From: harelb@math.cornell.edu (misc.activism.progressive co-moderator)
Subject: IRAQ-GATE (I)
Followup-To: alt.activism.d
Originator: daemon@pencil.cs.missouri.edu
Organization: misc.activism.progressive on UseNet ; ACTIV-L@UMCVMB
Date: Sat, 10 Oct 1992 04:15:49 GMT


    "Thanks to years of illegal U.S.  military aid, Iran had the edge.
    Now, to balance the scales, the [Bush Administration] decided to
    help Saddam... UNDER THE CIRCUMSTANCES, ADMINISTRATION OFFICIALS
    COULD HARDLY GO TO CONGRESS and admit that they wanted to build up
    Iraq.  SO THEY CHOSE THE COVERT ROUTE, creating a $5 billion aid
    program DISGUISED AS U.S. AGRICULTURAL CREDITS... The bank
    selected was not American, but Italian: the Banca Nazionale del
    Lavaro (BNL)
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
    "Then fate tossed a monkey wrench into the operation.  On August 4,
    1989, acting on tips from two BNL employees, FBI and Customs
    agents stormed BNL's Atlanta offices.  They discovered that U.S.
    loan guarantees were being used illegally [...]
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
    "In October 1989, JUST WEEKS AFTER the BNL scandal threatened to
    plug the money pipeline to Iraq, President Bush signed NATIONAL
    SECURITY DIRECTIVE 26, directing all executive departments to
    "improve and facilitate the U.S./ Iraq relationship."
==================================================================
[From _Mother Jones_, July/August 1992 article by Stephen Pizzo, pp 20-22]
Mother Jones // 1663 Mission St. // San Francisco, CA 94103
Email: majones@igc.org (although they log in infrequently)
==================================================================

			=====================
			C o v e r t   P l a n
			=====================

    He's become a kind of Washington fixture, the old congressman from
Texas, with his skin brown and wrinkled as rawhide, speaking
passionately before an empty House of Representatives.  He was there
in 1982, warning Congress not to deregulate S&Ls.  This spring, Henry
Gonzalez was back, addressing his colleagues' vacant chairs about the
scandalous role played by the Bush administration in building up
Saddam Hussein before the gulf war.  But again, no one seemed to be
listening.

    A bit of history.  During the Iran-Iraq war, the Reagan and Bush
administrations cared little that Iranians and Iraqis were
slaughtering one another. What they did not want was for either side
actually to *win*.  Thanks to years of illegal U.S.  military aid,
Iran had the edge. Now, to balance the scales, the United States
decided to help Saddam.

    Under the circumstances, administration officials could hardly go
to Congress and admit that they wanted to build up Iraq.  So they
chose the covert route, creating a $5 billion aid program disguised as
U.S. agricultural credits.  The scheme using the Department of
Commerce's Export-Import bank(Eximbank) and the Department of
Agriculture's Commodities Credit Corporation(CCC), would funnel over
$1 billion a year in U.S.-guaranteed loans to Iraq.

    All they needed to begin the flow of money was an accommodating
bank willing to extend these loans without asking questions about how
the money was spent.  The bank selected was not American, but Italian:
the Banca Nazionale del Lavaro(BNL), which had a branch in Atlanta,
Georgia.  Over the next four years, this little bank, more than any
other, would feed Iraq's military machine.

    According to congressional sources who have reviewed classified
documents, BNL had direct ties to high-ranking officials in the Bush
administration.  On the bank's International Advisory Board sat former
secretary of state Henry Kissinger, whose firm, Kissinger Associates,
served as BNL's U.S. consultant.  The vice-chairman of Kissinger
Associates during this time was Brent Scowcroft, who in 1989 became
national-security advisor to president Bush.  And the firm's president
was Larry Eagleburger, who is now deputy secretary of state.

    Between 1985 and 1989, BNL would supply Iraq with over $4 billion
in U.S.-guaranteed "agricultural" credits, but less than half of this
money actually went to buy food from American farmers.  Instead, $2.6
billion was spent by Iraq on military equipment from western
suppliers.  The Reagan-Bush strategy achieved its goals: by 1989, both
Iran and Iraq were bloodied and stalemated, and the balance of terror
had been maintained.

    But as early as 1986, the loan credits started facing stiff
opposition inside the Reagan and Bush administrations.  Still
classified memos indicate that the Federal Reserve Board and
Department of Agriculture and Commerce warned against extending
further loans to Iraq.  "Iraq only repays those who offer larger
amounts of new money," a secret 1989 Eximbank memo warned.  "Iraq
attempts to force new money from creditory by defaulting, or
threatening to default...Iraq seeks ...a foot in the door and will
seek larger Exim programs thereafter ...using U.S. exporters to lobby
for new credit."

    But Iraq's biggest U.S. supporter sat in the Oval Office, and
despite the repeated warnings from his own advisers, he kept the loan
credits flowing.

    Then fate tossed a monkey wrench into the operation.  On August 4,
1989, acting on tips from two BNL employees, FBI and Customs agents
stormed BNL's Atlanta offices.  They discovered that U.S.  loan
guarantees were being used illegally, that bank workers were getting
kickbacks from Iraq, and that BNL had provided loans to U.S. firms to
facilitate military exports to Iraq. This raid on BNL posed two big
problems for the Bush administration: exposure of the illegal use of
CCC credits, and the potential shut-off of $1 billion in new loan
credits, which Iraq needed to continue its war effort.

    When the BNL bust came to his attention, House Banking Committee
chairman Henry Gonzalez called for hearings into how the $4 billion in
CCC loan guarantees had been spent.  That was the last thing that the
administration needed, so then-attorney general Dick Thornburgh shot
Gonzalez as note inviting him to a private meeting.  Gonzalez refused.


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