Sanctions Busting: Technology Two-Timing

The Asian Wall Street Journal
March 19, 2001

After U.S. jets bombed anti-aircraft installations in Iraq last month, the American government was quick to explain that the sites had become a growing threat to its pilots, who must patrol them daily to keep Saddam Hussein in check. What it did not say, however, was that the potency of those sites has been increased by a company that owes its success to American technology, and is seeking to import more.

U.S. intelligence sources confirm (despite a denial from the Chinese government) that Huawei Technologies, one of China’s leading makers of communication networks, has helped Iraq outfit its air defenses with fiber optic equipment. The assistance was not approved by the United Nations, and thus violates the international embargo against Iraq. Unless Huawei leaves Iraq and takes its equipment with it, the United States should force American companies to cut Huawei’s technology lifeline.

Motorola would be first. It has applied for a U.S. export license to teach Huawei how to build high-speed switching and routing equipment — ideal for an air defense network. The equipment allows communications to be shuttled quickly across multiple transmission lines, increasing efficiency and immunizing a network from air attack. Motorola proposes to provide this know-how to Huawei free of charge, in the hope of later selling the large number of chips needed to make the equipment work. Huawei could then export the equipment to Iraq.

Other American firms have been selling Huawei the supercomputers and other technology it needs to develop high-speed communications. During the Clinton administration, the U.S. Commerce Department allowed Huawei to buy high-performance computers worth $685,700 from Digital Equipment Corporation, $300,000 from IBM, $71,000 from Hewlett Packard and $38,200 from Sun Microsystems. In addition, Huawei got $500,000 worth of telecommunication equipment from Qualcomm.

Still other American firms are transferring technology to Huawei through joint operations. Last year, Lucent Technologies agreed to set up a new joint research laboratory with Huawei “as a window for technical exchange” in microelectronics. AT&T signed a series of contracts to “optimize” Huawei’s products so that, according to a Huawei vice president, Huawei can “become a serious global player.” And IBM agreed to provide switches, chips and processing technology. According to a Huawei spokesman, “collaborating with IBM will enable Huawei to . . . quickly deliver high-end telecommunications to our customers across the world.” Does IBM know that one of these customers may be Saddam Hussein?

As a result of deals like these, Huawei’s sales rocketed to $1.5 billion in 1999, to $2.65 billion in 2000, and are projected to reach $5 billion in 2001. These are extraordinary heights for a company that began in 1988 as a $1,000 start-up. Real growth did not begin until the mid-1990s, when American help started rolling in. Texas Instruments started its assistance in 1994 and by 1997 had set up laboratories to help Huawei train engineers and develop digital signal processing technologies. Also in 1997, Motorola and Huawei set up a joint laboratory to develop communication systems.

This sudden flood of help was unleashed by the Clinton administration, which decided in 1994 to remove requirements for prior government approval of the export of fiber optic, switching and telecommunication transmission equipment. The first President Bush had resisted pressure from AT&T, Lucent and US West to decontrol fiber optics, but Clinton freed up the technology over the objection of the National Security Agency, which argued that the widespread use of fiber optics would cripple its eavesdropping ability.

The U.S. General Accounting Office found that in the first two years after the decontrol, China bought large amounts of telecommunication equipment suitable for military command and control and intelligence gathering, as well as for civilian uses. It is highly likely that Huawei was one of the buyers.

The U.S. government has the means to defend its interests. First, the Commerce Department should deny Motorola’s export license. American technology should not go to a company that is violating U.N. sanctions and helping Iraq take better aim at U.S. Air Force pilots. Second, President Bush should invoke the 1992 Iran-Iraq Nonproliferation Act against Huawei. This U.S. law forbids the transfer of American technology to a company that helps Iraq acquire communication systems that “destabilize the military balance.” Under the act, such a company could not receive U.S. export licenses for two years.

Third, President Bush should ask the American companies that are cooperating with Huawei to cut off their assistance. Do American firms really want to aid Huawei’s illegal quest to outfit the likes of Saddam Hussein? And are they content to watch American pilots risk their lives to bomb things that they helped develop? It is folly to think that the United States can supply powerful technology to a country like China without eventually paying the price.

Ms. Motz and Mr. Richie are researchers at the Wisconsin Project on Nuclear Arms Control.