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U.S. Approves Computer Sale to Iran Over Weinberger Objection

April 21, 1987

WASHINGTON (AP) _ Overriding objections of Defense Secretary Caspar Weinberger, President Reagan’s National Security Council has approved the sale of a $900,000 computer system to Iran, industry and administration officials said Tuesday.

The approval represents the first major U.S. transaction involving Iran since disclosures in late 1986 that the administration had been secretly selling arms to Iran.

Analysts suggested the move underscored a growing sensitivity on the part of the Reagan administration to problems faced by U.S. manufacturers of high- technology goods as they seek to compete in overseas markets.

The NSC had been asked to referee a high-level dispute within the administration over the sale.

Administration officials said the council ruled late last week in favor of Commerce Secretary Malcolm Baldrige and Secretary of State George Shultz - and against Weinberger.

Approval of the sale of the computers, described as relatively unsophisticate d devices to be used in an electric power grid, had been opposed by Weinberger on grounds that the United States should not be providing any aid to the Iranian regime.

Spokesman Robert Sims said Weinberger feels ″it is not in our interest to sell Iran any equipment except for humanitarian grounds.″

Baldrige and Shultz contended the computer involved - the PDP-11 manufactured by Digital Equipment Corp. of Maynard, Mass - had no military application.

A spokesman for Digital, Jeffry Gibson, said the company was notified last Friday of the NSC action.

He said a second proposed sale involved in the dispute, a $30,000 computer add-on memory system intended for the Iranian news agency, apparently is still awaiting NSC action.

Digital itself did not apply for a license. It was requested by an affiliated Swiss company, Brown, Boveri & Co., which has incorporated the Digital units in a system it plans to sell to Iran for monitoring electric power generation.

The computer units are already in Switzerland, Gibson said. But under various trade agreements, the equipment could not be shipped from Switzerland to Iran without approval of the U.S. government.

Last month, Baldrige told a Senate Banking subcommittee he was baffled by Weinberger’s opposition to the sale, saying the computers at issue ″have technologies that are eight to 10 years old.″

More recently, Baldrige said in an interview that his initial decision to approve the computer transaction reflected, in part, ″a growing awareness that national security consists of a lot more than just military security.″

″So, we should not put the very companies that we’re counting on for an increase in technology at a disadvantage by unilaterally controlling products that the rest of the world doesn’t,″ Baldrige said.

As part of his competitiveness program outlined in the State of the Union address last February, Reagan advocated less-restrictive export-control policies.

The administration proposed a package of steps designed to speed up the process of obtaining export licenses and to narrow the list of items subject to the controls. Some of the measures are being carried out administratively by the Commerce Department while others are awaiting congressional action.

However, the Commerce and Defense departments continue to be locked in a bitter battle over who should have the final say on approving many high- technology exports.

Howard Lewis, associate vice president for the National Association of Manufacturers, said that 40 percent of all products currently manufactured in the United States, worth between $60 billion and $70 billion annually, ″need prior approval from the U.S. government to get out of the country.″

″And we aren’t talking primarily of Eastern bloc countries. We’re talking primarily about exports to the free world.″

″It seems to us it’s time for people to sit down and ask: Is half of our manufactured trade really vital military stuff? And in some cases, probably it isn’t.″

According to Desiree Tucker, a Commerce Department spokeswoman, the only items specifically barred from export to Iran for foreign policy purposes are whole aircraft and helicopters and devices with direct military application.

The present computer sale does not violate these tests ″and by law we are required to grant the license,″ she said.

Commerce Department officials have said previously that computers costing some $70 million have been shipped to Iran over the past two years, although none since the Iran-arms controversy erupted last fall.

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