During the 1980s, Reagan officials talked often with Iraqi officials, and the U.S. removed Iraq from terrorist status, freed up loans for agriculture, encouraged arms trade, and helped out Iraqi nuclear development. The administration did its very best to look the other way when it came to gassing the Iranian front lines and the Kurdish villages. The U.S. policy on Iraq's use of poison gas was to condemn it formally but go forward with a growing relationship with Hussein, who was viewed as a useful counterweight to Iran's mad mullahs. Hussein, as we well knew at the time, had absolutely nothing to do with religious Islamists. He was a secular nationalist of a particularly vicious stripe.
According to U.S. government communiqués compiled by the National Security Archive, a private organization based at George Washington University, Rumsfeld and Aziz agreed in December 1983 that "the U.S. and Iraq shared many common interests." And Rumsfeld expressed "our willingness to do more" for Iraq in its war with Iran.
From the U.S perspective, gassing Hussein's Iranian enemies was not exactly the top priority, especially when, at the time, U.S. officials were trembling at the prospect of hundreds of thousands of Iranian fanatics overrunning the Middle East and rushing into Turkey and God knows where else.
When the Iranians tried to get the UN to pass a resolution condemning the use of gas, the Reagan administration ordered its ambassador, Jeanne Kirkpatrick, to seek what was referred to as a "no decision." If this were not achievable, she was to abstain on the issue.