AMERICANS now know that the war in the Persian Gulf was brought about by a colossal foreign-policy blunder: George Bush's decision, after the Iran-Iraq war ended, to entrust regional security to Saddam Hussein.
What is not yet widely understood is how that benighted policy led to the Bush administration's fraudulent use of public funds, its sustained deception of Congress and its obstruction of justice.
As the Saudi ambassador, Prince Bandar, was urging Mr. Bush and Mr. Baker to buy the friendship of the Iraqi dictator in August 1989, the FBI uncovered a huge scam at the Atlanta branch of the Lavoro Bank to finance the buildup ofIraq's war machine by diverting U.S.-guaranteed grain loans.
Instead of pressing the investigation or curbing the appeasement, the president turned a blind eye to lawbreaking and directed another billion dollars to Iraq. Our State and Agriculture Departments' complicity in Iraq's duplicity transformed what could have been dealt with as "Saddam's Lavoro scandal" into George Bush's Iraqgate.
The first element of corruption is the wrongful application of U.S. credit guarantees. Neither the Commodity Credit Corp. nor the Export-Import Bank runs a foreign-aid program; their purpose is to stimulate U.S. exports. High-risk loan guarantees to achieve foreign-policy goals unlawfully endanger that purpose.
Yet we now know that George Bush personally leaned on Ex-Im to subvert its charter -- not to promote our exports but to promote relations with the dictator. And we have evidence that James Baker overrode worries in Agriculture and OMB that the law was being perverted: Baker's closest aide, Robert Kimmett, wrote triumphantly, "your call to . . . Yeutter . . . paid off." Former Agriculture Secretary Clayton Yeutter is now under White House protection.
Second element of corruption is the misleading of Congress. When the charge was made two years ago in this space that State was improperly intervening in this case, Mr. Baker's top Middle East aide denied it to Senate Foreign Relations; meanwhile, Yeutter aides deceived Senator Leahy's Agriculture Committee about the real foreign-policy purpose of the CCC guarantees. To carry out Bush's infamous National Security Directive 26, lawful oversight was systematically blinded.
Third area of Iraqgate corruption is the obstruction of justice. Atlanta's assistant U.S. Attorney Gail McKenzie, long blamed here for foot-dragging, would not withhold from a grand jury what she has already told friends: that indictment of Lavoro officials was held up for nearly a year by the Bush Criminal Division. The long delay in prosecution enabled James Baker to shake credits for Saddam out of malfeasant Agriculture appointees.
When House Banking Chairman Henry Gonzalez gathered documents marked "secret" showing this pattern of corruption, he put them in the Congressional Record. Two months later, as the media awakened, Bush gave the familiar "-gate" order: stonewall.
"Public disclosure of classified information harms the national security," Attorney General William Barr instructed the House Banking Committee last week. ". . . in light of your recent disclosures, the executive branch will not provide any more classified information" -- unless the wrongdoing is kept secret.
"Your threat to withhold documents," responded Gonzalez, "has all the earmarks of a classic effort to obstruct a proper and legitimate investigation . . . none of the documents compromise, in any fashion whatsoever, the national security or intelligence sources and methods."
Barr, in personal jeopardy, has flung down the gauntlet. Mr. Gonzalez tells me he plans to present his obstruction case this week to House Judiciary Chairman Jack Brooks, probably flanked by Reps. Charles Schumer and Barney Frank, members of both committees.
"I will recommend that Judiciary consider requiring the appointment of an independent counsel," says Gonzalez, who has been given reason to believe that Judiciary -- capable of triggering the Ethics in Government Act -- will be persuaded to act.
Policy blunders are not crimes. But perverting the purpose of appropriated funds is a crime; lying to Congress compounds that crime; and obstructing justice to cover up the original crimes is a criminal conspiracy.
William Safire is a columnist for the New York Times.