Ahmad Chalabi, the controversial leader of the Iraqi National Congress (INC) and one-time candidate of Washington's neo-conservatives as future leader of Iraq, appears set to be denied a senior role in the future government.
The man once championed by both the Pentagon and Vice President Dick Cheney has become the focus of criticism by ordinary Iraqis, his former political allies and international officials involved in the country's reconstructiothat Chalabi is likely to be the most senior of a number of members of the Iraqi Governing Council (IGC) who will be sidelined when a new interim government is selected to run Iraq after the transfer of sovereignty on 30 June.
According to the newspaper, Washington is also considering cutting off the US$340,000 monthly stipend to Chalabi's INC party, which has been accused of inappropriately using the money to lobby in the US.
Chalabi and the INC are also accused of being the main source of much of the -- now disproved -- intelligence, fed to the CIA and other agencies, about Saddam's WMD programs, which formed a large part of the case for invasion.
The former financier (who is still sought in Jordan for theft from his own bank) has presided over a shambolic program of de-Baathification, say insiders. In an address on Friday designed to promote national reconciliation, Iraq's American administrator, Paul Bremer, said complaints that the program was "unevenly and unjustly" administered were "legitimate" and that the program had been "poorly implemented."
At the center of those allegations are claims that Chalabi's associates had favored those who had either joined the INC or given money to it.
Although similar allegations have been leveled against other Iraqi parties and the ministries they run, Chalabi appears to have sealed his fate by infuriating Bremer and his masters in Washington by his behavior, which officials have come to regard as divisive and self-promoting.
The final straw is understood to be Chalabi's denunciation of a US decision to allow some former Baathists to return to office. He claimed it was the equivalent of allowing Nazis to return to office.
Chalabi's fall from grace has been a sharp reversal of fortune for the suave exile, who was returned to Iraq with his grandly named Iraqi Free Forces by the US days after the fall of Saddam.
An early source of tension, say officials, was the INC's rapid seizure of vast numbers of documents taken from the offices of Iraq's intelligence agencies which the INC began to exploit, handing out a CD of digests most days to the Defense Intelligence Agency packaged for its own ends.
Chalabi also quickly exerted effective control over the Ministry of Finance, to a such a degree that ministers would not make important decisions without consulting him.
The rift with Bremer and the Coalition Provisional Authority (CPA) began, however, with Chalabi's grandstanding over one of the most shocking terrorist attacks to hit Baghdad, the bombing of the UN headquarters at the Canal Hotel, in which UN envoy Sergio de Mello died.
At the time Chalabi claimed publicly that he had had "intelligence" warning of the attack -- a claim that proved to be untrue.
Senior CPA officials were also incandescent over Chalabi's key role in the walk-out of the Shiite parties that humiliatingly delayed the signing of Iraq's interim constitution after weeks of negotiations.
But it has not only been the perception of Chalabi as a troublemaker with little public support that has weighed against him.
Increasingly, officials have also complained that his interventions on the Iraqi Governing Council have appeared to be mainly for the benefit of himself and the INC.
In one incident, during the introduction of the new Iraqi dinar, CPA sources complain bitterly that Chalabi insisted that the old currency should be incinerated -- rather than buried, as had been planned -- only for the incineration contract to go to an associate of Chalabi.
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