American global exterminism as fronted by Obama-Biden

[Paul Rigby]

Peter and Paul:

I am almost afraid to put this in print, but one thing about Obama has given me hope for sometime: The very thing that hurt him in the primaries. His former pastor. He sat in that church for 20 years. Wright spoke the truth about what really occurs in our country. The government bringing in crack is just one example. When he said "God DAMN America" he was referring to US imperialismn, not committing blasphemy. I think Obama knows a lot. Now what he can DO is entirely different. We all know that the president is a figurehead, but that said, W and Co accomplished a lot. All bad.
Let's get past 11/4 first. Then give the man sometime to morph into the combination of "the new deal and the new frontier", which is how he is sounding. Keep in mind JFK out cold -warriored Tricky Dick in the debates. But then look at all he did, and all that he attempted before the real powers took him out.

The big problem is that these bastards will not tolerate peace. War=big profits for the true powers. It's what it has always been about.
Which is why Dalton's Trumbo's brilliant book "Johnny Got His Gun" was banned in in the US for many decades.

I too fear another false flag psy op. Badly.

Dawn

I sincerely hope you're right, Dawn, and that I've entirely misread the runes.

In which case, as you rightly note, they'll likely kill him.

Paul

[Jan Klimkowski]

For millions & millions of Americans, Obama clearly represents hope of a better, cleaner, more honest politics.

Those of us who look at his backers and advisors, and the deep history of America, are pretty cynical about this. However, in a sense, that isn't the point of this election.

Probably for the first time since Camelot, many Americans feel they have a choice between the old Establishment and youthful idealism.

This means that Obama probably won't be stopped from winning by dirty electoral tricks. "Hangings chads" Mk 3 would not be tolerated. Obama wouldn't concede like Kerry. And if he did, there would be riots.

So, imo, Obama wins. And then his supporters, dreaming of a new America, have to be reminded that his new Camelot is an unrealizable dream, and the old order is still in charge - with Blackwater boots on.

To achieve this change of mindset, to persuade optimistic voters that their dream is impossible, and that their first instinct instead must be to surrender their liberties and destroy America's "enemies", a huge emotional trauma will have to be inflicted on the American psyche.

Tragically, I think this does mean a false flag or allowed atrocity (such as a nuclear bomb) on the American mainland. Or a brand new Crossfire on national TV, with Faux News having an already printed script on who to blame.

I sincerely hope I'm wrong.

[Paul Rigby]

So, imo, Obama wins. And then his supporters, dreaming of a new America, have to be reminded that his new Camelot is an unrealizable dream, and the old order is still in charge - with Blackwater boots on.

To achieve this change of mindset, to persuade optimistic voters that their dream is impossible, and that their first instinct instead must be to surrender their liberties and destroy America's "enemies", a huge emotional trauma will have to be inflicted on the American psyche.

Tragically, I think this does mean a false flag or allowed atrocity (such as a nuclear bomb) on the American mainland. Or a brand new Crossfire on national TV, with Faux News having an already printed script on who to blame.

I sincerely hope I'm wrong.

My favoured target of old was San Francisco, chosen to get the liberals on-side; given the new context, I wonder about a major southern city with a decentish record of integration and black success - Atlanta, perhaps?

Paul

[Dawn Meredith]

Well one thing Obama could do that would not cost tax payers a cent is to restore the Constitution to its pre-neo con beauty. Undo all the harm W and Darth Vadar did. Wishfull thinking? Perhaps, after all he did vote wrongly on the FISA bill.
I'd love to see him repeal Patriot Acts 1 and 2.
"You may say I'm a dreamer"...
Dawn

[Linda Minor]

...
Let's connect the dots. Drugs help stoke war. Defense firms sell the weapons of war – to governments, warlords, terrorists, whoever will pay. The investors and owners of defense firms – like, say, the Bush family and the bin Ladens [at that time recent partners in the Carlyle Group] – are directly enriched by war. And so the wars go on.

http://www.liveleak.com/view?i=a73_1205376092
Bush family touched by subprime crisis
By F William Engdahl

The severity of its liquidity problems indicates that the unfolding financial crisis is taking major parts of the US financial and political elite down with it. Carlyle Capital Corp Ltd, a subsidiary of one of the most influential US private equity funds and closely tied to the Bush family, is in default on several of its securities. Carlyle is an offshore subsidiary of the Washington-based Carlyle Group, one of the most politically powerful private equity firms of the past two decades.

Among the leading partners of the Carlyle Group in recent years have been George H W Bush, father of President George W Bush; James Baker III, the Bush family's attorney and fixer; and former British prime minister John Major.

Carlyle Capital reports it is attempting to convince lenders holding US$16 billion in securities not to liquidate the company's remaining collateral. The company is a listed mortgage-bond fund managed by the Carlyle Group. The Carlyle Group already has loaned Carlyle Capital $150 million to cover debt obligations since July 2007. In the past several days it failed to meet margin calls with four banks.

The fear in the market according to informed reports is that its entire portfolio, recently valued at $21 billion, could be sold off in a distress sale, putting major downward pressure on all mortgage bonds globally. A collapse at Carlyle would hit the value of all fixed-income securities, which have already dropped sharply as banks pull back on their lending, and force a new global round of asset sales.

Margin calls

In the past days, Carlyle Capital admitted it had received "substantial additional margin calls and additional default notices from its lenders". It said lenders are selling off securities held as collateral. Margin calls are demanded when a creditor questions the ability of the borrower to repay.

Shares in the fund, which trades on Euronext Amsterdam, have been suspended after closing down nearly 60%. Carlyle Capital was a prime example of the financial engineering encouraged during the Federal Reserve's Alan Greenspan era by Washington. It had leveraged $670 million in equity by an alarmingly high 32 times to finance a $21.7 billion portfolio of highly rated mortgage-backed securities issued by US housing mortgage agencies Freddie Mac and Fannie Mae. To finance the deals it entered into repurchase agreements with banks where it posted the mortgage securities as collateral in exchange for cash. If the value of the security held as collateral falls, the lender has the right to ask for more collateral - a margin call - to secure the loan.

If the borrower does not meet the margin call by putting up more collateral, the lender may sell the security.

More worrisome is the fact that the Carlyle crisis does not derive from so-called subprime or bad-grade mortgage debt. The company held US government agency AAA-rated residential mortgage-backed securities (RMBS). Now Carlyle's lenders have issued margin calls in excess of $400 million. At the onset of the subprime crisis in September 2007, Carlyle was forced to go to Abu Dhabi's sovereign wealth fund to get capital. Mubadala, the arm of Abu Dhabi that has invested in sectors as diverse as Libyan oil exploration and Ferrari, the Italian motor company, paid $1.35 billion for a 10% Carlyle stake.

And the Blackstone Group too?

Carlyle is by no means the only elite US private capital group in serious trouble. Blackstone Group, manager of the world's largest buyout fund, said fourth-quarter profit plunged 89% after a "meltdown" in the credit markets and warned that getting loans for takeovers will be difficult in 2008. Profit declined to $88 million from $808.1 million a year earlier.

Blackstone decided to list the private equity company on the stock market in June 2007 in a move some date as the last gasp of the huge securitization and private equity buyout mania of the past decade. Since June its stock has fallen 53%. More serious, it hasn't completed a takeover of more than $2 billion in five months and is struggling to close the $6.6 billion buyout of Dallas-based Alliance Data Systems Corp, a credit-card processor, announced in May 2007.

Blackstone and Carlyle led the recent "locust capitalism" (Heuschrecke)hostile takeover binge that triggered a major political backlash in Germany and elsewhere. That debt-financed takeover binge came to a halt with the eruption of the subprime securitization crisis last autumn. Blackstone has $102 billion in assets under management at present. The value of leveraged or debt-financed buyout (LBO) deals announced in the second half of 2007 plunged two-thirds from the first six months, according to data by Bloomberg.

Crisis spreads to US municipal debt market

The ongoing financial market crisis was nominally triggered by a crisis of confidence in the value of the most risky securities, subprime home mortgages in the US, mortgages often made by banks without checking the borrowers credit history or income. Because the securitization revolution was premised on the flawed illusion that by spreading risk throughout the global financial system, risk would disappear, once the weakest part began to collapse, confidence in the multi-trillion entire edifice of securitized debt began to collapse.

The process unravels over time, which is why most have the illusion of a localized crisis. In reality, centered in the US economic and financial sector, what is now underway is a crisis not even comparable to the 1930s Great Depression.

Now the normally high-quality debt of US local and state governments, so-called municipal debt, is getting hit. California, New York City and the owner of the World Trade Center site will replace their floating rate debt, sharply raising costs for local governments as the economic depression is slashing their tax revenues.

In February, interest rate yields on US tax-exempt municipal debt rose to the highest ever relative to Treasuries. The market is reacting to deteriorating finances at bond insurance companies and credit rating companies. States, cities and agencies are pulling out of the $330 billion floating rate or auction-rate market, where costs have doubled since January, and plan to sell about $22.5 billion of fixed-rate, tax-exempt bonds to raise capital at a significant penalty price.

Bond fund managers in New York and London tell us they have never seen such troubles in the municipal bond market before.

The market for floating rate or auction-rate municipal bonds in the US, once thought safe, entered crisis as losses tied to subprime mortgage bonds and related securities threatened so-called monoline bond insurers' AAA ratings, causing investors to avoid the bonds they had insured.

The same monoline insurers, specialized New York financial security insurance companies, had insured subprime mortgage securities and municipal debt. The monoline companies guarantee about half the $2.6 trillion of outstanding state and local government debt, some $1.2 trillion. Higher interest rate costs for states and local governments will aggravate local US fiscal crises as the depression spreads, creating a self-reinforcing downward spiral. The process is in its early stages yet.

F William Engdahl is the author of A Century of War: Anglo-American Oil Politics and the New World Order, Pluto Press Ltd. Further articles can be found at his website, http://www.engdahl.oilgeopolitics.net.

(Copyright 2008 F William Engdahl.)

[Linda Minor]

Peter and Paul:
...
We all know that the president is a figurehead, but that said, W and Co accomplished a lot. All bad. ...
Dawn

Obama kept reminding voters throughout the campaign that the U.S. government was spending $10 billion per month on the war in Iraq. The first question we have to ask is where did that money come from--was it in the military budget or the black budget? The second one is where did the money go? In the old days (say, pre-WWII) military logistics was performed within the military. The quartermaster corps was in charge of managing the money and doling it out in accordance with the budget, after being furnished proper receipts, etc.

Since Vietnam, our wars have become privatized. Investment banks like Carlyle raise money outside the Constitutional framework and budgetary process--outside the taxing power of the federal government--and international corporations like Halliburton and Blackwater contract with the military powers to provide services such as transportation, housing, food, weapons ad infinitum. Nobody really knows how this system really works because the people involved in the investment banks treat the information as classified financial information.

It appears to me that the fall-out in the housing market was directly related to the continuous rise in margin calls needed to buy the securities being pumped out by Wall Street to pay for the Iraq war. Wall Street bankers and lawyers were making a killing on fees alone every time these securities were sold; but they finally ran out of buyers for the derivative hedge fund securities and could no longer afford to pay the ever-increasing interest charges. It was a gamble Bush made when he lied us into that war, led no doubt by James A. Baker III and his network, who hated Saddam for not paying debts and accrued interest dating back to the BNL (BANCA NAZIONALE DEL LAVORO) scandal when the first Bush was president.

https://www.getgrowingforbusiness.com/my..._id=210814

http://www.reuters.com/article/hotStocks...0220080306

NEW YORK (Reuters) - Shares of U.S. mortgage real estate investment trusts plunged on Thursday after Carlyle Capital Corp Ltd (CARC.AS), a European firm that invests in mortgage-backed securities, failed to meet margin calls and received a notice of default.

Several mortgage REITs fell more than 20 percent and were among the top percentage losers on the New York Stock Exchange.

Carlyle Capital and the mortgage REITs invest in investment-grade mortgage-backed securities issued by Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz).

Mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac saw spreads widen against U.S. government debt for a fourth straight day on Wednesday.

Carlyle Capital, a Dutch-listed affiliate of private equity firm Carlyle Group (CYL.UL), said it had received margin calls totaling more than $37 million from seven financing parties on Wednesday and was unable to meet the demands for extra collateral to cover its market positions for four of them.

"We believe this news will pressure the stock of Annaly and MFA, who run a similar business model, given increased concern about tightening repo-lending standards across banks and brokers," said UBS analyst Omatayo Okusanya II, who covers the mortgage REITs Annaly Capital Management Inc (NLY.N) and MFA Mortgage Investments MFA.N.

Okusanya said that he did not believe Annaly and MFA would receive similar margin calls because they are not as heavily leveraged as Carlyle Capital.

Analysts at Keefe, Bruyette & Woods, which on Thursday downgraded Anworth Mortgage Asset Corp (ANH.N: Quote, Profile, Research, Stock Buzz) and MFA to "market perform," also removed Capstead Mortgage Corp CMO.N and Annaly from the firm's Best Ideas List, citing lower book values due to the lower value of the Freddie Mac and Fannie Mae bonds for all four of the companies. The analysts also said they believed the companies would have to carry more excess capital to lower leverage.

Anworth shares of were down 24 percent to $6.72 in afternoon trade on the New York Stock Exchange. Capstead was down 24.8 percent to $12.26, Deerfield Capital Corp DFR.N 24.4 percent to $2.17, Annaly 15.4 percent to $16.34, and MFA was off 14.6 percent to $7.42.

In Amsterdam, Carlyle Capital fell 58.3 percent.

(Reporting by Ilaina Jonas; editing by John Wallace and Gerald E. McCormick)

http://query.nytimes.com/gst/fullpage.ht...A963958260

U.S. Settles Suit by Bank
Published: February 17, 1995

The Justice Department said today that it was ending its opposition to settling a civil suit brought against the Department of Agriculture by Banca Nazionale del Lavoro of Rome.

The suit was an element in the welter of actions resulting from allegations and investigations over whether the Bush Administration had secretly armed Iraq and then tried to cover up its actions after Saddam Hussein invaded Kuwait.

The Department of Agriculture announced it had settled the suit, which had been brought in the United States Court of Federal Claims, by agreeing to pay the bank $400 million. B.N.L. sued the department to recover money it had lost when Iraq defaulted on payments in August 1990, shortly before the Persian Gulf war. B.N.L. had been assigned guarantees on the loans by the department's Commodity Credit Corporation.

http://query.nytimes.com/gst/fullpage.ht...A965958260

Figure in Bank Scandal Links Bush to Iraqi Loans
By NEIL A. LEWIS,
Published: November 10, 1993

An Atlanta banker who helped to secretly funnel more than $5 billion in loans that were used to arm Iraq in the mid-1980's told a Congressional committee today that everything he did was with the knowledge of the Governments of the United States, Italy and Britain.

But the banker, Christopher P. Drogoul, quickly found himself dismissed by some members of the House Banking Committee as unable to offer any proof for his allegations. Mr. Drogoul was the manager of the Atlanta branch of Banca Nazionale del Lavoro, which processed the loans.

On Sept. 2, a week before going to trial in Federal court in Atlanta, Mr. Drogoul pleaded guilty to three felony charges in connection with his role in making the loans. He is to be sentenced this month; Government prosecutors say Federal sentencing guidelines dictate a prison term of 46 to 57 months.

Mr. Drogoul is being held in the Federal penitentiary in Atlanta and was accompanied to today's hearing by United States marshals.

The Drogoul trial was to have been the principal stage to play out accusations that the Administration of President George Bush secretly armed Iraq and then sought to cover up that policy after Iraq invaded Kuwait in 1990.

But today's appearance before the Banking Committee made clear that even if that is true -- and Mr. Bush has said it is not -- Mr. Drogoul is not in a position to provide proof.

One person who should know many of the details of the Bush Administration's involvement with the bank, which is essentially an arm of the Italian Government, is Renaldo Petrignani, Italy's Ambassador to the United States from 1981 to 1991. Although Mr. Petrignani was subpoenaed to appear at today's hearing, he did not attend because he is in Italy to answer a bribery charge apparently unconnected to Banca Nazionale del Lavoro.

Mr. Petrignani has denied the charge.

At today's hearing, Mr. Drogoul described numerous conversations with officials of Banca Nazionale del Lavoro's headquarters in Rome and others that led him to believe that his loans to Iraq were part of a larger scheme approved of by the governments in Washington, Rome and London.

"Behind me, sitting on my shoulders I had three governments for all my activities," he said.

Mr. Drogoul, 44, was arrested after a Federal Bureau of Investigation raid on the bank's Atlanta office in 1989. President Bush denied that his Administration secretly armed Iraq through the bank, and the Justice Department at that time charged Mr. Drogoul with defrauding his superiors in Rome.

In essence, the Bush Administration said Mr. Drogoul was the mastermind of the scheme, a stance greeted with widespread skepticism. As a Presidential candidate, Bill Clinton said he would have the matter investigated, and in August senior officials of the Clinton Administration said they agreed with the conclusions of the Bush Administration.

Representative Charles E. Schumer, Democrat of Brooklyn, summed up much of the reaction at today's hearing when he said that he believed it was highly plausible that Mr. Drogoul acted with the knowledge or approval of his superiors who may have wanted to help Iraq.

"But you don't deliver any specifics that show that to be the case," Mr. Schumer said, adding that all Mr. Drogoul's allegations were nothing more than informed speculation.

Mr. Drogoul said the answers probably existed in government files in Rome.

http://www.globalsecurity.org/military/l...0325wp.htm

Gonzalez's Iraq Expose
Hill Chairman Details U.S. Prewar Courtship

[Page: H1763]

(Mr. FRANK of Massachusetts asked and was given permission to address the House for 1 minute and to revise and extend his remarks and include extraneous matter.)

Mr. FRANK of Massachusetts. Mr. Speaker, I want to call to the attention of the House the extraordinary discussion which the chairman of the House Committee on Banking, finance and Urban Affairs, the gentleman from Texas [Mr. Gonzalez], has been having about the incredible pattern of misbehavior and coverup with regard to Iraq that has been perpetrated by this administration.

Just to quote briefly from the Washington Post article on last Sunday:

Almost every Monday for the past couple of months, Representative Henry B. Gonzalez has been setting the Bush administration's teeth on edge with fiery exposes about its courtship of Iraq before the invasion of Kuwait in August 1990. Gonzalez's special orders are full of excruciating detail that could haunt the White House before this election year is over.

The article in its entirety is as follows:

From the Washington Post, Mar. 22, 1992

[FROM THE WASHINGTON POST, MAR. 22, 1992]

Gonzalez's Iraq Expose--Hill Chairman Details U.S. Prewar Courtship

(BY GEORGE LARDNER, JR.)

Almost every Monday for the past couple of months, Rep. Henry B. Gonzalez (D-Tex.), the feisty chairman of the House Banking Committee, has been setting the Bush administration's teeth on edge with fiery exposes about its courtship of Iraq before the invasion of Kuwait in August 1990.

So far, hardly anyone has been listening. Gonzalez's `special orders'--as such uninterrupted speeches are called--are delivered to a virtually empty House floor. But they are full of excruciating detail--much of it classified `'secret' and `confidential'--that could haunt the White House before this election year is over.

Gonzalez's charges are simple and direct: Senior Bush administration officials went to great lengths to continue supporting Iraqi President Saddam Hussein and his unreliable regime long after it was prudent to do so.

U.S. officials insisted in 1989, for instance, on playing down the importance of a scandal involving an Atlanta-based bank and more than $5 billion in unauthorized loans to Iraq, including $900 million guaranteed by the U.S. government. They even intervened in the case to prevent indictment of the Central Bank of Iraq while the Persian Gulf War was raging.

Despite stiff opposition from some officials inside the administration, senior policymakers pushed ahead with $1 billion in fresh agricultural credits for Iraq under a Commodity Credit Corp. program. They also pressed for continued Export-Import Bank financing despite congressional sanctions and kept sharing intelligence information with Baghdad until a few weeks before Iraq's invasion of Kuwait.

Then, in the wake of the gulf war when Congress began demanding more information about the prewar conduct of U.S. policy toward Iraq, administration officials tried to hide their embarrassment under a cloak of national security and created what Gonzalez has called a `coverup mechanism' to keep investigators at bay.

Administration officials strenuously contest the accusations of impropriety and illegality, but they plainly would rather not talk about them at all. So far, they have sent only muted complaints to Capitol Hill about Gonzalez, by way of the House Republican minority, even though, House aides say, the Texas congressman has plunked more classified documents into the Congressional Record than anyone since the Vietnam War.

`We have received no formal communication from the administration on the issue,' said a spokesman for House Speaker Thomas S. Foley (D-Wash.).

The centerpiece of the controversy is the scandal involving the Italian government-owned Banca Nazionale del Lavoro (BNL). It broke open on Aug. 4, 1989, when FBI agents and Federal Reserve officials, tipped off by two bank executives, raided BNL's Atlanta branch and confiscated thousands of documents. The branch had become Iraq's principal source of credit in the United States between 1984 and 1989, a period in which Iraq's eight-year-long war with Iran had turned Saddam's regime into a cash-starved and unreliable debtor.

According to interviews with knowledgeable officials, records made public by Gonzalez and documents obtained from other sources, it was soon apparent that Iraq was involved in a massive fraud to pump billions of dollars in illegal loans and credits out of BNL-Atlanta, far above the amounts reported to the Federal Reserve.

About half of the money allegedly went to finance the purchase of U.S. farm products, including $900 million guaranteed by the Agriculture Department's Commodity Credit Corp., but investigators said much of the rest had helped fuel Iraq's military buildup.

U.S. Customs Service reports dated Sept. 21, 1989, and Oct. 20, 1989, pointed out that BNL was suspected of financing shipments of industrial machinery, military-type technology and various controlled chemicals to Iraq and providing loans `to various U.S. firms for the illegal export to Iraq of missile-related technology.'

Federal prosecutors in Atlanta anticipated quick indictments. In Washington, records show, Agriculture Department officials learned in early October 1989 that the evidence indicated their $1 billion-a-year CCC program for Iraq was riddled with corruption, including kickbacks and bribes demanded by Iraqi government agencies and questionable consulting fees for Iraqi front companies in the United States.

There were also allegations, still unresolved, that food shipments destined for Iraq under the loan program never got there and may have been diverted to other countries in exchange for cash or goods. Investigators say they now believe some food may have been traded for weapons or Soviet bloc military assistance.

[Page: H1764]

MORE CREDITS URGED

Despite that, Agriculture officials recommended an `interim' $400 million in additional food credits be granted Iraq under the CCC program, and this was approved by an interagency council Oct. 4, 1989, over the opposition of the Federal Reserve and Treasury representatives. A confidential State Department memo minimized the objections of the two agencies, saying they were made `at the behest' of the Office of Management and Budget, which State suggested was taking its role as `watchdog against scandal' too seriously.

But Iraq rejected the $400 million as insultingly low--Baghdad had received $1.1 billion the year before--and said such a relatively small amount would be `widely viewed as a U.S. vote of no confidence in Iraq debt policy.' On Oct. 6, according to a secret cable, Secretary of State James A. Baker III assured complaining Iraqi Foreign Minister Tariq Aziz at a meeting here that he would `look into the matter immediately.'

BNL officials in Rome, faced with parliamentary demands for an investigation there, were also getting worried. On Oct. 19, 1989, according to a State Department cable, BNL's chairman and its director-general called on U.S. Ambassador Peter F. Secchia and `suggested that the matter should be raised to a political level.' They said they wanted to cooperate fully with U.S. authorities `while at the same time making it fairly clear they want to achieve some kind of damage control.'

Sometime that same month, President Bush stepped into the fray, issuing National Security Directive 26 (NSD-26). Gonzalez said the order has been withheld from his committee on grounds of executive privilege, but other documents show that it ordered `pursuit of improved economic and political ties with Iraq.' A report to Baker, dated Oct. 26, 1989, cited the directive in recommending approval `on foreign policy grounds' of a $1 billion CCC program for Iraq, to be paid in two installments in light of the BNL investigation.

The report warned that the bank fraud `may also involve several high Iraqi officials,' but emphasized; `Iraq is now our ninth largest customer for agricultural commodities. . . . Our ability to influence Iraqi policies in areas important to us, from Lebanon to the Middle East peace process, will be heavily influenced by the outcome of the CCC negotiations.'

BAKER CALLED YEUTTER

Baker called then-Secretary of Agriculture Clayton Yeutter and urged him to go forward with the $1 billion program. Deputy Secretary of State Lawrence S. Eagleburger made similar appeals to Treasury and OMB, explaining in one note that `the CCC program is important to our efforts to improve and expand our relationship with Iraq, as ordered by the President in NSD-26.'

The full $1 billion was approved at a high-level interagency council meeting on Nov. 8, 1989. According to a confidential memo, Treasury, the Federal Reserve and OMB still felt that `allegations of Iraqi wrongdoing in the BNL case, though not backed by evidence at this time, could eventually embarrass the administration.' But once again, the State Department representative invoked NSD-26 and said that `to abruptly terminate the [CCC] program would . . . clearly run counter to the president's intention.'

Alarmed by Baghdad's human rights abuses such as the gassing of Kurdish villages in northern Iraq, Congress later that month enacted limited sanctions against Iraq, prohibiting Export-Import Bank financing without a presidential waiver. The State Department quickly drafted one and Bush signed it Jan. 17, 1990, declaring that a prohibition on Ex-Im loan guarantees for Iraq--essentially a $200 million revolving credit line--would not be `in the national interest of the United States.'

Around that time, other documents show, prosecutors in Atlanta were planning to bring an indictment in February and wanted to arrange interviews abroad of some `essential witnesses,' especially in Turkey. The interviews never came about, for reasons that are not yet clear. Justice Department officials in Washington say they stepped into the case in February 1990 in view of its international implications. Not until a year later--on Feb. 28, 1991, the day after Bush ordered a cease-fire in the gulf war--were charges formally brought.

`It was a very complex case,' said Gerrilyn Brill, first assistant U.S. attorney in Atlanta. `There is no connection between any failure to meet our expected dates in the indictment and foreign policy considerations.'

Brill is in charge of the case because the U.S. attorney in Atlanta, Joe D. Whitley, appointed in the summer of 1990, disqualified himself. He came from a firm that represented Matrix-Churchill of Ohio, an Iraqi front company and machine tool manufacturer named in the indictment as one of the recipients of BNL loan money.

`It's just a matter of happenstance,' Laurence A. Urgenson, acting deputy assistant attorney general, said of Whitley's Matrix-Churchill connection. Urgenson, who worked closely on the case as chief of the Justice Department's criminal fraud section, said `people keep linking things together that don't link. You have no idea how unrelated the war was to what we were doing. We indicted the day we were finished.'

CREDITS FINALLY CUT

The Agriculture Department finally halted the CCC loan program in May 1990 as relations with Saddam were deteriorating, but by then, half the $1 billion in credits had already been used.

Documents indicate the cutoff came after a May 29 meeting of the National Security Council deputies committee. A secret State Department options paper prepared for the session listed other actions that could be taken against Iraq and noted that U.S. intelligence was still providing Baghdad `with limited information on Iranian military activity that would be missed.'

It is not clear when that intelligence-sharing relationship was terminated. A knowledgeable official said intelligence sharing was not discussed at the NSC meeting.

Months later, with the BNL indictment imminent, prosecutors wanted to name the Central Bank of Iraq as a defendant, a step they said would allow them to freeze $1.5 billion in Iraqi assets. Top lawyers from the State Department, the Federal Reserve and other agencies successfully opposed the move as a dangerous precedent that could invite similar action by other countries against the Fed.

In a separate memo, the State Department, apparently anticipating Saddam's downfall, expressed additional reservations, saying the Iraqi central bank `will be an important element in any reconstruction regime.' The memo also noted with apparent satisfaction that `contrary to press reports,' Saddam's son-in-law, Hussein Kamal, was not on the list of those to be indicted. He has been named, instead, as an unindicted co-conspirator.

The 347-count indictment accused three officers of BNL-Atlanta, two of whom pleaded guilty last Friday, of conspiring with four Iraqi officials in what amounted to a rogue operation to defraud BNL of more than $5 billion without the knowledge or approval of higher-ups in the Italian bank. According to one Justice Department memo, the main defendant in the case, Christopher Drogoul, who ran BNL-Atlanta, has accused higher-ups in Rome of complicity, but prosecutors rejected his claims as `spurious.' The trial is set for June 1.

Simply stated, Mr. Speaker, this article shows a pattern of this administration courting Saddam Hussein, of overruling efforts within the administration to cut off aid to him and, in fact, helping to create the monster that caused us so much difficulty a year and a half ago.

END