SANTIAGO -- Sen. Edward M. Kennedy's harsh criticism of the Chilean government's human rights violations and his sponsorship of an amendment cutting off weapons sales to Chile have won him few friends among businessmen and government officials here.

But Chilean businessman Carlos Cardoen credits Kennedy (D-Mass.) with helping him become the country's largest arms exporter.

After Congress in 1976 approved Kennedy's legislation prohibiting arms sales to Chile, the country's military regime asked Cardoen and other businessmen if they could take up the slack.

Nine years after getting into the weapons business, Cardoen says he exports more than $100 million worth of arms to Iraq a year and has built his rapidly expanding company into one of the biggest privately owned concerns in Chile.

"I always say in a humorous way that I'm thankful for Sen. Kennedy," Cardoen said in an interview.

"{His} stopping weapons sales to Chile has made us aware of what we could do," he said.

Cardoen, who has a doctorate in metallurgical engineering from the University of Utah, founded his company in 1977 to make explosives for the country's mining industry.

A year later, when Argentina and Chile nearly went to war over a longstanding territorial dispute, the government asked Cardoen and others to produce weapons the country had formerly purchased from the United States.

In late 1981, a year after the Iran-Iraq war broke out, the Chilean businessman began selling weapons to Iraq. Today, Cardoen said his company exports $120 million of arms a year.

Industrias Cardoen manufactures such weapons as hand grenades, antipersonnel mines and cluster bombs.

Spread by the hundreds over a wide area, cluster bombs have been deadly effective against "human wave" attacks by Iranian troops.

"We sell simple, reliable, low-cost weapons that are tailored for Third World countries," Cardoen, 45, said. "Too often we find that sophisticated weapons are not the solution to every problem."

Most of the cluster bombs' components are manufactured at a Cardoen factory in the northern town of Iquique, while final assembly is done in Iraq. The company also recently began manufacturing weapons in Spain and Greece.

Just back from a trip to the Middle East and Europe, Cardoen said he is discussing weapons deals with Jordan, Saudi Arabia and Egypt. He also hopes to begin selling arms to African and NATO countries.

Cardoen said he has rebuffed "inquiries" from Iran to sell them weapons.

He confirmed reports that Iraq pays in part with petroleum that he sells on the spot market.

"Saudi Arabia might pay in petroleum," Cardoen said. "We're applying more and more the system of barter."

This development has him analyzing the possibility of buying into the oil refining and distribution industry.

Cardoen has been diversifying into other areas. He owns 20,000 acres of pine forest in Chile and has begun exporting lumber to Iraq. Industrias Cardoen, which by 1989 could become Chile's largest exporter of kiwi, also ships several types of fruit to Iraq.

His company's increasing nonmilitary trade is why Cardoen said he is not worried if the United Nations succeeds in its efforts to end the seven-year-old Iran-Iraq war.

"We believe that the relationship we have established of friendship and trust with Iraq will be transformed into further relationships in the nonmilitary sector," he said.

Industry insiders said Cardoen has uneasy relations with Chile's military government, which has its own weapons company, Faema, and reportedly subsidizes a private firm.

Church leaders have criticized his activities. After an explosion at one of Cardoen's Iquique factories in January 1986 killed 29 workers, the Catholic Church condemned the arms production as "social sin."

"These are the same bombs that are killing people in Iran and Iraq, and now they have turned on our own brethren," said Iquique's bishop, the Rev. Javier Prado.

Cardoen rejects the criticism, saying any moral responsibility lies with the countries that use his weapons.

"I have nothing to hide," he added. "The more that people know us, the more that people will like us."