CNN found some interesting recently declassified documents from the 1980s:
Declassified U.S. government documents show that while Saddam Hussein was gassing Iraqi Kurds, the U.S. opposed punishing Iraq with a trade embargo because it was cultivating Iraq as an ally against Iran and as a market for U.S. farm exports.
According to Peter Galbraith, then an idealistic Senate staffer determined to stop Hussein from committing genocide, the Reagan administration “got carried away with their own propaganda. They began to believe that Saddam Hussein could be a reliable partner.”
I don’t believe in economic sanctions, even for brutal regimes. Mostly because they don’t usually work, and end up punishing the people of those countries, not their governments. Still, the whole “Saddam gassed his own people” line we heard over and over again as a justification for the war rings a bit hollow given that the U.S. was grooming Saddam as an ally while one of the more brutal gassings was actually taking place.