Ahmad Chalabi & The Neocons.

Falling from grace are Ahmad Chalabi in Baghdad and his neocon friends in Washington. This is a messy tale of deceit and cronyism. One Chalabi's closest neocon allies in Washington, Undersecretary of Defence for Policy Planning (the No. 3 man in the Pentagon) Douglas Feith, is losing influence in the Bush administration. Part of the Reagan-era Pentagon neocon group, Feith left government service and became a lobbyist, representing Turkey and Likud interests in Israel. In 1996, Feith co-authored a paper for Israel's then Likud Prime Minister Benjamin Netanyahu advising him to end the Oslo peace process with the Palestinians. When Netanyahu signed the Wye Agreement with Israel brokered by then Democratic President Bill Clinton, Feith broke with him, accusing the Israeli leader of compromising away his values, and backed Ariel Sharon.

Chalabi, from a prominent Iraqi Shiite family who left the country at the age of nine, has a long history of shady business dealings. His active courting of pro-Israel and neocon groups led to the passage by the US Congress of the Iraq Liberation Act of 1998 (ILA). His relationship with Feith blossomed after the latter, following Bush coming to office as president, was confirmed by the Senate and assumed his present post at the Pentagon.

Early in 2001, Feith began to lay out the justification for a war with Iraq. The funds that Congress mandated in the ILA had been frozen during the Clinton years. Under Bush, the funds were freed up to help finance Chalabi's activities. For his part, Chalabi and his Iraqi National Congress (INC) began to supply Feith's newly reorganised Defence Department with "intelligence" on Saddam's weapons of mass destruction (WMD) progress, and later on, with "information" linking the Baghdad regime to Osama Bin Laden's Al-Qaeda. Both wanted a US-led war to topple Saddam's Baathist regime and would go to any length to make that happen. Bin Laden obliged with 9/11. Immediately after 9/11 the neocons' top ideologue, Deputy Defence Secretary Paul Wolfowitz, called for a US-led war in Iraq to topple Saddam's regime.

It was Chalabi, among others, who sold Feith and Wolfowitz both on the ease with which the Saddam regime could be removed and the Shiite uprising of support for the US that would immediately follow. They were assessments such as these that provided Feith's planning office with logic that justified their flawed post-war calculations.

Chalabi's fabrications did not stop there. Even during the 1990s, he was promising the war's supporters that his post-Saddam Iraq would establish diplomatic and trade relations with Israel and the US. He and his neocon supporters were, at one point, quoted in the US to the effect that after Saddam, the Russians and French would be out, replaced by US companies who would be contracted for Iraq's socio-economic re-construction and development of the country's huge petroleum resources. Chalabi was said to be even promising both Israelis and their US supporters that not only would the new Iraq trade with Israel, but it would resurrect the Iraq-Israel pipeline for crude oil export.

Shortly after the war began on March 20 local time, Chalabi, despite strenuous objection from the State Department and the CIA, was airlifted with his US supporters into Iraq. He immediately began plans to establish a power base in Iraq. Appointed by the US to a position on the IGC, Chalabi assumed the role of director of its economics and finance committee. He was able to place his close relatives and other allies in key ministries and directorships of institutions dealing with Iraq's banking, finance and petroleum resources. The spoils of war were now within his reach.

One of his nephews, Salem Chalabi, chose not to hold a government position. Instead, he established the Iraq International Law Group (IILG), which describes itself as "your professional gateway to the new Iraq". Assisting Salem in setting up the IILG was a partner Marc Zell (the IILG's website has been registered in Zell's name). Zell is an Israeli settler of the Gush Emunim (Bloc of the Faithful) in the West Bank.

Zell had for many years been Feith's partner in their Washington-Tel Aviv law firm, Feith and Zell (FANDZ). FANDZ had been set up when Feith left government to pursue the work of a "foreign agent" representing Turkey and Likud interests in Israeli. Following the Baghdad opening of the IILG after the US-led invasion in 2003, Zell opened in the US an office for Zell, Goldberg & Co., which has since been promising to assist "American companies in their relations with the US government in connection with Iraq's reconstruction projects". Zell, Goldberg & Co. still uses the website FANDZ, the site of the old Feith and Zell firm. So when Zell boasts his connections to government, businesses know exactly what is means. In the relatively short period of time since the fall of Saddam's Baathist regime, IILG and Zell, Goldberg have facilitated contracts in the tens, possibly hundreds of millions of dollars.

Salem Chalabi has also been appointed by the Coalition Provisional Authority (CPA) to head the Iraqi tribunal that will investigate and prosecute the crimes Saddam and his cohorts committed against the Iraqi people. Saddam was caught hiding in a hole near Tikrit on Dec. 13, 2003. Saddam has since been moved to a fortified US detention place in Qatar.

Ahmad Chalabi has been railing against the corruption of Saddam's regime and demanding the right to investigate profiteering and kickbacks he alleges occurred in the UN's food-for-oil programme. In the latter case, it is believed that some elements of the UN secretariat would be implicated.

On the other hand, Feith has been implicated in the Abu Ghraib debacle. It was his office that had general oversight over post-war planning and pre-war propaganda. It was apparently his office which dismissed the applicability of the Geneva Conventions to the detained Iraqi prisoners. Growing displeasure with his work in this regard (Gen. Tommy Franks has been quoted as calling Feith "the stupidest guy on the face of the earth") has caused him to be sidelined. There are also hints he may soon step down from his post.

Ahmad Chalabi, who keeps saying he is not running for office in Iraq, recently caused some irritation by proudly boasting that it no longer mattered that the intelligence he gave to the Pentagon was faulty, because it got the job done. He has also angered his neocon and pro-Israeli supporters by turning his back on commitments he made to them. More recently he has been accused in the US of providing important secrets to Iranian intelligence. His home was raided by US and Iraqi forces.

It is said now that Feith may leave government. The last time he left the Pentagon, he turned his departure into business connections and a handsome profit. Chalabi also has a record of rebounding from setbacks that have marked his past. With Zell and Salem in business, both Feith and Chalabi may have a place to go.

The other neocons appear to have fallen entirely out of favour, both within the Bush administration and in Baghdad. The signs of their defeat at the hands of both reality and the "realists" - the latter headed by Secretary of State Colin Powell - are virtually everywhere. They were best marked by the cover of Newsweek last month, which depicted the framed photograph of the neocons' favorite Iraqi, Chalabi, shattered during a joint police-US military raid on his HQ in Baghdad. "Bush's Mr. Wrong" was the title of the feature article.

The victory of the realists, who include the uniformed military and the CIA, appeared complete on May 31 with the unveiling of the interim Iraqi government to which sovereignty is to be transferred from the US-led occupation authorities by June 30.

Not only was Chalabi's arch-rival-in-exile but relative, Iyad Allawi, approved by the IGC as prime minister, but neither Chalabi nor any of his closest IGC associates, especially Finance Minister Kamel Al-Gailani - who is accused of handing over much of Iraq's banking system to Chalabi during his tenure - made it into the final line-up.

Neocon has become a dirty word in Congress, where Republicans have become increasingly restive as a result of the recent debacles in Iraq, including the scandal over the abuse by US soldiers of Iraqi detainees and leaks that Chalabi had been passing sensitive intelligence to Iran (and may have done so for years).

Said Sen. Pat Roberts, a conservative Kansas member of Bush's Republican Party and chairman of the Senate Intelligence Committee, in a speech last month that was understood as a direct shot at the neocons: "We need to restrain what are growing US messianic instincts - a sort of global social engineering where the United States feels it is both entitled and obligated to promote democracy - by force if necessary".

The neocons, a key part of the coalition of hawks that dominated Bush's post-9/11 foreign policy, were the first to see the need to make a post-Saddam Arab world more hospitable to western values, US interests and Israel's territorial ambitions. Since the latter part of the 1990s, when they led the charge in Congress for the ILA, Chalabi and his INC was their chosen instrument to achieve that transformation. While no neocons were appointed to cabinet-level positions under Bush, they obtained top posts in the offices of Defence Secretary Donald Rumsfeld and Vice President Dick Cheney. Cheney's chief of staff and national security adviser was I. Lewis "Scooter" Libby, a key neocon.

On the White House National Security Council staff, the neocons were able to place former Iran-contra figure Elliott Abrams and Robert Joseph in key positions dealing with the Middle East and arms proliferation, respectively. Rumsfeld's Defence Policy Board (DPB) was dominated by neocons, notably its former chairman, Richard Perle, former CIA chief James Woolsey, former arms-control negotiator Kenneth Adelman and military historian Eliot Cohen.

More than any other group, the neocons predicted, backed up by Chalabi's assurances, that the war in Iraq would be a "cakewalk" and that US troops would be greeted with "flowers and sweets". They developed their own intelligence analyses to bolster and exaggerated Saddam's alleged WMD to provide a more credible pretext for war. Their friends on the DPB and in the media then stoked the public's fears about the WMD threats through frequent appearances on TV and a barrage of newspaper columns and magazine articles.

While analysts and regional experts at the CIA and the State Department, which had dropped Chalabi as a fraud in the mid-1990s, tried to resist the juggernaut, they were consistently outflanked by the neocons, whose influence and ability to circumvent the professionals was greatly enhanced by their access to Rumsfeld and Cheney, who served as their champions in the White House and with Bush personally.

The neocons' influence reached its zenith in early April 2003 when Chalabi and 700 of his paid INC troops were airlifted by the Pentagon to the southern city of Nassiriya on Cheney's authority against Bush's stated policy that Washington would not favour one Iraqi faction over another. Bush's national security adviser, Condoleezza Rice, professed surprise when informed of the move by reporters.

While they were riding high as US troops consolidated their control of Iraq, however, the neocons' star began to wane in August when it became clear that their and Chalabi's predictions of a grateful Iraqi populace were as founded as their certainties about Saddam's WMD. Sensing trouble ahead, Rice asked the former ambassador to India, Robert Blackwill, to return to the White House, where he had been her boss during the presidency of George H.W. Bush, the current leader's father (1989-93).

By October, Ms Rice and Blackwill had formed an inter-agency Iraq Stabilisation Group (ISG) that gradually wrested control of Iraq policy from the Pentagon. It was a process in which CPA chief Bremer, who had come to detest Chalabi and his neocon backers in Baghdad and Washington, was an enthusiastic participant. That was effectively completed with the announcement late in April 2004 that the State Department was taking over the $14 bn in reconstruction money for Iraq which the Pentagon had not yet spent.

In May, the neocon retreat turned into a rout, particularly as reports of Chalabi's coziness with Iran gained currency and, just as important, senior officers indicated that a military victory over the Iraqi insurgency was not possible. The public attention given to a blistering attack on the neocons by the former chief of the US Central Command, Gen. Anthony Zinni, on the popular television programme, 60 Minutes, also demonstrated that the media, ever cautious about taking on powerful figures, now saw them as fair game.

The FT noted recently that when Perle, Woolsey and several other neocons visited Rice at the White House on May 1 to protest the shoddy treatment Chalabi and his private militias were receiving at the hands of the CIA, Bremer and the State Department, "participants said she thanked them for their views and offered nothing more". The FT added that neither Rumsfeld nor Cheney nor any of their neocon aides attended that White House meeting.