Richard Armitage is a hard-guy, the point of the spear, who runs the wettest, blackest intel shop in Washington - he is not an idle gossip. He knew exactly who Valerie Plame was, that she was covert, and what she did at CIA Counter-Proliferation Division.
Why did Armitage out the AQ Khan network, when he did, and later take a lead role in outing Valerie Plame? I believe the answer is hinted at in this
New Yorker article by Sy Hersh from 2004:
http://www.newyorker.com/archive/2004/03/08/040308fa_fact?currentPage=4In a speech on February 5th at Georgetown University, George Tenet, the director of the Central Intelligence Agency, hailed the developments in Libya as an American intelligence coup. Tenet said, “We learned of all this through the powerful combination of technical intelligence, careful and painstaking analytic work, operational daring, and, yes, the classic kind of human intelligence that people have led you to believe we no longer have.” The C.I.A. unquestionably has many highly motivated and highly skilled agents. But interviews with former C.I.A. officials and with two men who worked closely with Libyan intelligence present a different story.
Qaddafi had been seeking a reconciliation with the West for years, with limited success. Then, a former C.I.A. operations officer told me, Musa Kusa, the longtime head of Libyan intelligence, urged Qaddafi to meet with Western intelligence agencies and open up his weapons arsenal to international inspection. The C.I.A. man quoted Kusa as explaining that, as the war with Iraq drew near, he had warned Qaddafi, “You are nuts if you think you can defeat the United States. Get out of it now. Surrender now and hope they accept your surrender.”
One Arab intelligence operative told me that Libyan intelligence, with Qaddafi’s approval, then quickly offered to give American and British intelligence details about a centrifuge deal that was already under way. The parts were due to be shipped aboard a German freighter, the B.B.C. China. In October, the freighter was seized, and the incident was proclaimed a major intelligence success. But, the operative said, it was “the Libyans who blew up the Pakistanis,” and who made the role of Khan’s black market known. The Americans, he said, asked “questions about those orders and Libya said it had them.” It was, in essence, a sting, and was perceived that way by Musharraf. He was enraged by what he called, in a nationally televised speech last month—delivered in Urdu, and not officially translated by the Pakistani government—the betrayal of Pakistan by his “Muslim brothers” in both Libya and Iran. There was little loyalty between seller and buyer.“The Pakistanis took a lot of Libya’s money and gave second-grade plans,” the Arab intelligence operative said. “It was halfhearted.”
The intelligence operative went on, “Qaddafi is very pragmatic and studied the timing. It was the right time. The United States (the Bush Administration) wanted to have a success story, and he banked on that.”
Read between those lines. The A.Q. Khan network (to some degree knowingly, by Khan and others in the Pakistani gov't) was a sting, managed by CIA-Counter Proliferation Division) for which Valerie Plame worked the Iraq and Iran accounts. Since the 1980s, Khan was the primary supplier of nuclear technology to Iraq and Iran. Valerie Plame started working these cases in 1997. It was Val who travelled to Jordan in 2002 to inspect aluminum tubes intercepted on their way to Iraq, and it was Val who pronounced that they weren't proof that Saddam Hussein was reconstituting a nuclear weapons program. That, of course, enraged Cheney, which is why he had Libby, Rove and others out Plame to the press.
That outing Plame effectively destroyed the operational life of everyone else in covert positions at CIA-CPD who worked with her was the very point. That was what Cheney and Armitage were really doing - destroying the part of the CIA that had been running a very successful sting operation that was peddling second-rate technology through Khan, effectively slowing down the nuclear bomb programs of a half dozen of the most dangerous countries in the world. See,
http://www.dailykos.com/story/2007/2/1/183411/6866; http://www.democraticunderground.com/discuss/duboard.php?az=view_oet&address=358x4659