Special Report: Clinton administration failed to monitor China's use of missile-technology exports

A special Salon report reveals that the Clinton administration failed to monitor China's use of U.S. missile technology exports, while ignoring the Pentagon's dire warnings.

By Murray Waas
May 29, 1998 11:00PM (UTC)
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The Clinton administration between 1993 and 1996 allowed numerous exports of potential ballistic-missile technology to the Chinese government despite China's refusal, in some instances, to allow inspections to assure that the technology was only being used for civilian purposes, according to classified documents and four U.S. government officials.

Moreover, as early as 1993, a classified Pentagon study raised questions about the possible diversion of U.S. technology by the Chinese military for China's ballistic-missile program, according to the documents and sources. Defense Department officials privately charge that the Clinton administration ignored its warnings regarding the potential diversions.


U.S. oversight of high-technology exports to China has been hampered by the fact that there has been no formal arrangement with China to allow for inspections, according to a Clinton administration official: "We don't have an agreement with China for postshipment verification checks."

Two senior administration officials told Salon that the Clinton administration has been quietly discussing with the Chinese the possibility of reaching an agreement to allow for inspections. "We have made it clear to them that our ability to license dual-use technology in the future will be in part dependent upon our ability to satisfy ourselves through our postshipment checks," said one senior official.

Last week, House Speaker Newt Gingrich and Senate Majority Leader Trent Lott announced that they were going to coordinate congressional investigations of the Clinton administration's China policy. Congressional Republicans demanded an investigation after the New York Times disclosed last week that the Clinton administration had granted a waiver to Loral Space and Technology Ltd. on February 18 to export communications satellite technology to China that might potentially assist China's ballistic-missile program.


Loral's chairman, Bernard Schwartz, has personally been the single largest campaign contributor to the national Democratic Party during the Clinton presidency, making $1.1 million in contributions in recent years.

When Loral was granted the waiver in February by the Clinton administration, the aerospace corporation was under investigation by the Justice Department for providing unauthorized assistance to China's ballistic-missile program. Justice Department officials were concerned that a waiver might make it tougher to bring a potential criminal prosecution against Loral.

Justice Department officials were reportedly not properly consulted before the administration's waiver decision. Loral has denied any wrongdoing, while the Justice Department continues its investigation.


In interviews with Salon, Clinton administration officials asserted that their policy regarding exports of "dual-use" technology -- advanced technological exports that have both civilian and military applications -- has been little different than that of the Reagan and Bush administrations. They also pointed out that the Chinese routinely denied inspections to the Bush administration. The officials contended that Republican criticism of Clinton's China policy has been motivated by partisanship.

Ironically, during the 1992 presidential campaign, then-candidate Bill Clinton accused the Bush administration of carrying out a failed foreign policy by allowing dual-use technology to Iraq -- prior to the Iraqi invasion of Kuwait -- that had assisted Saddam Hussein in his efforts to develop ballistic missiles, and chemical, biological and nuclear weapons. During the '92 campaign, Clinton also criticized the Bush administration for its China export policy.


The flow of high-technology exports from the U.S. to China in recent years has been significant. Between 1990 and 1993 -- during both the Bush and Clinton presidencies -- the Commerce and State Departments approved a total of 67 dual-use technology export licenses, worth more than $530 million, to China, according to an April 1994 report by the General Accounting Office, the congressional watchdog agency. More recent figures have not yet been made public by the Clinton administration.

A highly classified 1993 Pentagon study circulated to other government agencies raised questions about the potential diversion by China of some U.S. technology exports for military purposes, according to documents and sources. The study, prepared by the Pentagon's Defense Intelligence Agency, cited numerous examples of potential diversion of U.S. technology for use in China's ballistic-missile program.

The DIA report said that many of the technology exports' "end users" were connected to the Chinese military. The study pointed out that the Chinese military often oversees facilities and factories that produce both civilian and military goods. Further, it has been difficult for U.S. intelligence agencies to determine which companies in China are privately owned and operated and which are adjuncts of the Chinese military, the report pointed out.


Long after the shipments were made, U.S. intelligence agencies determined that a number of the end users of U.S. technology were in fact involved in the Chinese military's program to modernize its ballistic missiles.

The DIA report led to a debate about ballistic-missile technology exports to China among Defense, State and Commerce Department officials.

But the concerns raised by the DIA report were largely dismissed because of the ambiguity of the evidence, three officials recalled in interviews. A senior State Department official said the DIA's conclusions were "flimsy and speculative." According to the official, evidence in the Pentagon study had "hardly constituted a high enough threshold to consider changes in policy."


Shortly after the DIA completed its study, the CIA's nonproliferation center also weighed in with its own classified report on the same subject, according to documents and sources. The CIA concluded that the Pentagon study had overstated the technology diversion risk.

Two officials said they believed that the Pentagon's intelligence on export controls was sometimes skewed because of the Defense Department's historical opposition to exports: "They don't even want a personal computer that anyone can buy at Circuit City sent overseas," said one official.

A midlevel Pentagon official countered in an interview, however, that the dispute could have been resolved had the Clinton administration pressed China to allow for inspections of the end use of the U.S. technology.

But when the issue of inspections was raised by the U.S. embassy in Beijing, according to documents and sources, China simply refused to allow some inspections, despite the fact that the Chinese government had agreed in some instances to inspections as a condition for the technology exports. After China's refusal to allow the inspections, the State Department did not press the issue.


An April 1994 report by the Congressional GAO concluded -- as did the DIA study -- that efforts to monitor U.S. exports to China were "hampered by Chinese government reluctance to co-operate" with surveillance efforts. As a result, the report said, "The U.S. Embassy conducted no post-shipment verifications related to missile technology."

The U.S. government "cannot ensure that such U.S. exports to the People's Republic of China are kept from sensitive end users," stated the GAO report. "Our review indicates that a U.S. end-use check program to monitor license conditions has only marginal effectiveness for exports to China."

A single official in the U.S. embassy in Beijing was responsible for conducting prelicense checks, the report said. Making matters even worse was the fact that this embassy official's role has been "split between conducting checks and his trade promotion activities. The export controls function was secondary to the trade promotion role."

In 1996, two years after the GAO report, Loral chairman Bernard Schwartz cosigned a letter with the chairman of Lockheed Martin Marietta asking that President Clinton weaken even further controls of satellite-technology exports to China and other troubling nations. The chairmen of the two aerospace concerns asked Clinton to transfer approval of the satellite exports from the State Department to the Commerce Department.


Historically, the Commerce Department has favored more lax export controls, because its primary goal has been to promote overseas trade. The State Department, however, normally considers several foreign policy issues, such as nonproliferation and human rights concerns, as well as the promotion of overseas commerce.

"By making possible real 'one stop shopping' for all export authorizations related to commercial communications satellite systems, your decision will greatly enhance the ability of U.S. manufacturers to retain our global competitiveness," the chairmen of Loral and Martin Marietta wrote Clinton.

Over the objections of both the State and Defense Departments, sources said, President Clinton decided in favor of the aerospace corporations, transferring the primary approval of satellite-technology exports to Commerce.

Then, in February, Clinton signed the controversial export waiver for Loral.


Late last week, the White House declassified some records regarding the waiver in an effort to show that Clinton's decision had more to do with foreign policy than with campaign contributions from Loral's chairman.

A key document made public was a Feb. 12, 1998, memorandum to President Clinton from his National Security Advisor, Samuel R. Berger, which related that the State Department, Defense Department, the Arms Control and Disarmament and the National Security Council had all supported the waiver. Berger's memorandum underscored the importance of trade with China, observing that the Loral deal would "help maintain the competitiveness of U.S. satellite exporters in a most important satellite market."

A senior administration official, however, said it was hardly a case of the president simply doing what the bureaucracy wanted him to. "Despite the effort by the White House to distance the president from his own policy, this has been a president who has been fully engaged on this issue," said the official. "It's yet another example of them placing trade policy ahead of nonproliferation concerns."

Murray Waas

Murray Waas is a frequent contributor to Salon.

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