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H 514 CONGRESSIONAL RECORD HOUSE February 24, 1992 Over the next 7 years the State Department and the White House would pressure the Eximbank repeatedly to gain access to guaranteed financing for Iraqi projects. The most prominent of these projects was an Iraqi oil pipeline with an outlet at the Red Sea Port of Aqaba, Jordan. This contract alone was worth $1 billion for its contractor, Bechtel, the California engineering conglomerate. Secretary of State George Shultz and Bechtel had a longstanding business relationship. As a matter of fact, Secretary Shultz came from Bechtel, and he came back from Bechtel. He worked at Bechtel prior to becoming Secretary of State and, as I say and repeat, he went back immediately upon leaving the State Department. Other high officials in the Reagan administration involved in this project including President Bush, the current Deputy Secretary of State, Lawrence Eagleburger, former Attorney General Ed Meese, former NSC Director Robert McFarlane, and former CIA Director William Casey. At various times, every one of them contacted the Eximbank to obtain financing for the Aqaba pipeline project. These officials all had one thing in commonthey saw Eximbank financing as crucial to United States-Iraq relations. To illustrate that point consider the following: A December 21, 1983, telex from the U.S. interest section in Baghdad to the Secretary of State says: We should give serious thought to offering Eximbank credits. New U.S. credits in combination with our CCC credits would demonstrate U.S. confidence in the Iraqi economy. In a December 22, 1983, memo to Mr. Lawrence Eagleburger, the State Department’s Richard W. Murphy says: The U.S./Iraq political relationship could be advanced by Exim financing which has previously not been possible for political reasons. Viewed in combination with CCC credits already granted Iraq, an Exim gesture would go far to show our support for Iraq in a practical, neutral context. In a letter to William M. Draper III, then Chairman of Eximbank, Lawrence Eagleburger states: I would like to bring to your attention the important role Exim can play in furthering long range political and economic interests of the United States by being receptive to financing American sales to and projects in Iraq. From the political standpoint, Exim financing would show U.S. interest in the Iraqi economy in a practical, neutral context. This evidence of our interest in Increasing commercial relations also will bring political benefits. 0 1230 Mr. Speaker, at this time I would like to say that some documents that I have accumulated in support of what I am saying, instead of interspersing them I will offer them at the end of this special order today for the RECORD. These documents reveal that in 1983 then Under Secretary of State for Political Affairs, Lawrence Eagleburger wrote to Export-Import Bank Chairman Draper urging the Export-Import Bank to open its program to Iraq, as I have just stated. In 1989, Mr. Eagleburger wrote the Treasury Department to express his support for the $1 billion CCC Program for Iraq. Remember, that $1 billion is guaranteed by the taxpayers. They are going to have to shell that out. Previously, I had reported that Mr. Eagleburger was the Director of the Yugoslavian LBS Bank just prior to his confirmation as Deputy Secretary of State. I have already brought this out on two occasions. I offered the documentation. Mr. Eagleburger was instrumental in getting LBS established in the United States. I wonder where that bank is now, the Yugoslavian. I also reported that B&L was instrumental in getting LBS established in the United States in that B&L was the largest source of funds for LBS, the Yugoslavian Bank, and this comes back to what I said awhile ago. Something I will say now parenthetically by way of explanation. When we talk about these foreign entities, banking entities doing business in the United States, there seems to be no perception even among our monetary leaders that we are not dealing like we do with an American banking system, a private system. Almost every one of these banks are government owned. The B&L, for instance, is literally owned by the Italian Government. Therefore, the Yugoslavian Bank from which Mr. Eagleburger was on its Board and intervening in the United States in behalf to help to get set up, dovetailing with the fact that its financial nexus or background would be the B&L, a foreign-based entity owned by another government. These are facts that are not factored in. The reason we are going into this, and have for over 11/2 years, is that it has everything to do with the fact that in our country we are the only country of any consequence of any industrial size that does not have any kind of regulatory protection that will protect the public interest. We know we have over $800 billion of this kind of money in this country. What we do not know is who knows where it is going and how it is handled and how it is leveraged. Only a small chunk of that is highly leveragable from drug money laundering to such things as the procurement of sophisticated weaponry and technology for other countries that today may be off that list, but tomorrow, who knows, as in the case of Iraq. Previously I had reported that this B&L was Instrumental in this financing, because as I said a little bit earlier, these banks anymore than in the case of Iran and the hostages, at the bottom of all that is banking. Every thing that happens around the world and ever has happened, at the bottom of it is financing or banking. Just as in the cause of the Shah where one of our big banks in the United States had a $10 billion exposure, and that is what the hostage taking was all about. What people do not recognize is when the hostages were released, the same day that President Reagan took his oath of office of January 20, 1979, an official at the Federal Reserve Bank in New York pressed a button and released about $3 billion in London to Iran and then they released the hostages. So all of that is at this point in the background. It is not directly connected, other than the fact that it is the pattern that has existed and against which activity that would be contrary to our national policy is possible to happen without any regulatory oversight on our part. Neither the Federal Reserve Board nor these agency banks which are chartered by the States, the Atlanta Agency of the Banca Nationale is a Georgia Statechartered institution. Now, how in the world, as they found out in the stinkeroo that resulted from these deals, can that State be equipped to adequately monitor and oversee that entity? If the Federal Reserve Board cannot do it in the case of the parent bank in New York, how in the world can a State regulatory commission do it? So this is why we amended the law. I had been advocating changes in the international banking law, which incidentally we first passed in 1978 as a result of the hearings that I caused to bring about in San Antonio, TX. There was not any law then. In 1978 we got a little law, but never adequate. We had some amendments that strengthened it. My contention is that they are inadequate, yes, and this is why we are going into it, because we have a legislative purpose. We are not bringing out details in order that we can intentionally or with any kind of planned approach try to reveal somebody’s embarrassment. We are here to show the sorry role and the breakdown that our regulatory system has been undergoing for decades in our country. After the war, after 1945, this whole thing changed. We were no longer the still pretty much provincial country we were. And at this point there is such a tremendous exposure to the national interest that it behooves us to keep talking about it. It is not making any news stories. The newspapers have not picked up on this at any time, and we are not doing it for that reason. We are not issuing releases. We have had newspapers that have picked up months later because of some independent discovery they made somewhere, somehow, but which actually is repetitious to what we have been placing in the RECORD for my colleagues to have for more than 11/2 years. 24 JULY 4, 1992