Weapons of Mass Destruction (WMD)

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From the Weekly Standard, June 1, 1998

Clinton's China Commerce

The Clinton administration made a fateful decision in 1996 to put the Commerce Department in charge of overseeing exports of American satellite technology. Under fire now for transferring this weighty responsibility from the more security-conscious State Department, the administration insists the decision had nothing to do with campaign contributions from eager exporters. Instead, say the president's spokesmen, the transfer was just the outcome of a `bureaucratic squabble.'

Whatever role donations may be played in strengthening Commerce's hand, allowing that department to license militarily sensitive goods for export was not garden-variety Washington turf battle. It was the equivalent of decontrolling such exports entirely. The current congressional investigations of technology transfers to the Chinese military would not be taking place if, over the past five years, the administration had not given Commerce unprecedented power to promote American technology sales abroad, with dangerously little attention paid to how these exports can contribute to nuclear proliferation, threaten the supremacy of the U.S. military, and undermine America's national security.

The decontrolling mentality of the Commerce Department is exemplified by William Reinsch, who heads the department's Bureau of Export Administration. This is where American companies go if they want to sell sensitive products, like supercomputers in foreign countries. The bureau's role is both to stop exports that might compromise national security and
to help guarantee that the sensitive products it does approve for sale abroad don't end up in the hands of untrustworthy governments.

But Reinsch has effectively made the bureau a servant of Commerce's central mission: unbridled export promotion. His motto is `Yesterday's adversaries are today's customers.' This mentality has led Commerce to minimize the danger of sharing sensitive technology with countries like China. The Pentagon concluded last year that `United States national security has been harmed' by the assistance American aerospace companies have provided to China. Nonetheless, Reinsch was apoplectic when the House overwhelmingly voted on May 20 to block further exports of U.S. satellites to China: `We're talking about the potential loss of major contracts,' he whined to the Wall Street Journal. `It could really complicate people's lives.'

The controversy over the transfer of technology to China is but one outgrowth of Commerce's policy of giving American high-technology companies unprecedented freedom to sell their products in foreign markets. Another startling illustration of the fervor with which Commerce promotes the sale of even the most sensitive exports came early in 1996. According to Gary Milhollin, of the Washington-based Wisconsin Project on Nuclear Arms Control, that's when U.S. government nuclear experts asked Commerce to provide American computer companies with a list of nuclear laboratories in Russia and China. The goal was to prevent the companies from selling their high-performance supercomputers to these laboratories, which the companies might not otherwise know to be in the nuclear business. But Commerce officials refused to provide such a list, claiming U.S. policy prevented them from sharing such information.

While Commerce aggressively pushed exports in the Reagan and Bush administrations, it had not yet triumphed over its bureaucratic rivals elsewhere in the executive branch, who acted as a brake on Commerce's salesmanship. The Defense Department, notably, would frequently challenge export licenses that posed a potential threat to America's strategic position. But a further sign of Commerce's ascendancy in the Clinton administration is that the Pentagon, too, has become an enthusiastic partner in promoting the sale of American goods in overseas markets. (Reinsch said in an interview last November that relations between Commerce and the Pentagon are `the best they've been in 20 years.') This is not just a matter of politically savvy defense officials' knowing which way the wind is blowing. An array of these officials appointed to senior positions by the president--William Perry, Ashton Carter, Mitch Wallerstein, Ken Flamm, to cite a few--had made names for themselves as longtime supporters of easing export controls.

A key official is Peter Leitner, a 12-year veteran of the Pentagon office that oversees export controls. He notes that the Defense Department now instructs its employees to side with Commerce in interagency debates over export controls. In congressional testimony last year, Leitner observed that `this bizarre role change finds the State Department at times in the farcical position of being the lone agency making the national security case and opposing liberalization positions from DoD.'

Despite their generally pro-export posture, State and Defense still had reservations about transferring responsibility for licensing the export of satellite technology to Commerce. And their reservations were justified: For items under State's jurisdiction, the decision to grant an export license is supposed to be based only on national security. Moreover, Congress must be notified 30 days in advance of an export. By contrast, Commerce is mandated to weigh commercial and economic interests, and it is not required to notify Congress of its decisions. With communications satellites costing upwards of $100 million, it's easy to see how
commerical concerns would tip the scales away from export controls.

When Clinton announced the transfer of licensing responsibility on March 14, 1996. Commerce officals--who had lobbied hard to be given licensing repsonsibility--were thrilled. The New York Times reported that an e-mail was circulated at Commerce announcing `good news' but warning recipients not to publicize the decision in a way that would `draw attention' to it. Clinton officials did their best to bury the news by not publishing the new rules in the Federal Register until Election Day 1996. The strategy worked: One of the most important national-security decisions made in Clinton's first term received scant attention during his reelection campaign from Congress and the press.

Satellites weren't the only technology transferred from State to Commerce two years ago. Clinton also took something known as `hot section' technology of the State Department's munitions list and empowered Commerce to license such exports. Hot-section technology boosts the performance and durability of fighter jets. Steve Bryen, who oversaw export controls in the Reagan administration, says this technology is so sensitive that in previous administrations it wasn't even shared with allies like the French and the Germans.

During the internal debate over transferring hot-section jurisdiction from State to Commerce, some Clinton administration officials raised questions about whether America's national security would be compromised and whether it might reduce the combat advantage of U.S. aircraft. But Commerce officials argued it would be impossible for the technology to be used by foreign manufacturers in such a way that U.S. military power could ever be equaled or surpassed. To the amazement of many Pentagon officials, this argument prevailed and responsibility for licensing exports of the technology was handed from State to Commerce.

Commerce officials have gone to extraordinary lengths to circumvent even the most modest restraints placed on them. Last year, Congress approval a measure requiring American computer companies exporting to countries believed to pose a proliferation risk (that is, Russia and China) to give the executive branch 10 days' notice to determine whether a proposed supercomputer export requires an individual license. The measures also requires that, once supercomputers have been licensed and shipped to countries of proliferation concern, U.S. government officials must check whether the buyers are using the computers as proposed.

Yet Commerce has made a `deliberate effort to circumvent' the post-shipment verifications, according to Milhollin. Indeed, under Commerce's interpretation, in order for the government to block an export, only the most senior cabinet officials--undersecretaries or higher are permitted to intervene. This prompted David Tarbell, who heads the Pentagon agency that monitors export controls, to warn in an internal memo that the National Security Council and Commerce were using the undersecretary requirement to `ensure that no (or very few) objections would ever be received.' Tarbell's complaint is echoed by three Senate Democrats, and 10 Republicans, who have sent the president a letter asking for the law to be enforced.

There was a very precise reason Congress required the regulations: It has become disturbingly clear that Commerce had little clue about the ultimate destination of an extremely sensitive product--supercomputers. Silicon Graphics, for example, has acknowledged having sold four supercomputers to one of Russia's premier nuclear-weapons design laboratories, Chelyabinsk-70, and claimed it made the sale only because company officials didn't know the laboratory was involved in nuclear production.

Even more troubling was Reinsch's announcement last June that 47 supercomputers had been sold to China. Technical experts say these computers provide unprecedented technological capabilities to Beijing are likely to become a key element in China's nuclear program. But when Reinshc was asked about this at a congressional hearing last November, he said there was no evidence any of the computers was being used for nuclear purposes. When pressed by Rep.
Duncan Hunter on whether Commerce even knew where the computers were located, Reinsch bobbed and weaved until finally giving an answer that summed up the bankruptcy of the Clinton administration's export policy: `With respect to some of them, yes. With respect to all of them, not yet.'

There's a simple reason Reinsch couldn't be more definitive: China won't allow American officials to conduct post-shipment verifications, designed to guarantee that materials exported from the United States are being used as promised. Thus Reinsch acknowledged last December--six months after learning about the 47 supercomputers sold to China--that `no formal post-shipment verifications have yet been requested.' And now that another six months have passed, there's no evidence Commerce knows anything more about where the supercomputers are or how they're being used.

So what has the Clinton administration learned about the pitfalls of a permissive export-control policy? Apparently nothing. Consider this: The Defense Technology Security Administration--the agency charged with overseeing export controls for the Pentagon--is scheduled to be abolished this fall. Its successor agency will be moved within Defense to an acquisitions department that has traditionally been hostile to export controls. Even more ominous is a recent Defense News report that the Commerce Department is pushing to grant an export license for the sale of a high-temperature furnace, manufactured by a New Jersey-based company called Consarc, to a Chinese government agency. This sale--already approved in an interagency process--is all the more remarkable because the furnace will bolster Beijing's ability to produce nuclear warheads.

There's an interesting story behind the furnace. Consarc was all set to ship it to Iraq in 1990, one month before the invasion of Kuwait. The sale was blocked at the last minute by senior officials at the Pentagon and the National Security Council. Had it gone through, there's little doubt Saddam would have used it to bolster his arsenal. Clinton administration officials should have learned something from this. Short of a missile attack, what will wake them up?