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Daily Press Briefing
Richard Boucher, Spokesman
Washington, DC
January 2, 2003

INDEX:

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QUESTION: Can I ask you about reports that the U.S. has asked Israel to suspend sales of military equipment to China?

MR. BOUCHER: The United -- well, let me get the answer and tell you more clearly.

QUESTION: Can I ask you a question about South Asia, which will take you two seconds to answer while you're looking? Do you know anything about Richard Haass going to India in the near future?

MR. BOUCHER: Yes, I do.

QUESTION: I will ask then --

MR. BOUCHER: On the question that was asked, if I can. The United States and Israel consult closely on a wide array of issues, including nonproliferation concerns and U.S. policy towards China. During these consultations, the United States has made very clear the strategic implications for U.S. security interests of Israel's defense trade and transfer of U.S.-made equipment and advanced defense technologies to China. So that's an ongoing subject of discussion with the Government of Israel. It's based entirely on strategic concerns that the United States has and any allegations that it's based on commercial considerations are unfounded.

QUESTION: Are there specific items you've asked them not to sell?

MR. BOUCHER: We've always talked in very specific terms with the Israelis. I think you know some of the items. In the past, we've discussed the Falcon sale, for example. But we try to consult very closely. The United States and Israel share many strategic interests, and just as we are sensitive to Israel's strategic interests, we believe that Israel should be and is sensitive to ours.

QUESTION: When you spoke of U.S.-made technology, does your concern extend beyond that? Would you like Israel not to provide even Israeli-made technology.

MR. BOUCHER: I think our concern applies to any advanced defense technologies that might be introduced in a region.

Okay, can we keep working our way back?

QUESTION: Richard, on Iraq --

QUESTION: No, can I --

MR. BOUCHER: All right, let's. We're -- no. Let's hold on. You hold on. Does somebody want to finish up on Iraq?

QUESTION: I want to do this Israel-China.

MR. BOUCHER: Okay, sorry. Israel-China.

QUESTION: Since we all know about the Falcon affair and it was -- you were quite explicit at the time saying that you essentially wanted it to be stopped, and it was. Has there been any specific equipment since then where this process has been repeated, in other words, where you have asked --

MR. BOUCHER: As I said, this is an ongoing topic of discussion with Israel and it's something we talk about, I think, well in advance of any particular sale.

Okay. We're going to work our way back now.

QUESTION: Can I just finish on this one? There's no blanket ban on Israel selling stuff to China, then? You're saying you just talk about specific items, itemize and --

MR. BOUCHER: It's a process of consultation on what we see as a strategic situation in that region and the need for any suppliers of weaponry to be considerate and concerned about the strategic situation in a region that's of great sensitivity and importance to us.

Okay.

QUESTION: Can you be more specific on what kind of weapons systems besides --

MR. BOUCHER: No. He asked me that and I didn't do it for him. I won't do it for you.

QUESTION: Well, can I do Hughes and Boeing charge letter?

MR. BOUCHER: Okay. How much do you want to know?

QUESTION: Well, the Hughes company said they provided some information, some detailed information, because they were requests by insurance companies to investigate the failures of the launch. Then what is wrong with doing so?

MR. BOUCHER: All right. Let me give you the basics on this. We have sent a charging letter, a letter of charges, to Hughes Electronic Corporation and Boeing Satellite Systems, which was formerly Hughes Space and Communications. Boeing purchased that entity from Hughes Electronics January 13th, 2000. There are 123 charges that are detailed in this letter. The letter is available from the Press Office or at the reading room located at 515 22nd Street, Northwest. It's 32 pages long. You can read it.

Charges involve various violations of the Arms Export Control Act and the International Traffic in Arms regulations in connection with misconduct of these corporations in the aftermath of the January 1995 failed launch of the Long March 2E rocket carrying the APSTAR II spacecraft, the February 1996 failed launch of the Long March 3B rocket carrying the Intelsat 708 spacecraft, and the transfer of detailed data relating to the Astra 1G satellite and the Astra 1H satellite.

Hughes Electronics Corporation and Boeing Satellite Systems took numerous actions in violation of established export controls and prohibitions and restrictions and of the bilateral agreement between the United States and China.

The U.S.-China Launch Technology Safeguards Agreement formed the essential basis for the launch of all U.S. manufactured satellites from China. The charging letter provides a detailed analysis of the kinds of assistance that were not authorized by the Department of State despite well known defense trade sanctions related to China and repeated warnings not to engage in launch failure investigations.

The number and the substance of the charges reflect the seriousness of the violations. Any assistance to improve the launch vehicle is clearly prohibited by the U.S.-China bilateral agreement on technology safeguards.

The companies now have 30 days to respond to the charging letter. In their response, or within seven days of the service of that response, they can request an oral hearing, and then the administrative process will proceed.

QUESTION: If the insurance company demands detailed information, under State Department regulations, they are not supposed to provide anything?

MR. BOUCHER: Again, they are bound by the agreements, by the conditions of the licensing, and those are what we expect them to adhere to.

QUESTION: One last thing. Boeing company said they bought the branch from Hughes after all this had happened and they said they basically have nothing to do with the violations. What is your response to that?

MR. BOUCHER: I said Boeing bought the company from Hughes after all this had happened, but they're still the responsible party to respond to these claims about the unit and what it did.

QUESTION: Can I go back to Israel-China for two quick follow-ups, one which I think you sort of answered? You mentioned that these were ongoing consultations and I guess an ongoing, not a one-time request from the U.S., but Israel just now, I guess, decided to grant it. Is that -- for whatever reasons they might have?

MR. BOUCHER: I'm not sure when we might have discussions on this again. We have strategic discussions with Israel periodically, defense trade discussions with Israel periodically, a lot of fora in which this arises.

QUESTION: And that subject comes up regularly?

MR. BOUCHER: And the subject comes up regularly.

QUESTION: And secondly, could you elaborate for us on some of these strategic interests that you felt their arms trade with China had affected?

MR. BOUCHER: I don't think I can explain the entire strategic situation in Asia, but certainly the situation on the Taiwan Straits has been the primary concern over some of these sales.

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