NARRATOR: When governments and corporations treat armaments like any other product and ship them to foreign dictators, tragic things can happen. Dictators can use the arms against their own people, against their neighbors, and against the people who deliver the arms in the first place.

["AMERICA'S DEFENSE MONITOR" program introduction.]

Admiral GENE LaROCQUE (USN, Ret.): There's a well-kept secret in international affairs that has been developing over the past ten or fifteen years. Welcome once again to "AMERICA'S DEFENSE MONITOR."

That secret is simply this. The rich, powerful, demo-cratic nations of the world have made big business out of selling weapons to dictators throughout the world. The extent of that will surprise you. We're going to shed a little light on that subject today. I think you'll find it fascinating.

NARRATOR: For years the United States has helped arm dictators -- to keep them out of the communist bloc, to keep the oil flowing, to keep the arms makers happy. We have often found reason to regret it.

We armed the Shah of Iran before the militants in the streets overthrew him. We armed Suharto in Indonesia. He used American arms to invade East Timor and repress its people. We armed the generals and colonels throughout Central America. They ruled through death squads and terror even when civilian presi-dents were elected.

We armed the generals who ruled Pakistan, in violation of US law that sought to block aid to countries developing their own nuclear weapons. According to journalist Seymour Hersh in The New Yorker, Pakistan and India almost used nuclear weapons against each other in May 1990.

We armed Marcos in the Philippines and Noriega in Panama. But the most flagrant case was the US Government's support, legal and illegal, for Saddam Hussein's military build-up.

ALAN FRIEDMAN: If your viewers recall that first night of the bombing of Baghdad in January 1991, the shots that looked like fireworks over Baghdad? What you were looking at there, in part, was anti-aircraft spray based on technology that had been supplied to Baghdad from Pennsylvania by way of South Africa in covert shipments.

NARRATOR: Alan Friedman, of the Financial Times of London, has been following the Western arms build-up of Saddam Hussein for years. Now the Financial Times correspondent in New York, he first learned of an Iraqi arms-buying network while reporting from the paper's Rome bureau in 1987.

Originally, Saddam Hussein depended on the Soviet Union for most of Iraq's weapons. Then, in the mid-1970s he began to reach out worldwide. Using money from the sale of oil, Saddam developed an elaborate, clandestine network for buying weapons. Most of his network has never been seen by an unsuspecting world.

Mr. FRIEDMAN: Under the shadow of the Western tilt policy toward Iraq during the 1980s, a time when it was thought that helping Saddam Hussein would staunch the threat of Islamic funda-mentalism from Iran, a sophisticated procurement network was developed by Saddam, and bankers, and front companies in Europe and the United States that basically tapped into billions of dollars of US bank money that was borrowed through an obscure Atlanta, Georgia branch of an Italian bank and helped to fund nuclear, chemical, biological and other unconventional weapons programs.

NARRATOR: You'll hear more about that bank later in the program. It's called Banca Nationale del Lavoro, or BNL.

Joe Trento had an unusual glimpse of some of the key players in the Iraqi arms network in 1984. As a special corres-pondent for Cable News Network, he flew to Baghdad in Sarkis Soghanalian's private plane. Soghanalian was the biggest arms broker for the Iraqi government.

INTERVIEWER: You flew in on his plane?

JOE TRENTO: On his private plane. To my everlasting surprise, we weren't the only passengers. Richard Nixon's former Marine aide, Jack Brennan, was on the plane. It was very secretive, very strange. There were a couple of CIA guys on the plane.

INTERVIEWER: How did you know that?

Mr. TRENTO: Because I got a look at their diplomatic pass-ports later and had them independently identified by sources I have at the Agency.

NARRATOR: Today, Joe Trento directs the National Security News Service in Washington. Sarkis Soghanalian sits in jail in Miami for selling arms to Iraq. And Saddam Hussein remains in power in Baghdad.

From National Security News Service Video, Iraq, 1984:

SARKIS SOGHANALIAN: "You know, having a gun that's beautiful, effective gun, but you have to keep that gun alive so that, you know, it serves you."

"This is .50 belted -- "

JOE TRENTO: "Ammunition?"

Mr. SOGHANALIAN: "Ammunition, yes."

Mr. TRENTO: "Which tank are we going to go look at now?

Mr. SOGHANALIAN: "We go see the other M1-13s and the cannons."

NARRATOR: Lebanese-born Sarkis Soghanalian feels aggrieved. He claims that he has worked for the CIA and he felt that he had the full support of the US Government when he helped buy arms for Saddam Hussein.

Mr. TRENTO: Soghanalian had done a lot of favors for the various freedom fighters the Reagan administration was supporting around the world. He had supplied all kinds of things to

"Commander Zero," the leader of the contras, the first leader of the contras. Boots, this sort of thing. He'd done these things because he felt it was in his interests financially because, later on, if indeed the contras succeeded in their victory, they'd turn to him for arms supplying. He's a businessman.

From National Security News Service video:

Mr. SOGHANALIAN: "Some people call us arm dealer. Some people call us arm smugglers. Some people call whatever they want to call. But remember one thing then: Those weapons are not sold by people like us. The State Department himself, the Army, Pentagon himself, your own government himself is arm dealer."

NARRATOR: The Reagan and Bush administrations tilted sharply in support of Iraq. How the dictator in Baghdad treated his own people was the last thing on their minds. The overthrow, in 1979, of the Shah of Iran, the so-called "pillar" of US policy in the Persian Gulf region, shook the American foreign policy establishment. US officials came to fear the spread of Islamic fundamentalism, a Soviet takeover of Iran, the loss of the Persian Gulf oil supply.

Iraq invaded Iran during the US election year of 1980.

Mr. FRIEDMAN: Saddam Hussein took the place of the late Shah of Iran as the gendarme of the Persian Gulf in a series of simpleminded and mistaken US policies that, unfortunately, created another "Frankenstein" monster.

NARRATOR: Zbigniew Brzezinski, President Carter's national security adviser, made a secret trip to Jordan in 1980 to restore relations with Iraq. After Ronald Reagan entered the White House in 1981, he supported Saddam Hussein as the enemy of his enemy, Iran. President Reagan shared intelligence with Iraq.

Mr. TRENTO: We were supplying intelligence information. The CIA was setting up a downlink for spy satellite pictures, so they could process spy satellite pictures for Saddam of the opponents, the Iranians.

NARRATOR: President Reagan also urged Arab countries to send arms to Saddam Hussein. He removed Iraq from the list of countries aiding international terrorism, thereby encouraging free and easy business with Baghdad.

Mr. FRIEDMAN: I think we now understand a lot more about the tilt than we did in the 80s. I don't think the Reagan and Bush administrations were at pains to announce publicly their tilt for Iraq, although there were a series of congressional hearings during the 80s when they indicated some limited support for Iraq.

What we certainly didn't know then was the extent of intelligence-sharing, of apparent technology transfers, of degree to which a lot of information about Saddam's agents operating right here in the United States seems to have been ignored by our authorities, by the FBI, the CIA and other law enforcement auth- orities in the US.

NARRATOR: Between 1982 and '89, during the Reagan and Bush administrations, the Agriculture Department underwrote $25 billion worth of food sales abroad. Fully $5 billion worth, 20 percent of the full amount, went to Iraq.

Congressman Charlie Rose thinks Saddam Hussein exchanged US food for arms.

Rep. CHARLES ROSE (D-NC): Iraq would tell a vendor of some commodity that was selling to them that they wanted extra sales services, that they wanted some flatbed trucks with specially designed mountings on them. But frequently, the goods that were shipped themselves, when they were shipped would contain other things, such as parts, maybe even some instances of ammunition.

NARRATOR: Congressman Rose, chairman of the House Agricul-ture Subcommittee on Department Operations, is an active watch dog and leading critic of the food-for-arms traffic.

Rep. ROSE: Another way they got arms-for-food money, or the food loan guarantee, was to just actually barter the food away with the Russians and the Russians would give them munitions in return.

NARRATOR: Charlie Rose and crusading Congressman Henry Gonzalez of Texas have doggedly pursued evidence that American taxpayers helped finance Iraq's war machine.

Rep. ROSE: In many instances, no agricultural commodities went anywhere, that what left was cash.

NARRATOR: Iraq was a honey pot for arms sellers. It attracted governments, corporations, consultants and fixers. Their greed and Saddam Hussein's ability to lavish petrodollars on advanced weapons were a perfect match.

One hundred-ten German corporations sold materials and equipment for the production of weapons of mass destruction to Iraq, according to the Republican staff of the Senate Foreign Relations Committee. British, Austrian, American and French corporations also figure prominently on the same list.

Hewlett-Packard, Honeywell, and Hughes Helicopters were among the American companies.

German companies helped Iraq develop its own chemical weapons industry. Iraq and Iran used poison gas against each other during their eight-year war. The Senate Foreign Relations Committee staff found evidence that Saddam Hussein used poison gas against Iraqi Kurds in 1988. Iranian TV filmed the aftermath.

Three years later, when Iraq was defeated in Desert Storm, the United Nations ordered the destruction of Iraqi chemical and nuclear weapons programs. In March 1993, the UN announced the elimination of 70 tons of Iraqi nerve gas and reported that the burning of 400 tons of mustard gas was progressing steadily.

The Iraqis began developing a nuclear weapons program in the 1970s. The Israelis bombed an Iraqi nuclear reactor in 1981. In the following years, the Iraqis became more secretive about their nuclear weapons program. American planes attacked Iraqi nuclear weapons facilities during Desert Storm.

After Desert Storm, special UN teams destroyed some of Iraq's nuclear weapons facilities under the terms of the cease-fire. But information about Iraq's foreign supply network has been hard to obtain from either Iraq or Western governments.

It was not only weapons of mass destruction that Saddam Hussein bought from suppliers around the globe. To equip the fourth largest armed force in the world, the Iraqi leader bought conventional weapons of all kinds.

He bought $20 billion worth of French arms, and went to suppliers as far away as China and Brazil.

As the Iran-Iraq war dragged on and money became scarcer...

Mr. TRENTO (news broadcast): "...The war between Iran and Iraq is at a four-year peak..."

NARRATOR: ...Saddam Hussein developed his own arms industry. The Atlanta branch of the Rome bank BNL helped finance many Iraqi arms purchases.

INTERVIEWER: Congressman, could you explain the BNL situation to us?

Rep. ROSE: A lot of letters of credit that we saw being used to pay for ammunition or, let's say arms tool design systems, such as in Pennsylvania, came through BNL-Atlanta with the guarantee from the Rafidain Bank, the central bank in Iraq.

At the highest levels of our government, probably George Bush himself, knew or had given the okay for not only the CIA but the Justice Department to be involved in facilitating these transactions.

NARRATOR: In addition to its undercover money trail, Saddam's government perfected the art of camouflaging its arms purchases by buying civilian products, technologies and facili-ties and converting them to military use.

Mr. FRIEDMAN: One of the biggest series of shipments, totaling more than a billion dollars between 1985 and 1990, was approved by the Commerce Department, which issued export licenses for what is called "dual use technology," meaning technology that appears to have civilian application, but actually can be used in weapons systems.

NARRATOR: Joe Trento says Bell Helicopter trained Iraqi officers in Fort Worth in the early 1980s on dual use helicopters.

Mr. TRENTO: Saddam Hussein's cousin came into the country and was trained during that program. They were training officers in maintenance, in reconfiguring the helicopters and keeping up the helicopters, this sort of thing. Soghanalian would bring them in on his private jets, right into Fort Worth, and they'd be taken to a special secret building in the Bell complex and be trained there.

NARRATOR: Carlos Cardoen, a big Chilean arms maker, provided Iraq with cluster bombs. After being released, cluster bombs are opened in midair by an electronically programmed fuse and a number of bomblets are released. The fuses, says Alan Friedman, came from ISC Technologies.

Mr. FRIEDMAN: The fundamental technology for the Chilean-made cluster bombs that were shipped by Cardoen to Iraq came from International Signal and Control, a defense company in seemingly sleepy Pennsylvania Dutch country of Lancaster, Pennsylvania. We believe it was smuggled down by people working with former offi-cials of the US Government.

INTERVIEWER: Former CIA agents?

Mr. FRIEDMAN: Former members of the defense and intelli-gence establishment.

INTERVIEWER: With the knowledge of the US Government?

Mr. FRIEDMAN: Well, the US Government has consistently denied any knowledge of this. Our sources, including former executives of the company, say that they did work with the CIA.

NARRATOR: International Signal and Control was not the only Pennsylvania company that had a link to Carlos Cardoen.

Kennametal, of Latrobe, near Pittsburgh, is a tool and die manufacturer. Its products were used in the tooling for large guns, shells and fuses.

Rep. ROSE: They were sending their products to a company in Britain that's now openly known to have been an Iraqi front organization, and that organization is called Matrix-Churchill. And a young lady who was a lawyer for Kennametal questioned why she was being told to go to a company in Atlanta to get paid for work that the company, Kennametal, had sent to Matrix-Churchill in England. And what she discovered was that the payment that came through this Iraqi front company in Atlanta was actually from the Rafidain Bank in Baghdad, Iraq. She started asking questions; she got fired.

NARRATOR: In 1984, the Iraqi honey pot attracted some top officials of the Nixon administration. Former Attorney General John Mitchell and President Nixon's Marine aide, Jack Brennan, mentioned earlier by Joe Trento, wanted to sell uniforms to the Iraqi army.

Mr. TRENTO: The uniforms were supposed to be US-made, made in Tennessee, through a company that was represented by none other than former Vice President Spiro Agnew. So, it was like the old administration getting together. And Brennan and Mitchell had their company, Agnew had his company, and everyone was going to be happy.

Then they brought Richard Nixon into the act. It seems that Agnew's company couldn't make the uniforms so there'd be enough profit for these guys.

NARRATOR: So, Richard Nixon wrote a personal letter to Romanian dictator Nicolae Ceausescu preparing the way for the manufacture of the uniforms in Romania.

Mr. TRENTO: If you're familiar with the quality of Romanian tailoring, it doesn't quite come up to US standards. And it's rather hot in Baghdad in the summertime and when the uniforms arrived, much to the fear and loathing of the procurement officers who ordered them, they were not suitable. And these officers were afraid they were going to get shot.

NARRATOR: When the bloody eight-year Iran-Iraq war finally ended, what did the Bush administration do about supporting Saddam Hussein?

Mr. FRIEDMAN: They stepped up US taxpayer dollar assistance for Iraq through loan guarantees for farm exports, many of which we now think were actually bartered for weapons for Iraq at US taxpayers' expense. And in the autumn of 1989, President Bush signed a presidential directive, which is now declassified, which shows a clear and explicit stepping up of financial and military conventional weapons assistance for Iraq.

Mr. TRENTO: The Iraqis, just two weeks before the Iraqis invaded Kuwait, were meeting with the Bell Helicopter people about establishing a Bell facility, an assembly facility in Iraq with the full knowledge and permission of the Bush administration.

NARRATOR: Many of the arms shipments and bank loans from the United States to Iraq were illegal, but the Reagan and Bush administrations closed their eyes to illegality.

Chairman Henry Gonzalez, of the House Banking Commit- tee, has relentlessly exposed the BNL money trail to Iraq and charges an overall cover-up by the Bush administration.

Rep. HENRY GONZALEZ (D-TX) (on the floor of the House):

"True to form, the Bush administration stuck to the bitter end with its refusal to turn over all documents related to Iraq and the BNL scandal requested by the Banking Committee, and also subpoenaed by the Banking Committee. Top officials of the White House, Justice Department, CIA, State Department and other agencies decided against turning over hundreds of BNL-related documents requested or even subpoenaed by the Banking Committee."

NARRATOR: The cover-up has taken on the name "Iraqgate."

Mr. FRIEDMAN: Iraqgate raises questions about how our checks and balances work, Congress and the executive branch, honesty in government, when it's right to subvert national security for foreign policy purposes, when foreign policy should be privatized, if ever. And I think we can learn a lot of impor-tant lessons about what American military and foreign policy was really about in the 1980s by looking further at Iraqgate.

NARRATOR: Now that we've seen how Western governments and corporations built up Iraq militarily and how the Bush admin-istration tried to cover its tracks, let's take a brief look at another example: US military and economic support for Mobutu in the resource-rich former Belgian colony of Zaire.

Mobutu's looting of the treasury in Zaire has put him in a class of his own among the world's dictators. Dr. William Close first went to Zaire as a physician in 1960. It was the same year the CIA helped overthrow the government of that newly inde-pendent country, which is slightly more than a quarter of the size of the United States. For 16 years, Dr. Close was able to observe Mobutu from close up, as chief doctor of the army and Mobutu's physician.

Dr. WILLIAM CLOSE: Along with the economic problems that the country ran into, he tried to go through a period of Zairian-ization. That's when he changed his name and where everybody had Zairian names. That's when he, for all intents and purposes, appropriated everybody's property and gave it to his cronies, which was a disaster.

NARRATOR: A new word, "kleptocracy," was invented to describe Mobutu's rule by thievery.

Dr. CLOSE: I think the kleptocracy started at that point. Where other dictators would do away with people by killing them, he bought them off.

NARRATOR: But, adds Dr. Close, corruption is a two-way street.

Dr. CLOSE: I think one of the things that the American -- our administrations in the past have done is shamelessly corrupted people we wanted to have as clients.

NARRATOR: Newly-arrived Ambassador Dean Hinton asked

Dr. Close in 1974 what he thought were Zaire's real needs.

Dr. CLOSE: And I said, "Well, I think the real needs of this country are that the women, the mothers and the fathers have some tiny hope that the situation with their children will be better than theirs. And I think upon that depends stability -- the stability of the country depends." And he said, "Well, that's the sort of answer I'd expect from a doctor." And I said, "Well, Mr. Ambassador, you've been here two days. Now what do you think is the most important thing?" And he said, "The army needs better equipment."

NARRATOR: Mobutu has remained in power with the help of a US-trained army, American arms and more than $1 billion in US economic aid. Congress, not the president, suspended military aid -- but not arms sales -- to Zaire in 1990.

In 1991, the latest date for which information is available, 59 authoritarian governments received US arms. Some of these arms were sold to them, others were given as military aid.

America's biggest arms buyer today is the medieval government of Saudi Arabia. What will happen if a pro-democracy movement arises in that latest pillar of US policy in the region?

The United States continues to sell arms for influence, especially in the Third World, as well as for profits and jobs. But there are alternatives.

Dr. William Close's long experience in Zaire has led him to conclude:

Dr. CLOSE: I think that the American government right now needs to do what the previous administration did not do, and that is to come out loud and strong with a policy that declares that the United States does not support in any way dictators, espec-ially tyrants, who have become obstructive to the chaotic and sometimes violent process of democratization in a country, even if they were very useful clients in the past.

Admiral LaROCQUE: We in America, for centuries, have been proud of our democracy. We'd like to see democracy spread around the world. It's often been said that democratic nations don't fight against one another. But it has been our policy for the last ten or fifteen years to encourage the sale of weapons to countries around the world, particularly to dictatorships, and that is counter to the spirit of democracy which we so admire. Some of this action by our government and by commercial enterprises has been legal, some barely legal, and some illegal. We need a policy in this country to cover all aspects of arms sales, and that simply is to reduce the sale of arms, particu-larly to dictators.

I hope you found the program interesting. Until next time, for "AMERICA'S DEFENSE MONITOR," I'm Gene LaRocque.

[End of broadcast.]