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For years, Saddam Hussein showed himself to be a master practitioner of the big bluff. Everyone outside Iraq and just about everyone inside believed that he harbored a secret stockpile of weapons of mass destruction. So imagine the shock his generals received in late 2002 when U.S. forces were massing on the country's borders for an imminent invasion, and Saddam suddenly informed them that Iraq had no biological or chemical or nuclear weapons at all. Longtime aide Tariq Aziz told U.S. interrogators that military morale plummeted the moment senior officers learned Iraq would have to fight the U.S. without those weapons. The dictator's cunning policy of deception had deceived the wrong side.

Saddam had always hoped to dictate how history would view him. In his mind, he was the successor to great Iraqi heroes like Nebuchadnezzar and Saladin, to be revered as a giant among them for millenniums. But the Saddam who emerges from the pages of a new, comprehensive CIA report on Iraq's alleged arsenal will be remembered for the colossal misjudgments that cost him his rule. The exhaustive detail compiled by the report's author, Charles Duelfer, chief U.N. weapons inspector in the 1990s and the Bush Administration's top hunter since January, richly fills in the previous portrait of a paranoid and brutal dictator who believed that weapons of mass destruction (WMD) were the prime tools with which to advance his extravagant ambitions. Drawn from lengthy interrogations of the core Iraqi leadership and Saddam during their months in U.S. custody, the Duelfer report sheds fresh light on the dictator's inner motivations and artful deceptions.

Saddam was awed by science and impressed by the way technology conveyed military power. To him, WMD were a telling symbol of strength and modernity, and he thought any country that could develop them had an intrinsic right to do so. In his experience, through 25 years and two wars, WMD had also saved his neck. In the 1980s war with Iran, he concluded that chemical shells had repelled the enemy's human-wave attacks and that ballistic missiles had broken the will of its leaders. He was convinced that his readiness to use WMD during the Gulf War in 1991 had prevented the U.S.-led liberators of Kuwait from marching all the way to Baghdad to topple his regime. In a closed-door chat between Saddam and a senior aide just before the Gulf War began, the report says, he had ordered that "germ and chemical warheads ... be in [military officers'] hands asap" and targeted to hit Riyadh and Jeddah, "the biggest Saudi cities with all the decision-makers and where the Saudi rulers live," as well as "all the Israeli cities." He had squelched the Kurdish rebellion by gassing villages and put down the Shi'ite uprising in the wake of the Gulf War with the help of nerve gas.

But by the spring of 1991, Saddam faced a critical decision. Though defeated on the battlefield, he had kept stocks of WMD squirreled away and maintained secret development programs. Now he faced tough postwar U.N. sanctions that would cripple Iraq unless he got rid of the WMD. Saddam made a calculated decision, says the report, that getting out from under sanctions was of paramount importance. He opted for a "tactical retreat" by ordering the elimination of what he had left: all biological, chemical and nuclear programs were abandoned, stockpiles destroyed. The vast array of evidence uncovered to date shows that when the U.S. invaded in March 2003, Saddam had not been armed with WMD for a decade and that his ability to make new ones had been in a state of continual degradation.

But according to the report, former officials say they "heard him say or inferred" that he "intended to resume" developing his chemical- and nuclear-weapon capability—though biological warfare no longer interested him—once sanctions were lifted. The regime had "no formal written strategy or plan" to do so, but lieutenants say they "understood" that was his goal "from their long association with Saddam and his infrequent, but firm, verbal comments to them."

To hasten the day, Saddam turned his cunning to sanctions busting. He bought into the oil-for-food program in 1996 to acquire hard currency that could salvage his rock-bottom economy and pay for potential dual-use equipment on the black market. He personally doled out vouchers, which allowed recipients to buy Iraqi oil at a cheap price and then sell it for a quick profit, to foreign officials and companies, notably in France, Russia and China, that were expected to lobby their governments to lift sanctions. His wiles, said the report, had nearly scuttled the embargo by 2001.

Duelfer's report also gives an extraordinary, intimate glimpse into the dictator's behavior. Lieutenants thought his psychology was "powerfully shaped by a deprived and violent boyhood in a village and tribal society," especially by the strong influence of his xenophobic guardian uncle. One aide said Saddam "loved the use of force," confirming the tale that in 1982 he "ordered the execution" of a disloyal minister "and delivery of the dismembered body to the victim's wife."

Meanwhile, fear for his own survival increasingly ruled Saddam's daily life. He told his debriefer that he had used a telephone only twice since 1990, so no one could target him. He had his food tested for poisons at a special laboratory. He justified his orgy of palace building in the late '90s as a way to make it harder for enemies to spot him. He grew increasingly paranoid about assassination after attackers nearly killed his elder son Uday in 1996. In deepening seclusion, the former micromanager who used to personally ground-check the truth of his underlings' reports grew less engaged.

A top aide reported it would "sometimes take three days to get in touch with Saddam," even in periods of crisis. At one point during the 2002 face-off with U.N. inspections, Saddam was awol, so a senior official took it on himself to authorize inspection overflights.

Still, in a regime in which all important decisions were made by his fiat, Saddam kept tight control of subordinates. Their influence and willingness to speak up were constrained by fear of losing their jobs—or their lives. That fear generated a culture of lying that subverted Saddam's decision making. Top men, said an aide, "habitually" concealed unpleasant realities from Saddam. In late 2002 military officers lied about their preparedness, according to Aziz, which led Saddam to miscalculate Iraq's ability to deter an invasion.

Saddam had no clear picture of the U.S. He told his debriefer he tried to understand Western culture by watching U.S. movies and listening to Voice of America broadcasts. He loved Ernest Hemingway's novel The Old Man and the Sea because he read in the tale of the brave but failed fisherman a parallel to his own struggles.

"Even a hollow victory was by his reckoning a real one," the report says. Far more worried about Iran, Saddam did not consider the U.S. a "natural adversary" and throughout the '90s, he had his officials make overtures for a dialogue with the U.S. He said he was disappointed that Washington never gave him a chance. In the end, Saddam's failure to figure out the U.S. cost him everything. He never got the profound impact of 9/11 on U.S. attitudes and stupidly overruled advisers' suggestion that he issue a message of condolence for the carnage. Well into 2002, he never thought the U.S. could stomach the casualties of an invasion to depose him, and then "thought the war would last a few days and it would be over." Said Aziz: "He was overconfident. He was clever. But his calculations were poor."

The greatest mystery, though, was his long game of deception: if Saddam had destroyed his WMD to escape from sanctions, why did he work so hard from 1991 until he was overthrown in 2003 to perpetuate the belief he still had them? The reason, suggests Duelfer, lay in how he saw the "survival of himself, his regime and his legacy."

While the U.S. was fixated on Saddam's threat, he focused on his strategies for Iran and considered WMD essential to keeping his neighbor in check. So he was driven by what the report calls "a difficult balancing act": getting rid of his WMD to win relief from the sanctions while pretending he still had them to serve as a strategic deterrent. "The regime never resolved the contradiction inherent in this approach," says the report. Saddam privately told an aide the "better part of war was deceiving," but ironically he was telling the West the truth. In the end, his big bluff destroyed him—and drew the U.S. into an engagement that will help determine George W. Bush's fate at the polls next month.

• JOHANNA MCGEARY