UNITED STATES POLICY TO ARM IRAQ
Henry B. Gonzalez, (TX-20)
(House of Representatives - July 21, 1992)


[Page: H6338]

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Texas [Mr. Gonzalez] is recognized for 60 minutes.

Mr. GONZALEZ. Mr. Speaker, today I will begin a series of floor statements designed to inform my colleagues about the findings of the second phase of the Committee on Banking, Finance and Urban Affairs investigation of the Banca Nazionale del Lavoro, the BNL, otherwise known, and the scandal attached to it.

In the first stage, the committee explored the links between the BNL scandal and ineffective bank regulations and BNL's participation in the Export-Import Bank and the Commodity Credit Corporation programs for Iraq.

The second phase of the BNL investigation will explore Iraq's abuse of the United States financial system to finance its ambitious military industrialization effort. This has been the single purpose of our committee, the abuse, not only by Iraq, in fact, it is going on now because of the terrible laxity that we have allowed in the past with respect to the regulation of these type of financial activities. So that in pursuing the first phase, we stumbled across the Commodity Credit guarantee abuse and the related Export-Import Bank, which fortunately did not get as extensive an exposure to the taxpayer but still, to me, a lot of money that the taxpayer has to end up for even compared to the overall BNL involvement, minuscule, some $200 million that the taxpayers had to pay up because of the default of Iraq on the Export-Import Bank's guarantees.

The bothersome thing to me, I might say, by way of parentheses, is that I do not think our leadership has discovered anything to correct. I see evidences of these practices continuing with respect to other countries that possibly will be very embarrassing and certainly costly to our Treasury in the case of other countries right now.

Specifically, I would like to explore BNL's link to Iraq's military effort, including its role in funding Iraq's secret military technology procurement network, a very intricate, a very astute, a very infinitely thought-out procurement network.

This probe will also expose the Bush administration's policy of arming Iraq, despite the President's blatant declaration that the United States did not enhance Iraq's military capability.

I will begin by outlining some of the committee's major findings. I will then lay the foundation for a detailed look at BNL's role in arming Iraq by illustrating that the Bush administration knew of Iraq's intentions to become a military superpower and the United States policy that facilitated that plan.

The President has repeatedly claimed that his policy toward Saddam Hussein was `to encourage Saddam Hussein to join the family of nations.' He denounced those who suggest that the policy gave Iraq access to `bombs or something of that nature.'

But the truth is different. The administration knew a great deal about Saddam Hussein's military procurement program and made a conscious decision to tolerate it, and in many cases facilitated the effort. The Bush administration knew that Saddam Hussein was working on nuclear weaponry, and it also knew that some of the exports it approved were destined for nuclear establishments. The concept seems to have been to play along, let Saddam Hussein get U.S. technology for his weapons programs, and take the risk that he could be controlled.

To say the least, this was a very confusing policy. It meant winking at the Iraqi nuclear program, letting it slide, but not too far.

[Page: H6339]

Mr. WALKER. Mr. Speaker, I demand the gentleman's words be taken down.

[TIME: 2048]

The SPEAKER pro tempore (Mr. Torres). The Clerk will report the gentleman's words.

Mr. GONZALEZ. Mr. Speaker, I ask unanimous consent to delete the sentence to which the gentleman objects. I will certainly abide by the rules of the House.

The SPEAKER pro tempore. Is there objection to the request of the gentleman from Texas?

There was no objection.

The SPEAKER pro tempore. Without objection the words are stricken. The gentleman may proceed in order.

Mr. GONZALEZ. Mr. Speaker, the President's explanations as given thus far are not in conformity with the documentation that I am about to present, and the facts as we have adduced them in the course of this discussion and investigation by the committee.

A November 21, 1989, State Department memorandum discusses a CIA briefing received the day before on Iraq's nuclear program, and discusses how to proceed on licensing exports that could be used in Iraq's nuclear program. The memorandum states, and I quote:

We are still left with no clear indication of how to proceed on the majority of cases.

It further states, and I quote:

The problem is not that we lack a policy towards Iraq. We have a policy. However, the policy has proven very hard to implement when considering proposed exports of dual use commodities to ostensibly nonnuclear end users, particularly state enterprises.

The memorandum goes on to say how the policy permitted the approval of licenses for only benign equipment needed for nuclear medicine and the like. The memo further states, and I quote:

U.S. policy as confirmed in NSD 26 has been to improve relations with Iraq, including trade. Also U.S. policy precludes approval of munitions-controlled licenses for Iraq. Exports of dual use commodities for conventional military use may be approved.

In other words, while the policy did not permit the sale of bombs or something of that nature that would blow up, it clearly allowed the sale of the equipment needed to make them. The administration knew what Saddam Hussein was doing. The policy was to tolerate it up to some unknown and as yet undetermined point.

Again, the memorandum discussed the disjointed policy, and I am going to quote from it:

Complicating factors in decision-making include, one, a presumption by the intelligence community and others that the Iraqi Government is interested in acquiring a nuclear explosives capability; two, evidence that Iraq is acquiring nuclear-related equipment and materials without regard for immediate need; three, the fact that state enterprises are involved in both military and civilian projects; four, indications of at least some use of fronts for nuclear-related procurement; five, the difficulty in successfully demarching other suppliers not to approve exports of dual-use equipment to state enterprises and other ostensibly non-nuclear end users.

What this does not explain, and apparently maybe those intricacies were lost sight of, as in the case of the Italian bank, when we talk about a bank like the BNL we are not talking about an American bank, private, non-government. The BNL was owned by the Italian Government. Most of the banks are that are here in international banking from other countries.

In the case of state enterprises, here is a case where the Central Bank of Iraq is receiving these letters of credit and loans from BNL. Now the confusion that I think some administration spokesmen have deliberately tried to maintain is to try to say that the CCC guaranteed credits were used for direct military procurement. That is not the case at all. Where we started and where we are coming from is the commercial loans by BNL to enterprises that were actually supplying these military purpose supplies and equipment and material.

When we talk about state enterprises, there is nothing else in those countries. The same man who is the Minister of Procurement and Economic Development is the man in charge of defense procurement, and in one case there, and for a while it happened to be Saddam Hussein's relative.

High-speed photography gear for work on projectile behavior, for instance, and terminal ballistics was approved because, and I quote, `This equipment is appropriate for conventional artillery rounds but far too slow for nuclear applications.'

In short, the policy was to let Iraq have goods that could easily be used or diverted to nuclear application with a request that Saddam Hussein refrain from doing so.

[TIME: 2100]

This occurred despite the fact that everyone concerned knew that Saddam Hussein was making every effort to develop nuclear weapons. This occurred despite ample knowledge of Hussein's ruthless brutality, and this occurred despite knowledge that the threat was real, it was serious, and it was ongoing.

The truth is that the United States did nothing to check on how the United States technology was used in Iraq.

Out of 771 export licenses granted for Iraq, only 1 was ever checked to ensure that the equipment was actually being used for civilian purposes, only 1 out of 771.

So when the President claims, and I am gong to quote his words, `We did not enhance Iraq's nuclear, biological, or chemical weapons and missile capability,' it simply is contradictory to the facts as adduced in the evidence and in the documents that we are presenting to our colleagues.

What the President knew was that Saddam Hussein wanted nuclear weaponry--there is no way we can escape that conclusion--long-range ballistic missiles, and chemical and biological weapons, and that he had an elaborate plan to get them.

Our President also knew that Saddam Hussein was using front companies and other deceptions, and that equipment needed for Iraq's nuclear program was being bought in this country as well as others. He also knew that despite the U.S. request that equipment not be used for nuclear weapons purposes, the United States did nothing to ensure that the technology was not being diverted. He also had a policy of approving dual-use licenses for Iraqi conventional-weapons programs.

Our President claims that nothing had happened, but as I am saying, in shocking contradiction with the very documents that we have been adducing and presenting to our colleagues, so you can judge for yourselves.

Did Saddam Hussein respect any of the conditions that supposedly were supposed to be accompanying this equipment? There is nothing to indicate that he did. Dozens of United States firms, many of them receiving BNL financing, provided key technologies to Iraq's missile program and nuclear, chemical, and biological weapons programs.

So we cannot duck and dodge no matter how much we would want to.

These are the facts: It certainly, let me say, is no pleasure for me to get up and reveal what obviously would be embarrassing, but I have spoken out before in the case of other Presidents, including Presidents of my own party and even neighbors from my own State, because it was my duty as a Member of this branch of the Government involving either my participation in committee work or in voting on matters that led me to conclude critically of the President's requests or his statements or his actions, so I would like to diabuse anybody's mind that I have any particular pleasure.

My main and sole concern is with the tremendous debility, weakness, and exposure of our financial regulatory system. There is nobody who can assure us, and I can tell you as a fact that I cannot, that even as I am speaking now we do not have dozens of these cases taking place now, and what is more disturbing is the ancillary activities such as the offshore banking activities that we again have no control in, which not only do we have billions in tax evasion but in drug-money laundering. It is a real scandal.

Now, we have that responsibility in our committee. I have sat on this committee for 30 years and some 10 months, 9 months, that I have been a Member of the House, and it is no pleasure. Certainly I derive no pleasure.

I have been a protesting, overlooked witness all through these years.

The record shows that is the reason; I had not been a Member of this body 2 weeks after being sworn in that I made use of that which we call, and I call it a great privilege, special orders. Of course, at that time there was no such thing as even the need to speak on the floor. You could submit them in writing, and they would be printed as if you had uttered them. I never thought that was right, so I came to the floor, and I spoke, and all through, the record is there. It is not what I am saying now.

So I think that given this awesome task, the overlooking of the responsibilities, I am the reason we have the only international banking law on our statute books.

I have said this before, so I will not repeat it now.

So I come back on this issue, and it started in my district, where I caused the hearings to be held in 1975 that was the forerunner and the exposure of what we now commonly hear as an S&L scandal, and it involved this fast international money across our border down near our neighboring areas where I come from. And to my amazement then, I found out we had no laws, so the first act took 3 years, 1978, and it was so weak and anemic that every chairman I worked under ever since then I pestered them to try to strengthen the laws, and so we are in this sorry state, and unfortunately, we have no coordination of effort on the political, diplomatic, policy, and even the defense as I will show later on.

Dozens of U.S. firms have been involved. We know that. We have the documentation. There is no doubt that for the most part the Europeans provided Saddam Hussein with more treacherous technology than the United States might have, but that does not excuse us for its considerable role in arming Iraq and, to a large extent, it was sort of a reciprocal type of activity.

Some of the German banks, for instance, came in because some of the United States banks that joined in some minor syndication and also the policy of the Government to aid Saddam Hussein, first, during the Iraq-Iran war, and then after its cessation.

The Banking Committee's investigation of BNL and the company known as Matrix Churchill in Ohio will add dozens of names to the already extensive list of publicly available information on U.S. firms that helped to arm Saddam Hussein with the assistance of the administration and the immediate past administration.

The head of Iraq's ambitious military industrialization efforts was Saddam Hussein's son-in-law, as I said earlier, Hussein Kamil, who directed the flow of over $2 billion in BNL commercial loans to various high-profile Iraqi weapons projects. These loans were over and above BNL's much-discussed CCC loans.

Kamil was the cabinet official in charge of Iraq's Ministry of Industry and Military Industrialization and the head of Saddam Hussein's personal intelligence force called the Special Security Organization.

At the time of the BNL raid in August of 1989 by our law enforcement agents in Atlanta, the CIA concluded that Hussein Kamil was the second most powerful man in Iraq. Mr. Kamil and other high-level Iraqi military officials, including the day-to-day head of Iraq's most secretive weapons program, Amir Al-Saadi, are referred to as unindicated coconspirators in the BNL indictment in Atlanta. Three other key actors in Iraq's military procurement efforts, Safa Al-Habobi, Sadik Taha, and Raja Hassan Ali, were indicted for their roles in the BNL scandal.

BNL funds used to fund the Iraqi military effort: The Iraqi manipulation of the United States financial system through the BNL scandal contributed directly to Iraq's military capability.

[Page: H6340]

[TIME: 2110]

At least six Iraqi front companies in the military technology procurement network received direct funding from the BNL Bank. In addition, BNL loans were used to pay for technology identified by network companies.

Hundreds of millions of dollars of BNL loans went directly to purchase technology for Iraq's highest priority weapons programs including the covert nuclear weapons development program, Gerald Bull's Big Gun project--the famous Gerald Bull who was assassinated in Belgium, the long-range ballistic missile program called the Condor II, and the chemical weapons program. BNL loans were also used for more conventional weapons programs such as artillery, bomb, and shell factories.

Dozens of United States corporations and dozens of foreign corporations, knowingly or unwittingly supplied Iraqi weapons progams with industrial goods, including computer-controlled machine tools, industrial furnaces, heavy equipment, computers, special alloy steel and aluminum, chemicals, technical drawings, glass fiber factories, and training with the help of BNL financing of Iraqi Procurement Network facilities.

The Bush administration, this administration, permitted Saddam Hussein to operate front companies in Cleveland, OH, and Los Angeles, CA that were responsible for procuring technology for Iraq's covert nuclear, biological, and chemical weapons programs as well as various long-range missile programs. The Cleveland front company, called Matrix-Churchill Corp. [MCC], was permitted to remain open for nearly 3 months after the Iraqi invasion of Kuwait in August 1990. The Los Angeles front company, called Bay Industries, was not closed down until well into 1991. Iraqi Government agents running the procurement division of MCC were permitted to leave the country.

Many law enforcement officials investigating U.S. firms involved in arming Iraq have complained to the committee that they have been denied adequate resources, have trouble getting export licensing information from the Commerce Department, and received scant assistance from the intelligence community until well after the Iraqi invasion of Kuwait. Ironically, President Bush was personally involved in the effort to limit the flow of pre-August 2, 1990, Iraq-related information to Congress--this is where we come in, so that the Congress' right to know has been very much impeded.

There was also no resources on the Federal Government level to assist the law enforcement agencies in pursuing the Iraq-related cases.

Our intelligence community--we must give them credit--also had extensive knowledge of BNL's worldwide activities. They have monitored BNL's activities on a global basis since 1986. The Banking Committee had an appointment to review this information, but Nicholas Rostow, the National Security Council's legal counsel, and head of the Rostow Gang, ordered the intelligence agency to cancel the appointment.

The United States intelligence community had extensive knowledge of Iraq's secret technology procurement network as early as June 1989, including the fact that the network operated a United States-based affiliate in Cleveland, OH, as I said before, known as Matrix-Churchill. Since that information was contained in finished reports, they obviously used earlier raw data information to compile the report that was given to Congress.

The intelligence community was also closely monitoring many Iraqi entities that had numerous, almost daily contacts with the BNL Bank in Atlanta, GA, and Matrix-Churchill in Cleveland, OH. They had legal authority to intercept these communications abroad as well as in the United States because BNL and Matrix-Churchill were foreign owned.

In addition, the intelligence community had routine liaisons with intelligence agencies from the United Kingdom and Israel, which most certainly monitored Iraq's military plans. The Department of Defense [DOD] was aware of BNL link to procurement network.

The Department of Defense's [DOD] Defense Technology Security Agency [DTSA] was aware of BNL's role in funding Iraq's procurement network in the fall of 1989. We brought that witness in, the former official in charge of that Defense Technology Security Agency. He testified over a year and a half ago. I have been speaking out on this for 2 years. This month of July was the first--it is exactly 2 years this month that we formally began, even though for several months before I had discussed this with the staff. We were all weighed down with the S&L developments and the Keating hearing and other hearings.

So that we were told by the Defense Technology Security Agency head exactly what he was trying to get to the leaders of our country.

DTSA agents began advising the BNL investigation when they arrived in Atlanta just days after the BNL raid on August 4, 1989. DTSA's advisory role is ironic given that they had opposed granting export licenses to some of the very companies they were investigating in Atlanta. It was DTSA that eventually linked BNL loans to Iraq's military procurement network for the BNL grand jury in Atlanta. DTSA has also reviewed Matrix-Churchill's records.

And as I said, it is the hearings record of our committee hearings over a year and a half ago, and nobody was much paying attention then.

Given intelligence community and DTSA knowledge of Matrix-Churchill Corp.'s links to Iraq's military procurement network, well over a year before the Iraqi invasion of Kuwait, it is baffling to me how the United States Government could let Matrix-Churchill operate for over 2 months after the invasion of Kuwait. There is no plausible excuse for this delay that I can think of.

Now, the President's report to the Congress, I had written a letter asking for the report, the nature of the findings of that report that was supposed to be given to the Congress as a result of the Iraq Sanctions Act of 1990 that the President had signed on November 5, 1990.

The Iraq Sanctions Act contained a provision requiring the President `to conduct a study and report on the sale, export, and third-party transfer or development of nuclear, biological, chemical and ballistic missile technology to or with Iraq.'

In April 1991 I asked the President for a copy of the report, the request coming from me as chairman of the Banking Committee. I did not receive a copy. In October 1991, I repeated my request, that is from April until October, and finally received a copy that month. The President assigned a secret classification to the report, which severely restricted us in our ability to inform our fellow members of the committee and the House. The classification turned out to be misleading because there was no secret information in the report that had not previously appeared in newspapers, magazines or on television.

After reviewing the contents of the report it is all too apparent why the administration wanted to restrict access to the report--anybody that knew anything about the United States policy toward Iraq prior to the invasion of Kuwait would immediately know that the report was a phony and that the President was misleading the Congress about the United States role in arming Saddam Hussein.

The report lays the blame for enhancing Iraq's military capability squarely on the shoulders of the European Community while wholly disregarding the United States Government's role in arming Iraq.

[Page: H6341]

[TIME: 2120]

However, how the report would not even have one U.S. company listed is a clear indication of how inadequate it was in informing the Congress.

In my statement of February 3, this year, I showed that 13 United States firms sold equipment to Iraq's Condor II ballistic missile program. Over the course of the next several reports, I will show that BNL and Matrix-Churchill helped Iraq obtain equipment for its nuclear, chemical, and missile programs from dozens of United States companies. But I am not the only one who claims that United States firms helped to enhance Iraq's military capability. There is a plethora of evidence, a good deal already on the public record, showing that United States dual-use technologies went directly to the Iraqi Armed Forces and to Iraqi weapons factories.

The U.N. Special Commission, several high-ranking Bush administration officials, several congressional committees, several prominent proliferation experts, newspapers, magazines and television programs have all concluded that United States equipment enhanced Iraq's military capability.

An export license is needed for many types of equipment because the equipment has civilian as well as military uses, the so-called dual role.

The goal of the export licensing process is to stem the flow of U.S. equipment to dangerous end uses. The Reagan and Bush administrations maintained a public posture of denying Iraq sophisticated dual-use equipment. But in reality both administrations abused the export licensing process to funnel United States technology directly to the Iraqi Armed Forces and to numerous Iraqi weapons factories.

About 2 in every 7 export licenses approved between 1985 and 1990 went either directly to the Iraqi armed forces, to Iraqi end users engaged in weapons production, or to Iraqi enterprises suspected of diverting technology.

The policy seems to me to be that if it did not explode, ship it, and if it could be used in the Iraqi nuclear program, wink, wiggle, and then let it go.

There is no excuse for the over 80 export licenses granted to the Iraqi Armed Forces. These clearly enhanced Iraq's military capability. Equipment shipped under these 80 export licenses was sent directly to the Iraqi Air Force and the other branches of the Iraqi military.

Fifteen of the licenses were approved during this administration.

In addition, the Reagan and Bush administrations issued 15 licenses for the sale of United States munitions list equipment to Iraq. That is equipment that has only military uses. Three of those were granted by this administration.

Equipment sent directly to the Iraqi armed forces includes computers, communications equipment, navigation and radar equipment for aircraft, and lasers and laser equipment to repair engines and rockets.

The Export-Import Bank even got into the act by financing the sale of armored ambulances and communications equipment directly to the Iraqi military.

Iraq's default on some of the Export-Import Bank financing, I repeat, cost the taxpayer about some $200 million. I am also chairman of the Subcommittee on Housing and Community Development of the Committee on Banking, Finance and Urban Affairs, and let me tell you what we could do with $200 million for our communities.

Mr. Steve Bryen, the former deputy undersecretary for trade security policy, and the director of the Defense Technology Security Agency that I referred to a while ago, testified on April 18, 1991, before the House Committee on Ways and Means' Subcommittee on Oversight--and remember he also testified before the Committee on Banking, Finance and Urban Affairs. While complaining about how the DOD was sometimes cut out of the export licensing process--that is, they were not, as the law required and apparently the rules and regulations, consulting with the Defense Department in this procurement--Mr. Bryen stated, and I am going to quote:

[Page: H6342]

During the 1980's a very large amount of what I would call military-type equipment, military-type trucks, equipment for military aircraft being sold to the Iraqi Air Force, even equipment to repair rockets that went to the Iraqi Air Force was approved without DOD being consulted in any way.

In addition to approving licenses directly for the Iraqi armed services, the Bush and Reagan administrations approved dozens of export licenses directly to known Iraqi weapons factories.

Despite ample evidence showing that many of the Iraqi facilities that applied for United States export licenses were primarily weapons factories, and that Iraq was using civilian facilities to procure technology for military end users, two administrations repeatedly approved export licenses to dubious Iraqi facilities. In fact, the November 1989 State Department memo I quoted from above indicates that it was President Bush's administration policy to send technology directly to Iraqi weapons factories.

Inexplicably, many of the licenses were approved after the Iraq-Iran ceasefire in August of 1988, at which time our intelligence community had abundant knowledge of Iraq's military intentions, facilities, and programs.

An intelligence report dated July 1990 entitled, `Beating Plowshares into Swords: Iraq's Defense Industrial Program' states:

Some state establishments--sometimes called enterprises, organizations or general establishments--are responsible for the production of several types of weapons systems or components and control facilities at several locations.

The intelligence community had considerable information related to the weapons related activities of factories in Iraq. A compilation of these facilities contained in a report July 1990 is titled, `Iraq's Growing Arsenal: Programs and Facilities.' This report contains a section called `Defense Industrial Facilities.' A partial list of the weapons facilities includes:

Nassr State Establishment for Mechanical Industries [NASSR];

Badr General Establishment [BADR];

Saddam State Establishment [SADDAM];

Al Kindi Research Complex, formerly SAAD 16;

Salah Al Din State Establishment;

Al QaQaa State Establishment [AL QAQAA]; and

Hutteen State Establishment [HUTTEEN].

The U.N. Special Commission has also identified these entities as being involved in Iraq's clandestine nuclear, chemical, and biological weapons programs and missile programs.

A close examination of the Commerce Department list of export licenses to Iraq reveals that each and every one of these facilities received multiple United States export licenses. For example, the Saddam State Establishment and the Salah Al Din, received six export licenses during the Bush administration and many more in the Reagan era. An intelligence report on Iraq's weapons facilities states:

Salah Al Din and Saddam State Establishment are typical of Iraq's arms production facilities.

A 1990 State Department memo states:

Salah Al Din, which is associated with an Iraqi missile project.

In February 1990 an application to export computers to Salah Al Din was rejected by Commerce Department. Regarding Salah Al Din the licensing document says:

The end-user (Salah Al Din) is involved in military matters.

But, 2 months later, in April 1990, an application to export the same type of computer to Salah Al Din was approved. There was no reference to factory's military end-use.

Another example of the administration knowing what was going on is NASSR. A Commerce Department memo related to an export license application for NASSR dated August 1988 sheds light on how far back our Government knew of NASSR. The memo states of NASSR:

The equipment will be used by the NASSR State Establishment for Mechanical Industries. After several reviews DOD recommended a denial because DOD alleges that we are dealing with a `bad' end-user. The ultimate consignee is a subordinate to the Military Industry Commission and located in a military facility.

A month earlier, in July 1988, the Commerce Department had approved an application for NASSR. Several others were approved before that. It is also interesting to note that the Director General of NASSR, Safa Al-Habobi was indicted for his role in the BNL scandal.

[TIME: 2130]

An intelligence report on NASSR in May 1990 states:

In the case of the missile program--the Nassr State Establishments for Mechanical Industries [NASSR]--is instrumental to development effort.

In later floor statements I will provide more detail on the above-mentioned facilities and show how BNL funds flowed freely to these and other military factories. I will also show that Matrix-Churchill in Ohio and Bay Industries in California were United States-based procurement agents for these and other military factories in Iraq.

IRAQI GOVERNMENT ESTABLISHMENTS USED AS PROCUREMENT FRONTS

The intelligence community also had abundant information showing that Iraq used many ostensibly civilian factories as fronts to procure equipment for military use.

The report `Beating Plowshares into Swords':
We have identified 25-30 Iraqi establishments and facilities primarily producing military supplies, spares or weapons. Their facilities work closely with civilian organizations to procure equipment and technology.

Another forceful indicator of Iraqi's intentions is contained in a July 1990 intelligence report entitled, `Iraq's growing Arsenal: Programs and Facilities' which concludes:

* * * many entities are false end users, passing the materials acquired from foreign suppliers directly to enterprises involved in military projects, including chemical and biological warfare.

One of the false end users as listed in the report is the Technical and Scientific Materials Division of the Ministry of Trade, referred to as TSMID. The report says TSMID was involved in `biological warfare support and numerous other military activities.'

TSMID received 10 export licenses from the Bush administration for equipment including computers, frequency synthesizers, radio relay equipment, microwave equipment, communications equipment, and radio spectrum analyzers.

Another set of dubious end users mentioned in the report include the Scientific Research Center and the Space Research Center. These two organizations received seven export licenses during the Bush administration and several dozen during the Reagan administration, Intelligence information links these organizations to the Iraqi.

The President's NSD-26 places particular emphasis on expanding United States-Iraq oil industry related trade. The July 1990 intelligence report `Iraq's Growing Arsenal' identifies the State Establishment for Oil Refining and Gas Processing as a `dedicated front for procuring chemical weapons related components and production equipment.'

The Bush administration approved about a dozen export licenses to these Iraqi companies. One of the licenses went to Du Pont which has been identified by both the United Nation and the press as having supplied vacuum pump oil that was found in a facility dedicated to Iraq's clandestine nuclear weapons program.

BUSH ADMINISTRATION KNEW

There are numerous State Department memos recently declassified that show the Department was aware that they were helping to arm Iraq. The 1990 memo states:

An initial review of 73 cases in which licenses were granted by Department of Commerce [DOC] or DOC/DOD from 1986-1989 shows that licenses were granted for equipment with dual or not clearly stated uses for export to probably proliferation-related end-users in Iraq.

Another 1990 State Department memo further underscores the contention that the State Department was aware of how the export licensing policy toward Iraq was actually working to enhance Iraq's military capability. The Spring 1990 memo, which addresses the urgent need to change the export licensing policy toward Iraq, states:

[Page: H6343]

Formulating such a policy will be complicated because end-users which engage in legitimate non-nuclear and non-missile related end users also procure commodities on behalf of Iraq's nuclear and missile programs. Because the Iraqi procurement network serves both nuclear and missile programs, one cannot distinguish between purchasers of nuclear concern and those of missile concern. Thus, USG export policy should apply equally to Iraqi nuclear end-users and purchasers for Iraq's nuclear and missile programs.

Later in 1990, the administration became more concerned about Iraq's abuse of the United States export policy. But while there was concern, high-level NSC Deputies Committee's meetings in April and May 1990 failed to enact any changes in the policy. It was not until July 1990 that the State Department proposed preliminary changes to the policy. This is right on the verge of the imminent Kuwait invasion, the second day of August. The danger of that inaction is illustrated by the 1990 State Department memo which states:

At present, no foreign policy controls exist which permit the US to control nuclear-related dual-use commodities across the board to Iraq.

This was in July.

ONLY ONE POSTINSTALLATION CHECK

Postinstallation checks are used to ensure that U.S. dual-use technology is not diverted to military use. If the administration was concerned about Iraq's use of United States dual-use equipment, they could have traveled to the Iraqi factories that supposedly received the United States equipment to see if the equipment was being used for civilian purposes.

Tragically, in the case of Iraq, the United States did not adopt a policy of conducting postinstallation checks. Almost unbelievably, out of a total of 771 export licenses approved for Iraq, there was only one postinstallation check.

It is not as if there were no concerns about Iraq's intentions.

It seems as if the concerns expressed were just ephemeral, or not much attention was paid to them.

A spring 1990 memo received from the State Department states, and I quote:

The operation of Iraq's procurement network inevitably raises concerns about the potential for unauthorized diversion of commodities in Iraq and raises doubts about the veracity of the information provided on Iraqi license applications.

In late spring 1990 the administration proposed to tighten up on Iraq. The memo obtained from the State Department states:

The U.S. should also explore the feasibility of conducting post-installation checks in Iraq, similar to those conducted in Pakistan.

The Bush administration, in the course of wooing Saddam Hussein, pursued a blind policy. The administration knew Iraq was diverting United States dual-use equipment to military projects; no question of that. The evidence is there. Its documentation is self-evident, and I am offering that in the Record at the conclusion of these remarks.

The administration knew Iraq used many supposedly legitimate end users to procure technology for military purposes. Many in the administration did not even trust the information supplied by Iraq for export licenses.

Despite all these warning signs, the Bush and Reagan administrations made just one check to see how U.S. equipment was being used after it was installed. Last year United States District Judge Stanley Sporkin, presiding over the case Consarc versus the Iraqi Ministry of Industry and Minerals, made an insightful observation related to the export licensing process and postinstallation checks.

In this case Judge Sporkin ordered the largest putative damage award against a foreign government in U.S. legal history.

[TIME: 2140]

Judge Sporkin found that Iraq had intentionally misrepresented the end use of the Consarc furnaces it was buying. Iraq claims the furnaces were to be used to manufacture medical prosthesis, when in fact the furnaces were destined for Iraq's secret nuclear weapons program. While presiding over the case, Judge Sporkin stated:

I gather there is no compliance mechanism that is built into the end-user certificate and I don't see why somebody ought not to be working on that concept * * * (You're) going to have to design some system where the Government has the right to police this end-user certificate to make sure the product being used hasn't been resold or hasn't been altered.

OTHERS HAVE IDENTIFIED UNITED STATES FIRMS AS ARMING IRAQ

Several Bush administration officials in a position to know have testified before the Congress about the United States role in enhancing Iraq's military capability. To illustrate that point I refer to an April 18, 1991, hearing before the Ways and Means Committee, Subcommittee on Oversight.

The hearing focused on the administration and enforcement of United States export control laws with the main focus being the United States experience with Iraq. One of DOD's experts on proliferation, the DOD's Deputy for Nonproliferation Policy stated at various times during the hearing:

* * * a number of military useful technologies and pieces of equipment made their way into Iraqi hands.

There's no question that there were U.S. exports in support of military systems.

I don't think we exported weapons. What clearly is the case * * * is that U.S. technology did make its way to programs that had important military applications.

I will offer other observations for the Record.

On April 8, 1991, Dennis Kloske, the former Under Secretary for the Department of Commerce's Bureau of Export Administration, testified before the Subcommittee on International Economic Policy and Trade. At the hearing Mr. Kloske related how the State Department was the agency responsible for setting the trade policy with Iraq. In referring to the Commerce Department's lack of legal authority to stop licenses because of that policy, Mr. Kloske stated:

By 1990 U.S. exports of dual-use equipment to Iraq were subject to review for reasons of national security, nuclear nonproliferation, missile technology, chemical and biological weapons, human rights and regional stability. Under these circumstances, the Commerce Department still approved license applications destined for the Iraqi government agencies, military and research activities.

Many others have shown that United States companies have helped arm Iraq. For example, several proliferation experts have shown how United States firms helped arm Iraq. United States law enforcement officials have indicted several United States companies that illegally shipped technology that enhanced Iraq's military. Dozens more are now under investigation. There have been numerous newspaper stories, televisions shows, and magazine articles about United States firms sending technology to enhance Iraq's military.

So it is reasonable to conclude and inevitably and inexorably one must, that the people with the power within the administrative workings were familiar with these various techniques that were used in this somewhat intricate Iraqi procurement network, and also used to violate the United States export control policy and to work in the intricacies and the gaps, very, very dangerous gaps, in our banking laws.

From information gathered after the BNL raid in August 1979, the administration knew that BNL was linked to Matrix-Churchill and other Iraqi front companies. That meant BNL was linked directly to Iraq's clandestine nuclear, chemical, and biological weapons programs.

The BNL raid also showed that the highest levels of the Iraqi government were involved in the BNL scandal, and in Iraq's efforts to procure weapons of mass destruction technology from the United States.

With these facts in mind, it is apparent that this administration acted with full and complete knowledge, at least those persons in those areas of judgment-making and decision, of Iraq's intentions as they considered and approved the $1 billion one year in the CCC Program for Iraq in November of 1989, but, most importantly, the commercial loan aspects of the BNL activities.

In effect, the taxpayers subsidized Iraq's nefarious activities. That was made possible because the State Department made a determination that the CCC program was separate from BNL's other activities.

There is some evidence showing that as time progressed, certain lower level employees of the Bush administration became more and more concerned about Iraq's intentions, but there is scant evidence to show that these concerns were communicated to Iraq.

Mr. Speaker, I will merely sum up by saying that we will go into our delineation in a more specific form as to the companies and the uses that was made by Iraqi powerful officials buying into American companies and thereby being able to have access to such things as the designs of some of the weaponry components.

[Page: H6344]

Unclassified

[UNCLASSIFIED]

BUREAU OF OCEANS AND INTERNATIONAL ENVIRONMENTAL AND SCIENTIFIC AFFAIRS,
November 21, 1989.
Memorandum To: OES/N- S/NP- T- NEA/NGA-
From: OES/NEC-
Subject: SNEC Cases of Interest.

BACKGROUND

The November 12 meeting of the SNEC and the November 20, briefing on Iraq's nuclear program and the activities of state enterprises provided a thorough presentation of available information and Intelligence Community views on these matters. However, we are still left with no clear indication of how to proceed on the majority of cases currently before the SNEC.

POLICY

The problem is not that we lack a policy on Iraq; we have a policy. However the policy has proven very hard to implement when considering proposed exports of dual-use commodities to ostensibly non-nuclear end users, particularly state enterprises.

SNEC policy for some years has been not to approve exports for Iraq's nuclear program except for very insignificant items for clearly benign purposes such as nuclear medicine. However, at the same time, U.S. policy, as confirmed in NSD 26, has been to improve relations with Iraq, including trade, which means that exports of non-sensitive commodities to `clean' end users in Iraq should be encouraged. According to NEA/NGA, although U.S. policy precludes approval of Munitions Control licenses for Iraq, exports of dual use commodities for conventional military use may be approved.

Complicating factors in decision making include:

1. A presumption by the Intelligence Community and others that the Iraqi Government is interested in acquiring a nuclear explosive capability;

2. Evidence that Iraq is acquiring nuclear related equipment and materials without regard for immediate need;

3. The fact the state enterprises which are ordering substantial quantities of dual use equipment needed for post war reconstruction, such as, computers and machine tools, are involved in both military and civil projects;

4. Indications of at least some use of fronts for nuclear-related procurement.

5. The difficulty in successfully demarching other suppliers not to approve exports of dual use equipment to state enterprises and other ostensibly non-nuclear end users.

RECOMMENDATIONS

Notwithstanding the foregoing, we are prepared to recommend the following actions on the below-listed currently pending dual use exports to Iraq. Proposed conditions are tailored to significance of export. Other agencies, particularly DOD, may not concur in the recommendations for approval, which would result in split decisions being reported to Commerce for resolution at a higher level.

for one 1 GHZ oscilloscope for Technical University Research Center, Iraq. Pending reply to State cable requesting end user info and DOC info on end use. Defer for reply to state telegram to Baghdad.

for three HP 9000 workstations to Nasser State Enterprise, Iraq. Deferred for CIA code word level briefing on Iraqi State enterprises and their connections with Iraqi nuclear program. Deny on foreign policy (not nuclear) grounds based on specific information linking this proposed export to a missile development project.

for one HP model 360 computer to Ministry of Industry and Military Industrialization, Iraq. End user is identified as of concern for missile and other military activities. End user directs all state enterprises. However, computer proposed for export is only a PC. Approve with license conditions of no nuclear use and no retransfer without prior consent and end user certificate on same points.

for two 3-axis turning machines to Saddam General Establishment. Approve subject to license conditions of no nuclear use and no retransfer without prior consent; end user certificate on same points and periodic reporting of status of equipment by exporter or exporter reps.

for one coordinate measuring system to Bader General Establishment, Iraq. Favorable end use check received from U.S. Embassy Baghdad. Approve subject to license conditions of no nuclear use and no retransfer without prior consent; end user certificate on same points and periodic reporting of status of equipment by exporter or exporter reps.

for one numerically controlled machine tool to Bader General Establishment, Iraq. Approve subject to license conditions of no nuclear use and no retransfer without prior consent; end user certificate on same points and periodic reporting of status of equipment by exporter or exporter reps.

application D015535 for re-export of one VAX6320 and one MICROVAX II computers to Scientific Research Council, Iraq. Concerns have been raised because of possible nuclear-related procurement of items such as glove boxes. However this end user is responsible for universities and scientific institutions in Iraq, including such benign activities as astronomy. Moreover the computers proposed for export, though highly desirable VAX models, have rather low PDR ratings (300 for largest and 39 for the smaller system and workstations). Approve with license conditions of no nuclear end use and no retransfer without prior consent and end user certificate on same points.

for one Cyber 910B-400 series workstation to the Hutteen General Establishment, Iraq, for engineering applications. This is the low end of the CYBER mainframe line with a PDR of 318. Approve with license conditions of no nuclear use and no retransfer without prior consent and end user certificate on same points.

for two optical heads for cameras and timing lights to A.M. Daoud Research Center, Iraq, for work on projectile behavior and terminal ballistics. DOE review shows that speed of this equipment is appropriate for conventional artillery rounds but far too slow for nuclear applications. Approve with license conditions of no nuclear end use and no retransfer without prior consent and end user certificate on same points.

--

--

U.S. Nuclear Export Policy Towards Iraq

BACKGROUND

During the Iran-Iraq war, the US imposed a de facto embargo on the export of nuclear-related commodities to nuclear end-users in those countries. With the exception of China and Argentina, other nuclear suppliers had similar policies. The cease-fire prompted the US to demarche a number of nuclear suppliers urging that they not resume their pre-war practice of permitting export of nuclear commodities to Iraq and Iran. It also prompted the US export community to consider the need for a review of US export policy towards those countries. Because such a review has not been formally conducted, the Commerce Department has held without action for the last several months virtually all nuclear-related dual-use license applications for Iraq.

The recent attempt to export to Iraq capacitors with military specifications has made the need for export-related policy guidance even more apparent. This development, however identifies only one, now publicly known, Iraqi clandestine procurement effort. Prior to the arrest, ample evidence existed that Iraq operated an extensive, worldwide clandestine network which attempted to procure a wide range of military items, including nuclear-related dual-use commodities. Such procurement efforts and Iraq's apparent lack of commitment to its international treaty obligations, evidenced by its disregard of the Geneva Convention on chemical weapons, must be considered in formulating US export policy toward that country.

Formulating such a policy will be complicated because end-users which engage in legitimate non-nuclear and non-missile-related end-uses also procure commodities on behalf of Iraq's nuclear and missile programs. Because the Iraqi procurement network serves both nuclear and missile programs, one cannot distinguish between purchasers of nuclear concern and those of missile concern. Thus, US export policy should apply equally to Iraqi nuclear end-users and purchasers for Iraq's nuclear and missile programs.

CURRENT LICENSING PRACTICE

Current US policy is to deny all license applications for the export of NRC-licensed items to Iraq, notwithstanding Iraq's NPT status and acceptance of IAEA safeguards. This position results from doubts about Iraq's commitment to and support for nuclear non proliferation.

The Subgroup on Nuclear Export Coordination (SNEC) presently recommends denial of all cases involving
Commerce-licensed commodities for the Iraqi Atomic Energy Commission and performs case-by-case review of less significant commodities going to non-nuclear end-users. The SNEC has also recommended denial of certain cases involving proposed exports to entities believed to procure or produce commodities on behalf of Iraq's nuclear program. However, a large number of other cases involving proposed exports to Iraq are pending. At present, no foreign policy controls exist which permit the US to control nuclear-related dual-use commodities across-the-board to Iraq.

PROPOSED EXPORT POLICY

Computers

Given the difficulties involved in controlling the export of computers, their wide foreign availability and the pace of development of computer technology, it is proposed that export of computers with a PDR of 250 or less to non-nuclear Iraqi end-users be reviewed with a presumption of approval. This policy would also apply to end-users which have procured commodities on behalf of Iraq's nuclear and missile programs but which also engage in legitimate non-nuclear and non-missile related activities. An exception to this policy would be made, however, if there is information linking a nuclear or missile end-use to a specific export request under review.

[Page: H6345]

Foreign availability

While foreign availability should be taken into account in determining whether to approve a license, it should not be the overriding factor. In the case of other proliferant countries, the U.S. has denied licenses for the export of commodities available in other countries because it considered the risk of diversion to proscribed end-uses too high. The operation of Iraq's procurement network inevitably raises concerns about the potential for unauthorized diversion of commodities in Iraq and doubts about the veracity of the information provided on Iraqi license applications. Thus, U.S. export policy towards Iraq should generally be guided not by foreign availability to commodities but by U.S. nuclear and missile nonproliferation considerations.

Other suppliers

Despite the lack of U.S. policy guidance governing exports to Iraq, the U.S. has urged other suppliers to exercise extreme caution in permitting nuclear-related and dual-use exports to that country. In addition to demarching U.S. suppliers after the close of the Iran-Iraq war, the U.S. has also approached
suppliers on specific Iraqi procurement efforts, urging them to take steps to ensure that certain exports to Iraq not occur.

In considering U.S. export policy toward Iraq, we should also consider the need to establish procedures which would ensure regular communication with other nuclear suppliers about U.S. export control actions involving Iraq. Such communication would involve informing suppliers of general principles governing U.S. exports toward Iraq. It would also involve notifying them of actions taken by the U.S. on individual cases and urging those suppliers to adopt similar notification procedures. This is particularly important as much of the focus of Iraqi procurement efforts is in Europe. Thus attempts to impede development of Iraq's nuclear program by technology denial will succeed only with the cooperation of other nuclear suppliers.

U.S. conditions of supply

All nuclear-related dual-use exports to Iraq should be conditioned on no nuclear use and no retransfer within Iraq without prior USG authorization.

The U.S. should also explore the feasibility of conducting post-installation checks in Iraq, similar to those conducted in Pakistan. This method could be used to allay concerns that items are being illegally retransferred to nuclear or missile end-users. This method could deter unauthorized diversion of U.S. commodities. Such checks should generally be used only in instances where U.S. export policy does not preclude export of a commodity to a particular end-user. They should not, however, be used as a substitute for denial of commodities required under the above guidelines. Similarly, if such checks are not possible, a more restrictive approach to exports would be appropriate.

PROPOSED GUIDELINES

The following guidelines are proposed for use by SNEC agencies when considering dual-use license applications, excluding computers, for Iraq.

No export of Nuclear Referral List items will be permitted to Iraqi nuclear end-users, or end-users which are known or suspected to procure commodities on behalf of Iraq's nuclear and missile programs, regardless of the stated end-use. End-users in the latter category include state enterprises and ministries. A complete list of grey end-users is attached. (The list is currently being completed by Livermore.) Given the rapidity of change in the Iraqi
procurement network, this list will need to be updated regularly by the intelligence community.

Export applications for items not on the Nuclear Referral List to Iraqi nuclear end-users will be reviewed on an ad hoc basis with a presumption of denial.

Export applications for items not on the Nuclear Referral List to Iraqi end-users which have been involved in procurement of commodities for Iraq's nuclear and missile programs will be reviewed on an ad hoc basis and may be approved if the commodity is considered by technical experts to be appropriate for the stated end-use. Standard no-nuclear-use conditions would apply. If possible, conditions of supply should be verified, e.g. post-installation checks.

Export applications for items on the Nuclear Referral List and items not on that List to non-nuclear end-users with no known procurement connection to Iraq's nuclear and missile programs will be reviewed on an ad hoc basis with a presumption of approval if the commodity is considered appropriate for the stated end-use. Standard no-nuclear-use conditions would apply.

--

U.S. Department of State,
Washington, DC., September 22, 1989.

Information Memorandum

You will have seen reports in the press linking the Atlanta branch of Italy's Banca Nazionale del Lavoro to Iraqi nuclear and missile programs. The money does appear to have been used to finance a wide range of imports and projects, probably including the acquisition of sensitive technology, but the technology transfer aspects are separate from the scandal surrounding the credits.

Investigators are not talking, but it is clear the BNL branch manager in Atlanta gave Iraq over $4 billion in export credits in over 2500 separate transactions, at below market rates, that he kept on a secret set of books. Despite protests that BNL's Rome headquarters knew nothing of the unauthorized loans, the bank's two top officials have resigned and the former Italian defense attache in Baghdad has committed suicide. At least $900 million of BNL's letter of credit have not yet been paid out to the Iraqis, who are demanding that the bank make good on them.

The Financial Times and Wall Street Journal appear to be mixing up the credit scam, Iraqi conventional weapons production, and Iraqi nuclear and missile proliferation programs. The tone of the press stories tars all Iraqi industry--and technology transfer--with the proliferation brush. The September 14 WSJ, for example, claims U.S. officials have concerns about the nuclear weapons capabilities of a $500,000 machine tool designer an Alabama company wants to export to Iraq with BNL credits.

The net result could be perception that all technology transfer to Iraq is illegitimate. In attempting to counter Iraq's nuclear, missile and CW programs we have concentrated on denying key technologies. To be credible, we need to keep the focus on these key technologies--while recognizing that the Iraqis will, if they can, use basic civilian industrial technology for military production as well.

--

--

U.S. Department of Commerce, Bureau of Reports Administration
Washington, DC., August 8, 1988
Memorandum for: John R. Kenfela, Director, Strategic Trade, Defense Technology Security Administration.
From: Iain S. Baird, Acting Director, Office of Export Licensing.
Subject: Reexport Application.

registered the subject reexport request on . The request is for shipment of systems including peripherals and training valued at $600,000.00. This equipment will be used by * * * State * * * of Mechanical Industry in Iraq for a graphics design system used in tooling design. will provide on site support and training for maintenance of all hardware and software.

After several reviews, DOD recommended a denial because DOD alleges that we are dealing with a `bad end-user. The ultimate consignee is a subordinance to the Military Industry Commission and located in a military facility. Image of neutrality could hardly be served. Also, this system could contribute directly to increasing Iraq's military force capability'.

Although this export transaction would normally not require Department of State review, Commerce consulted with State on foreign policy grounds. State has recommended approval because there are no foreign policy controls applied to computer exports to Iraq, nor are there any other statutory or regulatory grounds for rejecting this case.

The fact that the pre-license check revealed the end-user to be under the Military Industry Commission is not grounds for denial. DOD has raised foreign policy concerns as a rationale for denial. As stated in the * * *, foreign policy controls are maintained on exports to Iraq of (1) certain chemicals identified as precursors to chemical warfare; (2) regional stability items, and (3) crime control and detective equipment. In addition, Iraq was removed from anti-terrorism controls applied to military end-users in 1982. The * * * Establishment is a multi-functional complex, which American officials have visited, and approval of this export will not affect the image of neutrality in the Iran-Iraq war. The knowledge that will provide on site maintenance and other servicing is another reason why this case should be approved. ------will know if the equipment is moved or if other conditions of the export license are violated in some way.

Given the recent MSC decision to more favorably review export licenses and applications to Iraq, please personally review this application and give me or Dan Hill a call if DOD maintains its objection and wishes to include this case in the next Policy Issues Group meeting. We can be reached at 377-8536. If no response is received within 10 days of the date of this letter, Commerce will process this application.

--

--

U.S. DEPARTMENT OF COMMERCE, BUREAU OF EXPORT ADMINISTRATION
Washington, DC.
Memorandum for: Dennis Kloske.
From: Iain S. Baird.
Subject: The NSC and Iraq.

To the best of my recollection, there have been four NSC meetings relating to export licensing and Iraq.

In late summer 1987, there was an NSC meeting at which Steve Bryen presented some satellite photographs of the SA'AD 16 facility. As a result of this meeting, Paul Freedenberg directed that we suspend the Gildemeister case (the Hybrid analog computer), and we did so on September 22, 1987, based on the new controls available under the MTCR.

In the spring of 1988, a number of Iraqi export licenses had backed up pending a decision by the Administration with respect to trading with Iraq. At an NCS meeting at that time, these cases were reviewed and cleared and the instruction was issued (conveyed by Paul Freedenberg) to treat Iraqi applications favorably.

On April 16 and May 29, 1990, there were Deputies Meetings chaired by the NSC at which you argued for expanded foreign policy controls on Iraq. You also sent a proposal to Robert Gates on June 8, 1990, outlining your proposal for the expansion of the MTCR, including controls on Iraq.

In June and July 1990, the proposal is discussed at several PCC meeting.

--

[Page: H6346]

Telex

[TELEX]

March 26, 1989.

For the attention of Mr. C. Drougol. I would like to express my greetings and personal good wishes for you and your family and all your staff at Del Lavoro Bank-Atlanta on the occasion of the Easter festivities.

Wishing you all happiness, good health and prosperity.
HUSSAIN KAMIL HASAN,

The Ministry of Industry
and Military Production.

--

--

Iraqi Export Cases: Why They Make the Case for Expanding License Requirements and Review

An initial review of 73 cases in which licenses were granted by DOC or DOC/DOD from 1986-1989 shows that licenses were granted for equipment with dual or not clearly stated uses for export to probably proliferation related end users in Iraq. This indicates that expanded license requirements and additional review of licenses could reduce U.S. contributions to proliferation activities. These cases concerned only exports for which a license had to be obtained; they indicate nothing about equipment that may have been exported freely because no license was required.

EXAMPLES

During the period in question, at least 17 licenses were issued for the export of bacteria or fungus cultures either to the Iraqi Atomic Energy Commission (IAEC) or the University of Baghdad.

A known procurement agent for Iraqi missile programs, ------ was issued licenses to export computers to a missile activity and computers and electronic instruments to the IAEC.

A license was issued to export a computer for a `fertilizer plant' to the Iraqi Ministry of Minerals, which is known to be associated with the Iraqi CW program.

------ received a license to export equipment to the Nasser Establishment for `general military applications such as jet engine repair, rocket cases, etc.'

Licenses were issued for the export to Iraq of computer-assisted design and manufacturing (CAD/CAM) and chemical process control equipment.

------ had a license approved by DoD for a computer system for use with a furnace for `medical prostheses.'

------ also had a license approved by DoD/DOC to export numerically controlled equipment related to crucibles.

------ received a license to export `navigation/direction finding/radar/mobile communications' equipment to Salah-al-Din, which is associated with an Iraqi missile project.

DoD approved a license for the export of possible telemetry equipment to the Saddam General Establishment.

Implementation of various aspects of EPCI would provide a basis to deny licenses (and require additional licenses so transactions could be reviewed) in cases similar to those reviewed because of the end user (country or entity), the knowing contribution to or risk of diversion to a proliferation activity.

The SPEAKER pro tempore (Mr. Torres). Under a previous order of the House, the gentlewoman from Maryland [Mrs. Bentley] is recognized for 60 minutes.

[Mrs. BENTLEY addressed the House. Her remarks will appear hereafter in the Extensions of Remarks.]

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Georgia [Mr. Gingrich] is recognized for 60 minutes.

[Mr. GINGRICH addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from California [Mr. Dreier] is recognized for 60 minutes.

[Mr. DREIER addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from California [Mr. Riggs] is recognized for 60 minutes.

[Mr. RIGGS addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]

END