Suddenly the phones went dead in Baghdad.

The day was March 10, 1951. By the time the dial tone came back, within about 24 hours, some 120,000 middle-class and affluent Jews in Iraq, nearly the whole of Iraqi Jewry, would discover they were paupers.

Penniless, they were then expelled en masse to Israel, leaving behind property now valued at $1 billion by some and many billions by others.

Today, as attorneys, Jewish organizations and individual claimants prepare to launch a massive claim against Iraqi assets held in Washington, the question remains: How did it happen and why?

For 2,600 years the Jews of Iraq had dwelled successfully in the land of Babylon, achieving as much acceptance and financial success as a non-Muslim group could in an Islamic society that despised infidels. Iraqi Jews were well entrenched at all levels of farming, banking, commerce and the government bureaucracy. They virtually invented the modern Iraqi monetary and financial system after that nation emerged from the British mandate in 1932. Jews contributed vibrantly to the arts and were the heart of Iraq’s international commerce.

Indeed, Jews were among the best-educated people in the country, and fiercely loyal to a land they had thrived in for millennia. As such, they were the wealthiest and most assimilated Jews in the Arab Middle East. In many ways they resembled the middle-class and affluent, entrenched Jews of Germany who felt more German than Jewish. Likewise, Iraqi Jews, universally anti-Zionist, believed they were more Iraqi than Jewish.

But with the outbreak of World War II, it all began to change. On Oct. 13, 1939, just six weeks after the war began, the mufti of Jerusalem slipped into Baghdad to make Iraq his new base. From Baghdad, the mufti repeated his Palestine incitements, launching a venomous and unrelenting campaign against Iraq’s Jewish community, accusing them of a Zionist plot to dominate Iraq and the wider Middle East.

At the same time, the mufti sealed an alliance with Adolf Hitler personally, seeking Germany’s help in destroying the Jews of Palestine and Eastern Europe, from where the stream of emigrants were escaping. In return, the mufti promised Iraq’s abundant oil reserves, the fuel Hitler needed to conquer Russia and the entire East.

On April 1, 1941, just months before the long-anticipated Nazi invasion of Russia, the mufti and a fascist cabal of pro-Nazi Iraqi officers known as the Golden Square staged a coup. The British-appointed ruler, the Hashemite regent, fled for his life.

To keep the oil out of Hitler’s hands, the British invaded Iraq, and flew air missions day and night to defeat German bombers sent by Hitler to assist the Baghdad coup. Within two months, the British had ousted the Golden Square, whose leaders escaped to Iran.

But on June 1 of that year, in the last hours of the revolt, indeed even as the regent was returning to his Baghdad palace from the airport, a frenzied Arab mob unleashed a two-day Kristallnacht-style pogrom against the Jews of Baghdad. Women were raped and infants crushed in front of their terrified families. Jewish shops were looted and torched. A synagogue was burned and its Torahs ceremoniously destroyed.

British forces eventually broke through, shot dozens of rioters and restored order. A government commission reported that at least 180 Jews had been killed and 240 wounded, 586 Jewish businesses pillaged, and 99 Jewish homes burned.

The carnage of those 48 hours would be forever seared upon the collective Iraqi Jewish consciousness as “the Farhud,” best translated as “violent dispossession.”

From that moment Iraq’s Jews, once a settled and peaceful group within Iraqi society, would be systematically targeted for violence, persecution, commercial boycott and confiscation.

Cry To Battle

After the mufti had fled Iraq in 1941, Nazi leader Heinrich Himmler sponsored him in Germany, offering him lavish facilities. In regular radio programs, the mufti broadcast the Iraqi rallying cry to Muslim Nazi troops and to Arabs everywhere to fight the Allies: “O Muslims! Proud Iraq has placed herself in the vanguard of this Holy Struggle … It is the duty of all Muslims to aid Iraq in her struggle and seek every means to fight the enemy.”

As for the Jews, he exhorted, “Arabs! Rise as one and fight for your sacred rights. Kill the Jews wherever you find them. This pleases Allah, history and religion. This saves your honor.”

So while Arab Jewish communities, such as those in Iraq, savored every day of seeming peace since the Farhud, the desire to see their destruction only ramified throughout the Arab world, particularly in Iraq. Moreover, the Jews were a convenient scapegoat for Iraqi politicians in the absence of any great industrial or national achievements.

Maj. John Glubb, the British officer who organized the Arab Legion, complained bitterly in a letter to Whitehall.

“We ... imagined that we had bestowed on the Iraqis all these blessings of democracy, which the British people enjoy with such relish,” he wrote.

“Nothing could be more undemocratic than the result. A handful of politicians obtained possession of the machinery of government, and all the elections were rigged,” Glubb lamented, going on to say, “In this process they all became very rich.”

After the defeat of Germany in 1945, Iraq retained its Nazified ideology. The situation escalated fiercely in February 1947, when the United Nations agreed to vote on the question of partitioning Palestine. Uniformly the Arab regimes, including the Baghdad government, officially threatened that if the UN dared vote “yes” to partition, the Arabs would exact reprisals against the 700,000 Jews who had dwelled in countries throughout the Middle East.

The day Israel declared its independence, the Arab League, including major units of the Iraqi army, invaded from all sides. The Arabs vowed an “extermination and a momentous massacre of the Jews.”

It didn’t happen.

Only Iraq refused to sign the armistice following Israel’s victory in 1948. Instead, it became convenient to again blame Iraqi Jews and “Zionist gangs” for this latest Iraqi military disaster.

On July 19, 1948, Iraq amended penal code Law 51, making Zionism itself a crime punishable by up to seven years in prison. Although Zionism was never defined, every Jew was thought to be a Zionist, thereby criminalizing every Jew. Hundreds of Jews were arrested, tortured until they confessed, and sentenced to long jail terms.

By October 1948, all Jews holding government positions — an estimated 1,500 — were summarily dismissed. There followed an organized boycott and systematic expulsion of Jews from Iraq’s commercial and cultural mainstream. Many purged Jewish government employees, highly skilled and well paid. Now destitute, they were reduced to selling matches on the streets to avoid being arrested for vagrancy.

Citizenship Revoked

An estimated 130,000 Jews lived in the Iraq of 1949, half in Baghdad. The Baghdad Chamber of Commerce listed 2,430 member companies; a third were Jewish. In fact, a third of the chamber’s board and almost all its employees were Jewish.

Jewish firms transacted 45 percent of the exports and nearly 75 percent of the imports. A quarter of Iraqi Jews worked in transportation, such as the railways and port administration. The controller of the budget was Jewish; a director of the Iraqi National Bank was Jewish; the Currency Office board was all Jewish; the Foreign Currency Committee was about 95 percent Jewish. Over the centuries, Jews had become essential to the economy.

Now Jews began fleeing, mainly to neighboring Iran. They smuggled out whatever valuables they could to rebuild their lives. On March 3, 1950, to halt the uncontrolled flight of assets and people, Iraq passed a one-year amendment to Law 1, the Denaturalization Act. This statute revoked the citizenship of any Jew who willingly left the country. Upon exit, their assets were frozen but were still available to the emigrants for use within Iraq.

Thousands of Jews seized the opportunity to leave, believing at least that their assets, while frozen, would still be viable within Iraq until a better day. But when the one-year law expired, a successor anti-Jewish statute was enacted secretly on March 10, 1951. Law 5, known as the Law for the Control and Administration of Property of Jews Who Have Forfeited Nationality, permanently seized all the assets of Jews who had been denaturalized by the previous law and any others that would be pressured to leave the country.

The day the law was passed, the phones went down all over Baghdad to prevent panicked Jews from swiftly transferring their assets to safety. What’s more, the banks were closed for three days.

With Jewish assets prone and vulnerable, Regulation 3 of Law 5 was unveiled. Regulation 3 empowered Iraq’s custodian general “to lay hands on all property belonging to the person who has forfeited Iraqi Nationality and to administer, dispose of and liquidate it.”

Like the Nazis before them, the Iraqi regulations meticulously constructed an elaborate juridical structure for the confiscations. The hope was to shield the confiscations from the reach of international law or compensation demands.

From 1951 to 1952, approximately 120,000 desperate Jews were airlifted from Iraq to Israel in Operation Ezra and Nehemiah. The speed and heartlessness of the exodus was part of a calculated Iraqi government plan to flood the fledgling Israeli state with destitute Jews. The idea was to crack Israel’s already strained infrastructure. Defrocked of all jewelry and valuables at the Baghdad airport, the forlorn airlifted emigrants arrived at Lod Airport bewildered, with little more than the clothes on their bodies.

Israeli and Jewish officials vociferously vowed to one day seek justice and hold their compensation of Palestinian claimants in the balance. That determination faded over the years even as the Israeli Ministry of Justice quietly gathered thousands of files on what Israeli officials derided as “robbery by force of law.”

After Saddam Hussein was toppled last year, hopes of compensation revived, not only among the Jews but also among many groups. Indeed, to address the many compensation claims by any number of minorities, Iraq’s Governing Council has created the Iraqi Property Claims Commission, with offices in 10 cities. The IPCC intends to review claims by any Iraqi of any ethnicity or religion — Kurd, Assyrian, Christian or Shiite — unfairly deprived of his property by the Baathist regimes.

However, the Baath movement first came to power in 1968, 17 years after the 1951 law that rapidly liquidated 2,600 years of Jewish existence in Iraq. Hence, the massive confiscations inflicted on Iraqi Jewry will be unaddressed by the existing mechanism, a fact not lost upon those seeking alternative avenues of restitution.

Whether or not giant sums are won in any court of law or claims tribunal, no sum of dollars or dinars can make amends for the traumatic expulsion of Iraqi Jewry from a cradle of civilization that they helped nurture. n

Edwin Black is the award-winning author of “IBM and the Holocaust” (Random House). This article is adapted from his just-released book, “Banking on Baghdad” (Wiley), which chronicles 7,000 years of Iraqi history.