Chemical Warfare Precusors and Equipment

Return to an Address of the Honourable the House of Commons
dated 18 July 1996 for the Appendices to the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq and Related Prosecutions laid before The House on 15 February 1996*

Volume One
Section D Arms and Defence-Related Exports to Iraq
Chapter 2 Applications of The Guidelines in the period
December 1984 to August 1988

D2.239 The use by Iraqi Armed Forces of chemical weapons in the war with Iran had been confirmed by intelligence by January 1984. It was believed that Iraq was engaged in manufacturing chemical weapons on a large scale. *346 A number of reports indicated that the Iranian authorities believed the United Kingdom to be involved in the export to Iraq of precursors and equipment required for the manufacture and use of these weapons. *347 On 13 January 1984 the Minister for Armed Forces asked Defence Sales for details of any chemical warfare (CW) kits sold by the UK to Iraq and of any industrial plant supplied by the UK that might have been diverted to CW production. *348 A copy of the request was sent to relevant DIS and FCO desks. Full details were hard to come by, mainly because most of the possible precursors and much of the relevant equipment was not at that time licensable. *349 Investigation revealed, however, that 76 protective suits had been supplied to Iraq in 1982 and that CW related medical kits had been supplied to Iraq in 1981. *350 These supplies had been made before evidence of Iraqi use of chemical weapons in the conflict had become known. *351 In March 1984 information from the intelligence agencies indicated that a British company was proposing to supply to Iraq two chemicals, thiodiglycol, used in the textile printing and dying industry, and chloro-ethanol, a chemical intermediary in the formation of thiodiglycol. Thiodiglycol is one of the chemical precursors of mustard gas. The amounts of the chemicals proposed to be exported were assessed to be insufficient for immediate operational use. A use for the purpose of research into the production of chemical weapons was, however, suspected. Neither of the chemicals was currently licensable.

D2.240 A Minute dated 23 March 1984 from Lord Howe to the Secretary of State for Trade and Industry discussed the possible options open to the Government regarding the proposed export to Iraq of the two chemicals. *352 One option was to make informal approaches to the company with the intention of persuading them to delay or cancel the export. Another was to bring the chemicals immediately under export control by an amendment to the current EG(C)Os. The Minute said that “there would be difficulties in making [the chemicals] subject to licensing under the Export of Goods Control Order, given that the normal end-use of these chemicals is industrial rather than military, and that any licensing arrangements would need to be extended across the board rather than applied only in the case of Iran (or Iraq).” These difficulties seem insubstantial. The dual-use character of items licensable under the Industrial List (Group 3) was a feature common to all the items. And an EG(C)O requiring a licence for exports to Iran or Iraq but not for exports elsewhere would have presented no legal problem. A more substantial objection to an amending EG(C)O would have been that unless all, or the bulk of, the exporting countries agreed to place similar controls on exports of the two chemicals to Iran or Iraq, the UK controls would be ineffective to deprive Iran and Iraq of the capacity to make mustard gas. They could easily obtain supplies of the precursor from elsewhere. Discussion on the issue continued.

D2.241 On 26 March 1984 a United Nations Report on the use of chemical weapons in the Iran- Iraq war was published. The Report concluded that both mustard gas and the nerve agent, Tabun, had been used in the fighting but stopped short of stating specifically that Iraq had been responsible. *353 There was no doubt, however, that that was the case. On 30 March 1984 the Security Council issued a statement on the report condemning the use of chemical weapons in the conflict and calling on both sides to end the war *354 and, in an answer given on 4 April 1989 to a “planted” Parliamentary Question, Lord Howe associated the United Kingdom with the Security Council’s statement.

D2.242 On 12 April 1984 an amending EG(C)O was made whereby export controls were extended to eight chemicals each of which was a possible precursor for use in the manufacture of chemical weapons. The controls were limited to exports to Iran or Iraq. Thiodiglycol and chloro- ethanol were two of the controlled chemicals. *355 In June 1985 a ninth chemical, dimethylphosphite, was added to the list of controlled chemicals and six of these, including thiodiglycol, were controlled for export to any destination. *356 In 1985, too, meetings between the countries that later became known as ‘the Australia Group’ led to agreement on controls to be placed by all members of the Group on exports of chemical warfare precursors.

D2.243 In April 1985 IMS submitted an AWP application seeking clearance to supply equipment to Iran to set up field hospitals. The IDC took the view that while no objection should be raised to standard medical equipment, confirmation should be obtained that no NBC equipment was included. IMS, in response, submitted a list of NBC related equipment. The IDC at its meeting on 18 March 1986 recommended refusal of a licence to export this equipment. The view taken was that the items listed “were equally applicable to the protection and decontamination of troops using chemical weapons and their sale would thus be in contravention of earlier Ministerial statements that equipment which could assist either side to wage Chemical Warfare would not be supplied during hostilities.”*357 The recommendation was accepted by MOD and FCO Ministers.

D2.244 On 18 December 1986 the IDC considered whether or not to approve the export to Iran and Iraq of Chemical Agent Monitors (CAMs). CAMs were sensitive, portable, handheld instruments developed for use by service personnel for monitoring the presence of nerve and blister agent vapour. The IDC concluded that the CAMs “should not be supplied to either side, both for security reasons and in view of the Government policy of not authorising the supply of any equipment which might assist Iran or Iraq to wage chemical warfare, in the context of which CAM would represent a significant enhancement.” *358

D2.245 The IDC’s conclusion at the 18 December 1986 meeting about the export of CAMs had been expressed in terms of “significant enhancement” i.e. guideline (iii). At the IDC meeting on 14 July 1988, the export to Iraq of one sample set of NBC protective clothing and respirator was discussed. It was obvious that the supply of one set would not constitute a significant enhancement. Nonetheless the IDC recommended refusal of the ELA “in line with the current policy of supplying no equipment to either Iran or Iraq which could assist them in the offensive use of chemical weapons.” *359 Notwithstanding the reference to “significant enhancement” in the record of the IDC decision taken on 18 December 1986, government policy regarding the supply of equipment related to the use of chemical weapons was not, in my opinion, based upon the Guidelines. In relation to that equipment, there was, in effect, an embargo on exports to Iran and Iraq.

D2.246 The Government’s restrictive approach to the approval of licences for the export of chemicals to Iraq was again manifested in April 1987 when officials considered an ELA to export hydrogen fluoride to the “Rayon State Establishment” for what was stated to be “[research and development] for a pilot scale production of a chemical product .... for the Iraqi state electricity organisation”. Mr David Powell of FCO/ACDD recommended that FCO Ministers (Mr Renton) should refuse the application. Mr Renton agreed. In a letter from Mr Powell to the DTI dated 30 April 1987, he put forward a number of reasons for refusal. *360 Mr Powell observed that hydrogen fluoride was a chemical precursor for the nerve agent, Sarin, and that Iraq had attempted to acquire it for its CW programme. He continued:

Mr Powell’s reasons for refusal, while entirely laudable, owed very little to the Guidelines. In the same letter, Mr Powell added that, for the same reasons, another exporter which had apparently asked for Government advice on the prospects of future sales of hydrogen fluoride for use as a catalyst in a petroleum “cracking” plant, ought to be advised by the DTI that export approval was unlikely to be given in respect of any such sales.

D2.247 The EG(C)O 1987 added three chemicals to the list of controlled chemicals. *361 One of these was hydrogen fluoride, the export of which to any destination was made licensable. The IDC meeting on 14 July 1988 considered an ELA for the export of 93,000kg of hydrogen fluoride to Iraq. The Committee concluded that “in view of the risk that the HF might be diverted for use as a CW precursor, this application should be refused.” *362 Chemical warfare precursors were all dual-use in character. All had acceptable civil uses in addition to their potential for CW use. It is interesting to notice the general acceptance in the IDC that the risk of use for CW purposes was sufficient to bar the export. Certainty was not insisted upon. This approach may be compared with the approach later adopted to dual-use machine tools where, it was said, certainty of an intended use for military purposes had to be shown if the refusal of an ELA was to be justified.

D2.248 The IDC’s approach on 14 July 1988 was consistent with guidelines which had been adopted earlier in 1988 in respect of the promotion and supply of NBC equipment and the provision of NBC training. The Guidelines were established in the following manner. In March 1987, MOD Ministers had endorsed a recommendation that all proposals to export NBC defence equipment or to provide related training should be considered on a case by case basis. In order to give effect to that policy, the MOD took the initiative in drafting a set of guidelines for use by officials. The guidelines were eventually agreed internally and interdepartmentally and circulated under cover of a minute from Mr Barrett dated 8 January 1988. *363 The guidelines, entitled “Guidelines for the overseas promotion and supply of NBC defence equipment and the provision of NBC training” (the NBC Guidelines) were circulated to a number of people, including recipients in the FCO and in the DTI.

D2.249 The NBC Guidelines were not merely intended for use in relation to Iraq and Iran. But Iraq and Iran were recognised as being especially sensitive destinations. Paragraph 2 of the NBC Guidelines provided that “all exports of NBC equipment [would], in future, require the inclusion of a no-transfer clause in the contract through which the purchaser undertakes not to re-export or to use the equipment except for the purposes of self-defence (as set out in Article 51 of the United Nations Charter”. The no transfer clause was to be supplemented by a standard form démarche drawing the attention of the purchasing government to the clause prior to supply. In paragraph 4 of the NBC Guidelines, the rules for Iraq and Iran were set out in no uncertain terms: “4. The supply of any item which might assist IRAN or IRAQ to wage chemical warfare will not be authorised. Therefore current policy is to prevent the sale or diversion of defensive CW equipment to Iran or Iraq”. The strictness of the test to be applied in relation to Iran and Iraq was thus quite obvious: the mere supply of any relevant item which might assist Iran or Iraq to wage chemical warfare would not be authorised. In paragraph 5, it was noted that the Government’s policy was to discourage proliferation of chemical weapons. Paragraph 5 also referred to Annex C to the NBC Guidelines which listed countries either known to hold stocks of chemical weapons or for which there was strong intelligence evidence that they held stocks or that they were actively interested in acquiring an offensive chemical capability. The countries so listed included Iran and Iraq, although the approach to licensing in respect of Iran and Iraq was expressly provided for in paragraph 4. Applications for promotion and supply to any of the Annex C countries were to be considered on a case by case basis but “approval [was] unlikely to be easily granted”. Annex E to the NBC Guidelines contained a list of countries known or suspected of diverting military equipment to Iran or Iraq. The DIS were responsible for the list of diverters and for the updating of the list. In the first such list a number of Middle Eastern countries including Jordan were included. I shall return to the question of diversion later in this Report. In paragraph 10 of the NBC Guidelines, it was stated that, in relation to Iraq and Iran (and in relation to other countries in Annexes C and E), “no HMG assistance should normally be given in the NBC defensive training or technology”.

D2.250 Mr Davies of FCO/ACDD recommended on 19 February 1988 that FCO Ministers should endorse the NBC Guidelines. Mr Goulden observed that the NBC Guidelines were worth circulating, but that they would not remove the need for all dubious cases to be referred to Ministers. Mr Mellor endorsed the Guidelines.

D2.251 In February 1985 an application was received by ECGD for insurance support in relation to a contract obtained by the UK subsidiary of a West German company for the design, supply and supervision of the erection and commissioning of a Chlorine-Alkali-Electrolysis plant in Iraq. The value of the contract was about £14 million. Such equipment as would need, under the contract, to be exported from the UK was not export licensable. One of the major outputs of the plant would be chlorine gas and, in a letter dated 1 March 1985 to the FCO, ECGD noted that chlorine was “an important building block for many chemical processes” but queried whether “the export of industrial plant to manufacture chlorine could be considered to be counter to the government’s policy of even-handedness in the hostilities between Iraq and Iran”. Mr Jaffray, the author of the letter, said that there were no ECGD reasons for refusing support to the project but that “there is potential for embarrassment... and it could cut across foreign policy objectives.” *364 Advice was sought. Mr Day (FCO), in a letter dated 5 March 1985 to Mr Petter (DTI), referred to the possibility that the Iraqis might wish to use the chlorine from the plant for the manufacture of mustard gas, and expressed the FCO view that “it would be preferable to prevent the sale of this equipment going ahead” and that “the provision of ECGD cover... would in the circumstances be most unwise.” *365 Mr Day’s letter was strongly endorsed by a letter dated 8 March 1985 from Mr Luce’s Private Secretary to Mr Channon. *366 Copies went to Mr Butler at the MOD and to ECGD.

D2.252 On 13 March 1985 Mr Foxall (ECGD) put up a submission to Mr Channon on the issue. He said that “ECGD would recommend against withholding cover for the transaction...” and that “ECGD’s normal position is that it stands ready to provide cover for legal trade.” *367

D2.253 A Ministerial meeting between Mr Luce, Mr Butler, and Mr Channon was arranged for 18 March 1985. In a ‘Speaking’ Note for Mr Channon prepared by Mr Hall (AS/OT2/3) one of the main points made was that the only certain way to prevent the fulfilment of the contract would be to amend the current EG(C)Os so as to catch the plant proposed to be exported but that “any such ban would not prevent the Iraqis obtaining chlorine elsewhere” and “British industry would resent a unilateral ban as an unreasonable commercial restraint.” *368

D2.254 At the meeting on 18 March “Mr Luce argued that this plant should not be exported to Iraq in view of HMG’s explicit position on chemical warfare...”. Mr Channon pointed out the practical difficulties of bringing chlorine and chlorine plant under export licence control and Mr Butler “did not consider it realistic to prevent the export”. It was decided (inter alia) that FCO “should approach the West German Government very quickly to establish their attitude to this contract.” *369

D2.255 The West German attitude was set out in telexes of 19 and 21 March from the British Embassy in Bonn. Much of the plant as was to be exported from West Germany did not require a West German export licence and the West German authorities had made no formal judgment on the end use to which the chlorine produced at the plant would be likely to be put. However, the West German parent company had received approval for export credit cover for their part of the contract and in taking that decision the West German authorities had been “fully satisfied with the company’s explanations”. In the circumstances, Mr Luce, in a letter dated 25 March 1985 to Mr Channon “reluctantly agree[d] that this contract should go ahead.” *370 He added, however, that “it would be helpful if ECGD could extract suitable assurances (preferably in writing) from the company about the end uses of the plant, before credit cover is approved...”

D2.256 Mr Luce’s letter settled the issue as to whether any amendment to the current EG(C)Os in order to try and prevent the export of the plant should be made. It did not settle the question whether ECGD should provide the requested credit cover and, if so, on what terms. In a Note dated 28 March 1985 to Mr Channon, Mr Kemp (ECGD) referred to the risk that the contract might subsequently be frustrated if chlorine from the plant were, contrary to the assurances given by the company, used by the Iraqis for chemical warfare purposes and if export restrictions were then brought in. He recommended that “risk of loss due to the imposition of export restrictions be excluded from the guarantee to be given” to the company. *371 He also said that the requisite end-use assurances from the Iraqi customer had already been given. The Minister, Mr Channon, accepted the ECGD recommendation. 372 Presumably the company accepted the limited cover offered by ECGD and the contract proceeded accordingly.

D2.257 A postscript to the history of ECGD cover for the plant in question is that by a letter dated 22 October 1987 to the Laboratory of the Government Chemist, ECGD referred to “a contract for the renovation of a caustic soda plant in Iraq” for which ECGD support was being sought, said that “since the plant’s capacity is unaltered we might reasonably have taken the view that we were not increasing Iraqi capacity to produce caustic soda or chlorine and that therefore we should allow this application to proceed” but asked for the Government Chemist to comment on “other less desirable applications” that the technology might have. 373 It is not clear whether the plant referred to was the same plant as that to which the 1985 contract proposals related. The Government Chemist’s response, by letter dated 23 October 1987, drew attention to the diversity of industrial uses to which chlorine and hydrochloric acid might be put, both innocuous and pernicious, but said that there was no distinguishing feature in the chlorine produced by the plant that would make it any way more suitable for one type of use than for another. *374

D2.258 It is, perhaps, convenient to mention that ECGD had also become apprehensive that some of the pharmaceutical products acquired by Iraq by means of the pharmaceutical credit facility agreed under the Protocols might have objectionable CW uses. The letter of 22 October 1987 sought reassurance from the Government Chemist on that point. Reassurance was provided by a letter dated 28 October 1987. *375

D2.259 The argument that it would be impracticable to bring under export control and impose an embargo on the export to Iraq of any chemical and any industrial plant the product of which might be used for some CW purpose was, in my opinion, almost unanswerable. Very ordinary chemicals with a widespread innocuous and beneficial use were capable of being turned to some pernicious CW use. A unilateral ban by the UK on the export of such plant or such chemicals to Iraq would have achieved nothing useful. The Government cannot, in my opinion, be reasonably criticised for proceeding down the road of co-operation with the other Australia Group countries in order to have multilateral restrictions imposed on the leading chemical precursors while at the same time banning any exports whose intended use was known or likely to be CW related. *376

*351 - see the Background Note to the draft reply to an oral Parliamentary Question by Mr Ian Mikardo MP (FCO/123.2.165 at paragraph 6)

*354 - see the Background Note to the draft reply to a Parliamentary Question by Mr Robert Brown MP (FCO/123.2.148)

*369 - see ECG/13.4.(Folio 25): per the Note of the meeting from Mr Watson (DTI) to Mr Petter, see also ECG/13.4.(Folio 26) and ECG/13.4.(Folio 27)

* The Full report is available from The Stationery Office Ltd., PO Box 276, London, SW8 5DT.