Based on the look of the cover, I think he was reading "What Uncle Sam Really Wants". It's a short work, only about 100 pages, but its focus on U.S. intervention around the world serves as the perfect mirror to what is going on in Iraq. In it, Chomsky states that the corporations drive American domestic and foreign policy, and what better proof do you have than Haliburton and the oil companies?
Here are a few snippets from the chapter "The Threat Of A Good Example", and you can see how it could be applied to the American presence in Iraq:
No country is exempt from U.S. intervention, no matter how unimportant. In fact, it's the weakest, poorest countries that often arouse the greatest hysteria.
There's a reason for that. The weaker and poorer a country is, the more dangerous it is as an example. If a tiny, poor country like Grenada can succeed in bringing about a better life for its people, some other place that has more resources will ask, "why not us?"
[W]hat the US wants is "stability," meaning security for the "upper classes and large foreign enterprises." If that can be achieved with formal democratic devices, OK. If not, the "threat to stability" posed by a good example has to be destroyed before the virus infects others. That's why even the tiniest speck poses such a threat, and may have to be crushed.
Dangerous stuff for the Iceman to be reading....