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Chalabi's fall from grace

Police raid, charges of cozying up to Iran

Conflicting reports surround airstrike that killed dozens of Iraqis.

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• Interactive: Who's who in Iraq
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United States
Ahmed Chalabi

BAGHDAD, Iraq (CNN) -- As the United States moved toward war with Iraq, exiled opposition leader Ahmed Chalabi was one of America's best friends -- the beneficiary of millions of U.S. taxpayer dollars for his Iraqi National Congress, with easy access to top officials in Washington.

After Saddam Hussein's regime fell, he was appointed to the Iraqi Governing Council and put in charge of its finances.

But as the post-war situation deteriorated, and the pre-war intelligence Chalabi supplied about Saddam's weapons of mass destruction did not pan out, the relationship soured.

Earlier this month, the Pentagon shut off the money spigot, and U.S. officials accused Chalabi of passing information about military operations in Iraq to Iran, which he hotly denied.

Then Thursday, Iraqi police, accompanied by American troops, raided Chalabi's compound -- and senior U.S. officials disclosed that they believe a Chalabi associate may be an Iranian intelligence agent.

At a news conference in Baghdad, an angry Chalabi claimed the raid was engineered by elements of the deposed Baathist regime, under protection of the U.S.-led Coalition Provisional Authority.

"When America treats its friends this way, then they are in big trouble," Chalabi said, calling the raid "the penultimate act of failure of the CPA in Iraq."

The man who once had American friends in the highest places then described his relationship with the Coalition Provisional Authority as "non-existent."

Estrangement of allies

However, CPA spokesman Dan Senor denied that coalition officials were behind the action taken against Chalabi's compound.

"It was an Iraqi-led investigation, an Iraqi-led raid. It was the result of Iraqi arrest warrants," Senor said. Senior coalition law enforcement and justice officials said the raid was part of an investigation of "suspected fraud in a government ministry."

Chalabi himself was not named in any of the warrants. But as news of the raid reverberated, Bush administration officials appeared to be putting distance between themselves and their one-time ally.

Asked if he still had confidence in Chalabi, Defense Secretary Donald Rumsfeld told reporters, "It is not for me to comment on this." He, like Senor, deferred questions about the raid to Iraqi authorities.

White House spokesman Scott McClellan, too, was equivocal when asked if President Bush had confidence in Chalabi.

"It's not the president's place to weigh in on who's going to be the future leaders of Iraq," McClellan said. "It's up to the Iraqi people to make the determinations about who they want leading their country going forward and who they want involved in their government."

Chalabi said coalition officials are upset with him because of his demands that the provisional Iraqi government taking over on June 30 have full control of the Iraqi army, as well as an ongoing investigation into charges that Saddam's regime and U.N. officials looted the oil-for-food program before the war.

He also charged Thursday that the new Iraqi police force has been "completely subverted" by Baathists.

Chalabi was the champion of a post-war "de-Baathification" program that sought to keep anyone associated with Saddam's regime from positions of authority in the new Iraq. The CPA has recently indicated it may relax that policy on a case-by-case basis, although senior Baathists and those involved in war crimes will still be excluded.

Despite his bitter critique of U.S. policy, Chalabi insisted Thursday that his beef is with Paul Bremer, the head of the Coalition Provisional Authority, and not Bush.

"My message to CPA is 'Let my people go,'" he said. "Let my people be free. We are grateful to President Bush for liberating Iraq, but it is time for Iraqi people to run their affairs."

Iranian connections

In addition to disagreements about the handover of power, another emerging bone of contention between Chalabi and his one-time friends in Washington is his relationship with Iranian leaders, with whom the United States has had chilly relations since the 1979 Islamic Revolution.

Chalabi, like a majority of Iraqis, is a Shiite Muslim, which is also the dominant sect in neighboring Iran, run by a hard-line theocratic government. Questioned by reporters about his travels to Iran to meet with senior officials there, Chalabi has insisted that it is logical and important for Iraq to establish a relationship with a key neighbor.

He has denied charges by U.S. officials that he passed intelligence information about U.S. operations in Iraq to the Iranians, and he has also dismissed fears that a hard-line Shiite regime might emerge in Iraq.

But Thursday, senior U.S. officials said they have evidence that an associate of Chalabi is an agent of Iranian intelligence. CBS News, which broke the story, said the Chalabi associate is believed to have been recruited by Iranian intelligence.

A U.S.-educated exile who lived abroad for more than four decades, Chalabi was convicted in absentia for bank fraud by a Jordanian military court in 1982 -- charges he insists were politically motivated.

After last year's invasion of Iraq, Chalabi returned from exile, on an American aircraft, to try to establish a political base in the country. But he has since struggled to gain a foothold, with many Iraqis distrusting him because of his many years in exile and close ties to the United States.

Through the years, the Iraqi National Congress is believed to have received around $27 million from the Pentagon, for information and training of INC members. But earlier this month, the Pentagon announced that the group's monthly stipend of $340,000 would end with May's payment.

CNN correspondents Harris Whitbeck and David Ensor contributed to this report.

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