GENERAL SCOWCROFT ON CHINESE SATELLITE LAUNCHES -- (BY BRENT SCOWCROFT AND ARNOLD KANTER) (Extension of Remarks - June 09, 1998)

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HON. LEE H. HAMILTON

in the House of Representatives

TUESDAY, JUNE 9, 1998

[FROM THE WASHINGTON TIMES, JUNE 5, 1998]

(BY BRENT SCOWCROFT AND ARNOLD KANTER)

The last few weeks have seen an avalanche of melodramatic charges about American `technology transfers' to China and claims that these actions have enhanced the capabilities of nuclear missiles aimed at the United States. In combination with confusing--and confused--media reporting and inept responses by the Clinton administration, these accusations threaten both to do needless damage to important U.S. national security interests and to impede the investigation of serious allegations of wrongdoing.

A great deal hangs in the balance. The consequences, if these allegations are proven, would be substantial. But the costs of accusations which turn out to be ill-founded--if not reckless--also can be great. Nowhere is this more clear than in the case of our relations with China. Not only is the character of our strategic relationship with China of fundamental importance to U.S. national security, but that relationship also is at an unusually critical and formative state both bilaterally and with respect to larger issues ranging from North Korea to South Asia.

The investigative congressional committees that are being established will have the responsibility for sorting out this complicated affair. Meanwhile, however, the protagonists in this controversy need to cool the rhetoric, get some basic facts straight and identify the real issues before more harm is done to U.S. security, political and economic interests.

Much of the confusion arises from the fact that four different issues are being lumped together:

U.S. government waivers to permit American commercial satellites to be launched on Chinese space boosters.

The unauthorized transfer to China of technical information by two U.S. satellite manufacturers, Loral and Hughes.

Large campaign contributions to the Democratic
Party by Loral's chairman, Bernard Schwartz.

Alleged contributions to the Democratic Party by Chinese citizens with ties both to the Chinese military and the Chinese company that launches American commercial satellites.

The current controversy has its roots in the 1986 Challenger disaster. There was serious concern that the loss of U.S. launch capability that resulted from the ensuing moratorium on shuttle flights would jeopardize America's pre-eminence in space. The Reagan administration responded by adopting a policy that opened the way for U.S. commercial satellites to be launched on Chinese space boosters on a case-by-case basis. The sanctions imposed by the Bush administration following the Tiananmen Square massacre in June 1989 blocked satellite launches by the Chinese but included a provision for case-by-case presidential waivers.

Last February, the State and Defense Departments recommended, and President Clinton approved, such a waiver to allow a commercial communications satellite built by Loral to be launched into orbit by a Chinese booster. This was the eighth waiver--covering eleven launches--approved by the Clinton administration. Previously, the Bush administration approved three waivers covering the launch of nine satellites.

The satellites in question are civilian, not military. More important, no `technology transfer' is permitted in connection with these satellite launches, which are the space-age equivalent of having Federal Express deliver a package across the country. On the contrary, there are strict safeguards designed to confine Chinese access to the most basic information about the U.S. payload these rockets carry--for example, size, weight and other mating data needed to ensure that the satellite will fit on top of the rocket and can be boosted into the correct orbit. (The waivers in question relate to the application of Tiananmen sanctions--which are designed to punish the Chinese for human rights abuses--not the safeguards against technology transfer.)

In principle, these safeguards mean that the Chinese learn no more about the `package' they are launching than FedEx knows about the package it is shipping, and that no information is provided which would improve the capabilities of their civilian space boosters, much less their nuclear-armed missiles. The March 1996 transfer of responsibility for licensing commercial satellite exports from the State Department to the Commerce Department likewise should not have had any effect on the strictness or application of the safeguards because a separate State Department license typically is still required to permit the Chinese to launch U.S. satellites, and the Defense Department continues to review all proposed waivers to ensure they are in the national security interest of the U.S.

The Justice Department is investigating the unauthorized
transfer of information to China by Loral and Hughes in connection with a 1996 review of the explosion of a Long March rocket launching a U.S. satellite. Because of the virtual identity between these Chinese `space boosters' and military missiles, assistance to the former could lead to improvements in the latter.

Experts from Loral, Hughes and other companies became involved in this review at the insistence of the international insurance industry, which refused to insure more Long March launches until an `outside' team reviewed the Chinese analysis of, and remedies for, the malfunctions their rockets had been experiencing. Ironically, the Chinese initially resisted this proposal, and allowed the international team of experts to conduct their review only when they became convinced that these insurance problems would jeopardize their commercial space launch business.

According to news reports, a Pentagon agency has determined that the information which Loral and Hughes transferred to the Chinese caused `harm' to U.S. national security, but the nature and extent of whatever harm was done is not yet clear. The congressional investigating committees will try to get the answers to that question. What does seem clear at this point is that the Chinese government never requested information or other assistance from our government to improve the space boosters they use to launch satellites. What is even more clear is that in 1996 the U.S. government did not provide, or approve Loral and Hughes providing, information which would improve Chinese space launch or missile capabilities.

Indeed, Loral and Hughes are under investigation for unauthorized transfer of information. The Justice Department's reservations about the February 1998 satellite waiver stemmed not from the waiver itself, but from a concern about how it might affect a jury's psychology should Justice decide to prosecute these two satellite manufacturers for what they may have done in connection with their review of the 1996 Long March rocket failure.

According to news reports, Mr. Schwartz--Loral's chairman and CEO--is the largest single contributor to the Democratic Party. Loral also was the beneficiary of the waiver which President Clinton approved in February. In addition, Loral successfully sought (along with other U.S. satellite manufacturers), presidential approval for the transfer of authority over the licensing process from the State Department to the Commerce Department. Many have suggested a relationship between the Schwartz campaign contributions and these Clinton decisions.

The question not only is legitimate, but goes to the heart of the larger issue of the impact of campaign fundraising and contributions on the American political process. But even if suspicions prove correct, the fact remains that no `technology transfer' is authorized when Loral (or any other American) satellites are launched by Chinese rockets. Moreover, there is no current indication
that any of the laws, policies and other safeguards against such technology transfers were relaxed as a result of campaign contributions. The issue of whether campaign contributions influenced presidential decisions in this case is of profound seriousness and should be pursued by the congressional investigative committees, but appears at this point to be essentially unrelated to the issue of technology transfer to China.

Democratic fundraiser Johnny Chung reportedly has told investigators that he served as a conduit for political contributions from the Chinese government. Specifically, he claims that Liu Chaoying, who is an officer in the Chinese army and an executive in the Chinese company which (among its many business enterprises) launches satellites, gave him money with instructions to donate a portion of those funds to the Democratic Party.

If substantiated, these assertions could have serious implications. That said, it also should be noted that, provided the safeguards described above do their job, even if a quid pro quo were sought and given, a satellite waiver might work to the commercial advantage of Liu's company, but would not have contributed to China's military capabilities.

In sum, several of the issues being raised in the current controversy are real and serious. Others, particularly those related to charges that satellite launch waivers somehow enhanced Chinese missile capabilities, may be based on fundamentally mistaken premises. Key to making that determination is an assessment of the practical effectiveness of the safeguards policies and practices that apply to these satellite launches.

If careful analysis determines that these safeguards have substantially achieved their objectives, then the imposition of blanket prohibitions on satellite launches by China would largely miss the point. On the one hand, it would not deal with concerns about how campaign contributions--from Americans, to say nothing of Chinese--might influence government decisions in ways which produce commercial advantage. on the other hand, it could prove to be worse than redundant with the safeguards already in place, because it would both place American industry at a competitive disadvantage and do needless damage to our critically important relationship with China.

One fact, however, already is abundantly clear: A great deal is at stake in the answers to the questions being raised in the current controversy. It therefore is essential that we get it right--that all of the charges be thoroughly investigated, that penalties be levied where appropriate, and that remedial actions be taken where required. But we should let the congressional committees do their jobs before a rush to judgment that may harm rather than advance our interests.

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