Testimony: Supercomputer Export Controls – 1997

Testimony of Gary Milhollin

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

Before the House Committee on National Security

November 13, 1997

I am pleased to appear before this distinguished Committee to discuss supercomputer export controls. I am a member of the University of Wisconsin law faculty, and I direct the Wisconsin Project on Nuclear Arms Control, a research project here in Washington that is devoted to tracking and inhibiting the spread of nuclear weapons to additional countries.

Recent sales and their impact

In April, in testimony before the Subcommittee on Military Procurement, I described the recent sale by Silicon Graphics, Inc., which shipped four American supercomputers to Chelyabinsk-70, the second most famous nuclear weapon laboratory in Russia, without obtaining the required U.S. export licenses. Chelyabinsk claims to have developed the world’s most powerful hydrogen bomb and is roughly equivalent to our Lawrence Livermore National Laboratory. Silicon Graphics delivered the computers in the autumn of 1996, at virtually the same time that the White House was turning down requests from IBM and Hewlett Packard to sell computers of equal power to Chelyabinsk.

These machines multiplied by a factor of roughly ten the computing power available to the Russians. They will allow Russia to design nuclear warheads cheaper and faster through simulations and to design more accurate long-range missiles. Russia can also use the machines to do encryption, or to design advanced conventional weapons. Because the machines were shipped without an export license, and are located at a site that is closed to the outside world, Russia can put them to any use it wants. In effect, Russia will continue the nuclear arms race on computers made in America.

We have recently learned more details about another sale of American supercomputers. Russia’s leading nuclear weapon laboratory, Arzamas-16, secretly bought supercomputers from IBM. Arzamas is the Russian equivalent of our Los Alamos National Laboratory. It too is closed to the outside world. According to a report in the New York Times, Arzamas acquired a series of sixteen IBM processing units that each operate at around 275 million operations per second (MTOPS) and together will perform roughly 3.3 billion operations per second. Russia also appears to have received a second IBM machine, called the SP-2, that may operate even faster. These computers too were delivered without the required export licenses, apparently in violation of U.S. export laws. So the Russians can now design weapons of mass destruction at two different sites with supercomputers imported illegally from the United States.

In April I also pointed out that Silicon Graphics sold an even more powerful supercomputer to the Chinese Academy of Sciences. The computer was shipped in the spring of 1996, also without an export license. The computer was about twice as powerful as the ones sold to Russia. It performs approximately six billion operations per second.

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 torpedos, sonar for nuclear submarines, 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.

The new 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 machines to design lighter nuclear warheads to fit on longer-range and more accurate missiles capable of reaching U.S. cities.

Under investigation, or under the rug?

The Commerce Department has responded to these three cases only by saying that they are “under investigation.” But what, exactly, is there to investigate? The Silicon Graphics sale to Russia came to light almost nine months ago and the violation was clear. The computers required an export license if they operated faster than 2,000 MTOPS–which they did–and if they were sold to a military or nuclear site–which Chelyabinsk obviously is. Silicon Graphics had a duty to apply for an export license unless Silicon Graphics had affirmatively determined that the site was not military and was not nuclear, which Silicon Graphics did not do. Silicon Graphics thus violated the law, pure and simple. The Silicon Graphics sale to China was similar. The computer operated above 2,000 MTOPS and went directly to a buyer engaged in nuclear, missile and military work. It too needed an export license and did not have one.

The IBM system, like the ones sold by Silicon Graphics, operated above 2,000 MTOPS; thus, it required an export license if shipped to a military or nuclear site. Arzamas, like Chelyabinsk, is both military and nuclear. IBM, like Silicon Graphics, was required to ascertain whether the buyer was non-military and non-nuclear before making the shipment without a license, which IBM failed to do. IBM too seems to have violated the law.

There is no reason why the details of these cases should not be made public. The Russians know precisely what they got. Only the Congress and the American people are still in the dark. Given the gravity of the violations, and the flagrant way in which they occurred, this Committee should ask the Commerce Department to answer the following questions:

  • How many computers were shipped to Russia and China in these three cases and what were their operating speeds?
  • Were the computers installed by, or installed under the direction of, Silicon Graphics and/or IBM, as reported?
  • Is either Silicon Graphics or IBM still servicing these computers?
  • Does the Commerce Department think that these shipments did not require an export license?
  • Why haven’t the investigations been completed?
  • When will they be completed?

In my testimony in April, I pointed out that under the U.S. Export Administration Regulations, the burden is on the exporter to find out enough about the buyer to determine whether an exception to the license requirement is available. Silicon Graphics admits that it didn’t find out, but claimed the exception anyway. Its defense is that it didn’t ask enough questions. But that is no defense when you have an obligation to ask enough questions. Silicon Graphics either knew that its buyers were nuclear, missile or military sites, or it didn’t bother to find out. Either way, Silicon Graphics broke the law.

I have discussed this view of the export control regulations with career-level experts at the Commerce, Defense and Energy Departments. They all agree that it is correct, and that it is the basis upon which they presently administer export controls.

So why the delay? Why is nothing happening? Doesn’t the executive branch want to enforce the law? Or is the executive branch confused about what the law is? The phrase “under investigation” is beginning to mean “under the rug.”

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 case has been under investigation since then. When will that investigation end?

And on July 1, the press reported that yet another supercomputer 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 planned to develop the next generation of Chinese weapons with American equipment.

In September, our government announced that China had agreed to return the supercomputer. The Commerce Department claimed the result was a victory for the 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 this Committee.

The diversion of the Sun supercomputer was discovered only after this Committee 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.

Apparently, this case too is still “under investigation.”

I recommend that this Committee request a briefing on the status of all five of these cases. I also recommend that the Committee ask the General Accounting Office to evaluate the adequacy of the enforcement effort devoted to them and to a list of other recent cases that I have attached to my testimony. These are cases in which serious violations seem to have resulted in only a small fine, which an exporting company can simply consider a cost of doing business. If the executive branch lacks the will to investigate and prosecute export control violations, that fact should be established. If the executive branch lacks the personnel or the legal authority, then more resources should be committed and the laws should be strengthened.

Fixing a broken policy

The present policy on supercomputer exports is broken and needs to be fixed. In April, I recommended a change in the policy to the Subcommittee on Military Procurement. I am pleased that the full Committee concurred with my recommendation and amended the Defense Authorization Act. The amendment is now on President Clinton’s desk. If the President signs it, the amendment will help exporters and at the same time help slow the spread of weapons of mass destruction.

The amendment is a boon to exporting companies. The burden is low and the benefit is high. The exporter need only notify the government of the name of the prospective buyer before exporting a computer performing more than 2,000 MTOPS. Then the government has ten days to determine whether the buyer is suspect. In exchange for this minimal effort, the seller has the benefit of keeping its product out of the wrong hands. Only in the few cases where the buyer appears suspect will an export license be required.

The amendment is also a bargain for the government. Without processing license applications, the government can keep track of the foreign companies that are importing U.S. supercomputers. If a foreign buyer is suspect, the government can get more information on the sale simply by requiring a license application. If the buyer proves too dangerous, the sale can be denied.

The amendment applies only to tier three countries, so the number of inquiries will be small. According to Commerce Department records, only 91 computers operating above 2,000 MTOPS were sold to tier three countries from early 1996 to the spring of this year. That is an average of only two per week. This would not create anything remotely like the “bureaucratic logjam” claimed by the White House in its October 20 letter to this Committee. Surely the Commerce Department can handle two inquiries per week in order to stop American supercomputers from contributing to arms proliferation. Because the Commerce Department is only processing one tenth as many licensing applications now as it did before the end of the cold war, there should still be sufficient staff to do the job.

The next step

Our export control system has broken down. After slashing export controls to the bone, the Commerce Department is now ignoring or minimizing violations of the few controls that remain. We are facing either a lack of will or ability to prosecute what appear to be clear and flagrant violations of present law. With judicial remedies lacking, other avenues must be considered or there will be no sanction at all for violations.

Given the present circumstances, I urge this Committee to consider additional sanctions through legislation. The general principle should be this: No American company willing to undermine U.S. security by contributing illegally to foreign weapon programs should be allowed to contract with similar programs in the United States.

If Silicon Graphics and IBM illegally help Russia and China maintain their nuclear arsenals, these companies should not be allowed to help us maintain ours. Exclusion from the U.S. stockpile maintenance program should be part of the punishment for illicit exports by an American computer company. This Committee has ample power to accomplish that change. I don’t have specific legislative language in mind, but I’m confident that the Committee’s able staff could come up with a way to implement this general principle. Our national security is at stake. It is vitally important that the laws protecting it be enforced. If the executive branch won’t enforce the law, Congress should.

Appendix One to Testimony
There have been recent reports of what appear to be excessively lenient penalties imposed by the Department of Commerce for serious export control violations. To determine whether United States export laws are being adequately enforced, the General Accounting Office should evaluate the enforcement effort devoted to the recent actions against the following companies:

  • Allvac
  • New World Transtechnology
  • Doornbos GmbH
  • RMI Titanium
  • William A. Roessl
  • I.G.G. Corporation
  • Yuchai America Corporation
  • Sigma Chemical Company
  • Lansing Technologies Corporation
  • Dell Computer Corporation
  • Digital Creations Corporation
  • AAT Communications
  • Lasertechnics, Inc.
  • Advanced Vacuum Systems, Inc.