U.S. Documents Dispute Bush on Iraq A-Arms : Policy: President says he was unaware of warnings on technology diversion. Issue was raised as early as 1985.

Newly declassified documents describe fears within the U.S. government that Iraq was diverting technology to its nuclear-weapons program as early as 1985--much earlier than previously known.

The documents contradict angry assertions Wednesday by President Bush that the United States was unaware of any such diversion in the years before the Persian Gulf War while Washington was providing billions of dollars in aid and technology to Baghdad.

The warnings about Iraq’s nuclear strategy are contained in Defense Department documents that sought restrictions on exports of U.S. technology with nuclear uses to Iraq. One memo referred to a CIA report on Iraq’s strategy to develop nuclear weapons and the potential for diversion of technology from commercial programs to its arms effort.

Rep. Sam Gejdenson (D-Conn.) made the documents available after the President’s televised remarks. The material had been declassified by the Defense Department at the request of Gejdenson, chairman of a House Foreign Affairs subcommittee investigating exports to Iraq.

“The Administration’s own documents tell us the President’s denials are not true,” Gejdenson said in an interview. “As early as 1985, the Defense Department said we cannot trust the Iraqis with nuclear technology because they are diverting it from other programs to their nuclear effort.”

Gejdenson said that an analysis of U.S. exports approved for Iraq between 1985 and 1990 revealed 162 instances in which technology with potential nuclear applications was licensed for sale. United Nations inspectors in Iraq have reported finding some U.S. technology used in Iraq’s nuclear-weapons facilities.

But in a CBS television interview from the White House Rose Garden, Bush said emphatically that the United States was unaware of any diversion of U.S. technology to Iraq’s nuclear program.

“We didn’t know that,” said Bush. “The State Department didn’t know that.”

And Bush said that U.S. assistance did not help Iraq develop weapons of mass destruction.

“We did not . . . enhance his (Iraqi President Saddam Hussein’s) nuclear, biological or chemical capability,” Bush said in response to a question on the CBS “This Morning” program. “I have an executive order out on specifically that. And you have repeated something that isn’t true.”

Bush was referring to National Security Directive 26, his Oct. 2, 1989, order mandating closer ties with Iraq in an attempt to influence the behavior of Hussein. The order warned that broad sanctions would be sought if Iraq tried to develop nuclear weapons.

The Times reported Sunday that U.S. intelligence agencies issued numerous warnings about Iraq’s nuclear-arms effort before and after NSD 26 but that the Administration took no steps to impose sanctions.

The new Defense Department documents show that U.S. authorities were aware of Iraq’s nuclear program and the threat of technology diversion even earlier than The Times previously had reported.

In addition, a separate Defense Department document indicates that the Administration considered expanding sales of military technology to Iraq in January, 1990, in response to NSD 26. However, the memo cited potential U.S. political opposition in proposing a lower level of military cooperation.

Bush’s assistance to Iraq before Hussein’s invasion of Kuwait in August, 1990, has come under increasing attack on the presidential campaign trail. On Tuesday, Democratic candidate Bill Clinton accused the President of “appeasement” of Hussein and likely independent candidate Ross Perot has charged Bush with “coddling” him.

“It’s pure, gut American politics,” Bush said of the criticism.

The aid policy, an attempt to persuade Hussein to adopt less belligerent and oppressive policies by offering him economic and technical assistance, dates to the Administration of Bush’s predecessor, Ronald Reagan. The new documents describe the willingness under Reagan to provide Iraq with dual-use technology--equipment that could be used for commercial or military purposes.

A March, 1985, Defense Department memo recommended that Iraq be required to certify that it would not use two American computers in its nuclear program if export licenses were granted. According to the memo, Iraq refused to provide the assurances and the State Department was arguing against requiring it to do so.

“It is firm U.S. policy to deny dual-use exports to Iraq if the stated end-use involves nuclear activities,” said the Pentagon memo. “The logical corollary is to require a commitment against such use.”

The memo said that similar computers would not be sold to Israel without such assurances, since Israel had not signed the nuclear non-proliferation treaty.

The issue of how Iraq was using American technology arose again on July 1, 1985, in a memo directed to then-Defense Secretary Caspar W. Weinberger.

The memo indicates that then-Secretary of State George P. Shultz was applying pressure to speed up high-tech exports to Iraq “without imposition of impractical conditions,” an apparent reference to the prohibition on nuclear uses.

In the memo, Assistant Defense Secretary Richard N. Perle described a CIA report as part of “a body of evidence indicating that Iraq continues to actively pursue an interest in nuclear weapons.”

Perle said there were concerns that Iraq might divert technology from commercial uses to nuclear-arms development, saying that, “in the past, Iraq has been somewhat less than honest in regard to the intended end-use of high technology equipment.”

By early 1988, U.S. intelligence agencies had detailed information about civilian and military facilities in Iraq being used in the nuclear-weapons program, according to other documents reviewed by The Times. Many facilities identified in the intelligence reports were destinations for U.S. technology.

Two Administration officials questioned whether the intelligence data was shared with licensing officers at the Departments of Energy and Commerce. But later intelligence reports show that such warnings were circulated at the top levels of the Administration throughout 1989.

In analyzing the 771 export licenses to Iraq approved during the Reagan and Bush administrations, Gejdenson’s staff found 162 licenses for technology with potential nuclear applications. More than 100 of the licenses listed Iraqi government facilities as the destinations for the technology.

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