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reportedly sent to Commerce along with the first license requests from
the Sa'ad organization in 1985. Indeed, on May 8, 1985, Gildemeister
filed an application for a $60,000 computer for the Sa'ad General
Establishment, which Commerce approved six weeks later (case
A897641). The letter listed 78 laboratories, including four for testing
"starting material and fuel mixtures," two for "calometric testing of
fuels," two for developing "control systems and navigation"
equipment and one for "measuring aerodynamic quantities on
models." On May 3, 1986 a second letter from Sa'ad revealed that the
Sa'ad General Establishment was a part of the "State Organization for
Technical Industries (SOTI)" and that another name for Sa'ad 16 was
the "Research and Development Center." /7 Commerce undoubtedly
received this second letter--an internal Commerce memo mentions
it./8 These two letters from Sa'ad, combined with the November 1986
message from the Pentagon, should have barred any of the
organizations named from receiving sensitive U.S. exports after
November 6, 1986.

But that was not the case. The Sa'ad General Establishment got over
half a million dollars' worth of U.S. computers in eight cases, seven of
which were approved after November 1986. These computers went
directly to Sa'ad 16, Iraq's largest and most important missile research
site. None of the cases was referred to the Department of Energy, as
required for items on the Nuclear Referral List such as computers. As
explained below, the Nuclear Referral List consists of items that are
especially useful for making nuclear weapons if diverted from their
civilian purpose. Sa'ad also got $290,000 worth of precision electronic
and photographic equipment, approved in February 1987, three
months after Commerce received the Pentagon's letter and two years
after the letter describing Sa'ad 16 was signed.

SOTI, the second Iraqi organization mentioned in the Sa'ad letter, got
high-speed U.S. oscilloscopes in March 1988, a year and a half after
Commerce received the Pentagon's letter (case B259524). SOTI is part
of the Iraqi Ministry of Defense. It directed the construction and
equipping of a solid rocket motor production plant called "DOT," and
it also procured equipment for at least two SCUD missile
enhancement projects. High-speed oscilloscopes are essential to
maintain radar, computers and missile guidance systems, all of which
have internal electronics that operate in short time frames.
Oscilloscopes are also used to capture the brief signals from a nuclear
weapon test, which occur in a microsecond or less. Only high-speed
oscilloscopes need a license for export.

The third organization mentioned in the Sa'ad letter was the "Research and Development Center," which the letter said was another name for Sa'ad 16. The "Center" was allowed to buy $850,000 worth of highperformance measuring, calibrating, and testing equipment (cases B060729 and B075876), all approved in January 1987, three months after the Pentagon's letter and almost two years after the Iraqi letter describing Sa'ad 16 was signed. These cases were not referred to the

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Department of Energy either, despite the fact that the items exported were on the Nuclear Referral List. The Defense Department apparently objected at the staff level but did not escalate its objections to a higher level before Commerce approved the exports. The Center also got communicating and tracking equipment valued at $3,000 in 1989 (case B382561), again without referral to the Department of Energy as required for an item on the Nuclear Referral List.

In addition to the letters from Sa'ad and the Pentagon, there were other warnings. According to U.S. officials, American intelligence began to brief other U.S. agencies on the Iraqi end user network at least as early as 1987. The briefings continued throughout 1988. By early 1989, the intelligence warnings had become clear and urgent. At that time the CIA called all the U.S. agencies concerned with exports together for a special meeting on Iraq. Commerce, however, refused to attend on the ground that its "judgment might be contaminated."

In the open press, the earliest detailed accounts of Sa'ad 16 emerged in January 1989, when the German magazine Stern published a list of the Sa'ad 16 laboratories. Over the next several months, the German press published several stories linking Sa'ad 16 to Iraqi missile, nuclear and chemical weapon development. But even these press reports did not stop Commerce from approving the tracking equipment in June of 1989.

Thus the Commerce Department continued to approve sales of sensitive American equipment to Iraqi front companies even after it knew that the equipment was likely to be diverted.

Violations of procedures

Commerce also failed to refer cases to other agencies for review, in violation of its own procedures.

The quartz crystals mentioned above were on the missile technology
list—the list of items deemed especially useful for missile
production./9Both that list and a second one, known as the Nuclear
Referral List, are subsets of the U.S. Commodity Control List (CCL).
All items on the CCL require an individual validated license for
export. Under Commerce Department regulations, quartz crystals are
defined as missile items if "usable as launch and ground support
equipment." This they clearly were, because the Iraqi buyer stated that
they would be used as "components in a ground radar system."
Ground radar is essential to support the launching, testing and tracking
of missiles. The frequency synthesizers were also on the missile
technology list if "usable as launch and ground support equipment."
They clearly were also, because the buyer admitted that they would be
used to "calibrate, adjust, and test surveillance radar." Thus,
Commerce should have referred both of these cases to the State
Department for review by the Missile Technology Export Committee,
the interagency group responsible for licensing missile-related

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The Commerce Department also failed to refer millions of dollars' worth of compasses, gyroscopes and accelerometers to the State Department. Some of these items were sold to Iraqi Airways, which the U.S. Treasury identified in April 1991 as a "front company" in Iraq's "arms procurement network." Some also went to the Iraqi Air Force and some went to the Iraqi Ministry of Defense—both military organizations. All items in this category (ECCN 1485) are defined as missile-related because they can be used to make missile guidance systems.110 Commerce nevertheless approved them without consulting the State Department, as required by its own procedures.

Thus when Commerce stated on March 11, 1991 in a press release that "no license applications for any MTCR [missile technology] items have been approved for export to Iraq," it contradicted its own export records.

Commerce also violated its statutory obligation to refer nuclear cases to the Department of Energy. Section 309(c) of the Nuclear NonProliferation Act of 1978 requires that the executive branch develop a special list of items that "could be of significance for nuclear explosive purposes" if diverted from civilian use. The list is known as the "Nuclear Referral List." All items on the list require export licenses, and all license applications must be "reviewed by the Department of Commerce in consultation with the Department of Energy."/11

In fact, Commerce licensed numerous items on the list without referring them to the Department of Energy. The most common item was computers, which carry CCL number 1565. Computers operating above a certain speed are regulated by the Nuclear Referral List, and some special computers are also on the missile technology list. Commerce approved the following 20 computer cases, with a total value of over $5 million, without referring any of them to the Department of Energy. The fact that these computers required licenses shows that the computing speed must have been high enough to be regulated by the list. Thus, in all 20 cases, Commerce violated its own procedures as well as Section 309(c) of the Nuclear Non-Proliferation Act.

Case A800390:
Importer: State Organization of Post & Tel.
Value: $3,600,000

Case A843654:
Importer: Iraq Spare Parts Manufacturing
Value: $13,000

Case A844783:
Importer: Ministry of Industry Value: $488,000

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Importer: University of Baghdad Value: $11,000

Commerce also approved several military items to military buyers without consulting the Department of Defense. These included the machine tools and lasers, discussed above, which are used to fabricate rocket casings, the quartz crystals discussed above which are used as components in ground radar, and the navigation, radar and airborne communication equipment sold to the Iraqi Air Force and Ministry of Defense. Exports of such clearly military items to military buyers should have been referred to U.S. security experts.

The Defense Department, in fact, played only a minor role in the
export approval process. The Pentagon saw an export case for only
two reasons. First, it was consulted for its opinion whether an item
was likely to be diverted to a Cocom-proscribed country (primarily the
East Bloc). For these cases, the Pentagon had no power to decide
whether the export might contribute to nuclear, missile or chemical
weapon proliferation. Such a decision was outside the scope of its

Second, the Pentagon saw a handful of nuclear cases because it
participated in the Subgroup on Nuclear Export Coordination (SNEC),
the interagency group that evaluates nuclear-related exports. But the
SNEC reviewed only 24 of the 771 cases approved from 1985 to
August 1990--three percent of the total. Commerce essentially
bypassed the SNEC by failing to refer cases to it. Thus, for the vast
majority of the exports—roughly 97%--the Pentagon did not
participate in judgments about the risk of proliferation. Neither did the
Arms Control and Disarmament Agency or the intelligence agencies.
They had no role beyond their participation in the SNEC. Thus, in
97% of the cases, Commerce alone decided, or decided with the
concurrence of Energy or State, whether an item increased the risk of
nuclear or missile proliferation.

Commerce did not follow a consistent pattern in selecting the few cases it did send to the SNEC. The Iraqi Atomic Energy Commission, for example, bought a large computer, valued at $2.8 million (case B175217) which was not referred to the SNEC, and also bought $87,000 worth of precision electronic and photographic equipment (ECCN 6599) with no external review at all (case D042767). But a second computer, worth only $24,390 (case B1081.66), was referred to the SNEC, indicating that the SNEC may not have received the most important cases. Ten of the items approved for the Iraqi Atomic Energy Commission were on the Nuclear Referral List, but only three were submitted to the SNEC.

Commerce also approved $200,000 worth of computers for Al-Qaqaa, the Iraqi nuclear weapon design laboratory. Commerce did not refer the computers to either the Department of Energy or the SNEC.

Violations of policies

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