COLUMN ONE : Iraq Arms: Big Help From U.S. : Technology was sold with approval--and encouragement--from the Commerce Department but often over Defense officials’ objections.

The Commerce Department approved millions of dollars in high-technology exports to an Iraqi research center after a classified Pentagon report warned on Nov. 6, 1986, that the nine-acre complex north of Baghdad was secretly developing missiles and weapons of mass destruction, according to government sources familiar with the report.

In a letter the next day, the Pentagon objected to issuance of an export license to a New Jersey computer maker, citing the “high likelihood” that American computer equipment would be applied to secret Iraqi military research at the complex called Saad 16.

Nonetheless, Commerce approved the sale “without condition.”

In fact, Commerce approved $1.5 billion in exports to Iraq of American high technology and other equipment with potential military uses from 1985 to 1990--some of it shipped directly to such Iraqi agencies as the Ministry of Defense, Atomic Energy Commission and air force. Although most of the U.S. government’s Iraqi trade documents remain secret, the story emerging from glimpses of Baghdad’s massive weapons procurement program reveals a U.S. export control system that seemed to be more sieve than barrier.

At Saad 16 alone, U.S. firms provided such products as: advanced computers, electronic instruments and high-grade graphics terminals for rocket testing and analysis; flight simulators and test equipment; microwave communications gear; radar maintenance equipment, and computer mapping systems.

The United States was not alone. In the years leading up to Iraq’s invasion of Kuwait, other countries now aligned against Saddam Hussein also sold him billions of dollars in arms and the technology to bolster his military manufacturing capabilities. Until mid-1988, Iraq was at war with Iran, a conflict in which the United States and others tilted toward Baghdad.

If America and its allies in the Gulf want to see who turned Iraq into the world’s fourth-largest military machine, “just look in the mirror,” said Stephen D. Bryen, a former deputy assistant secretary of defense in charge of the Pentagon’s technology security office.

But the reflected image is particularly painful for Americans, who now bear the heaviest burden of coalition forces in the Gulf War. Ironically, America also has been a leading critic of the spread of unconventional arms.

“We can’t go on solving every proliferation problem by committing 500,000 troops,” said one Pentagon official.

Although some of the international firms doing business with Iraq have been identified, most of the American companies have not. Commerce officials and a congressional oversight subcommittee refuse to release a secret list of American exports to Iraq on the grounds that it would embarrass the U.S. firms.

Among those calling for release of the list and reform of the entire export control system are such ideological opposites as California Rep. Howard L. Berman (D-Panorama City) and Sen. Jesse Helms (R-N.C.).

Ultraconservative Helms said that Iraq’s ability to rapidly develop such a dangerous arsenal is attributable to “unbelievable greed . . . and bureaucratic bungling.”

Staunch liberal Berman questioned the Commerce Department’s ability to balance its conflicting roles: promoting American exports while also acting as a national security watchdog to prevent export of sensitive goods.

“Their attitude is, ‘Business uber alles, ‘ “ scoffed Berman.

Missed Signals

Commerce apparently missed other warning signals from the Justice Department and Customs Service. High-profile prosecutions of smuggling conspiracy cases from Maryland to California showed that Iraq’s sophisticated and far-flung procurement network included Swiss front companies, hidden interest in established U.S. and British firms and batteries of covert agents arranging illegal exports of such items as ingredients for mustard gas and aircraft materials with low radar visibility.

In fact, the Iraqi dictator was buying more than arms and munitions. He was creating his own indigenous weapons industry--building military factories and research centers that needed Western technology. “Hussein had a very elaborate, comprehensive strategy,” said Massachusetts arms expert Michael T. Klare of Hampshire College.

Indeed, it was Iraq’s open acquisition of a vast range of U.S. technologies--much of it with State Department encouragement and all of it with Commerce Department approval--that prompted one veteran Customs official to contend, “We ran to sell rope to our hangman.”

Such sales were encouraged because one of America’s foreign policy goals, since the early 1980s, was to improve relations with Baghdad--what came to be called “the Iraq tilt.” Both the Reagan and Bush administrations sought to reduce Iraq’s reliance on the Soviet Union and to assure that it was a counterforce against the influence of Iran.

U.S. policy appeared to be: “The enemy of my enemy is my very good customer,” said the Customs official.

During congressional hearings last fall, the Commerce Department said it approved exports to Iraq “at a time when U.S. policy toward Iraq permitted commercial sales to take place.”

James M. LeMunyon, deputy assistant secretary of commerce for export administration, also testified, “The U.S. export controls program is the most extensive and complex in the world.”

Since the Gulf War broke out, however, Commerce officials have been unwilling to respond publicly to mounting questions about how the United States helped arm Iraq.

One of the first major targets of allied bombing raids in the Gulf War was Saad 16.

The Iraqi military research and development center was built in foothills of the Kurdistan Mountains north of Baghdad by a host of prominent international firms.

The prime contractor was a division of Gildemeister, the German machine tool and engineering firm in which Beverly Hills defense conglomerate Litton Industries held a substantial 14.3% stake at the time. A Litton spokesman said the firm had been “a passive investor” and had no direct involvement in the Iraq project.

The major subcontractor was industrial giant Messerschmitt-Bolkow-Blohm, a subsidiary of Daimler-Benz, the German auto maker, and an occasional supplier to the Pentagon. Other significant participants in the project included several German firms and companies from Austria, Brazil, Egypt, Italy and the United States.

Much detail about the project was provided to the U.S. Commerce Department in two letters supporting export license applications by Electronics Associates Inc. of Long Branch, N.J. The letters, copies of which were obtained by The Times, were originally submitted to Gildemeister in 1985 and early 1986 by officials of Saad General Establishment, the Iraqi government agency overseeing development of Saad 16.

Iraqi officials said the facility’s purposes were benign. Saad 16, they said, would be devoted to “the development and modernization of scientific instruments and apparatuses.” No nuclear research would be conducted, they assured.

The Pentagon’s Bryen, however, said he was alarmed that the complex was being equipped with wind tunnels, blast-proof rooms and 82 laboratories apparently dedicated to research in such fields as rocket fuels, guidance systems and chemicals.

So, in November, 1986, when Iraq sought to acquire what are known as hybrid computers for the Saad 16 facility, Bryen and his staff objected. The computers were to be provided jointly by Electronics Associates and the Gould Corp. of Ft. Lauderdale, Fla.

“(The Department of Defense) is inclined to deny completely this export because of the high likelihood of military end use and the association of the involved companies in sensitive military applications,” Bryen’s staff told Commerce in a Nov. 7 letter.

Fierce Debate

Bryen, in a recent interview, said the same computer destined for Saad 16 was then being used at the U.S. government’s White Sands Missile Range in New Mexico.

“We believed at the time that the computers were going to be used to help refine the accuracy of Hussein’s missiles,” Bryen said.

After what he described as a fierce debate with Commerce, Bryen said the matter was brought to the National Security Council, which he said reluctantly endorsed his conclusion. “I was under the impression the thing was stopped,” he recalled.

But last summer, shortly before Iraqi troops swept into Kuwait city, Bryen learned that the computers had been shipped. He said he reviewed documents showing that the export license had been “approved unconditionally”--even before the Security Council meeting.

“I don’t understand why Commerce did what they did--choosing to disregard explicit warnings,” Bryen said. “They didn’t dispute them; they simply ignored them.” Commerce officials would not comment.

Paul Finkel, a spokesman for Electronics Associates, said the company’s computer “could not be used for any meaningful military application.” He said it was too small to compute flight dynamics and was being confused with other larger computers made by the firm.

The Pentagon, however, believed that the equipment was capable of helping Iraq accomplish critical missile performance analysis.

Several other U.S. companies also sent high-tech equipment to Saad 16, among them the California firms Hewlett Packard of Palo Alto, which sold computers and signal analysis equipment, and Wiltron of Morgan Hill, which shipped electronic test and measuring equipment.

“All our sales were made under U.S. export laws,” said Marlene Somsak, a Hewlett Packard spokeswoman. “We are not in the foreign policy business. When the guys in the black hats can change so quickly, we look to the federal government to help us decide who to sell to.”

And Oregon-based Tektronix Corp., which sold a spectrum analyzer, oscilloscope and computer graphics terminal, also said its exports had been approved by Commerce after review by the National Security Council. Wiltron declined comment.

Ultimately, equipment worth at least $200 million went into Saad 16, 40% of it from U.S. companies, according to Senate testimony by W. Seth Carus, an analyst with the Washington Institute for Near East Policy.

‘Pile of Rubble’

Since Jan. 17, the complex has been a repeated target of bombing attacks. Said one government source: “It is now a beautiful pile of rubble.”

An arms control expert said: “It’s amazing. Sell it first and bomb it later seems to be the West’s motto.”

Gary Milhollin, director of the Wisconsin Project on Nuclear Arms Control, also said that if export controls had been properly exercised by Western nations, Hussein never could have become such a threat.

Iraq’s ease in acquiring weapons of mass destruction raises the prospect that it could happen elsewhere and casts doubt on the effectiveness of policies designed to check the spread of unconventional arms.

“We shouldn’t be doing any business in high technology with dictators,” said Los Angeles Rabbi Marvin Hier, dean of the Simon Wiesenthal Center, which has published two lengthy studies on Iraq’s arms procurement program.

American companies doing business with Iraq did so with the encouragement of the White House, which regarded improved economic links with Baghdad as an essential element of its warming relations with the Hussein government.

Also, President Reagan and then-Secretary of Commerce Malcolm Baldrige were acting to ease export controls generally as a means of battling America’s growing trade deficit. American high-technology firms in particular claimed that such controls hurt them as they competed with rival Japanese and West European companies.

In 1982, the Reagan Administration excused Iraq from the list of international terrorists that had been a barrier to virtually all trade with Baghdad. The next year, the U.S. began providing agricultural credits to allow Iraq to buy American rice and grain. In 1984, formal diplomatic relations were restored for the first time in 17 years.

And in 1985, U.S. companies were invited to the first Iraq-sponsored business exhibition in Baghdad. “The American Embassy places the highest priority on promoting commerce and friendship between our two nations,” U.S. Ambassador April Glaspie would assure prospective Iraqi customers later.

Trade between U.S. firms and Iraq began as soon as Baghdad escaped the terrorist list.

First on Hussein’s shopping list was helicopters--he bought 60 Hughes helicopters and trainers with little notice. However, a second order of 10 twin-engine Bell “Huey” helicopters, like those used to carry combat troops in Vietnam, prompted congressional opposition in August, 1983.

Rep. Berman complained in a letter to Secretary of State George P. Shultz that it had been “a serious mistake to take Iraq off the terrorism list” and warned that “American helicopters will fuel the Iran-Iraq conflict.” Nonetheless, the sale was approved.

Hussein was still buying helicopters in 1984 when Berman again urged Shultz to intervene. This time, Iraq sought 45 Bell 214ST helicopters that originally were designed for military purposes. U.S. officials said Iraq proposed using some of them to ferry VIPs and to equip others for crop dusting.

“It is beyond belief that Iraq, with its foreign exchange reserves depleted by its conflict with Iran, would purchase 45 helicopters at $5 million apiece simply to transport civilian VIPs,” Berman said.

A Shultz aide dismissed Berman’s concern. W. Tapley Bennett Jr., assistant secretary of state for legislative affairs, said the “civilian model” Bell helicopter was not on the official list of items controllable as a defense article.

Further, the State Department official responded in a letter to Berman, “We believe that increased American penetration of the extremely competitive civilian aircraft market would serve the United States’ interests by improving our balance of trade and lessening unemployment in the aircraft industry.”

Weinberger ‘Ballistic’

When Secretary of Defense Caspar W. Weinberger learned that Commerce, with State Department support, had approved the Bell sales, “he went ballistic,” according to Bryen. Then-National Security Adviser William Clark was brought in to mediate the high-level Pentagon-Commerce dispute. “There was no way you could prevent those helicopters from getting military capability,” Weinberger said in an interview.

As a result of Weinberger’s outburst, the Defense Department got a more direct role in reviewing applications for exports of goods with dual military and civilian uses.

The procedural changes in Washington came after the helicopter sales were completed. In 1988, Kurdish civilians were attacked with poisonous gas from Iraqi helicopters and planes. U.S. intelligence sources say they believe that the American-built helicopters were among those dropping the deadly bombs.

While officials in the U.S. were debating the wisdom of helicopter sales to Iraq, Hussein was undertaking a massive global weapons acquisition program of far greater consequence.

He bought advanced fighter aircraft from the French government. He ordered bombs, mines and grenades in countries ranging from Chile to Portugal. And he hired the expertise of noted Miami-based arms merchant Sarkis Soghanalian, who brokered the original U.S. sale of Hughes helicopters. Soghanalian volunteered in an interview that he arranged $2 billion in sales to Iraq of tanks, howitzers and other military goods from West European countries.

“Iraq was the only country purchasing with cash from the beginning of the war. Therefore, everyone was eager to knock on their doors and do business with them,” Soghanalian said. In 1987, he was indicted on charges of illegally exporting 103 helicopters to Iraq equipped with TOW antitank missiles. He denies the allegation, and a trial is pending.

Hussein also sought military self-sufficiency by building a huge domestic munitions industry. A key figure in that effort was a New Jersey cigarette exporter with longstanding business ties to the Mideast, Nasser Beydoun. He arranged the first bomb factory deal between the Iraqi government and Carlos Cardoen, a Utah-educated munitions engineer with business interests in Santiago and Miami.

Ultimately, Cardoen’s deals with Iraq amounted to $467 million, court documents state. Beydoun is suing Cardoen for failing to pay him $30 million in commissions from the sale of cluster bombs and other arms. U.S. Customs agents are investigating Cardoen and an Ohio company linked to Hussein’s web of European holding companies.

Six federal agencies also are investigating loans made by the Atlanta branch of Banca Nazionale del Lavoro of Italy. The small bank loaned more than $2 billion to Iraq, and investigators believe that more than half of that was used for military projects.

Ironically, Iraq also received extensive support from Kuwait, Saudi Arabia and Egypt, all of whom were aligned against Tehran. And for a time, Egypt had a joint venture with Iraq and Argentina for missile development.

In all, Iraq spent about $50 billion on its military buildup during the last decade, according to government sources.

The State Department official who spearheaded the campaign, called Operation Staunch, was hired by Iraq as its Washington lawyer shortly after he left the Administration in 1985. For the next five years, Richard M. Fairbanks III advised Iraq on a variety of issues, including how to manage the controversy after the disastrous missile attack that killed 37 sailors aboard the U.S. guided missile frigate Stark in 1987.

In fact, Fairbanks was a paid agent of Iraq when he served on a committee advising presidential candidate George Bush on Middle East matters in 1988, New York’s Village Voice disclosed in December.

Fairbanks, who did not return calls, also was an adviser to the U.S.-Iraq Business Forum. The private trade group, composed of many prominent American firms seeking business ties with Iraq, was established in 1985 by another former U.S. envoy, Marshall Wiley. The organization also lobbied against bills that could have restricted trade with Iraq, congressional sources said.

In 1988, for example, the forum opposed congressional efforts to penalize Iraq in retaliation for the gas attack on Kurdish civilians. The Senate unanimously passed sweeping sanctions that would have denied Iraq access to most U.S. technology. But the measure died after it was opposed by the White House.

“I am very concerned . . . that the Iraqi government will get the wrong message from our failure to complete action on this sanctions bill,” Sen. Claiborne Pell (D-R.I.) told colleagues.

U.S. Limits Resisted

Critics of American policy said that right up to the invasion of Kuwait, the U.S. government resisted taking actions limiting business between the two countries. Nor was there a strong response from Washington last March when the Iraqi military executed accused spy Farzad Bazoft, a British journalist who had been investigating a secret weapons plant.

A month after the execution, Sen. Alan K. Simpson (R-Wyo.) told Hussein during an amicable meeting in Baghdad: “I believe your problem is with the Western media and not with the U.S. government. . . . “

Last June, a State Department official told the Senate Foreign Relations Committee that Iraq had an “abysmal human rights record.” However, he refused to categorize the Baghdad government’s record as a “consistent pattern of gross violation of human rights,” a determination that could have led to sanctions.

That same month, the U.S.-Iraq Business Forum’s newsletter reported that 55 American companies already had rented all display space available in the U.S. Pavilion at the November, 1990, Baghdad International Fair.

Meanwhile, Hussein’s campaign to buy arms and the technology to develop his own was continuing. One American technology clearly included on Hussein’s shopping list was components useful in developing nuclear weapons.

A San Diego businessman was approached by the Iraqi government in 1988 for an order of specialized voltage capacitors to be used, the buyers said, in an aerospace laser project at the University of Technology in Baghdad.

But Jerold Kowalsky , president of CSI Technologies in San Marcos, knew the specifications fit only one product: a detonation device for nuclear bombs similar to those made by the firm for the U.S. government. He volunteered to aid federal agents in an undercover sting investigation that would last 18 months and exposed a network of front companies in London.

Negotiations ended with the arrest of Daghir and several others as a phony batch of detonators was being checked aboard an Iraqi Airlines flight from London to Baghdad. They are awaiting trial on smuggling charges in London before facing similar charges in the United States.

Kowalsky emerged from the case with a medal for public service from the Customs Service and strong opinions about Hussein: “He’s a highly intelligent thug.”

Commerce Dept. Help

But even as the San Diego investigation was concluding, another attempt by Hussein to acquire a product with potential nuclear use was being aided by the Commerce Department.

Iraqi business agents had approached a subsidiary of New Jersey’s Consarc Corp. to purchase high-temperature furnaces for use, they said, in making artificial limbs for war victims. Preliminary agreement on the deal was reached in April, 1989, prompting the U.S. commercial attache at the Baghdad embassy to send congratulations to Consarc executives saying: “Hooray for you!”

However, Consarc President Raymond J. Roberts was concerned about reports of Iraqi unconventional weapons projects, and soon thereafter notified Commerce that his “skull furnaces” could be used in nuclear arms development. Nonetheless, Commerce authorized the export, and Consarc’s furnaces were moved to a Philadelphia dock.

Last June, a Philadelphia reporter called Bryen, by then in private business in Washington, to ask about the shipment. The call set in motion a series of rapid actions leading to temporary Customs Service detention of the furnaces.

Commerce resisted Defense efforts to halt the shipment. Officials said buyers in Iraq assured Consarc that they would not use the furnaces for nuclear development. Lacking either evidence that the technology would be put to military use or explicit rules forbidding the furnace export, officials said they had no legal basis to block the shipment.

But after persistent complaints from the Pentagon and inquiries from eight senators, the National Security Council finally intervened and Consarc was ordered to apply for a special export license. Before the company could do so, Iraq invaded Kuwait and President Bush declared a total trade embargo.

Bryen is still angry that Commerce had failed even to consult the Pentagon before approving the sale and then “tried to stonewall” Defense efforts to reopen the matter. “I’m deeply concerned we will repeat this performance.”

There are signs the Administration favors further relaxation of export controls. Last week, National Security Adviser Brent Scowcroft told a group of Republican senators that the White House backs recommendations that would weaken Pentagon influence in export control decisions, a source at the meeting said. Scowcroft did not respond to calls.

Consolidating power in Commerce would perpetuate a system “designed to fail,” said a Senate source. Weinberger, now publisher of Forbes magazine, said it would be a mistake to reduce the Pentagon’s role.

Bryen and others still in the Pentagon are concerned that American forces in the Gulf are yet to pay for the loose export controls of the past.

Early in 1989, the Pentagon objected to the pending export of a computer system that officials warned “has too many applications in weapons systems development.”

The export application by a Massachusetts firm identified the buyer as the Scientific Research Centre of Baghdad and stated that the computer system’s intended use was to analyze blood, urine and geological samples.

But Defense officials told Commerce: “This system has uses in the production of chemical weapons, and we have no credible assurances that it will not be used in that way.”

Commerce approved the export.

Next: Hussein’s European suppliers.

Where Iraq Got Its Weapons

Throughout the 1980’s, weapons and technology poured into Iraq from all over the industrialized world. Nations that enabled Saddam Hussein to create his war machine now find themselves among the allies doing battle with it.

In much of the past decade, Iraq--brimming with petrodollars and at war with Iran, an archenemy of the United States--found willings arms merchants wherever it turned.

The greatest amount of weaponry in Iraq’s arsenal came from the Soviet Union. But other Western nations like France, Italy and West Germany sold weapons of every type. The United States and Britain--the bulwarks of the anti-Iraq coalition-sold tanks, missile launchers and helicopters.

Even more disturbing is the export of U.S high technology to Iraq that apparently occurred between 1985 and 1990, a whopping $1.5 billion worth. That technology is believed to have contributed to the development of Saad-16, a military-research complex that was part of Hussein’s goal of building a home-grown weapons industry.

BUILDING IRAQ’S ARSENAL: Countries and the Weapons They Sold UNITED STATES: Battle tanks, artillery, antitank missile launchers, helicopters BRAZIL: Armored personnel carriers, rocket launchers BRITAIN: Battle tanks, antitank missile launchers, helicopters FRANCE: Armored personnel carriers, artillery, antitank missile launchers, surface-to-air missiles, helicopters, combat aircraft SPAIN: Helicopters, combat aircraft ITALY: Artillery, helicopters YUGOSLAVIA: Artillery WEST GERMANY: Antitank missile launchers, surface-to-air missiles CZECHOSLOVAKIA: Armored personnel carriers HUNGARY: Armored personnel carriers AUSTRIA: Artillery EGYPT: Antitank missile launchers SOUTH AFRICA: Artillery SOVIET UNION: Battle tanks, light tanks, infantry-fighting vehicles, armored personnel carriers, artillery, rocket launchers, antitank missile launchers, surface-to-air missiles, surface-to-surface missiles, air defense guns, helicopters, combat aircraft CHINA: Battle tanks, combat aircraft, armored personnel carriers

SAAD-16: A Case Study

Saad-16, located in mountains near Mosul (north of Baghdad), was a military research and development center with 82 laboratories. Plans for the plant, above, were drawn up in Austria and show buildings and laboratories labeled in German.

Work in those labs was related to such areas as missile propellants, ballistics, chemical and nuclear weapons, composite metals, electronics, lasers and aircraft construction.

The United States provided much of the high-tech equipment that made the research possible. After repeated allied bombing attacks, U.S. government sources say, Saad-16 has been reduced to rubble.

A Sample of Products Exported to Saad-16 From U.S. Sources: * Electronic instruments for rocket testing * Computer graphic terminals for rocket research * Hybrid analog-digital computer for missile R&D; * Flight test lab equipment * Microwave technology * Radar maintenance equipment * Computer mapping system

Some Services Exported to Saad-16 From Various Foreign Sources: * Plans and blueprints for the plant--Austria * Rocket motor nozzles--France * Gyroscopes for missile guidance systems--France * Machine tools and precision lathes--Britain * Chemical weapons lab facilities--Italy * Plant construction--West Germany * Non-echoing room for missile research and development--West Germany * Wind tunnel--West Germany * Chemical weapons test equipment--West Germany * Computers for simulating nuclear explosions--West Germany Sources: Various U.S. government agencies; Middle East Defense News