- The Guardian, Tuesday 25 May 2004 02.17 BST
Some intelligence officials now believe that Iran used the hawks in the Pentagon and the White House to get rid of a hostile neighbour, and pave the way for a Shia-ruled Iraq.
According to a US intelligence official, the CIA has hard evidence that Mr Chalabi and his intelligence chief, Aras Karim Habib, passed US secrets to Tehran, and that Mr Habib has been a paid Iranian agent for several years, involved in passing intelligence in both directions.
The CIA has asked the FBI to investigate Mr Chalabi's contacts in the Pentagon to discover how the INC acquired sensitive information that ended up in Iranian hands.
The implications are far-reaching. Mr Chalabi and Mr Habib were the channels for much of the intelligence on Iraqi weapons on which Washington built its case for war.
"It's pretty clear that Iranians had us for breakfast, lunch and dinner," said an intelligence source in Washington yesterday. "Iranian intelligence has been manipulating the US for several years through Chalabi."
Larry Johnson, a former senior counter-terrorist official at the state department, said: "When the story ultimately comes out we'll see that Iran has run one of the most masterful intelligence operations in history. They persuaded the US and Britain to dispose of its greatest enemy."
Mr Chalabi has vehemently rejected the allegations as "a lie, a fib and silly". He accused the CIA director, George Tenet, of a smear campaign against himself and Mr Habib.
However, it is clear that the CIA - at loggerheads with Mr Chalabi for more than eight years - believes it has caught him red-handed, and is sticking to its allegations.
"The suggestion that Chalabi is a victim of a smear campaign is outrageous," a US intelligence official said. "It's utter nonsense. He passed very sensitive and classified information to the Iranians. We have rock solid information that he did that."
"As for Aras Karim [Habib] being a paid agent for Iranian intelligence, we have very good reason to believe that is the case," added the intelligence official, who did not want to be named. He said it was unclear how long this INC-Iranian collaboration had been going on, but pointed out that Mr Chalabi had had overt links with Tehran "for a long period of time".
An intelligence source in Washington said the CIA confirmed its long-held suspicions when it discovered that a piece of information from an electronic communications intercept by the National Security Agency had ended up in Iranian hands. The information was so sensitive that its circulation had been restricted to a handful of officials.
"This was 'sensitive compartmented information' - SCI - and it was tracked right back to the Iranians through Aras Habib," the intelligence source said.
Mr Habib, a Shia Kurd who is being sought by Iraqi police since a raid on INC headquarters last week, has been Mr Chalabi's righthand man for more than a decade. He ran a Pentagon-funded intelligence collection programme in the run-up to the invasion and put US officials in touch with Iraqi defectors who made claims about Saddam Hussein's weapons of mass destruction.
Those claims helped make the case for war but have since proved groundless, and US intelligence agencies are now scrambling to determine whether false information was passed to the US with Iranian connivance.
INC representatives in Washington did not return calls seeking comment.
But Laurie Mylroie, a US Iraq analyst and one of the INC's most vocal backers in Washington, dismissed the allegations as the product of a grudge among CIA and state department officials driven by a pro-Sunni, anti-Shia bias.
She said that after the CIA raised questions about Mr Habib's Iranian links, the Pentagon's Defence Intelligence Agency (DIA) conducted a lie-detector test on him in 2002, which he passed with "flying colours".
The DIA is also reported to have launched its own inquiry into the INC-Iran link.
An intelligence source in Washington said the FBI investigation into the affair would begin with Mr Chalabi's "handlers" in the Pentagon, who include William Luti, the former head of the office of special plans, and his immediate superior, Douglas Feith, the under secretary of defence for policy.
There is no evidence that they were the source of the leaks. Other INC supporters at the Pentagon may have given away classified information in an attempt to give Mr Chalabi an advantage in the struggle for power surrounding the transfer of sovereignty to an Iraqi government on June 30.
The CIA allegations bring to a head a dispute between the CIA and the Pentagon officials instrumental in promoting Mr Chalabi and his intelligence in the run-up to the war. By calling for an FBI counter-intelligence investigation, the CIA is, in effect, threatening to disgrace senior neo-conservatives in the Pentagon.
"This is people who opposed the war with long knives drawn for people who supported the war," Ms Mylroie said.
