EAST EUROPEAN INVOLVEMENT IN THE INTERNATIONAL GRAY ARMS MARKET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00283R000400070008-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: December 22, 2016
• Document Release Date: September 2, 2010
• Sequence Number: 8
• Publication Date: January 1, 1984
• Content Type: REPORT

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Directorate of
Intelligence
East European Involvement
in the International
Gray Arms Market F-1
seerer-
G! 84-10019
January 1984
Copy 4 6 1
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Directorate of Secret
Intelligence
East European Involvement
in the International
Gray Arms Market
This paper was prepared by
International Security Issues Division, Office of
Global Issues. It was coordinated with the
Directorate of Operations.n
Comments and queries are welcome and may be
directed to the Chief, Weapons Proliferation Branch,
OGI, on
Secret
GI 84-10019
January 1984
25X1
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East European Involvement
in the International
Gray Arms Market F-1
Key Judgments In addition to the direct sale'of military equipment to other governments,
Information available most East European nations sell arms and munitions to private dealers and
as of 15 December 1983 brokers on the international gray arms market. Because of the absence of
was used in this report.
effective end user controls, much of the ordnance sold on the gray market
is acquired by belligerent or embargoed nations and terrorist insurgent, or
criminal groups throughout the Third World and Europe. 25X1
To ensure government control and to provide an element of cover, East
European gray-market arms transactions are conducted by state-owned
foreign trade organizations, which also engage in government-to-govern-
ment military sales or commercial arms deals with legitimate foreign
clients. Nominally subordinate to their respective ministries of foreign
trade, most of these organizations have ties to Bloc military and security
services. Given the special role these services play in implementing the
policies of the East European Communist parties, we believe that these
state-controlled trading firms could not engage in gray-market arms sales
without the approval of the political leadership. 25X1
We believe that Moscow has traditionally imposed few restrictions on E--`
25X1
European ra -market arms sales
F_ I
however, that the Soviets may have
recently increased their control over such transactions as a result of 25X1
European press allegations of Bulgarian involvement in arms and drug
smuggling. F_~ 25X1
Most East European gray-market arms sales involve conventional small
arms that fire Soviet- and Western-caliber ammunition. Although far less
sophisticated than other weapons sold on a government-to-government
basis, such weapons constitute a major part of insurgent, terrorist, and
criminal arsenals. Some East European nations reportedly also supply
gray-market clients with unmarked "sterile" weapons or counterfeit copies
of Western small arms. In addition to pistols, rifles, and submachineguns,
East European arms suppliers also offer man-portable antitank and
antiaircraft weapons to gray-market clientsF__1 25X1
Secret
GI 84-10019
January 1984
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We believe that East European involvement in the international gray arms
market is prompted both by political and economic motives:
? Gray-market arms sales allow Bloc nations to earn badly needed hard
currency. Our tentative estimate is that East European gray arms sales
amount to some $100 million annually. In contrast with many other East
European manufactured goods that have difficulty competing on the
international market, East European weapons are well made, relatively
inexpensive, and sought after by gray-market clients.
? The use of gray-market trading firms enables East European nations to
purchase advanced Western weapons, which they would otherwise be
unable to obtain, and to profitably dispose of their surplus and obsolete
military stock.
? The use of gray-market intermediaries also allows East European
governments to distance themselves from the ultimate end user of their
weapons and to maintain an element of deniability should their weapons
be discovered in the possession of a politically embarrassing recipient.
We believe that Eastern Europe's involvement in the gray arms market will
continue and probably increase-given the growing demand for illicit
weapons throughout the Third World and the large sums of hard currency
to be earned in servicing this market. Moreover, East European nations
may begin selling more advanced ordnance to gray-market clients in order
to maintain and expand their share of lucrative sales. As a result, we expect
that significant quantities of silenced weapons, night-vision scopes, auto-
matic grenade launchers, and the newest versions of Bloc man-portable
antitank and antiaircraft weapons will soon become regularly available on
the international gray arms market. Much of this ordnance will be
acquired by nations or groups inimical to the interests of the United States.
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Key Judgments
Scope and Magnitude
Trading Mechanisms
2
Gray-Market Weapons: Small Arms
3
Gray-Market Weapons: Advanced Equipment
4
B.
Bulgaria
15
C.
Poland
19
D.
Hungary
23
F.
East Germany
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Eastern Europe
L%%
UNION
_" xt .. ~' Va 4^a~ Black
Sea
Secret Vi
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East European Involvement
in the International
Gray Arms Market F_1
Most East European nations are actively involved in
the gray arms market, the sale of arms and munitions
on other than a direct government-to-government
basis.' Because much of this ordnance is acquired by
belligerent nations or by terrorist, insurgent, or crimi-
nal organizations throughout the Third World and
Europe, such sales represent a dangerous form of
weapons proliferation. This intelligence assessment
examines gray-market arms dealings by East Europe-
an countries and the political and economic incentives
that prompt such sales. A discussion of individual
East European arms suppliers, their practices, and the
types and ultimate use of some of the weapons they
provide is presented in greater detail in the appendix-
Scope and Magnitude
? Bulgaria purchases significant quantities of foreign
weapons for subsequent resale on the gray arms
market. Sofia, in exchange for a fee, will also
expedite the flow of arms and other contraband
across Bulgarian borders,
an rug Enforcement Administration 25X1
? Poland-with the largest trade deficit of all East
European nations-makes large numbers of weap-
ons available to gray-market dealers. Polish arms
may, in fact, soon replace some Czechoslovak mod-
els as the preferred weapons of many Middle East-
ern terrorist groups.
? Hungary also sells weapons to private arms dealers,
Analysis of captured terrorist weapons suggests that
Hungary may specialize in the supply of counterfeit
Western weapons.
In contrast to government-to-government and licensed
commercial arms sales, the gray arms market encom-
passes the transfer of weapons and munitions from
legitimate arms suppliers through unofficial-and
sometimes illegal-intermediaries; Although the in-
termediary is often a private individual, corporation,
or group, state-controlled enterprises often facilitate
the movement of weapons into the international gray
arms market. East European nations are actively
involved in this market, primarily as suppliers, but
occasionally as middlemen or ultimate recipients:
? Czechoslovakia, the largest manufacturer and ex-
porter of land armaments in Eastern Europe, is
probably the single leading Bloc supplier of gray-
market weapons. Czechoslovak arms are reliable,
relatively inexpensive, and have been found in the
possession of criminal, insurgent, and terrorist
groups throughout the Middle East and Europe.
'This paper examines the gray arms market activities of Czechoslo-
vakia, Bulgaria, Poland, Hungary, Romania, and East Germany.
? Romania, a relatively new supplier to the gray arms
market, currently has.more firms engaged in gray-
market transactions than any other East European
nation.
? East Germany has a limited capacity for arms
production and, like Bulgaria, may serve as a broker
of gray-market weapons.0 25X1
We believe that East European nations are major
suppliers of gray-market weapons. Our estimate is
that East European gray arms sales amount to some
$100 million annually. Because of the secretive nature
of the market and general lack of sufficiently detailed
reporting, the actual value may be several times
greater. Although the amount of gray-market arms
sales is small compared to the annual value of East
European government-to-government arms deliver-
ies-which averaged $2 billion over the last five
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years-gray-market sales pose a danger far in excess
of -their actual monetary value. In contrast to most
official arms transactions-where at least nominal
control is maintained over the final disposition of the
weapons involved-the ultimate recipient of a gray-
market weapon is seldom known in advance. This lack
of accountability is further compounded by the lon-
gevity of modern small-arms, which are easy to
maintain or refurbish. These factors allow gray-
market weapons to be bought and sold many times
and preclude tracing them through complete pur-
chase-to-delivery cycles.F__-]
Most of these foreign trade organizations are primari-
ly involved in overt arms transactions, which provides
an element of cover for their gray-market activities.
Omnipol, Kintex, Romtehnica, Technika, and Cenzin
normally supply weapons on a government-to-govern-
ment basis, and Merkuria, Universal, and Kintex
usually handle legitimate commercial arms deals with
foreign clients, but each of these firms also sells
weapons to gray-market clients. (S NF)
Trading Mechanisms
East European gray-market arms transactions are
conducted by state-owned foreign trade organizations
Soviet Role
We do not know if Moscow is directly involved in the
international gray arms market. Soviet firms and
officials do not appear to sell weapons to private arms
dealers as do their East European counterparts, but
Soviet weapons have been discovered in the possession
of a wide range of terrorist and insurgent groups. This
suggests that, at a minimum, Moscow fails to exercise
adequate control over the military equipment it sup-
plies to lesser developed countries.' We believe, more-
over, that the Soviets provide weapons to Palestinian
groups and patron-state supporters of terrorism with
the full knowledge that some of these weapons are
resold, traded, or given to other recipients. Although
we do not know the exact amount, many of these arms
undoubtedly become available to gray-market dealers
and clients. (s NF)
There is little doubt that Moscow is well aware of
East European involvement in the international gray
arms market. We believe the USSR has traditionally
imposed few restrictions on these transactions provid-
ed the ordnance supplied is limited to small arms,
crew-served infantry weapons, and munitions. Press
I Although it is common practice among states exporting military
weapons to impose some sort of nominal end-use controls over such
ordnance, these controls vary widely. Some suppliers, such as the
United States, insist as a precondition for arms transactions that
recipients agree not to retransfer any weapons without the consent
of the original supplier. Other arms-exporting states assume no
responsibility for retransfers of their military equipment. F-1
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allegations of Bulgarian-and, by implication,
Soviet-involvement in illicit arms transfers may,
however, have caused Moscow to increase its control
over East European gray-market activities.
Gray-Market Weapons: Small Arms
The majority of East European gray-market arms
transactions involve conventional small arms and mu-
nitions rather than the more sophisticated weapon
systems sold on a government-to-government basis.
ammunition, which is readily available throughout
sales include pistols, assault rifles, and machineguns
of proven Soviet design. They also include weapons
produced in Eastern Europe that fire Western-caliber
Europe and the Third World (table 2).
Table 2
Typical East European Small Arms
Available on Gray Arms Market
Weapon
Caliber
Duo
6.35 mm*
Czechoslovakia
M-52
7.62 mm
Czechoslovakia
CZ-70
7.65 mm*
Czechoslovakia
AP-66
7.65 mm* Hungary
Walam
7.65- and 9-mm Short* Hungary
Firebird
9-mm Parabellum? Hungary
FP-9
9-mm Parabellum'
Hungary
CZ-75
9-mm Parabellum'
Czechoslovakia
P-64
9-mm Makarov
Poland
Submachineguns
Skorpion
7.65 mm,' 9-mm
Short,* 9-mm Parabel-
lum,' 9-mm Makarov
Czechoslovakia
AK-47 and
7.62 mm
Poland, Romania, East
AKM
Germany, Hungary,
Bulgaria
Besides selling their own ordnance, East European
nations also purchase large quantities of Western
small arms on the gray arms market. Because these
weapons are incompatible with those in use by East
European military and security services, they are
almost certainly intended for resale to gray-market
Some East European nations apparently also manu- clients with access to Western ammunition:
facture and sell unmarked or counterfeit firearms. 1
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Gray-Market Weapons: Advanced Equipment
In addition to small arms, East European nations also
sell more sophisticated ordnance on the gray arms
discovered in 1973 and 1979 in the possession of
suspected Palestinian terrorists in Italy.
East European nations also use gray-market interme-
diaries to purchase advanced Western military equip-
ment, which they would otherwise be unable to
obtain. Weapons acquired in this manner can either
be retained for familiarization or reverse engineering
or be resold:
Economic Incentives
We believe that East European nations sell arms on
the international gray arms market for many of the
same economic reasons that underly their direct
government-to-government arms transactions.
Faced with rising trade deficits, these countries have
increasingly turned to arms exports to earn hard
currency.
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Gray-market sales offer several distinct advantages
over official transactions.
or example, East
European nations almost invariably stipulate payment
in cash-usually in US dollars or West German
marks. This results in an immediate infusion of
convertible currency, precludes complicated, long-
term financial arrangements, and makes tracing such
transactions more difficult. Gray arms market deal-
ings also permit Bloc nations to profitably dispose of
obsolete and surplus weapons, which would otherwise
have to be stored, reconditioned, or given away as
foreign military aid:
East European nations occasionally trade weapons for
commodities, either for their own use or for resale.
25X1
A wide variety of Drug
Enforcement Administration and
Political Considerations
The use of gray-market intermediaries allows East
European governments to distance themselves from
the ultimate end users of their weapons and to
maintain an element of deniability should Bloc weap-
ons be discovered in the possession of politically
embarrassing recipients. Thus, by dealing through
foreign arms dealers or, in some cases, other govern-
ments, East European nations can sell to a wide range
of customers without being seen as selling weapons or
supplying nonsocialist countries. The following repre-
sent some examples of such activities:
? Bulgaria-acting through private West German
and Austrian arms dealers and a Danish shipping
firm-sold nearly $50 million worth of small arms
and ammunition to South Africa during 1976-80,
according to European press reports published after
two Danish sailors exposed the operation.' A Danish
Foreign Ministry official told a US Embassy officer
in 1983 that the Danish Government has known for
some time that Bloc countries have been involved in
arms shipments to South Africa. 25X1
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We believe that East European nations also use the
international gray arms market to curry favor with
Moscow by -acting as conduits for the supply of arms
and munitions to pro-Communist governments, insur-
25X1,ents, and national liberation movements throughout
the Third World.
25X
25X1
Although we cannot confirm Italian press allegations
that East European governments supply arms to
European terrorists in order to contribute to Western
political instability, we believe that lax or nonexistent
end user controls have allowed Bloc weapons pur-
chased by private dealers, radical Arab states, and
Palestinian organizations to be sold or traded to most
major European and Middle Eastern terrorist groups. 25X1
East European governments may not know the specif-
ics of such arms transfers, but we doubt that they
have ever required-or even requested-that their ,,GV,,
According to press reports, Polish weapons were also
used in a number of other terrorist attacks on Israeli
and Jewish targets in Europe during 1982. It is
possible that some of these attacks may have been a 25X1
form of "payment in kind" by West European terror-
ist groups for arms supplied in the past by Palestinian
terrorists.)
Besides facilitating the sale of arms to customers with
access to Western ammunition, East European acqui-
sition of Western small arms may be an attempt to
ensure that Western weapons turn up in terrorist arms
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Polish rifle-grenades captured
in Lebanon in 1982. Address on
crate indicates that these weap-
ons were intended for use by the
n
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Charred Czechoslovak and
Polish suhmaehineguns recov-
eredfrom the site of an Arme-
nian terrorist attack on a Turk-
ish diplomatic residence in
Portugal in July 1983.
We expect that East European involvement in an
expanding international gray arms market will in-
crease in the near term. Continued instability in the
Third World, arms embargoes on such nations as
Argentina and South Africa, the Iran-Iraq war, and
the rearming of the PLO as a result of massive
materiel losses during the Israeli incursion into Leba-
non all represent potentially lucrative markets for
East European arms suppliers seeking to earn badly
needed hard currency.FI
At the same time, however, we believe that, given the
increasing number of developing nations- such as
China, Singapore, Brazil, South Africa, and Egypt-
that manufacture and export small arms, East Euro-
pean nations will experience greater competition. We
expect that to compete most East European suppliers
will not only offer larger quantities of conventional
rifles and pistols at competitive prices but also supply
increasingly greater amounts of sophisticated ord-
nance to gray-market customers. As a result, signifi-
cant quantities of silenced weapons, night-vision
scopes, heavy machineguns, automatic grenade
launchers, recoilless rifles, and the newest versions of
Bloc man-portable antitank and antiaircraft weapons
may become regularly available to gray-market buy-
ers by the late 1980s. We expect that terrorist,
insurgent, and criminal organizations, as well as
nations hostile to the United States, will have little
difficulty in purchasing such ordnance.F___-]
Recent media reporting of Bulgarian arms-smuggling
activities will probably have little permanent effect on
East European gray-market arms operations other
than causing the countries involved to exercise greater
caution-including the use of additional intermediar-
ies. They are not likely, however, to reduce signifi-
cantly their level of involvement in a market that is
not only financially lucrative, but also pays substan-
tial political dividends to Moscow. For this reason, we
also believe that East European governments would
not respond positively to any US initiative to curb the
flow of arms and munitions into the gray arms
market.)
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Appendix A
Czechoslovakia
We believe that Czechoslovakia is one of Eastern
Europe's largest suppliers of gray-market weapons-
particularly of well-made, relatively inexpensive small
arms. With a well-developed industrial base and a
strong engineering tradition, Czechoslovakia has had
a long and profitable history as an arms manufacturer
since before World War I.
I not only manufacturing Soviet
equipment under license, but also producing a higher
proportion of weapons of domestic design than any
other Soviet satelliteF
Omnipol
Czechoslovak military sales are primarily the respon-
sibility of the Omnipol foreign trade organization, a
part of Obtechsprava-the Commercial-Technical
Directorate-of the Czechoslovak Ministry of For-
eign Trade.
We believe that Omnipol's activities include both
government-to-government transfers of heavy ord-
nance and gray-market sales of small arms. Although
Czechoslovak foreign trade directories identify Omni-
pol as an exporter of hunting and sporting firearms,
ammunition, sports and light civil aircraft, and blast-
equipment.) I various
sections within Omnipol specialize in such items as
military jet trainers; radars and other airport equip-
ment; rocket and grenade launchers, rifles, mines, and
ammunition; tanks and armored vehicles; military
production facilities; and military training of foreign-
ers in Czechoslovakia. Although Omnipol probab125X1
sells most of these products to other governments, '25X1
has also supplied large quantities of small arms an(.
ammunition to gray-market clients.
Merkuria
We believe that since the mid-1970s another foreign
trade enterprise, Merkuria, has increasingly assumed
responsibility for Czechoslovak gray-market arms
transactions. Although little is known about Merkuria
or the nature of its relationship with Omnipol, an
analysis of available reporting suggests that, although
Omnipol exports small arms and ammunition, the
bulk of its foreign sales seems to be in major military
items such as tanks, aircraft, and factories. Merkuria,
on the other hand, deals almost exclusively with small
arms-particularly pistols and assault rifles-and
ammunition. or examp125X1
that in 1982 Merkuria was preparing to ship 9,000
unassembled rifles and pistols, valued at $750,000, to
Ghulan Mohd Dossul and Company, a small arms
firm in Karachi, Pakistan, at the same time that
Omnipol was negotiating the sale of an $18 million
rifle factory with Dossul Engineering, Ltd., a Paki-
stani firm that, appears to be colocated with Ghulan
Mohd Dossul in Karachi. Similarly, although still
identified in foreign trade journals as an exporter of
"electrical and gas appliances, workshop tools, and
household articles," in 1983 Merkuria displayed a
large selection of military-style small arms at a major
ing equipment
Omnipol serves as a covert supplier of arms and offers
a wide range of military ordnance, vehicles, and
West European arms exhibition,
25X1
25X1
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Austrian authorities examine
smuggled Czechoslovak and
Romanian weapons seized in
January 1983.n
Merkuria, unlike Omnipol, employs foreign-arms
dealers and brokers as trade representatives abroad.
In addition to selling arms through foreign agents,
Merkuria also sells weapons directly to private arms
dealers and foreign customers. According to European
press reports, for example, Austrian customs authori-
ties at a border crossing with Czechoslovakia seized a
van carrying illegal weapons hidden under a declared
cargo of ammunition on 11 January 1983. Austrian
authorities reported that the confiscated weapons
included over 300 Czechoslovak pistols as well as
seven Romanian FPK Dragunov-type sniper rifles. All
of these weapons were reportedly still in their original
factory cartons. Documents discovered in the van
indicated that the pistols were consigned to a private
Austrian arms dealer named Leopold Willert, while
the sniper rifles were intended for Horst Grillmayer,
another Austrian arms dealer who had been previous- 25X1
ly linked with the wea n used in the 1981 attempted
papal assassination,
but stated that he never intended to import them into
After being arrested and questioned, Willert admitted
having purchased the pistols from Merkuria in Prague
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Skorpion. Seemingly tailor made for terrorists, the Skorpion is
less than l l inches long with its wire shoulder brace folded, weighs
under 3 pounds, and is available with a sound suppressor, night-
vision sight, and a "brass catcher" to collect the expended
cartridges. A selective fire weapon, the Skorpion can operate on
both the semiautomatic and full-automatic mode and has a cyclic
rate offre of over 750 rounds per minute. (u)
Terrorist Use of Czechoslovak Weapons
Czechoslak small arms are particular favorites of
terrorist, insurgent, and criminal groups-probably
because so many fire easily obtainable Western am-
munition. Of the four known versions of the Czecho-
slovak Skorpion submachinegun, for example, only
the 9-mm Makarov Model 65 fires a Soviet cartridge.
The others-the 9-mm Short (.380 ACP) Model 64,
the 9-mm Parabellum Model 68, and the more com-
mon 7.65-mm (.32 ACP) Model 61-all shoot ammu-
nition that is readily available throughout Europe and
25X1 the Middle East.F_~
safehouse by the international terrorist Carlos in 1975
and that Red Brigades terrorists killed former Italian
Prime Minister Aldo Moro in 1978 with a Skorpion
previously used by the Brigade to assassinate
Francesco Coco, the Chief Prosecutor of Genoa.
used in a submachinegun attack on a synagogue in
Brussels in September 1982,
mid-1982 for $190 each-less than one-half the price
of a well-made Western semiautomatic pistol.
Although these weapons may no longer be produced,
Skorpions are still available on the international gray 25X1
arms market. for
example, an firm active on the gray market
had 1,400 Model 65 Skorpions available for sale in 25X1
In an apparent attempt to capture a share of the
market held by the Belgian-made Browning 9-mm
Hi-Power pistol, the Ceska Zbrojovka Machinery
Enterprise at Strakonice began production of the
CZ-75-a large-frame, large-magazine-capacity pis-
tol-in 1975. The CZ-75 was particularly popular
among Turkish terrorists during the late 1970s be-
cause it chambered the same ammunition used in
many of their submachineguns and is superior to the
standard Turkish Kirikkale police sidearm, which 25X1
holds only eight cartridges of far less powerful .32- or
During the late 1970s, the Skorpion was the preferred
assassination weapon of Palestinian terrorists and of
those groups they supported. Press reports indicate
that two Skorpions were abandoned at a Parisian
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25X1'
CZ-75. This weapon closely resembles the
Browning Hi-Power but features a 15-round clip
and a double-action trigger, which allows the
firearm to be carried ready tofre with the safety
off, a round in the chamber, and the hammer
Another popular Czechoslovak weapon is the 7.65-
mm (.32 ACP) CZ-70 pistol, which-like the CZ-
75-fires Western-caliber ammunition and is made
for export.
Other Czechoslovak pistols have also been reported in
the possession of terrorist, insurgent, and criminal
groups. According to press reports, French authorities
claim that the same 7.65-mm Czechoslovak pistol was
used i and an
Israeli diplomat in 1982, and that a different weapon
of the same make and caliber was used in the
CZ-70. Generally similar to the West German
Walther Police Pistol, this small, defensive side-
arm features a double-action trigger and high
concealability, which apparently compensate for
its underpowered cartridge and its limited maga-
zine capacity of eight rounds.n
unsuccessful attack on a US Embassy officer in 1981.3
the Chief of the Netherlands Bureau for Firearms
also told newspaper reporters that the Dutch market
for illegal weapons was overrun by "CZ pistols" and
that large shipments of these weapons were regularly
intercepted coming by truck from Czechoslovakia via
Austria to the Netherlands.Q 25X1
Czechoslovakia also produces the 7.62-mm VZ-58.
assault rifle, which, although similar in concept and
external appearance to the AK-47 and AKM, is quite
' We continue to believe, however, that these attacks may have been
committed with 7.65-mm Czechoslovak Skorpion submachineguns
and not with semiautomatic pistols. According to press reports,
French authorities have stated that the empty cartridge cases
recovered after all three attacks were fired from Czechoslovak
weapons with a vertical ejection system. If these reports are true,
then the murder weapons could not have been CZ-70 pistols or the
older Czechoslovak 7.65-mm P-27 or CZ-50 pistols, which all have
standard Mauser-type right-hand ejection ports. Except for one
obscure pistol, which has not been manufactured since the early
1920s, the only Czechoslovak weapon in 7.65-mm with a vertical
ejector is the Model 61 Skorpion.F--]
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different internally from the Soviet Kalashnikov rifle.
after Japanese
Red Army (JRA) terrorists used this weapon during
the 1972 massacre at Lod Airport, a JRA unit
adapted this weapon's designation, VZ-58, as its nom
de guerre. In late 1979 a US military officer in
Turkey observed a case of new, consecutively num-
bered VZ-58 rifles seized from an illegal arms ship-
ment by Turkish authorities. More recently
This source also stated-that
similar weapon was used during the assassination of
anti-Mafia Carabinieri Gen. Dalla Chiesa and his
wife in September 1982 and during the murder of
Alfio Ferlito, the head of a Sicilian criminal family,
who, along with three police escorts and a driver, was
ambushed and killed in June 1982.1
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Appendix B
Bulgaria
Bulgaria has successfully capitalized on the highly
lucrative international gray arms market by combin-
ing the role of arms dealer and middleman with the
long-established Balkan tradition of smuggling.
and State Departme
reporting, Bulgaria has acquired huge quantities of
Western and Bloc weapons that are either incompati-
ble with or far in excess of its own domestic needs. In
return for badly needed hard currency, many of these
arms are sold to Third World governments such as
Libya and Iraq, which support international terror-
ism, and to gray-market arms dealers and brokers.
Bulgarian arms purchases and sales are the responsi-
bility of Kintex-a state-controlled foreign trade or-
ganization described in official trade journals as an
importer/exporter of special hunting, sports, and com-
5X1
5X1
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Sources of Supply
As an official representative of the Bulgarian Govern-
ment, Kintex is able to acquire large quantities of
weapons directly from West European manufacturers
(table 3). State Department reports indicate, for ex-
ample, that Kintex purchased 32,400 pistols between
1974 and 1976 and an additional 22,000 small arms
in 1979 from West European sources. Even the
United Kingdom exported 2,000 pistols to Bulgaria
through "a clerical error" in 1980, according to State
Department reporting.' (S NF)
for Western small arms
In an apparent effort to diversify its sources of supply
Impressive as these quantities of Western weapons
are, we believe that most Bulgarian arms purchases
are probably made from other Bloc nationsH
25X1 .
25X1
25X1 U
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throughout the Middle East and Europe.
Terrorist Use of Bulgarian Weapons
Although Bulgaria's involvement on the international
gray arms market is largely limited to foreign weap-
ons, the Bulgarian-manufactured PG-7 high-explo-
sive, antitank, rocket-propelled grenade is one of the
more ubiquitous components of terrorist arsenals
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Appendix C
25X1
Cenzin
The Central Engineering Directorate-Centralny
Zarzad Inzynierii (Cenzin)-of the Ministry of For-
eign Trade is primarily responsible for Polish arms
25X1 exports.
Universal 25X1
Another Polish firm engaged in arms exports is
Universal, a foreign trade enterprise subordinate to
the Polish Ministry of Foreign Trade. According to
Polish trade directories, Universal is an import/export
firm specializing in household appliances, musical
instruments, camping and tourist equipment, and 25X1
sports and hunting ammunition. We believe that
Universal sells munitions primarily to private dealers
and brokers, in contrast to Cenzin, which primarily
engages in government-to-government arms sales.)
Universal may also provide weapons to terrorist
groups. on 7 August
1981 an individual staying at the same hotel in Syria
Although the majority of its foreign sales are made on as then leader of the Armenian Secret Army for the
a direct government-to-government basis, Cenzin also Liberation of Armenia (ASALA), Hagop Hagopian,
sells arms directly to Palestinian organizations. 0 informed Universal that its shipping delay was putting
him in a difficult position with his customers. Press
reporting indicates that, two weeks later, Lebanese
25X1
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Turkey, according to State Department reporting.
Press reports indicate that, two days later, two Pales-
tinian terrorists fired WZ-63s during a machinegun
and grenade attack on a Jewish restaurant in Paris
and that the same type of weapon had been used in
the attempted assassination of Israeli Ambassador
Argov in London on 4 June 1982 as well as in a raid
on Vienna's central synagogue in August 1981.1
WZ-63. Two WZ-63 submachineguns were used by Palestinian
terrorists in a 1976 attack on an El Al airliner in Turkey.
Weighing less than 2 kilograms and measuring only 33 centimeters
in length with its stock folded, the WZ-63-like the Skorpion-is
easily concealed and can fire in either the semiautomatic or full-
automatic mode
25X1
authorities seized a shipment of 473 Polish pistols
illegally sent to Beirut on a Polish airliner. Given the
tenuous links between Hagopian and the Syrian hotel,
it is possible that these weapons were intended for
ASALA operatives active in Lebanon.=
25X1
Terrorist Use of Polish Weapons
Polish weapons. are also frequently encountered in the
hands of terrorists. The Polish WZ-63 submachine-
gun, for example, may soon replace the Czech Skor-
pion as the preferred weapon of Middle Eastern
terrorists. Unlike the Skorpion, the WZ-63 fires only
the Soviet 9- by 18-mm Makarov cartridge, which is
not readily obtainable outside the Bloc. The general
unavailability of this ammunition has not, however,
prevented a variety of terrorist groups from using the
? WZ-63 throughout Europe and the Middle East.
Photographs of weapons recovered in July 1983, for
example, indicate that Armenian terrorists used WZ-
63 submachineguns during an attack on a Turkish
diplomatic residence in Lisbon, Portugal. On 7
August 1982 two Armenian terrorists used WZ-63
submachineguns in an attack on Esenboga Airport in
European terrorist groups also have access to this
weapon-probably through radical Palestinian orga-
nizations, which supply arms and training in exchange
for logistic and operational support from other terror-
ist groups.
employed WZ-63s in a jailbreak of an imprisoned
member in Berlin in 1978 and in the abduction of
West German industrialist Hanns Martin Schleyer in
1977. In addition, a WZ-63 was recovered from the
car in which RAF terrorist Juliane Plambeck died in
an auto accident in 1980, according to press reports.
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P-64. The double-action P-64 resembles the West German Walther
PP but, like the WZ-63, fires the more powerful Soviet 9-mm
Makarov pistol cartridge
Another popular terrorist weapon is the Polish P-64
semiautomatic pistol. Press reports indicate that P-
64s were used in the 9 October 1982 attack on a
synagogue
21 Secret
25X1
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Appendix D
Hungary
some of the weapons it produces.
Commercial
Technika
Hungarian arms exports are handled primarily by the
25X1 military supply organization Technika,
Technika is also involved in the sale of military
equipment to private arms dealers.
FEG
One of Hungary's main producers of small arms,
Fegyer Es Gaz Keszulekek Gyara-the Weapons and
Gas Works Factory (FEG)-may also directly sell
sales of FEG weapons appear to be handled by a firm
called Ferunion, which, according to firearms jour-
nals, displayed samples of FEG-manufactured pistols
and shotguns at a West German arms fair in 1983-
25X1 25X1
Terrorist Use of Hungarian Weapons
Hungarian weapons frequently turn up in the posses-
sion of terrorists. Like Czechoslovakia, Hungary pro-
duces a variety of small arms patterned after popular
European weapons and that fire readily available
Western ammunition. Perhaps the most common are
the numerous-and unauthorized-Hungarian ver-
sions of the West German Walther police pistol. Like
the original Walther, these weapons feature a double-
action trigger and are available in both 7.65-mm (the
Walam, Hege, or AP66 pistols) and 9-mm short (the
Walam or Model 48 pistol). The 9-mm Walam in
particular was frequently used by Armenian terrorists
in attacks on Turkish diplomats during the late 1970s.
According to Interpol reports, four Walam pistols
were used during the murders of three Turkish am-
bassadors, in Vienna in 1975, in Rome in 1977, and in
The Hague in 1979.0 25X1
Although most weapons clearly identify their place of
manufacture, some Hungarian pistols, feature appar-
ent West German markings with no overt Hungarian
attribution. In 1981, for example, numerous "West
German Firebird" pistols were confiscated from
members of the FP-25 Movement in Portugal and
from Basque ETA/PM terrorists in Spain, according
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Fitebird. Although stamped
"West Germany," the 9-mm
Firebird is actually a Hungar-
ian version of the Soviet
7.62-mm Tokarev TT33 pistol.
Note Hungarian proofmarks
to local security officals. Small arms journals indicate
that this weapon-originally known as the Toka-
gypt-was manufactured by Hungary for sale to the
Egyptian armed forces. After the initial delivery,
Egypt canceled the order, and the balance of the
contract-estimated to be nearly 15,000 weapons-
was released by Hungary to the commercial arms
market. The words "West Germany" were presum-
ably added to the slide legend at this time because
many Firebirds were sold through the now defunct
German firm Hege Waffen.
In addition to its acquisition by Portuguese and
Spanish terrorists, this weapon became almost stan-
dard issue in West Germany's Baader-Meinhof gang.
According to press reports, member Rolf Pohle pur-
chased a number of Firebirds using forged gun per-
mits until he was apprehended when an arms dealer in
Ulm became suspicious of his papersF__-]
Photographs of arms captured in 1982 by Israeli
forces from the Palestinians in Lebanon show what
appear to be Hungarian 7.65-mm Walam pistols
disguised to look like the Walther police pistol, after
which they are modeled. Bearing Hungarian proof-
marks on both the frame and slide, these weapons also
have chamber indicators located on the upper left side
rather than the rear of the slide-a feature unique to
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Hungarian 7.65-mm Walam
Pistol. These Walther look-
alikes are stamped "GSM
Mauser Oberaudorf Germany"
even though the Mauserfirm
never produced the Walther PP
pistol and is located in Obern-
dorf, not Oberaudorf. These
pistols also feature special re-
coil springs and extended bar-
rels threaded to accept silenc-
ers. (S NF)
the Hungarian Walam. Because their slide legends Browning Hi-Power and is reported! available with a
contain obvious mistakes, we believe that these weap- 12- or 24-round clip.
ons were sold by Hungary without any attributive
markings to a customer who knew little about Ger-
man pistols but who sought to capitalize on the high
prices commanded by German arms-especially in
the Middle East.l
Although it has not yet been reported to have been
used by terrorists, Hungary has recently begun pro-
duction of a new 9-mm Parabellum pistol called the
FP9. Like the Czechoslovak CZ-75, this weapon
appears to be a double-action version of the Belgian
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Appendix E
Romania
Unlike most other East European nations-where one
or, at most, two foreign trade enterprises are responsi-
ble for foreign arms sales-we believe that several
Romanian entities are actively involved in the interna-
tional gray arms market, probably in response to the
Romanian Government's reported desire for all for-
eign trade organizations to become self-supporting.
Little information is available, however, on either the
organizations themselves or on their relationships to
each other. FI
Romtehnica
One of the most active of the organizations involved in
the arms trade is Romtehnica.
althoug
some agreements are also negotiated through Roma-25X1
nian military attaches or through special visiting
delegations. F - ] 25X1
Although the bulk of its foreign arms sales appear to
be made on a government-to-government basis, a
Romtehnica offered modern arms2
and munitions for sale to private buyers. The prof-
fered ordnance reportedly included pistols, Kalashni-
kov assault rifles, RPG-7 antitank weapons and gre-
nades, and SA-7 surface-to-air missiles and
launchers-man-portable weapons that are the stock
and trade of gray-market arms dealers. 25X1
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he National Aero-
nautical Center (CNA) entered the international arms
market in response to a Romanian Government de-
cree in June 1981 that within three months each
CNA officials met the following month in
enterprise should be self-supporting.
25X1 Bucharest with several West European arms brokers
to explore the possibilities of CNA dealing in interna-
tional arms sales. During this and subsequent meet-
ings thoughout the summer of 1981, CNA officials
negotiated with several well-known European arms
brokers for the purchase and sale of a wide range of
military ordnance including M-16 rifles, US TOW
and Soviet SA-7 missiles, US M-60 and Soviet T-62
and T-72 tanks, and Bell Cobra helicopter gunships.
25X1
During these negotiations, CNA's role appeared to be
that of an arms broker acting as a middleman for the
sale of Bloc ordnance to the West, and for Western-
particularly US-weapon systems intended for sale to
Middle Eastern clients. Although it is unlikely that
any of the parties involved had access to the more
sophisticated weapons discussed, it is not unusual for
gray-market arms brokers to offer large quantities of
advanced, hard-to-obtain military equipment as an
entree to a potential client in the hopes of securing a
contract to provide other, less exotic ordnance.
25X1 Fata may This firm ma serve as a front for CNA activities
abroad. Constantin
Luminos-identified as the director of the Fata enter-
prise-was scheduled to travel to Iraq as part of a
Romanian military delegation in August 1982. -
DCD
Another Romanian firm involved in international
arms sales, DCD is headquartered in BucharestF
Although available infor-
mation does not permit a more accurate assessment,
DCD may serve as the CNA representative to Iran,
while Fata is used in CNA arms deals with Iraq. The
use of such front organizations would allow CNA to
capitalize on the current Iran-Iraq war without the
onus of bein seen ming both bell' erents. For
example, DCD in-
formed the Iranian Ministry of National Defense for
Logistics in late 1982 that it had been offered 200
new engines with gearboxes for the M-60 tank and
inquired whether Iran were interested in purchasing
these engines.)
25X1
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Appendix F
East Germany
Soviet policy has
ensured that the East German armaments industry is
one of the smallest in the Bloc. As a result, we believe
that East German involvement on the gray arms
market is probably limited to selling the few types of
small arms that it produces and brokering the sale of
larger weapons produced in other East European
countries and the Soviet Union. F_~
ITA
Although detailed information is unavailable, we be-
lieve that the Engineering-Technical Foreign Trade
Corporation-Ingenieur Technischer Aussenhandel
(ITA)-ma be responsible for most East German
arms sales.
Other Dealers
In addition to ITA-which appears to represent East
Germany in its official arms dealings with other
recognized governments-one or more smaller East
German firms or individuals may also be involved in
the international gray arms market, probably as
brokers rather than manufacturers of military equip-
ment. One such company, "Firma Petrov Handels-
kontor" in East Berlin, appears to be colocated with
the East German international transport firm Deu-
trans and may be involved in the covert supply and
transportation of weapons. According to State De-
transshipment of 500 Uzi submachineguns.
partment reporting, in 1980 it was involved in the
More recently, Defense Department reporting indi-
cates that in 1983 the IMES Import-Export Corpora-
tion in East Berlin purchased at least 4,000 7.65-mm
pistols from the Spanish gun manufacturer Astra. The
acquisition of these weapons-which are incompatible
with East German arms and twice as expensive as
similar 7.65-mm Czechoslovak pistols-strongly sug-
gests that they were intended for resale to a foreign
client. F__1 25X1
At least one East German firm, Exportkontor, is
active on the commercial arms market, where it seeks
to capitalize on the German reputation for manufac-
turing high-quality hunting weapons. In 1983, for
example, representatives of this firm exhibited a large
variety of shotguns and hunting rifles at a major arms
exhibition held in West Germany. Although its activi-
ties appear to be overt, we cannot rule out the
possibility that Exportkontor, like Merkuria of
Czechoslovakia, serves as a front for the covert supply
of gray-market weapons.) 25X1
Insurgent Use of East German Weapons
Although we believe that East Germany's role on the
gray arms market is largely that of a broker rather
than supplier, some East German small arms have
been discovered in the hands of insurgent groups. An
analysis of the factory markings on "Soviet AK-50"
assault rifles captured by Philippine authorities from
New People's Army rebels in early 1982, for example,
indicates that the weapons are, in reality, MPiKM
assault rifles-the East German version of the Soviet
AKM.F_~ 25X1
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