Business is booming for Portugal's merchants of military hardware

Business is booming in warplanes, missiles, and helicopters for Portuguese arms traders like Luis Nogueira. This former in the Portuguese Marines is one of a handful of Lisbon-based arms dealers, many of whom have been in business for decades. At the first scent of war in the Gulf, several of them came scurrying around to the Iraqi Embassy, catalogues in hand, to peddle their wares.

Mr. Nogueira insists calmly but firmly that he sells no military hardware to anyone except the Portuguese armed forces.

He admits that earlier this year he gave the South Africans a design to convert water cannons for riot control into lethal instruments capable of transmitting high-voltage electric shocks through the jet of water. But that was just a favor for a friend.

Mr. Nogueira's family runs a string of arms-dealing companies from its office in a dingsy Lisbon office block and is frequently accused of shady dealings by the local press.

Informed sources in the arms trade allege that Mr. Nogueira arranged the sale of French antitank missiles and Belgian antiaircraft guns to Iraq last summer.

The merchants of military hardware are left untouched by the Lisbon government, which often uses them to procure equipment for its own armed forces and to find export markets for the country's state-owned defense industries. These manufacture light automatic weapons, mortars, bombs, mines, rockets, high-grade ammunition, and armored cars -- just the kinds of things that appeal to third-world governments in need of cheap and effective firepower.

Ninety-seven percent of Portugal's $46 million worth of arms exports last year went to developing countries and nearly half went to precariously unstable Bolivia. The arms dealers divert a large slice of Portugal's official exports to clandestine customers as well.

Over the past two years, about $15 million worth of arms and ammunition issued with export licenses for Gabon, Thailand, and Pakistan has vanished after leavint the Lisbon dockside. It was never ordered by these countries nor delivered, but much is thought to end up in South Africa.

The Lisbon dealers' heyday was in the 1960s and early '70s, when they furnished Portugal's colonial Armu in Angola, mozambique, and Guinea Bissau with weapons and equipment for the 13-year war against black nationalist guerrilla movements.

Portugal's NATO allies frowned on the country's attempt to prolong a bygone imperial age, and the right-wing dictatorship then in power was forced to procure most of its arms clandestinely and set up its own military production lines.

International isolation brought Portugal closer to Israel, South Africa, and other countries shunned by the international community. Business for the officially encouraged arms trade boomed.

The 1974 revolution led to rapid decolonization and Portugal's return to democracy two years later, but the arms dealers maintained their contacts at home and abroad to good advantage. Arms- trade sources say dealers use their influential military friends to make phony foreign arms orders for the Portuguese armed forces.

The arms traders are looking forward to the massive expansion of the Portuguese armaments industry outlined recently by Defense Minister Adelino Armaro da Costa.

He said that Portugal planned to use its cheap labor and arms-manufacturing experience to turn out a new range of export-oriented military products. Portugal would soon launch naval frigates from its dockyards and set up assembly lines to build military aircraft, he said.

Mr. Amaro da Costa talks mainly in terms of exporting arms made under license to other NATO countries, but Portugal is the poor man of Western Europe, and foreign exchange from any quarter is welcome.

"If a country is not on our blacklist, there is no reason why we should stop arms from going there," the defense minister said.