Allies’ Iraq Arms Sales Unopposed in ’89 : Weapons: The Bush Administration said it did not object to Indonesia’s plans to sell Hussein helicopters that could carry Exocet missiles.

State Department documents released Wednesday show that the Bush Administration did not object to U.S. allies selling military goods to Iraq after the end of the Iran-Iraq War and that it considered direct sales of American weapons to Baghdad.

Deputy Secretary of State Lawrence S. Eagleburger said in a November, 1989, cable that the Administration did not oppose plans by Indonesia to sell Iraq an undisclosed number of Super Puma helicopters capable of carrying Exocet missiles and other armaments.

“Although the U.S. severely limits the sale of our own munitions list items to Iraq, we have not had a policy of discouraging other countries’ arms sales to Iraq,” Eagleburger said in a cable to U.S. embassies in Jakarta and Baghdad. “Such a policy is in effect with regard to Iran.”

A second State Department document described the Administration’s attempts to come to grips with a new policy toward Iraq after the eight-year Iran-Iraq War ended in August, 1988.

The undated document proposed ways to build stronger ties to Baghdad but expressed caution over closer military relations because of Iraq’s threats to its neighbors and its development of nuclear and chemical weapons.

“We must set guidelines for a relationship that eases access but allows us to distance ourselves from Iraqi military ambitions,” the analysis by an unnamed official said.

The document discussed increasing sales of non-lethal military goods, such as computers and cargo aircraft, to Iraq. “But,” it said, “much will have to change in Iraq, and change fundamentally, before it can be prudent for us to sell weaponry.”

A top-secret order signed by President Bush on Oct. 2, 1989, authorized selling non-lethal military goods to Iraq while specifying that Iraqi leaders should be cautioned about the use of chemical weapons and nuclear development efforts.

The documents were among more than 50 records the Administration declassified at the request of Rep. Sam Gejdenson (D-Conn.), whose Foreign Affairs subcommittee has spent 18 months examining U.S. exports to Iraq.

Other documents discuss proposals to send U.S. weapons to Iraq and efforts to arm Iraq through third countries during and after the Iran-Iraq War. Gejdenson said he cannot prove that the United States actively encouraged allies to arm Iraq, but he said U.S. policy facilitated such sales to Iraqi President Saddam Hussein.

“It doesn’t take Perry Mason to figure out that the American government wanted him to get these systems,” Gejdenson said at a Capitol Hill press conference. “There certainly had to be more than just a wink and a nod.”

Eagleburger and other Administration officials have defended assistance to Iraq, saying it involved prudent efforts to moderate Hussein’s behavior. They have denied authorizing direct sales of U.S. weapons to Iraq.

An official at the Indonesian Embassy here said he could not determine whether the 1989 helicopter sale went through.

Some of the declassified documents show that senior officials ignored evidence that Iraq continued to support international terrorism long after its removal from the U.S. list of terrorist states.

Iraq had been removed from the U.S. list of nations sponsoring terrorism in 1982 over objections from some American officials so that it could receive U.S. economic aid. The documents show that Iraq initially restrained its support of terrorists but gradually resumed its backing for such groups as the Abu Nidal organization.

A month before Iraq’s invasion of Kuwait in August, 1990, a U.S. intelligence assessment warned that Hussein had strengthened his ties to terrorists “and may use terrorism to intimidate his Arab and Western opponents,” one document said.

Frantz is a Times staff writer and Waas is a special correspondent.