PREPARED STATEMENT OF GARY MILHOLLIN
PROFESSOR, UNIVERSITY OF WISCONSIN LAW SCHOOL, AND
DIRECTOR, WISCONSIN PROJECT ON NUCLEAR ARMS CONTROL
PROLIFERATION: CHINESE CASE STUDIES
SUBCOMMITTEE ON INTERNATIONAL SECURITY,
PROLIFERATION, AND FEDERAL SERVICES
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
APRIL 10, 1997
I am pleased to appear today before this distinguished
Subcommittee, which has asked me to discuss China's role in the spread
of weapons of mass destruction. I have been asked to respond to two
questions: First, how effective is our present ``engagement'' policy
toward China; second, is the executive branch implementing the U.S. law
concerning sanctions?
I think that the evidence is now clear on both questions. The
administration's engagement policy has run out of gas--it is no longer
achieving anything significant. The process is essentially dead. Since
1994, our ambassadors have gone to China, they have held out engagement
rings, and the Chinese have shut the door in their faces. This happened
most recently to Mr. Einhorn last month, whose trip produced nothing.
The Chinese are now refusing even to talk to us seriously about the
impact of their missile and chemical exports. There is no longer any
dialogue on these points. The State Department has a policy of engaging
the Chinese, but the Chinese do not have a policy of engaging the State
Department.
Nor is the administration complying with the sanctions law. Last
fall, the executive branch finished a number of studies on China's
missile and chemical exports to Iran and Pakistan. The studies
contained the legal and factual analysis necessary to apply sanctions,
but they have lain dormant since then. The State Department has chosen
not to complete the administrative process because if it did, it would
have to apply sanctions and give up its engagement policy. The
sanctions law is not achieving either deterrence or punishment, as
Congress intended.
Today, China's exports are the most serious proliferation threat in
the world, and China has held that title for the past decade and a
half. Since 1980, China has supplied billions of dollars' worth of
nuclear and missile technology to South Asia, South Africa, South
America and the Middle East. It has done so in the teeth of U.S.
protests, and despite repeated promises to stop. The exports are still
going on, and while they do, they make it impossible for the United
States and the West to halt the spread of weapons of mass destruction--
a trend that endangers everyone.
Missiles
Chinese companies were caught selling Pakistan M-11 missile
components in 1991. The M-11 is an accurate, solid-fuel missile that
can carry a nuclear warhead about 309 kilometers. In June 1991, the
Bush administration sanctioned the two offending Chinese sellers and
Pakistan's space agency, SUPARCO. The sanctions were supposed to last
for at least two years, but they were waived less than a year later, in
March 1992, when China promised to abide by the guidelines of the
Missile Technology Control Regime, a multinational agreement to
restrict missile sales.
But by December 1992, China had shipped roughly two dozen M-11
missiles to Pakistan. It had been a mistake to waive the sanctions.
In August 1993, the Clinton administration applied sanctions again
for two years, after determining that the Chinese had violated the U.S.
missile sanctions law a second time. But in October 1994, the United
States lifted the sanctions early again, when China pledged once more
to stop its missile sales and comply with the Missile Technology
Control Regime.
But since 1994, the stream of missile exports has continued. U.S.
satellites and human intelligence have watched missile technicians
travel back and forth between Beijing and Islamabad and have watched
steady transfers of missile-related equipment. When I queried U.S.
officials last week, they said that China's missile exports have
continued up until the present moment, unabated.
In fact, our officials have learned that they were duped in 1992
and 1994. What we thought China was promising is not what China was
really promising. Our officials now realize that China interprets its
promises in 1992 and 1994 so narrowly as to make them practically
meaningless. That is how the Chinese have justified their continuing
missile exports. Because of this interpretation, China should no longer
be considered as complying with the Missile Technology Control Regime.
In addition to its sales to Pakistan, China has also sold Saudi
Arabia medium-range, nuclear-capable missiles, sold Syria components
needed to improve Syria's missile arsenal, sold Iran missile guidance
components, and sold Pakistan complete M-11 missiles.
I have attached a table to my testimony that shows China's mass
destruction exports since 1980.
In its latest venture, China is helping Pakistan build a plant to
produce M-11 missiles in Pakistan. U.S. officials said last week that
activity at the plant is ``very high.'' If the Chinese continue to help
at their present rate, the plant could be ready for missile production
within a year.
This activity, combined with the State Department's refusal to
apply sanctions, means that the State Department is now giving a green
light to one of the most dangerous missile plants in the world.
Poison gas
In addition to missiles, China has been selling the means to make
poison gas. In 1995 I discovered, and wrote in the New York Times, that
the United States had caught China exporting poison gas ingredients to
Iran, and that the sales had been going on for at least three years.
The State Department sanctioned the front companies that handled the
paperwork, but did nothing to the Chinese sellers for fear of hurting
U.S. trade relations.
China's poison gas shipments have only become worse since then. In
1996, the press reported that China was sending entire factories for
making poison gas to Iran, including special glass-lined vessels for
mixing precursor chemicals. The shipments also included 400 tons of
chemicals useful for making nerve agents.
The result is that by now, in 1997, China has been outfitting Iran
with ingredients and equipment to make poison gas for at least five
years. When I spoke to U.S. officials last week, I asked them whether
there was any change in China's export behavior on poison gas. They
said that the poison gas sales had continued to the present time,
unabated.
There is no reason to think that this pattern will change as long
as the United States follows its current policy. If anything, China's
position seems to be hardening. China is now saying, explicitly, that
it will not even talk to us about missile and chemical proliferation
unless we are willing, at the same time, to discuss restraints on our
arms sales to Taiwan. The arms sales, of course, are caused by China's
threat to Taiwan. And to make matters worse, the Chinese are beginning
to complain about our policy of providing theater missile defenses to
countries like Japan that might be vulnerable to Chinese missile
attacks. The Chinese say that this is another form of missile
proliferation.
Nuclear weapons
China has also been the leading proliferator of nuclear weapons in
the world. China gave Pakistan nearly everything it needed to make its
first atomic bomb. In the early 1980s, China gave Pakistan a tested
nuclear weapon design and enough high-enriched uranium to fuel it. This
has to be one of the most egregious acts of nuclear proliferation in
history. Then, China helped Pakistan produce high-enriched uranium with
gas centrifuges. Now, it is helping Pakistan build a reactor to produce
plutonium and tritium for nuclear weapons, and helping Pakistan
increase the number of its centrifuges so it can boost its production
of high-enriched uranium.
In January of 1984, Chinese Premier Zhao Ziyang made his famous
White House toast saying, ``we do not engage in nuclear proliferation
ourselves, nor do we help other countries to develop nuclear weapons.''
The United States relied on that promise in making its agreement for
nuclear cooperation with China in 1985. But we caught the Chinese
breaking the promise immediately afterward, so the agreement never came
into effect. China's habit of making and breaking promises is not new.
China's most recent export was of specialized ring magnets, which
are used in the suspension bearings of gas centrifuge rotors. The sale
was revealed in early 1996. The magnets were shipped directly to a
secret nuclear weapon production site in Pakistan, and were sent
without requiring international inspection. The seller was a subsidiary
of the China National Nuclear Corporation, an arm of the Chinese
government. In my opinion, this export violated China's pledge under
the Nuclear Nonproliferation Treaty, which it joined in 1992. Article
III of the Treaty forbids the sale of such items without requiring
international inspection. The sale also violated China's pledge under
the Article I of the Treaty not to help other countries make nuclear
weapons. Yet, the State Department has not sanctioned China for this
sale, or even complained about it publicly.
Iran is the next candidate for China's nuclear help. China has
agreed to sell Iran a 25 to 30 megawatt nuclear reactor, which is an
ideal size for making a few nuclear weapons per year. And China has
also agreed to sell Iran a plant to produce uranium hexaflouride from
uranium concentrate.
The hexaflouride plant is essential to enrich uranium for use in
atomic bombs. Bombs fueled by enriched uranium have become the holy
grail of developing countries trying to join the nuclear club. Such
bombs are easier to make than those fueled by plutonium because uranium
is easier to work with, less toxic, and easier to detonate with
confidence that a substantial nuclear yield will result. Iraq was close
to making a uranium bomb when the Gulf War began. The first bomb ever
dropped was a uranium bomb. The United States released it over
Hiroshima without having to test it.
There is no peaceful use for enriched uranium in Iran. Enriched
uranium is used to fuel reactors, but the only reactors in Iran that
could use such fuel are being supplied by Russia, which is also
supplying their fuel. The conclusion has to be that Iran wants to use
this plant to make atomic bombs. The fact that China is even
considering this deal shows that China is quite ready to put nuclear
weapon-making capability into the hands of what the United States
regards as a terrorist nation.
These two sales have not been finalized. In effect, they are being
held over our heads like swords. If we don't start cooperating more
with China in the nuclear area, then China can simply complete these
two dangerous export deals with Iran. This is fairly close to nuclear
blackmail.
To sum up, I think the conclusion has to be that our engagement
policy has failed and has been failing for some years. The policy is
not producing any change in China's behavior, and is not even producing
engagement. The negotiation process is effectively dead. The Chinese
are not even talking to us about their exports. We are just watching
the shipments go out, without any hope of stopping them. All our
present policy has produced is a new missile factory in Pakistan, an
upgraded nuclear weapon factory in Pakistan, new chemical weapon plants
in Iran, and possibly a nuclear weapon factory in Iran.
When you are losing the game, it is time for a new strategy. We
need to replace our current strategy with a strategy based on linkage.
We should link our cooperation with China to its export behavior. We
will cooperate with China if and when China becomes a responsible
member of the world community.
Sanctions
The Subcommittee has asked me specifically to discuss sanctions. It
is clear that the administration is not implementing the present U.S.
sanctions law. The missile sanctions law does not require evidence that
an entire missile or missile components have been shipped. The law says
that sanctions are to be applied whenever a foreign company ``conspires
or attempts to engage in'' the export of missile technology to a
country like Pakistan.
As I have said, the executive branch has done a legal study to
determine what this language means. That study has been completed for
more than a year. There has also been a factual documentation of the
conspiracy. The factual study has been completed for at least six
months. These studies covered China's missile exports to both Iran and
Pakistan. Thus, there is no longer any legal or factual basis for not
applying missile sanctions to China as Congress intended.
The State Department has admitted this fact by implication. The
State Department is no longer saying that there is ``not enough
evidence'' to apply sanctions to China. It is now saying that it has
``not yet made a determination'' to apply sanctions, which is quite
different. In effect, the State Department is saying that it has not
applied sanctions because it has chosen not to complete the
administrative process.
The sanctions law does not allow this kind of discretion. The
executive branch has an obligation to weigh the evidence and apply the
law in good faith. Otherwise, the law is meaningless. As things stand
now, the State Department has nullified the sanctions law by refusing
to carry out the administrative process that allows the law to take
effect.
The status of chemical sanctions against China is similar to the
status of missile sanctions. Chemical sanctions apply to any foreign
person who knowingly and materially contributes to the development of a
chemical weapon in a country like Iran. The evidence of China's poison
gas-related exports to Iran during the past five years is overwhelming,
and the sales are still going on. The case is clear. All the analysis
and documentation has been finished. The State Department is limply
standing in the courthouse door, preventing justice from being done, in
the same way it is doing for missile sanctions.
For nuclear-related transfers, the law is more complex. Under
Section 821 of the Nuclear Proliferation Prevention Act of 1994, if the
seller knowingly and materially helps a country like Pakistan obtain
enriched uranium, then the seller cannot sell anything to the United
States Government. In addition, under the Export-Import Bank Act, if
the seller is a country, the country is not eligible for U.S. Export-
Import Bank financing.
The transfer of the ring magnets to Pakistan was done by an arm of
the Chinese government, and thus with the knowledge of Chinese
government officials. The administration said that it did not impose
sanctions because it was unclear whether high Chinese officials knew
about the sale. But at least mid-level Chinese officials knew, so it is
difficult to see why the Chinese government was not held responsible.
Governments are routinely held liable for the actions of their agencies
and employees. Indeed, governments, like corporations, can only act
through their employees. This seems to be another case where the State
Department was unwilling to implement the law.
Conclusion
We are following essentially the same policy toward China now that
we followed toward Iraq before the Gulf War. When Iraq was caught
smuggling nuclear weapon triggers out of the United States before the
Gulf War, that act violated Iraq's pledge under the Nuclear
Nonproliferation Treaty not to try to make nuclear weapons. But the
United States was silent. Rather than apply sanctions, or even complain
publicly about Iraq's violation, the State Department chose
``constructive engagement.'' It would be better to maintain our
influence with Saddam Hussein through trade, the State Department said.
By selling Saddam what he wanted, and by not complaining about his
behavior, we would bring him into the mainstream of nations. Sanctions
would only isolate Saddam, hurt American exporters and allow the
Europeans and the Japanese to get all the petrodollars.
We now know what that policy produced. If Saddam had not been
foolish enough to invade Kuwait, we would be facing a nuclear-armed
Iraq today. And the Iraqi bomb would have been built with exports from
America and its allies. To stop Saddam's bomb, American pilots had to
risk their lives to destroy factories full of equipment that the West
had provided.
The lesson is that you should not make a rogue stronger while he is
still a rogue. And, you don't stop a rogue from being a rogue by
treating him like a non-rogue. The message we gave Saddam Hussein was
that nothing bad would happen to him as long as he bought our products.
We followed a policy of ``constructive engagement'' and of ``de-
linkage.'' We are giving China the same message now.
The numerous high-level visits to China by U.S. officials over the
past year have produced nothing. In recognition of that, we are not
even making nonproliferation a big issue in our high-level meetings.
The Chinese understand this message very well. They know that even if
they supply weapons of mass destruction around the world, they won't
face any penalty from us. We are acting like a paper tiger, and being
treated like one. Until we put some teeth into our sanctions policy, we
will just rub our gums together.
History shows that sanctions work. The only time we have managed to
get any progress on proliferation out of China is when we either
applied sanctions or threatened to apply them. In the face of sanctions
the Chinese have an incentive to talk to us. An example is intellectual
property rights. In 1994, when we threatened to impose 100 percent
tariffs on more than a billion dollars' worth of Chinese imports if
China didn't stop looting our inventions, the Chinese backed down. So
far, the Clinton administration has done more to protect Hollywood
videos than to stop the spread of weapons of mass destruction.
When we get serious about proliferation, the Chinese will get
serious. Now, there is nothing to talk about because the Chinese don't
see any risks. If we really want to engage the Chinese, we have to show
that we are willing to punish them when they break the rules. So far,
we haven't done that.
Recommendations
1. The Subcommittee should require the State Department to provide
all the legal and factual analysis that has been done by the executive
branch on the sanctions issue concerning China. The Subcommittee should
also require the State Department to explain why it has chosen not to
complete the administrative process on sanctions.
2. The Subcommittee should consider strengthening existing
sanctions laws to accomplish the following:
a. Prohibit the export of U.S. commodities controlled for non-
proliferation reasons for one year to all Chinese government-controlled
companies if any Chinese government-controlled company contributes to
proliferation through its exports. If the Chinese government is willing
to proliferate, China should not be able to import American technology
that could contribute to proliferation. Except for sales to Iran and
Iraq, present law is confined to punishing only the company making the
export, which is not a sufficient deterrent.
b. Prohibit the import into the United States of any product
produced by a foreign entity whose exports contribute to nuclear arms
proliferation. This would bring the nuclear sanctions law up to the
level of the chemical/biological and missile sanction laws.
3. The Subcommittee should obtain and review the U.S. export
licenses approved for China by the Departments of Commerce and State
during the past five years. The Subcommittee would discover that both
the Commerce and State Departments have allowed sensitive U.S.
technology to go to the very Chinese companies that are making mass
destruction exports to Pakistan. Some of the munitions exports to these
companies were authorized by express Presidential waivers.
Congressional oversight of our exports to China is long overdue.
CHINA'S DANGEROUS EXPORTS
----------------------------------------------------------------------------------------------------------------
TO PAKISTAN TO ALGERIA TO SAUDI ARABIA
----------------------------------------------------------------------------------------------------------------
1980-1984 Supplies A-bomb design and its
fuel
Secretly agrees to supply a
1985-1989 Agrees to sell tritium gas to
boost the yield of fission
bombs
Trains Algerian scientists Sells CSS-2 medium-range,
1989-1996 Plans to supply a second nuclear
reactor
Completes reactor and
----------------------------------------------------------------------------------------------------------------
CHINA'S DANGEROUS EXPORTS
----------------------------------------------------------------------------------------------------------------
TO IRAQ TO SYRIA TO IRAN
----------------------------------------------------------------------------------------------------------------
1980-1984 Nuclear bomb design supplied to
Pakistan makes its way to Iraq
1985-1989 Helps make magnets for high- Contracts to sell M-9 nuclear- Trains Iranian nuclear
speed centrifuges to enrich capable missiles technicians in China
uranium
1989-1996 Supplied rocket fuel ingredients Sells ingredients for missile
intercepted by U.S. en route to fuel
Iraq
Supplies a calutron and a
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