Sensitive U.S. Exports to WMD Procurement Agents in Iraq

Testimony of Gary Milhollin

Director, Wisconsin Project on Nuclear Arms Control

Before the House and Senate Joint Economic Committee
Subcommittee on Technology and National Security

April 23, 1991

I am pleased to have this opportunity to address the Subcommittee on Technology and National Security of the Joint Economic Committee.

I am a member of the University of Wisconsin Law School Faculty and director of the Wisconsin Project on Nuclear Arms Control in Washington, D.C., a project devoted to slowing the spread of nuclear and other weapons of mass destruction to developing countries. It is encouraging to me, and I am sure to others working in this field, that the Subcommittee has taken an active interest in U.S. export controls and policies.

The Subcommittee has asked me to address a number of topics bearing on the current state of export controls–both U.S. and multilateral–and to recommend ways to improve the present systems.

I will discuss the U.S. export record concerning Iraq, the Bush administration’s recent nonproliferation initiatives, and then I will make my own recommendations for strengthening export controls.

I. U.S. exports to Iraq

I. The Bush Administration’s Actions on Arms Proliferation

After the Gulf crisis began, and everyone realized that the allied coalition might face a mass-destruction arsenal built with imports, the Bush Administration began to announce measures on export control. On November 16, 1990, the President issued Executive Order Number 12735. The Order listed sanctions that could, at the Administration’s discretion, be imposed on foreign persons and foreign countries that promote the spread of chemical and biological weapons. The measure was intended to be a substitute for the mandatory sanctions that Congress wrote into last year’s Export Facilitation Act, which the President vetoed.

But the Order is not really a substitute; it is only a statement that sanctions may be imposed if the Administration wants to impose them. Sanctions against foreign countries can be waived entirely for “significant foreign policy or national security reasons.”

In light of the State Department’s record of pampering Iraq right up to the invasion of Kuwait, I think that there is little chance that Secretary Baker will jump to cut off foreign aid, arms sales, and trade with other proliferant countries, or to punish one of our NATO partners for supplying a proliferant with equipment or know-how. State reportedly did not even want to name the countries that are subject to new controls under the Enhanced Proliferation Control Initiative, which I will discuss in a moment.

The Executive Order also does not even apply to the spread of nuclear weapons or ballistic missiles, in spite of all the evidence of outside help to Iraq’s nuclear and missile programs. If we are going to deal effectively with supplier countries like China–which reportedly has once again broken a nonproliferation pledge to us, this time by selling medium-range missiles to Pakistan–we have to impose swift and sure penalties for aiding all kinds of nonconventional weapon programs.

The Administration’s second measure is the Enhanced Proliferation Control Initiative (EPCI), announced on December 13, 1990. In that same announcement, unfortunately, the President also revealed that he had just approved the export of supercomputers to Brazil and India and a near-supercomputer to China.

Supercomputers are the most powerful tools known for designing both nuclear weapons and ballistic missiles. The Brazilian machine is slated for a Brazilian aircraft company that has a history of helping Iraq develop long-range missiles. The Indian machine is slated for an institute that is working on rocket research for the Indian government. The Chinese machine is being sent in spite of China’s recent missile deal with Pakistan, China’s nuclear help to Algeria, and China’s human rights record. Thus, while the Bush administration talks tough on proliferation, its officials are doing little to stop it. Its actions show that it is really not interested in spending any political capital to control weapons of mass destruction.

Under the Enhanced Proliferation Control Initiative, the administration applied export controls to chemical and biological weapon production equipment, and it expanded the number of precursor chemicals that require an export license. It also barred U.S. exporters from knowingly supplying goods for chemical or biological weapon or missile production.

These rules are fine as far as they go, but unfortunately that is not very far. Like the President’s executive order, the EPCI says nothing about controlling dual-use nuclear technologies, and it only addresses missile proliferation in its provision barring U.S. exports to countries or projects that the exporter knows is developing missiles. The Initiative does not make any real change in the way in which the government licensing process works. Merely expanding the list of chemicals and chemical equipment to be controlled does not equal getting tough on proliferation.

The administration’s most recent nonproliferation measure has been to require that the Commerce Department refer more license requests to other agencies for review. The Pentagon, for example, now is apparently receiving roughly 100 cases annually. This is only a tiny fraction of the many thousands of cases Commerce processes each year, but it is a larger fraction than before.

The Missile Technology Control Act, which Congress passed last session, now requires the Commerce Department to refer all items on the missile technology control list to the Pentagon for consultation if the exports are destined for a “country of concern.” The administration is supposed to be drawing up a classified list of these countries, but it is not clear where this process stands, and therefore it is unclear how thoroughly the act is being implemented. This referral procedure does not apply to nuclear-related items, so there now appears to be more Pentagon review of cases on missiles than there is of cases on the nuclear warheads that the missiles would carry.

In sum, the Bush administration is applying a few band-aids where a tourniquet is needed. If we are going to get serious about controlling nonconventional weapons proliferation, we need to adopt measures much stronger than these.

II. Strengthening U.S. Export Controls

If stopping proliferation really is a national security priority, as the President says, we need to put the people who make national security decisions in charge of controlling strategic exports. At present, the power is in the Commerce Department, which is exactly the wrong place. Commerce cannot both promote trade and police it at the same time, as the record in Iraq shows. When I last testified before the Subcommittee, I pointed out that old Atomic Energy Agency had the job of both promoting and regulating nuclear energy until 1974, when the functions were split. Everyone now agrees that the regulatory process gained great credibility and effectiveness from the separation.

I recommend that the Defense Department be made the “hub” agency for controlling all exports relevant to nuclear, chemical, biological, and missile proliferation. Commerce should have, at most, a record keeping function. Commerce should refer applications on receipt to the Pentagon, which would make the final licensing decision in consultation with the Commerce, Energy, and State Departments and the Arms Control and Disarmament Agency and with advice from the intelligence agencies.

To coordinate this process, the Defense Department could merge its relevant staff, and the relevant staffs from other agencies, into a Bureau for Strategic Trade. Commerce could still handle the paperwork once an application was approved, but DOD would have the power to approve or deny the license.

This change would put military experts in charge of licensing exports with military applications. If we should ever have to use force against another proliferant country, our armed forces would not be in the position in which they found themselves at the beginning of Operation Desert Shield last fall, when they did not know which U.S. exports had enhanced Iraqi weapons systems because Commerce would not give the Pentagon information about licensed sales.

I also recommend that Congress adopt a more systematic and effective form of oversight. A Congressional committee with jurisdiction over national security matters should oversee and evaluate U.S. export control on a regular basis. That committee could be a subcommittee of one of the Armed Services committees, or of the Governmental Affairs or Governmental Operations committees, or of the Joint Economic Committee. It could even be this subcommittee. The committee or subcommittee should receive complete quarterly data on completed export cases, and should have sufficient staff to oversee the export process. If necessary, the General Accounting Office could be asked to help.

I also recommend, as I did in my previous testimony, that the dual-use export process be pushed into the light of day. Congress should amend Section 12(c) of the Export Administration Act without delay, so as to require publication of quarterly public reports describing the dual-use export licenses that have been granted, including the name of the exporter. If a company is ashamed to have it known that it sold something, it should not have made the sale. Every dual-use export licensed is for a civilian item restricted to peaceful use. There is no excuse whatever for keeping such exports secret.

III. Cocom and Other Multilateral Export Regimes


I have spoken and written about Cocom’s rush to celebrate the end of the Cold War by reducing its control list, which in many cases means eliminating the only export controls in member countries on equipment with nuclear weapon and missile applications. That process is scheduled to continue later this month at a high-level meeting in Paris. The entire schedule of dual-use goods may be scrapped and replaced by a much smaller “core group” limited to eight categories. After the Paris meeting, a new text will be sent to industry for comment, and new regulations should be published this summer.

Among the items that probably will be released for sale are filament winding machines to make uranium gas centrifuges, “shake and bake” equipment for testing the ability of nuclear warheads and missiles to withstand atmospheric reentry forces, and high-speed cameras used to study the implosive shock waves that detonate fission bombs. The United States has tried to keep these goods away from proliferant countries for years.

If President Bush really believes that proliferation is a threat, he should be pressing Cocom to develop North-South controls as it loosens East-West controls on these and other technologies. Instead, the Bush administration is pushing Cocom along, and is not coordinating its nonproliferation goals with its actions on Cocom controls.

In November, the President ordered the Commerce Department to eliminate validated license requirements for exports to Cocom countries by June 1, 1991. The United States has also proposed that Cocom extend license-free treatment to some non-Cocom countries, including Hong Kong, Switzerland, Finland, Austria, Singapore, and South Korea. (The director of U.S. Naval Intelligence told Congress last month that South Korea probably has an offensive chemical warfare capability. South Korea also has a large civilian nuclear power infrastructure, a rival neighbor that is clearly trying to make the bomb, and has shown a past interest itself in acquiring nuclear weapons.) Removing these license requirements will eliminate the paper trail for sensitive dual-use goods and will make it easier for countries to re-export technology without being held accountable for where it goes.

The Nuclear Suppliers Group:

The members of the European Community adhered to the Nuclear Suppliers Guidelines in 1985, and have recently begun working through this medium to develop ways of controlling dual-use nuclear exports. The Nuclear Suppliers Group met in March 1991, for the first time in thirteen years, and on the basis of recent disclosures about exports to Iraq the United States persuaded most of the 26 members to pledge to adopt export controls on dual-use goods.

The NSG members will meet again in May to draft a multilateral dual-use nuclear control list, at which time they will look at the Cocom Atomic Energy List and the U.S. Nuclear Referral List for guidance. There have been discussions about controlling items such as beryllium, zirconium, and boron carbide, and Norway has raised the possibility of heavy water controls.

There is less agreement about requiring full-scope safeguards as a condition of nuclear exports. Several countries, including the United States and Germany, favor requiring full-scope safeguards as a supply condition, but France, the Soviet Union, Britain, Belgium and Italy are resisting unilateral requirements for full-scope safeguards, although Britain will apply them if all other supplier states do the same. Argentina and Brazil have been encouraged to join the NSG but have not done so, and there also has been discussion of the need to include China.

East Bloc export controls:

All of the former East Bloc nations have signed the Nuclear Non-Proliferation Treaty and adhered to the Nuclear Supplier Guidelines. However, without the Soviet Union as an enforcer, effective nuclear export controls are not assured. Cash-poor regimes and companies in Eastern Europe and the Soviet Union may become nuclear brokers and conduits for sensitive material to proliferant countries.

Nevertheless, Cocom is moving toward a policy of approving license for all but the most sensitive technologies to civilian end users in Poland, Hungary and Czechoslovakia within 30 days. The United States is committed to liberalizing export policy to these countries and is working with them to develop effective export control systems, although U.S. officials concede that these countries still have strong ties with the Soviet Union and with developing countries and that there is no sure way to prevent technology from being diverted.

Chemical and biological arms control:

According to reports on the latest Australia Group meeting, there is a good chance that the other member countries will adopt export controls on all 50 precursor chemicals on the warning list as the United States has done under the Enhanced Proliferation Control Initiative. There is more resistance to controlling chemical production equipment, but I would urge the administration to press hard on this issue so that chemical and equipment controls will be as multilateral as possible.

I think it is promising that the Australia Group began last year to discuss biological weapons proliferation as well as chemical weapons issues, and since equipment for BW production is even more dual-use than that for chemical weapons, it seems logical for the United States to see whether the Australia Group can become a forum for developing multilateral controls in this area too.

I also would add that in light of President Bush’s declaration that chemical weapons proliferation is a national security threat, the United States should change its position in the Geneva negotiations on a multilateral chemical weapons convention and drop the proposal to retain two per cent of our CW stockpile for the first eight years of the agreement. As Congressman Martin Lancaster has pointed out, this position actually encourages chemical weapons proliferation, since countries with chemical weapons will have veto power over final implementation of the agreement at the eighth-year review conference. We showed very clearly in Operation Desert Storm that we do not need chemical weapons to achieve our military goals, and the Bush administration is undermining its own nonproliferation goals and slowing down the negotiations by sticking to this position.

Developments in the MTCR:

Last month the MTCR members met in Tokyo to for the first comprehensive review of the MTCR Equipment and Technology Annex since the Regime began in 1987. The Annex delineates the items that the member nations agree to control. Officials involved in the talks refused to release any specific details on what changes were accepted by the group, however, it was reported that several agreements were reached. There will be another meeting later this year to complete the review process. In addition to discussing the wording of the Annex discussions were also held to try to achieve a consistent interpretation of the provisions of the regime and how they will be enforced. These efforts are in parallel to other bilateral talks between the U.S. government and the European Space Agency on developing fair trade rules for space launch competitions. U.S. companies and ESA have clashed on several occasions over ESA offers to deliver technology offsets in exchange for launch contracts. Finally, several more nations including Austria, New Zealand, Norway and Denmark have joined the Regime bringing the total membership to sixteen. The administration has been pressing for all the European Community nations to join.