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Licensing Mass Destruction U.S. Exports to Iraq: 1985-1990 by Gary Milhollin June 1991. INTRODUCTION The U.S. Department of Commerce licensed more than $1.5 billion worth of sensitive U.S. exports to Iraq from 1985 to 1990./1 Most were "dual-use" items, capable of making nuclear weapons or long- range missiles if diverted from their claimed civilian purposes. On March 11, 1991, the Commerce Department released a list of those licenses. The list showed the equipment approved, the date, the value, the buyer in Iraq and the claimed Iraqi end use. This report is an analysis of the list. It shows, beyond any doubt, that U.S. export controls suffered a massive breakdown in the period preceding the Gulf War. When U.S. planes were sent to destroy Iraq's strategic sites, much of the equipment they bombed was made in the United States. The report finds that: The Commerce Department knew that millions of dollars' worth of sensitive American equipment would wind up in Iraq's missile and other military programs, but approved the licenses anyway. The Commerce Department failed to refer missile technology export cases to the State Department and nuclear technology cases to the Energy Department, in violation of its own procedures. Front companies for every known nuclear, chemical and missile site in Iraq bought American computers, with total American computer exports exceeding $96 million. American machine tools may have helped build the SCUD missiles that hit Tel Aviv and killed U.S. troops in Saudi Arabia. American radar components may have helped shoot down U.S. aircraft and develop long- range missiles. Based on these findings, the study recommends that Congress take dual-use licensing away from the Commerce Department, appoint a Congressional committee to oversee the licensing process, and open dual-use licensing to public view. EXPORTS TO IRAQ: THE U.S. RECORD Dangerous technology Rocket casings "General military repair applications such as jet engines, rocketcases, etc." This was the declared purpose of two U.S. exports to Iraq, valued at $1.4 million and approved on January 20 and February 10, 1988. The first was for precision machine tools, the second for lasers. The Iraqi buyer was a procurement agent for the Iraqi SCUD missile program. With this equipment, Iraq would be able to make precision parts for missiles, and also be able to rework the cases of its short- range SCUD missiles, enabling them to carry more fuel and fly farther. Indeed, the stated use on the application was to work on "rocketcases." With the longer range, the new Iraqi SCUDS could hit Tel Aviv and kill U.S. soldiers in Saudi Arabia. The exporter was a German company, exporting from the United States. The company, whose name the Commerce Department refused to disclose, first came to the attention of German officials in early 1984, when German intelligence reported that the company was suspected of selling Pakistan equipment for making nuclear weapon fuel. In May 1987, the firm was cited in news reports, this time for trying to smuggle blueprints for uranium enrichment to Pakistan through Switzerland. To make matters worse, another German firm, Uranit, was suing this company for stealing the blueprints. According to a German official, the evidence against the company was "very incriminating."/2 The company was also suspected of hiring a Swiss firm to produce special equipment for Pakistan that could enrich uranium to nuclear weapon grade. The press reports appeared only six months before the company applied for its two U.S. export licenses on December 1 and 22, 1987. Despite the exporter's notoriety, the Commerce and Energy Departments took only two months to approve the first application (case B281441) and less than a month to approve the second (case B286904). Neither was referred to the State or Defense Departments for review. The importer was the "Nesser Establishment for Mechanical Industries," also known as the "Nassr State Enterprise for Mechanical Industries." One of Nassr's main jobs was to procure equipment for Project 1728, devoted to increasing the range of Iraq's SCUD missiles. Nassr was part of the Iraqi Ministry of Industry and Military Industrialization (MIMI), run by Saddam Hussein's son-in-law Hussein Kamil al-Majid. MIMI was generally in charge of Iraq's missile and chemical weapon efforts. Nassr also served as the procurement arm for Taji, a site used to produce chemical munitions and, according to Western intelligence documents, "responsible for the development and manufacture of gas centrifuges for uranium enrichment."/3 In addition, Nassr ran artillery ammunition plants, purchased "high- capacity driving nozzles" for missiles from a German company,/4 and was linked to the Condor II intermediate-range missile project. Thus the Commerce Department approved sensitive U.S. equipment that would go directly to Iraqi nuclear weapon, chemical weapon, and missile sites, despite the fact that the exporter was suspected of nuclear smuggling, and despite the fact that the importer declared an intention to work on rocket bodies. Commerce knew that the exporter was unreliable, and knew that the end use was improper, but approved the export anyway. This equipment may well have helped build the SCUD missile that killed American troops in Dhahran. The buyer represented the SCUD program, the equipment was used to rework rocket casings, and Iraq used a long-range SCUD with a reworked casing to reach the U.S. troops in Saudi Arabia. Radar In January 1988, the Commerce Department approved more than two million dollars' worth of quartz crystals to the "Salah al Din Establishment" (case B290664) and the "Iraqi Trading Company" (case B346115), both of which frankly said that they wanted the crystals for "components in a ground radar system." Salah al Din was a military electronics factory built by the French company Thomson- CSF. It manufactured three-dimensional early warning radars and may have made components for missile guidance and radar jamming equipment. Quartz crystals perform a vital function in radar: they measure time accurately in small units. Because the position of an object is determined by the time it takes a radar pulse to reach the object and return, accurate time measurement is essential. Military-level quartz crystals are defined as those with high stability over a wide operating temperature, or with the ability to withstand acceleration forces up to 20 times gravity, or shock greater than 10,000 times gravity, or very high radiation. Lower grade crystals do not need a license. The crystals carried commodity control number 1587, identifying them as especially useful for missile production. All items on the U.S. Commodity Control List require an individual license for export, but some of the items, such as quartz crystals, are singled out as sensitive for missiles. In such cases, the State Department is supposed to be consulted because State chairs the Missile Technology Export Committee (MTEC), an interagency group that evaluates export applications subject to missile controls. This means that the Commerce Department should have referred the two applications to State for interagency review. Instead, Commerce itself approved both in only ten days. Commerce claimed that the cases were "not restricted for MTCR [missile], chemical/biological, or nuclear non- proliferation." Salah al Din also needed advanced equipment to operate its radars. In late 1989, it bought American frequency synthesizers valued at $140,000 to "calibrate, adjust, and test surveillance radar" (case D055821). This would apparently include the radar used to shoot down U.S. aircraft in the Gulf War, and radar used as ground support for missiles capable of delivering nuclear weapons. The frequency synthesizers carried commodity control number 1531, also on the missile technology control list when used for missile "launch and ground support equipment." Commerce did not refer this case to the State Department either, as it should have done for a missile technology item. It approved the application unilaterally in only nineteen days, claiming again that the export was "not restricted for MTCR [missile], chemical/ biological, or nuclear non-proliferation." In fact, Commerce knew that Salah al Din was building military radar. When Commerce compiled its internal records on the frequency synthesizers, it noted that "according to our information, the end user [Salah al Din] is involved in military matters." Commerce then deleted this statement before it released the export list to the public. Thus, Commerce approved vital parts for a surveillance radar that Commerce knew was military. The effect was to provide ground support for Iraqi missiles, and to help Iraq detect and shoot down U.S. planes in the Gulf War. It is not surprising that Commerce concealed this knowledge from the public. Guilty knowledge Sa'ad 16 In November of 1986, the Defense Department sent an important letter to the Commerce Department./5 The letter informed Commerce that the Pentagon had intelligence information linking a giant Iraqi site called "Sa'ad 16" to missile development. Later, the Los Angeles Times reported that the exact date of the letter was November 6, and also said that according to government sources familiar with the letter, it revealed that Sa'ad 16 was working on other non-conventional weapons as well. Thus, by November 6, 1986, the Commerce Department should have stopped approving dual-use exports for Sa'ad 16. There is also compelling evidence that Commerce knew what was going on at Sa'ad 16 much earlier. In February 1985 the Director of the Sa'ad General Establishment sent a letter to Gildemeister Projecta, the German company in charge of buying equipment for Sa'ad 16./6 The letter, which described the Sa'ad 16 project in detail, was reportedly sent to Commerce along with the first license requests from the Sa'ad organization in 1985. Indeed, on May 8, 1985, Gildemeister filed an application for a $60,000 computer for the Sa'ad General Establishment, which Commerce approved six weeks later (case A897641). The letter listed 78 laboratories, including four for testing "starting material and fuel mixtures," two for "calometric testing of fuels," two for developing "control systems and navigation" equipment and one for "measuring aerodynamic quantities on models." On May 3, 1986 a second letter from Sa'ad revealed that the Sa'ad General Establishment was a part of the "State Organization for Technical Industries (SOTI)" and that another name for Sa'ad 16 was the "Research and Development Center." /7 Commerce undoubtedly received this second letter--an internal Commerce memo mentions it./8 These two letters from Sa'ad, combined with the November 1986 message from the Pentagon, should have barred any of the organizations named from receiving sensitive U.S. exports after November 6, 1986. But that was not the case. The Sa'ad General Establishment got over half a million dollars' worth of U.S. computers in eight cases, seven of which were approved after November 1986. These computers went directly to Sa'ad 16, Iraq's largest and most important missile research site. None of the cases was referred to the Department of Energy, as required for items on the Nuclear Referral List such as computers. As explained below, the Nuclear Referral List consists of items that are especially useful for making nuclear weapons if diverted from their civilian purpose. Sa'ad also got $290,000 worth of precision electronic and photographic equipment, approved in February 1987, three months after Commerce received the Pentagon's letter and two years after the letter describing Sa'ad 16 was signed. SOTI, the second Iraqi organization mentioned in the Sa'ad letter, got high-speed U.S. oscilloscopes in March 1988, a year and a half after Commerce received the Pentagon's letter (case B259524). SOTI is part of the Iraqi Ministry of Defense. It directed the construction and equipping of a solid rocket motor production plant called "DOT," and it also procured equipment for at least two SCUD missile enhancement projects. High-speed oscilloscopes are essential to maintain radar, computers and missile guidance systems, all of which have internal electronics that operate in short time frames. Oscilloscopes are also used to capture the brief signals from a nuclear weapon test, which occur in a microsecond or less. Only high-speed oscilloscopes need a license for export. The third organization mentioned in the Sa'ad letter was the "Research and Development Center," which the letter said was another name for Sa'ad 16. The "Center" was allowed to buy $850,000 worth of high-performance measuring, calibrating, and testing equipment (cases B060729 and B075876), all approved in January 1987, three months after the Pentagon's letter and almost two years after the Iraqi letter describing Sa'ad 16 was signed. These cases were not referred to the Department of Energy either, despite the fact that the items exported were on the Nuclear Referral List. The Defense Department apparently objected at the staff level but did not escalate its objections to a higher level before Commerce approved the exports. The Center also got communicating and tracking equipment valued at $3,000 in 1989 (case B382561), again without referral to the Department of Energy as required for an item on the Nuclear Referral List. In addition to the letters from Sa'ad and the Pentagon, there were other warnings. According to U.S. officials, American intelligence began to brief other U.S. agencies on the Iraqi end user network at least as early as 1987. The briefings continued throughout 1988. By early 1989, the intelligence warnings had become clear and urgent. At that time the CIA called all the U.S. agencies concerned with exports together for a special meeting on Iraq. Commerce, however, refused to attend on the ground that its "judgment might be contaminated." In the open press, the earliest detailed accounts of Sa'ad 16 emerged in January 1989, when the German magazine Stern published a list of the Sa'ad 16 laboratories. Over the next several months, the German press published several stories linking Sa'ad 16 to Iraqi missile, nuclear and chemical weapon development. But even these press reports did not stop Commerce from approving the tracking equipment in June of 1989. Thus the Commerce Department continued to approve sales of sensitive American equipment to Iraqi front companies even after it knew that the equipment was likely to be diverted. Violations of procedures Commerce also failed to refer cases to other agencies for review, in violation of its own procedures. The quartz crystals mentioned above were on the missile technology list--the list of items deemed especially useful for missile production./9 Both that list and a second one, known as the Nuclear Referral List, are subsets of the U.S. Commodity Control List (CCL). All items on the CCL require an individual validated license for export. Under Commerce Department regulations, quartz crystals are defined as missile items if "usable as launch and ground support equipment." This they clearly were, because the Iraqi buyer stated that they would be used as "components in a ground radar system." Ground radar is essential to support the launching, testing and tracking of missiles. The frequency synthesizers were also on the missile technology list if "usable as launch and ground support equipment." They clearly were also, because the buyer admitted that they would be used to "calibrate, adjust, and test surveillance radar." Thus, Commerce should have referred both of these cases to the State Department for review by the Missile Technology Export Committee, the interagency group responsible for licensing missile-related exports. The Commerce Department also failed to refer millions of dollars' worth of compasses, gyroscopes and accelerometers to the State Department. Some of these items were sold to Iraqi Airways, which the U.S. Treasury identified in April 1991 as a "front company" in Iraq's "arms procurement network." Some also went to the Iraqi Air Force and some went to the Iraqi Ministry of Defense--both military organizations. All items in this category (ECCN 1485) are defined as missile-related because they can be used to make missile guidance systems./10 Commerce nevertheless approved them without consulting the State Department, as required by its own procedures. Thus when Commerce stated on March 11, 1991 in a press release that "no license applications for any MTCR [missile technology] items have been approved for export to Iraq," it contradicted its own export records. Commerce also violated its statutory obligation to refer nuclear cases to the Department of Energy. Section 309(c) of the Nuclear Non- Proliferation Act of 1978 requires that the executive branch develop a special list of items that "could be of significance for nuclear explosive purposes" if diverted from civilian use. The list is known as the "Nuclear Referral List." All items on the list require export licenses, and all license applications must be "reviewed by the Department of Commerce in consultation with the Department of Energy."/11 In fact, Commerce licensed numerous items on the list without referring them to the Department of Energy. The most common item was computers, which carry CCL number 1565. Computers operating above a certain speed are regulated by the Nuclear Referral List, and some special computers are also on the missile technology list. Commerce approved the following 20 computer cases, with a total value of over $5 million, without referring any of them to the Department of Energy. The fact that these computers required licenses shows that the computing speed must have been high enough to be regulated by the list. Thus, in all 20 cases, Commerce violated its own procedures as well as Section 309 (c) of the Nuclear Non-Proliferation Act. Case A800390: Importer: State Organization of Post & Tel. Value: $3,600,000 Case A843654: Importer: Iraq Spare Parts Manufacturing Value: $13,000 Case A844783: Importer: Ministry of Industry Value: $488,000 Case A847302: Importer: Schlumberger Value: $500,000 Case A849514: Importer: Ministry of Irrigation Value: $389,000 Case A892228: Importer: State Organization for Tech Ind. Value: $11,000 Case B050974: Importer: Directorate of Mobilisation Value: $25,900 Case B061971: Importer: Central Statistics Value: $ 87,800 Case B069513: Importer: Iraq Nation Oil Value: $210,600 Case B072960: Importer: Economic Commission Value: $40,810 Case B073687: Importer: Schlumberger Value: $2,000 Case A853710: Importer: Saab Abbas Value: $40,700 Case A854382: Importer: Arab Petroleum Value: $37,500 Case A857954: Importer: State Organization for Phones Value: $48,000 Case A862229: Importer: Ministry of Education Value: $13,000 Case A862232: Importer: Ministry of Industry Value: $22,400 Case A866566: Importer: Scientific Council Value: $1,900 Case A866912: Importer: Mendes Jr. International Value: $32,000 Case A887265: Importer: University of Baghdad Value: $10,000 Case A887266: Importer: University of Baghdad Value: $11,000 Commerce also approved several military items to military buyers without consulting the Department of Defense. These included the machine tools and lasers, discussed above, which are used to fabricate rocket casings, the quartz crystals discussed above which are used as components in ground radar, and the navigation, radar and airborne communication equipment sold to the Iraqi Air Force and Ministry of Defense. Exports of such clearly military items to military buyers should have been referred to U.S. security experts. The Defense Department, in fact, played only a minor role in the export approval process. The Pentagon saw an export case for only two reasons. First, it was consulted for its opinion whether an item was likely to be diverted to a Cocom-proscribed country (primarily the East Bloc). For these cases, the Pentagon had no power to decide whether the export might contribute to nuclear, missile or chemical weapon proliferation. Such a decision was outside the scope of its review. Second, the Pentagon saw a handful of nuclear cases because it participated in the Subgroup on Nuclear Export Coordination (SNEC), the interagency group that evaluates nuclear-related exports. But the SNEC reviewed only 24 of the 771 cases approved from 1985 to August 1990--three percent of the total. Commerce essentially bypassed the SNEC by failing to refer cases to it. Thus, for the vast majority of the exports--roughly 97%--the Pentagon did not participate in judgments about the risk of proliferation. Neither did the Arms Control and Disarmament Agency or the intelligence agencies. They had no role beyond their participation in the SNEC. Thus, in 97% of the cases, Commerce alone decided, or decided with the concurrence of Energy or State, whether an item increased the risk of nuclear or missile proliferation. Commerce did not follow a consistent pattern in selecting the few cases it did send to the SNEC. The Iraqi Atomic Energy Commission, for example, bought a large computer, valued at $2.8 million (case B175217) which was not referred to the SNEC, and also bought $87,000 worth of precision electronic and photographic equipment (ECCN 6599) with no external review at all (case D042767). But a second computer, worth only $24,390 (case B108166), was referred to the SNEC, indicating that the SNEC may not have received the most important cases. Ten of the items approved for the Iraqi Atomic Energy Commission were on the Nuclear Referral List, but only three were submitted to the SNEC. Commerce also approved $200,000 worth of computers for Al- Qaqaa, the Iraqi nuclear weapon design laboratory. Commerce did not refer the computers to either the Department of Energy or the SNEC. Violations of policies The Commerce Department had full authority to reject every application discussed above. Under Commerce regulations, dual-use exports must satisfy specific criteria. The criteria include the following tests: whether the stated end use is acceptable, whether the item could aid nuclear weapon or missile development, whether the importing country has a nuclear or missile development effort, and whether the recipient country has good "non- proliferation credentials."/12 Iraq never came close to passing those tests. The "stated end use" of some of the items was explicitly to produce rockets and radar. The items exported, such as machine tools and radar components, were obviously powerful enough to aid missile and nuclear development. It was also clear that Iraq had nuclear and missile development programs. Iraq had been trying to build nuclear weapons since at least 1981, when Israel bombed the Osirak reactor near Baghdad, and Iraq had been known since the mid-1980s to be working with Argentina and Egypt on nuclear-capable missiles. In addition, U.S. intelligence knew by the mid-1980s that many of the importers listed on the licenses were fronting for Iraqi nuclear and missile sites. If the Commerce Department had applied its own criteria, it would have denied many of the Iraqi applications. Dangerous end users The annex to this report lists Iraq's known military and nuclear end users. The sixteen buyers listed either built, equipped or operated Iraq's nuclear, missile and chemical weapon sites. Given the centralized control of all important activity in Iraq, and the supreme importance of the Iraqi military, the true list of military users is surely longer. Any sensitive export to a buyer in Iraq must have been available to the military, regardless of what the export application said. Nevertheless, the sales to these sixteen buyers tell an important story. All sixteen imported U.S. computers, the indispensable tool of modern research and manufacture. These computers must have aided the work of virtually every Iraqi nuclear, missile and chemical weapon site. Altogether, about $25 million worth of U.S. computers went to the sixteen military or nuclear buyers identified in this report. Iraq's total purchases of U.S. computers amounted to more than $96 million, one fourth of all the Iraqi dual-use imports from the United States. Exports were also licensed that--for reasons known only to Commerce--did not appear on the list released to the public. In 1987, Electronic Associates of Long Branch, New Jersey sold Sa'ad 16 a "hybrid digital-analog computer," specially designed for wind tunnel experiments on missiles. The computer is reportedly identical to a computer now operating at the U.S. government's White Sands missile range in New Mexico. The sale went to MBB and Gildemeister, the two German companies that were Sa'ad 16's main missile technology suppliers. The Department of Defense opposed the sale and had the license brought before the National Security Council in September 1987. Although the NSC decided to block the export, the computer had been shipped eight months earlier in January, without the Pentagon's knowledge. Commerce also approved exports informally that do not appear on the public list. In response to an exporter's request, Commerce can approve a shipment by stating that no license is required. Two of these cases have recently come to light. In 1989, the Consarc Corporation of New Jersey notified Commerce that it wanted to export a "skull" furnace to Iraq. Consarc explicitly told Commerce that the furnace could aid a nuclear program. The furnace could melt zirconium for nuclear fuel rods, could melt titanium for missile nose cones and other critical missile parts, and might be able to melt plutonium and uranium for nuclear bomb cores. The skull furnace was to be accompanied by three other furnaces: an electron beam furnace from Consarc, and furnaces for vacuum induction and heat treatment from Consarc's subsidiary in Scotland. Used together, the four furnaces would have far exceeded Iraq's stated purpose, which was to manufacture artificial limbs for victims of the Iran-Iraq War. According to U.S. officials, Iraq would have had a "Cadillac" production line for atomic bomb and ballistic missile parts, even better than the facilities at American nuclear weapons labs. Commerce nevertheless told Consarc that no export license was needed. In June 1990, a person outside the government told the Pentagon about the sale. This set off a chain of official reactions that led the White House to block the shipment. It turns out that equipment accompanying the furnaces needed export licenses. In June 1989, Commerce licensed special computing equipment to control the furnaces' operation (case D030956) and in January 1990, Commerce licensed numerical control equipment to make new crucibles for the furnaces (case D064342). This latter export was crucial. One of the main reasons for thinking that the original skull furnace might not be used to make A- bombs was that the original crucible was not suited for melting heavy metals such as uranium. But when Commerce licensed the equipment for making additional crucibles, Iraq got what it needed to make A-bomb cores. Also in 1989, another New Jersey company, Struthers, Dunn, Inc. of Pitman, contacted the same Commerce representative, Michael Manning, who had advised Consarc. Iraq wanted to buy "time-delay relays," devices that have civilian uses but are also used to separate the stages of ballistic missiles in flight. Iraq wanted a special model, "tested for shock and vibration" that would perform at 350,000 feet-- 66 miles above the earth. Ronald Waugaman, who handled the case for Struthers, Dunn, said "when I heard 350,000 feet, I thought missile."/13 Waugaman said he told Manning about the high-altitude specifications, which were military grade. They contradicted Iraq's official claim that the relays were for "heavy industrial use." Waugaman said he told Manning that "they're not putting tractors 350,000 feet in the air."/14 Nevertheless, Waugaman said that U.S. officials told him that if a civilian end use was stated, there was no reason to bar the export. RECOMMENDATIONS Strengthening U.S. Export Controls The U.S. export control system has broken down for three reasons: the wrong people are in charge of it, Congress has ignored it, and it is secret. Remove export control from the Commerce Department It has frequently been said that there is a conflict between the Commerce Department's duty to promote exports and its duty to regulate them--that Commerce has conflicting missions in the export field. The licenses to Iraq prove that this is true. Commerce licensed items that did not meet its export criteria, that it knew would be diverted from their supposed civilian purposes, and that it knew would help Iraq's nuclear and missile programs. Commerce even excluded the State and Energy Departments from the licensing process, in violation of its own procedures. The best known example of a federal agency that tried to promote and regulate at the same time is the old Atomic Energy Commission, which had the job of both promoting and regulating nuclear energy until 1974, when Congress decided to split the functions. The Nuclear Regulatory Commission now regulates; the Department of Energy promotes. Everyone agrees that nuclear regulation gained great credibility and effectiveness from this separation. Congress should now follow this precedent for dual-use licensing. It should take this function away from Commerce and give it to an independent regulatory agency such as the Nuclear Regulatory Commission or to some other department, such as Defense, that has no export promotion function. The Commerce Department, which specializes in trade, is not the place to decide strategic questions. An agency that specializes in national security should have that task. It is essential to recognize that the real significance of dual- use items is strategic, not economic. The number of items on the control list is small; well over 90% of the applications to export them are granted; and the value of the few applications denied is tiny compared to the overall value of U.S. foreign trade. It has been suggested that Congress should create a new agency to handle all export licensing. Such a move would be sound if Congress could insure that industrial interests would not take the agency over, as they have the Commerce Department. Industry would have a great incentive to pack such an agency with personnel loyal to its interests. It would be safer and more logical to make the Defense Department the "hub" for controlling all exports relevant to nuclear, chemical, biological and missile proliferation. Most of the expertise is already in the Pentagon, and any additional expertise could be transferred from other agencies and obtained through the national laboratories. Commerce, which has no substantive expertise on dual-use technology, should retain only a record keeping function. Commerce should refer applications to the Pentagon, which would make the final licensing decision in consultation with the Commerce, Energy, and State Departments, and with the Arms Control and Disarmament Agency and the intelligence agencies. This change would put military experts in charge of exports with military applications. Impose Congressional oversight Congress essentially ignored export licensing to Iraq until the invasion of Kuwait. Oversight was entirely lacking during the period preceding the Gulf War. If Congress had looked into what the Commerce Department was doing, Congress would have learned quickly that Commerce was not following the rules. A Congressional reaction might have stopped some of the worst exports from going out. Congress should now impose an effective form of oversight. A Congressional committee with jurisdiction over national security matters should be given the task of overseeing and evaluating export licensing. That committee could be a subcommittee of one of the Armed Services committees, or of the Governmental Affairs or Government Operations committees, or of the Joint Economic Committee. The committee or subcommittee should receive complete reports on pending or approved licenses and should have sufficient staff to oversee export controls. If necessary, it could receive assistance from the General Accounting Office or the Office of Technology Assessment. Open export licensing to public view The other important lesson we can draw from nuclear regulation is the great benefit of making decisions in public. All of the Nuclear Regulatory Commission's export licenses are granted on the public record and in the light of day. This is the main reason why there are no horror stories about U.S. nuclear exports to Iraq. Neither exporters nor regulators want to defend such transactions in public, so they do not happen. The Commerce Department's process is secret. Neither Congress nor the public is permitted to examine Commerce licensing in the open. This is true despite the fact that dual-use licenses are supposed to be for civilian items restricted to peaceful use. Commerce refuses even to confirm the existence of an individual license application, and refuses to disclose which applications have been approved after the exports have gone out. Cases come into public view only when someone inside the government becomes angry enough to leak them to the press. This means that only the exporters know which cases are pending, and only the exporters' voices are heard by the licensing officers when decisions are made. The effects are to freeze the public and Congress out of the process and to open the door to the worst forms of private lobbying. The Commerce Department argues that secrecy is necessary to protect proprietary interests. But the U.S. nuclear industry competes well on the international market despite the openness of NRC regulation. Congress should now require the Commerce Department to publish quarterly summaries of all dual-use licensing actions. This information already exists in a database. It could be released by pushing a button. The resulting list would be the same as the one that Commerce released in March on Iraq, but would include countries such as Iran, Libya and Syria. The list would only cover licensing actions that have been completed. Pending sales would not be revealed. Congress could accomplish this by amending Section 12(c) of the Export Administration Act, which the Commerce Department now interprets as requiring complete secrecy for dual-use licenses. The list would also include the name of the exporter. If a company is ashamed of having sold one of its products to a developing country, the company should not have made the sale in the first place. Reputable companies do not object to telling the truth about their business. If the sales are legitimate, and satisfy the export criteria, there is no reason to keep them hidden. The decision to license them is an official government act paid for with tax dollars. Pushing export licensing into the light of day would encourage the exporters to be honest, encourage the government to be careful, and allow the public to find out whether U.S. exports are undermining national security. ANNEX: IRAQI END USERS Following is a list of the known Iraqi military and nuclear end users that imported sensitive American equipment from 1985 to August 2, 1990, when Iraq invaded Kuwait: Iraqi Airways: One of the "agents and front companies" that Iraq used for its "arms procurement network," according to the U.S. Treasury Department. In a press release on April 1, 1991, Treasury termed these companies "Specially Designated Nationals," and said that "when you deal with them, you're dealing with Saddam." Total approvals to Iraqi Airways: over $50 million, including: 1. Compasses, gyroscopes, and accelerometers (ECCN 1485) valued at $13 million in seven cases. - The Commerce Department approved these sales without external review in four of the seven cases, despite the fact that these were missile items and were approved after the missile list came into effect. All items under category 1485 are controlled as missile items. 2. Navigation, radar and airborne communication equipment (ECCN 1501) valued at $5 million in five cases. - Approved without external review in four of the five cases. 3. Computers (ECCN 1565) valued at $5 million. 4. Aircraft, helicopters, engines and equipment valued at $23,000,000. 5. Aircraft parts, boats, diesel engines, underwater cameras, and submersible systems valued at $28 million. Many of the items approved for Iraqi Airways fell into categories that are listed, by their commodity control numbers, as useful in the development, testing, production and deployment of missiles capable of delivering nuclear weapons. Items such as compasses, gyroscopes, accelerometers, computers, radars and navigational equipment all fall into this category. It is possible that some of these items aided the Iraqi SCUD program. The procedures by which missile technology exports are approved are not available to the public. It is widely assumed that at least the Department of State reviews and approves these sensitive exports. However, the Department of Commerce approved at least six exports that appear to be on the missile technology list with no external review. In one case (B373514), the Commerce Department approved over a million dollars' worth of compasses, gyroscopes, and accelerometers without consulting either the State or Defense Departments. All items in category 1485 are missile items and should have been referred to the State Department. Iraqi Air Force: Total approvals: $57 million, including: 1. Navigational, radar, and air communication equipment (ECCN 1501) valued at more than $200,000 in nine cases. - No external review in five of the cases (A839273, A858162, A866417, B200489, B222433). - State Department approved three of the cases. 2. Compasses, gyroscopes, and accelerometers (ECCN 1485) valued at $957,500. - Commerce Department approved without external review in March 1989, despite the fact that these are missile technology items. 3. Oscilloscopes (ECCN 1584) valued at $12,391 (case A826888). - Approved by State Department in May 1985. 4. Computers (ECCN 1565) valued at $11,394 (case B236580). - No referral to Energy Department, as required for items on the Nuclear Referral List. 5. Aircraft and helicopters (ECCN 6460) valued at $45.8 million. - Approved by the State and Energy Departments from April to June, 1988. Iraqi Atomic Energy Commission: Responsible for nuclear research in Iraq, including Iraqi work on nuclear weapons. Total approvals: over $3 million, including: 1. Computers (ECCN 1565) valued at $2.9 million. - The largest computer export, valued at $2.8 million (case B175217) was approved by the Energy Department without referral to the SNEC, whereas a second computer, worth only $24,390 (B108166) was referred to the SNEC, indicating that the SNEC did not receive the most important cases. - A third computer was approved without referral to the Energy Department, which is required for a commodity on the Nuclear Referral List being exported to a nuclear end user for a nuclear end use. This violated export control procedures. 2. Precision electronic and photographic equipment (ECCN 6599) valued at $87,000 (case D042767). - No referral for external review. Ten of the items approved for this end user were on the Nuclear Referral List, but only three were submitted to SNEC for interagency review. Ministry of Defense: In charge of Iraqi defense operations. Responsible for the State Organization for Technical Industries (SOTI) and the Sa'ad General Establishment (both described below). Total approvals: over $567 million, including: 1. Computers (ECCN 1565) in eighteen cases valued at $2.1 million. - Commerce referred only two of the eighteen cases to the Energy Department, as required for items on the Nuclear Referral List. Of the two cases referred to Energy, only one was referred to the SNEC. 2. Compasses, gyroscopes and accelerometers (ECCN 1485) in three cases valued at over $1 million. - These items are subject to missile technology controls. - Commerce did not refer one case (B204774) valued at $60,136 for external review, although the approval was in May 1987 after the establishment of the missile control list in April 1987. 3. Navigation, radar, and airborne communication equipment (ECCN 1501) valued at $291,000. - These items may be subject to missile technology controls. - The bulk of the value of this approval was for case B353226, valued at $264,000, which Commerce did not refer for external review, despite the fact that the approval was in September 1988 after the establishment of the missile control list in April 1987. - Commerce licensed this sale of dual-use military equipment to a military end user without external review by the Defense Department. State Organization for Technical Industries (SOTI): Subdivision of the Ministry of Defense. Commissioned the building and equipping of DOT, a solid rocket motor production plant built as part of the Condor II project. Also procured, according to U.S. officials, equipment for the Al-Hillah and Al-Fallujah SCUD modification projects and the space launch facility at Karbala. Total approvals: $1.4 million, including: 1. Oscilloscopes (ECCN 1584) valued at $20,000. - Commerce approved three applications, two without the external review required for items on the Nuclear Referral List. - One oscilloscope went to Mansour, a military site described below. 2. Computers (ECCN 1565) valued at $380,000 in five cases. - Only one of the five cases was reviewed by the Energy Department, as required for items on the Nuclear Referral List. 3. Measuring, calibrating, and testing equipment (ECCN 1529) valued at over $143,000 in three cases (B052572, B156528, B311058). - Commerce licensed the largest approval (B052572), valued at over $132,000, without an end use statement. - Commerce referred only one of the three cases to the Energy Department, although all three were on the Nuclear Referral List. - Commerce made no referral to the State Department, despite the fact that this item appears to be on the missile technology control list, and one of the cases was approved in 1988 after the list went into effect. Sa'ad General Establishment: A division of SOTI. Self-described as "a state organization specialized in the planning and erection of large industrial complexes for the Government of Iraq," Sa'ad does not operate any of the contracted facilities itself./15 According to MidEast Markets, Sa'ad only does work on military projects. Contracted for the construction of Sa'ad 16 at Mosul. Total approvals: $1.1 million, including: 1. Computers (ECCN 1565) valued at more than $450,000 in seven cases (B177669, B224682, B265627, B271629, B350736, E000057, E002881). - No referral to the Energy Department, as required for items on the Nuclear Referral List. 2. Precision electronic and photographic equipment (ECCN 6599) valued at $290,000. Monsour Factory (or Al Mansour): Linked to SOTI and served as a procurement agent, according to U.S. officials, for the SCUD enhancement facilities at Al-Fallujah and Al-Hillah, and the space launch center at Al-Anbar. According to press reports, purchased a high- speed oscilloscope from Tektronix. Total approvals: $5.2 million, including: 1. Electronic manufacturing equipment (ECCN 1355) valued at $4.2 million. - No referral to the State or Energy Departments. - This equipment enables domestic production of transistors and diodes for use in computers and other electronics, including military systems such as communications and radar. 2. Electronic measuring, calibrating and testing equipment (ECCN 1529) valued at $644,000. - No referral to the Energy Department, as required for items on the Nuclear Referral List. - No referral to the State Department, despite the fact that this item appears to be on the missile technology list and was approved in October 1989 after the list came into effect. 3. Computers (ECCN 1565) valued at $354,000 and $12,000. - No referral to the Energy Department, as required for items on the Nuclear Referral List. 4. Superconductive electromagnets (ECCN 1574) valued at $8,280. - No referral for outside review. Ministry of Industry and Military Industrialization (MIMI), formerly Ministry of Industry and Minerals: Run by Saddam Hussein's son-in-law Hussein Kamil al-Majid, with overall responsibility for Iraq's nuclear, missile and chemical weapon programs. MIMI ordered furnaces, the sale of which was blocked by the White House in June 1990 because of Iraq's plan to divert the furnaces to nuclear weapon production. Total approvals: $8.5 million, including: 1. Computers (ECCN 1565) in twenty cases valued at almost $8 million. - No referral of 19 of the cases to the Energy Department, as required for items on the Nuclear Referral List. - Commerce referred one case, valued at $29,300, to the Departments of State and Energy, but approved another valued at $488,000 unilaterally. 2. Computer-controlled machine tools (ECCN 1091) valued at $525,000 (case D064342). - Departments of State and Energy approved in January 1990. Nassr State Enterprise for Mechanical Industries (or Nesser Establishment for Mechanical Industries): Part of the Ministry of Industry and Military Industrialization (MIMI), described above. Nassr procured equipment for Project 1728, a SCUD modification effort; was involved in Iraq's nuclear program; was the procurement arm for Taji, a site used to produce chemical munitions; and, according to Western intelligence documents, was "responsible for the development and manufacture of gas centrifuges for uranium enrichment."/16 Nassr also ran artillery ammunition plants; purchased "high-capacity driving nozzles" for missiles from a German company; may have been a part of the European procurement network run by Iraqi front company TDG in London; was the main customer of Matrix Churchill, another Iraqi front company in England; and was linked to the Condor II intermediate-range missile project. Total approvals: $1.8 million, including: 1. Computers (ECCN 1565) valued at $1 million. - State Department approved in mid-1988. - No referral to the Energy Department, as required for items on the Nuclear Referral List. 2. Computer-controlled machine tools (ECCN 1091) valued at $888,000 (case B281441). - Energy Department approved in February 1988. Al-Qaqaa State Establishment: Part of MIMI. Responsible, at least in part, for Iraq's nuclear weapon program. According to Western intelligence, this center was "concerned with the development of the non-nuclear components of nuclear weapons."/ 17 The intelligence report also states that Al-Qaqaa had experience with modern high explosives and high- speed measurements, both of which are necessary to develop nuclear weapons. In March 1990, customs officers at Heathrow Airport in London seized a case of capacitors bound for Al-Qaqaa that were especially designed for detonating nuclear warheads. Total approvals: over $200 thousand, including: 1. Computers (ECCN 1565) in three cases valued at $200,000. - No referral to the Energy Department, as required for items on the Nuclear Referral List. Technical Corporation for Special Projects (Techcorp): Also part of MIMI. Operated Sa'ad 16. Responsible for the SCUD modification project and development of the Condor II missile. Also purchased parts for the Iraqi supergun. Total approvals: $61,300, including: 1. Two computers (ECCN 1565) valued at $16,980 and $44,320. - No referral to the Energy Department, as required for items on the Nuclear Referral List. University of Mosul: Site of and procurement agent for Sa'ad 16 (also referred to as "Research & Development Center"), Iraq's major missile research and development center, where work was done on the Condor II and SCUD modification as well as research on chemical and nuclear weapons. According to European news reports, the German company that supplied Sa'ad 16 described the project as a "laboratory and workshop complex [that] will be run in cooperation with Mosul University."/18 Total approvals: over $1.8 million, including: 1. Equipment for enhancing satellite images, including computers (ECCN 1565) valued at $1 million and related equipment (ECCN 4590) valued at $27,800. - Commerce Department approved the related equipment (ECCN 4590) in June 1985 without external review. - This equipment enhances photographs taken by satellites. The enhanced photos can be used to improve targeting by missiles or aircraft, or for other reconnaissance objectives. The licensee, International Imaging Systems of Milpitas, California, did not ship the equipment approved in 1990. However, on two previous occasions, International Imaging sent shipments to Iraq. In 1981, an image processing system went to the Iraqi Directorate General for Geological Survey and Mineral Investigation, and in 1987 a similar system went to the Space and Astronomy Research Center in Baghdad./19 2. Viruses and viroids (ECCN 4997) valued at $1. - Commerce Department approved in December 1987 without external review. 3. Computer (ECCN 1565) valued at $483,000. - Approved (case B062253) without referral to the Energy Department, as required for items on the Nuclear Referral List. Research and Development Center: Another name for Sa'ad 16, Iraq's main missile research and development site at Mosul. Total approvals: $927,000, including: 1. Measuring, calibrating, and testing equipment (ECCN 1529) valued at $870,000 in two cases (B060729 and B075875). - No referral to the Energy Department, as required for items on the Nuclear Referral List. - The Defense Department objected at the staff level but did not escalate its objections before Commerce approval. - This equipment can be used to test and develop microwave circuits for missile guidance radars and microwave communications. One licensee, Wiltron of Morgan Hill, California, sold a scalar network analyzer using a radio frequency of up to 40 GHz to test and develop these circuits. According to one report, the Department of Defense tried to stop an approval valued at $49,510 in November 1986, but the Commerce Department licensed the export the following January. 2. Communicating and tracking equipment (ECCN 1502) valued at $3,000. - No referral to the Energy Department, as required for items on the Nuclear Referral List. 3. Radio spectrum analyzer (ECCN 1533) valued at $45,664. 4. Computers (ECCN 1565) valued at $10,228. Hutteen General Establishment: Iraqi government organization that purchased large-caliber artillery shell cases from Spain and Germany that could be filled with chemical payloads. Total approvals: over $1 million, including: 1. Computers (ECCN 1565) in four cases (B249146, B322679, D030887, D014317) valued at over $1 million. - No referral to the Energy Department, as required for items on the Nuclear Referral List. Badar Establishment of Mechanical Engineering (or Bader General Establishment): A military enterprise responsible for producing aerial bombs. Total approvals: $2 million, including: 1. Computer (ECCN 1565) valued at $1.6 million. - Departments of Energy and State approved from March 1988 to June 1988. 2. Technical model (ECCN 9999) valued at $373,708. - No referral for external review. Salah al Din Establishment (originally called Saad 13; apparently also called University of Salahaddin): A military electronics factory built by the French company Thomson-CSF. Manufactures three-dimensional early warning radars under license from Thomson as well as other Thomson military telecommunications equipment. Some electronic countermeasures and inertial guidance components were also made here. Total approvals: over $1.6 million, including: 1. Quartz crystals and assemblies (ECCN 1587) valued at $1.1 million (case B290664). - Commerce approved without external review, despite the fact that this item is on the missile technology control list and was approved in January 1988 after the list went into effect. The stated end use was components for a radar system. 2. Frequency synthesizers and equipment (ECCN 1531) valued at $140,000 (case D055821). - Approved without external review, despite the fact that this item is on the missile technology control list and was approved in November 1989 after the list went into effect. - The stated end use of this item was for "calibrating, adjusting and testing of a surveillance radar," which could function as a ground support system for nuclear-capable missiles. 3. Navigational, radar, airborne communication, and mobile communication equipment (ECCN 6598) valued at $115,000 (case D092873). - Approved without external review in April 1990. 4. Communication, detection, and tracking equipment (ECCN 1502) valued at $1,825. - Energy Department approved in February 1987. 5. Computers (ECCN 1565) in three cases valued at $130,000. - Energy Department approved all three cases. 6. Measuring, calibration, and testing equipment (ECCN 1529) valued at $7,375 (case D066127). Endnotes 1. "BXA Facts" (press release), U.S. Department of Commerce, Bureau of Export Administration, March 11, 1991. The list covers a period from 1985 to August 2, 1990, when Iraq invaded Kuwait, and reveals that three of the approvals were for over $1 billion worth of cargo trucks, which were not shipped. Id. at p. 3. See also, Stuart Auerbach, "$1.5 Billion in U.S. Sales to Iraq," Washington Post, March 11, 1991, p. A1; Michael Wines, "U.S. Tells of Prewar Technology Sales to Iraq Worth $500 million," New York Times, March 12, 1991, p. A13. 2. Mark Hibbs, "Components For Pakistan Were Intended For High- Enriched U, German Confirms," Nuclear Fuel, May 18, 1987. 3. Mark Hibbs, "Intelligence Reports Identify Two Sites as Key to Iraqi Weapons Program," Nuclear Fuel, January 21, 1991, p. 3. 4. "Involvement in Iraqi Gun Factory Reported," Der Spiegel (Hamburg), July 9, 1990, pp. 54-56, translated in JPRS/TND, July 18, 1990, pp. 35-37. 5. United States Government Accounting Office, "Arms Control: U.S. Efforts to Control the Transfer of Nuclear-Capable Missile Technology" (Report to the Honorable Dennis DeConcini, U.S. Senate), GAO/NSIAD-90-176, p. 14. 6. N.B. Namody, Director of the Saad General Establishment, letter of February 27, 1985 to Gildemeister Projecta, describing the 76 laboratories at the Sa'ad 16 Research and Development Center. 7. Sa'ad General Establishment, letter of May 3, 1986 from H. A. Al- Dahan to Gildemeister Projecta. 8. U.S. Department of Commerce, Memorandum to John Knofala from Willard A. Workman, August 12, 1986. 9. Quartz crystals are missile technology items if "usable as launch and ground support equipment" under commodity control number (ECCN No.) 1587. See Part 779, Supplement Four, U.S. Export Administration Regulations (April, 1987). 10. See Part 779, Supplement Four, U.S. Export Administration Regulations (April, 1987). 11. U.S. Export Administration Regulations, Supplement No. 1 to Part 778, p. 1. 12. U.S. Export Administration Regulations, Sections 776.18 (missile technology) and 778.4 (nuclear technology). 13. Henry Weinstein, "Despite Warning, U.S. Okd Sale of Missile Part to Iraq," Los Angeles Times, April 9, 1991. p. A7. 14. Id. 15. Sa'ad General Establishment, letter of May 3, 1986 from H. A. Al- Dahan to Gildemeister Projecta. 16. Mark Hibbs, "Intelligence Reports Identify Two Sites As Key to Iraqi Weapons Program," Nuclear Fuel, January 21, 1991, p. 3. 17. Mark Hibbs, "Intelligence Reports Identify Two Sites As Key to Iraqi Weapons Program," Nuclear Fuel, January 21, 1991, p. 3. 18. "A Civilian Project of Mosul University," Stern (Hamburg), January 26, 1989. See also Alan George and Herbert Lansinger, "Rocket Merry-Go-Round," Profil (Vienna), March 20, 1989, pp. 36-38, translated in JPRS/TND, May 5, 1989, pp. 31-34. 19. 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