SAUL LOEB / AFP / Getty Images Former President George W. Bush arrives to speak on the war in Iraq at the White House in Washington, D.C., on April 10, 2008.

This article was updated with Condoleezza Rice’s response at 10:50 am

When George W. Bush became President in January 2001, American policy towards Iraq was in free fall and the United Nations sanctions against Saddam’s regime, in place since the first Gulf War, were in tatters. By early 2003, Bush had achieved something most analysts had thought impossible: sanctions on Iraq were tighter than ever and inspectors were back in the country. Most surprising, Saddam Hussein had reportedly offered to go into exile, as long as he could take $1 billion with him.

And then Bush threw that diplomatic progress aside and committed the U.S. to a war that would cost thousands of American lives, hundreds of thousands of Iraqi ones, and more than $700 billion in American treasure. If you factor in veterans care and other costs, the price runs to the trillions. As President Obama heads down his own path to war over Iran’s nuclear program, it’s worth reviewing not only what Bush did wrong as he confronted Iraq ten years ago–but what he did right.

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In Jan. 2001 the collapse of the Iraq sanctions regime was obvious. Passed in the wake of the Gulf War, the sanctions were intended to enforce provisions of Iraq’s 1991 surrender requiring the destruction of all of its chemical and biological weapons and prohibiting its pursuit of a nuclear program. All Iraqi oil sales were to be controlled by the U.N. But throughout the Clinton administration, Saddam violated the surrender terms and the U.N. sanctions regime. In Oct. 1998 he permanently kicked out U.N. inspectors. By November 2000, Syria had opened an unauthorized pipeline from Iraq. Oil and refined petroleum were flowing across the Turkish border in long convoys of tanker trucks. International flights, also banned under the sanctions, were starting up again. “The U.S. position is deteriorating by the day,” Ken Katzman, the long-time Middle East analyst for the Congressional Research Service, told TIME late in 2000.

By Jan. 22, 2003, things could hardly have looked more different. The year before, the U.S. had won a replacement sanctions regime at the United Nations allowing civilian supplies into Iraq while cracking down on material that could be used for WMD programs. These so-called smart sanctions brought renewed international cooperation and opened the way for more aggressive U.S. enforcement of the embargo. Soon the New York Times reported that the U.S. Navy was “taking a very, very energetic posture” on the enforcement of sanctions in the Gulf, at the same time that U.S. forces were patrolling borders from the air.

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After mounting threats of war from the Bush administration in the summer of 2002, Saddam agreed to let U.N. inspectors back into Iraq for the first time in nearly four years. Congress authorized Bush in Oct. 2002 to go to war to disarm Iraq, and the following month the United Nations unanimously adopted a resolution threatening “serious consequences” if Iraq did not allow inspectors full access to all suspected weapons sites. When U.N. and IAEA inspectors returned to Iraq, their access was not complete: in testimony in Jan. 2003, the inspection leaders said weapons inspectors had been harassed and prevented from viewing some sites. But Bush had put Saddam under new scrutiny, and inspectors were learning more about his activities every day.

Though few remember it today, the pressure nearly drove Saddam from power without war. On Feb. 22, Bush had a telephone conversation with Spanish Prime Minister Jose Maria Aznar, a Bush ally in much of the pre-war diplomacy, in which Bush said that Saddam had been speaking with the Egyptians about possible exile. “The Egyptians are talking to Saddam Hussein,” Bush said, according to a transcript obtained by the Spanish paper El Pais. “It seems that he’s indicated that he’s willing to go into exile if they let him take $1 billion and all the information that he wants about the weapons of mass destruction,” Bush said. Further, Bush said, Libyan leader Muammar “Gaddafi has told Berlusconi that Saddam Hussein wants to go.” A senior Bush administration official who was on the call confirms that it took place.

The official does not remember what, if any, effort was made by the Bush administration to encourage Saddam’s departure. But when Aznar asked Bush if he thought exile was possible “with some guarantee”, Bush responded, “No guarantee. He’s a thief, a terrorist, a war criminal.” Two days later, Saddam gave an interview to Dan Rather of CBS News saying that exile was out of the question. “We will die here. We will die in this country, and we will maintain our honor,” Saddam said.

Less than a month later, Bush ordered the start of Operation Iraqi Freedom.

Even if Saddam had stayed in power, says Katzman today, Bush made remarkable diplomatic progress through his threats of war and could have effectively contained Iraq by solidifying the gains he had achieved over two years. “He could have easily accomplished his objectives without actually launching the invasion,” Katzman says. That was a contested point at the time–hawkish analysts in the administration and around Washington argued that once the moment of confrontation had passed, the sanctions regime and Saddam’s cooperation with inspectors would end.

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But a leading sanctions expert and Bush administration official says that in retrospect it is clear that sanctions pressure, combined with pre-invasion air strikes by the Bush and Clinton administrations, had already accomplished the administration’s goals. “Iraq actually did give up the pursuit of WMD, at least for as long as it was under sanctions,” says Meghan O’Sullivan, a former Bush administration National Security Council staffer now at Harvard’s Kennedy School. “The sanctions, because they were complemented by the [pre-invasion] use of force and other policy tools, did bring about the desired result,” she says, but “no one knew about it because Saddam wanted [his regional enemy] Iran to believe he in fact still had these capabilities.”

Which brings us to the current stand off between the U.S. and Iran. Could Obama reproduce Bush’s successful policy moves without the tragic mistake at the end? There are some similarities. When Obama took office, sanctions against Iran were failing to constrain Iran’s nuclear program or penalize its violations of U.N. resolutions. In June 2010, the U.S. successfully imposed tough new sanctions on Iran, and while they have failed to change Tehran’s commitment to its nuclear program, they are increasingly affecting its economy. U.N. inspectors remain in the country, though they are not allowed completely unfettered access to various suspicious sites.

There are also important differences. The threat of force was more credible in 2002, with Bush’s cabinet full of hawks like Dick Cheney and with 9/11 still freshly seared in the world’s mind. It’s not clear whether Obama–who, among other things, chose for his new Defense Secretary a man who has warned against attacking Iran–could threaten his way to real concessions by Iran’s Supreme leader. So far, notes O’Sullivan, “Iran hasn’t budged on the issue of policy concern: its pursuit of nuclear weapons.”

Obama and his advisors swear they will go to war to prevent Iran from getting a nuclear weapon. And they may well. But the lesson from Iraq is clear ten years later. Before pulling the trigger, Obama will need to convince himself that war won’t turn a diplomatic victory into a military defeat.

Update: Bush’s former National Security Adviser Condoleezza Rice responded Wednesday morning by email regarding the Bush administration’s follow up with the Egyptians on Saddam’s interest in going into exile. Says Rice: “We actually did go back to the Egyptians — nothing every materialized.”

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