Arms Maker Putting Chile in Thick of Things in International Market

As long as there has been war, there have been those who profit from it. In that ancient tradition, Chilean industrialist Carlos Cardoen has made a fortune from the war between Iran and Iraq.

Cardoen, 45, also has made Chile one of the few developing countries that can compete successfully with industrial powers for international arms sales.

The most profitable product built by Cardoen is the cluster bomb, a devastating device that bursts in midair and scatters hundreds of smaller bombs over a wide target area.

Human rights organizations have denounced cluster bombs as inhumane. Cardoen sells them and other weapons to Iraq, and he insisted in an interview that he does it with honor.

“I believe in the dignity of manufacturing weapons,” he said. “I do not defend arms races nor do I defend the human stupidity of fighting, but I do strongly defend the belief that it is necessary to be strong to be respected.

“And as long as man has this limitation of having to be strong to be respected, someone has to manufacture weapons.”

Cardoen does not sell arms to just anyone. He said he has turned down lucrative orders from both Iran and Libya. He said his “special relationship” with Iraq precludes him from selling to Iran and that he believes that it would be unethical to sell arms to Libya.

“I have had very important and very tempting letters of credit from the Iranians,” he said. “I have rejected them.”

He said his company, Cardoen Industries, employs 1,200 Chileans and sells arms worth between $100 million and $150 million a year. More than 98% of the arms sales are to foreign countries, he said, and at least 75% are to Iraq.

He declined to identify his other primary customers by name but said they are Arab countries “that are now living in situations of tension” on the Persian Gulf. Except for Iran and Iraq, Saudi Arabia is the biggest arms buyer on the Persian Gulf.

In addition to exporting weapons to Iraq, Cardoen has set up factories there so that the Iraqis can make their own bombs. He said Iraq and other customers appreciate the transfer of technology as a long-range advantage.

“A factory that is producing bombs today will be making gasoline containers tomorrow for the whole Arab world,” he said.

In his appearance, his surroundings and his driving enthusiasm, Cardoen is the epitome of the successful entrepreneur. A touch of gray at his temples matches his silk suits and contrasts with the glowing tan of his boyish face. His well-appointed headquarters are at the top of Chile’s tallest building, the 29-story Santa Maria Tower. He travels in his own helicopter and airplane.

Cardoen began his business career in the United States after earning a doctoral degree in metallurgical engineering at the University of Utah and he speaks with enthusiastic admiration for American business efficiency. But he contends that Americans have lost ground in developing conventional military weapons for export.

“The United States in general has tended to put a lot of effort into developing the hyper-sophisticated segments,” he said. “I’m talking about ‘Star Wars,’ sophisticated missiles. . . . But in conventional war, it has fallen far behind, far behind in imagination.”

Meanwhile, Cardoen and many Brazilian arms manufacturers have capitalized on a growing Third World market for innovative but relatively uncomplicated and inexpensive weapons.

Brazil’s arms exports have burgeoned to more than $2 billion a year, according to knowledgeable estimates. Brazilian products include armored cars, heavy artillery, battle tanks, subsonic jet fighters, and ground-to-air missile systems.

More than 350 Brazilian companies manufacture arms, employing nearly 100,000 workers. Brazil’s best customers, like Cardoen’s, are Iraq and other Middle East countries.

Cardoen praised Brazil as a Latin American trailblazer in international arms sales. Until recently, he said, Latin America’s more industrially advanced countries were regarded as “little more than banana republics.”

“Brazil has destroyed that myth,” he said. “Brazil is the one that leads the way with the machete, opening a path in the jungle, and I think we are coming along a little way behind.”

Brazil’s big push in the arms trade began after 1977. Reacting to U.S. criticism of human rights abuses, the military government then in power canceled an arms-supply agreement with Washington and pushed for domestic production of weapons. Foreign sales helped make production possible on an economic scale.

Legislation passed by Congress in the late 1970s barred U.S. arms sales to Gen. Augusto Pinochet’s government here, so Chile began to look for domestic supply sources.

At that time, Cardoen’s company manufactured explosives for mining. Gen. Fernando Matthei, head of the Chilean air force, asked Cardoen if he could make a small bomb.

Working on the project himself, Cardoen produced a prototype of the bomb in less than three weeks.

“Well, then Gen. Matthei said, ‘Gee, how interesting. Hey, you could do other things,’ ” Cardoen recalled. “Then we started testing. And we continued and continued. And the cluster bomb took me two years to develop and several million dollars.”

Cluster bombs were used by the United States in the Vietnam War and are also made by other countries, including Britain and France. Cardoen said he has copied the concept but has used his own technology to build more efficient and less costly models.

One innovation is a casing of fiberglass rather than aluminum. The fiberglass, implanted with a detonator cord to blow it open in the air, saves weight and increases the bomb’s capacity for “sub-ammunition” or bomblets.

Cardoen said his 1,000-pound cluster bomb, the largest of three sizes, contains 400 bomblets--”more than any other bomb.”

“Ingenious little things like that permitted us to win contracts, competing with the Americans and the French,” he said.

Cardoen’s other military products, pictured in a slickly printed catalogue, include small demolition charges for sappers, three kinds of hand grenades, anti-personnel mines, anti-tank mines, general-purpose bombs of up to 2,000 pounds, high-fragmentation anti-personnel bombs, anti-runway bombs, armored trucks, combat cars and troop transport vehicles.

The vehicles are assembled with both Chilean materials and imported components, including engines.

Planned new Cardoen products include “sleeper” and “standoff” cluster bombs.

The sleeper will have bomblets timed to explode intermittently for some time after hitting the ground. “You prevent the enemy from operating at least for a while in that area,” Cardoen said.

The standoff “will have wings, and the airplane will be able to drop it from a greater distance,” he said.

He said he also is planning to adapt a small helicopter for double use as a civilian rescue craft and a combat gunship. The chopper, which would use some American-made parts, would be attractive to Third World countries that cannot afford sophisticated American helicopter gunships, which cost up to $22 million each, he said.

Because the United States and some other countries still do not export materials and equipment for military use to Chile, Cardoen plans to assemble the helicopters in Spain. He already has a factory there that makes bomb fuses for export to the Middle East.

He also has recently bought an explosives factory in Greece. He said his goal in Europe is to eventually sell military weapons and parts to countries of the North Atlantic Treaty Organization.

“My dream is to finally manufacture for sale to the United States,” he said. “I hope to be able to do it because I think I have something to offer.”

At the same time, Cardoen is planning to diversify his Chilean production into non-military products, such as rock-crushers for mining and a two-passenger Hovercraft-type vessel. A prototype of the craft, developed in collaboration with a British inventor, is scheduled to be demonstrated at a Chilean aviation exhibition in March.

Cardoen emphasized that it will be a recreational craft. But with undisguised enthusiasm, he added that it could have military value as well, perhaps in swampy areas of the Iran-Iraq battlefront.