Administration Preferred ‘Iraq Papers’ Under Wraps : Gulf War: Documents described history of assistance to Baghdad. Disclosure was likely to stir public concern.

On June 12 of last year, Commerce Secretary Robert A. Mosbacher met with key aides to confront the contents of a three-ring binder that threatened to tarnish the Bush Administration at the height of its glory.

It was the summer of 1991, and President Bush was still basking in the glow of the allied triumph in the Persian Gulf War. But even as the parades and television clips were creating an aura of political invincibility for the President, senior Administration officials were grappling behind the scenes with the prospect of seeing that victory turned to ashes.

Congressional committees were demanding access to a vast collection of classified cables, presidential orders, internal memos and raw notes. The material came to be known within the Administration as the “Iraq papers.”

As commerce officials gathered that day, on the table before them was the binder filled with potentially damaging documents: presidential orders mandating favorable treatment for Iraq, interagency records raising alarms over technology sales to Baghdad, a memo invoking the name of the White House in overruling Defense Department objections to the export of computers to an Iraqi military facility.

The following account shows how the Administration systematically sought to keep some of its most sensitive Iraq papers under wraps, while trying to avoid a full-blown confrontation with Congress. It is based on previously undisclosed records, documents released by congressional committees and interviews with officials on both sides of the disputed strategy.

The Administration’s circle-the-wagons strategy has become a central focus in the controversy over the ill-fated U.S. policy toward Iraq that has dogged President Bush for months. And if the independent counsel sought by Congress is appointed, the possibility of a cover-up is certain to be on the investigative agenda.

The Iraq papers described a history of assistance to Baghdad dating back to the early days of the Bush Administration and beyond. Their release would document the extent of that aid, as well as the escalating objections within the Administration to the policy of conciliation toward Iraqi President Saddam Hussein. Full disclosure would undoubtedly stir public concerns over the Administration’s role in Iraq’s massive prewar military buildup.

With so much at stake, the debate was carried on at the highest levels. Secretary of State James A. Baker III had a say in which documents to provide. National Security Adviser Brent Scowcroft advocated restricting congressional access. A plan was broached in which Mosbacher would risk a criminal contempt charge by refusing to turn over material. And President Bush’s concerns were invoked on numerous occasions.

Some key details of the Administration’s strategy are missing. Not all of the Iraq papers have been turned over to Congress. The White House has refused to comment or permit key officials to testify.

Nonetheless, some in Congress and elsewhere say they have seen enough. They suspect a cover-up, possibly a criminal one. The House Judiciary Committee contends that only an independent counsel can cut through the screen of contradictory statements and missing documents that conceal the extent of the Administration’s dealings with Iraq.

To the Administration, charges of a cover-up are deliberate distortions by Democrats who, seeking political gain, want to criminalize legitimate decision-making. Officials say the strategy amounted to nothing more than a responsible effort to respond to congressional requests while observing the separation of powers between the executive and legislative branches.

“This exercise was about seeing whether there were documents over which the White House might want to assert executive privilege,” said an official who attended many White House meetings. “If it is a conspiracy for a bunch of lawyers to sit down and figure that out, then I quit.”

The Administration’s strategy was rooted, at least in part, in the legacy of Watergate. As the Richard M. Nixon Administration saw firsthand, a congressional inquiry can pose a significant threat. Ronald Reagan and his aides had a similar brush with that threat in the congressional investigation of the Iran-Contra scandal.

“One thing that now occurs in the post-Watergate era is the fear of an impeachment effort, not because someone has done anything wrong, but because someone else could present a theory of a kind of conduct that will be regarded as impeachable,” says Terry Eastland, author of a new book on the presidency and a former senior Justice Department official who was involved in the Reagan response to Congress in Iran-Contra.

Those fears do not necessarily translate into a cover-up, Eastland says, but they can provide a psychological motivation for executive branch officials to gather every relevant scrap of paper and reassess every decision to see where they might be vulnerable to a congressional inquiries.

Indeed, as questions from congressmen mounted this summer and the request for a special prosecutor became inevitable, the two key agencies involved in U.S.-Iraq policy--the National Security Council at the White House and the State Department--ordered internal sweeps for all material relevant to relations with Baghdad.

But the Administration’s efforts to limit disclosure of sensitive documents began much earlier. The first clear-cut example occurred not long after Hussein’s troops overran Kuwait on Aug. 2, 1990.

As the Administration began massing military forces in the Middle East, it became apparent American soldiers might face weapons developed with U.S. technology. Rep. Doug Barnard Jr. (D-Ga.) responded with an investigation into whether the Commerce Department had been lax in monitoring exports to Iraq.

Early that October, Barnard asked for a list of export licenses for Iraq issued between 1985 and 1990. He later amended the request to add recommendations on each license by the departments of State, Defense and Energy.

Alarm bells rang at commerce. Officials feared the agency would wind up taking the blame to protect President Bush and Secretary of State Baker.

“Commerce had been ‘set up’ as a conscious effort to distance Bush and Baker from Iraq,” Iain Baird, director of export licensing at commerce, later told internal investigators.

So deep was the concern, records show, the response to Barnard was monitored by Mosbacher and top aides. Documents also show that Mosbacher, now general chairman of the President’s reelection campaign, advocated full disclosure but ran into opposition, led by the State Department.

The interagency conflict led to intervention by an ad hoc group dubbed “the Rostow gang” by House Banking Committee Chairman Henry B. Gonzalez (D-Tex.), who has leveled the strongest allegations of cover-up against the Administration. The name refers to C. Nicholas Rostow, chief lawyer for the National Security Council. Rostow headed an interagency group assigned to handle what became a blizzard of congressional requests for the Iraq papers.

The export license list has become a crucial element in the effort to obtain an independent counsel, because it was later determined that military designations and destinations on licenses for $1 billion worth of trucks and computers had been deleted.

Dennis E. Kloske, a former undersecretary of commerce, said in a recent statement that Rostow and White House counsel C. Boyden Gray provided advice to commerce officials as they prepared the list. But he did not accuse them of playing a role in deleting the military designations. Kloske has acknowledged making those changes himself, although he maintains he was not responsible for the same alterations in the permanent records at commerce.

After the Gulf War, demands for documents intensified--as did the White House effort to manage the flow.

Gonzalez had been investigating $5 billion in loans to Iraq by the tiny Atlanta branch of Italy’s Banca Nazionale del Lavoro since late 1989. In the spring of 1991, he broadened his inquiry into U.S.-Iraq policy, papering the White House and other agencies with subpoenas.

Rep. Sam Gejdenson (D-Conn.), chairman of a House Foreign Affairs subcommittee with jurisdiction over international trade, also sought records from the Commerce, Defense and State departments.

The strategy to limit disclosure was not confined to the White House. Baker persuaded House Foreign Affairs Chairman Dante B. Fascell (D-Fla.) to kill Gejdenson’s subpoena to state, promising instead to turn over records voluntarily.

And White House documents show that Scowcroft, the President’s national security adviser, lobbied Fascell to block the release of two presidential orders concerning Iraq--National Security Directive 315, issued Sept. 23, 1988, by former President Reagan, and National Security Review 17, signed by President Bush on June 15, 1989.

Two sources said NSD 315 may have provided justification for a National Security Council decision to release 71 export licenses for Iraq held up at commerce in the summer of 1988. Documents indicate NSR 17 dealt with Iraq and the spread of nuclear, chemical and biological weapons and ballistic missiles.

Congressional staffers say neither document has been provided to Congress, although a censored version of another presidential directive, NSD 26, has been released. NSD 26 is President Bush’s Oct. 2, 1989, order mandating closer ties to Iraq.

Both NSD 315 and NSR 17 were in the three-ring binder in the Commerce Department conference room that June morning a year ago.

According to notes taken by one participant, the meeting was called to divide the documents into categories, with the most sensitive slated for White House review to see if they should be withheld on grounds of executive privilege.

The categories are intriguing. Some documents identified Iraq as a “problem.” Others provided Administration reasons for favorable treatment for Iraq. Still others disclosed which departments favored shipments to Iraq in the months before its invasion of Kuwait.

Another entry said: “nasty case--Baird/Kanfala. No. 4 in book.” The reference was to an Aug. 10, 1988, memo from Iain Baird at commerce to John Kanfala of the Defense Department. The memo dealt with Defense Department objections to selling $600,000 worth of computers to an Iraqi military facility, according to a copy obtained by The Times.

“This system could contribute directly to increasing Iraq’s military force capability,” warned the memo.

Yet the memo said commerce would approve the export because the State Department did not object and because of NSC orders to treat Iraq favorably.

Mosbacher was willing to turn over his records. But the decision on interagency documents--and the two presidential orders--was referred to the White House, where the documents were the subject of intense strategy sessions, according to Administration officials and records.

At one White House meeting, notes describe a plan to send Mosbacher before Congress without documents. “Sec wld have to appear or run risk of contempt,” said the notes. “Or app w/o docs. Still run risk of contempt. Able to say Pres directed him to w/hold. No criminal risk. U.S. Atty. will not prosec when official w/holds at dir of Pres.”

Commerce lawyers blocked the plan. They feared Mosbacher would take the heat for the whole policy, according to an official involved in the matter.

President Bush’s name was invoked at several meetings. A document quoting Rostow and Stephen Rademaker, another NSC lawyer, discusses NSD 315 and NSR 17 and says: “Protect. Pres has decided to.” But those lines are crossed out, replaced by: “BS will review,” an apparent reference to NSC boss Scowcroft.

Records indicate Scowcroft, whose office is just down the hall from the Oval Office, talked to Bush about the two presidential orders. At one point, there was a “heated discussion” and the President was “very very mad,” according to notes.

Gray, the President’s counsel, said several times that Bush would review documents under consideration for asserting executive privilege, according to notes. But no record is available of Bush’s role in the final decisions and the White House has refused to answer questions. Administration officials maintain, however, that the debate centered on a legitimate issue of executive privilege.

Eventually, thousands of pages of documents were provided to Congress. But many documents mentioned in the Iraq papers have been withheld, including the two presidential orders and key State Department records. And, after Gonzalez released dozens of embarrassing classified records, the White House restricted his staff’s access to classified records.

Coupled with White House and State Department involvement in the investigation of the Italian bank’s links to Iraq, such actions have caused some Democrats to take a sinister view of the Administration’s strategy.

“It is clear that they have been trying to hold back information because it is clear that their policy toward Iraq is indefensible,” Gejdenson said.

Gonzalez is characteristically blunt, charging that the single purpose of the continuing White House effort is to “cover up embarrassing and potentially illegal activities.”