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Licensing Mass Destruction
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The Commerce Department had full authority to reject every
Iraq never came close to passing those tests. The "stated end use" of some of the items was explicitly to produce rockets and radar. The items exported, such as machine tools and radar components, were obviously powerful enough to aid missile and nuclear development. It was also clear that Iraq had nuclear and missile development programs. Iraq had been trying to build nuclear weapons since at least 1981, when Israel bombed the Osirak reactor near Baghdad, and Iraq had been known since the mid-1980s to be working with Argentina and Egypt on nuclear-capable missiles. In addition, U.S. intelligence knew by the mid-1980s that many of the importers listed on the licenses were fronting for Iraqi nuclear and missile sites. If the Commerce Department had applied its own criteria, it would have denied many of the Iraqi applications.
Licensing Mass Destruction
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suppliers. The Department of Defense opposed the sale and had the license brought before the National Security Council in September 1987. Although the NSC decided to block the export, the computer had been shipped eight months earlier in January, without the Pentagon's knowledge.
Commerce also approved exports informally that do not appear on the public list. In response to an exporter's request, Commerce can approve a shipment by stating that no license is required. Two of these cases have recently come to light.
In 1989, the Consarc Corporation of New Jersey notified Commerce that it wanted to export a "skull" furnace to Iraq. Consarc explicitly told Commerce that the furnace could aid a nuclear program. The furnace could melt zirconium for nuclear fuel rods, could melt titanium for missile nose cones and other critical missile parts, and might be able to melt plutonium and uranium for nuclear bomb cores. The skull furnace was to be accompanied by three other furnaces: an electron beam furnace from Consarc, and furnaces for vacuum induction and heat treatment from Consarc's subsidiary in Scotland.
Used together, the four furnaces would have far exceeded Iraq's stated
In June 1990, a person outside the government told the Pentagon about the sale. This set off a chain of official reactions that led the White House to block the shipment.
It turns out that equipment accompanying the furnaces needed export licenses. In June 1989, Commerce licensed special computing equipment to control the furnaces' operation (case D030956) and in January 1990, Commerce licensed numerical control equipment to make new crucibles for the furnaces (case D064342). This latter export was crucial. One of the main reasons for thinking that the original skull furnace might not be used to make A-bombs was that the original crucible was not suited for melting heavy metals such as uranium. But when Commerce licensed the equipment for making additional crucibles, Iraq got what it needed to make A-bomb cores.
Also in 1989, another New Jersey company, Struthers, Dunn, Inc. of
It has frequently been said that there is a conflict between the Commerce Department's duty to promote exports and its duty to regulate them--that Commerce has conflicting missions in the export field. The licenses to Iraq prove that this is true. Commerce licensed items that did not meet its export criteria, that it knew would be diverted from their supposed civilian purposes, and that it knew would help Iraq's nuclear and missile programs. Commerce even excluded the State and Energy Departments from the licensing process, in violation of its own procedures.
The best known example of a federal agency that tried to promote and regulate at the same time is the old Atomic Energy Commission, which had the job of both promoting and regulating nuclear energy until 1974, when Congress decided to split the functions. The Nuclear Regulatory Commission now regulates; the Department of Energy promotes. Everyone agrees that nuclear regulation gained great credibility and effectiveness from this separation.
Congress should now follow this precedent for dual-use licensing. It should take this function away from Commerce and give it to an independent regulatory agency such as the Nuclear Regulatory Commission or to some other department, such as Defense, that has no export promotion function. The Commerce Department, which specializes in trade, is not the place to decide strategic questions. An agency that specializes in national security should have that task. It is essential to recognize that the real significance of dual-use item strategic, not economic. The number of items on the control list is small; well over 90% of the applications to export them are granted; and the value of the few applications denied is tiny compared to the
Licensing Mass Destruction
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overall value of U.S. foreign trade.
It has been suggested that Congress should create a new agency to handle all export licensing. Such a move would be sound if Congress could insure that industrial interests would not take the agency over, as they have the Commerce Department. Industry would have a great incentive to pack such an agency with personnel loyal to its interests.
It would be safer and more logical to make the Defense Department
Impose Congressional oversight
Congress essentially ignored export licensing to Iraq until the invasion of Kuwait. Oversight was entirely lacking during the period preceding the Gulf War. If Congress had looked into what the Commerce Department was doing, Congress would have learned quickly that Commerce was not following the rules. A Congressional reaction might have stopped some of the worst exports from going out.
Congress should now impose an effective form of oversight. A Congressional committee with jurisdiction over national security matters should be given the task of overseeing and evaluating export licensing. That committee could be a subcommittee of one of the Armed Services committees, or of the Governmental Affairs or Government Operations committees, or of the Joint Economic Committee. The committee or subcommittee should receive complete reports on pending or approved licenses and should have sufficient staff to oversee export controls. If necessary, it could receive assistance from the General Accounting Office or the Office of Technology Assessment.
Open export licensing to public view
The other important lesson we can draw from nuclear regulation is the great benefit of making decisions in public. All of the Nuclear Regulatory Commission's export licenses are granted on the public record and in the light of day. This is the main reason why there are no horror stories about U.S. nuclear exports to Iraq. Neither exporters nor regulators want to defend such transactions in public, so they do not happen.
Licensing Mass Destruction
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The Commerce Department's process is secret. Neither Congress nor the public is permitted to examine Commerce licensing in the open. This is true despite the fact that dual-use licenses are supposed to be for civilian items restricted to peaceful use.
Commerce refuses even to confirm the existence of an individual
The Commerce Department argues that secrecy is necessary to protect proprietary interests. But the U.S. nuclear industry competes well on the international market despite the openness of NRC regulation.
Congress should now require the Commerce Department to publish quarterly summaries of all dual-use licensing actions. This information already exists in a database. It could be released by pushing a button. The resulting list would be the same as the one that Commerce released in March on Iraq, but would include countries such as Iran, Libya and Syria. The list would only cover licensing actions that have been completed. Pending sales would not be revealed. Congress could accomplish this by amending Section 12(c) of the Export Administration Act, which the Commerce Department now interprets as requiring complete secrecy for dual-use licenses.
The list would also include the name of the exporter. If a company is ashamed of having sold one of its products to a developing country, the company should not have made the sale in the first place. Reputable companies do not object to telling the truth about their business. If the sales are legitimate, and satisfy the export criteria, there is no reason to keep them hidden. The decision to license them is an official government act paid for with tax dollars. Pushing export licensing into the light of day would encourage the exporters to be honest, encourage the government to be careful, and allow the public to find out whether U.S. exports are undermining national security.
ANNEX: IRAQI END USERS
Following is a list of the known Iraqi military and nuclear end users that imported sensitive American equipment from 1985 to August 2, 1990, when Iraq invaded Kuwait:
Iraqi Airways: One of the "agents and front companies" that Iraq used for its "arms procurement network," according to the U.S. Treasury Department. In a press release on April 1, 1991, Treasury