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It's highly unlikely it was a terrorist missile. When it was shot down it was probably out of range for a stinger and possibly out of range for even a somewhat larger ground-air missile (in addition, for some reason it was lower than most planes are at that point). If a terrorist group had wanted to down a plane they could easily have gone nearer the airport, where they would have had an easier shot.
As for the navy missile theory, explosives were found on the crash debris, so it's highly likely that, if it was a navy missile, it was loaded, rather than having just some sort of dummy warhead. I don't really know, but I doubt the navy tests live warheads off Long Island.
The most popular proponent of the bomb theory now is Peter Lance, about half of whose Cover Up is about it. Lance points out that Ramzi Yousef was on trial during the event. One of the things Yousef was tried for was an attack on PAL 434 on its way to Tokyo in the early nineties. The bomb on PAL 434 was highly innovative in that it was very small (Ramzi got it aboard the plane in his shoe) and was basically just a blasting cap. The bomb could not destroy the plane but Ramzi tried to place it above one of the fuel tanks, which he thought would then explode, downing the plane. In the event, Ramzi was a few feet out, the tank didn't explode and only one person was killed. Lance got hold of a bunch of FBI documents and found that the FBI was conducting some sort of operation using an informant in the cell next door and that Ramzi was able to make a few phone calls. Ramzi apparently told this informant he was planning to blow up a plane out of NY so that he could file for a mistrial (he did file, but the application was rejected). Lance says that putting Yousef on trial would have meant using the informant, who the powers-that-be needed to put away for a long time (he was involved in lots of other mafia-related cases in which his credibility had to be destroyed to put away a bunch of mafioso; if they built his credibility up in a Yousef trial, they couldn't then turn round and destroy in the mafia trials). The decision that TWA 800 wasn't going to become a criminal investigation was taken after a meeting with some lawyers and Lance simply thinks it's an ends/means decision. They'd rather put the mafioso away than Yousef et al. Yousef got life plus twice anyway.
The NTSB reconstruction of the plane proved (definitively in Lance's and my opinion) that the center wing fuel tank exploded - they can somehow tell by the way the metal is bent. Lance merely says that the cause was the blasting cap bomb, whereas the NTSB explanation is basically that the plane spontaneously combusted. For various reasons Lance thinks the FBI wasn't playing straight with the NTSB (it was a joint investigation) and I even read the transcript of an interview where he beat an NTSB guy on this point. The FBI explained the explosives found on the plane by saying that they were left there by a sloppy bomb-sniffer dog test a couple of weeks before. However, the test used smokeless powder, water gel, C-4, det cord and ammonia dynamite, whereas the explosives actually found aboard were RDX, PETN and nitroglycerine.
My explanation is different (you knew it was going to be, didn't you?). I think it can be actually pretty hard to prove that an aircraft has been blown up by a bomb, because the clinching piece of evidence is an actual piece of the bomb (which obviously blew up). Given that the bomb was real small - the timer for PAL 434 was a casio watch with a couple of components soldered into it (for the actual trial they recovered a bit of the watch and proved that the solder was not of the type usually used by Casio) and the plane exploded over water, I find it hard to believe that any piece of the bomb was recovered. All the defence attorney has to do is point out that they didn't actually find a bomb ("They didn't find a single piece of a bomb. The reason they didn't find a single piece of a bomb was because there wasn't a bomb.") and then put an NTSB guy on the stand and ask him if there might be another explanation (there might be, but I don't like it). Yousef was the ringleader and he was in jail anyway. Why risk your reputation trying such a risky case? I have no idea what happened to the other guys, I guess there either dead in a ditch or at Gitmo having their sleep "managed" (don't know which is worse).
BTW In Against All Enemies Richard Clarke includes this at the end of the bit about TWA 800: "Unfortunately, the public debate over the incident was clouded by conspiracy theory. Conspiracy theories are a constant in counter-terrorism. Conspiracy theorists simultaneously hold two contrary beleifs: (a) that the US government is so incompetent that it can miss explanations that the theorists can uncover, and (b) that the US government can keep a big, juicy secret. The first belief has some validity. The second idea is pure fantasy. Dismissing conspiracy theories out of hand, however, is dangerous. I learned early on in my government career not to believe that government experts knew it all. The list of major intelligence failures and law enforcement errors is far too long to dismiss alternative views. Because I was personally sceptical about what agencies told me and always intrigued by the possibility of an unlikely explanation, I encouraged my analysts to have an open mind and perform due diligence on every claim." Funny it's right after the TWA 800 section, eh?
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