American relations with Iraq weren’t so frosty twenty years ago. It looks like Rumsfeld and Hussein were friends back then; I bet Ol’ Rummy wouldn’t even invite Saddam to his birthday party now. Photograph is courtesy of the National Security Archive. It appears the Americans knew Iraq was using chemical weapons on the Iranian’s and Kurds but didn’t do anything about it (article):
While condemning Iraq’s chemical weapons use . . . The United States finds the present Iranian regime’s intransigent refusal to deviate from its avowed objective of eliminating the legitimate government of neighboring Iraq to be inconsistent with the accepted norms of behavior among nations and the moral and religious basis which it claims
Rumsfeld wasn’t working for the American government at the time, but rather pharmaceutical company G.D. Searle & Co. He was sent as a Presidential envoy and personal friend of Reagan. He had served posts in the Nixon and Ford administrations.
They also have a videoclip of the handshake available.