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QUESTIONS SUBMITTED BY MR. GRAHAM Mr. GRAHAM. On July 16 in the context of the Maritime Security Program, testimony was presented to this Committee indicating that the DoD has contracts for our national security with companies which are wholly owned and controlled by foreign entities-entities which continue to do substantial business with nations like Iran and Iraq which we have designated as state sponsors of international terrorism. I don't know the extent of this practice, and I would hope that your Department would conduct a review of its frequency and its potential consequences.

Testimony at the hearing showed that AP Moller/Maersk Sealand, a Danish company, owns and controls Maersk Line, Ltd., its American subsidiary. The CEO of the American company acknowledged that the company does business in Iran, Iraq, Sudan, and Libya. In fact, the business transactions with these countries can be found on the company's website.

Should we award critical defense contracts to companies without them first certifying that they have no potential conflicts with our national security goals—including not being affiliated with, or controlled by a foreign company which has substantial commercial relationships with terrorist sponsoring countries?

Secretary RUMSFELD. As required by section 2327 of title 10, United States Code, DoD does not do business with contractors that are substantially owned or controlled by any country or government that has been determined by the Secretary of State under 50 U.S.C. App. 2405(j)(1)(A) to have repeatedly provided support for acts of international terrorism. Also, the United States does not procure products of countries or governments that support international terrorism. The Foreign Assets Control Regulations (31 CFR Chapter V) of the Department of the Treasury prohibit persons and companies in the United States from conducting most business transactions for supplies or services originating from sources within, or that are located in or transported from or through, countries that support international terrorism. Finally, section 721 of the Defense Production Act of 1950 established the process whereby the inter-agency Committee on Foreign Investment in the United States (CFIUS) reviews national security issues that may be associated with foreign acquisition of U.S. defense contractors. Under this process, we have the opportunity to insist that foreign investments are structured in ways that address national security concerns.

The provisions discussed above provide substantial safeguards against actions by terrorist governments and companies in terrorist countries. In addition, DoD components that propose to depend upon a contractor that is owned or controlled by a foreign entity must assess, on a contract-by-contract basis, the risk to performance of their mission and take appropriate action to mitigate or eliminate such risks. Such actions give us confidence in the dependability of our supplier base and lines of supply.

Mr. GRAHAM. Should we require those who would benefit from US defense contracts to comply with the economic sanctions regulations already applicable to US companies?

Secretary RUMSFELD. Our present safeguards in defense procurement, with regard to those contractors and subcontractors that receive defense contracts and subcontracts, deny financial support to countries that support international terrorism.





Washington, DC, Thursday, September 19, 2002. The committee met, pursuant to call, at 10:20 a.m., in room 2118, Rayburn House Office Building, Hon. Duncan Hunter presiding.


REPRESENTATIVE FROM CALIFORNIA Mr. HUNTER. Folks, today the Committee on Armed Services continues its review of the Iraqi threat and United States policy toward Iraq with a specific focus on how the U.S. and the international community should act in concert to restrain Saddam's weapons of mass destruction (WMD) programs. This morning's hearing marks the third of a number of planned public sessions designed to inform the committee and the American people on the various issues surrounding Iraq's continued violation of numerous United Nation's resolutions, its illicit development of weapons of mass destruction and the threat that Saddam Hussein poses to the United States and the international community.

In the past two weeks, the committee received classified briefings from the Central Intelligence Agency (CIA) and Defense Intelligence Agency (DIA), and I might add we had yesterday's briefing that we opened up to the full membership, some 83 members of the House beyond the Armed Services Committee membership, and we heard testimony from former senior United Nations Special Commission (UNSCOM) inspectors about Iraq's illicit weapons programs; and we have also received the administration's position on Iraq yesterday from Secretary of Defense Rumsfeld.

Next week, the committee will hold another public hearing on U.S. policy toward Iraq, but will hear from private sector foreign and defense policy experts.

Today the committee will learn how the Iraqis built and sustained their weapons of mass destruction programs through the illegal and legal acquisition of technology on the world market, and how the United States' own export control system may have contributed to the problems we are now facing with Iraq.

It is ironic that presently pending before the Congress is legislation to reauthorize the Export Administration Act. The EAA, as it is more commonly known, is a primary legislative vehicle through which the United States exercises control over sensitive dual use items, those with both military and commercial application.

These national security export controls are critical to ensuring that our adversaries and potential enemies don't acquire the high technologies that will threaten the United States national security or reduce the qualitative advantages of our armed forces.

The irony that rather than strengthening these systems of control, the legislation that is being pushed through Congress dramatically liberalizes these key protections making it easier for Saddam Hussein and his ilk to continue their weapons of mass destruction programs.

This morning our witnesses, who we hope will connect the dots between export controls technology transfers, and Iraq's weapons of mass destruction program are, the gentleman who has been with us many times, and think one of our most valuable citizens, Dr. Gary Milhollin, Director of the Wisconsin Project on Nuclear Arms Control. Dr. Milhollin has been watching and documenting Iraq's WMD programs for years and is also an expert in national security export controls.

And, I might point out to the members and to the American people, The New York Times op-ed written Friday, April 24th, 1992, by Dr. Milhollin entitled Iraq's Bomb, Chip by Chip, in which he traced back all of the contributors, including many Western corporations, of the Iraqi nuclear weapons program.

We are also pleased to have Dr.-Doctor, if I butcher your name here, you please correct me—Dr. Khidhir Hamza, is that close enough for government work?

Dr. HAMZA. That is close.

Mr. HUNTER. Who was a trained nuclear engineer who worked in various parts of the Iraqi nuclear weapons program, both before and after the 1990, 1991 Gulf War. Dr. Hamza will tell us how Saddam Hussein acquired the technologies necessary for its weapons of mass destruction program, even while under the watchful eyes of the United Nations (U.N.) inspectors and the restriction of U.N. sanctions.

Gentlemen, I want to thank you both for agreeing to appear before the committee today, and before we begin, I want to invite the very distinguished gentleman from Missouri, Mr. Skelton, the ranking Democrat on the committee to offer any comments that he might have.

[The prepared statement of Mr. Hunter can be found in the Appendix on page 219.] STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE


Mr. SKELTON. Mr. Chairman, thank you very much. I thank you for your leadership in quickly scheduling a range of hearings on the issues related to Iraq and its weapons of mass destruction program. We here in Congress, as well as the American people, need to understand clearly the nature of the threat posed by Saddam Hussein so that we can carefully consider what action the United States must take.

The hearings we have had so far with former United Nations weapons inspectors and with Secretary Rumsfeld, General Myers, have presented valuable information about Iraq's weapons pro

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