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Testimony: China’s Proliferation Activities

By Gary Milhollin

Testimony of Gary Milhollin

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

Before the Senate Select Committee on Intelligence

September 18, 1997

I am pleased to appear today before this distinguished Committee, which has asked me to discuss three subjects: First, China’s exports to countries that are trying to make weapons of mass destruction, second, the strategic impact of American exports to China, and third, the role of the U.S. intelligence community in monitoring China’s proliferation activities.

China’s exports to proliferant countries

Today, China’s exports are the most serious proliferation threat in the world. They have been so for the past decade and a half. Since 1980, China has supplied billions of dollars’ worth of nuclear weapon, chemical weapon 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 its allies to halt the spread of weapons of mass destruction.

I have attached tables to my testimony that list China’s exports of nuclear, chemical and missile technology since 1980. The tables reveal that China has consistently undermined U.S. nonproliferation efforts for nearly two decades and is still doing so today.

Missiles

In the early 1990s, Chinese companies were caught selling Pakistan M-11 missile components. The M-11 is an accurate, solid-fuel missile that can carry a nuclear warhead about 300 kilometers. In June 1991, the Bush administration sanctioned the two offending Chinese sellers. 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 the sales continued and in August 1993, the Clinton administration applied sanctions again for two years, after determining that China had violated the U.S. missile sanctions law a second time. Then 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.

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. U.S. officials say 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. China was not promising what we thought it was. Our officials now realize that China interprets its promises in 1992 and 1994 so narrowly as to make them practically meaningless. It is clear that China has not complied with the Missile Technology Control Regime in the past, that it is not complying now, and that it probably never will comply unless something happens to change China’s attitude on this question.

In addition to its sales to Pakistan, China has also sold Saudi Arabia medium-range, nuclear-capable missiles, and sold Iran missile guidance components. The intelligence community has completed an air-tight finding of fact that the missile sale to Iran happened. All the legal and factual analysis necessary to apply sanctions has been finished since last year, but the findings 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.

In its latest venture, China is helping to build a plant to produce M-11 missiles in Pakistan. U.S. officials say 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 to China, means that the United States 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. 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. U.S. officials say that the poison gas sales are continuing despite our government’s decision in May 1997 to sanction five Chinese individuals and two companies for contributing to Iran’s chemical weapons program.

Nuclear weapons

China has also been the leading proliferator of nuclear weapon technology 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. More recently, it has helped Pakistan build a reactor to produce plutonium and tritium for nuclear weapons, and has helped Pakistan increase the number of its centrifuges so it can boost its production of high-enriched uranium.

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.

There is also concern within the U.S. government that Pakistani scientists may be receiving nuclear weapon related information through their visits to the Chinese Academy of Engineering Physics. The Academy designs China’s nuclear weapons.

Iran is the next candidate for China’s nuclear help. The Beijing Research Institute of Uranium Geology (BRIUG) has been helping Iran prospect for uranium. Attached to my testimony is a picture of this Institute’s personnel prospecting in Iran. Any uranium it finds is likely to go directly into Iran’s nuclear weapon program. This Institute is part of the China National Nuclear Corporation (CNNC). I have also included a picture of the Deputy Chief of the China National Nuclear Corporation posing with Reza Amrollahi, Vice President of Iran and President of the Atomic Energy Organization of Iran. China has apparently promised to stop this activity, but this promise, like China’s other promises, must be treated with skepticism.

China has also been talking to Iran about selling a 25 to 30 megawatt nuclear reactor, which is an ideal size for making a few nuclear weapons per year. Also on the horizon is a plant to produce uranium hexafluoride from uranium concentrate, a step necessary to enrich uranium for use in atomic bombs.

These latter two sales are being held over our heads like swords. If we don’t start cooperating more with China in the nuclear area, then China will complete these two dangerous export deals with Iran. This amounts to nuclear blackmail.

The conclusion has to be that our engagement policy toward China has failed. 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 chemical and missile exports. We are simply watching the Chinese 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 and new chemical weapon plants in Iran. In time, it will probably produce a nuclear weapon factory in Iran.

This failure will be compounded if the United States begins nuclear trade with China without stopping these exports. If we sell China nuclear reactors while China is still selling missiles and poison gas ingredients to Iran and Pakistan, what will we be saying to the world? The message will be that no matter how bad China’s exports are, we still can’t resist making a buck from our own exports. No wonder China doesn’t take us seriously. The United States should not begin exporting nuclear technology to China until China stops exporting mass destruction technology to other countries. It would be folly to “de-link” nuclear proliferation from other forms of proliferation.

Buying from America and exporting to Iran

There is considerable evidence that American technology may be fueling some of these dangerous Chinese exports. I have listed two cases where this appears to have happened. There are undoubtedly others.

Case #1: The C-801 and C-802 anti-ship missiles

Iran recently bought these new anti-ship missiles from the China Precision Machinery Import-Export Corporation (CPMIEC). Admiral John Redd, our naval commander in the Persian Gulf, took the unusual step of complaining publicly about the sale. Iran appears to have up to 60 of these missiles so far, plus fast attack boats to carry them. The missiles are a threat to our ships and sailors in the Gulf and they are also a threat to commercial shipping.

It seems quite likely that these missiles were built with help from the United States. In the appendix to my testimony, I have listed the sensitive, controlled equipment that the U.S. Commerce Department approved for export to China Precision Machinery from 1989 to 1993. It includes computer workstations for the simulation of wind effects, analyzers and computer equipment. The ability to simulate wind effects is something the designer of an anti-ship missile could find quite useful. I would like to emphasize that all of this equipment was deemed so sensitive that it required an individual validated export license to leave the United States.

I have attached a print-out from the database that my Project publishes. It is called the Risk Report. It lists the companies around the world that are suspected of contributing to the proliferation of weapons of mass destruction. It includes China Precision Machinery Import-Export Corporation, which was sanctioned in 1993 by the United States for exporting missile components to Pakistan.

If the question is: Who has been helping Iran build anti-ship missiles to threaten our sailors? The answer may well be: The U.S. Commerce Department.

Case #2: Air surveillance radar

Iran recently imported a powerful surveillance radar from the China National Electronics Import-Export Corporation. The radar is now part of Iran’s air defense system, and it can detect targets up to 300 kilometers away. If the United States ever comes to blows with Iran, American pilots will have to contend with it.

This radar too seems to have been built with help from the United States. In the appendix to my testimony, I have listed the sensitive, controlled equipment that the U.S. Commerce Department approved for export to China National Electronics from 1989 to 1993. It totals $9.7 million. It includes things like equipment for microwave research, a very large scale integrated system for testing integrated circuits, equipment for making semiconductors, and a shipment of computer gear worth $4.3 million. All of this equipment appears highly useful for developing radar, and all of it was deemed so sensitive that it required an individual validated export license to leave the United States.

If the question is: Who has been helping Iran build air defenses? The answer may well be: The U.S. Commerce Department.

I would like to point out that in these two cases, the exports were approved under the Bush Administration. I urge the Committee to obtain and study the exports approved under the Clinton Administration. The generally pro-export stance of the Clinton Administration leads one to suspect that China is importing even more sensitive high-technology from the United States today. I cannot emphasize too strongly the need for effective Congressional oversight of our export licensing process. The lack of Congressional oversight was one of the main reasons why the Commerce Department approved so many sensitive American exports to Iraq before the Gulf War.

In addition to these two cases, other Chinese organizations involved in military or nuclear weapon work have either received sensitive American products or may do so soon.

A fusion reactor

In 1993-94, the Institute of Plasma Physics of the Chinese Academy of Sciences transferred a nuclear fusion research reactor to the Azad University in Tehran. The reactor is a training device ostensibly used for peaceful purposes. Despite this help to Iran, and despite being a well-known contributor to China’s nuclear and missile programs, the Academy of Sciences managed recently to import an American supercomputer from Silicon Graphics, Inc.

So if the question is: what happens to a Chinese organization that helps Iran do nuclear research? The answer is: It can import an American supercomputer.

Uranium exploration

I have mentioned above the uranium prospecting in Iran by the China National Nuclear Corporation (CNNC). The CNNC has been implicated in the sale of ring magnets to the A. Q. Khan Research Laboratory in Pakistan, which enriches uranium for nuclear weapons, and it is also involved in the development of Pakistan’s secret nuclear reactor at Khusab. A CNNC subsidiary is currently constructing a power reactor for Pakistan at Chashma. CNNC would be the key player in any nuclear cooperation agreement that might be implemented between the United States and China. Right now, our government, under pressure from Westinghouse, is planning to revive the cooperation agreement that has been stalled since 1984 because of China’s bad proliferation behavior.

If the question is: What happens to a Chinese organization that helps Iran prospect for uranium and helps Pakistan make nuclear weapons? The answer is: the United States government tries to find a way to sell it American nuclear technology.

None of these Chinese missile, nuclear and military organizations is on the Commerce Department’s list of dangerous buyers. American exporters are free to sell these companies sensitive dual use equipment as long as the equipment is not on the small list of items that are still controlled for export. These organizations could get a high-speed American computer–performing up to two billion operations per second–without an export license, or in some cases up to seven billion if the exporter could claim that it did not know what the buyer was up to.

The names of these four organizations should be added to the Commerce Department’s list immediately. So should several others such as China North Industries Corporation (Norinco). Its Hong Kong subsidiary was shut down in July by the Hong Kong government for smuggling materials to make poison gas to Iran, and in 1996 its employees were indicted for conspiring to import 2,000 automatic weapons into California for street gangs.

I urge this Committee to ask the U.S. intelligence agencies why these companies have not been listed. I am convinced that our government–and in particular our intelligence agencies–should be doing more to help exporters avoid dangerous sales.

Diverting American equipment

On July 1, the press reported that yet another sensitive American export had been diverted in China. A supercomputer manufactured by Sun Microsystems of Mountain View, California had wound up at China’s National University of Defense Technology in Changsha. The University, which is run by the People’s Liberation Army, does research and training in advanced weapons systems. It specializes in missile design, detonation physics, supercomputer development, and automatic target recognition. Scientists at Changsha plan to develop the next generation of Chinese weapons with American equipment.

Last week, our government announced that China had agreed to return the supercomputer. The Commerce Department claimed that this result was a victory, and that it was due to a safeguards system that the United States has in place for preventing diversions.

In fact, the United States has no such system. China’s diversion was a defeat for the Administration, and the decision to return the supercomputer was a victory for Congress.

The diversion of the Sun supercomputer was discovered only after Congress demanded an investigation to find out what had happened to the many American supercomputers that had been exported since early 1996, when the Administration slashed export controls. To satisfy Congress, the Commerce Department asked Sun Microsystems about its exports. Only then did Sun disclose the diversion. If Congress had not forced the Commerce Department to conduct an investigation, the Sun supercomputer would still be in China, helping to design advanced weapons.

The Sun diversion is not an isolated case. In 1994, China wanted to import sensitive American machine tools that had been used to build the B-1 strategic bomber. To do so, China promised the U.S. government that the machines would be used to make civilian aircraft in Beijing. Instead, the machines were diverted immediately to a missile and military aircraft factory in Nanchang. Satellite photos have since revealed that at the very time the Chinese were promising to use the machines in Beijing, the Chinese were constructing a special building in Nanchang to house one of the largest ones, a stretch press. China intentionally committed fraud to get the equipment.

The Commerce Department now admits that China has imported at least 47 American supercomputers since early 1996 without export licenses. The press reports that the real figure is much higher. These imports were made possible by the Clinton Administration’s decision in late 1995 to slash export controls. The Chinese Academy of Sciences, which helps develop China’s nuclear weapons and long-range missiles, bought a supercomputer from Silicon Graphics, Inc. that performs approximately six billion operations per second.

According to Chinese government publications, the Academy of Sciences oversees institutes that perform missile and military research as well as research related to nuclear weapons. In the 1970s, the Academy helped develop the flight computer for the DF-5 intercontinental missile, which can target U.S. cities with nuclear warheads. The Academy’s Mechanics Institute has developed advanced rocket propellant and helped develop the shield for the warhead of China’s first ICBM. The Academy’s Institute of Electronics has built synthetic aperture radar useful in military mapping and surveillance, and its Acoustic Institute has developed a guidance system for the Yu-3 torpedo, together with sonar for nuclear and conventional submarines.

In the nuclear field, the Academy has developed separation membranes to enrich uranium by gaseous diffusion, and its Institute of Mechanics has studied the effects of underground nuclear weapon tests and ways to protect against nuclear explosions. It has also studied the stability of plasma in controlled nuclear fusion. Its Institute of Electronics has developed various kinds of lasers used in atomic isotope separation.

According to information published by Silicon Graphics, the supercomputer it sold to the Academy is now the “most powerful SMP supercomputer in China,” and provides China “computational power previously unknown.” According to information that I have received from industry sources, the most powerful computers previously sold to China operated at approximately 1.5 billion operations per second. If this information is accurate, the Silicon Graphics machine is roughly four times more powerful than anything China had before.

The new computer, which was financed by a loan from the World Bank, has become the centerpiece of the Academy’s new Computer Network Information Center. According to the Academy, the computer is now available to “all the major scientific and technological institutes across China.” This means that any Chinese organization that is designing nuclear weapons or long-range missiles has access to it. In effect, Chinese weapon designers can use the Silicon Graphics machines to design lighter nuclear warheads to fit on longer-range and more accurate missiles capable of reaching U.S. cities. This is a giant loss for U.S. security.

The role of U.S. intelligence agencies

It is vital for Congress and the American public to understand what is happening in China. Both Congress and the public depend on U.S. intelligence agencies to provide the facts that underpin American policies and decisions. There are a number of steps that this Committee can take to insure that Congress and the public get the information they need.

First, the Committee should be notified whenever a U.S. intelligence agency makes a determination on sanctions. The determinations on China’s missile exports are now being ignored by the State Department. The Committee should determine why that is so.

Second, the Committee should ask the intelligence agencies to prepare a report describing all of China’s exports of nuclear technology since May 1996, when China promised to stop aiding unsafeguarded nuclear facilities. The report should include findings on whether China is still helping Iran prospect for uranium, and whether Pakistani scientists are receiving nuclear weapon related technology through visits to Chinese nuclear weapon sites. China’s recent export behavior will be a crucial issue in the forthcoming debate on U.S. nuclear cooperation with China. Congress and the public should know as much about that behavior as possible.

Third, the Committee should ask the intelligence agencies to assess the impact that American technology is having on China’s strategic capability and on China’s ability to fuel proliferation through it exports. This assessment should include findings on:

  • the impact of U.S. imports obtained legitimately, including computers;
  • the impact of U.S. imports diverted to illegitimate purposes;
  • the risk of future diversions of U.S. imports by China, including diversions through Hong Kong;
  • transfers of technology to China by American companies that are building manufacturing plants in China.

The Committee should request that as much information as possible in these reports be unclassified.

CHINESE AND RUSSIAN SUPPLIERS TO IRAN
Case #1

Product: C-801 and C-802 anti-ship missiles
Supplier: China Precision Machinery Import-Export Corporation (CPMIEC)

Comments: Iran has been steadily increasing its military presence in the Persian Gulf, and according to Admiral John Redd, Commander of U.S. naval forces attached to the Central Command, has tested a ship borne C-802 anti-ship cruise missile in January 1996. These missiles are deployed on Hudong Fast Attack Craft also supplied by China in 1994. Iran is believed to have obtained about 60 of the missiles, which are capable of destroying a warship, and could also pose a significant threat to commercial shipping in the Gulf. Iran reportedly tested a shore-launched C-802 in December 1995.

The China Precision Machinery Import-Export Corporation (CPMIEC) manufactures and markets the C-802. It is a long range, sea-skimming, multi-purpose anti-ship missile, powered by a turbojet engine. It can be deployed on warships, coastal bases, and aircraft. It can carry a warhead at high subsonic speed (Mach 0.9) to a range of 120 kilometers (75 miles) and is considered to be more sophisticated than the older Silkworm.

Iran has also obtained and deployed the C-801 anti-ship missile from CPMIEC. The smaller C-801 has a range of 40 kilometers and can also travel at high subsonic (Mach 0.9) speeds.

China Precision Machinery was sanctioned by the U.S. government in August 1993 for missile proliferation activities.

U.S. Exports: U.S. Commerce Departments records show that the following items were approved for export to CPMIEC from 1989 to 1993:

  • modems for data transmission – $32,628
  • modems for data transmission – $6,630
  • cables and adapters for a macroware system – $45,834
  • computer workstation for simulation of wind effects – $43,700
  • analyzers – $4,876
  • computer equipment – $7,707Total: $141,375

Case #2

Product: JY-14 three-dimensional tactical air surveillance radar
Supplier: China National Electronics Import-Export Corporation (CEIEC)

Comments: According to U.S. Naval Intelligence, Iran recently acquired this tactical air surveillance radar from China. It can provide long-range tactical surveillance as part of an automated tactical air defense system. It can detect targets up to 300 kilometers away and at altitudes up to 75,000 feet, even when subjected to high electronic clutter or jamming. The system also provides automatic tracking and reporting of up to 100 targets. CEIEC also manufactures cryptographic systems, radars, mine detection equipment, fiber and laser optics, and communications technologies and is overseen by the Ministry of Electronics Industry (MEI), which is also known as the China Electronics Industry Corporation (CEIC) or Chinatron.

U.S. Exports: U.S. Commerce Departments records show that the following items were approved for export to CEIEC from 1989 to 1993:

  • radio communication service monitor – $21,754
  • computer equipment and software – $4,375,000
  • personal computers and processor boards – $1,579,830
  • protocol tester for telecommunications – $4,100
  • equipment for basic microwave research – $10,916
  • traveling wave tube amplifier – $33,600
  • microwave frequency counter – $6,124
  • statistical multiplexer systems and accessory boards – $75,632
  • statistical multiplexers for use in data communications network – $65,120
  • integrated circuits – $17,326
  • computer equipment – $46,022
  • computer equipment – $29,094
  • equipment for circuit board design – $9,580
  • computer chips – $1,820
  • computer software – $105,000
  • equipment for semiconductor manufacture – $107,000
  • equipment for sweep generators for resale to Ministry of Machine Building and Electronics Industry – $32,000
  • equipment for semiconductor wafer testing – $82,610
  • computer equipment – $1,924
  • computer equipment – $10,457
  • computer equipment for oil reservoir numerical simulation – $92,916
  • computer equipment – $32,500
  • switching exchanges – $1,269,047
  • phosphorus oxychloride (nerve gas precursor) for transistor manufacture – $7,397
  • export telephone system – $15,000
  • circuit design software – $243,160
  • VLSI system to test integrated circuits – $1,315,000
  • transistors and amplifiers – $13,648
  • electronic equipment – $32,610
  • equipment for electronic component testing – $60,000Total: $9,696,117

Case #3

Product: Tokamak nuclear fusion reactor
Supplier: Chinese Academy of Sciences, Institute of Plasma Physics

Comments: The Chinese Academy of Sciences’ Institute of Plasma Physics transferred a HT-6B Tokamak nuclear fusion research facility to the Azad University in Tehran in 1993-94. The Institute designed and developed the Tokamak in the mid-1980s and successfully operated the unit for 10 years, after which it was transferred to Azad. In 1994, the Institute sent technicians and engineers to Azad to assist in the unit’s installation and debugging, with the understanding that the two sides would continue joint nuclear fusion research in the future.

U.S. Exports: Despite being a well-known contributor to Iran’s nuclear program, the Academy of Sciences managed recently to import an American supercomputer. In March 1996, California-based Silicon Graphics Inc., sold the Academy a powerful supercomputer without bothering to obtain a U.S. export license. In addition to supplying Iran, the Academy has helped develop the flight computer for the Chinese DF-5 intercontinental missile, which can target U.S. cities with nuclear warheads. The Academy’s Mechanics Institute has also developed advanced rocket propellant, developed hydrogen- and oxygen-fueled rockets, and helped develop the nose cone for the nuclear warhead of the DF-5. Its Shanghai Institute of Silicate successfully developed the carbon/quartz material used to shield the tip of the DF-5’s reentry vehicle from the heat created by friction with the earth’s atmosphere. The Academy’s Institute of Electronics has built synthetic aperture radar useful in military mapping and surveillance, and its Acoustic Institute has developed a guidance system for the Yu-3 torpedo, together with sonar for nuclear and conventional submarines.

In the nuclear field, the Academy has developed separation membranes to enrich uranium by gaseous diffusion, and its Institute of Mechanics has studied the effects of underground nuclear weapon tests and ways to protect against nuclear explosions. It has also studied the stability of plasma in controlled nuclear fusion. Its Institute of Electronics has developed various kinds of lasers used in atomic isotope separation.

Case #4

Product: Uranium mining exploration
Supplier: Beijing Research Institute of Uranium Geology (BRIUG)

Comments: BRIUG conducts scientific exchanges with Iranian and Pakistani nuclear scientists.

As part of the China National Nuclear Corporation (CNNC), BRIUG carries out research on radio metrical and conventional geophysical uranium prospecting methods and conducts geological interpretations throughout China using satellite images. It develops and designs spectrometers, laser fluorometers for trace uranium analysis, mineral inclusion analyzers, scintillation radon analyzers, scintillation spectrometers, laser analyzers for trace substances, and high and low frequency dielectric separators. BRIUG also conducts research on geological disposal of nuclear waste, and possesses scientific equipment including neutron activation analyzers, electron microscopes, electron microprobes, mass spectrometers, X-ray fluoro-spectrometers, X-ray diffractometers, infrared spectrophotometers, ultraviolet spectrophotometers, atomic absorption spectrophotometers, laser raman spectrophotometers, fluoro-spectrophotometers, gas chromatography analyzers, fluid chromatography analyzers, image processing system and computer and color plotter systems.

BRIUG’s parent, CNNC has been implicated in the sale of ring magnets to the A. Q. Khan Research Laboratory in Pakistan, which enriches uranium for nuclear weapons. CNNC is also involved in the development of Pakistan’s secret research reactor at Khusab and a CNNC subsidiary is currently constructing a power reactor for Pakistan at Chashma.

 Dangerous Exports Table

Testimony: US Export Controls on Dual-Use Technology

By Gary Milhollin

Testimony of Gary Milhollin

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

Before the Senate Armed Services Committee

July 9, 1998

I am pleased to appear today before this distinguished Committee. In accordance with the Committee’s request, I will discuss the adequacy of U.S. export controls on dual-use technology.

The most important thing to recognize about export controls is that they work. They buy the time needed to turn a country off the nuclear weapon path. Argentina and Brazil agreed to give up nuclear weapons in part because of the costs that export controls imposed upon them. And in Iraq, documents discovered by the United Nations inspectors showed that export controls on dual-use equipment seriously hampered the Iraqi nuclear weapon design team. The Iraqis spent time and money making crucial items that they could not import. The same controls also stopped Iraq’s drive to make a medium-range missile. In addition, these controls are now hampering India’s effort to build an ICBM and will hamper the efforts of both India and Pakistan to weaponize their nuclear arsenals.

But how much do export controls cost? Are they a drag on the U.S. economy? How many jobs are at stake? The total American economy was about 6.7 trillion dollars in 1994, the last year for which I have been able to find complete export licensing data. Of that, only two tenths of one percent ($10.7 billion) even went through Commerce Department licensing. And only $141 million in applications were denied–which is less than one hundredth of one percent of the U.S. economy. Export control is not a jobs issue. It is a security issue. It has only a microscopic effect on employment. Reducing export controls will not stimulate the U.S. economy; it will only stimulate the proliferation of weapons of mass destruction.

And what about the end of the cold war? Does that mean that export controls are less important? If anything, they are more important. With bipolar stability gone, regional tensions are growing. These tensions stimulate the appetite for weapons of mass destruction. The nuclear and missile arms race has just shifted into high gear in South Asia and is continuing in the Middle East. It is illogical to say that because the Cold War is over, proliferation is the main international threat, and that export controls, which are one of the best ways of containing that threat, should be reduced.

In fact, the lesson of Iraq was that export controls need to be stronger instead of weaker. But today’s export controls are only a shadow of what they were before the Gulf War, when Saddam Hussein was buying the means to make his mass destruction war machine. Since 1988, applications to the Commerce Department have dropped by roughly 90%. Cases have fallen from nearly 100,000 in 1989 to 8,705 in 1996 and 11,472 in 1997. The reason is simple: fewer items are controlled, so fewer applications are required. The number of items controlled now is so small that we have virtually given up export control as a foreign policy tool.

I would like to discuss two technologies that show what is wrong with our present export control policy: supercomputers and satellites. The way we have handled these technologies shows how far we have gone in putting trade interests above national security.

Supercomputers

In January 1996, the Clinton Administration decided to slash controls on supercomputers. It abolished controls on computers operating at less than 7,000 Mtops (million theoretical operations per second) to most countries. It did so on the strength of a government-sponsored study in 1995 that predicted that computers operating at 7,000 Mtops would become so common by 1997 that it would no longer be feasible to control them for export.

In fact, the situation predicted in 1995 never came to pass. Computers operating at 7,000 Mtops are not commonly available even today. A more recent government-sponsored study by the same author finds that machines operating at much lower speeds could still be controlled until the year 2000. An independent study by the General Accounting Office comes to the same conclusion. Thus, the decontrol was a mistake.

The result of the decontrol was a series of scandals, in which IBM and Silicon Graphics were caught outfitting Arzamas-16 and Chelyabinsk-70, Russia’s key nuclear weapons laboratories, and Silicon Graphics was caught supplying the Chinese Academy of Sciences, a leading Chinese nuclear and missile research site. In addition, IBM and the Digital Equipment Corporation have supplied supercomputers to the Indian Institute of Science in Bangalore, one of India’s main missile research sites.

Supercomputers are the most powerful tools known for designing nuclear weapons and the missiles to deliver them. They can model the thrust of a rocket, calculate the heat and pressure on a warhead entering the Earth’s atmosphere and simulate virtually every other force affecting a missile from launch to impact. Because of the billions of computations needed to solve these problems, a supercomputer’s speed is invaluable for efficiently finding design solutions.

Arzamas-16 is the Russian equivalent of our Los Alamos National Laboratory. It pioneered Russia’s nuclear weapon program. Chelyabinsk-70 claims to have developed the world’s most powerful hydrogen bomb and is roughly equivalent to our Lawrence Livermore National Laboratory. The American supercomputers are estimated to have increased the computing power available to these Russian laboratories by a factor of ten.

The Chinese Academy of Sciences oversees institutes that perform missile and military research as well as research related to nuclear weapons. The Academy helped develop the DF-5 intercontinental missile, which can target U.S. cities with nuclear warheads. It has also developed advanced rocket propellant, guidance for torpedoes, sonar for nuclear submarines, and separation membranes to enrich uranium by gaseous diffusion. Its Institute of Mechanics has studied the effects of underground nuclear weapon tests and ways to protect against nuclear explosions.

The new Silicon Graphics computer is available through a network, so any Chinese organization that is designing nuclear weapons or long-range missiles can have access. In effect, Chinese weapon designers can use the Silicon Graphics machine to design lighter nuclear warheads to fit on longer-range and more accurate missiles capable of reaching U.S. cities.

The Indian Institute of Science is on the British government’s official list of organizations that procure goods and technology for India’s missile programs. It develops India’s most advanced rocket propellants, guidance systems and nose cones. Its wind tunnels and other equipment analyze rocket fuel combustion and flight performance. It has even been linked in published reports to India’s new nuclear-capable missile called the “Sagarika,” intended to be launched from submarines.

Thus, American supercomputers are now helping Russia design nuclear weapons, helping India design nuclear-capable missiles, and probably helping China design both nuclear weapons and missiles.

Under investigation, or under the rug?

The Administration has responded to the IBM and Silicon Graphics cases only by saying that they are “under investigation.” But how much is there to investigate? The sales to Russia came to light more than a year ago. The computers clearly required an export license and did not have one. The Silicon Graphics sale to China is even older. Silicon Graphics sent its computer directly to a buyer engaged in nuclear, missile and military work, and this sale too needed an export license and did not have one.

To these cases one must add the now-celebrated McDonnell Douglas case. In that case, China deliberately diverted U.S. machine tools to a military aircraft and missile plant in 1994, and the matter has been under investigation since. When will that investigation end?

Our export control system is simply not working. After slashing controls to the bone, the Administration is now ignoring or minimizing violations of the few controls that remain. We are facing either a lack of will or a lack of ability to prosecute what appear to be clear violations of the law. The phrase “under investigation” is beginning to mean “under the rug.”

Satellites

This Committee is aware of the fact that the Clinton Administration has transferred licensing authority over satellites from the State Department to the Commerce Department. That process is now complete. It occurred under great pressure from the satellite industry and, as the industry expected, it will allow trade interests to dominate national security in U.S. export policy.

One of the main effects of this transfer has been to remove satellites from the list of items that are subject to U.S. sanctions for missile proliferation. In effect, the transfer has given Chinese firms a green light to sell missile technology to Iran and Pakistan. Chinese companies can now sell components for nuclear capable missiles without worrying about losing U.S. satellite launch contracts.

Our sanctions laws, as written by Congress, are based on a simple idea. A foreign company cannot import American missile technology with one hand and proliferate missile technology with the other. If a Chinese company decides to sell Iran or Pakistan a nuclear-capable missile or the means to make one, that company has to forget about importing any missile-related American technology. U.S.-made satellites were originally part of this equation, because they contain missile-related American components.

That simple idea has now been abandoned by the executive branch. When the Administration transferred licensing authority over satellites from the State Department to the Commerce Department, satellites were effectively removed from the list of U.S. exports subject to missile sanctions.

Let me explain why this is so. If a Chinese company sells whole missiles to a country like Iran or Pakistan, the company would be guilty of what is known as a “Category One” violation. This is because whole missiles are listed on Category One of the Annex to the Missile Technology Control Regime, an agreement among countries that are trying to curb missile proliferation by controlling their exports. For selling a Category One item, the sanctions bar the guilty company for at least two years from importing any item controlled by the Export Administration Act. Category One sanctions would thus bar satellites even if controlled by the Commerce Department, which administers that Act.

China did export whole missiles to Pakistan in the fall of 1992. Since then, however, China has changed its tactics. It now exports missiles piecemeal, as components. An example would be a piece of guidance equipment. These items are on Category Two of the MTCR Annex. A “Category Two” violation bars only the export of U.S. “missile equipment or technology ” under the Export Administration Act and under Section 73 of the Arms Export Control Act.

But what is “missile equipment or technology”? According to the licensing practice of the State Department, a missile-related item retains its identity as a missile item even if it is embedded in a commercial satellite. Thus, if a Chinese company were sanctioned, the export of satellites would be blocked by the State Department because satellites have missile-related items embedded in them. In the view of the Commerce Department, however, a missile-related item loses its identity as a missile item if it is incorporated into a commercial satellite. Thus, the export of satellites would not be blocked by the Commerce Department even though the satellites contained items that would be considered missile-related if not embedded. These embedded items are such things as radiation-hardened computer chips, gyroscopes, and accelerometers.

The result is that now, satellites are insulated from missile sanctions because control over everything associated with launching them has been transferred to the Commerce Department, where sanctions will not be applied.

It is important to realize that the same Chinese companies that launch U.S. satellites also sell missiles to places like Iran and Pakistan. Who are these companies? China Great Wall Industries, China Aerospace International Holdings Ltd. (CASIL, of Hong Kong) and their parent, China Aerospace Industry Corporation. These companies launch satellites on China’s Long March rockets. The United States has sanctioned both China Great Wall and China Aerospace Corporation in the past for supplying missile technology to Pakistan.

It is also important to realize that a satellite launch contract is one of the most lucrative things a Chinese aerospace company can get from the United States. Thus, by removing satellites from the threat of sanctions, the Administration has surrendered one of the most important levers America has to stop Chinese missile proliferation. Chinese companies are free to proliferate missile technology without risking their most lucrative source of revenue.

This result sends an important message to the world. The Clinton Administration is saying–quite clearly–that the United States thinks it is more important to make money from satellite exports than to stop missile proliferation.

Conclusion

Our government’s export policy on satellites has enabled Chinese companies to sell missile components to Pakistan without fear of punishment. Thus, it may be that we are asking the wrong question about how our satellite export policy affects missile proliferation.

Whether or not our satellite policy has caused U.S. missile technology to go to China, it has certainly made it easier for Chinese missile technology to go to Pakistan.

India, of course, has watched this happen. India watched China help Pakistan make not only missiles but the nuclear warheads to go on them. India also watched the United States invent every excuse possible not to do anything about it. We asked the Indians to show restraint in nuclear testing, but we were unwilling to put restraints on our own satellite companies by sanctioning China for missile proliferation. The Indians no doubt concluded that we were against the spread of the bomb unless it might cost us something. It should not surprise us if our non-proliferation policy lacks credibility.

Testimony: Cooperation in Space and Missiles

By Gary Milhollin

Testimony of Gary Milhollin

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

Before the House Committee on Science

June 25, 1998

I am pleased to appear today before this distinguished Committee. In accordance with the Committee’s request, I will discuss the U.S. policy of cooperation with foreign space programs and the risk that this cooperation could contribute to the spread of missile technology.

Helping India and Pakistan

I would like to begin with a bit of history. There is an important lesson to be learned about the origin of India’s largest nuclear-capable missile, the “Agni.”

In November 1963, NASA began the Indian space program by launching a U.S. rocket from Indian soil. Between 1963 and 1975, more than 350 U.S., French, Soviet and British rockets were launched from India’s new Thumba Range, which the United States helped design. Thumba’s first group of Indian engineers learned rocket launching and range operation from the United States.

Among these engineers was A. P. J. Abdul Kalam, the Agni missile’s chief designer. After the Indian nuclear tests last month, he was also hailed as the “father” of the Indian atomic bomb. In 1963-64, he spent four months in training in the United States. He visited NASA’s Langley Research Center in Virginia, where the U.S. Scout rocket was conceived, and the Wallops Island Flight Center in Virginia, where the Scout was being flown. The Scout was a four-stage, solid-fueled launcher used to orbit small payloads. It was also used to test the performance of reentry vehicles–a technology necessary to deliver nuclear warheads. According to NASA officials, the Indian engineers saw the blueprints of the Scout during their visit.

In 1965, the Indian government asked NASA for design information about the Scout. The request should have raised some eyebrows. It came from the head of the Indian Atomic Energy Commission. Nevertheless, NASA obligingly supplied the information. Kalam then proceeded to build India’s first big rocket, the SLV-3, which was an exact copy of the Scout. The first stage of the SLV-3 is now the first stage of the Agni missile.

The second stage of the Agni is based on a surface-to-air missile known as the SA-2 that India bought from Russia. But in order to build the second stage, India also had to learn about liquid propulsion. For this, India turned to France. The French willingly transferred the technology needed to build a powerful liquid-fueled rocket motor called the “Viking,” which powers the European Space Agency’s Ariane satellite launcher. Thus, India learned how to build the first stage of the Agni from the United States, and how to build the second stage from France and Russia. The U.S. and French help was supposed to be for peaceful space exploration, but it wound up helping India’s missile program.

The Agni also needed a guidance system. For this, India turned to the German Space Agency. In the 1970s and 1980s, Germany conducted an intensive tutorial for India in rocket guidance. The assistance–once again–was supposed to be for peaceful space exploration. But each step in the process for building a guidance system for India’s space launcher moved India further down the road to building a guidance system for the Agni missile. In fact, India seems to have invented a new term to describe its progress. Again and again, India’s Department of Space, in its annual reports, announced that it was able to “indigenize” another piece of essential equipment.

Germany also provided other help. The German Space Agency tested a model of the first stage of the SLV-3 (identical to the Scout) in its wind tunnel at Cologne-Portz. That first stage is now the first stage of the Agni missile. The German Space Agency also helped India build rocket test facilities, and trained Indians in the use of the special composite materials needed to make rocket nozzles and nosecones. I have included a graphic and a table in my testimony that summarizes the extensive foreign help that India received.

Thus, India’s biggest nuclear missile is an international product. Under the guise of peaceful space cooperation, the United States, France and Germany helped create the most advanced nuclear missile in South Asia. The Agni’s first stage, second stage and guidance system all come from Western technology, which proves beyond any doubt that you cannot help a country build space launchers without helping it build missiles.

The story in Pakistan is similar. In 1962, NASA launched Pakistan’s first rocket, a U.S. made Nike-Cajun, in a project led by Tariq Mustafa, the senior scientific officer of the Pakistan Atomic Energy Commission. NASA also trained Pakistani rocket scientists at Wallops Island. Other NASA-sponsored launches followed until 1970. Thus, the first rockets in both India and Pakistan were launched by NASA under a policy of peaceful space cooperation. The result of that cooperation, however, has been long-range missiles tipped with nuclear warheads.

Cooperation with China

This past March, the Administration invited China to join the Missile Technology Control Regime. In a memorandum dated March 12, White House staff member Gary Samore stated the reasons for making the offer. If China joined, the memo stated, China could expect “substantial protection from future U.S. missile sanctions.”

Mr. Samore could have said “complete protection.” Under Section 73 of the Arms Export Control Act, sanctions would not apply to a Chinese company if China joined the MTCR even if the company transferred complete missiles to Pakistan. Sanctions would be avoided if the sale were legal under Chinese law, or if China took action against the company, or if China found the company to be innocent. In effect, the Administration offered China a complete shield against U.S. sanctions law. The result would be to allow China to continue its sales of missile components and technology to Pakistan with no fear of punishment by the United States.

In addition, China’s own missile and space effort would probably get a boost from American imports. The United States now requires an export license for a missile-related item shipped to any country except Canada. It is likely that China would enjoy a presumption of approval for such licenses if China were admitted to the MTCR. Earlier this year, the pro-export Commerce Department announced that applications for dual-use nuclear exports to China would begin to benefit from a presumption of approval instead of a presumption of denial because of the new China-U.S. nuclear cooperation agreement.

China’s missile firms would also find it easier to import American goods that are not on the control list. An example would be a powerful computer operating at a speed just under the present control level, or a machine tool with an accuracy just under the control level. As things stand now, if a U.S. exporter gets an order from a known missile maker in China, the exporter cannot make the sale without notifying the U.S. government and getting an export license. This is required by Section 744.3 of the Export Administration Regulations. If China were to join the MTCR, however, no license would be required for such a sale. U.S. firms could deliberately outfit Chinese missile manufacturing sites without telling anyone.

There is also a risk that China could undermine the MTCR by making use of the knowledge it would gain by membership. The countries that participate in the MTCR notify each other of sales that they deny. If the United States decides, for example, not to sell a vacuum furnace to India, the United States notifies the other members of the MTCR of the denial so that the other members will not let their firms step in behind the American company and make the sale. In light of China’s past behavior on missile exports, there is a concern that China would pass the denial information along to Chinese firms that would make the sale.

It is important to remember that the firms with which we are cooperating in satellite launches are the same Chinese firms that are proliferating missile technology to Iran and Pakistan. Who are these companies? China Great Wall Industries, China Aerospace International Holdings Ltd. (CASIL, of Hong Kong) and their parent, China Aerospace Industry Corporation. These companies launch U.S.-made satellites on China’s Long March rockets. The United States has sanctioned both China Great Wall and China Aerospace Corporation in the past for supplying missile technology to Pakistan, and the intelligence community reports that the exports are still going on.

It is also important to realize that a satellite launch contract is one of the most lucrative things a Chinese aerospace company can get from the United States. It is a major source of revenue. By continuing our space cooperation with companies that sell missile technology to Iran and Pakistan, the United States is putting money into the pockets of companies that are directly undermining our nonproliferation policies. This is one of the clearest instances in which space cooperation contributes to missile proliferation.

Although I have not had time to research fully the question of American missile help to China, there are at least a few facts that the Committee might like to know. They concern the educational backgrounds of China’s leading rocket scientists. One of China’s most celebrated rocket scientists is Qian Xuesen, who studied at both the Massachusetts Institute of Technology and the California Institute of Technology, where he received his doctorate in 1938. He later taught at both MIT and Cal Tech before returning to China to lead its missile programs. Another leading rocket expert, Tu Shoue, received a master’s from MIT in aviation engineering before going home to design China’s launch vehicles as well as several intermediate-range missiles. A third is Liang Shoupan, who after getting the same master’s degree from MIT, taught at the military engineering academy of the People’s Liberation Army and served as China’s chief systems designer for ballistic missiles. And one might also mention Huang Weilu, a missile guidance specialist who studied at the University of London, and Ren Xinmin, a liquid propellant specialist who got a Ph.D. in engineering mechanics from the University of Michigan.

These scientists were no doubt welcomed to the United States under the assumption that they would use their learning for peaceful space exploration. We now realize, however, that American universities taught many of China’s leading scientists how to make better long-range missiles.

It is difficult to see how it would be prudent to allow China to join the MTCR at this time. China has repeatedly failed to comply with MTCR guidelines since promising to do so in 1992 and 1994. There is no real evidence that China has changed its ways. Thus, the main effect of the offer may be to insulate Chinese aerospace companies from U.S. sanctions laws so that satellite launches can continue.

The lesson from what I have said above is clear. The United States and its allies should only cooperate with countries that share our commitment to nuclear and missile non-proliferation. U.S. space cooperation should be a reward for countries that are part of the solution to proliferation, not a bribe to those that are part of the problem. That principle excludes, at a minimum, China, India, Israel and Pakistan. The latter three have rejected the Nonproliferation Treaty and China, while nominally a member, continues to spread missile technology through its exports. If we look back on our space cooperation with India and Pakistan, we can see that it was a mistake. Those countries are now poised to mount nuclear warheads on rockets, and those rockets were built from programs we have nurtured.

Missile Helpers

India did not build its missiles alone. The world’s leading rocket producers gave essential help in research, development, and manufacture.

France

  • Licensed production of sounding rockets in India
  • Supplied the liquid-fuel Viking rocket engine, now the “Vikas” engine of the PSLV second stage
  • Tested Indian-produced Vikas engine in France

Germany

  • Delivered measurement and calibration equipment to ISRO laboratories
  • Trained Indians in high-altitude tests of rocket motors and in glass and carbon fiber composites for rocket engine housings, nozzles and nose cones
  • Designed high-altitude rocket test facilities
  • Conducted wind tunnel tests for SLV-3 rocket
  • Developed radio frequency interferometer for rocket guidance
  • Developed computers for rocket payload guidance based on U.S. microprocessor
  • Supplied documentation for a filament-winding machine to make rocket engine nozzles and housings
  • Helped build Vikas rocket engine test facilities
  • Designed hypersonic wind tunnel and heat transfer facilities
  • Supplied rocket motor segment rings for PSLV

Russia

  • Supplied surface-to-air missiles which became the models for the Prithvi missile and the second stage of the Agni medium-range missile
  • Sold seven cryogenic rocket engines

United Kingdom

  • Supplied components for Imarat Research Center, home to the Agni missile
  • Supplied magnetrons for radar guidance and detonation systems to Defense Research and Development Laboratory

United States

  • Launched U.S.-built rockets from Thumba test range
  • Trained Dr. Abdul Kalam, designer of the Agni
  • Introduced India to the Scout rocket, the model for the SLV-3 rocket and the Agni first stage
  • Sent technical reports on the Scout rocket to Homi Bhabha, the head of the Indian Atomic Energy Commission
  • Sold equipment that can simulate vibrations on a warhead

Testimony: China’s Proliferation Record – 1998

By Gary Milhollin

Testimony of Gary Milhollin

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

Before the House Committees on International Relations and National Security

June 17, 1998

I am pleased to appear today before these distinguished Committees. I have been asked to discuss U.S. policy on satellite exports to China. I will direct my remarks to the effect of that policy on Chinese transfers of missile technology to countries that are trying to make weapons of mass destruction.

We have heard a lot about satellites lately, especially American-made satellites going to China. We have also heard about campaign contributions, about waivers of export prohibitions, and about the transfer of control over satellites from one government agency to another.

What we have not heard, and what I will talk about today, are decisions by our government that have given Chinese companies a green light to sell missile technology to countries like Iran and Pakistan. The Administration has made three crucial decisions in this regard.

First, it has decided to transfer control over satellite exports from the State Department to the Commerce Department, an action that effectively pulls the teeth from any future U.S. sanctions against Chinese companies guilty of missile proliferation.

Second, it has decided to suspend, without any legal basis, the implementation of U.S. statutes that require sanctions to be imposed against Chinese companies for past sales of missile technology to Iran and Pakistan.

Third, it has decided to invite China to join the Missile Technology Control Regime, an invitation that, if accepted, would immunize Chinese firms from any future application of U.S. sanctions laws for missile proliferation.

When we look at the cumulative effect of these decisions, we see something both surprising and alarming. Our government has enabled Chinese companies to proliferate missile technology with little fear of punishment. More specifically, Chinese companies have been able to sell Iran and Pakistan components for nuclear capable missiles without worrying about losing U.S. satellite launch contracts.

Satellites

Our sanctions laws, as written by Congress, are based on a simple idea. A foreign company cannot import American missile technology with one hand and proliferate missile technology with the other. If a Chinese company decides to sell Pakistan or Iran a nuclear-capable missile or the means to make one, that company has to forget about importing any missile-related technology from the United States. U.S.-made satellites were originally part of this equation, because they contain missile-related American components.

That simple idea has now been abandoned by the executive branch. When, for example, the Administration transferred licensing authority over satellites from the State Department to the Commerce Department, satellites were effectively removed from the list of U.S. exports subject to missile sanctions.

Let me explain why this is so. If a Chinese company sells whole missiles to a country like Iran or Pakistan, the company would be guilty of what is known as a “Category One” violation. This is because whole missiles are listed on Category One of the Annex to the Missile Technology Control Regime, an agreement among countries that are trying to curb missile proliferation by controlling their exports. For selling a Category One item, the sanctions bar the guilty company for at least two years from importing any item controlled by the Export Administration Act. Category One sanctions would thus bar satellites even if controlled by the Commerce Department, which administers that Act.

China did export whole missiles to Pakistan in the fall of 1992. Since then, however, China has changed its tactics. It now exports missiles piecemeal, as components. An example would be a piece of guidance equipment. These items are on Category Two of the MTCR Annex. A “Category Two” violation bars only the export of U.S. “missile equipment or technology ” under the Export Administration Act and under Section 73 of the Arms Export Control Act.

But what is “missile equipment or technology”? According to the licensing practice of the State Department, a missile-related item retains its identity as a missile item even if it is embedded in a commercial satellite. Thus, if a Chinese company were sanctioned, the export of satellites would be blocked by the State Department because satellites have missile-related items embedded in them. In the view of the Commerce Department, however, a missile-related item loses its identity as a missile item if it is incorporated into a commercial satellite. Thus, the export of satellites would not be blocked by the Commerce Department even though the satellites contained items that would be considered missile-related if not embedded. These embedded items are such things as radiation-hardened computer chips, gyroscopes, and accelerometers.

The Administration first transferred export controls on satellites from State to Commerce in 1996, and in its implementing regulations, it also moved a number of missile-related items associated with satellites. Then in 1998, the Administration moved the rest of the missile-related items associated with satellite launches, even though the items are not embedded in satellites. These items included ground support equipment, test equipment, replacement parts, and non-embedded kick motors.

The result is that now, satellites are insulated from missile sanctions because control over virtually everything associated with launching them has been transferred to the pro-export Commerce Department, where sanctions will not be applied.

It is important to realize that the same Chinese companies that launch U.S. satellites also sell missiles to places like Pakistan. Who are these companies? China Great Wall Industries, China Aerospace International Holdings Ltd. (CASIL, of Hong Kong) and their parent, China Aerospace Industry Corporation. These companies launch satellites on China’s Long March rockets. The United States has sanctioned both China Great Wall and China Aerospace Corporation in the past for supplying missile technology to Pakistan.

It is also important to realize that a satellite launch contract is one of the most lucrative things a Chinese aerospace company can get from the United States. Thus, by removing satellites from the threat of sanctions, the Administration has surrendered one of the most important levers America has to stop Chinese missile proliferation. Chinese companies are free to sell missile technology to Iran or Pakistan without risking their most lucrative source of revenue.

Failure to apply sanctions laws

China’s exports remain the most serious proliferation threat in the world. Since 1980, China has supplied billions of dollars worth of nuclear weapon, chemical weapon and missile technology to South Asia, South Africa, South America and the Middle East. It has done so despite 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 its allies to halt the spread of weapons of mass destruction.

I have attached tables to my testimony that list China’s exports of nuclear, chemical and missile technology since 1980. The tables reveal that China has consistently undermined U.S. nonproliferation efforts for nearly two decades and is still doing so today.

In the early 1990s, Chinese companies were caught selling Pakistan M-11 missile components. The M-11 is an accurate, solid-fuel missile that can carry a nuclear warhead about 300 kilometers. In June 1991, the Bush administration sanctioned the two offending Chinese sellers. 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.

But by December 1992, in violation of its promise, China had shipped 34 M-11 missiles to Pakistan. Waiving the sanctions was a mistake.

In August 1993, the Clinton administration applied sanctions for two years, after determining that China had violated the U.S. missile sanctions law a second time. Then 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 MTCR.

Since late 1994, the stream of missile exports has continued. U.S. officials say that China’s missile exports have continued up until the present moment, unabated. These exports include the sale of missile-related guidance and control equipment to Iran as well as Pakistan.

In fact, our officials have learned that they were duped in 1992 and 1994. China was not promising what we thought it was. Our officials now realize that China interprets its promises in 1992 and 1994 so narrowly as to make them practically meaningless. It is clear that China has not complied with the MTCR in the past, that it is not complying now, and that it probably never will comply unless something happens to change China’s attitude on this question.

In its latest venture, China is helping to build a plant to produce M-11 missiles in Pakistan. U.S. officials say 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.

By the autumn of 1996, the intelligence community had completed an air-tight finding of fact on China’s missile transfers to Pakistan. There was clear proof that the transfers had happened. All the factual analysis necessary to apply sanctions had been finished. A similar finding on China’s missile exports to Iran had also been made.

And roughly one year earlier, an important legal analysis had been completed. The legal analysis established that sanctions could be applied where a foreign person “conspires to or attempts to engage in” the export of any MTCR equipment or technology. Thus, sanctions could be applied without a finding that hardware or technology had actually been exported. A conspiracy or even an attempt to transfer such items would be enough. One did not need a photograph of a missile with “made in China” written on the side.

The findings of fact and the legal analysis showed clearly that China should be sanctioned. Both the findings and the analysis had been circulated to the relevant agencies by the autumn of 1996. Both Pakistan and Iran were covered. The process, however, was short-circuited at that point.

The next step would have been for the National Security Council to call a meeting at which each agency could submit for the record its views on whether sanctions should be imposed. The NSC would then forward these views to the Department of State, which would prepare a decision memorandum for the Under Secretary, who has the legal authority to impose sanctions.

But none of these steps were ever taken. The State Department simply chose not to complete the administrative process. Thus, the sanctions law is not being implemented as Congress intended and, in fact, is being circumvented. It is obvious that the law can never take effect unless the administrative process is completed, so the failure to complete it is manifestly illegal.

Last week, in testimony before the Senate Committee on Foreign Relations, Mr. Gordon Oehler, who headed the CIA’s non-proliferation center when the findings were made, confirmed that the evidence of the missile transfers was clear. Mr. Oehler said that there was no doubt in his mind that the transfers happened, and that the rest of the intelligence agencies agreed.

The State Department has now 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 not chosen to complete the administrative process. I recommend that Congress take steps to see that the law is enforced.

Now that Pakistan has demonstrated its nuclear weapon capability, and announced that it will mount nuclear warheads on missiles, this matter has become urgent. The Chinese-supplied M-11s will actually carry nuclear weapons. President Clinton has said that the world should try to prevent India and Pakistan from putting warheads on missiles, but his Administration refuses to apply a U.S. law designed to prevent Pakistan from acquiring missiles in the first place.

I would also like to mention the Iran-Iraq Nonproliferation Act of 1992. Under that Act, a foreign company is sanctioned if it exports “destabilizing numbers and types of advanced conventional weapons” to either Iran or Iraq. The sanctions bar any American product that needs an export license, including satellites.

In 1995, the China Precision Machinery Import Export Corporation sold Iran advanced C-802 anti-ship cruise missiles. Estimates of the number sold range from 60 to 100. The State Department admitted that the shipment occurred but concluded in 1997 that it was not of “a destabilizing number and type.” Thus, it declined to apply sanctions, despite the fact that Admiral John Redd, our naval commander in the Gulf, took the unusual step of complaining publicly about the sale. The missiles threaten our ships and sailors in Gulf and also commercial shipping.

If sanctions had been applied, the export of U.S. satellites would have been cut off. Under the Iran-Iraq Nonproliferation Act, the sanctions reach the parent organization of the guilty party. The parent of China Precision Machinery is the China Aerospace Corporation, which launches U.S.-origin satellites. This raises the question whether the State Department, when ruling that the missiles were not destabilizing, was simply trying to protect U.S. satellite makers.

China in the MTCR?

This past March, the Administration invited China to join the Missile Technology Control Regime. In a memorandum dated March 12, White House staff member Gary Samore stated the reasons for making the offer. Sanctions figured prominently among them. If China joined, the memo stated, China could expect “substantial protection from future U.S. missile sanctions.”

Mr. Samore could have said “complete protection.” Under Section 73 of the Arms Export Control Act, sanctions would not apply to a Chinese company if China joined the MTCR even if the company transferred complete missiles to Iran or Pakistan. Sanctions would be avoided if the sale were legal under Chinese law, or if China took action against the company, or if China found the company to be innocent. In effect, the Administration offered China a complete shield against U.S. sanctions law.

The Administration was also offering China a second benefit. As things stand now, if a U.S. exporter gets an order from a known missile maker in China, the exporter cannot make the sale without notifying the government and getting an export license. This is required by Section 6 of the Export Administration Act. If China were to join the MTCR, however, no license would be required for such a sale. U.S. firms could deliberately outfit Chinese missile manufacturing sites without telling anyone.

It is difficult to see how such an offer is prudent. China has repeatedly failed to comply with MTCR guidelines since promising to do so in 1992 and 1994. There is no real evidence that China has changed its ways. Thus, the offer seems to be yet another effort to insulate Chinese aerospace companies from U.S. sanctions laws so that satellite launches can continue.

Conclusion

When we look at the history of U.S. sanctions policy, we see a willingness to sanction China for missile proliferation in both the Bush Administration, which applied sanctions in 1991, and in the Clinton Administration, which applied sanctions in 1993. But in 1995, the Clinton Administration policy changes. China supplied the C-802s to Iran in 1995; China supplied other missile components to Iran and Pakistan in 1995 and has continued to supply up to the present time. And in 1996, the Administration refused to act on explicit findings by the intelligence community that the transfers occurred. Also in 1996, the Administration started transferring control over satellites exports from the State to the Commerce Department, insulating them from the application of missile sanction laws in the future. For some reason, the Administration decided in either 1995 or 1996 that missile sanctions would no longer be part of U.S. policy in dealing with China.

Why did U.S. policy change? I don’t know the answer to that question, but I urge the Committees to look into it.

We do know the result of the policy change. It gave China a green light to proliferate. Our government’s policy on sanctions has enabled Chinese satellite launch companies to sell missiles and missile components to Iran and Pakistan without fear of punishment. Thus, it may be that we are asking the wrong question about how our satellite export policy affects missile proliferation.

Whether or not our satellite exports caused U.S. missile technology to go to China, they have made it easier for Chinese missile technology to go to Pakistan.

India, of course, has watched this happen. India watched China help Pakistan make not only missiles but the nuclear warheads to go on them. India also watched the United States invent every excuse possible not to do anything about it. America asked the Indians to show restraint in nuclear testing, but America was unwilling to put restraints on its own satellite companies by sanctioning China. The Indians no doubt concluded that Uncle Sam was against the spread of the bomb unless it might cost him something. It should not surprise us if our non-proliferation policy lacks credibility.

 Dangerous Exports Table

Testimony: US Satellite Exports and China

By Gary Milhollin

Testimony of Gary Milhollin

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

Before the Senate Committee on Foreign Relations

June 11, 1998

I am pleased to appear today before this distinguished Committee. I will direct my remarks to U.S. foreign policy toward China, particularly as it concerns transfers of missile technology by China to countries that are trying to make weapons of mass destruction. I will discuss the failure of the United States to sanction China under U.S. law for these exports, and the link between this failure and the current U.S. policy on satellite exports.

We have heard a lot about satellites lately, especially American-made satellites going to China. We have also heard about campaign contributions, about waivers of export prohibitions, and about the transfer of control over satellites from one government agency to another.

What we have not heard, and what I will talk about today, are decisions by our government that have given Chinese companies the green light to sell missile technology to countries like Iran and Pakistan. The Administration has made three crucial decisions in this regard.

First, it has decided to transfer control over satellite exports from the State Department to the Commerce Department, an action that effectively pulls the teeth from any future U.S. sanctions against Chinese companies guilty of missile proliferation.

Second, it has decided to suspend, without any legal basis, the implementation of U.S. statutes that require sanctions to be imposed against Chinese companies for past sales of missile technology to Iran and Pakistan.

Third, it has decided to invite China to join the Missile Technology Control Regime, an invitation that, if accepted, would immunize Chinese firms from any future application of U.S. sanctions laws for missile proliferation.

When we look at the cumulative effect of these decisions, we see something very surprising and very alarming. Our government has enabled Chinese companies to proliferate missile technology with little fear of punishment. More specifically, Chinese companies have been able to sell Pakistan components for nuclear capable missiles without worrying about losing U.S. satellite launch contracts.

Satellites

Our sanctions laws, as written by Congress, are based on a simple idea. A foreign company cannot import American missile technology with one hand and proliferate missile technology with the other. If a Chinese company decides to sell Pakistan or Iran a nuclear-capable missile or the means to make one, that company has to forget about importing any missile-related American technology. U.S.-made satellites were originally part of this equation, because they contain missile-related American components.

That simple idea has now been abandoned by the executive branch. When, for example, the Administration transferred licensing authority over satellites from the State Department to the Commerce Department, satellites were effectively removed from the list of U.S. exports subject to missile sanctions.

Let me explain why this is so. Under Section 73 of the Arms Export Control Act, sanctions apply to a Chinese company that sells components to a country like Iran or Pakistan for use in a program to make nuclear-capable missiles. The sanctions prevent the guilty company from importing U.S. missile-related items for a period of two years if the company’s sale was of something less than a complete rocket system or subsystem. Most sales fall into this category. An example would be a rocket motor casing or a piece of guidance equipment. These are known as “Category II” items on the Annex of the Missile Technology Control Regime, an agreement among countries that are trying to curb missile proliferation by controlling their exports.

So sanctions bar the guilty company from buying missile-related items from the United States. But what is a “missile-related item”? According to the licensing practice of the State Department, a missile-related item retains its identity as a missile item even if it is embedded in a commercial satellite. Thus, if a Chinese company were sanctioned, the export of satellites would be blocked by the State Department because satellites have missile-related items embedded in them. In the view of the Commerce Department, however, a missile-related item loses its identity as a missile item even if it is incorporated into a commercial satellite. Thus, the export of satellites would not be blocked by the Commerce Department even though the satellites contained items that would be considered missile-related if not embedded. These embedded items are such things as radiation-hardened computer chips, gyroscopes, and accelerometers.

The Administration first moved export controls on satellites from State to Commerce in 1996, and in its implementing regulations, it also moved a number of missile-related items associated with satellites. Then in 1998, the Administration moved the rest of the missile-related items associated with satellite launches, even though the items are not embedded in satellites. These items included ground support equipment, test equipment, replacement parts, and non-embedded kick motors.

The result is that now, satellites are insulated from missile sanctions because control over everything associated with launching them has been transferred to the Commerce Department, where sanctions will not be applied.

It is important to realize that the same Chinese companies that launch U.S. satellites also sell missiles to places like Pakistan. Who are these companies? China Great Wall Industries, China Aerospace International Holdings Ltd. (CASIL, of Hong Kong) and their parent, China Aerospace Industry Corporation. These companies launch satellites on China’s Long March rockets. The United States has sanctioned both China Great Wall and China Aerospace Corporation in the past for supplying missile technology to Pakistan.

It is also important to realize that a satellite launch contract is one of the most lucrative things a Chinese aerospace company can get from the United States. Thus, by removing satellites from the threat of sanctions, the Administration has surrendered one of the most important levers America has to stop Chinese missile proliferation. Chinese companies are free to sell missile technology to Iran or Pakistan without risking their most lucrative source of revenue.

Failure to apply sanctions laws

In October of last year, I testified before this Committee on China’s export behavior. I will not repeat that testimony here, except to summarize some points that are especially important to keep in mind.

China’s exports remain the most serious proliferation threat in the world. Since 1980, China has supplied billions of dollars worth of nuclear weapon, chemical weapon and missile technology to South Asia, South Africa, South America and the Middle East. It has done so despite 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 its allies to halt the spread of weapons of mass destruction.

I have attached tables to my testimony that list China’s exports of nuclear, chemical and missile technology since 1980. The tables reveal that China has consistently undermined U.S. nonproliferation efforts for nearly two decades and is still doing so today.

In the early 1990s, Chinese companies were caught selling Pakistan M-11 missile components. The M-11 is an accurate, solid-fuel missile that can carry a nuclear warhead about 300 kilometers. In June 1991, the Bush administration sanctioned the two offending Chinese sellers. 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.

But the sales continued and in August 1993, the Clinton administration applied sanctions again for two years, after determining that China had violated the U.S. missile sanctions law a second time. Then 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 MTCR.

Since 1994, the stream of missile exports has continued. U.S. officials say that China’s missile exports have continued up until the present moment, unabated. These exports include the sale of missile-related guidance and control equipment to Iran.

In fact, our officials have learned that they were duped in 1992 and 1994. China was not promising what we thought it was. Our officials now realize that China interprets its promises in 1992 and 1994 so narrowly as to make them practically meaningless. It is clear that China has not complied with the MTCR in the past, that it is not complying now, and that it probably never will comply unless something happens to change China’s attitude on this question.

In its latest venture, China is helping to build a plant to produce M-11 missiles in Pakistan. U.S. officials say 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.

In the autumn of 1996, the intelligence community had completed an air-tight finding of fact on China’s missile transfers to Pakistan. There was clear proof that the transfers had happened. All the factual analysis necessary to apply sanctions had been finished. A similar finding on China’s missile exports to Iran had also been made.

And roughly one year earlier, an important legal analysis had been completed. The legal analysis established that sanctions could be applied where a foreign person “conspires to or attempts to engage in” the export of any MTCR equipment or technology. Thus, sanctions could be applied without a finding that hardware or technology had actually been exported. A conspiracy or even an attempt to transfer such items would be enough. One did not need a photograph of a missile with “made in China” written on the side.

The findings of fact and the legal analysis showed clearly that China should be sanctioned. Both the findings and the analysis had been circulated to the relevant agencies by the autumn of 1996. Both Pakistan and Iran were covered. The process, however, was short-circuited at that point.

The next step would have been for the National Security Council to call a meeting at which each agency could submit for the record its views on whether sanctions should be imposed. The NSC would then forward these views to the Department of State, which would prepare a decision memorandum for the Under Secretary, who has the legal authority to impose sanctions.

But none of these steps ever happened. The State Department simply chose not to complete the administrative process. Thus, the sanctions law is not being implemented as Congress intended and, in fact, is being circumvented. It is obvious that the law can never take effect unless the administrative process is completed, so the failure to complete it is manifestly illegal. I recommend that Congress take steps to see that the law is enforced.

Now that Pakistan has demonstrated its nuclear weapon capability, and announced that it will mount nuclear warheads on missiles, this matter has become urgent. The Chinese-supplied M-11s will actually carry nuclear weapons. President Clinton has said that the world should try to prevent India and Pakistan from putting warheads on missiles, but his Administration refuses to apply a U.S. law designed to prevent Pakistan from acquiring missiles in the first place.

China in the MTCR?

This past March, the Administration invited China to join the Missile Technology Control Regime. In a memorandum dated March 12, White House staff member Gary Samore stated the reasons for making the offer. Sanctions figured prominently among them. If China joined, the memo stated, China could expect “substantial protection from future U.S. missile sanctions.”

Mr. Samore could have said “complete protection.” Under Section 73 of the Arms Export Control Act, sanctions would not apply to a Chinese company if China joined the MTCR even if the company transferred complete missiles to Iran or Pakistan. Sanctions would be avoided if the sale were legal under Chinese law, or if China took action against the company, or if China found the company to be innocent. In effect, the Administration offered China a complete shield against U.S. sanctions law.

It is difficult to see how such an offer is prudent. China has repeatedly failed to comply with MTCR guidelines since promising to do so in 1992 and 1994. There is no real evidence that China has changed its ways. Thus, the offer seems to be yet another effort to insulate Chinese aerospace companies from U.S. sanctions laws so satellite launches can continue.

Conclusion

Our government’s export policy on satellites has enabled Chinese companies to sell missile components to Pakistan without fear of punishment. Thus, it may be that we are asking the wrong question about how our satellite export policy affects missile proliferation.

Whether or not our satellite policy has caused U.S. missile technology to go to China, it has certainly made it easier for Chinese missile technology to go to Pakistan.

India, of course, has watched this happen. India watched China help Pakistan make not only missiles but the nuclear warheads to go on them. India also watched the United States invent every excuse possible not to do anything about it. Uncle Sam asked the Indians to show restraint in nuclear testing, but Uncle Sam was unwilling to put restraints on his own satellite companies by sanctioning China for missile proliferation. The Indians no doubt concluded that Uncle Sam was against the spread of the bomb unless it might cost him something. It should not surprise us if our non-proliferation policy lacks credibility.

 Dangerous Exports Table

Made in America? How U.S. Exports Helped Fuel the South Asian Arms Race

By Gary Milhollin

The Washington Post
June 7, 1998, p. C1

India and Pakistan, fresh from testing nuclear devices, are poised to build missiles that could deliver the bomb deep into each other’s territory. The United States deplores these developments, but along with other countries, stands guilty of supplying much of the necessary technology.

In fact, India’s next generation of nuclear missiles will probably be designed with the help of American-made equipment.

U.S. officials say that in 1996, Digital Equipment Corp. shipped a supercomputer to the Indian Institute of Science in Bangalore, a key missile research site. Supercomputers are the most powerful tools known for designing nuclear weapons and the missiles to deliver them. They can model the thrust of a rocket, calculate the heat and pressure on a warhead entering the Earth’s atmosphere and simulate virtually every other force affecting a missile from launch to impact. Because of the billions of computations needed to solve these problems, a supercomputer’s speed is invaluable for efficiently finding design solutions.

The DEC computer will come in handy at the Indian Institute of Science. The institute is on the British government’s official list of organizations that procure goods and technology for India’s missile programs. It develops India’s most advanced rocket propellants, guidance systems and nose cones. Its wind tunnels and other equipment analyze rocket fuel combustion and flight performance. It has even been linked in published reports to India’s new nuclear-capable missile called the “Sagarika,” intended to be launched from submarines.

International Business Machines Corp. supplied the institute with an even more powerful supercomputer. According to IBM spokesman Fred McNeese, IBM installed the supercomputer at the institute’s Supercomputing Education and Research Center, which specializes in computer-aided design. The machine operated at 1.4 billion operations per second when installed in 1994, and IBM upgraded it in March 1997 to perform 3.2 billion operations per second and again in June 1997 to 5.8 billion, making it one of the most powerful computers in India.

The pro-export Commerce Department granted a license for the DEC sale, despite the notoriety of the institute as a missile site. Commerce also licensed the original installation by IBM, but IBM performed the upgrades without a license, in apparent violation of the law.

This week, the U.S. Customs Service opened an investigation into the IBM upgrades. It is already investigating IBM for selling a supercomputer to Russia’s leading nuclear weapons lab under similar circumstances.

The U.S. government requires an American company to obtain an export license if it wants to sell to a bomb-prone nation like India a computer that performs more than 2 billion operations per second. IBM claimed an exception, that allows such computers to be shipped as long as the buyer is not connected to nuclear weapons, chemical weapons, missile or military work. The seller must ensure that the exception applies, which IBM failed to do. McNeese of IBM says only that the company “has no indication that the machine has been used for anything other than university research.”

And there is the case of Viewlogic Systems Inc. of Marlborough, Mass. According to the Journal of Commerce, Viewlogic shipped computer software for designing printed circuit boards to an Indian missile manufacturer on the very day that President Clinton announced sanctions against India for its five nuclear weapon tests.

The Commerce Department approved the sale, despite the fact that the buyer was Bharat Dynamics Ltd. (BDL), a leading entry on the British government’s list of Indian missile makers. BDL manufactures and assembles India’s single-stage Prithvi missile, which can deliver a nuclear payload about 150 miles, and the two-stage Agni, which can deliver one about 1,500 miles. Both threaten Pakistan’s major cities.

With better electronic circuits, BDL’s nuclear missiles will be more accurate and reliable. The same is true of the antitank and other guided missiles that BDL makes, and advertises in a public catalogue.

How the Commerce Department could approve a sale to India’s main missile assembly site remains a mystery. Both Viewlogic and the Commerce Department decline to comment on the sale. This misguided policy of helping India develop missiles is not new. In 1963, the United States began India’s missile program by launching a U.S. rocket from India’s new Thumba Range, which the United States helped design. Despite his recent claim to being “indigenous,” A.P.J. Abdul Kalam, the “father” of the Indian bomb, spent four months in training in the United States. After visiting NASA’s Wallops Flight Facility on the Virginia coast, where he saw the U.S. Scout space rocket in action, he returned to India to build a copy.

The U.S. government obligingly supplied data on the Scout’s design after a request from the Indian Atomic Energy Commission. The Scout’s first-stage rocket is identical to the first stage of India’s longest-range missile, the Agni.

Virtually every element of India’s nuclear and missile programs has been imported directly or copied from imported designs. The Agni’s second-stage rocket motor is derived from a Russian-supplied surface-to-air missile and the Agni’s guidance system was developed with help from Germany’s space agency.

The story in Pakistan is similar. In 1962, NASA launched Pakistan’s first rocket, a U.S.-made Nike-Cajun, in a project led by Tariq Mustafa, the senior scientific officer of the Pakistan Atomic Energy Commission. NASA also trained Pakistani rocket scientists at Wallops Island. The Pakistanis were there at the same time as the Indians. Other NASA-sponsored launches followed until 1970. China stepped in later to supply Pakistan’s need for bigger missiles, but Uncle Sam launched Pakistan’s missile program just as he did India’s.

Sanctions will stop at least some of the exports from the United States. Because of the recent nuclear tests, U.S. law now bars the sale to India or Pakistan of any “goods and technology” controlled by the Commerce Department. Although the White House was quick to apply financial sanctions, it is still deciding how to interpret this export prohibition. It could cost big exporting companies real money. The companies are already lining up to limit the sanctions as much as they can.

On May 14, the Industry Coalition on Technology Transfer, the exporters’ main lobbying group, wrote to the White House urging that the sanctions be confined to nuclear-related items. They hope the White House will decide that missile-related and chemical weapon-related items will still be free for export. They also requested that they be allowed to sell spare parts and service for U.S. products already in place — such as the DEC and IBM computers. The exporters seem content to watch India and Pakistan build nuclear missiles with American technology.

The administration is now considering three options. The first is to forbid any item controlled for export to be sold to anyone in India or Pakistan — no one could buy a military-related item or any item that could help make nuclear weapons, chemical/biological weapons or missiles. Only 1 percent of U.S. sales to India are now controlled for export, so this option would be effective and painless.

The second option is to deny the nuclear and missile items to everybody, but allow private companies in India and Pakistan to buy only conventional military and chemical/biological items. The third option would allow the two governments to buy such items as well. These latter two options would undermine the integrity of the legislation passed by Congress.

What will the president decide? The pro-trade and pro-India forces are leaning on him, and he is bending. He has already hinted that he would be satisfied if India merely promised to sign the Comprehensive Test Ban Treaty and to cap its production of nuclear weapon material.

But neither pledge would mean much. The treaty tries to limit the qualitative improvement of nuclear weapons by countries that already have arsenals. It has little to do with proliferation — the decision of a country to build an arsenal in the first place. Even if India and Pakistan signed the treaty tomorrow, they would still be free to build an unlimited number of bombs and the missiles to deliver them. Both countries now have nuclear test data and India even has American supercomputers to process it.

Capping nuclear material production won’t work either. By the time a limit could be negotiated, India could have enough for well over 100 warheads. Pakistan could have enough for at least a couple dozen. The total yield could still devastate the subcontinent.

The only solution is the Nuclear Non-Proliferation Treaty, which obliges countries other than the five big nuclear powers to give up the bomb. Although neither India nor Pakistan would join the treaty now, while tempers and rhetoric are boiling, there is a decent chance in the long run. The goal must be to get South Asia to behave like South Africa. Pretoria secretly built six workable warheads, but decided life would be better without them. Trade, investment and high-tech imports were judged more valuable than a nuclear arsenal. Argentina and Brazil made the same decision, as did Belarus, Kazakhstan and Ukraine, which inherited nuclear warheads from their Soviet days.

All of these countries gave up the bomb and all except Brazil joined the Nuclear Non-Proliferation Treaty as non-nuclear weapons states in the 1990s.

That’s the direction the world is going and the direction the world must press India and Pakistan to take. Pakistan has said repeatedly that it will join if India does, so the situation can still be reversed, even after Pakistan’s tests.

Sanctions are the best hope of getting there. President Clinton should adopt a broad ban on high technology and convince U.S. allies to join. At a minimum, it would sever the technological lifeline that has always sustained the South Asian nuclear and missile effort. That alone would be a worthy achievement. It would prevent the Commerce Department from licensing more mass destruction.

And because a cutoff would ban much civilian high technology as well, India in particular would be deprived of what it needs to modernize its industry and armed forces. After a few years, India would face the technology gap that doomed the Warsaw Pact.

India’s tests were a reckless maneuver by a shaky government to shore up domestic political support. The tests left Pakistan little choice but to answer in kind. When the aftershocks die down, and more rational heads prevail, the path away from the bomb will open once again.

Should We Sell Supercomputers to Algeria?

By Gary Milhollin

The New York Times
April 24, 1998, p. A26

Since January, the Clinton Administration has been quietly circumventing a new law designed to keep American supercomputers away from third world bomb and missile makers. Supercomputers are the most powerful tools available for designing nuclear weapons and the missiles to deliver them. The world may soon face more weapons of mass destruction, all so computer companies can reap a few export dollars.

The Digital Equipment Corporation has asked the Commerce Department for permission to sell a supercomputer to India’s Nuclear Power Corporation, which runs a string of reactors, widely assumed to produce plutonium used in atomic bombs. Digital also wants to supply China’s Harbin Institute of Technology, which makes rocket casings and other components for long-range missiles.

Sun Microsystems wants to outfit the Indian Institute of Technology, which develops rocket propellants and performs wind tunnel research to improve the flight of nuclear missiles. And Silicon Graphics, Inc. is hoping to supply supercomputers to another company that develops India’s biggest rocket and missile engines.

By law, American companies must notify the government before shipping a supercomputer to countries like Russia and China, which don’t control their exports effectively, and India, Israel and Pakistan, which reject the Nuclear Nonproliferation Treaty. If a Federal agency objects to a sale within ten days of notification, the seller must provide more information.

Congress passed legislation last fall after Silicon Graphics and IBM were caught shipping supercomputers to Russia’s leading nuclear weapon labs without the required export licenses.

But in January, Gary Samore, the White House official in charge of nonproliferation and export controls, knocked the teeth out of the law. He informed the Federal agencies that they could not object to a sale unless an undersecretary personally put the objection in writing. This is like requiring the Postmaster General to personally forward your mail.

A Pentagon expert told me that this requirement is “outrageous,” because even formal license applications–which are more important than notices–are handled by mid-level personnel. David Tarbell, a senior Pentagon official, complained in a memo that the White House seemed to want to “ensure that no (or very few) objections would ever be received.”

The Energy Department has not objected to a single sale, because staffers there believe they would not get an objection up their chain of command within ten days. Even Federal agencies that have persisted have been unsuccessful. In February, the American arm of Siemens, the German electronics giant, announced that it wanted to sell a powerful computer to the Russian Academy of Sciences. The Pentagon objected because the Academy’s institutes still design nuclear warheads and missiles. But the Commerce Department returned the objection because an undersecretary hadn’t signed it. The Russians got the machine, and the Pentagon got stiffed. Only the tiny Arms Control and Disarmament Agency has been nimble enough to lodge effective objections.

Most recently, the Commerce and Energy Departments are trying to drop more than twenty countries that are now covered by the law. They want to allow supercomputer exports to Algeria, a terrorist-plagued state that is planning to process plutonium. The two departments also want to drop restrictions on countries like Vietnam and Vanuatu, which have no export controls, so technology could be easily diverted to other countries.

For all this, the computer companies would gain relatively little. The countries on the list of risky destinations account for only five percent of the potential market for supercomputers. Is it worth the risk, if someday American soldiers and sailors face Russian- and Chinese-supplied missiles in the Persian Gulf? Unless the Clinton Administration follows the intent of the law, those missiles will be designed with American help.

Proliferation Tango

The Progressive
April 1998

[…] Gary Milhollin, founder of the Wisconsin Project on Nuclear Arms Control, […] is a complicated character. One of the main advocates dedicated to exposing and stopping the spread of weapons of mass destruction, he is respected by colleagues in the anti-nuclear movement for his groundbreaking work. At the same time, with his hawkish views on U.S. foreign policy, he is friendly with the national security establishment. […]

To read the complete article, click here:  Proliferation Tango

Arrow Anti-Tactical Ballistic Missile System and Ofek Satellite Program Suffer Setbacks

According to a report in Jane’s Defence Weekly, development of the Arrow-2 “Chetz” antitactical ballistic missile (ATBM) system has fallen at least one year behind schedule due to bureaucratic red tape and a fire at its production facility in April 1997.

A Israeli Knesset member recently disclosed that major project management errors had been discovered which have slowed the development of the Arrow. In addition, the Israeli Ministry of Defense conceded in January 1998 that the fire and explosion at an Israel Aircraft Industries (IAI) plant, where much of the Arrow work is conducted, caused about $30 million in damage and set back the program six to nine months.

The Arrow-2 is a two-stage, solid-fuel missile, and is a key component of Israel’s program to develop an anti-missile shield linked to Israeli military surveillance satellites that are launched by IAI’s Shavit rockets. The Arrow is a joint project of Israel and the United States.

News of the delay comes on the heels of successful tests in 1996 and 1997. The inaugural intercept test, and the third overall, of the Arrow-2 was conducted on August 20, 1996. During this test, the target – a modified Arrow-1 missile with a radar cross section and payload designed to match that of a Scud – was fired from a launch platform in the Mediterranean. The Arrow-2 was then launched from the Israeli Air Force Test Range just south of Tel Aviv. Within 45 seconds, the Arrow-2 locked on and destroyed the target. The intercept was designed to test the capability of the Arrow-2’s missile guidance and control system, its ability to receive inflight updates from the fire control center, and to test its tracking and destruction of a target.

In its fourth test launch, in March 1997, the Arrow-2 scored a direct hit against a missile target, although, according to a report in Aviation Week and Space Technology, its fragmentation warhead failed to detonate due to a sensor malfunction. Despite the problem, U.S. and Israeli officials said the “overwhelming majority of test objectives were achieved” because the Arrow acquired, locked on, intercepted and destroyed the target. The March test also employed for the first time as an integrated system both the “Green Pine” fire control radar and the “Citron Tree” battle management center. “Green Pine” is manufactured by Israel’s Elta Electronics Industries and the fire control system is produced by Tadiran.

A month later, U.S. Secretary of Defense William Cohen and Israeli Defense Minister Yitzhak Mordechai agreed to continue their cooperation on the Arrow program, with the U.S. pledging a 25% increase in its annual $200 million contribution.

Arrow’s next test, in August 1997, was not successful. Seconds after launch, the missile veered from its planned flight path and had to be destroyed. According to a report in Jane’s Defence Weekly, the Israeli Ministry of Defense said the problem stemmed from an “irregular functioning of one of its subsystems,” but stressed that the aborted test would “not affect the timetable to complete the development and equipping of the Arrow system.”

Despite the failure, Israeli TV announced in November 1997 that the Arrow would be “partly operational” by mid-1998. Although the Ministry of Defense and IAI refuse to comment on the report, there is speculation that the Arrow is being readied in case Iran is successful in its bid to develop long-range missiles.

On the space front, Israel secretly launched the Ofek-4 spy satellite in January 1998, but it failed to reach its proper orbit, and was expected to burn up reentering the Earth’s atmosphere. Ofek-4 was set to replace the Ofek-3 satellite, which has been operating nine months longer than planned. Loss of the Ofek-4 means Israel will soon be without any reconnaissance satellites to monitor activities in Iran and Iraq.

The Ofek-4 satellite program is one of Israel’s most ambitious projects, and several of its top defense companies are involved: Elisra built the video compression, Elop manufactured its cameras, Elbit supplied the computer, Tadiran the communications, and Rafael provided Ofek’s electricity and power.

The Pitfalls of Nuclear Trade with China

By Gary Milhollin

The Boston Sunday Globe
February 22, 1998

China’s export record and its refusals speak of the need for US safeguards.

Congress is now debating whether to approve President Clinton’s recent agreement allowing nuclear trade with China. Will the deal encourage China to continue exporting weapons of mass destruction, as its opponents fear, or will it create American jobs and preserve U.S. security, as its backers claim?

Both sides agree that China’s nuclear export record is bad. Since 1980, China has supplied billions of dollars in nuclear, chemical and missile technology to South Asia, South Africa, South America and the Middle East. The shipments have flowed side-by-side with China’s promises to stop them.

In 1992, after the United States caught China giving missile assistance to Pakistan, China promised to stop such sales. The State Department then dropped trade sanctions against the offending Chinese companies. But it had to impose them again in 1993 because China was caught helping Pakistan again. The State Department lifted the sanctions once more in 1994, when China made a second promise to stop, but the missile shipments soon resumed, and they have continued.

China is also helping Pakistan to build its own missile plant, which will produce rockets powerful enough to hit Indian cities with nuclear warheads. State acknowledges the shipments are going on, but has chosen not to apply sanctions because it is following a policy of “engagement.”

China has also given Pakistan a tested nuclear bomb design. As recently as 1996, China supplied magnets specially designed to boost Pakistan’s production of atomic bomb fuel. If China’s aid were subtracted from Pakistan’s nuclear and missile programs, the programs would not exist.

The Clinton administration acknowledges all this, but argues that it has “seen a marked positive shift” in China’s nuclear export behavior. The administration points out that since May 1996, when U.S. diplomats confronted China over the magnet sale, China has stopped supplying nuclear components to plants not subject to international inspection.

Moreover, the administration says, China has promised to phase out its nuclear cooperation with Iran. Beijing planned to sell Tehran a plant to enrich uranium to nuclear weapons grade. The plant had no civilian use, and was an evident step toward the bomb.

China now says it will drop this deal, but it is fair to ask why China would agree to such an outrageous sale in the first place. Were the Chinese just pulling Uncle Sam’s beard, to see how many concessions he would deliver? And if America rewards China for not selling such a plant, how is that different from giving in to blackmail?

To open nuclear trade, President Clinton must certify that China is no longer helping other countries to make nuclear weapons. By ending its secret nuclear sales to Pakistan, and by phasing out its help to Iran, China has shown that it meets this litmus test, the administration says. Thus, it makes sense to reward China’s progress, especially if it means creating American jobs. The State Department calls the pact a “win-win situation.”

But what China hasn’t promised is even more important. Beijing has refused to cut off aid to Pakistan’s nuclear program: China promises only to refrain from shipping things to secret plants. Training Pakistan’s nuclear experts, and selling components that can be diverted from an inspected plant to a secret one, will continue. China has also refused to curb its missile exports to Pakistan and Iran, and refused to stop helping Iran to make poison gas. If China were truly mending its ways, critics say, it would stop these exports too.

The jobs issue was clearly paramount in the administration’s calculations. Increased trade has been Clinton’s main goal in foreign policy. So what’s in the deal for the American worker?

Westinghouse, which led the campaign to open trade, argues that China will buy up to sixty billion dollars worth of reactors over the next fifteen years. Each twin-reactor order would create 5,000 jobs, including 1,600 in Pennsylvania, according to Westinghouse estimates.

But that seems unlikely. China has said that most of the jobs will be Chinese. In September, a high Chinese official explained how China plans to buy its reactors. There will be three criteria: China must be offered the latest reactor design, the sale must be on credit, and the seller must teach China how to build the reactor on its own.

The last point is vital. In February, Zhao Chengkun, dean of China’s Nuclear Power Institute, laid out China’s plans for dealing with Westinghouse. China plans to start with the latest Westinghouse design, the advanced AP600 reactor, for which U.S. taxpayers shouldered half the development cost. Then, China and Westinghouse will jointly develop a Chinese version, the “China AP600.” According to Zhao, this will “facilitate independent design and domestic manufacturing.”

The “construction…should be done mainly by the Chinese,” Zhao said, under China’s policy of “international cooperation, with China taking the lead.” He estimated that China would “produce at least 70 percent of the equipment.” During construction, “a few Westinghouse experts may come to China to provide technical assistance on new technologies,” he said, but “the next century of reactors in China shall be designed and built in China and be economically competitive.”

No one should be surprised by this strategy. It is the same path that Japan and France chose decades ago. When those two countries were faced with building a string of new reactors, each bought an American plant to get the latest design. Then each country built the rest of its reactors on its own. If China doesn’t do the same, it will spend billions of dollars it can ill afford to squander.

France, in fact, is offering China the Westinghouse design that France originally imported from the United States. Framatome, the French reactor builder, uses Westinghouse technology under a U.S. license. If Congress approves the trade pact, Westinghouse will be competing in China against its own technology. This makes sound hollow the recent pronouncement of Michael Jordan, the Westinghouse chief executive officer, who told the press in October that “Westinghouse is perfectly delighted to have the opportunity to compete at long last with our foreign rivals in China’s $60 billion market for nuclear power.”

Jordan also forgot to mention that Westinghouse is leaving the business. After leading the charge to get the China agreement through the White House, the 111-year-old company became the CBS Corporation. In November, its management sold its power generation business to Siemens AG of Germany for $1.53 billion, and what’s left of its nuclear business will probably be disposed of this year to another foreign buyer.

Opening trade with China could make Jordan’s nuclear unit worth more on the auction block, which helps to explain his lobbying effort. Any American jobs produced by the pact probably will be few and short-lived.

The final question is whether China can or will control its exports. China promulgated its first regulation on nuclear trade only last fall, in a move that produced mostly skepticism. A leading defense authority in India observed that the new rule will be administered by the same Chinese government institutions that handled the nuclear sales to Pakistan. Thus, he concluded, “There is no guarantee that nuclear exports will not take place in the future.”

And there is the question of “dual-use” equipment. These are the high-accuracy machine tools and other sensitive items needed to make nuclear weapons, but which also have civilian applications. All the nuclear supplier states except China regulate their sale. Until China can control these items, it cannot truthfully assure the United States that it is not helping other countries build nuclear weapons. China is not expected to control dual-use items until mid-1998, at the earliest.

Congress would be prudent to require three things before allowing the nuclear pact to take effect. First, the President should certify that China can control its exports of dual-use technology. Until China can do so, there can be no confidence that Chinese equipment is not helping other countries build the bomb.

Second, the President should certify that China is no longer selling the means to make missiles and poison gas. China should not be able to receive American nuclear technology with one hand and spread missile and poison gas technology with the other.

Third, China should stop giving nuclear aid to Pakistan and other countries that do not open all their nuclear plants to inspection. If China wants the benefits of nuclear trade, it should accept the burdens of being a responsible nuclear supplier.

If Congress imposes these conditions, nuclear trade with China could make the world safer. Without them, weapons of mass destruction will continue to spread.