Testimony: Export Controls and the Spread of Weapons of Mass Destruction

Testimony of Gary Milhollin

Director, Wisconsin Project on Nuclear Arms Control and
Professor Emeritus, University of Wisconsin Law School

Before the Committee on Armed Services
United States House of Representatives

March 17, 2004

I am pleased to appear today to discuss export controls and their impact on the spread of mass destruction weapons. Before getting into the substance of my testimony, I would like to offer a recent publication by my organization for inclusion in the hearing record. It is an article listing transshipments of dangerous items through Dubai in the United Arab Emirates. The article appeared in the New York Times on March 4, 2004.

The committee has asked me to give a status report on worldwide export controls and to comment on the proposals that President Bush made during his speech on February 11 at the National Defense University. The committee has also asked me to describe an effort that my organization is making to improve export controls in the countries of Eastern Europe and the former Soviet Union.

One of the best ways to appreciate the strengths and weaknesses of today’s export control system is to consider the amazing nuclear smuggling network that we have been reading about in the newspapers. In his speech on February 11, the president described what one Pakistani scientist, plus a handful of his henchmen, have been able to achieve during the past decade. To Libya, Iran and North Korea, they supplied components for high-speed gas centrifuges, machines that convert natural uranium to nuclear weapon grade and are very hard to manufacture on one’s own. To Libya, they even sold the design for an actual nuclear weapon – one that is known to work. Iran and North Korea also may have received the same bomb design; we still don’t know.

The most important fact about this network is its success. The failure of the United States to detect or to close down this nuclear arms bazaar must rank as one of the great national security disasters of our time. It allowed threats to develop that dwarf anything Saddam Hussein was able to do after the 1991 Gulf War. Three of America’s most resolute foes got much of what they needed to make nuclear weapon material, and we either didn’t know about it or didn’t do anything sufficient to stop it. Two of those foes, Iran and Libya, are long-time supporters of terrorist organizations.

To make matters worse, this nuclear spider’s web was not spun by some shadowy figure. It was set up by the well-known Abdul Qadeer Khan, a Pakistani scientist notorious since the 1970’s as a nuclear smuggler. While employed in the Netherlands, he stole the designs for European centrifuges, brought them home to Pakistan, and became the “father” of the Pakistani bomb. Then, traveling from his nuclear weapon laboratory in Pakistan, he made dozens of trips to Libya, Iran and North Korea to sell his wares and keep his customers happy.

Iran was outfitted in the late 1980’s and early 1990’s. North Korea got what it needed in the mid and late 1990’s. Libya was still getting things last fall. Thousands of centrifuge parts were sent to Libya from a factory in Malaysia, and other parts and machinery also came from Europe. We should ask the question: What can we learn from this frightening experience?

The first lesson is that these smuggling networks must be stopped before they succeed. This one wasn’t. It defeated our export control system like the German army defeated the Maginot line – by simply going around it.

President Bush claimed in his speech that the Khan network was “gradually uncovered” over “several years” by U.S. and British intelligence agents. But that seems to be a great exaggeration. Pakistani President Pervez Musharraf says that our government didn’t tell him about the network in any detail until last October. When asked about Musharraf’s statement, U.S. officials have not refuted it. They say only that Musharraf was given more general warnings earlier. As for North Korea, U.S. diplomats only confronted Pyongyang over its centrifuge imports in 2002, several years after they happened. And Iran’s centrifuge factory didn’t become a public issue until it was publicized by the Iranian resistance in August 2002. Concerning Libya, our intelligence agencies take credit for the seizure last October of centrifuge parts bound for that country, but according to a recent report in the New Yorker magazine, it was the Libyans themselves who revealed the shipment as part of their peace offering to the West.

Even if we look at these cases in the rosiest possible light, the United States was about a decade late in confronting the Pakistani government; it was more than a decade late responding to Iran’s progress; it was tardy by several years in the case of North Korea. What this shows is that the United States was essentially defenseless against a burgeoning nuclear black market across the span of three U.S. administrations.

The question is: what was the U.S. government doing all this time? Apparently, nothing effective. I suggest that Congress could provide a great public service by demanding a clear explanation of why our government failed for so long to stop this network.

The second thing we should realize about this network is that most of the persons and countries that participated in it were outside the worldwide system for controlling exports. In fact, the network seems to have been set up for the express purpose of defeating export controls. The network was overseen by a Pakistani; it was operated by companies in Dubai in the United Arab Emirates; it carried out manufacturing in Malaysia. None of these countries takes part in the existing regimes to control nuclear exports.

Malaysia and the Emirates do adhere to the Nuclear Nonproliferation Treaty. But under that treaty, it is legal for a member to ship centrifuge parts to other treaty members such as Libya or Iran without imposing any restrictions. This is so because of the assumption that any fissile material that exists inside a treaty member’s borders will be inspected by the International Atomic Energy Agency. Of course, both Libya and Iran made fissile material with imported equipment without telling the Agency. The lack of control on exports among treaty members is a large loophole that needs to be closed.

The third thing we should realize is that persons and companies from countries inside the worldwide export control system also were involved. Germany and Switzerland are both implicated. The authorities there are no doubt looking into what their companies did. In addition, it has just been revealed that Japan sold Libya an entire uranium conversion plant in the mid 1980’s. Such a plant is specifically designed to help its user enrich uranium, which in Libya could only have been intended for atomic bombs. It is hard to understand how the Japanese government could have allowed such a reckless export to happen. These lapses show that existing laws need to be more vigorously enforced.

Despite these setbacks, it is important to understand that export controls still perform a vital function. They slow down countries that want to make mass destruction weapons, they make their weapon programs more expensive, and they give diplomacy time to work. In effect, they force buyers to use a smuggling network. And because things like centrifuge components cannot be bought openly from reputable suppliers, Iran has taken more than a decade to develop its existing centrifuge capability, which, as far as we know, is based on old and less efficient designs. Libya had made little progress when it decided to give up its program. It was entirely dependent on continued help from outside. If these countries could have purchased turn-key centrifuge plants on the open market with engineering support, their bomb programs would probably have succeeded long ago. As for North Korea, the status of its centrifuges is still a mystery, like most things about its nuclear programs.

The committee has also asked me to comment on the proposals in President Bush’s speech. Some of the proposals are aimed at tightening the rules applied by the Nuclear Suppliers Group, which now includes forty countries. These suppliers could no longer sell the means to make plutonium and enriched uranium, the two nuclear weapon fuels, to any country that was not already capable of making these materials. Unfortunately, this proposal is not too clear. It does not seem to affect Israel, India, Pakistan and North Korea – the newest nuclear weapon builders – because they can already make such bomb fuel. It might not even affect Iran, which can already enrich uranium. When we consider that Iraq and Libya have now moved out of the bomb business, it is hard to see who might be the target of this proposal, other than perhaps Syria. In addition, the proposal does not apply to sellers in countries that do not belong to the Nuclear Suppliers Group, such as Malaysia, Pakistan and the U.A.E., not to mention some 150 other non-participating states.

The president’s plan also appears to prohibit the nuclear suppliers from selling nuclear-related exports to any country that has not yet agreed to the “Additional Protocol” sponsored by the International Atomic Energy Agency. This is a good idea, so long as many more countries, including the United States, agree to the heightened inspections that the protocol requires.

The president further recommended that a new committee be created at the International Atomic Energy Agency, the purpose of which would be to enforce the Agency’s inspection agreements. In addition, he recommended excluding from this committee and from the Agency’s Board of Governors any state that is under investigation for violating its non-proliferation obligations. This latter measure is aimed at Iran.

These are all good proposals, but they don’t go far enough. They are not aimed at the main target – which is the nuclear black market. Tinkering with what law-abiding countries do won’t make much difference to rogue networks like A. Q. Khan’s. The only way to combat these networks is to find out about them early, and to shut them down before they achieve their goals. So far, we have not been able to do that.

The president did recommend strengthening the new Proliferation Security Initiative, which is a positive development. But seizing a cargo here and there is not going to be enough to stop proliferation. We must see to it that smugglers are deprived of their legal havens. That means getting more countries to adopt and enforce adequate export controls. In neither Dubai, Pakistan nor Malaysia is there any legal restriction on selling centrifuge parts to Libya or Iran. That is also true of many other potential manufacturing sites in the world. Unless we do something to remove the possibility of using such sites as smugglers’ havens, we will continue to face the danger of nuclear black markets.

One step toward closing this loophole would be to get all nations to adopt the export controls that are contained in the “Additional Protocol” mentioned above. These controls provide that if a country exports, say, centrifuge components, it must notify the International Atomic Energy Agency that the export is going out. It must also tell the Agency where the export is going. The importing country must then allow the Agency to inspect the components.

Once the United States ratifies the protocol, it should try to get all countries to adopt it. The United States could, for example, introduce a U.N. Security Council resolution requiring all nations to adopt at least the export control provisions of the protocol. Such a measure could be added to the resolution to outlaw proliferation that the White House is now drafting. Pakistan, the United Arab Emirates and Malaysia would then be under pressure to control what crosses their borders.

A second step would be for the United States to crack down on retransfer points such as the Emirates. President Bush has mentioned interrogations in Pakistan and actions against the factory in Malaysia, but has given no indication that Dubai will suffer any adverse consequences. We cannot worry only about rogue regimes without also shutting down the places that allow them to buy what they want. We have to put pressure on the countries that allow dangerous trade to flourish, even if it means, in the case of the Emirates, withholding aid and refusing arms sales.

A third way to strengthen export controls is to work directly with other countries to help them improve their performance. That is what my organization has been doing for the past four years. In January 2000 we started a program to help the countries of Eastern Europe and the former Soviet Union. Since then we have visited eighteen of these countries and trained more than 250 officials.

All of these countries are trying to build successful export controls over the remains of the administrative systems they inherited from their days in the East Bloc. Most of them must contend with goods coming across their borders from Russia or elsewhere that are mislabeled. Whether we like it or not, these countries are now the first line of defense against arms proliferation. It is their export control officers, customs officials and border guards who must stop dangerous exports before those exports threaten us in our homes. In the most literal sense, homeland security now begins abroad.

To help these officials do their jobs better, we are supplying them with our database, which is called the Risk Report, and showing them how to use it. The database was launched with support from private foundations, and is now being sustained with subscription revenues and support from the Defense and State Departments.

The Risk Report lists the names and activities of over 3,700 entities around the world that are linked to nuclear, chemical, biological, and missile proliferation or to terrorism. It also describes the sensitive products that are controlled for export, and has pictures of these products and explains why they are controlled. The Risk Report is now being used by some 30 countries, for both export licensing and export enforcement. We know that the information in the database has been used to block dangerous exports to both India and Iran. In the years ahead, we hope to bring the database to even more countries.