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Iran has also ranged further afield, pressing both Russia and China for nuclear reactors that could halve the time needed to produce a nuclear weapon. North Korea has devoted its recent shopping to expertise, coming with-in minutes last fall of luring a contingent of Russian nuclear scientists to Pyongyang. Libya has tried to buy rocket fuel from a Russian concern. India and Pakistan have been similarly energetic.

In the American-led efforts to curb such commerce, the recriminations of the gulf war still echo. Under pressure from Washington, Germany in particular has taken steps to tighten its once-flaccid export controls. Britain has begun an inquiry to review what led its companies to assist in the Iraqi buildup, including the manufacture by Sheffield Forge-masters of 52 six-meter-long barrels for Iraq's never-completed supergun. With the Iraqi lesson as a model, Congress last fall voted to subject Iran to export restrictions as rigid as those that are in effect on Baghdad.

Not even Iran has proven anywhere near as brazen as Iraq, however, making its quest harder to detect and easier to minimize.

In the absence of a recognizable villain like Saddam Hussein, a private company can find the temptation of big business abroad difficult to resist. “One major foreign order is enough incentive for some of these firms to turn a blind eye to the law," said Anthony Cordesman, a Middle East expert who has advocated even more rigid restrictions.

That problem is compounded when governments send mixed messages, as a lawyer for an Atlanta banker argued last week. The client, the local representative of the Banca Nazionale del Lavoro, is accused of granting nearly $5 billion in unauthorized loans to finance Iraq's military buildup, and former President Bush was served with a subpoena after the lawyer said his testimony was needed to demonstrate that the client was just carrying out unstated United States policy.

Even the Clinton Administration, having vowed to subject Iran and Iraq to a new "dual containment," has yet to reject an appeal by Boeing and General Electric for special permission to sell $750 million worth of commercial aircraft and engines to Iran. Boeing has warned that a White House refusal to approve the sale would effectively surrender thousands of jobs to Europe's Airbus Industries.


Vague Pledges and New Pleadings

Still more powerful pressures affect Germany and Japan, who rely far more heavily on the Iranian market. So it was no surprise that President Clinton was able to win little more than a vague pledge from other leaders at the economic summit in Tokyo to hold Iran and other rogue countries accountable for their actions. As Mr. Milhollin warns, "Most of the companies that sold to Iraq are still in business, and are still looking for sales in the Middle East."

And for governments increasingly preoccupied with job creation, it may be difficult to reject new pleadings from those who insist that their chemical or computer can do no harm.

Any sale looks less sinister when considered individually; but the lesson of Iraq might counter such complacency. As chronicled now, it shows millions of dollars in British and German machine tools used to make centrifuges; sleek new Swiss presses designed to forge nuclear weapons parts; Mercedes-Benz tractors and flat-bed trailers fitted as mobile missile launching pads. Its message is that economic security, for all its importance, remains a subset of something more fundamental.

Licensing Mass Destruction

Licensing Mass Destruction
U.S. Exports to Iraq: 1985-1990

by Gary Milhollin

June 1991.


The U.S. Department of Commerce licensed more than $1.5 billion worth of sensitive U.S. exports to Iraq from 1985 to 1990./1 Most were "dual-use" items, capable of making nuclear weapons or longrange missiles if diverted from their claimed civilian purposes.

On March 11, 1991, the Commerce Department released a list of those licenses. The list showed the equipment approved, the date, the value, the buyer in Iraq and the claimed Iraqi end use. This report is an analysis of the list. It shows, beyond any doubt, that U.S. export controls suffered a massive breakdown in the period preceding the Gulf War. When U.S. planes were sent to destroy Iraq's strategic sites, much of the equipment they bombed was made in the United States. The report finds that:

• The Commerce Department knew that millions of dollars' worth of sensitive American equipment would wind up in Iraq's missile and other military programs, but approved the licenses anyway.

• The Commerce Department failed to refer missile technology export cases to the State Department and nuclear technology cases to the Energy Department, in violation of its own procedures.

• Front companies for every known nuclear, chemical and missile site in Iraq bought American computers, with total American computer exports exceeding $96 million.

• American machine tools may have helped build the SCUD missiles that hit Tel Aviv and killed U.S. troops in Saudi Arabia.

• American radar components may have helped shoot down U.S. aircraft and develop long-range missiles.

Based on these findings, the study recommends that Congress take dual-use licensing away from the Commerce Department, appoint a Congressional committee to oversee the licensing process, and open dual-use licensing to public view.


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This was the declared purpose of two U.S. exports to Iraq, valued at
$1.4 million and approved on January 20 and February 10, 1988. The
first was for precision machine tools, the second for lasers. The Iraqi
buyer was a procurement agent for the Iraqi SCUD missile program.
With this equipment, Iraq would be able to make precision parts for
missiles, and also be able to rework the cases of its short-range SCUD
missiles, enabling them to carry more fuel and fly farther. Indeed, the
stated use on the application was to work on "rocketcases." With the
longer range, the new Iraqi SCUDS could hit Tel Aviv and kill U.S.
soldiers in Saudi Arabia.

The exporter was a German company, exporting from the United States. The company, whose name the Commerce Department refused to disclose, first came to the attention of German officials in early 1984, when German intelligence reported that the company was suspected of selling Pakistan equipment for making nuclear weapon fuel. In May 1987, the firm was cited in news reports, this time for trying to smuggle blueprints for uranium enrichment to Pakistan through Switzerland. To make matters worse, another German firm, Uranit, was suing this company for stealing the blueprints. According to a German official, the evidence against the company was "very incriminating."/2 The company was also suspected of hiring a Swiss firm to produce special equipment for Pakistan that could enrich uranium to nuclear weapon grade. The press reports appeared only six months before the company applied for its two U.S. export licenses on December 1 and 22, 1987.

Despite the exporter's notoriety, the Commerce and Energy

Departments took only two months to approve the first application
(case B281441) and less than a month to approve the second (case
B286904). Neither was referred to the State or Defense Departments
for review.

The importer was the "Nesser Establishment for Mechanical
Industries," also known as the "Nassr State Enterprise for Mechanical
Industries." One of Nassr's main jobs was to procure equipment for
Project 1728, devoted to increasing the range of Iraq's SCUD missiles.
Nassr was part of the Iraqi Ministry of Industry and Military
Industrialization (MIMI), run by Saddam Hussein's son-in-law
Hussein Kamil al-Majid. MIMI was generally in charge of Iraq's
missile and chemical weapon efforts. Nassr also served as the
procurement arm for Taji, a site used to produce chemical munitions



Licensing Mass Destruction

and, according to Western intelligence documents, "responsible for the
development and manufacture of gas centrifuges for uranium
enrichment."/3 In addition, Nassr ran artillery ammunition plants,
purchased "high-capacity driving nozzles" for missiles from a German
company,/4 and was linked to the Condor II intermediate-range
missile project.

Thus the Commerce Department approved sensitive U.S. equipment that would go directly to Iraqi nuclear weapon, chemical weapon, and missile sites, despite the fact that the exporter was suspected of nuclear smuggling, and despite the fact that the importer declared an intention to work on rocket bodies. Commerce knew that the exporter was unreliable, and knew that the end use was improper, but approved the export anyway.

This equipment may well have helped build the SCUD missile that killed American troops in Dhahran. The buyer represented the SCUD program, the equipment was used to rework rocket casings, and Iraq used a long-range SCUD with a reworked casing to reach the U.S. troops in Saudi Arabia.


In January 1988, the Commerce Department approved more than two
million dollars' worth of quartz crystals to the "Salah al Din
Establishment" (case B290664) and the "Iraqi Trading
Company" (case B346115), both of which frankly said that they
wanted the crystals for "components in a ground radar system." Salah
al Din was a military electronics factory built by the French company
Thomson-CSF. It manufactured three-dimensional early warning
radars and may have made components for missile guidance and radar
jamming equipment.

Quartz crystals perform a vital function in radar: they measure time accurately in small units. Because the position of an object is determined by the time it takes a radar pulse to reach the object and return, accurate time measurement is essential. Military-level quartz crystals are defined as those with high stability over a wide operating temperature, or with the ability to withstand acceleration forces up to 20 times gravity, or shock greater than 10,000 times gravity, or very high radiation. Lower grade crystals do not need a license.

The crystals carried commodity control number 1587, identifying them as especially useful for missile production. All items on the U.S. Commodity Control List require an individual license for export, but some of the items, such as quartz crystals, are singled out as sensitive for missiles. In such cases, the State Department is supposed to be consulted because State chairs the Missile Technology Export Committee (MTEC), an interagency group that evaluates export applications subject to missile controls. This means that the Commerce Department should have referred the two applications to


Page 3 of 25


Licensing Mass Destruction

State for interagency review. Instead, Commerce itself approved both
in only ten days. Commerce claimed that the cases were "not restricted
for MTCR [missile], chemical/biological, or nuclear non-

Salah al Din also needed advanced equipment to operate its radars. In
late 1989, it bought American frequency synthesizers valued at
$140,000 to "calibrate, adjust, and test surveillance radar" (case
D055821). This would apparently include the radar used to shoot
down U.S. aircraft in the Gulf War, and radar used as ground support
for missiles capable of delivering nuclear weapons. The frequency
synthesizers carried commodity control number 1531, also on the
missile technology control list when used for missile "launch and
ground support equipment." Commerce did not refer this case to the
State Department either, as it should have done for a missile
technology item. It approved the application unilaterally in only
nineteen days, claiming again that the export was "not restricted for
MTCR (missile], chemical/ biological, or nuclear non-proliferation."

In fact, Commerce knew that Salah al Din was building military radar.
When Commerce compiled its internal records on the frequency
synthesizers, it noted that "according to our information, the end user
[Salah al Din] is involved in military matters." Commerce then deleted
this statement before it released the export list to the public.

Thus, Commerce approved vital parts for a surveillance radar that Commerce knew was military. The effect was to provide ground support for Iraqi missiles, and to help Iraq detect and shoot down U.S. planes in the Gulf War. It is not surprising that Commerce concealed this knowledge from the public.

Guilty knowledge

Page 4 of 25

Sa'ad 16

In November of 1986, the Defense Department sent an important letter
to the Commerce Department./5 The letter informed Commerce that
the Pentagon had intelligence information linking a giant Iraqi site
called "Sa'ad 16" to missile development. Later, the Los Angeles
Times reported that the exact date of the letter was November 6, and
also said that according to government sources familiar with the letter,
it revealed that Sa'ad 16 was working on other non-conventional
weapons as well. Thus, by November 6, 1986, the Commerce
Department should have stopped approving dual-use exports for Sa'ad

There is also compelling evidence that Commerce knew what was going on at Sa'ad 16 much earlier. In February 1985 the Director of the Sa'ad General Establishment sent a letter to Gildemeister Projecta, the German company in charge of buying equipment for Sa'ad 16./6 The letter, which described the Sa'ad 16 project in detail, was



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