From September 1990 to September 1991, the U.S. Department of Commerce approved nearly $60 million dollars' worth of sensitive exports to Iran. Most of these items were "dual use," meaning that in addition to their civilian uses, they can be used to make nuclear weapons, long-range missiles or other military equipment. The record of these exports has just become available.

The Commerce Department granted these licenses despite Iran's "terrorism" status under U.S. export law. For several years U.S. regulations have designated Iran as having "repeatedly provided support for acts of international terrorism."/1 As a result, the regulations provide that export licenses to Iran "will generally be denied" for a specific list of sensitive items./2 This amounts to a denial rule for items on that list.

From 1990 to 1991, however, the Commerce Department licensed the export of millions of dollars' worth of these very items. The Commerce Department does not appear to be following its own regulations, and therefore is not implementing the U.S. policy against international terrorism.

Commerce approved one of these exports over the opposition of the State Department and another over the opposition of the Defense Department. Commerce also approved several other cases after either State, Defense or the Department of Energy recommended that the application "return without action." According to a knowledgeable Defense Department official, "return without action" is usually a polite denial for a country like Iran. The government has information showing that the license should not be granted, but does not want to say so publicly with a rejection. The RWA is a polite way of informing the exporter of this fact. The unspoken implication is that the application will be rejected if submitted again. Applications may also be returned without action because the file is incomplete or because the application was filed for an item that does not require a license.

In the past, Commerce has deferred to the recommendations of State, Defense and Energy on dual-use licensing. These latter agencies, rather than Commerce, possess the diplomatic and strategic expertise to decide whether an export might be diverted to A-bomb or missile production. Now a new pattern has appeared: Commerce can ignore the judgement of other agencies in order to promote exports.

The following discussion is organized according to the items Commerce approved for export. Computers, the first category, have a number of military uses depending on their speed and configuration. They can powerfully aid in the design, development, and testing of both nuclear weapons and long-range missiles. Navigation, direction-finding and radar equipment, the second category, is necessary for missile guidance and military targeting. Oscilloscopes, the third category, are high-speed electronic diagnostic instruments that can be used to develop missile guidance systems and to process the rapid signals from nuclear weapon tests. Compasses, gyroscopes and accelerometers, the fourth category, are also necessary for missile guidance systems.

Computers (ECCN 1565)

Of the 92 export licenses granted, 30 were for computers, with a total value of over $33 million. One computer license alone (Case No. D112977) was valued at $28 million. The most remarkable aspect of this approval was that there was no stated end-use or end-user. This means that the buyer was free to resell the computers to whomever he wished. The Department of Energy (DOE) recommended that this case be "returned without action," probably because of the lack of information on end-use. The Department of Commerce, however, approved it.

In addition, the Commerce Department approved the following computer cases:

Case No. D119049: Value $1.5 million; DOD recommended that the case be returned without action

Case No. D129095:Value $105,000; DOE recommended that the case be returned without action

Case No. D139248: Value $358,000; DOD recommended that the case be returned without action

Navigation, direction-finding, radar, and airborne communication equipment (ECCN 6598)

The Commerce Department approved the following eight cases in this category, despite the fact that all of the items are on the list that "will generally be denied" to Iran:

Case No. D139105:Value $150,062; State recommended that the license be rejected

Case No. D130025:Value $70,919; DOD recommended that the license be rejected

Case No. D131504:Value $276,407; State and DOE recommended that the case be returned without action

Case No. D114219: Value $13,211; DOE recommended that the case be returned without action

Case No. D130639:Value $100,000; DOE recommended that the case be returned without action

Case No. D134953:Value $532,800

Case No. D139107:Value $36,145

Case No. D122107: Value $58,110

It should be emphasized that Commerce approved two of these denial list items over the opposition of either the State or Defense Departments, both of which have expertise in national security matters and are charged with executing U.S. national security policy. Commerce also approved three other cases despite a recommendation by DOE that they be returned without action.

Oscilloscopes (ECCN 5584)

The following two cases were licensed in this category, despite the fact that they are for items on the denial list:

Case No. D123901:Value $75,735

Case No. D125372: Value $5,000

These items are also on the "Nuclear Referral List," a list of equipment that the U.S. nuclear weapon laboratories have designated as especially useful in the production of atomic bombs. Neither case was referred to the Subgroup on Nuclear Export Coordination, an interagency group that is supposed to review sensitive nuclear export cases.

Compasses, gyroscopes, and accelerometers (ECCN 1485)

The following two cases were licensed in this category, despite the fact that they are for items on the denial list:

Case No. D115751:Value $277,200

Case No. D115918:Value $18,952

The items in this category are also on the "Missile Technology Control List," a list of items judged especially useful for missile development and manufacture./3

Other licenses for items on the denial list

The following additional items were licensed despite the fact that they are in categories on the denial list:

Case No. D110773: Electronic measuring, calibrating and testing equipment (ECCN 1529); value $179,000; on both the Nuclear Referral and the Missile Technology Control lists

Case No. D114141: Microwave equipment (ECCN 1537); value $35,050

Case No. D119763:Radio spectrum analyzers (ECCN 1533); value $40,000; on the Missile Technology Control List

Case No. D099075:Diesel engines for trucks, tractors and automotive applications of 400 horsepower or greater (ECCN 6498); value $15.5 million

Other licenses approved

The following items, although not on the denial list, were also licensed:

Case No. D132016:Explosives, propellants, fuels (ECCN 2708); value $600,000

Case No. D135230: Frequency standards (ECCN 4529); value $12,500; State recommended that the case be returned without action

Case No. D135369: Radio relay communication equipment (ECCN 5A93); value $12,890; State recommended the case be returned without action

Case No. D138311: Electronic devices (ECCN 3A01); value $9,454; DOD recommended that the case be returned without action

Exceptions to the denial rule

U.S. export law does provide certain exceptions to the denial rule for Iran. A license may be granted for sales contracts in effect before November 27, 1987; or if the U.S. item is less than 20% of a foreign-produced commodity; or if the item will be used for humanitarian purposes./4 None of these exceptions appear to apply to the above cases, save perhaps one case in which U.S. equipment was to be combined with a foreign-produced system.

Conclusion

Despite the clear anti-terrorism policy of the United States, Iran has been able to buy millions of dollars' worth of strategically sensitive American equipment. The Commerce Department records do not reveal why individual sales were approved, or why agencies recommended that some applications be returned without action. Congress should require the Commerce Department to explain why it approved the numerous cases covered by the denial rule. Congress should also require the Commerce Department to publish a record of all export licenses granted to other countries on the terrorism list. Providing this information would allow Congress and the public to determine whether American exports are undermining the U.S. policy against terrorism.