Lax Security in Satellite Exports Points to Risks

Repeated snafus and breakdowns have marred the Clinton administration’s system for safeguarding some of America’s most sensitive technological secrets in the export of U.S. satellites to China, according to government officials and documents.

Government rules call for close and continued oversight when companies ship high-tech products that might give a foreign power new military capabilities. But the recent history of satellite exports to China shows regular slip-ups in a system that the administration has defended as fully adequate to protect national security.

Specifically, the government failed to require Pentagon export-security monitors at seven of the 12 launches that occurred during President Clinton’s watch--including one as recently as May--although officials said they believe that a monitor should be present for each event.

And in five of the launches, the monitors now required by government regulations were not on hand for prelaunch planning meetings between U.S. and Chinese teams, though some experts consider these meetings even more critical to protecting secrets than the launches themselves.

These and other failures come as critics--who include congressional Republicans, some defense hawks as well as some liberal nonproliferation activists--are charging that the administration has relaxed export controls too far in its drive to spur greater exports and to strengthen U.S. diplomatic “engagement” with China.

Some critics assert as well that, with the nation’s Cold War vigilance receding into the past, government watchdogs are spread far too thin. The tiny Pentagon agency that watches technology transfer has a total staff of 117 to handle 900 applications a day, officials say.

And critics contend that the new system for controlling militarily sensitive exports relies too heavily on voluntary compliance by U.S. companies, which have much to gain from good relations with Chinese officials who can help them win a piece of that country’s multibillion-dollar telecommunications market.

The government relaxed export controls in 1988, although exporters have been required to obtain special presidential waivers for launches of U.S. satellites atop Chinese rockets since the United States imposed sanctions after the 1989 Tiananmen Square massacre of dissidents by Chinese troops.

It is not clear whether any valuable military information has fallen into Chinese hands in the course of the 17 launches since controls were relaxed. Critics fear that information from satellite companies could advance the Chinese ballistic missile program, as the technologies of commercial rockets and missiles are similar.

Even if no information has been compromised, however, the integrity of the U.S. technology-control system remains crucially important at a time when all sides agree that the United States, with its technological sophistication, has more to lose than any other nation.

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The current examination of satellite exports began with questions about whether Clinton, in giving special permission for a Loral satellite to be launched in China earlier this year, was influenced by the political contributions of Loral Chairman Bernard L. Schwartz, the Democrats’ largest donor during the 1995-96 campaign cycle.

While 10 congressional panels have studied this and related issues, the Justice Department has been conducting a separate criminal investigation of whether Loral gave the Chinese improper assistance as it learned what went wrong in the February 1996 crash of a rocket carrying one of its satellites.

Some lawmakers are demanding a regulatory clampdown. “From what we’ve seen so far, it looks like their attitude is far too relaxed,” said Rep. Curt Weldon (R-Pa.), a member of a House select committee that is gearing up to study the issue. “I think we’re going to find that the policy needs to be grossly tightened.”

The system governing satellite exports to China requires exporters to report to the State Department in detail the information they intend to share with the Chinese. Separately, they must write a detailed plan for the Pentagon’s Defense Technology Security Agency concerning how they intend to ensure that sensitive information will not be compromised.

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Satellite exporters must pay the salaries of Pentagon security monitors who supervise all meetings between U.S. and Chinese officials. The prelaunch arrangements typically take about two years. When the satellite arrives in China, it takes four to six weeks to fit the craft to the rocket and make final preparations.

Under the rules, the satellites are kept in sealed containers during shipment and held under armed guard while in China.

In general terms, American satellite engineers are permitted to talk to the Chinese about how the satellite is to be physically attached to the nose of the rocket, but they cannot discuss how the rocket and satellite function.

U.S. officials acknowledged there are powerful economic incentives for U.S. companies to help the Chinese improve their rocketry. A senior defense official said the system “depends to a great extent on the cooperation of the private sector. . . . If companies want to circumvent the law, they have plenty of opportunity to do so.”

In addition to that, government officials conceded, engineers have a natural desire to want to pass along information. “They’re problem-solvers. They want to share information and share solutions,” the defense official said.

Pentagon monitors are supposed to supervise all meetings between U.S. and Chinese engineers, to listen in on any phone calls between the two sides and to approve the contents of e-mail or fax messages before they are sent.

But because of bureaucratic confusion, the government did not require monitors for the launch of seven satellites.

On three of these, monitors ultimately were present at the launch. But in two instances, it was at the contractors’ request rather than the government’s. In the third case, the monitor happened to be at the launch site because of a previous assignment.

Some Republican lawmakers asserted that the government did not send the monitors because of its casual attitude about guarding secrets. Administration officials said that the lapses occurred because of bureaucratic mix-ups from 1994 to 1996, when the administration was shifting primary oversight responsibility for commercial satellites from the State Department to the Commerce Department.

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Administration officials said it is their policy to require a monitor for every license that is issued for export of a satellite to China. Some Republicans in Congress said that having a declared but unwritten policy is not sufficient. They are pushing to have the rule spelled out in regulation or statute.

Another of the export-control system’s safeguards is contained in rules that require the government to seek the views of various agencies before the release of potentially sensitive information to the Chinese.

But Commerce officials conceded that they slipped up on this obligation in 1995, when they gave Hughes clearance to give the Chinese their analysis of what caused the crash of a rocket carrying Hughes’ Apstar II satellite. Such an analysis is considered sensitive because it could get into a discussion of rocketry, which is militarily sensitive and forbidden.

The report should have had a special license from the State Department, which regulates weapons sales, and input from the Pentagon. But a mid-level Commerce official considered the report inoffensive and approved it without seeking other clearances, officials said.

Administration officials, while asserting that no sensitive information was lost, acknowledged that this was a slip-up.

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To ensure that the Chinese never have an opportunity to tamper, export rules provide that U.S. officials have sole custody of satellites and unrestricted access to any debris generated by a crash.

But this provision has been open to question since a Chinese Long March rocket carrying a satellite built jointly by Hughes and Loral blew up just after launch in February 1996. Chinese officials denied Americans access to the site for five hours, saying it was too risky.

U.S. officials acquiesced. But when they arrived at the site, they could not find two computer chips used to encode satellite communications. These so-called encryption chips are used to keep outsiders from sending signals that could move--and destroy--satellites.

National Security Agency officials said in a report that they considered it “highly unlikely” that the chips survived the crash. But U.S. officials never pressed the question of immediate access after launch failures with the Chinese, and it remains unresolved.