In Iraq, Key US Ally Falls from Grace ; Thursday, US Forces Raided the Baghdad House of Ahmed Chalabi, Who Loomed Large in the Decision to Invade Iraq

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A year ago, Ahmed Chalabi was the darling of American policymakers, a political powerhouse with unprecedented access to the highest levels of the Pentagon.

It's hardly an exaggeration to say that he changed the course of Iraqi history: the information he and his party gave to the US about weapons of mass destruction - much of which proved to be false - was central to Washington's decision to launch the war that toppled Saddam Hussein.

But Thursday, US troops raided his house and the offices of his Iraqi National Congress political party. Earlier this week, his party's monthly US stipend of $340,000 was abruptly cut off.

Mr. Chalabi's standing is a marker of sorts showing the philosophical shift in the US effort to create an Iraqi body politic.

Hours after the raid, Chalabi repudiated the American occupation authority and declared himself a leader of the new Iraq.

"My relationship with the Coalition Provisional Authority doesn't exist," he told a packed room at "Chinese House," in the wealthy Mansur neighborhood of Baghdad. "And together with the governing council, we are still seeking to form a stable government."

Thursday at 10:30 a.m. local time, American troops and Iraqi forces surrounded Chalabi's compound in Mansur and entered the house. They overturned desks, seized computers and documents, and loaded boxes into waiting cars. Coalition officials told Associated Press that warrants had been issued for "up to 15 people" on allegations of "fraud, kidnapping, and associated matters." An Iraqi National Congress (INC) spokesman, interviewed on the Arabic language Al Jazeera satellite TV channel, said troops accused Chalabi of harboring terrorists.

Observers say that Chalabi's fall from American graces began months before Thursday's sudden raid. After allegations that Chalabi had provided faulty intelligence to American defense leaders - mainly, weapons of mass destruction that were never found - the American government cut off his party's monthly stipend.

In recent days, American officials have hinted that Chalabi was impeding US investigations into funds allegedly skimmed from the United Nations oil-for-food program during the time of Saddam Hussein. In a strange twist, Chalabi claimed Thursday that one of the reasons for this raid was his leading role in opening the investigation.

Last year, Chalabi was one of 25 Iraqis handpicked by US authorities for Iraq's governing council. His name was originally floated as a possible finance minister, though that idea was eventually scrapped, in large part because of his 1992 conviction for embezzlement in the neighboring country of Jordan. (Chalabi, who lived in exile for years during Hussein rein, claimed the conviction was politically motivated.)

Despised in Iraq

In Iraq, Chalabi is so widely despised that people blame him for everything from kidnapping and assassinations to electrical outages. …