U.S. Punishes China for Iran Silkworm Sales

The Reagan Administration, intensifying efforts to undercut third-country support for Iran, on Thursday announced that it will maintain curbs on the export of high technology goods to China to punish that nation for selling Silkworm missiles to the Tehran government.

Meanwhile, President Reagan told a nationally televised news conference that he intends to continue providing U.S. Navy escorts for Kuwaiti oil tankers in the Persian Gulf for an indefinite period but sees no reason to fear an all-out war with Iran.

No Timetable Offered

Under strong pressure from Congress to bring the high-profile U.S. military operation in the gulf to a speedy conclusion, Reagan declined to predict how long the escorting of reflagged tankers would continue.

“We’re not there to start a war,” he added. “I don’t see it leading to a war or anything else and I don’t see anything to panic about. I think we’ve done very well.” But he noted that “if attacked, we’re going to defend ourselves.”

The trade action aimed at China, which was taken by the State Department, came after several months of U.S. protests to Beijing about its Silkworm sales to Tehran and only hours after an Iranian-fired Silkworm damaged Kuwait’s main oil terminal on Thursday.

The trade rebuke against China halts the gradual easing of limits on the U.S. export of high technology products, such as computers, semiconductors, machine tools and telecommunications hardware, to that country. In recent years, as Sino-American relations have improved, China has sought the same free trade status that U.S. allies have.

“We have decided not to proceed for now with review of certain liberalizations of high technology export controls,” said State Department spokeswoman Phyllis Oakley. “ . . . What we’re talking about is a period of tension obvious in the gulf and that we feel at this point it’s simply inappropriate to proceed.”

Chinese Deny Role

Chinese officials have denied supplying Iran with the powerful Silkworms, but U.S. officials reportedly confronted them with hard evidence of the missiles’ Chinese origin last week after a Silkworm fired from an Iranian position on the Al Faw Peninsula heavily damaged the U.S.-flagged Sea Isle City in Kuwaiti waters.

“We have discussed the question of our views and concerns about China and Silkworms before,” Oakley said. “We have . . . consulted with the Chinese recently, both in Washington and Beijing, concerning recent events in the Persian Gulf.”

Thursday’s State Department announcement was quickly attacked both by Chinese officials and by leaders of the U.S. trade organization that represents approximately 400 private American companies exporting goods to China.

“We consistently hold that technological exchange between China and the United States is beneficial to both parties,” said a spokesman for the Chinese Embassy in Washington, who said China should not be blamed for the Persian Gulf tensions. “It is regrettable should the U.S. government resort to actions which are in the opposite direction.”

‘It Only Hurts Us’

Roger Sullivan, president of the National Council for U.S.-China Trade, remarked: “If the Chinese can’t get it here, they’ll get it from Japan or West Germany. I don’t think this hurts the Chinese at all. It only hurts us. We must be the only country in the world that uses trade for political purposes.”

The Iranian attack on the Kuwaiti oil terminal Thursday was at least the third one recently in which Silkworms were used. Last month, a Silkworm exploded on the Kuwaiti coast near a port facility.

‘Naked Aggression’

Oakley condemned the latest incident as an example of Iran’s “naked aggression” but indicated that no direct U.S. retaliation was being considered. The explosion did not harm U.S. personnel or U.S.-flagged vessels, she said.

She said the State Department expects “that the international community will move urgently to address the situation.”

At his press conference, the President described the mission of the U.S. Navy in the gulf as that of keeping the international sea lanes open, and he noted that American forces have been plying gulf waters for that reason since 1949.

“We’re there to protect neutral-nation shipping in international waters that under international law are supposed to be open to all traffic,” he said.

Opponents of Reagan’s policy say this is not an accurate description of the mission since U.S. forces do not have orders to defend from Iranian attack any vessels other than those, including 11 Kuwaiti tankers, that are sailing under the American flag.

‘Provocative Acts’

Reagan vowed to respond to “provocative acts” by the Iranians, whom he described as irrational, but he added that the United States hopes to convince Iran’s leader, the Ayatollah Ruhollah Khomeini, that it is “a little too expensive” to continue such assaults.

In a related development, the State Department confirmed that it is considering selling Stinger anti-aircraft missiles to Bahrain to bolster that gulf nation’s defenses against possible Iranian attacks. The U.S. has been concerned about allowing the sophisticated hand-held missile to fall into hostile hands in the troubled region, but Oakley said the sale might be justified by “the particular defense needs of Bahrain.”

Oakley said the possible sale would involve a “limited” number of the weapons. Government officials indicated that the sale might total less than $14 million, making congressional approval unnecessary.

Times staff writer Jim Mann contributed to this story.