When the Baath party seized power in Iraq in February 1963, area experts in the U.S. State Department welcomed the development as a “net gain for our side.” The Baath’s 1963 coup unfolded during the height of modernization theory’s influence on American foreign policy. Drawing on the doctrines of modernization theory, the U.S. moved into a close alliance with the fledgling Baathist regime in Iraq. Despite robust political, economic, and military aid from the U.S., the Baath was unable to establish a stable government and was overthrown in November 1963. Five years later, the Baath party launched a second coup in Iraq. As the Baath party retook power, its leaders expected the U.S. to provide the same kind of assistance that it did in 1963. However, by 1968, the Baath party found the U.S. unwilling to accommodate its bid for power. What explains these differing responses to the Baath? In this paper, I argue that by 1968 the U.S. State Department had become disillusioned with the doctrines of modernization theory and was no longer interested in promoting economic development and gradual political reform in Iraq. Rather than managing process of political and economic change in Iraq, emphasis shifted to maintaining political order in the region. Rather than embracing Iraqi modernizers and steering their course in a direction compatible with US interests, the U.S. moved into an increasingly tight embrace with Iraq’s non-Arab rivals (Israel, Iran, and Kurdish nationalists) who sought to disrupt, destabilize, and otherwise suppress the Baath and its modernization efforts. This paper analyzes a reorganization of the State Department over the course of the 1960s to bring the institution in line with these new political priorities. It shows how the cadre of Arabists that that helped to devise and implement U.S. policies in Iraq and the region more generally were pushed aside in favor of new officials fully committed to a Manichean vision of the Cold War world in which Israel and Iran were friends, while Iraq was an enemy.