WITH the end of the Iran-Iraq War in the spring of 1988, the United States was confronted with a new strategic balance in the Persian Gulf. Iraq had replaced Iran as the military power in the region.(1)As President Ronald Reagan's final term drew to a close, the US government was still undecided about how it would deal with Iraq and President Saddam Hussein. By the spring of 1989, President George Bush's administration decided on a policy of constructive engagement with Iraq in the hopes that such a policy would lead to Saddam Hussein's moderation.
By April of 1990, however, it became apparent that the policy had failed. At that time, the Bush administration decided to suspend the agricultural credit program, which had provided Iraq with approximately $1 billion of credit per year to purchase US commodities. Many in the administration, however, continued to hope for constructive engagement, and until the invasion of Kuwait on 2 August 1990, the US government remained publicly supportive of Hussein.
In the aftermath of the 1991 Persian Gulf War, questions were raised about Bush's policy toward Iraq prior to August 1990. Most of these focused on allegations involving illegal loans underwritten by the Atlanta branch of the Banca Nazionale del Lavoro (BNL). Representative Henry Gonzalez (D-Tex.), chairman of the House Banking Committee, pursued the trail of Iraqi weapons procurement and claimed that the Bush administration had covertly armed Iraq in direct contravention to stated policy.(2) These allegations were echoed by William Safire in the New York Times, by Douglas Frantz and Murray Waas in the Los Angeles Times, and by Alan Friedman in the Financial Times, among others.(3)
Much of what has been written on the Iraq policy before the Kuwait crisis has rested on a tenuous documentary foundation,(4) and the documentary record provides only circumstantial evidence that improprieties of the type alleged by Gonzalez occurred. As the record shows, however, and as this article will endeavor to prove, the policy of constructive engagement was ill-conceived and was based on a series of questionable assumptions. Furthermore, when it became clear in the spring of 1990 that Hussein was becoming even less moderate, the Bush administration continued to cling to hopes of rapprochement. The article also will show that, contrary to the claims of Bush administration officials,(5) there were alternative policies, and these might have yielded better results in the long run.
US policy toward Iraq was developed in the context of the Iran-Iraq War (1980- 88). The Reagan administration, with its antipathy toward the fundamentalist regime of Ayatollah Ruhollah Khomeini, began to tilt toward Iraq after 1982, when it appeared that Iran might be winning.(6) Full diplomatic relations were restored with Iraq in 1984, and Iraq was given Export-Import Bank development loans and credits guaranteed by the Agriculture Department's Commodity Credit Corporation (CCC). The US tilt toward Iraq also entailed support for the conservative Gulf states, which were Iraq's primary financial backers, and in 1987, the US navy began escorting reflagged Kuwaiti tankers in the Persian Gulf.
Some in the Reagan administration were skeptical of Hussein,(7) and though policy dictated support, this support varied in intensity, depending on the ebb and flow of the battlefield. When Iraq seemed to be losing the war in 1982 and 1986-87, the administration tilted more heavily toward Iraq. When Hussein appeared to be winning, US ardor cooled off and aid levels decreased.(8) Indeed, throughout the war, there was sufficient distrust of both Iraq and Iran that the prevailing sentiment in Washington seemed to be "a plague on both of their houses."(9)
Nonetheless, hostility toward Iran, shared by both Washington and the United States' allies in the Gulf--Iraq, Kuwait, Saudi Arabia, and the UAE--demanded that Hussein emerge from the war with his regime intact. …