Bush Policy Toward Iraq Emerging as Possible Achilles’ Heel : Clinton-Gore campaign seeks to transform President’s foreign affairs strength into a vulnerability and undercut the benefit of the military victory in the Persian Gulf War.

As the presidential race enters its final weeks, President Bush’s role as chief architect of an ill-fated policy toward Iraq is emerging as a potential weak spot in one of his strongest selling points to voters, his reputation as a savvy manager of foreign affairs.

From stump speeches to CNN’s “Larry King Live,” the Clinton-Gore campaign has turned up the political heat after sensing an opportunity to transform a Bush advantage into a vulnerability and undercut the benefit of the military victory in the Persian Gulf War.

Democratic nominee Bill Clinton has demanded appointment of an independent counsel to investigate whether the Administration has covered up its prewar dealings with Iraq. Clinton’s running mate, Tennessee Sen. Al Gore, has charged that Bush’s conciliatory stance toward Iraq led directly to the war itself.

Pressed on the issue, Bush has defended his actions as a reasonable attempt to bring Iraqi leader Saddam Hussein into the “family of nations” and denied that U.S. aid helped Iraq’s military.

However, the President’s defense is encountering increasing difficulty as hundreds of pages of policy documents from his Administration surface to provide new ammunition for criticism. Those records relate in mounting detail the series of steps in which Bush and his senior advisers offered economic and diplomatic incentives to Iraq, although warnings were being received that Hussein was abusing the aid and using U.S. technology to produce weapons.

One of the most potentially damaging documents, a copy of which was obtained recently by The Times, is a secret, personal communique sent from Bush to Hussein at the critical juncture in the U.S.-Iraq relationship.

On July 28, 1990, with 35,000 Iraqi troops poised on the border with Kuwait, the President ordered a message conveyed directly to Hussein that stands as a concise summary of Bush’s stance toward Iraq--a measure of cautious warning and a measure of friendly suasion.

“Let me reassure you . . . that my Administration continues to desire better relations with Iraq,” Bush wrote Hussein in the still-classified cable. “We will also continue to support our other friends in the region with whom we have longstanding ties.”

Five days later, on Aug. 2, 1990, Iraqi troops overran Kuwait. The appeal--and the Bush Administration diplomacy--had failed.

A senior Administration official said in an interview that critics of the Iraq policy have consistently failed to put forward an alternative for dealing with the explosive unpredictability of Hussein and the complexities of Mideast politics at the time.

“Based upon what we knew, it made sense to maintain a limited relationship with Iraq in hopes of making Hussein a better actor,” said the official, who spoke on the condition that his name be withheld. “It was a sensible, rational policy that was, by and large, professionally implemented. And there was a noticeable lack of viable alternatives.”

The official argued that the intelligence warnings about Iraq’s ambitious weapons program were “few and thin,” and therefore did not warrant jettisoning the delicate relationship with Baghdad.

“The policy was somewhat of a risk,” acknowledged the official. “I don’t know of any risk-free foreign policy.”

While Bush and others attempt to defuse the issue, the rhetoric from Clinton and Gore and the stream of revelations from records obtained by the press and by Congress have now elevated it to greater attention.

The effect is becoming apparent. Bush’s leadership in the war has been gradually tarnished, and it is no longer possible for his campaign to invoke the Gulf affair as incontrovertible proof of his superior foreign affairs prowess.

The damaging paper trail began in the Ronald Reagan Administration and shows that when Bush took office in January, 1989, the tilt toward Iraq was already in place, set during the Iran-Iraq War by his predecessor.

But by the time Bush moved into the White House, the war was over and some were counseling a reassessment of the stance. Instead, Bush made it clear that he meant to expand relations with Iraq and quickly took steps to convey that intention to Hussein.

On March 24, 1989, at Bush’s behest, then-Secretary of State James A. Baker III met with Nizar Hamdoon, an accomplished Iraqi diplomat described in papers prepared for Baker before the meeting as “a unique channel” to Hussein.

According to declassified records, Baker was told at the time that Iraq was sheltering international terrorists and was “working hard at chemical and biological weapons and new missiles.” While he did raise U.S. concerns over terrorism and Iraq’s use of chemical weapons against Kurds, Baker also stressed to Hamdoon that the Administration sought to broaden ties with Baghdad.

It was a signal that never wavered despite repeated warnings from intelligence agencies and other quarters in the following months that Iraqi agents were scouring the world--the United States included--for weapons technology.

Records show that in April, 1989, Energy Department officials discovered Iraq was trying to buy nuclear weapons technology from American firms. In later months, the CIA and the Pentagon’s Defense Intelligence Agency described Iraqi front companies buying technology for nuclear, chemical and biological weapons and its missile program.

Each new dose of worrisome evidence, laid out in a succession of memos and reports, was countered successfully by the State Department and the National Security Council staff, which advises the President on foreign policy and national security. On Oct. 2, 1989, almost precisely a month after a particularly blunt CIA warning to Baker and others about Iraq’s advancing nuclear and missile programs, Bush signed a top-secret order mandating closer economic and political relations with Baghdad.

Still to be sorted out is the essential matter of what the President knew about Iraq’s arms buildup at the moment he signed the order, National Security Directive (NSD) 26. Bush insists his Administration never “knowingly” helped Hussein develop nuclear, chemical and biological weapons. But Baker saw intelligence reports about Iraq’s abuse of U.S. technology. So did Brent Scowcroft, the President’s national security adviser. Does that mean only Bush did not know?

Bush has yet to answer specific questions on that subject, and the trail of available documents now stops outside the Oval Office. NSD 26, however, is Bush’s indisputable personal stamp on Iraq policy.

“It seems likely that Bush was personally involved at key junctures of the Iraq policy from October ’89 on,” said Roger W. Robinson Jr., who spent nearly four years as a senior director at the NSC under Reagan. “Once that NSD was issued, Baker and his inner circle had a virtual blank check to accommodate Saddam despite increased interagency objections.”

The senior Administration official interviewed, however, said Iraq was never a top item on Bush’s agenda--or on the agenda of the anyone in the Administration-- before the invasion of Kuwait. He said Bush’s involvement in the policy before the invasion was limited.

After October, alarm bells still rang within the Administration over Iraqi activities, but NSD 26 largely thwarted any response.

In October and November, 1989, records show, several departments objected to giving another $1 billion in agricultural loan guarantees to Iraq, but they were overridden.

In January, 1990, Bush himself waived congressional sanctions prohibiting loan guarantees for Iraq by the U.S. Export-Import Bank and ordered the aid continued. The decision was made despite a very specific warning to Baker during the waiver debate that Iraq was stealing technology to produce bomb-grade uranium and testing ballistic missiles.

Classified documents indicate those concerns could have been mentioned in a memo to Bush from Baker recommending the extension of the Export-Import financing to Baghdad, but the memo itself remains secret.

In the spring of 1990, Hussein threatened to destroy half of Israel and escalated his anti-American rhetoric. Still, records show, the NSC and State Department blocked efforts by the Administration’s senior export official to restrict technology sales to Iraq.

A key meeting in that period is recounted in a newly obtained Administration memo. On May 29, 1990, the NSC conducted an interagency meeting at the White House to review Iraq policy in light of Hussein’s increasing belligerence. A decision was made to re-examine exports, but it was business as usual on the money front.

Senior officials from the State Department, the Defense Department, the CIA, the NSC and other agencies agreed unanimously to retain the option of providing Iraq with more agricultural loan guarantees and to continue aid from the Export-Import Bank.

The possibility that Iraq might get more agricultural guarantees was a big carrot. Some wanted a stick too.

An options paper sent to Scowcroft earlier in May, 1990, proposed that Bush send Hussein a personal message that “hit hard” on concerns over weapons proliferation and regional tensions. However, there is no record a message was sent until the eve of Iraq’s invasion of Kuwait--and then the tone was cautiously diplomatic.

On July 25, 1990, Hussein had summoned U.S. Ambassador April Glaspie for a discussion. He expressed concern over his relations with the United States in light of his threat to use military action to settle financial grievances with Kuwait. The day before, Iraqi troops had moved to the border with Kuwait.

“Saddam wished to convey an important message to President Bush: Iraq wants friendship, but does the USG (U.S. government)?” according to Glaspie’s account of the meeting in a classified cable obtained by The Times.

Glaspie concluded that Hussein was sincerely seeking a peaceful settlement with Kuwait. When Iraq made public a transcript of the session after its invasion of Kuwait, Glaspie was pilloried in Congress for sending a weak message that Hussein interpreted as a green light to launch his attack.

However, dozens of classified and declassified documents examined in recent months indicate that Glaspie’s remarks were consistent with Bush’s policy--a policy confirmed by the President on July 28, 1990, when he responded to Hussein.

In his secret cable, Bush echoed Hussein’s desire for good relations, saying he would raise concerns about “certain Iraqi policies” in “a spirit of candor and friendship.” Although Hussein had specifically asked Glaspie to clarify earlier Administration remarks that it was committed to defending its friends in the Gulf, Bush only repeated that the United States would “continue to support our other friends.” The word Kuwait does not appear in the cable.

Bush’s defenders point out that signals from moderate Arab allies and other sources indicated that Hussein had agreed to a negotiated settlement of the border dispute with Kuwait. As a result, the decision was made to send a cautious message that would not “throw some matches on a fire that was going out,” said one official involved in the policy.

Others are dumbfounded by the tenor of Bush’s cable at that critical time.

“That message had to be blunt and say: ‘The United States will not tolerate any attack on Kuwait,’ ” said Judith Kipper, a Mideast expert at the Brookings Institution here, who reviewed the cable. “Saddam understands only two things--power and toughness.”

Following the Paper Trail

Here are some key Bush Administration documents concerning Iraq:

March 23, 1989: State Department memo warns that Iraq is harboring Palestinian terrorists and working on chemical and biological weapons and new missiles.

April, 1989: Energy Department official warns superiors that Iraqi agents are seeking U.S. technology for nuclear weapons.

June, 1989: Defense Intelligence Agency warns that “Iraq has developed a major European military procurement network” for its military programs.

Sept. 3, 1989: CIA informs Secretary of State James A. Baker III and others that Iraq is developing a nuclear weapon to “counter perceived military threats from Israel and Iran.”

Sept. 19, 1989: Defense Intelligence Agency report cautions that Iraq is trying to obtain U.S. technology for a ballistic missile that could destabilize the Mideast.

Oct. 2, 1989: President Bush signs National Security Directive 26, requiring closer U.S. ties to Iraq.

Nov. 6, 1989: CIA report identifies seven Iraqi front companies buying technology worldwide for nuclear, chemical and biological weapons as well as ballistic missiles.

Jan. 5, 1990: State Department memo says Iraqi network has obtained technology to produce bomb-grade uranium.

Undated 1990: State Department finds that 73 U.S. exports to Iraq between 1986 and 1989 went to facilities “probably” engaged in weapons production. Items included bacteria cultures, advanced computers and equipment to repair jet engines and rockets.

July 19, 1990: Memo to Baker says: “Iraq is actively engaged in developing chemical and biological weapons and ballistic missile systems, and may be seeking to develop nuclear weapons as well. Iraq has been attempting to obtain items to support these proliferation activities from U.S. exporters, in some cases successfully.”

July 24, 1990: Baker asks Commerce Department to impose additional controls on exports that could assist Iraq’s weapons developments.

July 28, 1990: Bush tells Saddam Hussein in a cable that he wants better relations with Baghdad but cautions the Iraqi leader against settling disputes with military force.