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The Al-Qaeda Protection Racket in Iraq

BAGHDAD–Contractors are a “significant source” of funds for al-Qaeda in Iraq, Iraqi power-broker Ahmed Chalabi told me yesterday.

U.S. contractors work with multiple layers of local subcontractors. These subcontractors must pay al Qaeda protection money to move their convoys through enemy-held territory or build schools or police station in hostile areas. Protection money, which varies by the size of the enterprise and the location, is paid monthly, Chalabi said.

He had no knowledge of the amounts or the names of subcontractors who paid. He estimates the combined payments as “millions of dollars” per year, all told.

For their money, contractors get not only safe passage from al-Qaeda but protection from competitors, who are threatened by al Qaeda if they try to do business in the area.

U.S. companies may be unaware of the payments, Chalabi said, but they cannot be ignorant of the fact that identical projects and shipments cost vastly different amounts in Iraq, depending on whether they occur in what the soldier’s call “Indian country” or relatively safer areas controlled by Coalition forces.

Informal conversations with contractors–who asked not to be named–generally support Chalabi’s account. While they say they are unaware of specific payments or amounts, they do not doubt that the practice is widespread. “T-I-I,” one says, “This Is Iraq.”

If the surge succeeds–and early signs are promising, despite spectacular attacks on the parliament and yesterday’s mass murder at an open-air market–these payments may disappear in time. That would be a real blow to al Qaeda’s finances.

But for now, apparently, al Qaeda lives like a vampire on America’s vast supply lifeline, hauling tons of ice, bottled water, food and ammunition every day hundreds of miles across the sunburned landscape.

Al Qaeda in Iraq other major funding source, according to Chalabi, is wealthy princes and other private citizens in Saudi Arabia and Arab gulf states.

I met Chalabi at his “summer home,” deep in the red zone neighborhood of Hurriya, which has been in his family since the 1920s. His main house is in the Mansour district of Baghdad.

Chalabi is one of handful of Iraqi leaders who live outside the green zone. While the green zone is neither safe nor lush, it undoubtedly irks many Iraqis that their leaders do not live among them. Chalabi’s highly secure red zone redoubt is a powerful political symbol. “I live in the red zone. I live on the property of my family,” he says with pride.

Chalabi volunteers that he does not even like going to green zone, with its nervous contractor guards from Peru who speak neither English nor Arabic and its checkpoints every half mile. “It would take a lot to get me to go to the green zone.”

Instead the world comes to Chalabi, everyone from then-U.S. Ambassador Zalmay Khalilzad to us.

My friend Eli Lake of the New York Sun and I were met by Samad al Qusi, in the over-priced al-Rasheed hotel on the inner edge of the green zone and walked past through the concrete check points, manned by Iraqi and American machine-gun crews. We moved past signs that read “Stay Back 100 meters. Deadly Force Authorized” in English and Arabic, and through a maze of sandbags and chain-link fence topped with razor wire.

We were in the red zone.

A small white Toyota pick-up awaited and two Iraqi technicals (pick-ups with mounted machine guns) took up front and rear and rolled through the city. The highways that I saw seemed intact and the store fronts busy. We passed a market selling produce and stores selling mattresses and plastic jugs.

Eventually, we came to gated archway that seemed to hem in a forest of tall date palms. The Iraqi Army guards opened the gate while men in machine-gun towers looked ready. As the driveway wended around the corner of the palm grove, we came to a small art-deco house. A bit of Miami Beach without the garish colors.

Chalabi was chatting with a Callaway golf shirt-wearing reporter from al-Hayat, Jordan’s Arabic daily paper of record. The conversation was spirited and in Arabic.

After a while, we were ushered out to a shaded pavilion beside an Olympic-size pool built by his father.

Despite the heat, Chalabi never loosens the middle button of his blue three-button suit jacket. Nor does he take off his black square-toed Prada shoes (the label is clearly visible). Neither does he pull at his carefully knotted red foulard tie. He is comfortable in his country’s heat.

As he continues in Arabic, I note the sandbagged gun post on the roof of his art-deco cottage and the wooden gun towers that line the 14-foot high concrete walls of his property. He is comfortable, but not safe.

At last, the halogen spotlight of Chalabi’s attention turns to us. We talk for hours about a range of issues facing Iraq. He is direct, intelligent, engaging but also controlled, contrarian and clearly not an uncritical admirer of the American occupation. He sees neither Iran not Moqtafda al-Sadr as enemies and lambastes the CIA and former Coalition Provisional Authority leader Paul Bremer.

Chalabi has gotten a lot of criticism over the years. Some see him as “neo-con” puppet who helped beguile America into war. “I did not con the neo-cons,” he says and they largely agree. While still on friendly terms with many leading neo-conservatives, he has broken with them on Iran and Sadr. Chalabi sees Iran as a potential friend and trading partner of Iraq–while many neo-cons see Iran’s dark designs to turn Iraq into either a Lebanon, riven by civil war and divided into terrorist fiefdoms, or into another Syria, a satellite of the Islamic Republic.

To my surprise, he denies a February 2007 Daily Telegraph story that .50 calibre sniper rifles, purchased by Iran from Austria Steyr-Mannlicher GmBh, have turned up in Iraq. “Where are the rifles? If the U.S. has captured them, why don’t they show them?”

The next day, when I circle back with U.S. military public affairs officers who work for Gen. Petraeus, they agree with Chalabi. No such weapons have been found in Iraq. The reports appear to be false.

Still, the overall picture of Iran’s increasing involvement in the insurgency, by funding and arming both Sunni and Shia to attack each other and create enough combined mayhem to drive the U.S. from Iraq, is clear. President Bush made Iran’s involvement in Iraq public in January and U.S. military officials in Iraq have repeatedly confirmed it.

Chalabi counters by pointing out that Iraq increasingly relies on electricity from Iran. While the U.S. has spent billions building new generators and transmission lines, Iraq has fewer megawatts per day than under Saddam. “One of the greatest successes of the terrorists has been to deny Baghdad electricity.”

Meanwhile, Diyalla, the province where many insurgents have holed up after the surge in Baghdad began, receives much of its power from Iran. That power supply, Chalabi says, have never been interrupted.

Is that because the enemy does not want to bite the hand that feeds it?

He refuses to take the bait. He sees Iran’s involvement as small and asserts that Iran has an interest in a stable Iraq. Iran is, after all, a major trading partner. And so on. He argues vigorously, but one is left wondering why? Does he believe it? He may. Chalabi excels in working off the energy of opponents; perhaps he hopes to forge a new relationship with Iran. He sees himself as an Iraqi patriot who thinks it should be at peace with its neighbors. Or perhaps he is simply on their side.

Moving on to al-Sadr, he says he has no idea where he is. Later, he seems to agree to Sadr is Iran.

Sadr’s father stayed in Iraq to fight Saddam and it cost him his life. Moqtada fled. Does Chalabi think this seemingly cowardly behavior could be used against him?

He smiles. “So did the prophet. He [Mohammed] made a hegira [flight] from Mecca to Medina.”

I have to smile too. The phrase is well-turned and it is probably what his supporters would say.

Chalabi sums up Sadr: “He is not benign, not pro-Iran and not anti-American.”

Has his Mahdi Army gone to war with American troops? he asks.

Isn’t the Mahdi Army splintering, as U.S. forces woo away key commanders with money or promises of immunity and safety?

“The Mahdi Army is not the Wehrmacht. There is no iron discipline and no leadership,” he said. He compares it to a coalition of militias, with many rivalries. I take that answer as a “yes.”

Still, Chalabi says, it is “wishful thinking” to imagine the Mahdi Army will evaporate any time soon.

Chalabi, who is still friendly with Sadr, thinks he was simply mishandled by the Americans, especially Bremer. “Bremer pushed Sadr into the arms of Iran.”

“It was a mistake not to bring him into the governing council” under Bremer, he says. Bremer further alienated the young cleric by shutting down his newspaper and twice issuing warrants for his arrest. As a result the Mahdi Army was born, he says.

Once Chalabi succeeded in bringing him into government, Iraq had a great opportunity to win his movement over. That nettle was not seized. “You have to lead them by persuasion, not by force,” he says of Sadr’s movement of disaffected Shia. “We want to improve the lot of these people. You don’t start it by killing them.”

Asked about the resignation of Sadr’s officials, who until this past week ran six government ministries, Chalabi is quick to offer a defense wrapped in an unusual point. While the ministers left the cabinet, he says, their party did not leave the governing coalition. Indeed, he insists that they still support the government. So why did they go?

Chalabi smiles. Sadr’s allies controlled ministries, such as health and transportation, that were supposed to deliver highly visible basic services to Iraqis. The Sadr officials failed to deliver, partly due to poor management skills, the security situation and an ineffective bureaucracy. They left to avoid blame–and the declining political influence that comes with it.

And they might have left just before they were fired? I asked.

Chalabi nodded. This was possible too. Motivations are multi-faceted here.

He remains deeply critical of the CIA, which is one of the reasons he remains a controversial figure. He criticizes the American intelligence bureaucracy for failing to examine information that is offered to them by outsiders. First, they are not open to information that does not filter down through the bureaucracy. Second, he says, “They evaluate the source, not the information itself.”

This is a well-documented weakness of the CIA. The agency fails to realize that trusted sources can lie or mislead and even enemies can provide useful intelligence. The answer is to analyze the information itself, to test it for internal contradictions and see if it fits with other established reports. Yet somehow, six years after the 9-11 attacks, the agency seems unable to adapt.

Plus, the agency cannot forgive Chalabi for telling it the truth in 1996; its coup attempt against Saddam had been penetrated. His timely warning could have saved many lives. Instead, it was held against him.

As for the Iraqi economy, he agreed that Iraqi consumers have more spending power and more goods than ever before. Setting aside northern Iraq, where the Kurds have “developed managerial competence” and “spend much more rationally,” central Iraq has largely benefited from a boost in government salaries–which have more than doubled since Saddam’s day– and a massive increase in the number of Iraqis employed by the government. Under Saddam, the Ba’athist dictatorship paid some 1.9 million government workers and pensioners. Today, the government payroll exceeds 3.4 million for both workers and pensioners.

Even in cases where worthless government factories have been closed, the workers are still paid by the government. “Privatization is not being done here” in Baghdad, he says. He seeks massive privatization of the government’s rotting “assets,” but thinks it will take time. Perhaps a long time.

“In Baghdad, there are no private sector jobs” for Iraqis, he says, obviously unhappy about the fact.

On the whole, he thinks it would be a disaster for the Americans to leave Iraq and believes things are getting better. In fits and starts, the economy is improving, the surge seems promising and the government is functioning. Yes, these are humdrum developments. But Iraq only became a “normal” country a few years ago. It still has its awkward teen years ahead.

Later, I walked with him through the date palm groves planted by his family more than 50 years ago. In their shade, he has planted citrus trees that will take years to mature.

While he talks, I think that Chalabi has won. He persuaded the most powerful nation on Earth to free his country. Now the exile is home. Once derided as an outsider with no Iraqi support, he has proved to be an adept political leader who regularly asked to resolve local conflicts. When he lost America’s favor, he became even stronger. Not yet ready to rest, he will be a force in Iraq for years to come.

It would be foolish and dangerous to make an enemy of him, like Sadr.