User:Hcberkowitz/Sandbox-West German support for Iraq during the Iran-Iraq war

Export Controls

"Germany bars the sale of nuclear equipment and "technological support" to Iran and nine other nations, including Israel, without a special permit from the German Federal Office of Economics and Export Control (BAFA). The Russian government, however, is not required to secure such a permit. Thus, German engineering firms can easily circumvent export regulations by designating a country that is not among the 10 listed in the export control law. "

Precision guided munitions for land warfare

Primarily anti-tank guided missiles

Land mines

Main discussion of mines here; naval mines cross-reference to this.

Missile technology

Includes special items like Bull's "Supergun"

Chemical weapons

In December 2002, Iraq's 1,200 page Weapons Declaration revealed a list of Eastern and Western corporations and countries—as well as individuals—that exported chemical and biological materials to Iraq in the past two decades. Among the largest was Germany (1,027 tons).

In 1984, the German government failed to convict Karl Kolb GmbH for having delivered CW gear to Iraq. Timmerman said Kolb built the main Iraqi CW plant. The company, however, successfully sued the government for libel.

Land warfare

Tanks and other armored fighting vehicles

Includes both new equipment, and repair and ammunition to old equipment

Infantry equipment

Includes rifles, handheld rocket launchers like the RPG, useful against both tanks and buildings. Trying to decide if shoulder-fired antiaircraft missiles should go here or to Air Defense.

Artillery

Includes multiple rocket launchers, medium and heavy mortars, and other weapons mounted on, or towed by, vehicles

Antitank missiles

Milan missiles (Missile d’Infanterie Léger Antichar) are among the most widely used anti-tank missiles worldwide. The Milan was developed in the 1970s by the Euromissile consortium owned by the French company Aerospatiale and the German MBB, and are now produced by MBDA in cooperation with LFK. Around 230,000 missiles have been jointly produced by the companies since the 1970s. France and Germany, Milan missiles and missile launchers have been exported not only to a number of other European countries, but also to a very large number of countries in Africa and the Middle East, including Cameroon, Egypt, Gabon, Kenya, Iraq, Lebanon, Mauritania, Morocco, Oman, Qatar, Somalia, Syria, Tunisia, Turkey, and the United Arab Emirates.

Missile technology

In the late 1980s, compliance discussions focused largely on actual or proposed transfers by European member-states. In 1989, the United States objected to France's intention to sell Viking rocket motor technology to Brazil. Technology transfers from Germany, Italy, and Austria were crucial to development of the Argentine Condor-II project, in partnership with Iraq and Egypt.

"This program originated as the Condor II program that the Iraqis developed in conjunction with Egypt and Argentina. Timmerman, however, stated that many major European aerospace firms were contributing to the Badr 2000 program when Egypt and Argentina withdrew.

After Egypt withdrew from the program in 1988 and Argentina withdrew in 1989, Iraq continued development of the program by itself. The missile was never tested, and its appears that UNSCOM effectively ended the Badr 2000 program. Again, despite the presence of UNSCOM inspectors, Iraq most likely retains information and know-how associated with the missile's design."

Critical materials

Iraq used a full range of front companies, clandestine investment, middlemen and third-country shippers, and countries with less restrictive export policies to obtain strategic materials.

H+H Metalforming

Dietrich Hinze and Peter Huetten, the founders, designed and sold specialized metal-forming machinery to civilian and military manufacturers worldwide. Their unique equipment made precision, high-strength, thin-walled, metal tubes. By 1983, they had developed their first product, and were selling machines to Brazil, the Soviet Union, India, and Taiwan. All of these sales, however, were much smaller than the business with Iraq. The tubes could be used in civilian applications from gas-cylinders and pressure cookers, but also in rocket motors and in uranium enrichment centrifuges.

Meed International

H+H first significant business contacts with Iraq were through the British company Meed International. Headed by Mansour Wadi and Roy Ricks, Meed International was active in acquiring a wide variety of items for the Iraqi military and nuclear programs under the false pretense that the items were for civilian industries. Meed was controlled by the Baghdad-based front company Al Arabi Trading Company,

=SPS, April 1987

In early 1987, a representative of Meed contacted the company SPS (Shirmer, Plate, Simpelkamp) in Krefeld, Germany. Meed wanted machine tools for flow-forming parts for Nassr General Establishment as part of a 80 million DM (DM) project to equip an artillery rocket and grenade manufacturing facility in Taji, about 80 kilometers northeast of Baghdad. SPS in turn contacted H+H in April 1987, and encouraged it to submit a quotation to Meed for equipment and supplies worth about 30 million DM. In return, SPS wanted a commission of five percent of the contract amount and a 10 percent commission for Meed. Based on Hinze's interest, SPS notified Wadi about H+H's desire to provide a quotation.

Iraqi investment, June 1987

According to the Institute for Science and International Studies, Iraq's procurement agents, in 1987, used their front company, Al Arabi Trading Company.

Safa Al Habobi, the person responsible for Iraqi procurement in Europe, and Ali Mutalib Ali, the Iraqi commercial attaché in Germany. Ali and Habobi represented the Nassr Establishment; Habobi controlled Al Arabi.

to buy 50 percent of the shares in a German firm, H+H Metalform. The stock sale funded a purchase that Iraq wanted H+H to make. This ownership was discovered in the early 1990s.

Iraq Secretly Acquired 50 Percent of H+H

While H+H was negotiating its first contract with Iraq in June 1987, it assumed it would be able to obtain the necessary bank loans to make the equipment. However, the German banks said no. This denial gave Iraq the opportunity to buy 50 percent of H+H Metalform. Iraq then was able to exercise significant influence on H+H both as a shareholder and its largest client.

When Hinze, co-principal of H+H, he told Habobi, that his firm would have to refuse the contract, due to inadequate cash and credit. Habobi responded that H+H's offer was 12 million DM cheaper than that offered by H+H's competition, Leifeld & Co. "How much money do you need," he said. Hinze replied that he needed 5 million DM. After quickly conducting an audit of H+H's worth, Habobi said that H+H could borrow 5.5 million DM for ten years, but the Iraqi company, Al Arabi Trading Co. Ltd., would secretly own half of H+H during that ten-year period and share equally in the profits. Hinze was amazed by the offer, because he knew it would lead to more contracts with Iraq. He agreed, and they went to a notary to sign the agreements. Five days later, Iraq placed 5.5 million DM in H+H's account. Subsequently, Iraq reduced the principal to 3 million DM, and H+H had 2.5 million DM in profit before they made a single machine. In total, H+H made seven million DM in profit on this contract alone.

Iraq's secret purchase of H+H shares was done by splitting each of Hinze's and Huetten's shares of 25,000 DM into two pieces of 12,500 DM. These new sets of shares were purchased by Al Arabi for 2.75 million DM each, or a total of 5.5 million DM. Habobi, representing Al Arabi, entered into a trust relationship with Hinze and Huetten whereby Al Arabi's shares would be held in trust by Hinze and Huetten for ten years. In practice, Habobi became a silent partner in H+H Metalform and several affiliated companies.

This arrangement, which was signed on the same day as the first contract, was designed to hide Iraq's partial ownership of H+H. All parties agreed to keep the trust relationship and the content of the agreement secret.

Al Arabi also committed "to do everything in its powers to procure orders for the company in the framework of the company's purpose." A preliminary draft of the trust agreement stated that Al Arabi promised to procure orders from H+H worth about 80 million DM per year. According to H+H's tax accountant, Habobi told Hinze and Huetten that together they will lift the company and based on the excellent business situation, Habobi "will make them rich men."

H+H Supplied Iraq's Ballistic Missile Program

H+H's initial contract was followed by many other orders from Nassr. Iraq purchased machine tools, components, and tooling for Iraq's ballistic missile projects. H+H also provided technical assistance in flow-forming various components of its ballistic missiles. If H+H could not provide the item itself, it often acted as an Iraqi agent in acquiring other types of equipment, technology, and materials for Iraqi armaments and ballistic missile programs.

Starting in the fall of 1987, H+H signed contracts to provide items to Iraq's ballistic missile program to increase the range of its missiles. In early 1988, Iraq's improved missiles would play an important role in the so-called "War of the Cities" against major Iranian cities.

Iraq increased the range of the Russian-supplied, liquid-fueled SCUD B missiles from a maximum range of 280 kilometers to over 600 kilometers, under "Project 144." According to evidence introduced in the H+H trial, the range was increased to about 650 kilometers in the variant "Al Hussein" and to about 900 kilometers for the "Al Abbas" model. Increased range was obtained mainly by enlarging the fuel tanks and reducing the weight of the warhead.

H+H also contributed to "Project 1728" that was aimed at the domestic manufacture of a three-stage intercontinental missile, called "Al Abid." The first phase of this project involved clustering of SCUD missiles, and the second phase involved an enlarged SCUD modification with a diameter of 1.25 meters. Iraq did not finish the development of the first phase prior to the Persian Gulf War.

In its 1994 ruling, the German court concluded that H+H managers knew by the end of 1987 or early 1988 that its deliveries were intended to support Iraq's ballistic missile program. The court added that Iraq did not tell H+H details of the missile project or discuss the true purpose of the supplied items with H+H. Based on the evidence introduced at the trial, however, the court concluded that H+H managers knew enough about missile programs to determine on their own the true purpose of their exports.

Some of the initial discussions between H+H managers and Iraqis were about civilian products, but the discussions also indicated that another end-use was actually intended. An internal H+H memorandum dated September 25, 1987 summarizes a meeting held with Iraqis at H+H. Dr. Modher, a leader of the Iraqi ballistic missile program and the delegation visiting H+H, started the meeting with a discussion of the type of milk separators Iraq wanted to produce. H+H immediately recommended a nearby company that was making such components. Modher laughed and said he knew of this company, but he decided not to contact this company. He said that he and his colleagues were already in the position to make separator and cheese factory equipment on their own. Although the subject of the letter is obtuse, the nature of the discussion must have at least raised questions in the minds of Hinze and Huetten about the true end-use of the equipment they were being asked to supply.

Contracts and False End-Use Statements

In October and November 1987, H+H signed its first two contracts with Nassr to supply equipment for making components for ballistic missiles. The contracts, worth over 3 million DM, were for a two-roller flow-forming machine, a press, and tooling for both machines. This high-technology equipment enabled Iraq to make SCUD missile components that were difficult to produce.

In October 1987, H+H filed an export license application with German authorities at the Federal Office for Trade and Industry (BAW) for the flow-forming machine stating that the end-use was to make objects using "flow-forming procedures for milk and oil separator parts." Because civilian use was listed on the application, the BAW returned the application to H+H later in the month containing a stamp stating the "export of goods mentioned in the application…did not require an export license based on currently valid regulations." In Germany, this determination is referred to as a "zero declaration," because a zero is put in a key blank in the application to designate this decision. If H+H had stated that the purpose of the items was for ballistic missiles, however, the BAW would have denied the export application.

H+H filed an export application for the press, without its associated tooling, stating the end-use as "pressing operations for the manufacture of deep-drawn components made of rust-proof steel." The BAW issued a zero declaration in this case as well.

In 1988, H+H entered into a 2.3 million DM contract for the delivery of equipment and tooling to make several specific missile components and 50-200 samples of several missile parts. Iraq gave detailed drawings of these components to H+H that included oxidant intake tubes, air intakes on oxidant and fuel tanks, valves of different types, and special fasteners.

In these cases, H+H declared the end use as oil separators exclusively for civilian applications. In addition, a senior H+H official characterized Nassr to German officials as comparable to a large civilian company. The BAW again issued zero declarations for these exports.

H+H shipped several hundred of these components in 1990 that were used to fasten a platform that holds the controls of the SCUD missile or its modifications. The export application listed the end-use as a fastener for oil and milk separators.

H+H also provided several hundred components for the Al Abid missile. H+H listed the end-use as parts for use in the fish-processing industry and luxury food containers.

Over a three-year period, H+H signed a multitude of contracts with Nassr to supply missile-related items. It also filed roughly 20 export applications with the BAW, all stating that the end-use was strictly civilian.

In addition to equipment and components, H+H personnel provided a steady stream of technical assistance. This assistance was more extensive than normal, because the Iraqis had difficulty operating the machines to make parts of the required specifications. For example, Modher telephoned Hinze one time and said that a machine was broken, because the parts did not meet the required specifications. However, nothing was broken with the machine, according to Hinze. The problem was that the Iraqis were using material with a slightly different physical property, and the technicians were unable to recognize that they needed to adjust the machinery to cope with these differences in the material.

H+H personnel often warned the Iraqis that sand could destroy the ability of a flow-forming machine to work adequately. Although Iraq built proper workshops to hold the machines, Iraqis would open windows that let sand blow onto the machines.

A senior H+H manager characterized the Iraqis as lacking technical understanding. They were used to buying high-technology items, but they did not understand the underlying processes adequately to operate the machines without extensive continuing assistance.

H+H partners and subcontractors

SPS

In early 1987, a representative of Meed International, Ltd. contacted the German firm SPS. Meed wanted machine tools for flow-forming parts for Nassr General Establishment for artillery rocket and grenade manufacturing facility in Taji, Iraq. SPS referred the lead to H+H, in return for commissions for itself and Meed. Hinze was interested, and SPS told Wadi that H+H's would quote a price. Slightly later, Hinze and Huetten met Wadi in Italy at the Euromac-European Manufacturer Center, which another Iraqi purchasing company linked to the Al Arabi Trading Company. Later, Euromac opened an affiliate based in London and was involved in trying to illegally obtain high-speed capacitors from the United States for Iraq's missile or nuclear program.

Kieserling and Albrecht; Neue Magdeburger

H+H planned to subcontract with the German firms Kieserling and Albrecht GmbH & Co.and Neue Magdeburger GmbH. By this time, some of the meetings by H+H staff were at the Iraqi Embassy in Bonn. Additional Iraqi participants included Ali Mutalib Ali, the Iraqi commercial attaché in Germany and a central figure in Iraq's clandestine procurement network in Europe, and Safa Al Habobi, the person responsible for Iraqi procurement in Europe.

The final negotiations were conducted in Bonn in early July and involved Hinze, Huetten, Ali, Habobi, and Wadi. On July 9, 1987 H +H signed a contract with Nassr for the supply of eight DV 450 flow-forming machines, one DV 600 flow-forming machine, and ancillary equipment at a total cost of 27 million DM. Neue Magdeburger, represented by Hinze and Huetten, signed a contract with Nassr on the same day for 13 CNC machines at a cost of 16 million DM. Kieserling and Albrecht GmbH sold machine tools worth 19 million DM. These contracts also included training programs at the suppliers' facilities

Because the machines were to make specific parts for Nassr's armaments factory, the Iraqis provided these companies with design drawings of the pieces that the machines were to make. The judges in Hinze's and Huetten's trial concluded that Hinze and Huetten knew the true purpose of these sales from these drawings, which had a military character, and were of items well known to H+H personnel. They knew the true purpose, according to the court, even though the court accepted that the Iraqis never discussed with them the actual use of these parts.

Hinze and Huetten also received commissions for arranging the subcontracts with Neue Magdeburger and Kieserling and Albrecht. These commissions would be an important motivation for Hinze and Huetten to act as procurement agents for Iraq. Their company Hinze and Huetten Vermittlungs GbR received the fees for arranging sales to Iraq.

TI Machine Tools/Matrix Churchill

A representative of the British company TI Machine Tools Ltd., which was later bought by Iraq and became part of Matrix Churchill, also attended the sessions in Bonn and agreed to make deliveries of equipment to the same project. Huetten said that the German negotiators worked with TI to lower the price of their offer to Iraq and ensure that it was included in the deal.

Dresdener Bank

Iraq's first payment to H+H came from the Dresdener Bank in Bonn. Later payments were also received from London, Switzerland, and directly from Iraq as letters of credit.

Iraqi procurement before the 1990-1991 Gulf War

ver about the next three years (untill the invasion of Kuwait in August 1990) h+h supplied machines, tools and eqipment for the production of rockets and ballistic missiles worth altogether around 25 millions US-dollars. In nearly all cases, export permits were issued by the authorities (BAW). In the applications, the machines were always declared as being for civilian use, like gas-cylinders, hydraulic-cylinders, lamp-posts, etc. Later the court wrote in its verdict, that these were cover descriptions, invented only to gain the export permits.

Iraqi involvement becomes public

Such tubes are useful in making ballistic missile and uranium separation centrifuge components. Iraq's secret partnership in H+H was not revealed until about 1992 when the German government investigated H+H's activities following the Persian Gulf War. As late as 1991, Hinze and Huetten were stating that they owned H+H in equal parts and were the "masters of their [own] house." Only after the German prosecutor obtained a copy of a notarized record dissolving the trust agreement between Al Arabi and Hinze and Huetten was it realized that Al Arabi was a part owner of H+H.

A 1992 notarized agreement formalized Hinze and Huetten's decision after the Persian Gulf War to buy back H+H shares from Al Arabi for one million Deutsch Marks. Al Arabi was represented by Yassin Hussain Alewyi, who lived in Germany and had a general power of attorney to represent Al Arabi before H+H and companies owned by H+H. A set of documents related to this transaction can be viewed here.

According to Hinze, the Iraqis were good, correct businessmen. Although Iraq owned 50 percent of H+H, they never tried to influence the company, he said. Once a year, Habobi came for the meeting of the shareholders and expressed trust and faith in the management of H+H.

Trial of H+H Executives

However, the evidence presented in the trial of Hinze and Huetten shows a less benign situation. Habobi received quarterly reports and directed the course of company policy at board meetings that were often held in London. An Iraqi named Naseer was assigned to work at H+H on behalf of the Iraqi partners and to represent H+H in Iraq. H+H personnel also taught him to use their equipment.

The evidence showed that Iraq exercised considerable influence on H+H. By owning 50 percent of the shares and providing lucrative contracts, Iraq was able to manipulate Hinze and Huetten to do their bidding.

Hinze and Huetten were extremely important to the Iraqis and dealt directly with several key leaders of Iraq's missile and nuclear programs. On two occasions, Hinze met Hussein Kamel, the powerful son-in-law of Saddam Hussein, the head of Iraq's ballistic missile program, and, after 1988, the leader of all of Iraq's weapons of mass destruction programs. During one of the meetings, Kamel told Hinze that H+H would have "a lot of business" with Iraq.