AGSCAM: the new world money order; the Department of Agriculture's long, dirty dance with a dictator - loan guarantee program to Iraq

Washington Monthly, April, 1991 by Mark Feldstein

Not surprisingly, the shakedowns continued, and by 1988, several exporters were so exasperated by the Iraqi blackmail that they put their complaints in writing to USDA. Officials from one U.S. company even met with the agency's attorneys, turning over written evidence of Iraqi threats.

Meanwhile, concern was mounting in other government agencies. The Export-Import Bank warned in August 1988 that, despite Iraq's oil-rich potential, the country's accumulated war debts-estimated at $90 billion-made it a risky recipient of U.S. largess. In fact, Iraq was already "in arrearage" to the bank itself. Yet the next month, USDA provided Iraq with a supplemental $36.5 million in credit guarantees. And as 1989 began, it extended another billion dollars' worth of credit to Iraq.

Given the tobacco scandal, the allegations of blackmail, and the emerging proof of Iraq's inability to repay, why was USDA still so resistant to terminating aid to Iraq? One reason was a concerted campaign by wheat, wood, and rice distributors from Alabama to the Pacific Northwest, who papered USDA with pleas to keep their Iraqi deals alive. After all, as former General Sales Manager Melvin Sims remarks, [The Department of] Agriculture considered it very much a market development program." Still, as documentation of iraq's abuses piled up, another advocate of continuing the program may have been equally influential: the State Department. State officials routinely meet with USDA administrators and representatives of Treasury, Commerce, and other federal agencies to discuss the credit guarantee program in the National Advisory Council, a body that makes non-binding recommendations on which nations will be given credit guarantees. While the minutes of the council's deliberations on the Iraqi loans have not been released-even to GAO auditors--GAO concluded, and Sims confirms, that State was an unwavering supporter of continuing the loan guarantees to Saddam. I think our government wanted to be good to Saddam Hussein and to help him as quietly as they could," speculates North Carolina Rep. Charlie Rose, who is leading a subcommittee investigation of the Iraqi loans. "They didn't want to directly ship military systems to Iraq. They didn't want to excite Israel. They didn't want to directly offer foreign aid or military sales credit. So they told USDA to be as generous as [it could] with agricultural credits."

It was not until the BNL-Atlanta allegations surfaced in the fall of 1989 that USDA ordered an "administrative review" of the Iraqi program. Yet two months later, USDA's new general sales manager, Paul Dickerson, proposed that Iraq's credits remain at $1 billion for 1990, BNL allegations notwithstanding. When other government officials rebelled, Dickerson reconsidered-but didn't stop the credits altogether. After negotiations in Baghdad, he reduced the guarantees to $500 million, holding the other $500 million in abeyance until the BNL investigation was resolved. A memo Dickerson wrote at the time noted that the decision to continue the loans would receive "strong interagency opposition . . . particularly [from] the Treasury Department." Still, he pointed out, "Iraq is a major market for U.S. agricultural products and our largest market for rice."