Los Angeles Times
January 23, 2000, p. M5
Commerce Dept. Works to Allow the Export of a Tool
Like the Ones that Prompted a Justice Dept. Indictment.
Just over two months ago, CATIC, the Chinese military and aviation giant, was indicted for diverting American machine tools to a Chinese cruise missile and military aircraft plant. The powerful machines had produced parts for the B-1 strategic bomber and the MX nuclear missile, and CATIC was charged with lying to get the machines out of the U.S. in 1995 by promising to restrict them to civilian use.
Yet with the ink barely dry on the indictment, the Clinton administration has begun to undermine it. According to U.S. officials, the Commerce Department wants to allow one of CATIC’s sister companies to buy the same kind of American machine tool that CATIC is accused of diverting. “Even in the face of an indictment,” said one government official familiar with the case, “there is no behavior change. It is still business as usual.” If the deal goes through, it will show that there are no real limits on high-tech exports to China.
The export in question is a five-axis milling machine, a computer-controlled marvel similar to the machines listed in CATIC’s indictment. It is capable of making high-precision parts for China’s next generation of fighters, bombers and missiles.
A company in Milford, Mass., named Bostomatic has requested permission to sell the machine to China’s Xian Aero Engine Co., which makes engines for China’s military aircraft, including the nuclear-capable H-6 strategic bomber. Bostomatic was purchased last year by the Agie Charmilles Group, a Swiss concern. According to U.N. inspectors, 11 of Agie’s machine tools were found at five of Saddam Hussein’s leading nuclear weapon and missile sites in 1992. And in January 1999, Gen. Alexander Zdanovich, a spokesman for Russia’s foreign intelligence services, said that Agie also had supplied Iran with equipment for making liquid-fueled ballistic missiles.
Why does the Commerce Department want to allow a suspect Swiss conglomerate to sell a sensitive American product to a Chinese military aircraft plant? The Commerce Department is supposed to protect the American public from such risks but, instead, is trying to promote trade no matter what the cost to national security.
The Pentagon is fighting the export license. The same officials who tried to block the export of the machines that CATIC diverted in 1995 are objecting to this one. The officials were right the last time, but got overruled. Xian Aero Engine is pledging to use the milling machine only to make civilian aircraft. That is what CATIC promised. Since Xian and CATIC are part of the same state-owned organization, no one should be fooled.
Nor should anyone be fooled by the CATIC indictment. It took more than four years for the Justice Department to get around to it, and Justice is dragging its feet in a string of other apparently illegal exports of U.S. high technology.
In 1996, Silicon Graphics Inc. of Mountain View, Calif., sold four supercomputers to one of Russia’s leading nuclear weapon laboratories without the required export license. The U.S. computers were 10 times more powerful than anything the Russians had. After the deal was done, Russia’s nuclear chief told the press that Russia would start designing its warheads with simulated explosions using the American computers. There is considerable evidence that Silicon Graphics broke the law. It knew it needed a U.S. export license and did not get one. The case was sent to a a federal grand jury in 1997, where it has languished.
Also in 1996, Silicon Graphics sold a powerful supercomputer to China’s Academy of Sciences, which develops nuclear warheads and long-range missiles, and IBM sold an equally powerful supercomputer in 1997 to the Indian Institute of Science, India’s leading missile research site. Neither Silicon Graphics nor IBM bothered to obtain the required export licenses.
The Cox committee on Chinese spying found that Hughes Electronics and Loral Space and Communications, two big American satellite makers, “deliberately acted without the legally required licenses and violated U.S. export control laws” when they helped China improve its rockets in 1995 and 1996. To boost their profits, these U.S. firms gave China technology that could, in the committee’s words, increase “the reliability of all PRC ballistic missiles.” A federal grand jury has had these cases for more than a year and a half.
The message from these cases is the same: Get the exports out, and don’t worry about the law. The Justice Department probably won’t indict you, and even if it does, the Commerce Department will help you get what you need.