'Failed' U.S. policy on Iraq well-intended, panel told

May 22, 1992|By Nelson Schwartz | Nelson Schwartz,Contributing Writer

WASHINGTON -- In their first appearance before a House committee investigating U.S. support for Iraq prior to the Persian Gulf war, top administration officials yesterday rejected charges that they allowed Saddam Hussein to divert hundreds of millions of dollars in agricultural credits to buy weapons.

Testifying before the House Banking, Finance and Urban Affairs Committee, Deputy Secretary of State Lawrence S. Eagleburger said there was "no indication" or "specific evidence" that Iraq misused the U.S. loans made in 1989 and 1990.

Mr. Eagleburger also denounced recent decisions by the committee chairman, Henry B. Gonzalez, to put hundreds of pages of classified documents into the Congressional Record, the daily report of Congress' activities.

He said the release of the classified material "has led -- knowingly or otherwise -- to distortions of the record, half-truths and outright falsehoods, all combined into spurious conspiracy theories and charges of a cover-up."

Mr. Gonzalez and committee staff member have been investigating U.S. links with Iraq for more than a year.

The Texas Democrat has sharply criticized Mr. Eagleburger and others for their handling of Iraq, charging that the United States ignored overwhelming evidence of human rights abuses and

TC huge military buildup by Baghdad prior to the invasion of Kuwait.

Yesterday's hearing marked the first time that administration officials have publicly responded to the issue on Capitol Hill.

The investigation has centered on the Atlanta branch of an Italian bank, Banca Nazionale del Lavoro, which has been accused of funneling billions of dollars to Iraq. Published reports have charged that Iraq may have diverted shipments of U.S. grain to obtain weapons from the former Soviet Union. The United States granted Iraq $5 billion worth of credits between 1983 and the Persia Gulf war.

Democratic members of Congress have launched several other investigations into U.S. support for Iraq and have vowed to make it an issue against President Bush in this year's political campaign. Several more hearings by Mr. Gonzalez's committee are expected in the coming months.

Under questioning by Rep. Jim Leach, R-Iowa, Mr. Eagleburger admitted that the administration had hoped to bring Iraqi President Saddam Hussein "to a more reasonable position."

But, he said, "It is clear that didn't work. We failed."

Three other high-ranking administration officials -- John E. Robson, deputy treasury secretary, Edward W. Kelley Jr., a member of the Federal Reserve board of governors and Richard T. Crowder, undersecretary of agriculture -- also testified, defending their roles in a late 1989 decision to offer an additional $1 billion in agricultural credits to Iraq even as evidence emerged that the Atlanta bank had acted fraudulently and Iraq may have misused the credits.

Mr. Eagleburger warned that the administration would not turn over any more material unless "it receives appropriate assurances from this committee regarding the storage and protection of such materials."

But Mr. Gonzalez, who has asked for the appointment of an independent counsel to investigate U.S. support for Iraq, said he was willing to subpoena witnesses as well as more documents from the administration.

Rep. Jim Slattery, D-Kan., said the government's attempts to clamp down on the documents "have all the appearance of using the veil of national security to hide colossal political blunders."

Rep. Charles E. Schumer, D-N.Y. called the Bush administration's support of Iraq in the 1980s more than just "a policy miscalculation." The links with Iraq involve "at best, improper conduct, and at worst, criminal activity by U.S. government officials," he said.

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