Panel to Probe Reports on Aid to Iraq : Arms buildup: Rep. Gonzalez’s aide says the hearings will include questions raised in The Times’ articles about assistance in the 1980s.

The House Banking, Finance and Urban Affairs Committee plans extensive hearings into disclosures that President Bush and other high U.S. officials secretly helped Saddam Hussein build Iraq’s war machine almost until the start of the Persian Gulf War.

An aide to committee Chairman Henry B. Gonzalez (D-Tex.) said Monday that the hearings will address questions raised in a series of Los Angeles Times articles as well as other issues surrounding “the Iraqi procurement network.”

In a House speech, Gonzalez said that he also will ask a congressional agency to investigate whether the Export-Import Bank improperly approved aid for Iraq in 1984 and 1987 after being lobbied by then-Vice President Bush and others.

Gonzalez said that Congress’ General Accounting Office will examine “ample evidence” that directors of the bank approved $684 million in loan guarantees for Iraq, despite repeated warnings that there was no “reasonable assurance of repayment,” as required by the agency’s charter.

“The policy toward Iraq is by far the most tragic foreign policy episode of the Bush and (Ronald) Reagan administrations,” the congressman declared.

Two other Banking Committee members, Reps. Maxine Waters (D-Los Angeles) and Jim Slattery (D-Kan.), sharply criticized the actions of Bush and other officials. Their remarks suggested that Democrats may try to use the disclosures in election campaigns this year if they are assailed for voting against Bush’s request to wage war against Iraq.

“We now learn that the same President who sent our sons and daughters to fight a war also empowered the monster we were fighting by sending them a billion dollars in foreign aid,” Waters said. “American taxpayers subsidized the development of his (Hussein’s) ballistic missiles and then had to pay for the war too.”

Slattery said that The Times articles outline “a very troubling record of what I’d have to call appeasement” of Hussein.

“Who was really advising this policy of appeasement?” Slattery asked. “Was it the President, the vice president, aides in the White House, or all of the above. . . . ? The President and the team around him like to view themselves as experts in foreign policy. These stories raise questions about just how much they did know.”

Gonzalez already has conducted three hearings on $4 billion in unauthorized loans made by the Atlanta branch of Banca Nazionale del Lavoro, an Italian bank that was heavily involved in Export-Import Bank loan guarantees for Iraq. Investigators have determined that funds from the unauthorized loans were used to buy military technology and goods.

In his speech, Gonzalez deplored “how the Export-Import Bank was cajoled into granting credit for Iraq, even though the financial experts at the bank repeatedly warned” that Iraq did not seem capable of repayment.

“In fact,” the congressman said, “Iraq later defaulted on its Ex-Im bank commitments.”

He noted that “it took interventions and constant pressure, often from high-level State Department policy-makers and even (then-Vice President) Bush, to permit Iraq to utilize Ex-Im bank credits.”

Gonzalez recounted how Bush, in June, 1984, telephoned the president of the bank shortly before the agency’s directors overrode staff objections and approved $484 million in loan guarantees to help Iraq build an oil pipeline. A confidential State Department memo to Bush suggested that he argue that the credits would play “a crucial role” in U.S. foreign policy in the region.

Eventually, the pipeline project was abandoned by Iraq, so the guarantees were never used.

In February, 1987, Bush again called the head of the bank; another State Department memo suggested that he urge “favorable consideration” to Iraq’s request for renewal of $200 million in short-term credits.

Three months later, against the advice of the Ex-Im staff, the agency’s board of directors approved the credit program.