZ: Gentlemen, thanks a lot.