Jim Hoagland's latest attack on my country's leadership and policies {"Turning a Blind Eye to Baghdad," op-ed, July 5} bordered upon irresponsible and dishonest journalism.

After eight destructive years of war with Iran, the Iraqi leadership is committed to rebuilding. At the same time, Iraq must address the reality of existing in a dangerous region with aggressor nations on two sides: Israel and Iran. To the west and east, Iraq faces nations possessing nuclear weapons, missiles, chemical and/or biological weapons. Iraq did not introduce this capability into the area. Our policy is one of deterrence. Any warnings from Baghdad are intended to discourage hostile acts against Iraq and certainly don't amount to the saber-rattling Mr. Hoagland alleged.

The poison-gas issue, constantly raised by Iraq's adversaries, was accurately reported by Patrick Tyler {news story, May 3}. Citing Pentagon sources, he said it was Iran, not Iraq, that deployed cyanide gas on Kurdish populations in the war. Mr. Tyler quoted U.S. officials to the effect that "Iraq does not use cyanide gas." Mr. Hoagland's insinuation that Iraq used it against its own Kurdish people is an unsubstantiated charge, without a shred of evidence.

The charge that Iraq is giving office space to Abu Nidal, after we gave him the boot several years ago, was a cheap shot.

Mr. Hoagland's claim that "Iraq's policy in Lebanon, like that of Syria's, is simple: Fight to the last Christian" is disingenuous in the extreme. Had he bothered to examine the facts, he would have acknowledged that Iraq's policy is against the presence of non-Lebanese forces in Lebanon, including the Iranians, Syrians and Israelis. Several months ago, Iraq stopped supplying military aid to Michel Aoun at the request of the tripartite Arab committee. Moreover, Iraq has been playing a key role in ending the fighting and reaching a truce between Gen. Aoun's forces and the Lebanese forces led by Samir Geagea.

Mr. Hoagland seemed preoccupied with the religious equation, but Iraq, as a secular nation, has no bias toward any religion. The founder of the Baath party, the late Michel Aflak, was a Christian, as is our deputy prime minister and minister of foreign affairs, Tariq Aziz.

Finally, the allegation related to Iraqi impropriety with the U.S. Commodity Credit Corp. and the Bank of Lavorno was fanciful and frivolous.

Iraqi transactions involving the loan-guarantee programs have been honorable, and our commitments have been fully met. If the U.S. government has problems with the Bank of Lavorno or with its branch office in Atlanta, it is a matter of domestic American banking regulations and is not our responsibility. We do not receive any assistance from the U.S. government agencies and programs. The CCC program helps American exporters and does not cost U.S. taxpayers one cent. It is a fundamental truth that imposing economic sanctions against Iraq will do much greater harm to America's farmers and businesses, as Iraq can easily purchase commodities and technology on the open market, at lower prices.

Iraq is concerned both about its own security needs and the peace and stability of the region. Iraq's desire is to solve the Arab-Israel conflict by implementing the United Nations Security Council resolutions that provide, among other things, for Israel's withdrawal to the pre-1967 border. This policy was manifested by a communique' signed by all Arab heads of states in Fez, Morocco, in 1982. It is no secret that Iraq supports the PLO's efforts to establish a Palestinian homeland, as does much of the world and an increasing number of Americans. But these facts do not justify Mr. Hoagland's frenzied conspiratorial theories.

Iraq's concern about security is fully justified, given these dangerous times in the Middle East. Nevertheless, Iraq's policy has been to ban all mass destructive weapons held by every party in the Middle East.

MOHAMMED AL-MASHAT Ambassador of Iraq Washington