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Bush Had Long History of Support for Iraq Aid : Arms control: Actions in the '80s are an example of how leaders bend programs to serve their own ends.

BUSH AND AID TO IRAQ: SECOND OF THREE PARTS. Next: U.S. loan guarantees help Iraq build its war machine.

February 24, 1992|MURRAY WAAS and DOUGLAS FRANTZ | SPECIAL TO THE TIMES; Frantz is a Times staff writer and Waas is a special correspondent

WASHINGTON — In early March of 1987, Vice President George Bush met with Nizar Hamdoon, the Iraqi ambassador to the United States, to deliver some good news: Bush's lobbying efforts were about to pay off handsomely for Saddam Hussein.

First, Hamdoon was told, two long-awaited licenses permitting Hussein's government to buy militarily sensitive American technology had been approved--over the objections of the Pentagon, according to classified documents. Moreover, Bush had telephoned the chairman of the Export-Import Bank and pressed him to end his opposition to new loan guarantees for Iraq.

Good news indeed. During the months that followed, more than $600-million worth of technology with dual commercial and military application was licensed for sale to Iraq, government documents and numerous interviews show. And not long after Bush's call, the Export-Import Bank reversed its position and approved $200 million in new loan credits for Iraq, which earlier had been denied further loans because it was not paying its debts.

Bush's efforts reflected a pattern of personal intervention and support for aid to Iraq that extended from his early years as vice president in the Reagan Administration through the first year of his own presidency and almost to the eve of the Persian Gulf War.

And, while Bush's actions appear not to have violated any laws, taken together with the activities of other senior officials, they form a textbook example of how powerful political leaders seek to bend obscure government programs to serve their own ends--sometimes with costly results.

At the Export-Import Bank, at the Commerce Department and at the Department of Agriculture, Bush and officials following his lead repeatedly worked to overcome the objections of other officials to what they regarded as unwise aid for Iraq.

In the case of the Export-Import Bank, Bush and others succeeded several times in changing its course, but its officials offered surprisingly stubborn and effective resistance--a rear-guard action that ultimately held down the cost to American taxpayers and reduced the indirect U.S. contribution to the Iraqi war machine that engulfed the Middle East in war.

At the beginning, Bush's efforts on Iraq's behalf were part of an unannounced U.S. "tilt" toward Baghdad that was intended to prop up Hussein during his long war with Iran. Behind the tilt was a desire to use Iraq as a buffer against Iranian influence and radical Islamic fundamentalism in the Middle East.

But the policy was pursued well beyond the end of the Iran-Iraq War in the summer of 1988.

Apparently Bush and his supporters failed to recognize that the original reasons for the tilt toward Iraq had been overtaken by events and that their efforts to turn Hussein to more benign directions were not bearing fruit.

As revealed in dozens of classified documents obtained by The Times, Bush and others who shared his views continued to press for financial aid and access to sensitive technology for Iraq even after it became clear that Hussein was building an arsenal far larger than he needed to defend his country and was actively developing both nuclear and chemical weapons.

The White House has declined comment.

For instance, a license was approved for the sale of a laser-guided welding system to Iraq for $1.4 million in January, 1988, at a time when the Iran-Iraq War was in its final months, even though the exporting firm acknowledged in its application that the system would be used for general military repairs on such items as jet engines and rocket casings.

When U.N. inspectors began examining Iraqi nuclear-weapons facilities late last year, they discovered that the welding system had been configured to manufacture centrifuges, a key component in Iraq's massive program to enrich uranium for nuclear weapons.

This export was no isolated case. Front companies for every known site at which Iraq developed nuclear and chemical weapons bought American computers with licenses approved by the Commerce Department, according to an analysis by the Wisconsin Project on Nuclear Arms Control, a Washington-based group that monitors arms-proliferation issues.

Eventually, officials at the Commerce Department began to resist aid for Iraq but not as quickly or tenaciously as some at the Export-Import Bank.

The Export-Import Bank, known in Washington simply as Ex-Im, was created by Congress in 1934 to help American companies sell more goods abroad. The bank does this by offering loan guarantees to foreign customers purchasing U.S. goods. Virtually all developed countries have similar programs.

While Ex-Im has always made its loan decisions with an eye on American foreign policy interests, the bank is prohibited by law from guaranteeing loans for foreign countries without "a reasonable assurance of repayment."

In the case of Iraq, the bank's economists consistently concluded that there was little chance Iraq could or would repay the debts.

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