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U.S. Export Policy Toward Iraq: An Agenda for Tomorrow

by Kenneth R. Timmerman


Testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Tuesday, Oct. 27, 1992


I am an author and independent journalist, and have specialized over the past ten years in Middle East security questions, with particular emphasis on the proliferation of weapons of mass destruction.

My latest book, which was published last year by Houghton Mifflin, is called The Death Lobby: How the West Armed Iraq. It is the story of how Western governments, companies and their bankers conspired in an orgy of greed and error to build up Saddam Hussein's military capability. In one review, the New York Times said the book was "in a class by itself."

I began reporting on Iraq in 1984, and first met senior officials in the Iraqi military-industrial establishment in 1986. I returned to Iraq on several occasions after that, and published many early warnings on Iraqi military power and the growth of the Iraqi arms industry. The Death Lobby details the contributions made by more than 450 Western companies to Iraq's military buildup. (Oral: For the full story of how Saddam Hussein filled up his shopping cart with advanced weaponry and military production equipment and managed to pay for it all on credit, read my book.

Was the United States Iraq's principle supplier of arms or advanced production technology? Certainly not. Those honors must go to France and Germany. Was the American contribution to Saddam Hussein's military build-up significant? Absolutely, in financial terms, in terms of the technology actually supplied, and for the political impact this had in emboldening the Iraqi regime.

From January 1985 through August 1990 the Department of Commerce approved 771 license applications valued at $1.5 billion. The following statistics are drawn from an analysis of 474 of these licenses, worth $1,272,466,525. My criteria for selecting licenses for inclusion in this data base were their monetary value, the Iraqi end-user, and the sensitive nature of the equipment. While some items have invariably been missed, it is my belief that the conclusions of this analysis accurately reflect both the reality and the intent of U.S. export licensing policy toward Iraq.


Conventional military sales


Contrary to claims that have been advanced here and there, the United States government did indeed approve conventional military sales to Iraq.

The single largest sale was a $491 million proposal to sell Iraq several thousand military cargo trucks. This particular deal was licensed on two separate occasions by the Department of Commerce, in April 1986, and in April 1988, but major shipments never occurred. According to a report by the Commerce Department's Inspector General, the records on these licenses were falsified when they were submitted to Congress last year to delete the mention "military."

Notwithstanding the clear military nature of this sale, it is my belief that Iraq never intended to purchase these trucks but instead used the prospect of a major, relatively uncontroversial sale of this kind as an enticement to American businessmen and to the American government. It was a tactic Saddam and his procurement agents used again and again: if Washington would just "play ball" on more critical exports of sensitive technology, then a vast new market would open up in Iraq for American businessmen.

American military sales to Iraq began in December 1982, when the Reagan Administration agreed to support the sale of 60 Hughes MD 500 "Defender" helicopters to Baghdad, despite their obvious military applications. The Hughes "Defender" was advertized by Hughes as a dedicated anti-tank machine; an earlier version was used in Vietnam equipped with TOW missile launchers. A few Senators objected at the time that the proposed sale was not in the interests of the United States, but the Commerce Department informed them that their objections were irrelevant, since the sale of aircraft weighing less than 10,000 pounds did not require an export license to countries not subject to Foreign Policy restrictions. (Iraq was taken off the terrorism list that March). All 60 helicopters were delivered by the end of 1983. Iraq paid for them in a barter agreement through Chevron Oil. The deal was brokered by the Lebanese-American intermediary, Sarkis Soghenalian, and is described in some detail in my book.

In February 1984, the Italian subsidiary of Bell Textron, Agusta Bell, agreed to sell Iraq eight AB 212 military helicopters equipped for anti-submarine warfare, worth a $164 million. They were intended equip the Lupo class frigates Iraq had purchased from Italy four years earlier. This sale also required U.S. approval, but to my knowledge was never submitted to Congress.

Following its sister company in Italy, Bell Textron got into the act in late 1984 with a proposal to sell 48 Bell Textron 214 ST utility helicopters. A version of this helicopter, sold around the world as a military transport and commando support machine, had been reclassified as a civilian aircraft, and arms broker Sarkis Soghenalian proposed selling them to Iraq for "recreational" purposes and "VIP transport." This deal was approved by the Reagan Administration.

When the delivery of these helicopters was discussed with U.S. Embassy officials in Baghdad in late 1984 and again in early 1985, they were concerned that these aircraft could be used for Medevac purposes or as troop carriers. But in a written reply to Congress, Secretary of State Shultz stated in November 1984 that "increased American penetration of the extremely competitive civilian aircraft market [in Iraq] would serve the United States' interests by improving our balance of trade, and lessening unemployment in the aircraft industry."

Here is a photograph I took of one of these helicopters at the al Muthana airbase outside Baghdad in April 1989. As you can see, it has been painted in the colors of Iraq's Army Aviation Corps. The only "recreational" purpose it may have been used for is the gassing of Kurdish civilians in northern Iraq.

Probably in conjunction with the Bell Textron sale, the Commerce Department approved 13 other licenses, worth $102,758,428, for "civilian" helicopters and spare parts. One 1986 license is described as "Navigation and support equipment to maintain the two [] helicopters exported to President of Iraq." During the winds of Desert Storm Saddam Hussein could have fled the country on board an American helicopter, and perhaps have escaped detection. It is my understanding that the Defense Department protested these sales vigorously, but was overruled by State and Commerce during one of the many bureaucratic turf battles over Iraq licensing policy.

Another, particularly egregious case of U.S. military equipment winding up in Iraqi weapons systems involves a Dutch company called Delft Instruments N.V. Delft purchased infra-red sensors and thermal imaging scanners from U.S. defense contractors, and re-exported them illegally to Iraq. The Iraqis used this equipment successfully during their night attack across the border into the Saudi town of Kafji. U.S. intelligence had been unaware that Iraq possessed night vision equipment for its Soviet-built tanks, until it cost the lives of Allied soldiers.


Dual-Use Equipment


The International Atomic Energy Agency (IAEA) has discovered a very broad range of U.S.-built equipment in Iraqi weapons establishments engaged in nuclear weapons development. Some items have been catalogued as "key equipment" for making the bomb, and have been destroyed by the IAEA. Other U.S.-built items will remain under long-term IAEA monitoring, to ensure that the Iraqis do not use them in future attempts to build the bomb.

U.S. equipment found in Iraqi nuclear weapons establishments includes:

• spectrometers, oscilloscopes, and other precision scientific instruments

• electron beam welders to make uranium enrichment centrifuges,

• high-precision machine tools to make bomb cores

• sophisticated numerical controllers, and high-power computers

• neutron initiators and high-speed switches for nuclear detonation

• vacuum pumps for centrifuge and calutron enrichment units

• rare lubricants needed to make the centrifuges work.

One entire facility, a tungsten-carbide manufacturing plant that was part of the Al Atheer complex, was blown up by the IAEA in April 1992 because it lay at the heart of the Iraqi clandestine nuclear weapons program, PC-3. Equipment for this plant appears to have been supplied by the Latrobe, Pennsylvania manufacturer, Kennametal, and by a large number of other American companies, with financing provided by the Atlanta branch of the BNL bank. .

To my knowledge the Kennametal sales were never subject to licensing by the DoC; neither were sales of machine-tools by U.S. companies to numerous other Iraqi weapons plants . Furthermore, Iraq has succeeded in hiding large quantities of machine-tools and advanced production equipment, making it difficult to evaluate with any certainty the true extent of Iraq's unconventional and conventional weapons manufacturing capability, or how long it might take for Iraq to resume its nuclear weapons program once UN sanctions are lifted.


Electron Beam Welders


When the President insisted on Oct. 19 that there was not "one scintilla" of evidence that U.S. equipment had made its way into the Iraqi nuclear weapons program, many people including David Kay and Gary Milhollin pointed immediately to the Leybold Heraeus electron beam welder, which was licensed by Commerce for sale to the Nassr State Establishment for Mechanical Industries in Taji, Iraq.

This particular piece of equipment had been used by the Iraqis in their uranium enrichment program. Leybold's parent firm in Germany apparently supplied what the IAEA called "application-specific fixtures," which enabled the welder to hold six centrifuge rotors simultaneously while maraging steel end caps were welded in place - a high precision and vital step in building the most sensitive part of the enrichment centrifuge. Leybold's offices were searched by German Customs on July 6, 1992, and the company is now subject to a criminal investigation.

But the IAEA found not one but three Leybold EB welders; and so far, nobody has explained how they made their way to Iraq. The Pentagon is currently investigating whether these machines had in fact been manufactured in the United States and exported to Germany, where Leybold modified them before shipping them on to Iraq. Documents seized in Iraq by the IAEA show that Leybold began discussing these sales directly with the Iraqi Atomic Energy Organization in 1982.


Main-frame computers


It is widely acknowledged today in scientific circles that advanced computers give the edge to Third World countries, such as Iraq, who are seeking to develop a nuclear device without going through the costly and political perilous process of a nuclear test. Using high-speed computers and graphics work stations it is now possible to simulate a nuclear blast, thus allowing design improvements to be developed in a matter of months that used to require long and arduous live testing. The IAEA discovered documents in Iraq which proved beyond a doubt that Iraq was using mainframe computers in precisely this way, and had gone through five major design upgrades of a nuclear explosive device, all without undertaking a live nuclear test. Those documents, as you may recall, saw the light of day thanks to the determination of David Kay, who deserves a tribute from all of us who are concerned with the proliferation of unconventional weapons technology. Without David's work on the ground with the UN inspection teams, we might never have pierced some of the secrets of the Iraqi nuclear weapons program.

My analysis of the Department of Commerce records shows that in the United States alone, Iraq received a total of 370 export licenses for computers and advanced scientific analysis equipment from May 1985 through August 1990, worth a total of $114,637,902.

Of these, 167 licenses worth $58,095,322 concerned advanced computing systems. The most widely selling item were VAX machines from Digital Equipment Corp. Other frequently sold items included high-speed oscilloscopes, radio-spectrum analyzers, integrated circuits, gas chromatography equipment, spectrophotometers, and a wide range of electronics manufacturing and test equipment. All were used in Iraqi weapons plants, many in the manufacture of ballistic missiles and in nuclear weapons research and development. Typical purchasers were the Iraqi Ministry of Industry (and Military Industrialization), the Ministry of Defense, and known weapons establishments such as Saad 13, Saad 16, Huteen, Badr, and Nassr.

To date, however, Iraq has only acknowledged to possessing a single IBM 370 mainframe, located at the Thuwaitha nuclear research center. Earlier this year, an IAEA team visiting computer facilities in Baghdad discovered six other mainframes, four IBMs, a VAX Intergraph 6310, and a Hewlett Packard Model 3000.

But let's take a closer look at what was actually sold. Hewlett Packard, for instance, received 57 licenses to export computer systems to Iraq from the United States, worth $3,147,608. HP systems were sold to Thuwaitha, to the Saad 16 research and development center, and to a variety of heavy engineering complexes that were manufacturing parts of uranium enrichment centrifuges and calutrons. Hewlett Packard maintained an office in Baghdad throughout most of the 1980s, and was a major exhibitor in the yearly Baghdad international trade fair. All these exports were approved by the Department of Commerce under the Reagan and Bush Administrations.

Iraq's second-largest computer supplier in the United States was Digital Equipment. DEC operated in Iraq through a UK franchise outfit, International Computer Systems (London) Ltd, and its sister company, Computer and Communications Services (CCS) in Amman, Jordan. Both are controlled by a Jordanian of Palestinian origin, Isham Fayez Samarra. ICS received 49 export licenses from the Department of Commerce to sell computers to Iraq worth $16,377,132. Once again, these computers were sold to known Iraqi weapons establishments and procurement fronts, including the Nassr State Establishment for Mechanical Engineering, Saad 16, the Scientific Research Council, the Ministry of Industry and Military Industrialization, and the State Establishment for Heavy Engineering Industries (SEHEE). This latter was deeply involved in manufacturing parts for uranium enrichment centrifuges and calutrons.


The Super Gun


Evidence is now beginning to emerge that American companies were engaged in an effort to ship an entire production line to Iraq, to manufacture large diameter gun barrels for the Super-Gun project.

U.S. manufacturing equipment for this project was shipped to the Saddam General Establishment, Faluja, Iraq in 1989 and 1990. An export license was awarded for at least some of these shipments to RD&D International, a Vienna, Virginia company which is under criminal investigation. The RD&D license was "embargoed" following August 2, 1990, as were many other deals for advanced military production equipment which had received Commerce Department approval in application of the President's new Iraq policy. In other words, if Iraq had not invaded Kuwait, it would have received the goods.

Among the equipment sold to the Saddam General Establishment apparently for the supergun project was a 5-axis, 1250 mm CNC vertical turning, milling and slotting center; a 9000mm long CNC gantry mill ,worth $1,050,000; two 36 inch by 30 foot CNC lathes; a 15 inch Chamber boring machine; and a 36 inch by 36 foot combination boring and turning lathe. All of this equipment, of obvious military purpose, would have been prohibited for export to the Former Soviet Union. But apparently, not to Iraq.

The super-gun procurement package was worth tens of millions of dollars. And like so many Iraqi purchases in the United States, it was financed by the BNL in Atlanta.

A parallel effort by Iraq in June 1990 to purchase a large, refurbished forge from a Pennsylvania company, was apparently blocked by the Pentagon's Defense Technology Security Administration, in conjunction with the U.S. Customs Service. This forge had been used, decades earlier, to cast the barrels for the 16 inch guns on the four surviving battleships of the US Navy.


What the Administration Knew


The Commerce Department knew as early as March 1985 that Iraq was seeking advanced American scientific instruments and computers for Saad 16, a giant ballistic missile research and development center near Mosul. How did Commerce know this? Simple. The Iraqis informed them of their request in writing.

At the same time Commerce was nimbly approving export licenses for the German contractor in charge of this scheme, other government agencies were attempting to win international agreement to set up the Missile Technology Control Regime, which would have outlawed precisely this type of sale.

Nor did the United States government ignore the fact that Iraq was developing a broad-based chemical weapons manufacturing base. The State Department delivered the first of more than 100 official "demarches" or protests to the West German governments on sales of CW technology to Iraq by German companies in 1983. Despite this, between 1985 and 1989 the Commerce Department approved fourteen separate shipments described as "Bacteria, fungus, protozoa," most of which were sent directly to the Iraqi Atomic Energy Commission.

How about the nuclear weapons program? Records recently obtained by Congressman Gonzales and the House Banking Committee show that the CIA was warning Commerce, the State Department, and presumably the White House, about Iraq's nuclear weapons program in 1989 if not earlier. By June 1989, according to a November 21, 1989 State Department memo, the CIA had already reported to U.S. government agencies on the activities of Iraq front companies operating in the United States and Western Europe to purchase equipment for the Iraqi nuclear effort. Furthermore, the memo states, the intelligence community had developed a long list of "bad end users" known to be working on nuclear, ballistic missile, and biological weapons projects . Despite this knowledge, the Administration went ahead with its policy to expand trade with Iraq. This policy was codified as National Security Decision Directive 26 in October 1989.

The most active of the front companies operating in the U.S. was Matrix Churchill, a wholly-owned Iraqi entity with manufacturing facilities in Coventry, England, and a procurement office in Solon, Ohio. Matrix Churchill was used by Iraq starting in 1987 to procure a wide range of advanced military production technologies, including four and five axis CNC machine-tools that even today would be forbidden for export to countries such as Russia.

In Great Britain, where the company was based, the government granted export licenses to Matrix Churchill to sell 176 precision machine-tools to Iraq from 1987-1989, according to information I have compiled from official records made available to the House of Commons late last year. Most of these machines were shipped to the Taji and the Huteen facilities, which contributed to Iraq's nuclear and conventional weapons programs as well as to the supergun project. The IAEA has tagged some of these machines for long-term monitoring, because they had been used for manufacturing components for uranium enrichment centrifuges.

In the United States, Matrix Churchill served as a "cut-out" for purchases from more than fifty American manufacturers. It made massive purchases of tungsten-carbide machine tool bits from Kennametal, of Latrobe, Pennsylvania; it purchased large quantities of platinium and rhodium; it jobbed out an advanced glass and ceramic fiber plant, suitable for manufacturing ballistic missile nose cones and perhaps centrifuge rotors to Glass International Inc, of Chino, California; it was working hand-in-hand with Industrias Cardoen of Chile to purchase zirconium sponge and special equipment to build cluster bombs. And yet, this company was allowed to operate freely until September 1990, when it was finally closed down by U.S. Customs.

I have mentioned the Matrix Churchill case to illustrate the fact that we are confronted here with two separate, but related problems. The first involves U.S. policy toward Iraq. The mountain of evidence now available suggests that the Bush Administration was pursuing covert policy objectives, yet to be revealed, which clearly contradict the Administration's public committment to non-proliferation. The United States made a major contribution to the expansion of Iraq's military capabilities. This contribution increased dramatically with the change of administration in January 1989, and was formalized by NSD 26, which specifically authorized sales to conventional military facilities in Iraq.

The second and larger problem concerns the gaping loopholes in our export control system, and what to do about them.


Reforming the Export Control System


Following the lead of President Reagan, who believed that proliferation concerns should take a back seat to commercial imperatives, the Bush Administration has failed to provide leadership to the international community in this area, actually vetoing several Congressional bills that would have put the United States in the forefront in preventing the proliferation of mass destruction weapons. As paradoxical as this may seem, Germany today has the toughest export controls on its books of any Western nation, while the United States is still wondering whether it has an export control problem.

Here are some of the steps I would take to fix the problem if I were in charge of U.S. export licensing policy.

1) Withdraw export licensing from the Commerce Department, which is primarily responsible for promoting U.S. exports, and establish an independent Export Control Agency.

I believe such an Agency should be subordinated directly to the White House, to ensure that everyone knows who will take the blame if there are mistakes in the future. Is it the President's policy to build up Iraq's military capabilities? The way the system works now, nobody can tell for sure; by placing export controls under White House authority, there can be no doubt as to ultimate accountability.

2) Proliferation concerns should determine what technologies should be subject to new export controls, since proliferation has become the security problem of the 1990s and beyond.

For example, machine-tools that were not controlled in the 1980s because they fell below the standards of the Soviet military industry formed the backbone of Iraq's military industrial complex. If we continue to use Cold War standards, the net effect will be to bring the military industries of countries such Iran, India, Pakistan, Syria and Iraq up to Cold War standards. This will result in an unacceptable financial burden on the American taxpayer, as America is called on time and time again to take out the very dictators failed government policies helped to create.

3) Export licenses to countries of proliferation control should be subject to mandatory review by the Department of Defense and the U.S. Customs Service.

These agencies maintain lists of "bad end-users" against which proposed exports should be checked on a routine, on-line basis, which is not the case today.

4) Internationally, the United States should take the lead in establishing a single, unified, multilateral Proliferation regime, to replace the four separate regimes (nuclear, chemical, missile, and dual-use technology) that currently exist today. The new regime should review strategic exports to the Third World before they occur, much as COCOM reviewed strategic trade with the Soviet Union during the Cold war.

5) Lists of approved exports should be published by member countries, to encourage greater "transparency" in the licensing process. (As it stands today, export licensing records remain classified). Respectable companies doing business with reliable customers will have no shame in making their contracts public. It is primarily the handful of violators who continue to lobby for secrecy.

6) Russia, China, and other non-Western exporters of military production equipment and nuclear technology should encouraged to become partners in elaborating multilateral proliferation guidelines, and should be assisted in setting up effective export control systems.

Finally, I would support strong legislation that would impose mandatory sanctions on foreign companies which fail to respect the new multilateral export controls, irregardless of where the violation occurs. All too often when an American company refuses a lucrative export contract because it would violate U.S. law, a French, or German, or Japanese competitor leaps into the breach, because their governments are lax on export control enforcement. Mandatory sanctions against violators would help to prevent foreign businesses from taking unfair advantage of U.S. companies who choose to play by the rules.

I believe that the Iraqi experience is repeating itself in countries such as Iran, India, Pakistan, and Syria, even as we speak. There is still time to stem the flow of strategic technologies to such countries; but without a major reform of our current system, soon it will be too late.