[CTRL] ACUTE KNOWLEDGE OF IRAQ

[Euphorian]

-Caveat Lector-

BUSH ADMINISTRATION HAD ACUTE KNOWLEDGE OF
IRAQ'S MILITARY INDUSTRIALIZATION PLANS
Henry B. Gonzalez, (TX-20)
(House of Representatives - July 27, 1992)
http://www.fas.org/spp/starwars/congress/1992/h920727g.ht
m


[Page: H6696]

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.

[TIME: 1610]

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.

[Page: H6697]

[TIME: 1620]

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.

[TIME: 1630]

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.

[Page: H6698]

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.

[TIME: 1640]

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:

[Page: H6699]

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.

[TIME: 1650]

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:

[Page: H6700]

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.

[TIME: 1700]

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
A<:>E<:>R
~~~~~~~~~~~~~~~~~~~~
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has to stand on its own merits.  Therefore, unless I am a first-
hand
witness to any event described, I cannot attest to its validity.
~~~~~~~~~~~~~~~~~~~~
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is distributed without charge or profit to those who have
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