BUSH ADMINISTRATION HAD ACUTE KNOWLEDGE OF IRAQ'S MILITARY INDUSTRIALIZATION PLANS
Henry B. Gonzalez, (TX-20)
(House of Representatives - July 27, 1992)



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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, last week I showed that this administration, President Bush's administration, deliberately and not inadvertently helped to arm Iraq by allowing United States technology to be shipped to the Iraqi military and to the Iraqi weapons factories. Throughout the course of the Bush administration, United States and foreign firms were granted export licenses to ship United States technology directly to Iraqi weapons facilities, despite ample evidence showing that these factories were producing weapons.

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I also showed how the President misled the Congress and the public about the role United States firms played in arming Iraq.

Today I will show that the highest levels of the Bush administration, including the President himself, had specific knowledge of Iraq's military industrialization plans, and despite that knowledge, the President mandated the policy of coddling Saddam Hussein as spelled out in National Security Directive 26 (NSD-26) issued in October 1989. This policy was not changed until after the Iraqi invasion of Kuwait, by which time the Bush administration had sent Saddam Hussein billions of dollars in United States financial assistance, technology and useful military intelligence information.

I will also show how the President's policy of appeasing Saddam Hussein was at odds with those in the administration who saw Iraq as a major proliferation threat. This will help set the stage for next week's report which will discuss Iraq's clandestine technology procurement network and the Italian bank agency in Atlanta's role in funding that network.

We will bring out the very intricate system which up to now has not been elaborated upon other than through the great alarm sounded by the Commodity Credit Corporation's extension of guarantees through the letters of credit that were issued by this bank. But it was more intricate, it was a lot more elaborate, and it was very well thought out by these overseas students or system, and its gaps, and its failures, which is the reason that I am here today and have from the beginning spoken out, that is on the vulnerability of our financial banking system to these external forces.

I would like to emphasize, however, that the administration knew about the procurement network, and I indicated some of that last week, and decided to go ahead and tolerate it.

From the beginning of the Bush administration Iraq received billions in United States financial assistance and sophisticated United States technology, what actually had started under President Reagan's first term in 1983 when the President took Iran off of the list of nations that he had listed as terrorist nations.

As is well known, the largest financial aid program for Iraq was the Commodity Credit Corporation and their export guarantee program. Between 1983 and the invasion of Kuwait in 1990, Iraq received $5 billion in CCC guarantees that allowed them to purchase United States agricultural products on credit. Over half of that program or $2.6 billion was authorized during the first 2 1/2 years of this administration, the Bush administration.

The CCC program was the single largest chunk of financial assistance that Iraq received from what we call the West. It helped to feed the people of Iraq, and it freed up scarce resources that were first used to purchase weapons to fight the war against Iran, and later, during the Bush administration, it freed up resources, and those that were freed up were ploughed into Iraq's military industrialization program.

There have been many allegations, and there are still ongoing investigations that are attempting to determine if Iraq was diverting CCC guaranteed commodities to purchase weapons. And as I said from the beginning when I first started out on this 2 years ago exactly this month of July, there is not and never has been any attempt to verify the end use of the guarantees, that is the loan guarantees and the commodities as they were supposed to have been delivered. But there is still some investigations.

When we started ours, as it was in the beginning, has been and will continue to be, my single-minded purpose was the shoring up of the most vulnerable aspects of our national interest, and that is the banking and financial oversight or regulatory which is full of just absolute gaps, and loopholes, and we have been better analyzed by people all the way from Asia to Europe and the Middle East who have studied these vulnerabilities for years and are still making ample use.

As I have said repeatedly, my most worrisome problem is that there is no telling how many of these BNL's, how many of these BNL-like, how many of these guarantee programs are still being fed into international places that tomorrow can very well be listed as menaces or enemies, and all guaranteed by the U.S. taxpayer. This has been extremely bothersome to me, because I sat on a committee that has jurisdiction through such subcommittees as the Housing and Community Development Subcommittee, which I also happen to chair and have since 1981. And I hope my colleagues, those who were here then, and those who were not, would try to understand my travail as I have seen billions and hundreds of billions of dollars sanctioned through this committee for private gain for the bankers and the financial manipulators, both domestic as well as foreign, hoarding through greedy accumulation billions of dollars while we have to fight and fight and fight to try to get our communities, 65 percent of which now are strapped financially, taken care. It was in the name of the Subcommittee on Housing and Community Development and the full committee that I went to Rhode Island on May 25 last year, and it was a result of our action and our committee that we were able to get a feeble guarantee for that State to enable it and its government to be able to pay out the thousands of poor fellow Americans in Rhode Island who had all of their life savings, their little proceeds that had enabled some of the retirees to live from their pension funds all frozen in the Rhode Island S&L's and banks. Thank goodness, and thanks to the great efforts of Representatives, particularly John Reed who brought it to my attention, I responded and we went there. We got the legislation 1 month later in the June 28 Banking Act that the Committee on Banking, Finance and Urban Affairs approved.

But what about California today? The State of California is paying, to my pain, and I am a Depression era kid. I can recall when our schoolteachers, and when our public employees were being paid in script. Sometimes the bankers and the merchants would honor them at a discount. They would have to pay for that as if it were interest. Sometimes not. And I swore that if the Lord permitted me to ever be in a position where that could be avoided, I would do everything in my power to avoid it. So I cannot begin to describe the pain I felt as I looked into the eyes of those thousand or more Rhode Islanders that turned out to our hearings in Providence. I cannot begin to tell you the pain I felt, because it made me recall those haunting years of the Depression which I hoped and prayed and did everything within my power in between to try to eliminate, the horrible, real, excruciating, deathly poverty that existed, watching even relatives die slowly of tuberculosis where my city was known as the tuberculosis capital of the United States.

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Then later even after the war, areas there that were called the death triangle because they had the greatest rate of infant diarrhea deaths of any anywhere, and, yes, we are better off and, yes, I have had great privilege serving on the local level.

I was able to work between 1950 and 1953 for the San Antonio Public Housing Authority and see in that very death triangle the elimination and the destruction of earth-floor shocks with pit privies, all within a quarter of a mile of downtown San Antonio.

I was later elected to the city council, any my greatest, greatest satisfaction was to be able to work and change the system of self-perpetuating city water board. Those things had not happened since the rotten borough of England in the 1930's, and here we had them, and I was able to lead the fight. It took 3 years. It was mean. It was tough. But we

changed that system, and for families within a quarter of a mile of city hall who had to buy water in barrels at 40 cents and 50 cents a barrel with wiggle worms in them, we were able to change that in less than 1 year after that forum, the city water board, came about, so when I speak to you, my colleagues, I speak as a man privileged under our system to work on every level of legislative representation our country has to offer, the local, and 5 years in the State Senate of Texas, and now I have been privileged to have served here for 30 years and 8 months in this great and august body, and I have the same determination.

So I hope those of you who have at first ridiculed and then slowly and by the dint, force, of circumstances have admitted that I have had a cause and that I have spoken out responsibly will realize the pain I feel to even get up now and have to reveal these things where I am just as much respectful of the institution of the Presidency as anybody, and maybe even more, and it is not that I love the system less. It is that I love it more. For without it, I would not have anyplace in the world that would have been able to duplicate the very actions I am taking today. And I know it.

So I bring these factors in to give you the background of how it pains me to see these quickly enacted billions of dollars of subsidies to the richest of the rich, the strongest corporations through tax giveaway. It pains me to see the housing programs that were structured by the Congress after many years of debate and hearings and which have served our country for 40 years; they housed America between 1940 and 1980. All of a sudden in the name of economy and budget exigency, they are faced with extinction or diminution to the point of extinction while billions and billions, much more than we have meekly offered since 1981 and 1982 and have not had, but watch these other billions just go through as fast as they could slip through a congressional process.

Do you think that makes me feel good or proud? Of course not. But it is the truth, and it is a fact of life, and when we see that a whole country has been raised to the point of war fever and a war psychosis, suddenly discovering that a man is a monster, a Hitler in the President's words, only to discover sadly that this same individual had been backed up, supported, and at the cost of taxpayers' liability, given billion of dollars.

We have to examine that, because I look around and see now where our Government has been extending similar guarantees backed by the taxpayer to other countries that just a few years ago we had them as a list of bitter enemies.

Now I say whether a nation and its people, above all, in the words written down in one of the halls here in our Congress, in our House of Representatives, when a people forget their hard beginnings, they are in for trouble, and they are in danger of losing maybe perhaps not directly forsaken, but certainly ending up in forsaking the heritage of freedom which is what is at stake today.

I will tell you why, and I am going to bring this out in separate addresses and messages to you, my colleagues, and that is that we have become accustomed and have lived in a state of emergency since 1932, the bank closing or the bank holiday edict issued by President Franklin Roosevelt.

Do my colleagues know that we are still living under emergencies? In fact, last week, last Tuesday, just before I got up to give the last special order, a message came from the President. It was lost sight of because there were three messages in a row, but the middle one said, `This will extend our state of emergency with respect to the crisis in the Persian Gulf and Iraq for another year.' We ought to go into that, my friends, because we like to look down on countries that we consider lesser than us by saying, `Oh, look at the turmoil, and they have government by decree.'

My colleagues, because Congresses have delegated that constitutional power and only because of that can the President issue that kind of emergency decree as we have been living under since 1942. In fact, I will go even before that and go to the National Espionage Act of 1917 most of which has never been returned to the Congress and which President Wilson asked for in time of war. And it has been a President's resorting to that one that has brought some very, very, I think, draconian actions against American individuals including some who have been charged with actual espionage under that act.

When Iraq invaded Kuwait in August 1990, it defaulted on $2 billion of the CCC credits advanced during the Bush administration. But the CCC Program was not the only financial benefit bestowed upon Iraq during the Bush administration.

As I have reported elsewhere, the Bush administration also authorized a $200 million credit program through the Export-Import Bank [Eximbank] that allowed Iraq to import various equipment and raw materials. The Eximbank Program was one of the largest of its type among the Western industrialized nations. This credit not only permitted Iraq to purchase United States equipment, it also freed up scarce resources for cash strapped Iraq, and was granted despite Iraq's shaky finances, under pressure from the highest levels of the administration.

Not to be overlooked is BNL-Atlanta's $5 billion in supposedly unauthorized loans to Iraq--well over $1 billion in commercial loans which were issued during the Bush administration. While the intelligence community has remained silent on what it knew about BNL's activities prior to the raid on BNL-Atlanta in August 1989, it is safe to assume that it would have been highly unusual for our intelligence community not to have noticed thousands of communications between Iraq's highest profile military organizations and BNL in Atlanta, GA. The same can be said of Iraq's front company in Ohio called Matrix-Churchill.

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This is actually British-based and apparently British-controlled in London.

At a minimum, the Bush administration looked the other way and allowed BNL's and Matrix-Churchill's activities to continue. We must not forget the CIA has a history of neglecting to inform law enforcement officials about nefarious activities when those activities just happen to facilitate the administration's policy. The recent Bank of Credit and Commerce International [BCCI] and International Signal and Control [ISC] cases provide vivid examples of that phenomenon, or problem where the intelligence agency is totally controlled by the political program at that particular moment of the administration in power.

Later on I will add details to this particular phase.

During the period 1985-90, the Reagan and Bush administrations approved 771 export licenses for Iraq--as I brought out last week--239 of these approvals came from the Bush administration. Much of the equipment shipped to Iraq under these licenses ended up considerably enhancing Iraq's military capability. For example, licenses for the Iraqi Armed Forces and Iraqi weapons factories were routinely approved. As I showed last week, and provided the documentation, this was not done inadvertently; it was a written, but never publicly stated, Bush administration policy to help arm Iraq itself through the export licensing process, as we are again with other countries, as I will bring out in future special orders.

Given the administration's refusal to accept responsibility for facilitating the arming of Iraq, it is important to understand the context in which the billions in United States financial assistance and sophisticated technology flowed to Iraq. Once you understand the context of the decision to provide financial assistance and technology to Iraq, you will understand that it was United States policy to accommodate Saddam Hussein's military ambitions.

The Bush administration was acutely aware of Iraq's intentions, and knew that the financial assistance it was providing to Iraq facilitated Saddam Hussein's ambitious military industrialization effort.

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GOAL OF IRAQ'S MILITARY INDUSTRIALIZATION EFFORT

To understand the Iraqi military industrialization effort, one must understand that since the 1970's the goal of Iraq was to become militarily self-sufficient.

It seems to me incredible that a Deputy Secretary of State, like Mr. Eagleburger, would come before the committee, and every one of them from the Secretary of State on down and the President act as if they did not know that ever since 1948 a state of war has existed between Iraq and Israel.

Now, Iraq, let me disabuse my colleagues of any conclusion they might have formed through our war propaganda that Saddam Hussein is looked upon especially in the Muslim-Arab world as a villain. He is a hero.

I brought out the special orders that I took when we returned after the break in August and Labor Day in September 1990, I laid out here before my colleagues, it is all in the Record, that Saddam Hussein had and still has the largest and most expensive news disseminating TV and radio network in all the Middle East and that particular portion of Asia.

He is a hero because he is considered the only one who stood up to what the Arabs feel has been an attempt to liquidate them.

I brought out, and it is in the Record, when Saddam Hussein properly was excoriated for having been charged with using poison gas against some of his own citizens at the time, the Kurds, but I pointed out that the first one to use chemical warfare, that is gas, was Winston Churchill in 1921 and 1923 against the Arabs, what he called the recalcitrant Arabs.

Who do you think they were? They were the Arabs where Iraq is today.

We must never forget also that we are talking about a country that is now named Iraq, but which has been the fountain place or the birth place of western civilization, Mesopotamia.

When we bombed and carpetbag bombed Baghdad, we destroyed artifacts of civilization that are priceless.

Now, if we once understand this, we will then understand why Iraq stood out as the only Arab nation that did not in the opinion of these Arab minds kowtow to Israel and the Western powers.

He was also anxious to get away from relying on the Russians, or the Soviet source of aid.

So he, unlike every other Arab nation, then decided to be the leading Arab military power. That goes back to early and even before the beginning of the Iraq-Iran war.

We must also never forget that Iran is not an Arabic nation. It is non-Arabic.

We must never forget that Syria under Assad was the only Arab nation that went against Iraq in the Iraq-Iranian war, and were it not for the great divisions that have existed among these Arab peoples and we are not aware, we have a tendency to look down on peoples who are extraneous to us and our language particularly, but that is a fatal flaw in our makeup that sooner or later we are going to have to try to correct.

To understand this policy, we have to understand that the goal of the 1970's in this country that was considered the only one that was responding to what segments of the Arab world were saying were attempts of genocide, which unfortunately we have had such a thing. It is unfortunate, but it is true. It is enough.

There is an old saying in equity law that says in an act in which equity or relief is sought to correct a wrong, that action must first be rooted in a wrong. We know from reading human history that the kind of actions that seem to us to be inexplicable in the proceedings of some of these countries, we must never forget that those actions are never born except out of a rooted wrong. That has been stamped into the human makeup no matter what we are by I am sure God's breathing life into our souls and bodies and with that saving water of freedom, no matter where, every human being desires freedom, no matter how much it seems he has accepted the chains of enslavement.

To understand the Iraqi military industrialization effort, I repeat, we have to go back to the beginning of a program of self-sufficiency.

Iraq wanted to have its own military industrial base so that it did not have to depend on the Soviet Union or Western arms suppliers and others for its national security.

The Iraq-Iran war placed the better part of Iraq's military industrialization program on hold because resources were used to purchase urgently needed finished military products such as tanks, fighter jets, ammunition, artillery, and other equipment.

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However, during that war Iraq also continued to work on its highest priority indigenous military projects, and when the war ended Saddam Hussein began a massive military industrialization effort.

Iraq had several ambitious goals as it ended its long 8-year war with Iran. First, Iraq wanted to provide for its own national security. Second, Iraq wanted to remain the Arab world's strongest military power. Third, Iraq wanted to become the Arab world's strongest industrial power.

As a matter of fact, all the Arab countries, except one, Syria, supported Iraq in its war against Iran.

As I said before, Iran is a non-Arabic nation. Now, Arabic or not, my colleagues, I ask you how could we be supplying Iraq with everything from intelligence--because we had an intelligence-gathering agreement all during that war with Iraq--supplied them with everything else, even backed up foreign countries like France to make sure they supplied military things all the way from Mirages to Exocet missiles, one of which, incidentally, was the one that killed 37 of our sailors in the Persian Gulf.

Have we forgotten that? How did they get them? That way. And we helped. Do we think that these people, which we, like the British and others, tend to look down upon as inferiors, do not know that at the same time Colonel North and the other hosts and security advisers of Mr. Reagan were over in Iran conveying TOW missiles, do you think they did not check with each other to know? How many Iraqi soldiers died as a result of the TOW missiles we gave them in the Iran-Contra deal? I am sure they know.

Do you believe the Iranians did not know that a lot of their soldiers and a lot of their people and a lot of the destruction through the bombing of Iraqi warplanes did not come from the aid we were giving them? Well, of course they did. They are not inferior people. They happen to have come from an era of long-retarded development, that is all.

We must remember that our modern engineering, and mathematics--how many buildings based on engineering formulas do you think we could build with Roman numerals? It was Arabic numbers which came to Europe through Spain, through the 800-year occupancy of southern Spain by the Moors. Modern medical science, that came through Spain. In the 16th century, Spanish ships bringing colonists, and what have you, including my ancestors on my father's side, who got to the province of what is now the state of Durango in 1560-something, were being inoculated against smallpox.

Now, maybe they did not know about the germ theory, but they knew the cause and effect. Spanish doctors, or what have you, were inoculating the Spanish occupants of these ships on their way to the New World against smallpox in the 16th century.

Where do you think they gained that lore? From the Moors, the Arabs.

So, let us remember that it is always good to remember that God is no respecter of individuals or nations.

Evidence that the Bush administration knew of Iraq's plans is widespread. One example is an Export-Import Bank country risk reported dated June 1989. The Eximbank report, which was based in part on intelligence information, was presented to the Eximbank board of directors along with representatives of the State Department, CIA, and Commerce Department. This report states:

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In addition to higher oil production, the government is planning to develop new state controlled industries to supply the military, the civilian market and export markets. Iraq's ambitious plans, unlikely to be completed even within the next five-to-ten years, include oil refineries, petrochemical complexes, specialty steel and aluminum plants, vehicle assembly and various manufacturing activities. These new industries will fashion products for the new arms industries, and produce goods for sale in the domestic market and perhaps export markets.

A year later the CIA reported:

One of Iraq's main post-war goals it the ambitious expansion of its defense industries

What could be clearer? After the cease-fire in its long war with Iran, Iraq obviously did not have any plans to demilitarize. In fact, it is apparent from reading intelligence community reports that Iraq's highest postwar priority was expanding its military industrial base. Like the Eximbank, a 1989 intelligence community report similarly states:

A dramatic reduction in domestic military and civilian state sector claims on oil revenues and non-oil production would provide resources for an earlier end to arrears and rescheduling. However, such a massive reduction in military and civilian absorption of resources seems very unlikely ***.

Iraq's ambitious military industrialization plan called for civilian activities to be integrated into military production and vice versa. In a public speech to the nation in 1989, Saddam Hussein urged Iraqis to:

*** make use of civilian industry for military purposes *** and military industry for civilian purposes using their surplus potential.

This point is further brought home in a June 1989 intelligence report which shows that:

The Ministry of Industry and Military Industrialization [MIMI] planned to integrate proposed specialty metals, vehicle assembly, and other manufacturing plants directly into missile, tank, and armored personnel carrier industries.

United States knowledge that Iraq gave highest priority to development of its defense industrial base is further spelled out a year later in a July 1990 report which states:

In May 1989, Hussein Kamil, the head of the Ministry of Industry and Military Industrialization (MIMI), proclaimed publicly that Iraq was implementing a defense industrial program to cover all its armed forces' needs for weapons and equipment by 1991. He stated that Iraq's industrialization program was intended to provide all of Iraq's basic industrial supplies from indigenous sources.

For Iraq the drive to develop its own weapons production capability required, to say the least, a complex and intensive undertaking. Not surprisingly, a 1990 CIA report noted that evidence indicated Iraq was devoting a considerable amount of its financial and labor resources on military industrialization.

An estimate of the magnitude of the effort is contained in a June 1989 Eximbank report which says that in 1988 Iraq devoted 42 percent of its oil revenues to military-related procurement.

FOREIGN FIRMS PLAY A BIG ROLE

Iraq had several motivations in embarking on such an ambitious military industrialization effort. First, Saddam Hussein did not want his national security beholden to foreign suppliers of military hardware. Foreign government policies change and Iraq had trouble developing secure long-term supply relationships for the supply of military hardware. The intelligence community stated in the summer of 1990:

Iraq's desire for a large arms industry has grown during the past decade. President Saddam Hussein apparently believes an expanded arms industry will enhance Iraqi prestige and help solve security problems identified during the war such as lack of reliable arms suppliers.

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In future statements I will show how Iraq used BNL money to pay foreign firms for their critical role in his ambitious military industrialization effort. Iraq clearly could not have achieved the success it did in its military industrialization program without massive assistance from firms in Europe and the United States.

As we all know, foreign firms played a critical role in many of Iraq's most dangerous and exotic weapons programs such as the Condor II ballistic missile and Gerald Bull's `big gun' project, which I have referred to from the very beginning 2 years ago.

While the resources and coordination required to successfully carry out Iraq's military industrialization effort was monumental, many within the administration believed that Iraq would take a practical approach to setting priorities. For example, in July 1990 the intelligence community stated:

Although Iraq's stated goals almost certainly are over ambitious, we believe the regime recognizes its limitations and holds more pragmatic aspirations in private.

The goals of Iraq's military industrialization program, while ambitious, were considered substantial for several reasons. An executive branch report of July 1990 noted that:

Baghdad has significant advantages in making this grandiose, but still substantial expansion of its defense industries a realistic goal:

1. It has cheap hydrocarbons;

2. Oil income is likely to increase long-term;

3. Large Iraqi military can absorb high levels of production;

4. Iraq has the most highly educated work force in the Arab world;

5. A potential supply of customers for exported arms exists.

These factors are still valid today--not just for Iraq, but also for Iran, Saudi Arabia, and the former Soviet Union. It was Iran that we were against. Where is Iran today? Well, for the first time in just recent weeks it has gone across the sea there, into Sudan. Never before, to the great travail of Egypt, which looks upon Sudan with a lot of fear. Besides that, it has obtained nuclear assistance from one of the now independent states of the former Soviet Union. How well has all of this been reported, and where does this leave the so-called stabilization of

the Middle East for which we pay treasury and blood?

Our Government knew from Saddam's own words that Iraq's military industrialization effort was designed to make it difficult to distinguish between military and civilian end uses. As a result, huge industrial complexes in Iraq, many covering thousands of acres, contained civilian as well as military components.

In addition, Iraq did not allow very many foreigners to have complete access to these complexes. United States intelligence no doubt had plenty of satellite photos of Iraqi establishments, but given strict travel restrictions in Iraq, they had limited human intelligence about exactly what was going on in various facilities.

Iraq's mixed-use complexes made it difficult for export licensing officials and those concerned about proliferation to tell exactly where United States equipment was going in Iraq, and, as I pointed out, out of the 771 licenses, only 1 was followed through to try to make sure that the end-use purposes had been served. Only 1 out of 771. That is why postinstallation checks; the Bush administration did only one, as I said; should have been a prerequisite for approving the shipment of United States dual-use technology to Iraq. Without checking on the technology after it was installed, there was almost no chance of determining if it was being used for civilian purposes as claimed by Iraq. The lack of any checks, given that the administration knew what Iraq wanted to do and how it was going to develop military facilities is inexplicable.

That problem is illustrated in a July 1990 executive branch report which states:

Iraq's military industrialization program presents a significant problem for controlling U.S. origin goods and technology and preventing its use in Iraqi military program, particularly strategic projects developing missiles and nonconventional weapons * * * dual-use equipment and technologies can be easily diverted from civilian to strategic military programs.

What could be clearer than that memorandum?

Iraq's close control of production and its mixed-use facility scheme was always a problem for policymakers. A declassified November 1989, State Department memo discussing how President Bush's mandate to increase trade with Iraq was at odds with efforts to stop Iraq's proliferation efforts put it this way:

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The problem is not that we lack a policy toward 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.

The memo goes on to state, as I have reported before:

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 explosives capability;

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

3. The fact that state enterprises * * * are involved in both military and civilian 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.

I will now provide a real world example of this dilemma using a BNL-financed glass-fiber factory that went to Iraq through Matrix-Churchill Corp.

One of the Iraqi military's highest priorities was carbon- and glass-fiber technology. Western militaries use carbon and glass fibers extensively in nuclear, missile, aerospace programs. These very lightweight fibers, when mixed with the proper ingredients, can protect metal from temperatures up to 3,000 degrees. For example, carbon and glass fibers can be used to insulate pipe in nuclear reactors. Carbon fiber technology is used to make nose cones and other temperature-resistant parts for rockets.

When properly fabricated these fibers can also be used to replace metal in many applications. For example, missile casings and many airplane fuselage parts are made with these fibers. These fibers are lighter and more heat resistant than metal. Carbon fibers can also be used to make parts for high-temperature applications such as uranium-enrichment centrifuges.

Carbon- and glass-fiber technology also has many civilian uses such as making the hull of a boat, computer casings, and even golf clubs. Given Iraq's military intentions and the priority they placed on military production, a carbon- or glass-fiber plant in the hands of Iraq was known to be dangerous.

Certainly they were not forming any golf greens anywhere in that desert, but with the help of a BNL loan and Iraq's front company Matrix-Churchill the Iraqis were able to obtain from the United States a glass-fiber factory for the Nassr state enterprise for mechanical industries--which was Iraq's prime ballistic missile maker and also an integral cog in Iraq's efforts to enrich uranium through the centrifuge method.

Even though the United States had severe restrictions on sending carbon-fiber technology abroad, Iraq was able to obtain glass-fiber technology through the United States export licensing process. The glass-fiber debacle dramatically illustrates how President Bush's mandate to increase trade with Iraq was at odds with the policy of limiting proliferation. Iraq's military industrialization strategy of mixing military and civilian production with the same complexes, repeatedly caused nightmares within the export licensing process.

A summer 1990 Government report reflecting the dangers of Iraq's strategy cautioned that:

Development of missiles and non-conventional weapons was Iraq's highest priority and the program most at odds with U.S. policy of limiting proliferation. Iraq's activities clearly presented tough problems for controlling U.S. dual-use technology that can easily be diverted from civilian programs because Iraq integrates civilian and military production facilities.

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But instead of heeding numerous warnings about Iraq's military intentions and dubious procurement activities, the Bush administration repeatedly approved export licenses of military useful technology to Iraq. The glass-fiber factory and many other military useful technologies and equipment were shipped to Iraq in order to improve trade.

We are still doing that. We have also seen a recent helter-skelter of the falling dollar. It was almost in a free fall. The Federal Reserve had to intervene and get 17 other nations in Europe to intervene.

But what have I been saying since the middle 1970's about that? That has been lost side up. It is on record. I felt it was my responsibility. Certainly not having too much power and being looked down upon by the tremendous powerful banking lobbyists

as somebody that did not have clout on the Banking Committee, my words went unheeded.

But there is where our danger is. Iraq has done and its advisers, and it is brilliant, whoever advised them, and I suspect a lot of those were non-Arab or non-Middle East, but probably European. This is why the Europeans, beginning after World War I when they were doing the same thing, today and are going the same place as after World War I, they used to say not Uncle Sam, but Uncle Sap.

That is what we continue to be. We continue to be played as Uncle Saps. It aggrieves me to see this, whether it is Middle East, Far East, Asia, or Europe, where it is still an ongoing process.

Does anybody think as our leaders have for the last decade and a half or two that we can depend on help, relief, from friendly sources? If we as an individual family suddenly decided that we are going to depend on our well-being and the supply of our essential needs from some good will neighbor down the street, how many of us would say that was very precarious? But we have been doing that on a national level. Any warnings, any voices speaking out, have been marginalized, shunted aside, including my own, in all fairness to myself.

I have had to take the brutality of dismissal and criticism, and even accusation of perhaps lack of patriotism long enough. So if this be treason, then make the most of it.

Shortly after the BNL raid in August 1989, the U.S. attorney in Atlanta began investigations of several BNL-financed projects, because they got tipped off that something was wrong, even though everybody else that had anything to do with it knew it. So they decided that some rogue element officials in this Italian bank branch in Rome did not know anything about $5 billion-plus of extension of credit through this little branch, or agency as they call it, in Atlanta?

Well now, come on. Anybody that believes that believes in the tooth fairy still.

A Federal Reserve memo indicated what the assistant U.S. attorney [AUSA] thought of the project. The September 22, 1989, Federal Reserve memo of a conversation with the Atlanta U.S. attorney states:

McKenzie said that everything being written about the missile sales is true. Matrix-Churchill made missile casings.

A Federal Reserve memo dated September 28, 1989, indicates that the DOD had real concerns:

The Department of Defense is investigating allegations that BNL's funding was used at least in part to finance arms shipments to Iraq in violation of U.S. law. The Atlanta U.S. attorney Gail McKenzie has indicated orally that she believes that BNL-Atlanta made loans to Matrix-Churchill * * * to finance the purchase by Iraq of missile casings * * *.

My gosh, the Atlanta assistant attorney general left and went to work for Matrix-Churchill, and then comes back to the Justice Department and the Atlanta Office of the Federal Attorney.

Two months later, on November 24, 1989, Matrix-Churchill Corp., Iraq's front company in Cleveland, OH, applied for an export license to ship equipment for the glass-fiber factory to Iraq. The Matrix-Churchill export application states:

Equipment to be used to control a glass-fiber production line with a capacity of 15 tons a day.

The end user listed in the Matrix-Churchill was the technical corporation for special projects, referred to as TECO or Techcorp. The Bush administration had information on TECO going as far back as far as the middle 1980's. For example, a September 1989 Government report says that TECO was involved in high priority military projects that included chemical weapons, antimissile programs, long-range missiles, and nuclear weapons.

A later document showed that TECO served as a focal point for defense related industrial construction and civil engineering and commercial contacts between Iraq establishments and foreign suppliers.

Thus, before the November 1989 date of the application for a license to ship the glass-fiber technology to Iraq, the Bush administration had clear information showing that Matrix-Churchill was part of Iraq's secret military technology procurement network, and that the network's goal was to procure technology for high-priority missile and nuclear weapons projects in Iraq.

They also had information showing that the end user of the technology was an integral part of Iraq's procurement network and that TECO was responsible for Iraq's highest priority clandestine missile and nuclear programs.

Meanwhile, on February 12, 1990, a secret State Department cable was sent to the U.S. Embassies of our closest allies in Europe and Asia. The State Department instructed the Embassies to warn host governments about Iraq's plans to procure nuclear and missile technology, especially carbon- and glass-fiber technology. Can we imagine that?

The cable, subtitled, `Possible Iraqi Missile and Nuclear-related Procurement' reported that the NASSR State Enterprize for Mechanical Industries had been seeking a glass fiber production plant and that NASSR had procured commodities for Saddam Hussein's nuclear and missile programs in the past.

Here is the State Department warning these vacant embassies, `Look out, this is what they are trying to do,' and yet we are supplying them with the fiberglass factory.

As I revealed last week, as far back as 1988 the administration had abundant information showing that NASSR was the heart of Iraq's ballistic missile programs and also a critically important player in the nuclear weapons program. 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's activities. The memo states of NASSR:

[Page: H6701]

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.

An intelligence report on NASSR in May 1990 showed that:

In the case of the missile program--the NASSR State Establishments for Mechanical Industries [NASSR] was instrumental to Iraq's missile development effort.

Amazingly, despite all this and in complete contradiction to the State Department's February warning, on May 30, 1990, the U.S. Commerce Department informed Matrix-Churchill that it did not even need a license to ship the equipment and the glass fiber technology to Iraq. Commerce told Matrix that the technology was G-DEST--in other words all Matrix-Churchill had to do was to have Techcorp verify in writing that is would not divert the technology to a third country. It is unbelievable.

Several weeks ago the committee interviewed a Matrix-Churchill employee assigned to the fiberglass project.

Let me pause at this point to give credit to one of the most indefatigable and brilliant professional staffers we have on the committee, Mr. Dennis Kane, and his able assistant, Debra Carr, under the leadership of our staff director, Mr. Kelsay Meek. I just cannot begin to describe to my colleagues what it has taken to get thousands of these documents. Some of them of do not seem to make sense, they have numbers or codes, and they match them.

Mr. Kane and his helpers have worked all through the night and weekends. They have gone down even as tired as they are to Cleveland and talked to the Matrix-Churchill employees.

[TIME: 1710]

The moral of this zany, but dangerous story is this. When it came to Iraq, the general policy of thwarting proliferation was at odds with the President's policy of increasing trade with Iraq as spelled out in NSD 26. The Iraq policy permitted Iraq to obtain sophisticated United States military useful technology despite abundant evidence of Iraq's intentions and military programs and even despite our Government trying to stop these purchases elsewhere.

CONCLUSION

There is no way the administration can say that it did not know of Iraq's intentions. There is no way the administration can claim that it was not aware that it was helping to arm Iraq. The intelligence information and reports on Iraq's military industrialization program that I have discussed today and last week were widely disseminated within the administration.

Individuals at the White House, State Department, DOD, Export-Import Bank and the Commerce Department received all this information and much more throughout the entire Bush administration. In fact, the President himself received a good dose of this information in a national intelligence review which was sent to him in November 1989.

Last Friday the Los Angeles Times printed an article which stated:

Administration officials maintain that any military assistance to Iraq was an inadvertent consequence of the attempt to moderate Iraqi actions. They said that they were unaware of the extent of (Iraq's) network in this country and that top officials were distracted by other foreign policy concerns.

This claim is patently false. The fact is that the Bush administration had excruciating detail on Iraq's military industrialization plans and intentions and that Iraq gave highest priority to expanding its indigenous weapons manufacturing capability.

It was in this context that President Bush issued NSD-26 even though he had evidence of Iraq's intentions and dubious practices showed growing danger. The Bush administration did nothing to significantly alter its strategy toward Iraq.

It was a written policy of the Bush administration to help arm Iraq. The Bush administration sent U.S. technology to the Iraqi military and to many Iraqi weapons factories, despite overwhelming evidence showing that Iraq intended to use the technology in its clandestine nuclear, chemical, biological, weapons and long-range missile programs.

And yet, in 1991 President Bush stated flat out that not one United States firm supplied Saddam Hussein with equipment that enhanced Iraq's military capability. Last week and this week I have shown that the Bush administration actively participated in enhancing Iraq's military capability by watching and even encouraging the flow of billions in United States financial assistance and technology to Iraq.

Any claim that the United States may have inadvertently helped to arm Iraq is a smokescreen to obscure the massive blunder that occurred during the coddling of Saddam Hussein. There is more to say about this.

Mr. Speaker, I include for the Record documents to which I referred.
February 1990.
From: Secstate Washdc
To: Amembassy Bern priority, Amembassy Bonn priority, Amembassy Madrid priority, Amembassy Paris priority, Amembassy The Hague priority, Amembassy Tokyo priority, Info Amembassy London, Amembassy Ottawa, Amembassy Rome.

Secret State 046278

E.O. 12356: Decl: Dadr.

Tags: PARM, KNNP, MNUC, PREL. IZ.

Subject: Possible Iraqi missile and nuclear-related procurement.

Refs: (A) 89 State 292127; (B) 89 State 292006.

1. Secret--Entire text.

2. Action addressees will recall reftels which describe

(Secret)

(Secret)

USG concerns about the nuclear programs of Iran and Iraq and steps they have taken to reinvigorate those programs. Reftels urged host governments not to provide either Iran or Iraq with commodities or training which could lead to the production of fissile materials directly usable for nuclear explosives. i.e., plutonium or highly enriched uranium. In particular, reftels cautioned against the export of so-called `dual-use' items to the nuclear programs of Iran or Iraq which could be important in a nuclear weapon program.

3. In an ongoing effort to impede further development of the nuclear programs of Iran and Iraq, department would like to bring to the attention of host governments efforts by Iraq to acquire carbon fiber--and glass fiber-related technology--dual-use technologies which could have both missile and uranium enrichment centrifuge applications. (Begin FYI: Department is currently considering additional approaches which may be made to allied governments regarding other Iraqi efforts to acquire missile and CW-related technology. End FXI.) Embassy is requested to raise this issue drawing on the following talking points, as appropriate.

[Page: H6702]

4. Talking points.

(A) You will recall our discussions of last fall during which we expressed concern about efforts by Iran and Iraq to reinvigorate their nuclear programs.

(B) We urge your government not to provide to Iran and Iraq equipment, materials, technology, or training which

(Secret)

(Secret)
could lead to the production of fissile material directly usable for nuclear explosives, i.e., plutonium or highly enriched uranium.

(C) We also urged suppliers to be extremely cautious about transfer of so-called dual-use items to Iran and Iraq which could be important to a nuclear weapon program.

(D) In our continuing effort to remain alert to efforts by Iran and Iraq to acquire technology which could contribute to a nuclear explosives program, the USG wished to bring to your attention efforts by Iraqi entities to acquire dual-use technologies which could have both missile and uranium enrichment applications.

(E) The USG has learned that Iraqi entities have been seeking carbon fiber production technology. A carbon fiber precursor known as polyacrylonitrile, and equipment for producing carbon fiber fabrics and components.

(F) The USG has also learned that Iraq's Nasser State Enterprise has been seeking a glass fiber production plant. Nasser has procured commodities on behalf of Iraq's nuclear and missile programs in the past.

(G) Certain high-precision forms of carbon fiber and glass
fiber technologies have both missile technology and uranium enrichment centrifuge applications. We believe it is possible that Iraq is trying to acquire this technology for use in one, or perhaps both, of these end-uses.

(H) We believe that the following companies posses this technology and may be approached by the Iraqis:

I. For the UK: (points are being passed to the UK Embassy in Washington)

(Secret)

(Secret)

Glass fibers: Courtalds, Ltd.

Carbon fibers: Courtalds, Ltd.

Filament winding machines: Plastrax and Courtalds, Ltd.

II. For the FRG:

Glass fibers and reinforced plastics: Lipex Anlagentechnik.

Filament winding machines: Josef Baer Maschinenfabrik, Bolenz and Schafer Maschinefabrik KG, and Maschinenbau-Gesellschaft MBH.

Other manufacturers of autoclaves which can be used for advanced fiber and reinforced plastic: F.G. Bode and Co. GMBH, and Deutsch and Neumann GMBH.

III. For France:

Filament winding machines: Berthiez, MFL and Senico.

IV. For Japan:

Carbon fibers: Sumika-Hercules Co., Ltd., a Japan-U.S. joint venture, and Toray Industries.

Filament winding machines: ASAHI.

V. For Switzerland:

Carbon fiber related technology (autoclave) manufacturers:

(Secret)

(Secret)

Nova Werke AG and Sulzer AG.

VI. For the Netherlands:

Carbon fibers: Hercules BV.

VII. For Spain:

We have not identified specific Spanish manufacturers which produce this type of technology, but we believe that such companies may be approached by Iraq.

VIII. For all:

(A) We would urge you to review cautiously license applications for the export of dual-use commodities and technology to Iraq that could be important in a nuclear weapon or missile delivery program, including carbon and glass-fiber technology and equipment.

(B) Filament winding machines and filamentary materials are covered by the so-called `second track' list, which nuclear suppliers agreed in 1984 to use best efforts to control. (This list contains items related to centrifuge enrichment and was adopted to complement the Zangger committee exercise on centrifuge enrichment which preceded it.) The list specifies `filament winding machines where the motions for positioning, wrapping and winding of fibers are coordinated and programmed in three or more axes, especially designed to fabricate composite structure or laminates from fibrous and filamentary materials' and `filamentary materials suitable for use in composite structures and having a specific modulus of greater than 12.3-times-ten-to-the-sixth-power and a specific strength greater than 0.3-times-ten-to-the-sixth-power in SI units.'

(Secret)

(Secret)

(C) Filament winding machinery and filamentary materials are subject to COCOM control under IIL 1357 and IIL 1763, and are listed under category II of the equipment and technology annex of the missile technology control regime.

(D) A number of companies in the U.S. manufacture these items: the USG is exercising special caution to ensure that those companies are aware that a license is required for their export.

(E) Those companies are also being told that, given U.S. policy, licenses for the export to Iraq of these particular items would not be granted.

(F) the USG urges your government to take similar steps to ensure that Iraq is not successful in efforts to obtain these items, which could contribute to the development of Iraq's nuclear and missile programs.

End talking points. Eagleburger.

--

--

Glass Inc. International
Covina, CA, February 22, 1990.

Roland Davis,
Matrix-Churchill Corp., 5903 Harper Road, Cleveland, OH.

Dear Roland: I received your fax dated 2/22/90. I know that I promised you a fax regarding a schedule for supplying you with control drawings. I was unable to do this since our employee responsible for this activity was not able to attend work on the 21st. We now have arrived at a tentative date of March 9, 1990 for delivery of the documents under question, but I must advise you that we will not supply this data until we receive a signed copy of an Export License from the U.S. State Department authorizing the shipment of the Computer Control System software and related drawings, and or equipment.

Your office was advised in August 1989 that in our opinion an Export License was required for the Computer Control System.

Since you were unable to prepare the application for the Export License, we at our cost, prepared a draft of an Export Application and sent it to you on October 10, 1989 and revised it at your request on October 18, 1989.

Please note in the September Monthly Report Par A. and C., purchasing of the computer was delayed for two reasons, (1) Not being paid under the terms of Letter of Credit and (2) Not having received a copy of an approved Export License for the Computer, software, and related drawings. It was made very clear in each of the following Monthly Reports, October, November, December 1989 and January 1990, that the Computer Control System was not complete.

I would like to point out as I have in the past that to my knowledge it is a criminal offense in export from the United States anything related to Computers without an approved Export License. This point was discussed again with your office when we were advised by the Del Lavoro Bank that we have been investigated by the United States Government (F.B.I. and Customs), regarding exporting to Iraq. At that time I told your office that I was glad that nothing related to the Process Computer System had been supplied to Iraq.

We are doing our utmost to support MCC. Please note that if your Export Application is not approved what are we to do with all of this equipment as well as our engineering investment in the Control System.

Very truly yours,
Albert Lewis.

--

Telex No.: 3-030.


Date: March 7, 1990.
To: Techcorp--Baghdad, Iraq.
Attn: Mr. Taha Salman.
Subject: Glass Fiber Project--Contract No. 3128, export license application control No. C120752.

(AA) This is to advise you that we have just been informed by the U.S. Department of Export License that our application (control code No. C120752) for the IBM personal computers (AT286) will be rejected as they are not allowed to be exported to Iraq.

(BB) From talking to the Iraqi commercial attache at the Embassy earlier today, he informed me that there are similar cases on other projects for which the Embassy will contact the U.S. State Department to resolve. But he requested that they receive an authorization from you or the ministry to discuss our case. Therefore, you are kindly requested to Telex the Embassy immediately (with a copy to us) authorizing them to follow up on our case and to help in obtaining the export license. Please make sure that you refer to our project name, number, and the export license application No. as stated above.

Also, it will be of great help, if the commercial section of the American Embassy in Baghdad are contacted by the ministry for the same purpose. I do not see why they are objecting to export simple personal computers to Iraq, while they can be exported to most countries.

(CC) At our end, we are still in contact with the U.S. authorities, but I believe your official involvement will expedite matters considerably.

Best Regards,

A.T. Qaddumi.

--

--

MATRIX-CHURCHILL CORP.,

Harper Road
Cleveland, OH, May 15, 1990.
To: Iraqi Embassy.
Atten: Yousif Abdul Rahman.
From: Mr. Roland Davis.
Subject: Export License.

Application for Export License No. C120752, Dated Nov. 17, 1989, Log No. D065531.

Presently in the hands of: Office of Export License, Mr. Dan. Hill (Since May 8, 1990) 1-202-377-4055; Last Contract was 5-14-90 @ 4:15 P.M. Said he had to talk with the Director of the Export License Office and would get back with me on Tuesday, May 15, 1990.

The Technology is that of Glass Inc. International and a letter explaining dated March 30, 1990 is attached.

Spent the better part of 2 days trying to get the status of our application for Export License application C120752. It seems that it has been rejected by:

[Page: H6703]

1. Defense Dept.

2. Office of Export Enforcement.

3. Office of Technology and Policy Analysis.

It is presently in the Office of Export License who is leaning toward denial. The denial is not based on the computer, but the technology of the process, which is the process for manufacture of `E' Glass Fiber Technology.

Enclosed is the brief explanation of the technology that Glass Inc. International is providing along with Matrix-Churchill to Iraq.

We would like to bring this subject to your attention and request your assistance in this matter.

If you have any questions, please do not hesitate to call.

Regards,
Roland B. Davis.

--

Glass Inc. International,
Covina, CA, March 30, 1990.

Mr. Lockett Yee,
U.S. Department of Commerce, BXA/OTPA/TTC, 41th E. Constitution Ave N.W., room 4068, Washington, DC.

Dear Mr. Yee: Enclosed find a copy of the Export License and supporting document for a commercial glass fiber plant in Peoples Republic of China. The technology being supplied by Matrix-Churchill to Iraq is a standard commercial glass fiber used as a reinforcement for plastics and asphalt. The generic name for the fiber is E-Glass. Its chemistry is typically 54.0 percent SiO2, 15 percent Al2O3, 15 percent CaO/MgO, 11 percent B2O3, 2.0 percent F2, 0.9 percent Na2O/K2O. This glass would not be suitable for light transmission since it contains large amounts of chrome and iron. Also, the process can not produce glass of the required quality or characteristics.

The fiber is essentially a single rod of glass having the above chemistry. The diameter of the fiber is typically, 10 to 14 microns. The glass making raw materials are melted in a large furnace approximately 24 feet long and 9 feet wide. The resulting glass is drawn into fibers using platinum bushing having 400 or more holes. These fibers are married together into rovings and/or chopped into fiber length form 1/4 to 1 1/2 inches.

See the attached picture of E-Glass Fiber Furnace. 1

1 Photographs not reproducible in Record.

The fibers used in telecommunications are generally known as optic fibers. These are made using two different glasses; a core glass and a clad glass. The core glass is normally pure Quartz (SiO2). The cladding glass may be a zinc lanthanum borate glass (ZNO, LA, B2O3).

See attached picture of Optic Fiber Furnace. Also, see attached picture of E-Glass products. 1

Sincerely,
Albert Lewis.

--

--

U.S. DEPARTMENT OF COMMERCE,

Bureau of Export Administration,
Washington, DC.

Export License Application, RWA Notice, Case Number: C120752.

Action Date: May 30, 1990.

The reason printed below explains why the referenced Export License Application is (r)eturned (w)ithout (a)ction. When an application has been returned without action and is being resubmitted, a new application form must be submitted. When a new form is submitted, it must reference the original application. The resubmission must be in accordance with the requirements existing at the time of the resubmission (see paragraph 372.4(G) of the Export Administration regulations).

Applicant reference number: C120752.

Applicant: M467939.

Matrix Churchill Corporation.

5903 Harper Road, Cleveland, OH 44139.

Consignee in country of ultimate designation: Techcorp, Ministry of Industry Building, Al Nidhal Street, Baghdad, Iraq. Reason: The equipment specifically identified on this application do not need a validated license and qualify for general license G-Dest.

Refer inquiries to: Exporter Assistance Staff, Office of Export Licensing, P.O. Box 273, U.S. Department of Commerce, Washington, D.C. 20044, or nearest district office (see Export Administration regulations for list of district offices).

--

Matrix-Churchill Corp.,
Cleveland, OH, May 30, 1990.

Mr. Albert Lewis,
Glass Inc. International
Chino, California
Subject: Glass Fiber Project--Export License

This is to advise you of my phone discussions with Mr. Richard Kress of the Department of Commerce--Office of Export Licensing, with regard to the subject of our export license. Mr. Kress called me today at noon in response to our letter dated May 25, 1990, copy attached. He advised me that after review of the technical data for the computers we are intending to ship for the plant, it was established that this equipment is classified as G-Dest, and as such does not require an export license. He advised me that we could go ahead and ship. However, I requested that they advise me in writing stating the above, which he promised to do immediately.

I then asked him about the Glass Fiber Technology itself, and whether it is also clear. His reply was that the only concern was with the computer equipment, and since no export license is required, the end user does not matter anymore, and that we can ship all the equipment for the plant including the computer. I stated to him that I would not ship the computer equipment until receipt of his letter.

As soon as we receive such letter, I will send a copy for your records.

Very Truly Yours,

A.T. Qaddumi,
Project Manager.

--

--

U.S. DEPARTMENT OF COMMERCE,

Bureau of Export Administration,
Washington, DC.

Mr. A.T. Qadummi,
Matrix-Churchill Corp.
Cleveland, Ohio.

Dear Mr. Qadummi: Pursuant to our recent telephone conversations I am informing you of the following. The Office of Technology and Policy Analysis informed me that they concur with our determination regarding the 286 computer and peripherals on export license application C120752. This equipment is decontrolled under General License G-Dest and should be classified as 6565G. The technical data for glass fiber production can be shipped under General License GTDR with a letter of assurance. The glass fiber equipment qualifies for General License G-Dest and should be classified as 6399 G. Temperature and process controllers that are serially networked to the computer should be classified as 6599G and qualifies under General License G-Dest. The following item numbers identified in the equipment list provided by the applicant cannot be classified because of lack of technical parameters: 24, 49, 78, 89, 90, 91, 92, 93, 99, 101, and 105. For these items a formal commodity classification should be obtained in order to determine whether they require a validated license. For further information please contact Lockett Yee in OTPA-TTC at 377-1662 or Dale Jensen in OTPA-CS at 377-0708. The statements made in this response are based on information from the OTPA files for the export license application referenced above.

Sincerely,

Richard Kress,
Strategic Trade Specialist.

--

Matrix-Churchill Corp.,
Cleveland, OH, June 1, 1990.

Mr. Lockett Yee,
U.S. Department of Commerce,
Washington, DC.
Subject: Glass Fiber Project--Application for Export License.
Reference: Our Application No. C120752--Your Control Code No. D065531.

Dear Mr. Yee: As per your request, please find another copy of our application dated November 17, 1989. Also attached is a copy of Mr. Albert Lewis's letter dated March 30, 1990, to yourself on the specification of Glass Fiber. I will call Mr. Lewis today to ask him to send you a complete copy of the document he sent to you then.

You are kindly requested to review the above documents and to advise us whether we need an export license or not for exporting the technology of Glass Fiber, and if so, to grant us the export license. If you need additional information, please don't hesitate to call us.

Your urgent attention to this matter is greatly appreciated.

Very Truly Yours,

A.T. Qaddumi.

--

--

Matrix-Churchill Corp.,
Cleveland, OH, June 4, 1990
Name: Mr. Adnan Al-Amiry.
Company Name: TDG--London.

Dear Adnan: Please fax the following (2) sheets to Techcorp as per our discussions earlier today. Also, if you may send it to our office in Baghdad for follow up.

Thanks,

A.T. Qaddumi

--

Matrix-Churchill Corp.,
Cleveland, OH, June 4, 1990.

Mr. Taha Salman,
TECHCORP,
Baghdad, Iraq.
Subject: Glass Fiber Project--Export License.

After a lengthy debate with the U.S. Department of Commerce--Office of Export License, we were able to obtain their approval to export the technology for the E-Glass Continuous Fiber on the condition that we receive a `Letter of Assurance' from the Importer, Technical Corps for Special Projects, that neither the technical data nor the direct product thereof is intended to be shipped, either directly or indirectly, to some specified countries, as per the list of countries in the attached letter text.

To enable us to transfer the technology, you are kindly requested to send a `Letter of Assurance' as per the attached text.

Very Truly Yours,

A.T. Qaddumi
Project Manager.

--

REPUBLIC OF IRAQ,

Techcorp.

Matrix Churchill Corp.,
Cleveland, OH.
SUBJECT: E-GLASS CONTINUOUS FIBER PLANT--EXPORT LICENSE APPLICATION NO. C120752 LETTER OF ASSURANCE.

[Page: H6704]

Gentleman: This is to assure you that neither the technical data nor the direct product thereof from the above plant is intended to be shipped, either directly or indirectly to the following countries:

(1.) Country Group Q: Romania.

(2.) Country Group S: Libya.

(3.) Country Group W: Hungary, Poland.

(4.) Country Group Y: Albania, Bulgaria, Czechoslovakia, Estonia, German Democratic Republic, Laos, Latvian, Lithuanian, Mongolian People Republic, U.S.S.R.

(5.) Country Group Z: North Korea, Vietnam, Kampuchea, Cuba.

(6.) Afghanistan.

(7.) People's Republic of China.

(8.) Kama River (Kam AZ) or ZIL truck plants in the U.S.S.R.

Osama Humadi,
Technical Corps for Special Projects.

The SPEAKER pro tempore (Mr. Johnson of South Dakota). Under a previous order of the House, the gentleman from Indiana [Mr. Burton] is recognized for 60 minutes.

[Mr. BURTON of Indiana 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 New York [Mr. Owens] is recognized for 60 minutes.

[Mr. OWENS of New York 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 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 Wisconsin [Mr. Obey] is recognized for 60 minutes.

[Mr. OBEY 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 of California 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 New York [Mr. Fish] is recognized for 60 minutes.

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

END