Testimony
of Gary Milhollin
Professor Emeritus, University of Wisconsin Law School
and
Director, Wisconsin Project on Nuclear Arms Control
Before the Subcommittee on International Security, Proliferation
and Federal Services
Committee on Governmental Affairs
United States Senate
November 7, 2001
I am pleased to appear before this distinguished
Subcommittee to discuss the effect of export controls on the
spread of mass destruction weapons.
I will cover four topics.
First, whether export controls are succeeding in
protecting our security; second, whether they are now being
weakened; third, whether violations are being punished; and
fourth, what could be done to make export controls stronger.
The first thing to recognize about export controls is
that they can work. They
can make it more expensive, more time-consuming and more
difficult for countries to develop mass destruction weapons.
They can also buy the time needed to turn a country off
the nuclear weapon path. Argentina and Brazil agreed to give up nuclear weapons in
part because of the costs that export controls imposed upon
them. And in Iraq,
documents discovered by the United Nations inspectors showed
that export controls on dual-use equipment seriously hampered
the Iraqi nuclear weapon team. Export controls also stopped Iraq's drive to make a
medium-range missile. In
addition, these controls are now hampering India's effort to
build an ICBM and will hinder the efforts of both India and
Pakistan to build more efficient nuclear warheads.
But despite these successes, American export controls are
now weaker than ever before in our history.
Today's export controls are but a shadow of what they
were in the 1980's, when Saddam Hussein was building his mass
destruction war machine and we were still in the cold war.
Since 1988, applications to the Commerce Department have
dropped by roughly 90%. Cases
have fallen from nearly 100,000 in 1989 to roughly 10,000 in
fiscal year 2000. The
reason is simple: fewer items are controlled, so fewer
applications are required.
When applications do come in, they are almost always
approved. In fiscal
year 2000, only 398 applications were denied – about four
percent of the total received.
Perhaps we could put up with this system in a time of
peace, but we now know that there are terrorist organizations
willing to do us harm, and that weapons of mass destruction in
their hands would threaten our way of life.
There is little doubt that the present system allows
American exports to endanger our security.
A recent example is American transfers to Huawei
Technologies, the Chinese company caught helping Iraq improve
its air defenses by outfitting them with fibre optic equipment.
The assistance to Iraq was not approved by the United
Nations, and thus violated the international embargo.
The history of Huawei shows how American exports to China
can wind up threatening our own armed forces.
At about the time when this company’s help to Iraq was
revealed earlier this year, Motorola had an export license
application pending for permission 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 reducing
the risk from air attack.
Motorola is only the most recent example of American
assistance. During
the Clinton Administration, the Commerce Department allowed
Huawei to buy high-performance computers worth $685,700 from
Digital Equipment Corporation, worth $300,000 from IBM, worth
$71,000 from Hewlett Packard and worth $38,200 from Sun
Microsystems. In
addition, Huawei got $500,000 worth of telecommunication
equipment from Qualcomm.
Still other American firms have transferred 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 sell Huawei 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.”
Did IBM know that one of these customers might 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.
These exports no doubt make money for American companies,
but they also threaten the lives of American pilots.
Huawei is not an isolated case.
From 1989 to 1993, the U.S. Commerce Department approved
six licenses for the export of equipment to China Precision
Machinery Import-Export Corporation (CPMIEC).
This company has supplied C-801 and C-802 anti-ship
cruise missiles to Iran, and, according to United States
intelligence, it shipped M-11 missiles to Pakistan in 1992.
It was sanctioned by the United States in August 1993 for
missile proliferation.
Among the items that the Commerce Department approved was
a computer workstation for simulating wind effects.
The ability to simulate wind effects is something the
designer of an anti-ship missile could find useful.
The missiles now pose a threat to U.S. ships and sailors
in the Persian Gulf as well as to commercial shipping.
And there is the China National Electronics Import-Export
Corporation (CEIEC). It
markets cryptographic systems, radars and mine detection
equipment, among other things.
In the mid-1990s, this company sold Iran the powerful
JY-14 surveillance radar – it can detect targets up to 300
kilometers away – that Iran integrated into its air defense
system. This radar
was probably built by using U.S. equipment.
Microwave research equipment, a very large scale
integrated system for testing integrated circuits, equipment for
making semiconductors, and computer equipment were all licensed
for export to this Chinese company by the Commerce Department
from 1989 to 1993. Only
last month, the Washington Times reported that Iran was
installing another JY-14 radar near Iran’s border with
Afghanistan.
The second thing to recognize is that export controls are
being weakened. In reaction to the attacks on September 11, one would expect
the United States to search for ways to strengthen controls on
the sales of dangerous commodities.
Instead, we are going in the opposite direction.
The United States has just dropped sanctions against a
long list of dangerous buyers in India and Pakistan that were
denied U.S. exports after those two countries tested nuclear
weapons in 1998. It
seems hard to believe, but our response to a terrorist attack on
American soil was to loosen our export controls and make it
easier for foreign countries to build weapons of mass
destruction.
I would like to describe the activities of some of these
companies. First is
Hindustan Aeronautics Ltd.
It produces major components for India’s largest
rockets, such as the Polar Satellite Launch Vehicle (PSLV).
Here is a photograph of some rocket nose cones that this
company makes.
Sanctions were also dropped against the firm Godrej and Boyce.
It too produces major components for India’s rockets,
such as engines, motor casings and heat shields.
At left is a photograph of a liquid-fueled rocket engine
that this firm produces.
India’s National Aerospace Laboratory performs rocket
and missile research. It does wind tunnel testing, ground vibration testing, and it
analyzed the first flight test of the Prithvi missile.
At right, I have included a photograph of a rocket model
wired for testing in this firm’s wind tunnel.
It is now free to import American dual-use items.
And there is Walchandnagar Industries, which
produces major components for uninspected Indian reactors that
make plutonium free for use in atomic bombs.
At left is a photograph of an end shield that this
company produced for the Madras-2 nuclear reactor. Walchandnagar
too was freed of export control sanctions.
I would like to emphasize that all of these firms are
unquestionably making weapons of mass destruction, and all of
them have just been cleared for American exports.
Third, there is the problem of enforcement.
A company that violates the law by not applying for a
license is rarely punished.
For example, in 1996 Silicon Graphics Inc. of Mountain
View, Calif., sold four supercomputers to one of Russia's
leading nuclear weapon laboratories without the required export
license. The U.S.
computers were 10 times more powerful than anything the Russians
had before. After the deal was done, Russia's nuclear chief told the
press that Russia would start designing its warheads with
simulated explosions using the American computers.
There is strong evidence that Silicon Graphics broke the
law. It clearly
needed an export license and did not get one. The case went to a
federal grand jury in 1997, where it has not been heard from
since.
In 1999, the Cox Committee found that Hughes Electronics
and Loral Space and Communications, two big American satellite
makers, "deliberately acted without the legally required
licenses and violated U.S. export control laws" when they
helped China improve its largest rockets in 1995 and 1996. To boost their profits, these U.S. firms gave China
technology that could, in the committee's words, increase
"the reliability of all PRC ballistic missiles."
These cases too went to a federal grand jury well over
three years ago and have not been heard from since.
I recommend that this Subcommittee ask the Department of
Justice to report on their status.
The United States can do a much better job of export
control. One
improvement would be to make the process transparent. We could start down that path by publishing a comprehensive
list of dangerous buyers. The
United States now publishes such a list in the Federal Register
but it is far too small. The
list for China contains only nineteen names.
Our government has claimed that a more extensive list
would reveal intelligence sources and set off diplomatic
conflicts. But it
is well-known that scores, if not hundreds of firms in China are
active in nuclear, missile and military production.
Their names are not secret.
It is silly to pretend we don’t know they exist.
The same is true of the Indian organizations I mentioned
above and scores of other Indian organizations like them.
The computer industry, in fact, would welcome a list of
dangerous buyers. Industry
would prefer to spend its scarce marketing dollars on buyers
that don’t present problems.
As a first step in building such a list, I have attached
to my testimony the names of 50 firms that are well-known parts
of China’s nuclear, missile and military complex.
I should point out that this is not a blacklist.
It is only a warning list.
These names have been selected on the basis of reliable,
unclassified information. I
recommend that Congress submit these names to the Department of
State, and ask for an opinion on whether the names should be
included on the published U.S. export warning list.
If the State Department judges that these firms should be
included, then the Subcommittee should ask the Commerce
Department to add the names to the “entity” list in Part 744
of the Export Administration Regulations.
American firms should not unwittingly make sales that
undermine American security.
Appendix to the testimony of Gary Milhollin, November 7, 2001
Chinese organizations that should be placed on the U.S.
“entities list.”
22nd Construction and Installation Corporation (Yichang)
23rd Construction Corporation (Beijing)
Aviation Industries of China I and II (AVIC) (Beijing)
Beijing Institute of Aerodynamics (BIA) (Beijing)
Beijing Institute of Electromechanical Engineering (Beijing)
Beijing Institute of Electronic Systems Engineering (Beijing)
Beijing Institute of Nuclear Engineering (BINE) (Beijing)
Beijing Institute of Space System Engineering (Beijing)
Beijing Institute of Technology (BIT) (Beijing)
Beijing Research Institute of Uranium Geology (BRIUG) (Beijing)
Beijing Wan Yuan Industry Corporation (BWYIC) (also known as the
China Academy of Launch Vehicle Technology [CALT]) (Beijing)
Chengdu Aircraft Industrial Corporation (CAIC) (Chengdu)
China Aerospace International Holdings Ltd. (CASIL) (Hong Kong)
China Aerospace Machinery and Electronics Corporation (CAMEC)
(Beijing)
China Aerospace Science and Technology Corporation (CASC)
(Beijing)
China Chang Feng Mechanics and Electronics Technology Academy
(Beijing)
China Great Wall Industries Corporation (CGWIC) (Beijing)
China Haiying Electro-Mechanical Technology Academy (Beijing)
China Hexi Chemistry and Machinery Company (Beijing)
China Nanchang Aircraft Manufacturing Company (Nanchang)
China National Aero-Technology Import-Export Corporation (CATIC)
(Beijing)
China National Aero-Technology International Supply Corporation
(CATIC Supply) (Nanchang)
China National Nuclear Corporation (CNNC) (Beijing)
China North Chemical Industries Corporation (NOCINCO) (Beijing)
China North Industries Corporation (NORINCO) (Beijing)
China North Opto-electro Industries Corporation (OEC) (Beijing)
China Nuclear Energy Industry Corporation (CNEIC) (Beijing)
China Precision Machinery Import-Export Corporation (CPMIEC)
(Beijing)
China Sanjiang Space Group (Wuhan)
Chinese Academy of Sciences (CAS) (Beijing)