Inside The Takedown

By Brian Bennett; Michael Weisskopf/Washington

The White House meeting in late April opened with the presentation of a seven-page, single-spaced memo titled "Marginalizing Chalabi." Drafted by the National Security Council (NSC), the document detailed three options for sidelining the controversial Iraqi political figure Ahmad Chalabi--methods ranging from gently pushing him offstage to cutting off U.S. funds for his intelligence-gathering operation. Once a Pentagon favorite to lead Iraq, Chalabi had been criticizing Washington for dragging out the transfer of power to Iraqis. It was time for Chalabi to go.

The April memo marked the beginning of the White House's strategy to cut its ties to Chalabi--a campaign that reached its climax late last month when Iraqi police, backed by U.S. forces, raided the former exile's house and office in Baghdad. But that move hardly came out of the blue. New details of the relationship between the U.S. and Chalabi, provided to TIME by senior Administration and intelligence officials, reveal that after a decade of lobbying Washington, Chalabi began to lose his footing early this year after he ran afoul of President Bush and L. Paul Bremer, the U.S. administrator in Iraq.

The extent of Chalabi's alleged malfeasance is still being unearthed. Senior Administration officials tell TIME that the U.S. is investigating whether Chalabi revealed to the Iranians highly sensitive information about how the U.S. gathers intelligence in the region. Other U.S. officials told TIME that the FBI has begun reviewing logs and other data that might turn up clues as to when sensitive information was divulged; the feds are also interviewing and giving lie-detector tests to U.S. officials in Iraq who may have had access to the information.

The White House has been steadily losing patience with its former client. The beginning of the end came in February when Chalabi was quoted in a London Daily Telegraph article saying that even if the intelligence about Saddam Hussein's weapons programs that Chalabi passed to the U.S. before the war was faulty, it was "not important," compared to the end result of toppling Saddam. "We were heroes in error," he said in the article. Chalabi insists he was misquoted, but the damage was done. "That set the President off," a senior Administration official told TIME. The general feeling among top officials was "We gotta do something about this guy."

The NSC office of Iraqi expert Robert Blackwill was commissioned to draft a plan to cut its ties to Chalabi. Blackwill's recommendations for "marginalizing Chalabi" were endorsed by State Department and CIA officials, who have long criticized intelligence provided by Chalabi.

The Iraqi had also fallen out with Ambassador Bremer. In early spring an Iraqi judge issued a search warrant in an investigation into alleged theft of property and government vehicles by members of Chalabi's Iraqi National Congress (I.N.C.). Bremer wanted to make an example of the I.N.C. and prove that no political party is above the law, but the search was stymied: according to a senior U.S. official, the police couldn't get into the I.N.C. offices the first time they went. Defense Intelligence Agency (DIA) officials who were working in a Pentagon-funded intelligence program attached to Chalabi's group stopped the officers at the door, arguing that the sensitive intelligence inside needed to be protected. But on May 13, after the Administration decided to cut off the $335,000 monthly subsidy to the I.N.C., the DIA agents vacated the I.N.C. offices. Administration officials say Bremer sent the police back a week later, backed by U.S. soldiers. Bremer has denied prior knowledge of the raid, but sources say he authorized it. Bremer didn't inform the White House or the Pentagon of the timing of the move, an official says, but Chalabi had few allies left in Washington willing to defend him. "Nobody can protect anyone anymore," says a Pentagon official.

It was the CIA that was responsible for launching the separate leaks probe, which Chalabi's backers see as just the latest in a long series of attempts by the agency to undermine him. Richard Perle, a Bush defense adviser who has met with White House officials to plead Chalabi's case, says, "The CIA has disliked Chalabi for a long time and has concocted a case against him." Chalabi has described the accusation that he gave intelligence to Iran as "nonsense."

If Chalabi did betray U.S. secrets to Iran, it appears he was playing a brazen double game. U.S. commanders in Iraq have said the information Chalabi's organization has passed on to the U.S. since the war began has been helpful. According to a March assessment by a high-ranking military intelligence officer reviewed by TIME, the I.N.C. provided about 50 reports a month last year of "actionable" intelligence, which, among other things, led to the arrest of former leaders of Saddam's regime. The officer stated that the I.N.C. was "directly responsible for saving the lives of numerous" U.S. troops. For his part, Chalabi is attempting to turn the U.S.'s campaign to "marginalize" him into a political coup, telling any Iraqi who will listen that he is clearly no U.S. stooge. Says a senior White House official: "We expect Chalabi to be very politically active on the ground there." That may be the only thing you can count on from Ahmad Chalabi.

--With reporting by Matthew Cooper, Michael Duffy, Viveca Novak and Elaine Shannon/Washington; Scott MacLeod/Cairo; Vivienne Walt/Baghdad; Hassan Fattah/Amman

With reporting by Matthew Cooper, Michael Duffy, Viveca Novak and Elaine Shannon/Washington; Scott MacLeod/Cairo; Vivienne Walt/Baghdad; Hassan Fattah/Amman