[Senate Hearing 106-613]
[From the U.S. Government Publishing Office]
S. Hrg. 106-613
THE WASSENAAR ARRANGEMENT AND THE FUTURE OF MULTILATERAL EXPORT
CONTROLS
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HEARING
BEFORE THE
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
APRIL 12, 2000
__________
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINGINT OFFICE
64-899 cc WASHINGTON : 2000
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington, DC 20402
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
Christopher A. Ford, Chief Investigative Counsel
Mark T. Esper, Professional Staff Member
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Laurie Rubenstein, Miniority Chief Counsel
Darla D. Cassell, Administrative Clerk
C O N T E N T S
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Opening statements:
Page
Senator Thompson............................................. 1
Senator Lieberman............................................ 3
Senator Akaka................................................ 18
WITNESSES
Wednesday April 12, 2000
Hon. John D. Holum, Senior Advisor for Arms Control and
International Security, U.S. Department of State............... 5
Hon. William A. Reinsch, Under Secretary for Export
Administration, U.S. Department of Commerce.................... 7
Frank J. Gaffney, Jr., President, Center for Security Policy..... 27
Stephen J. Hadley, Former Assistant Secretary for International
Security Policy, U.S. Department of Defense.................... 29
Henry D. Sokolski, Executive Director, The Nonproliferation
Policy Education Center........................................ 31
Alphabetical List of Witnesses
Gaffney, Frank J. Jr.,
Testimony.................................................... 27
Prepared statement........................................... 61
Hadley, Stephen J.:
Testimony.................................................... 29
Prepared statement........................................... 67
Holum, Hon. John D.:
Testimony.................................................... 5
Prepared statement........................................... 49
Reinsch, Hon. William A.:
Testimony.................................................... 7
Prepared statement........................................... 55
Sokolski, Henry D.:
Testimony.................................................... 31
Prepared statement with attachments.......................... 79
THE WASSENAAR ARRANGEMENT AND THE FUTURE OF MULTILATERAL EXPORT
CONTROLS
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WEDNESDAY, APRIL 12, 2000
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:05 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Fred
Thompson, Chairman of the Committee, presiding.
Present: Senators Thompson, Lieberman, and Akaka.
OPENING STATEMENT OF SENATOR THOMPSON
Chairman Thompson. All right. Let us come to order, please.
We appreciate very much our witnesses coming to be with us here
today. We are considering a subject that a lot of people
consider to be one of the most important subjects that we have
to deal with. We spend an awful lot of time dealing with things
that many of us think do not amount to much, but this is
clearly an area that does. I remember shortly after I came to
town, I was watching television, I flipped on a speech that
Senator Nunn, former Senator Nunn, was giving in Houston. He
was talking about the proliferation of weapons of mass
destruction as the greatest threat that this country faced. A
few days later I watched former Secretary of State Christopher
on a Charlie Rose show and Charlie put the question to him what
was the greatest danger to our national security? He gave the
same answer. I know Secretary Cohen in the recent past has
basically said the same thing.
I think there is a growing realization that we do not have
the one big threat that we had back during the days of the
Coordinating Committee on Export Controls (or COCOM), but we
now have a different kind of threat. In many ways, it is more
dangerous and more insidious. Of course, what we do not agree
upon is exactly what we ought to be doing to deal with it. We
have a major debate going on about this right now in terms of
the Export Administration Act. I hear that it is going to be
brought to the floor shortly. I think the current EAA bill is a
mistake. I think we have not spent enough time on it. There are
several committees, including this Committee, that have
jurisdiction in these areas and we are just kind of going
lickety-split. I know the Banking Committee has spent a lot of
time on it, but we are just now getting our focus on the issue
and we are going too fast because there is great pressure in
terms of the issues of trade and commerce to get this done.
But anyway, we will have that debate. Also, I think most of
us do agree that we need to do what we can in terms of
multilateral regimes, arrangements, treaties, and what not to
cut down on the proliferation of weapons of mass destruction,
ballistic missiles, and biological, chemical, or dual-use
items.
We are dealing here today primarily with to one of those
multilateral arrangements, the Wassenaar Arrangement, which I
guess you might say deals with the other edges of our concern.
We have more consensus in the area of missiles, nuclear,
biological, and chemical weapons than we do with regard to the
sort of dual-use items controlled by Wassenaar, for example. So
we are not together with our allies on exactly what we should
be doing.
Some of us are going to be talking to our allies over this
next recess about those issues, and while we could spend an
awful lot of time disagreeing--as I'm sure I do with our first
two witnesses on some aspects of our export control policy and
about what I believe to be an unjustified loosening in terms of
many of these areas--clearly we now live in a different world.
We do not live in a COCOM world anymore. There is more foreign
availability of sensitive technologies than ever before, but we
have dangers that are increasing--as we are told by the
Rumsfeld Commission, as we see with the North Koreans launching
their three-stage rockets and other things that come as a great
surprise to us, as we read the Cox Report that the Chinese are
using our high performance computers to enhance their own
nuclear capabilities, as we see diversions in high performance
computers to China and to Russia, as we see with the Loral
problem, and now the Lockheed problem, and as we read the
Inspector Generals' reports concerning what they believe to be
a lack of training, lack of end-user verification, and other
controls of that nature. I simply believe that instead of
pushing forward with what I would call a further loosening
across the board, especially in terms of high speed computers,
encryption and things of that nature where the technological
pace is picking up, instead of doing that, we ought to sit back
and have a new assessment of some kind.
The more I get into this, the more I see that all points
have certain validity. And what we really need is not for
Congress to sit here and decide whether or not ``x'' item ought
to be exported or not. What we need is to make sure we have a
process where all of the relevant interests are presented,
whether it be through a separate, independent agency or
whatever. I think we need to reassess that. Perhaps our view in
terms of what we ought to be controlling should be changed. Now
I read where some people are saying we ought to control fewer
items, build higher fences around fewer items.
Some are also saying that we need to concentrate more on
catch-all provisions in terms of what countries we are sending
things to--that is, not to control so many things, but to
concentrate more on bad destinations. That sort of thing. I do
not pretend to have the answers to all of these questions, but
the more I get into it, the more I am convinced nobody else
does either. Perhaps it is time that we really sit back and
take a look at the fact that we are in a new world: One with
more foreign availability and more opportunities for even our
allies to undercut us if we do not trade, but also many new
dangers from many other countries. Even countries whose people
are starving to death apparently have the ability today to
launch chemical and biological weapons onto this country, and
perhaps shortly nuclear ones as well. I am referring to, of
course, North Korea.
So, in that kind of world, what should we be doing? I
believe we should be trying to exercise some leadership with
regard to our allies, which gets us into the Wassenaar and
these other multilateral arrangements, which is what we are
dealing with here today. So after saying I did not want to get
into all that, I got into all of that. But now, I really am
going to try--and others can follow their own lead, but I
really am going to try--to direct my attention toward what
should we be doing in terms of these arrangements. Are they
really helping? What are our successes, our failures? What are
we trying to do as a nation in terms of exercising leadership
with regard to these arrangements?
What are our criteria for success? How do we know how much
good we are doing? Could things be done differently? How
important is it? To what extent are we getting cooperation from
our allies? How important is the fact that we have different
views, clearly, on some things?
We all seem to agree that there is a certain list of items
that ought to be of concern, and we pretty much agree what that
list is. We all agree that there are a certain group of
countries that ought to be of concern, but we certainly do not
agree with our allies with regard to what to do about that. And
we disagree not only about what to do about the so-called rogue
nations, but with regard to China. So that is why we asked you
to come here today: To get your views on the significance of
these arrangements, and the significance particularly of the
Wassenaar Arrangement because we saw with Iraq that this dual-
use issue is very important and that controlling such items is
very difficult.
Where are we and where should we be going? So, gentlemen, I
appreciate your being here with us today to discuss these
issues. Thank you. Senator Lieberman.
OPENING STATEMENT OF SENATOR LIEBERMAN
Senator Lieberman. Thanks, Mr. Chairman. Thanks for a
thoughtful statement and thanks for calling the hearing today
because it does give us the opportunity to explore this
important issue of export controls from a perspective that
often does not get the attention it deserves and that is the
multilateral perspective.
As you indicated, we are living in an age of remarkable
globalization. It is a different world and a world of stunning
technological innovation, both of which have brought
extraordinary benefits to our country and to the world, but, as
we have become increasingly aware, there are some downsides to
our entrance into the otherwise happy post-Cold War global
cyberage.
With the release of the Cox Committee Report last year and
other more recent allegations of improper transfers of
sensitive technology, we have all become aware that the
proliferation of so-called dual-use technology, which is to say
technology with both civilian and military applications, has
important and potentially dangerous ramifications for our
national security.
Nowhere is addressing this concern more complicated than in
the context of multilateral export controls. During the decades
of the Cold War in our confrontation with the Soviet Union, we
and our allies were pretty much able to keep our enemies from
obtaining significant amounts of potentially harmful
technology. We were able to do this because our allies broadly
shared our concerns and our strategic views and because much of
the technology that we wanted controlled was, in fact, capable
of being controlled by our allies and us.
But with the end of the Cold War and our entrance into a
period of extraordinary technological advancement, all of that
has now changed. We live clearly in a multipolar rather than a
bipolar world, and our allies no longer share our strategic
views on some important issues. To cite the obvious example,
some of our key perceptions regarding countries like China,
Iraq and Iran different fundamentally from that of our allies.
Just as importantly, private industry today, not government
supported military research, stands at the forefront of many
new technological advances with security and military
implications. So governments have to run hard to stay in place
technologically and so they usually do not own or control new
technologies in the same way we did at an earlier stage of
history.
All of that means that the old system under which the
United States through COCOM was able to essentially tell our
allies not to transfer sensitive items or technology and
usually have them abide by that decision and thereby keep
dangerous technology out of the hands of our enemies--that
system no longer does or in some measure can exist. Our allies
no longer see a reason to give us a veto over their export
decisions. And the proliferation of readily accessible
technology makes it very difficult for us to exercise the
control that we once did.
This all has very significant consequences for our national
security in the traditional sense by which I mean that it
clearly can expose us to threats that are serious from those
who wish us ill. And if we and our allies cannot agree on who
to sell to and who not to sell to, it also potentially harms
our national security in another sense. If, for example, our
allies decide to sell advanced technologies such as satellites
or supercomputers to places that we will not allow our American
companies to sell to, our action may not only fail to prevent a
potential adversary from obtaining what they want to obtain,
but it may also do damage to our ability to maintain the robust
technology and defense industries that are critical to
providing for our own defense.
These are not easy questions to balance. In some sense, as
I believe the Chairman said earlier, there is a lot of right on
all sides. But the bottom line is that we have to figure out
how to protect our national security in this very different
world. We must do what we can, but we also obviously have to
work with our allies, understanding that they are not always
going to see things the way we do.
This is a complicated problem that our witnesses today have
thought long and hard about. I am grateful that they are here
and I look forward to hearing their views on how best we can
work in this new multilateral high technology context to
achieve both our central national goal of protecting our
national security and also in the process trying to keep the
world as safe as we can. Thank you.
Chairman Thompson. Thank you very much.
Gentlemen, your statements will be made a part of the
record. If you would summarize those for us, we would
appreciate it. Mr. Holum.
TESTIMONY OF HON. JOHN D. HOLUM,\1\ SENIOR ADVISOR FOR ARMS
CONTROL AND INTERNATIONAL SECURITY, U.S. DEPARTMENT OF STATE
Mr. Holum. Thank you, Mr. Chairman, and thank you for
having this hearing and for laying the basis, both you and
Senator Lieberman, for I think a productive discussion. We
appreciate presenting the Department of State the opportunity
to discuss the Wassenaar Arrangement and the future of
multilateral export controls. It is important to note at the
outset, as both of you have noted, that Wassenaar is not and
cannot be COCOM.
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\1\ The prepared statement of Mr. Holum appears in the Appendix on
page 49.
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COCOM and other multilateral control mechanisms had a
clearly defined, mutually agreed strategic threat, and
addressed that threat by embargoing exports of arms and
sensitive dual-use items to proscribed destinations. Along with
our allies, we agreed on procedures for controlling exports to
those destinations including allowing for any Nation to veto a
specific export.
The end of the Cold War, the disintegration of the Soviet
Union, moves toward democracy and market-based economies in the
former Warsaw Pact, deep cuts in the strategic arsenals of both
sides, and the goal of assuring or assisting economic and
political reform in Eastern Europe, Russia and other newly
independent States rather than retarding their economic
development, all led our allies to the view that the COCOM
arrangement had outlived its strategic rationale and could not
be sustained.
The United States eventually joined this view when it
became clear that our trading partners would no longer agree to
follow the procedures outlined in the COCOM arrangement. In the
waning days of COCOM, the United States sought to preserve the
controls for as long as possible and push to establish a new
world wide arrangement to cover conventional arms and related
technologies. It was only through United States leadership that
we were able to stem the flow of arms and sensitive
technologies to places such as Iraq, Iran, North Korea and
Libya, destinations largely ignored by the former COCOM.
The world has changed for the better. The targets of COCOM
now are members of Wassenaar as well as trading partners,
friends and in some cases treaty allies. And our former COCOM
partners recognize that responsible national export controls
and policies remain indispensable to promote international
peace and security in the post Cold War environment even though
they opposed and continue to oppose any COCOM-like control
regime. COCOM members, eventually with participation by Russia,
designed a new multilateral export control regime to address
the new challenges posed by regional instability in States
whose behavior threatened international security.
The new regime, Wassenaar, is the first global multilateral
arrangement covering both conventional weapons and sensitive
dual-use goods and technologies. It was negotiated and
established in the mid-1990's at the same time that COCOM was
disbanded. As you noted, Iraq's build up of arms before the
Gulf War demonstrated the need for some form of global export
regime and the Wassenaar Arrangement responded to this
challenge by covering more than just dual-use items as had been
COCOM's focus.
The Wassenaar Arrangement which began operation in
September 1996 is designed to prevent destabilizing
accumulations of arms and dual-use goods and technologies. The
arrangement encourages transparency, responsibility,
consultation, and where appropriate national policies of
restraint. In doing so, it fosters accountability in transfers
of arms and dual-use goods and technologies.
It also provides a venue in which governments can consider
collectively the implications of various transfers on their
international and regional security interests. It also seeks to
enhance cooperation to prevent dangerous transfers. Wassenaar
members maintain export controls on items covered by the
munitions and dual-use lists, which are regularly reviewed by
experts as needed.
However, the decision to transfer or deny any controlled
items remains the responsibility of individual member states.
There are no, as there were in COCOM, case-by-case prior
reviews of proposed exports to proscribed destinations or
vetoes on proscribed or proposed exports. But members do report
on their decisions to transfer or deny to non-members certain
classes of weapons and dual-use technologies.
Again, unlike COCOM, Wassenaar members are not constrained
to honor each other's denials, but consultations are encouraged
in such cases. Although no country is an explicit target of the
Wassenaar Arrangement, members are committed to dealing firmly
with states whose behavior is a cause for serious concern.
There is broad agreement that these states presently are Iran,
Iraq, Libya and North Korea. Wassenaar members deal with these
countries of concern by preventing through shared national
policies of restraint their acquisition of armaments and
sensitive dual-use goods and technologies for military end-use.
So Wassenaar provides for the first time a global mechanism
for controlling transfers of conventional armaments and a forum
in which governments can examine and debate the implications of
various transfers on their international and regional security
interests.
I have in my statement a further elaboration of some of the
achievements of Wassenaar which I hope we can get into in the
questions and answers, but I see my time has expired. So I will
conclude there.
Chairman Thompson. Thank you very much. Mr. Reinsch.
TESTIMONY OF HON. WILLIAM A. REINSCH,\1\ UNDER SECRETARY FOR
EXPORT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Mr. Reinsch. Thank you, Mr. Chairman. In light of what you
and Senator Lieberman said and also what Mr. Holum said, I
think I can abbreviate my remarks, since I understand you will
put the whole statement in the record anyway.
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\1\ The prepared statement of Mr. Reinsch appears in the Appendix
on page 55.
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Chairman Thompson. All right.
Mr. Reinsch. Let me concentrate for a few moments on the
relationship between Wassenaar and COCOM and then conclude with
some suggestions as to what we might usefully do next, which I
think is what you said you wanted to focus on.
As both you and Mr. Holum made clear and in contrast to
COCOM, Wassenaar's membership has a much broader base. It is
not limited to NATO members. One of what we think is the major
successes of the Wassenaar Arrangement is that Russia, Ukraine
and other former Warsaw Pact countries are members and have
committed to develop effective export controls and to end
destabilizing arms sales to Iran.
Wassenaar's members also include countries that have been
outside of NATO during the Cold War such as Austria, Sweden and
Switzerland and new industrial powers such as the Republic of
Korea and Argentina. We think this broad membership needs to be
considered as one the successes of Wassenaar.
Now, in retrospect, we are trying to, if you will, meld the
legacy of COCOM with the new realities that both senators so
eloquently described in their remarks. We inherited from COCOM
a long list of goods to be controlled. The selection of those
goods was based on preventing the Soviet Union from improving
its weapons and its high tech industries. That list is out of
date. It is out of date in terms of the objective. It is out of
date in terms of the technologies. And we believe it needs a
good deal of work.
In addition, we inherited some mistrust that had arisen as
a result of debates in COCOM, and this was an obstacle to
progress in building the new regime. Most importantly, COCOM
permitted the United States and other COCOM members to share a
common approach to export controls. As you noted, as we
discovered via Iraq, this changed after the collapse of the
Soviet Union.
Our export control policies and those of our allies differ
widely in some respects. The Europeans have made clear, for
example, that they have no intention of adopting our unilateral
sanctions. The Wassenaar Arrangement, covering as it does both
conventional arms and related dual-use equipment, also does not
have the same degree of consensus we find in other regimes.
This is because there is much legitimate trade in the items
controlled by Wassenaar so the kind of blanket denial policies
found in the MTCR or the nuclear suppliers group for weapons of
mass destruction or the embargo approach found in COCOM will
not work.
The United States is a major exporter of arms and military
technologies and considers its ability to make such transfers a
necessary tool of foreign policy. Many of the items controlled
by Wassenaar are also becoming widely available through the
kind of globalization that we were discussing earlier.
One thing our Wassenaar partners have consistently made
clear for the last 7 years is that they will never submit to
the kind of consensus arrangement for export approval known as
a veto that was found in COCOM. The military threat to European
security that justified a veto no longer exists. In addition,
as the Europeans have made clear in other contexts, they have
no intention of adopting our unilateral sanctions such as those
against Iran or Cuba or our sanctions against India or
Pakistan. And they believe that if they accepted a veto, we
would attempt to use it to enforce such sanctions.
No other export control regime has a veto rule for export
decisions, and I believe we would be mistaken if we think we
can persuade Wassenaar or the other regimes to adopt it. It is
also worth noting that one aspect of the veto debate is that
some transfers we make to our allies and security partners
would likely trigger a veto from other Wassenaar members.
Unlike the other members, the United States has global security
commitments, and I am not sure that we would want Russia or
others to sit in judgment on our exports to our security
partners in certain states in Asia or in the Middle East.
And there is skepticism among our partners, frankly, as to
how we would react to a veto if we believed that our national
interests were at stake; in other words, if the tables were
turned. Our Wassenaar partners have also consistently made
clear that China is not a target of the regime. Many Wassenaar
members wish to see China join the arrangement. For the most
advanced industrial economies in Wassenaar, China is an
important market, not a threat. And they have told us that it
is a market that they will service.
The most salient examples are in machine tools and semi-
conductor manufacturing equipment. We often hear criticism of
sales of five access machine tools to China. The United States
has approved only two in recent years, but in the same period
our Wassenaar partners have approved more than 20. In fact,
exports to China of the most advanced machine tools more than
doubled in the last year, and they did not come from the United
States.
For semi-conductor manufacturing equipment, we have been
told by the other major producers, Japan, Netherlands and
Germany, that they will sell to China even if we will not. A
good example of that is China's Project 909, where Japan
approved the joint venture using the most advanced chip making
equipment before the United States had even finished debating
whether to allow its companies to apply for a license.
Now let me make some suggestions in closing, Mr. Chairman,
for the future. First, we need to recognize that much of the
debate in the United States over export controls is out of sync
with the rest of the industrialized world. This reflects in
part larger differences over security policies, threat
perceptions, or trans-Atlantic cooperation. But it forms a
crucial backdrop to improving multilateral controls.
Second, we need to consult with our allies and with other
regime members on the scope for cooperation and improving
controls. For conventional arms and related dual-use equipment,
it may be less than we would wish. Related to that, we should
continue our efforts to promote adoption of catch-all controls
by our regime partners in order to ensure that adequate
authority exists for controlling a wide range of technology to
specific end-users of concern.
Third, we need to refocus the list of those items that are
controllable and critical to advance military capabilities. The
globalization of technology poses new challenges in that
regard, as Senator Lieberman pointed out.
Fourth, we need to give up the ghost of COCOM. COCOM was a
valuable tool for NATO in the Cold War, but it is gone and
cannot be resurrected.
Fifth, we need to continue efforts to get China to
participate in multilateral regimes such as Wassenaar. To this,
China will need to make progress in adhering to the
international norms for non-proliferation and arms sales. There
is no question that they are not there yet.
We must continue our efforts to encourage non-members to
adhere to regime standards. The Commerce Department, working
closely with State and Defense, Customs and others, has worked
with the countries of the former Soviet Union and Warsaw Pact
to develop comprehensive and effective export control systems.
We have often found that even in cases where these
governments are willing to take the hard steps to keep items
out of the hands of unreliable parties, they do not have the
practical means or the legal basis to do so. We have had some
success in encouraging them to take all the necessary steps
including adopting the control lists of the multilateral
regimes to allow them to adhere to the objectives of the
regimes. But we need to do more in that area.
Finally, we need to continue to work towards national
consensus or as close as we can get to consensus in our
national discussions over export controls. The recent
legislative debate, as you have noted, Mr. Chairman, reveals
the differences among us are wide in some respects, and those
differences do not provide a firm basis for U.S. leadership at
this time. So I think it is particularly important that we try
to get together and see if we can develop a common view. Thank
you.
Chairman Thompson. Thank you very much.
Let us kind of summarize for a moment. See if I am right,
and correct me if I mischaracterize anything, but under COCOM,
basically each Nation had a veto over the other nations' export
of any particular item. The world changed and we moved away
from COCOM. Just a bit of history. I hear different things from
different people about how the demise of COCOM came about. I
have always read that the United States took the lead in doing
away with COCOM and moving to another arrangement.
In fact, did not President Clinton campaigned on this
point? I do not know specifically, but in terms of loosening
controls I recall that he thought many were out of date and too
onerous. He kept that commitment and took the lead in changing
the COCOM arrangement, moving away from that. Now the
administration suggests that the United States was kind of
dragged away reluctantly from COCOM and tried to keep what
remnants of it we could as we were being pulled away from it
against our will.
I do not know exactly whether you were in the middle of
that, Mr. Holum, at the time that it came about, but could you
give us a little history on this point in terms of your
understanding?
Mr. Holum. I was not in the middle of it because at that
time I was Director of the Arms Control and Disarmament Agency.
We were involved but not centrally, but my understanding of
that period is that the United States was anxious to maintain
as rigorous an international control regime as we could. And
when we consulted with our allies and our former COCOM partners
who had long since begun agitating with the fall of the Soviet
Union for a liberalized regime, we found that there was very
limited stomach for that kind of an arrangement, and
particularly, even during the COCOM regime, some members had
chaff against the veto arrangement.
So at the end of the Cold War, it was our leadership which
led to a successor regime. I think there were some, certainly
not all, who would have been content to let the COCOM process
disappear and let things revert to national decision-making.
And we pressed very hard for a continued multilateral
arrangement recognizing that it could not have the same rules
and procedures as COCOM. But it did keep alive the export
control lists and the basic arrangements for consultation.
Chairman Thompson. So we went into the Wassenaar
Arrangement, which basically did away with the veto, as we were
talking about. It is an arrangement that has no large staff or
anything like that, but they have annual meetings. There is an
agreed upon list that countries agree to pay attention to.
There's an agreed upon list of bad countries that the members
agree to pay attention to, but they do not commit to do any
particular policy with regard to dual-use items.
They will make their own decisions. Each country makes its
own decisions as to what it should do. There is no agreement to
notify before a transaction is made. There is no agreement not
to undercut. In other words, if one Nation turns down a sale or
a transfer, there is no agreement that somebody else will not
come along and take that opportunity instead.
There are discussions concerning problem areas and problem
items. But basically, some might consider it generally only a
discussion society whereby the United States, and others, have
an opportunity to persuade people to generally move in the
right direction. And then you have Russia, who is a member of
Wassenaar, whose general interest and attitudes and behavior
some might say are quite different than those of most of our
allies, not only in terms of their proliferation activities but
in terms of some of the issues that they have taken on in the
foreign policy and export control arena.
My understanding is that Russia has been most reluctant or
one of the more reluctant to do anything with regard to issues
such as prior notification or undercutting or anything of that
nature.
I want to focus in one aspect of all this, and it has to do
with what Mr. Reinsch mentioned, the catch-all provision--which
basically to me means that you look to the country the item is
going, and take that into consideration, and give additional
weight and consideration to where it is going, and not
concentrate so much on having a strict control of the item or
prohibiting it from being moved per se.
The allies agree that there is a problem country list, but
they do not agree specifically as to what to do. What I would
like is your assessment of exactly where we are with regard to
our allies on that issue. They agree somehow to pay special
attention to those countries but do not agree to do anything
specifically one way or another.
Is it not true in practice that many of our allies require
that there be some very direct evidence of danger before they
will stop an export of a dual-use item that we might consider
very sensitive? That before they will stop such an export, for
them there needs to be shown a direct relationship between that
export and the production of weapons of mass destruction or
their delivery systems?
In other words, it is easy to give lip service to export
controls--to say, yes, we agree. To say, ``These rogue
countries are problems and we are going to give them special
attention,'' but when it comes right down to brass tacks, many
of our allies have different criteria than we do. And I am
talking about our European allies now. Do they not as to what
they ought to do with regard to exports to those countries? Is
that a fair assessment, and could you elaborate on that a
little bit?
Mr. Holum. Well, I think it is a fair assessment that we
have far more consensus in regimes other than Wassenaar on
sensitive technologies. In the Missile Technology Control
Regime and the Australia Group, the Nuclear Suppliers Group,
the Zanger Committee, all the other multilateral informal
arrangements that are nonetheless focused on weapons of mass
destruction have a far easier time reaching consensus on what
should be controlled and to where.
And the rules are much stricter. You have to look at
Wassenaar in the context of that, and as you said earlier, we
are on the edges of the technologies that contribute to arms
programs. And the United States in general is more active, more
anxious and interested in controlling dual-use technologies
with other weapons applications than some of our Wassenaar
partners are.
That said, they all do have dual-use control lists that go
beyond the WMD regimes and delivery system regimes. And it is
more than a matter of persuasion. I think the existence of the
Wassenaar Arrangement and the continuous discussion in that
context has helped to bolster countries' national export
control policies on both dual-use and munitions. But I would
agree or I would argue that absent Wassenaar, those regimes
would be or those national controls would be less rigorous.
Chairman Thompson. Well, that is an argument that can be
made. I am more interested right now, I guess, in understanding
exactly what their position is--if we can generalize with
regard to our allies--about how that works in the real world.
There are supposed to be notification requirements after sales
are made periodically twice a year--notification requirements
for certain things, certain sales that are made so everybody
can kind of keep up with what everybody else is doing. The
notification is not item specific, as I understand it. It is in
categories. But it is still, I suppose, somewhat helpful.
Can you give us a feel--I do not know to what extent you
deal with Wassenaar, to tell you the truth--but can you give us
a feel for the extent to which our European allies are, in
fact, exporting dual-use items to problem countries that cause
us concern? Can you explain the extent to which there is
discussion between our country and our European allies about
those matters? Have there been any instances where they have
refrained from such exports because of perhaps intelligence
that we had that we imparted to them and that changed their
mind? How much give and take is going on? How much impact are
we having? Lastly, can we say that things are better than if we
did not have Wassenaar or that it is successful?
What criteria are we using? Is there any indication that
there is in the works a system whereby problem items can be
kept from winding up in these problem nations? In terms of
government management, we are getting into a performance-based
system around here in trying to get the Results Act
implemented. So it is not enough anymore for agencies to say
``we process this many pages of paper'' or ``we approved this
many applications'' and ``we had this many discussions.'' We
want to know: Is it really working? Is there any indication
that we are keeping bad stuff out of bad hands that otherwise
would go there?
Mr. Holum. Yes, I think there is. Some of it I cannot go
into any open session for reasons you understand. Generally,
for example, there is a decline in arms shipments to the four
countries, to terrorist list countries, under Wassenaar. I am
not saying that Wassenaar is the only reason for that. Part of
the reason obviously is that after the Iraq war Russia was not
giving as much away and was not able to sell as much.
In the dual-use area, my assessment is that the greatest
accomplishments are bilateral rather than multilateral. But the
multilateral regime creates the framework and the overall
political commitment to control sensitive technologies. But we
have four committees in the United States that the State
Department chairs that examine transfers or potential
transfers. We sift intelligence. We see what is likely to
happen and go to our Wassenaar partners or to others and
demarche them in case we see a bad shipment to a dangerous
destination.
And we have success in that process. I think Wassenaar
contributes to our ability to have success. But I think the
bilateral component of it is also indispensable. The Wassenaar
environment also is a regime in which countries agree more
generally on what are the problem destinations. I have
mentioned the four, but they have also focused on areas in
conflict. They focused on the Sudan. They focused on
Afghanistan and other regions where shipments are less likely
to take place. So there is a collective judgment rendered.
It is very difficult to do these things multilaterally for
all the reasons you know including the membership of Russia in
Wassenaar. Russia does take a different view on many of the
issues. Given that Russia has many of the technologies that we
want to control, I think it is better to have them in than to
have them out, but it makes consensus harder to achieve.
Chairman Thompson. It seems to me that you could almost
make the argument, on the other hand, that the Wassenaar
Arrangement might hinder these bilateral activities. After all,
you have got the umbrella of approval with regard to certain
things out there that countries might not be as willing to take
a chance on if they did not know that others were doing it. You
are going to have to be reporting this periodically anyway.
Everybody is going to see that if you go ahead and do it,
regardless of the United States' objection, there will be no
problem. So the next country might be tempted to do the same
thing.
I do not know. I have just one other follow-up. My time is
over, but I have a follow-up on something you said. How easy or
difficult is it for us to share our intelligence even with our
allies concerning these things? Is that flow going the way that
it should?
Mr. Holum. It is always very difficult. It varies obviously
with the country, but there is a constant struggle to be able
to share as much intelligence information as we have and to
tell as much as we know to the country we are trying to
influence because of sources and methods problems and that is a
legitimate concern of the intelligence community. I will not
dispute that it exists. I do not want us to not have
information, but it is a problem when you have information and
cannot act fully on it because you cannot release it.
Chairman Thompson. If you will indulge me, Senator, just
one more question. We clearly in this country do have a
different view of how to deal with the rogue nations. But why
is this? And I wonder if it relates to the intelligence part?
Do our allies not perceive the same kinds of threats that we
do, especially with regard to Iran? There seems to be a
disconnect there. Why is it that our allies do not see some of
these nations being as much of a potential threat as we do?
Does it have to do with the nations, or does it have to do with
the kinds of items, dual-use items, that are often at issue and
that are going to these nations?
Mr. Holum. I think it has to do to some extent with both. I
think there is a perception among some of our allies that the
best way to deal with Iran, for example, is engagement, that we
will change their approach by being willing, for example, to
transfer peaceful nuclear technologies.
At the same time, I think it is important to note that our
allies generally have agreed with us on the conclusion that
Iran is seeking a nuclear weapons capability. So none of our
European allies engage in even peaceful nuclear cooperation
with Iran. Russia obviously is a different story so they have a
different perception of Iran overall and think engagement can
lead to positive results.
But I think at the same time, they have accepted our
premise, at least on the nuclear front and on the missile
front, that these are dangers. But again when you get into the
level of dual-use items where Wassenaar is applicable, it is
more difficult to reach a consensus.
Chairman Thompson. Senator Lieberman.
Mr. Reinsch. May I add something to that, Mr. Chairman? I
think the other perspective is some of these countries have a
different, a different history, a different commercial
relationship with these countries where the breaking of ties
and the whole hostage episode which they did not experience has
created a different attitude.
Chairman Thompson. France and Libya, for example.
Mr. Reinsch. Pardon me?
Chairman Thompson. France and Libya, for example?
Mr. Reinsch. Well, Italy and Libya in particular, yes.
Chairman Thompson. Italy and Libya.
Mr. Reinsch. I mean those are good examples. We also have
global commitments and a global perspective and despite what
some of our allies may say from time to time, they do not
necessarily. They do not look at Iran from the standpoint of a
global perspective. They look at it from a narrower perspective
which makes it easier to look at it commercially.
Chairman Thompson. Thank you. Senator Lieberman.
Senator Lieberman. Thanks, Mr. Chairman. Very briefly,
first, I am interested if either of you know from a historical
perspective whether there was an attempt as the Wassenaar
Agreement was coming together to have veto authority within it.
Was it discussed at any point and rejected, or was it just
assumed that we were in a new world and it was----
Mr. Holum. Yes, I would have to get back to you on the
specifics, but my understanding is that we concluded after
consultations that it was hopeless to try to include it so it
was not actively proposed.
Mr. Reinsch. My understanding is the same, Senator. We had
to, we had to do something because COCOM was aimed at the
Soviet Union and we were concerned about Iran, Iraq, Libya and
North Korea.
Senator Lieberman. Right.
Mr. Reinsch. The pariah states necessitated a change. My
understanding is our allies made it very clear from the
beginning that a veto wasn't one of the options that they were
prepared to consider.
Senator Lieberman. And as a result, we have not at any
point since initiated discussions about putting veto authority
into Wassenaar just because we thought it was a non-starter?
Mr. Holum. That is right, although we have made a very
active effort including in the 1999 assessment. I was the head
of the delegation. Under Secretary Reinsch was also a
participant in December in trying to strengthen the regime, in
particular to provide for notifications of all dual-use
denials. One of our major objectives in this context is to
achieve a no undercut process.
It is not the same as a veto. You cannot force somebody not
to sell, but if we deny a license to somebody, we would like to
report that and have other members know than if they undercut,
they are going to be under a lot of pressure. Now that is
available in a limited way for very sensitive items on the
dual-use list. But it is not available for all items, and that
is what we would like to accomplish.
Mr. Reinsch. I am advised, Senator, that we did repeatedly
propose a veto in various forms in the 1993-94 period, but we
haven't proposed it recently.
Senator Lieberman. And those efforts were rejected?
Mr. Reinsch. That is correct.
Senator Lieberman. Help me understand. When a nation, when
a member Nation of Wassenaar violates the agreement by
exporting an item on the agreed upon list, what are the
sanctions that are possible?
Mr. Holum. Well, there are no sanctions because ultimately
the decision making belongs to the countries. It is
consultative arrangement rather than a sanctions arrangement.
Now individual countries can make their own determinations. If
we decide as a matter of national policy that we want to
sanction somebody for an export that goes beyond Wassenaar, we
tend to do that in other areas, but there is not a formal group
sanction.
Senator Lieberman. So this leads to me to the question I
wanted to ask, which is that some have suggested that we should
consider creating our own stronger hammer outside of Wassenaar,
such as trade sanctions against countries that are involved in
the transfer of dual-use technology, and I wanted to ask you
what you think about that idea?
Mr. Holum. I think as a general matter, we certainly need
to consider unilateral controls, and we do apply unilateral
controls and restraints, limits, for rare circumstances. But I
think the entire process of proceeding unilaterally in this
area is a loser over the long term, that the technology has
spread so widely around the world and is available from a lot
of different places that pursuing unilateral controls and
sanctions will not achieve the objective, that you really have
to choose the best basis for getting multilateral consensus
among the suppliers.
Mr. Reinsch. I would agree with that, Senator. The only
thing I would add is that the Congress has, as I understand
your question, done that with respect to various pieces of
legislation on Iran, Iraq and Cuba.
Senator Lieberman. Right.
Mr. Reinsch. I think I would leave to you to judge whether
those have been more effective than what we're describing.
Senator Lieberman. Well, as the sponsor of a few of those,
I hope it has.
Mr. Holum. Well, one of the things they do is, and can have
a tactical advantage in persuading other countries that were
serious and as part of the efforts to bolster diplomacy, but I
think they are always more effective in the threat or the
potential for doing them than they are if you actually have to
carry them out.
Senator Lieberman. Let me come at this a different way,
going back to something I said in my opening statement, which
is the extent to which our ability, U.S. ability, to maintain
military dominance depends on technological developments and to
some extent a vibrant technology industry here may depend on
that industry exporting.
So I wanted to ask you to what extent would you say that
those kinds of concerns, which we certainly hear from the
industries involved, express themselves or play a part in our
approach to Wassenaar and the whole question of controlling
dual-use technologies? How do we balance the relative, the
various national interests we have here?
Mr. Holum. Well, we clearly do with the decline in defense
budgets and with the growth in reliance of defense industry and
our security agencies on technologies developed in the private
sector outside of the defense sector. It is unquestionably true
that our ability to maintain a cutting edge in both military
and dual-use technologies depends on exports and depends on a
healthy industrial base.
We take a slightly different view, and Under Secretary
Reinsch will want to comment on the dual-use side of this,
slightly different approach on munitions than we do on dual-use
items.
Senator Lieberman. Right.
Mr. Holum. If there is a security reason not to export a
munitions item, it will not be done whether or not there is an
economic consideration in favor of it. We do consider the
industrial base as part of our conventional arms transfer
policy. But if the Department of Defense, which has the primary
security oar, says this sale should not be made, the State
Department will not issue the license.
In dual-use, there is more of a balancing between the risks
and the costs, but----
Mr. Reinsch. Yes. If I could add, Senator, I think that is
a very interesting question and one that deserves, I think,
more thought than we can put into it right now. The main impact
of what you are talking about occurs as each nation makes its
own national decisions about whether to approve a license or
not.
Senator Lieberman. Right.
Mr. Reinsch. Particularly on the dual-use side. One of the
arguments that we have made frequently with respect to a number
of sectors is that the real security issue is those sectors'
health and their ability to supply the Defense Department and
that, in turn, depends on their ability to export and plow
their profits back into R&D and so on, has been said.
As far as the international or the multilateral process is
concerned, at one level that is a little bit of a destabilizing
factor rather than an easy factor because we are making that
analysis with respect to our own industry. Presumably the
European nations are making that analysis with respect to their
own industries which are competing with us.
Our interest is, for example, to take a current one, the
health of our computer industry and the health of our satellite
and telecommunications industry because we think they are
essential to our security. The Europeans have the same concern
about their computer industry and their satellite industry. It
does not necessarily lead them to the same licensing decisions.
It is not a secret, and I know it will not be a surprise to
you that for years in COCOM--I have heard this less in
Wassenaar, but I am sure it is true--that all parties have
occasionally accused other parties of either making decisions
or pressing positions on what should be listed and what should
not that had more to do with local commercial interests than
the larger good of nonproliferation. All countries routinely
deny that accusation when it is made, but there is some history
there.
Senator Lieberman. Thanks. Let me ask a last question in a
different area which is, as we all know, the Export
Administration Act, which is our major domestic export control,
lapsed several years ago and we have not yet reauthorized it,
but we have continued the controls through executive orders.
Has the absence of the reauthorization, had any effect on our
participation in the Wassenaar Agreement? Or have the executive
orders basically had the same force and not diminished our
position there?
Mr. Holum. Well, what I miss most about the Export
Administration Act is the level of penalties that are available
because they are outdated. Bill, you might add to it?
Mr. Reinsch. I think in the spirit of detente with the
Chairman, I was not going to get into the Export Administration
Act, but you have asked an important question.
Senator Lieberman. It was much too peaceful here.
Chairman Thompson. I am going to violate it again, go
ahead. [Laughter.]
Mr. Reinsch. Well, you have asked an appropriate and
important question. The biggest problem, I think, is absence of
penalties, but there are also police power problems from our
standpoint. We have to go be deputized marshals. It makes
enforcement more difficult, the penalties are the cost of doing
a business. It also has caused us some legal difficulties. The
law contained a confidentiality provision that precluded us
from making public proprietary industrial information, for
example.
We are now in the midst of two court battles where via FOIA
requests that kind of information has been sought, and the
argument of the plaintiff is that we have no authority to keep
it confidential because the act has expired. We are concerned
about the litigation risk here.
On the anti-boycott side, which is part of the statute it
is the same thing. Any lawyer worth his salt in an anti-boycott
claim would argue that under IEEPA the government has no
authority to pursue the anti-boycott law because it has
expired.
In the multilateral context, the biggest problem I have
seen is as we go out to countries of the former Soviet Union
particularly, where we have a quite extensive program that I
alluded to in our testimony--I know Secretary Holum could talk
about--to try to help those countries develop export control
systems of their own. We have helped them draft laws. We have
helped them draft regulations. We have helped train their
Customs and border officials. We have helped them adopt control
lists and done a wide variety of things including providing
hardware and software so they can keep track of their exports,
and we have done it on the theory that while we do have policy
differences with some of those governments, we also have policy
congruities. There are areas where they would like to stop that
technology from leaking outside their borders, and they do not
have the means to do it.
We can help them do that. In that context, our absence of a
law has been a problem because we go to them and say you need a
law and you need a regulation and you need all this stuff, and
they say you do not have one. And it really, I think, has
damaged our credibility with countries whose performance we are
trying to beef up. I think with the UK and our NATO allies, it
has been less of an issue.
Senator Lieberman. Did you want to add anything, Mr. Holum?
Mr. Holum. No, I agree with the basic conclusion that we
should have a new law as soon as we can.
Senator Lieberman. Yeah.
Mr. Holum. But we want it to be a good law.
Senator Lieberman. Right. Well, absolutely. I did not want
to destroy the detente too much by saying though there are some
negatives associated with no reauthorization, obviously that
does not mean we should adopt any law.
Chairman Thompson. We all agree we need a law. We have a
small problem with what goes into the law.
Senator Lieberman. That is right.
Mr. Reinsch. If you will just do exactly what we want, Mr.
Chairman, then everything will be fine.
Senator Lieberman. That is all it takes.
Chairman Thompson. That was what the Executive Orders did.
Senator Lieberman. Thank you, both. Thanks, Mr. Chairman.
Chairman Thompson. Senator Akaka.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman. Glad we
are having this hearing and hope maybe that we can come back
and reexamine this as was indicated. The end of the Cold War
has not meant an end to our concern about the diversion of
technology to the wrong parties for the wrong things. But it
has meant a loosening of export controls. Mr. Chairman, I ask
that my opening statement be made a part of the record.
Chairman Thompson. Without objection.
[The prepared statement of Senator Akaka follows:]
PREPARED STATEMENT OF SENATOR AKAKA
Mr. Chairman and Senator Lieberman I commend you for calling
today's hearing.
The end of the Cold War has not meant an end to our concern over
the diversion of technology to the wrong parties for the wrong things.
But it has meant a loosening of export controls.
Unfortunately, the loosening of controls has come at the same time
that the information to develop weapons of mass destruction--chemical,
biological or nuclear--has become more widely available and the
technology to manufacture these weapons more easily obtained.
A building the size of this hearing room--perhaps smaller--would be
sufficient--I am told--to house a biological weapons plant. This makes
it easy for a country to hide its weapons program. I am also told that
the technology to develop biological and chemical weapons is widely
available, making it easy for a state to develop such weapons.
While the technology has become easier to obtain, the end of the
Cold War has also made it harder for the United States to convince
other countries to share our concern about states, such as Iran, whom
we believe are secretly developing weapons of mass destruction.
When we voice our fears, our allies charge us with trying to hinder
their economic growth, preventing competition in order to preserve
American dominance of world markets.
It has become sometimes harder to work with our friends and allies
to ensure security in the world.
It has been made even more difficult by globalization. Corporations
span international boundaries. Investments involve a multitude of
businesses and nationalities. This is especially true in high
technology areas--aerospace, for example.
How to make progress without providing the seeds for our own
destruction is the central challenge of this century.
I welcome the witnesses to today's hearing. It promises to be a
lively debate and I hope not the only time this Committee examines this
problem.
Senator Akaka. And I would like to ask a few questions of
Mr. Holum. You state that countries in 1999 agreed only to a
modest increase in arms transparency. What were our proposals
concerning transparency?
Mr. Holum. Essentially what we did accomplish, first, is
members are now going to report reconnaissance troop command
and electronic warfare equipment in the armored combat vehicle
category. There are several changes along that line that expand
the reporting requirements in certain Wassenaar categories of
arms. We proposed a number of additional categories which were
not accepted. But we did make some modest headway.
The main thing we wanted to accomplish is to require
reporting on denials of dual-use exports or export licenses,
which would lead to then a no undercut possibility, the
possibility of consulting if another country moves to export
something that you have already denied. We think that is a
fundamentally important reform of Wassenaar to make it
stronger. We also wanted to pursue in the Wassenaar context a
common approach to the export of MANPADS, man-portable surface
to air missiles, which have a very grave threat or pose a very
grave threat in the context of terrorist use, for example.
The subject was remanded to the general working group. They
agreed we should continue to work on it, but we did not get as
far as we wanted in that area. So those are the kinds of
priorities we will continue to pursue.
Senator Akaka. Just to get your comments of a witness that
will appear on the next panel. Henry Sokolski raises concerns
that the United States shows a--and I quote from him--
``willingness to subsidize known proliferating entities.'' And
he cites several examples such as the U.S. Export-Import Bank
guaranteeing exports to the Nanjing Chemical Company, which was
proliferating chemical weapons equipment to Iran. Do you agree
with Mr. Sokolski that we should not subsidize exports to
foreign companies which proliferate and could you give me your
reasons one way or the other?
Mr. Holum. As a matter of principle, I would like to look
at the specific cases to see if my perception of the facts is
the same as Mr. Sokolski's, but as a general proposition, no, I
do not think we should subsidize proliferators.
Senator Akaka. Mr. Reinsch, what do you think of the
recommendation by Henry Sokolski, again, that the United States
should take steps to limit or prohibit the licensing of
American exports to companies our intelligence agencies have
clearly identified as proliferators? Do we do this already?
Mr. Reinsch. Yes, we do. And I think it is an appropriate
way to go. The key word there is the word you emphasized,
Senator Akaka, which is the word ``clearly.'' One of the
problems of intelligence, particularly the kind of intelligence
we are talking about here, is that it often is not clear. You
are putting together two plus two plus two, and you are
assuming it is six, but you do not really know because there
are pieces missing.
The intelligence community often gives us as clear a
picture as they can and they tell us what they know and they
tell us what they do not know. I think the process works in the
way that Henry is recommending. That is, when we have that
information, we act on it, and when the intelligence community
presents a clear picture of a bad end-user, if you will, the
licensing process has pretty consistently denied those exports.
When the intelligence community presents a mixed picture, then
sometimes we have more of a debate.
Senator Akaka. Steve Hadley, who will appear, in his
testimony quotes a Defense Science Board report to support his
proposal that export controls should be targeted on what is
unique, military, critical and controllable. Do you think this
approach is workable or has a distinction between what is of
critical military use and what is of civilian use been blurred
by today's technologies?
Mr. Reinsch. Well, it has been blurred. There is no
question about that. I attended most of the sessions of that
review board task force, and I recommend it to all of you. It
is a very thoughtful piece that was produced primarily by ex-
military officers and ex-Defense Department officials from the
last two administrations primarily. So it is a very, I think,
objective piece that is most useful in its discussion of how
the world has changed, which is something that Mr. Hadley's
testimony also comments on.
The recommendation that you are making, which is a
variation of what the Chairman alluded to, higher fences,
smaller items--I mean the reality is that we all give that
speech. I have heard Senator Thompson give a variation of that
speech. Senator Gramm has given that speech. I give that speech
all the time. The difficulty is translating the speech into the
specifics of saying what is going to be on that list.
And once you get beyond fissile material and stealth
technology, and a couple other things, agreement over what
those really critical items are becomes a lot more difficult to
reach, and people simply do not always agree. One of the
reasons they do not always agree is the point that you made--
because these things have both military and civilian
application.
Night vision equipment is a classic case. This is
absolutely essential to the Army and its ability to outmaneuver
its adversaries in twilight or darkness. At the same time, you
can buy them in an L.L. Bean catalog. Night fisherman and
boatmen use virtually the same stuff. It is classic dual-use.
There is not any question what this is, but making decisions
about a technology that we very much do not want to fall into
other people's hands creates dilemmas. Is that critical or is
it not? And the DSB report for all of its strengths
conveniently does not provide a suggested list. It suggested
that we create a list and, as I think you have discovered in
the EAA debate, that is a difficult task, and people of
goodwill and good intentions have honest disagreements over
what should be on it and what should be off it.
Mr. Holum. There is another caution I would add, and that
is that if we are talking about munitions, we have always
treated, and I think should continue to treat, exports of arms
as a foreign policy decision, whatever the level of technology.
In Africa, in the last decade, the AK-47 has been a weapon of
mass destruction. And I do not think the United States wants to
be competing for all those markets. I think the decision to
export even low-tech munitions must remain a matter of national
determination.
We consider in the munitions realm where equipment that
goes to allies is likely to end up. We attach re-export control
limitations, for example. So this is an area that we need to
focus on as well. It is not only a question of technologies,
and I agree that we can and should explore liberalizing
transfers of technologies to close allies and we are very much
engaged in that kind of an effort. But we have to treat
munitions differently from dual-use technologies because these
are direct instruments of conflict.
Mr. Reinsch. And the Commerce Department agrees completely
with that. The issue that you are raising, which is the key
issue, is what is a weapon and what is not? And there I think
the fact is if it is an F-15, it is clear. If it is a computer,
I think it is also clear. But the reality is there are some
things that are more in the middle of that spectrum, and that
is what some of these debates that we have been involved in
have been about.
Senator Akaka. Mr. Chairman, let me conclude by mentioning
to both of our witnesses if, as Mr. Holum has said, that
unilateral controls do not work and if we have difficulty
getting unilateral agreement--multilateral agreement--where are
we left at the end of the day? Do we give up or do we keep
pushing at the proverbial open door while these dangerous goods
get exposed to dangerous countries? Can the situation become,
as Senator Thompson has indicated, any more frustrating?
Mr. Holum. I think it could become much more frustrating,
but it seems to me that we have no choice but to work to build
the strongest multilateral regimes we can. And I am not as
pessimistic as some about that. I think it is very important to
decide what the critical technologies are, what the proscribed
destination should be, and continue our efforts to work with
other suppliers, principally through multilateral regimes.
Where countries are not party to a regime, we should try to
broaden it to have them--such as China--to have China live up
to the standards that would allow it to become a member, for
example, of the Missile Technology Control Regime, the
Wassenaar Arrangement. They are certainly not qualified now,
but I think it would serve our interests for them to be subject
to the same constraints as other members.
Mr. Reinsch. The thing to keep in mind, Senator, from my
perspective is these regimes are works in progress. None of
them started with a whole loaf, if you will. And you do not get
the whole loaf in negotiation. It simply is not that easy.
Brick by brick we build them and make them better. As Secretary
Holum pointed out, we did not get everything we wanted in
Wassenaar in 1999. We will be back at the plenary in 2000
trying again. And the people that come after us will be back
the following year and eventually we will get what we want.
But these things do not happen overnight and one of the
main characteristics that I think you have to demonstrate in
Mr. Holum's business in particular as a negotiator is patience.
Senator Akaka. Thank you very much, Mr. Chairman.
Chairman Thompson. Thank you very much. One or two more
questions. What are we trying to get? What is on the table?
What was discussed in your December 1999 meeting? We have
talked about catch-all provisions, undercutting, and all those
things. Are these things that we are actively trying to get
some movement on? What are the most important things that
realistically we could expect some movement on perhaps in the
future?
Mr. Holum. I think the most important single step we can
take is notification of dual-use denials that would lead to the
possibility, to something akin to a veto, at least an
opportunity to persuade with knowledge that somebody is
undercutting a dual-use transfer. That is the highest priority,
I think, because of the threat it poses. Getting some action on
MANPADS is also crucial. We at the last session, and I--in
fact, Under Secretary Reinsch and I both made a number of trips
to engage in bilateral consultations leading up to the December
session. We wanted to expand the list. We found a way to expand
the list by not changing the number but adding more reporting
requirements in the various categories, and I can supply you a
list that would probably be useful for you to have before you
leave on your trip of the kinds of things that we think would
strengthen the regime.
Chairman Thompson. There are some notifications for dual-
use denials, are there not?
Mr. Holum. For very sensitive items on the list.
Chairman Thompson. You are talking about broadening that?
Mr. Holum. That is the objective.
Chairman Thompson. On the catch-all that you referred to,
Mr. Reinsch, I take it that this is not realistic in the short
term? I mean, this issue has to do with their viewing end-user
countries, if you want to put it that way, the same way we do
or with concentrating more on them than they are willing to
right now. Is that a correct assessment?
Mr. Reinsch. No, not exactly, Mr. Chairman. We have made a
good bit of progress getting our allies to adopt the catch-all,
but we have to keep in mind, I think, what the catch-all was
designed to do. It was invented in the last administration when
we discovered a circumstance in which we had identified a bad
end-user but were going to send something that was not at that
moment under control, yet we wanted to stop it because of its
significance to that end-user and our high level of confidence
as to how it would be used.
Chairman Thompson. We have learned there are some things
that are not on anybody's control list necessarily but that are
problems when they are going to the wrong place.
Mr. Reinsch. Well, exactly, and that is what catch-all is
about. It is designed to provide in our case a regulatory basis
for stopping things that would not normally require a license
because we know the nature of the end-use and because we have a
high level of confidence it is going to be used for
proliferation purposes. This is even more important for some of
our allies whose legal authority to control exports is rooted
in the multilateral list.
In other words, they do not have a unilateral list of their
own that goes beyond whatever is on the Wassenaar and the other
lists they belong to. So on occasion, we have gone to them and
said this bad thing is about to go there and they will say,
well, we agree with you, it is a bad thing; we have no legal
authority to do anything about it. A catch-all provision, if we
can persuade them to adopt it, gives them a legal basis to
respond to the kinds of dialogue Secretary Holum wants to have
with them when we discover these things.
In fact, we have had a lot of success with the Japanese and
with I think--I cannot give you a number--I think the State
Department can--most of our allies in getting them to put this
into place. Now, the next step, of course, is to watch it,
observe it, and take advantage of it when we see something
going notwithstanding the catch-all, to go back and remind them
that they have one and they can take these steps.
Chairman Thompson. I see what you are talking about. On the
undercutting provision--I take it we are trying to get some
movement on that also----
Mr. Holum. Yes, sir.
Chairman Thompson. Could that turn around and bite us on
any occasion, such as an outright veto might? You point out the
downside of the veto. I am wondering about whether or not there
would likely be instances where one of our allies would come
forth and say, they approached us first and we denied them
these sales and therefore, you, the United States, cannot sell
these things to your allies.
Mr. Holum. That raises the same point why a number of
people think a veto is not in our national interests. We are a
country that leads in technology.
Chairman Thompson. But this is not an outright veto, of
course.
Mr. Holum. This is not an outright veto.
Chairman Thompson. It is a no-undercutting arrangement.
Mr. Holum. We would have to be able to stand up and defend
our decision if we had made a decision to undercut. I think the
reason something like this would serve our interests is the
United States is unquestionably the most aggressive country in
the world in terms of controlling exports of arms and dual-use
items. The likelihood of our being caught in that kind of a
bind and being unwilling to defend our self is limited compared
to others.
Chairman Thompson. Finally, Mr. Reinsch, I cannot resist
the temptation, since you kind of opened the door here a few
minutes ago in terms of credibility.
Mr. Reinsch. I am going to pay for that.
Chairman Thompson. What does it say about our credibility
when we have our intelligence experts, our CIA analysts come
before this Committee and tell us that China is still one of
the world's greatest proliferators? The same countries that
they are selling to we are told by the Rumsfeld Commission and
others are posing an ever-increasing threat. And yet we are
engaging more and more in dual-use trade with China, expanding
the MTOP performance level export license threshold for
supercomputers, what have you. I wonder what our allies think
when they look at what we are doing with regard to China.
Senator Akaka referred to one of the other witnesses'
statements about the fact that when they use our capital
markets, they raise billions of dollars for state-owned
companies. Some think the money goes back to enhance their
military. We do not know where it goes because there is no
transparency.
Even leaving all the other human rights issues and so forth
aside, they seem to be thumbing their nose at us in every
respect, reminding us that they can lob a missile on to our
cities, and threatening Taiwan. From the front page of the
Washington Post today it looks like the Great Leap Forward guys
in Beijing are having their say now, brooking no dissent and
all that. What does it say to our allies when we so
aggressively pursue trade with China when the PRC is so clearly
proliferating to nations that our own people tell us are
increasing threats to us? I mean does that not----
Mr. Reinsch. We are dividing the answer, Mr. Chairman, and
Mr. Holum is going to go first.
Chairman Thompson. All right.
Mr. Holum. I think putting it in a broader context, we are
certainly dissatisfied with China's performance on non-
proliferation standards, but we also have to proceed on the
basis of two other realities. One is that we are not going to
solve the non-proliferation problem if we do not have China
assisting, if we do not have them actively participating in
control regimes and agreeing to contain their transfers of
technologies and especially WMD and delivery system items. That
is one reality.
Another reality is we have had some considerable success in
pursuing those efforts through a combination of steps that
include sanctions, that include positive inducements, that
include the full range of diplomatic engagement at every level
up to and including the President.
In 1994, as part of a process to lift sanctions related to
missile transfers to Pakistan, China agreed not to transfer
MTCR class missiles to anyone. That goes beyond the MTCR
commitment. And they have lived up to it. They have as near as
we can tell not since that time transferred such missiles
anywhere. They have agreed, and President Zhang said they would
not transfer CA801 or 802 missiles to Iran.
Chairman Thompson. When they get caught on a particular
thing, they make only very specific agreements not to do very
specific things.
Mr. Holum. I agree, but it is a step in the right direction
to have them agree to that. I would like to have them in the
MTCR. If they can meet the standards of that regime, I would
like to have them in that regime so that they would be
constrained like other members are. But their nuclear----
Chairman Thompson. But there is really no--I mean that is
not even on the distant horizon. They do not have adequate
export controls. They do not adhere to existing
nonproliferation regimes. They do not have responsible policies
towards the so-called rogue nations. All of those are
requirements for becoming a part----
Mr. Holum. That is right.
Chairman Thompson [continuing]. Of the Wassenaar Agreement.
And they do not, they will not be a part of any regime that
requires full IAEA controls. I mean, what in the world gives us
reason to even hope that they might change their policies
enough that they might qualify even for the Wassenaar
Arrangement?
Mr. Holum. If they will not, they will not be members. But
what I am saying is I want to continue the effort to make them
part of the solution because if they are part of the problem,
we are not going to solve the problem. And we have made some
headway. In the nuclear area after the 1996 ring magnets case,
they agreed to not transfer nuclear technology to countries
without full scope safeguards. They have continued, lived up to
that obligation. They are not cooperating except for a couple
of winding down projects with Iran's nuclear program, unlike
Russia.
All I am trying to say is we are not happy with their
performance, but this is a mixed picture, and we need to keep
working it. If we give up, we are not going to solve the
proliferation problem.
Chairman Thompson. That is good enough for me unless you
just want to add something?
Mr. Reinsch. Well, I was going to say also, first, Mr.
Chairman, on the export control side, we have had a series of
encounters with our counterpart in China, which is MOFTEC, not
the Ministry of Foreign Affairs, which actually administers
Chinese export controls, and have had two sessions last year
which were essentially training and information sharing
sessions in which they sent I think virtually all their people
here a week at a time to learn about how to maintain a
competent export control system.
We are planning to go back now in the fall. This was
arranged last week. We are planning to go back in the fall to
Shanghai and meet with their businesses. This is a slow
process. We are doing the same thing in Russia. We are doing
the same thing in Ukraine. I mean Mr. Holum is right. It is a
mixed picture. It is coming along.
On the industry side, I would just say that I urge you not
to let the computer issue obscure all the other issues. One of
the comments I made earlier was that in the last couple of
years, we sold them two machine tools, five axis machine tools,
while our European friends sold them 20.
We actually maintained quite tight controls over
manufacturing technology and production technology going to
China, and if you want to have a panel of the machine tool
people and semi-conductor manufacturing equipment people here,
they will tell you their long litany of complaints about this
administration's repeated denials of things that they want to
send, and we will tell you our repeated efforts to demarche our
European friends not to sell either, which have not been very
successful.
Computers are a different story. It is a different
technology. They make them themselves. They make high
performance computers themselves. The reality, the commercial
reality in China right now is Legend, which is a Chinese
company, is now fourth in computer marketing in the Asia-
Pacific region. It is the largest producer in China. At the PC
level, they are eating American companies' lunch.
Chairman Thompson. They do not need ours anymore. That is
good news.
Mr. Reinsch. Well, that is what is happening. If you think
about it from the standpoint of economic development history,
this is going to be like everything else. They are moving up
the value-added chain and they are going to start making the
bigger PCs. They are going to start making the servers. They
are going to start making work stations, and they are going to
displace us in the marketplace there. The thing that people
forget about regarding the proliferation issue, if you are the
PLA and you want to use a high performance computer for
something, keeping in mind that most of the things you would
want to use a computer for, you can use an ordinary PC for in
the weapons area, which is what we did for our designs--all the
weapons in our arsenal were designed with computers of a
thousand MTOPS or below--there are many ways to acquire them.
I mean the technology is way out of the box. But if they
want an HPC, they make them. They do not make enough of them to
compete with us. They are not as good as ours, they are not as
cheap as ours, but, if you are the PLA, what do you need? Ten,
20? They can do that in a few months. So what we have tried to
do about that technology, not all technologies, but that
technology, is take a realistic view of what is going on in the
world an get a sense of what is most in the interest of our
security, which we think is a healthy industry, but I would not
extrapolate that history or that case to cover all technologies
or our entire policy.
Mr. Holum. Mr. Chairman, I am sorry I need to correct
something. I was playing my last answer through in my head, and
I think I said that China agreed not to transfer nuclear
technology to countries without full scope safeguards. That is
not correct. They agreed not to assist unsafeguarded nuclear
facilities.
Chairman Thompson. Because Pakistan would not fit that
criterion.
Mr. Holum. That is right. That is an important distinction.
I think I misspoke.
Chairman Thompson. All right. Thank you.
Senator Akaka. Mr. Chairman, may I follow up with a quick
question?
Chairman Thompson. Yes, go ahead, Senator Akaka.
Senator Akaka [continuing]. On China. Mr. Holum, you said
that you hoped to broaden membership in the Wassenaar and
suggested including China in it. And the Missile Technology
Control Regime. Has not China said that it would adhere to the
MTCR?
Mr. Holum. China has said it would consider membership in
the MTCR and they gave us a long list of questions that were
serious questions that they wanted answered, but they would
have to live up to the obligations of the MTCR and so this
would be a decision-making process on our part as well as the
other members. But at this stage, they are not prepared.
Senator Akaka. Thank you, Mr. Chairman.
Chairman Thompson. OK. Well, we can continue our discussion
on these other items at a later date. It will be ongoing. I
would refer anyone who is interested in this to make part of
their reading the Cox Report, but I appreciate your being here
with us today. We have another panel that is patiently waiting,
so we will move on to that. Thank you, gentlemen.
Senator Lieberman. Thank you.
Chairman Thompson. I would like to ask our second panel to
come forward. Our first witness will be Frank Gaffney, Director
of the Center for Security Policy. He will be followed by Henry
Sokolski, Executive Director of the Nonproliferation Policy
Education Center, and the Hon. Stephen Hadley, former Assistant
Secretary for International Security Policy at the Department
of Defense.
Thank you for being with us today. It just occurred to me I
do not think I ever introduced our last two gentlemen. But I
think Mr. Reinsch and Mr. Holum are so well known I suppose
they did not need any introduction. Mr. Gaffney, do you have an
opening comment or two?
TESTIMONY OF FRANK J. GAFFNEY, JR.,\1\ PRESIDENT, CENTER FOR
SECURITY POLICY
Mr. Gaffney. I have about 20 minutes of opening comments,
Mr. Chairman, to be honest. And I will try to reduce it to the
time that light will give me. I appreciate very much the chance
to appear and ask you to submit for the record my entire tome
and will try to summarize three main points.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Gaffney appears in the Appendix
on page 61.
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Chairman Thompson. Your statements will be made a part of
the record.
Mr. Gaffney. Thank you, sir. Three main points. The first
is really in the nature of an acknowledgement and a thank you
to you personally, Mr. Chairman, and many other members of this
Committee and the Senate, for taking this issue up. I have had
the privilege of working on it off and on for about 20 years,
starting back when I worked for a member of this Committee,
Scoop Jackson. And I believe we are in serious danger when
there is not aggressive oversight by the Congress in this area.
And so I commend you both for what you are doing to look at the
multilateral side of this and, of course, the activities that
look like they are going to resurface today on the floor in
terms of the domestic EAA and I wish you well in that regard.
I will turn second and quickly to how we got here and you
have heard a little bit of what I would consider to be
revisionist history of the demise of COCOM and the construction
of the Wassenaar accord. I have indicated in my testimony
several themes that I think actually contributed materially to
the decision to end COCOM. And there is no getting around it,
the allies wanted it ended, but I remember one of my first
tasks working for Senator Jackson, as a matter of fact, was
supporting an effort he made in 1977 to prepare for then the
new president Jimmy Carter a strategic arms control proposal
that would involve the kind of radical reductions that
ultimately characterized President Reagan's initiatives.
And that proposal was taken to Moscow and presented by
Cyrus Vance and a negotiating team including Paul Warnke who
wanted no part of that agreement any more than the Soviets did.
And I would suggest to you that you had precisely the same kind
of phenomenon at work here. This administration, I regret to
say, populated senior positions in several departments, but
most notably in the Defense Department, with responsibility for
export controls with people who had a very clear record of
hostility to export controls in general and specifically to
COCOM.
When you had such people going to our allies and saying we
need to keep that veto, if they did indeed do that, it was not
credible, and the fate of a very valuable, very important
institution, not only during the Cold War but I believe
arguably even more so today, was a foregone conclusion.
I will not belabor some of these other points except to say
that I think the principle that we can trust people who regard
as clients countries we regard as rogue states, to be full and
reliable allies and partners in these kinds of multilateral
arrangements is foolish in the extreme.
It is not an accident, in other words, that quite apart
from many of our allies, who frankly are not terribly reliable
in these areas either, some of our long-time adversaries have
proven to be part of the problem. To hear Secretary Holum
talking about getting them into these multilateral arrangements
and thus making them part of the solution I think, in fact,
preordains that there will be no solution at least through this
approach.
Quickly, I would like to just cover a couple of the points
that I think you need to think about concerning what do we do
now? I know you do not want to talk about it and I will not
except to say: First, do no harm. And the EAA bill before the
Senate today will do more harm, I believe. We need to
reestablish an appropriate balance. We all agree there are
subjective judgments and a lot of nuances here, but we need to
reestablish balance between commercial interests and national
security interests, a balance that I think has been egregiously
lacking in this administration.
To start with, you need to have a focus. And as you said,
Mr. Chairman, and I think Senator Lieberman and others, it is
obvious that the old Soviet focus is no longer relevant. But I
am afraid as your colloquy just now indicates a focus on China
and for that matter a focus on Russia ought to be part and
parcel of what we understand to be a continuing contributing
force in the problem export controls are designed to address.
We need to reestablish in the Pentagon a real voice for a
national security-minded approach to export control. This
involves personnel questions. It involves organizational
questions. It demands really your attention, if I may be so
bold as to suggest, particularly this Committee, because others
have not given it the attention that it requires.
I would like to leave you with one further thought. It is
now pretty clear that because of the complications that have
been introduced with the destruction of COCOM, because of the
proliferation of a lot of technologies that contribute to
proliferation, that it is going to be very hard to get the
genie back in the bottle. I think therefore it is incumbent
upon us, before we do more damage, to be insisting upon some
kind of rigorous exercise. I have come up with the term of a
``qualitative edge impact statement.'' Because let us be clear.
To the extent that we are contributing to the arming of
potential adversaries, we are having a negative effect on the
qualitative edge that our military has relied upon and I will
believe will continue to require to assure its ability to
prevail on the battlefield, minimize casualties and so on.
This has a corollary. We not only need to understand what
we are doing to harm our qualitative edge, we need to be
introducing new energy into the need to restore it. This means
a really concerted effort in the research and development area.
And I would suggest--and maybe this is heretical, but I would
suggest that the very companies that are so keen to contribute,
not intentionally, of course, but practically to deteriorating
the qualitative edge of our military ought to be assigned the
task of helping to restore it, to build it up, using some of
perhaps the same technologies and capabilities and certainly
know-how that would go into their exports.
Finally, Mr. Chairman, I would just suggest that there is a
question of leverage. You have asked--I think both of you have
asked--what do you do now that we have destroyed COCOM. We have
gotten rid of a veto, a veto which I believe on balance, if you
do not have the Russians exercising it, is still in our
interest to have exercised. I think you have leverage in a
couple of areas.
Secretary Hadley will speak to the question of access to
U.S. technology. I would like to just address, though, access
to our markets. To the extent that companies or for that matter
their countries are bound and determined to sell harmful
technologies over our objections to potential adversaries, we
ought to let them know that there is a cost to doing so. And
that cost could--in my judgment, should--be that they will not
be able to sell their products to our market. And I think in
that calculus most people would prefer to sell to the American
economy than to Iran's or North Korea's.
Last, I wanted also just again to commend you, Mr.
Chairman. You have personally taken an interest in an issue
that I know Henry Sokolski is going to speak to, too, and that
is a new front that is being opened up in the proliferation
fight. That is the front of companies and their governments
coming to our capital markets to finance their proliferation
and technology acquisition and espionage and other hostile
activities. The most recent of these, of course, was the very
controversial IPO issued last week by Petro China, a company
with close ties both to the Chinese government and the largest
oil giant in China. The parent company is doing business with
Sudan, helping Sudan's government engage in weapons of mass
destruction and proliferation--Bill Safire has written about
possible missile construction there--but also genocide and
slave trading.
So this is an area that I commend to your further attention
and urge you to focus on as well as these other very complex
but very important questions. Thank you, sir.
Chairman Thompson. Thank you very much. Mr. Hadley.
TESTIMONY OF STEPHEN J. HADLEY,\1\ FORMER ASSISTANT SECRETARY
FOR INTERNATIONAL SECURITY POLICY, U.S. DEPARTMENT OF DEFENSE
Mr. Hadley. Mr. Chairman, if my statement could be
submitted for the record.
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\1\ The prepared statement of Mr. Hadley appears in the Appendix on
page 67.
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Chairman Thompson. It will be part of the record.
Mr. Hadley. It is a real privilege to have the opportunity
to be with you today. I would like to focus on the broader
question of multilateral export controls and how to improve
them. Much of my statement in the beginning talks about how the
world has changed, and the opening statements that you made and
Senator Lieberman made are clear that you understand this fact
and I will not go over it.
My basic point is that we need, in light of all the changes
that we have seen, a fundamental relook at the whole export
control issue. What truly is in our national security interest?
What do we want to protect? How best to protect it? I think
only if we conduct this kind of intensive review are we going
to be in position to go to our allies effectively and to get
them to do more from a multilateral export control standpoint.
Just about three or four points on that theme, if I might.
The Defense Science Board Report, which was referred to
earlier, is interesting because it really suggests that
military advantage is going to come in a different way in the
future than it has in the past.
Rather than developing capabilities in the military
establishment and fielding them, the prize is going to go to
the country that can take what is available, primarily
commercially, and incorporate it quickly into military hardware
put in the hands of well trained and well led military forces.
I am not competent to say whether that analysis is right. It is
interesting that it comes from a group of people that have had
long experience in a number of administrations with the defense
establishment.
And for me it underscores the need for a new look,
particularly at this issue of what do we want to be controlling
through export controls. So far as I know the last major look
was 1991 and 1992 when the United States began to move out of
the Cold War. The military led that effort and the most
difficult issue was to identify the criteria to use to try to
identify the technologies and capabilities to protect.
We, at that time, came up with what we called gap closing
technologies. Was it a technology or capability that could
really allow, in that case the Soviet Union, to close a gap
with our own military forces? I do not know if that is the
right criteria for the new context in which we find ourselves
in but I am convinced that it is this kind of analysis that we
need to give content to some of the things Frank Gaffney has
talked about. When we say preserving our technological edge, we
need to know what that means and in concrete terms what that
means we need to protect.
I talk, in the statement, about some of the questions that
I think this review ought to undertake, some of the
implications the answers may have for our approach to export
control. I also think that once we have completed that review,
we need to have a different approach with respect to our
allies. I think our tendency is to go over and want to talk to
them about export controls and the details of the Wassenaar
Agreement. I think that is the wrong approach. I think we have
to go back much further in the analysis and talk to them about
our assessment of the serious risks of proliferation of various
kinds, what are the countries of concern, why we are worried
about countries like Iran. I think we really see Iran very
differently in strategic terms and I do not think we are going
to make progress on export controls until we have an intensive
dialogue that tries to get our allies to understand how we see
Iran and why.
We then need to start talking about strategies that will be
focused on the states of concern and that will use all the
various tools that are available--of which export controls is
one but only one. And I think only if we have this kind of
active engagement with our allies are we going to be able at
the end of the day to get a strengthened approach to
multilateral export controls. Thank you very much.
Chairman Thompson. Thank you very much. Mr. Sokolski.
TESTIMONY OF HENRY D. SOKOLSKI,\1\ EXECUTIVE DIRECTOR, THE
NONPROLIFERATION POLICY EDUCATION CENTER
Mr. Sokolski. Thank you very much. Having worked up here, I
am reminded of a story. I used to work for a little known
senator from Indiana, Dan Quayle. And I would come in and
complain about things. One day he turned on me and he said,
Henry, what is it with you? It is always doom and gloom. What
is the good news? What I told him then is what I will tell you
now.
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\1\ The prepared statement of Mr. Sokolski with attachments appears
in the Appendix on page 79.
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The good news, Senator, is that you still have not fired
me, and you will ask the questions necessary to get to the
bottom of what I am complaining about. I think in essence what
you are doing with these hearings will only be useful if you
keep it up. I urge you to keep asking the very questions both
of you asked at the beginning because those are the right
questions. It is going to take a long time to get the answers,
but if you keep asking, you will get to where you want to go.
In that regard, let me try to speak to some things which
have not been raised. I ask that the balance of my remarks be
placed in the record.
Chairman Thompson. Without objection.
Mr. Sokolski. Thank you very much. Look, as you have all
now established, post-Cold War trends have made controlling
strategic weapons goods much more difficult. I think this
highlights the need for three new kinds of restraint.
First, we need to prevent not just listed strategic
commodities, but unlisted strategic goods from going to foreign
weapons projects. We focus on lists because the analytical work
has to be done to know what it is we should worry about. But
there will never be a list that will be perfect. And in that
regard, we need to get other nations to adopt the kind of
catch-all controls the United States and the European Union are
using and apply them with existing multilateral export controls
regimes, not just Wassenaar. I know this Committee is focused
on Wassenaar, but it turns out other control regimes have no
undercut provisions. And we can use them. And the coverage of
items these regimes control is pretty good. It is not as
expansive as Wassenaar and what they look at, but it is pretty
good.
Second, as these charts will demonstrate, getting a more
accurate inventory on the status and amounts of nuclear weapons
usable materials worldwide and especially with Russia is
imperative. I know the Committee wants to talk about dual- use
controls, but if we want to talk about multilateral
proliferation controls, we need to understand that there is a
limited budget of political capital and you have to pick what
you want to emphasize. I would say the trends here are really
disturbing and have major implications for national security.
Finally, and a point that I think both of you have raised,
we have got to strengthen our authority as a nation to
negotiate on any of this. The two recommendations I have are
ending U.S. subsidies to known proliferators and upholding U.S.
nonproliferation laws particularly with regard to U.S. trade
and nonproliferation cooperation with, and I emphasize the
word, known, proliferators in Russia, China and North Korea.
Let me make a few comments beyond what I have made to
amplify these three points. On the first point, I think
encouraging the multilateral use of catch-all controls is our
best bet for preventing risky exports to bad end-users. This
approach avoids the fruitless multilateral debates over what
items should be controlled to what destination and instead
gives control regime members an incentive to exchange threat
assessments. In essence, if you want to get engagement, you
have got to have something operational and concrete to bring to
your ally or friend and say, look, this left-handed franostat,
whether it is on a list or not, if it goes to Country X, is
going to do this kind of harm.
When you present it that way, and you do a denial and you
ask for no undercut, you get the dialogue that you need. I
think we can go much further than we have in producing that
dialogue, however. We, in fact, drag our feet. How? We listen
to the exporting community demand that we develop a list again
of what those things that should be controlled and because we
cannot get a list, we do not do the no undercut and catch-all
controls the way we could by simply taking actions instead of
focusing on endless debates about the list.
Now, I am going to move very quickly because my time is
running out. These charts I believe are self-explanatory and
they are in the testimony. At the height of the Cold War,
almost all the fissile that could be made into bombs was in
bombs. If you take a look at the middle chart, you will notice,
and just as a peg, United States now only deploys about 6,000
nuclear weapons. The civil material that is not only in Russia
but Japan and Europe can make many, many times more than that
number of bombs now. That overhang did not used to exist during
the Cold War.
In addition, we have only the vaguest idea of the various
categories of nuclear materials Russia has. Now the United
States is an open country. People know what all the categories
are and the numbers are for the United States and its nuclear
holdings. We need to get others to step up to the plate and
start showing some nuclear candor as well. If we cannot, that
has enormous implications. You will notice that the only
categories of materials that can be most quickly deployed as
bombs are those highlighted on the chart. We do not pay, our
policies do not pay any attention to the other categories.
Those other things are very dangerous as well.
That then brings me to the last point and that is to get a
better fix on all of these things and to do better, we have got
to stop being part of the problem and I am afraid we are. The
earlier admission by one of the administration witnesses that
we export controlled items to proliferators I thought was
chilling. Look, the intelligence community does know who the
proliferators are. It is the other agencies that do not want to
listen to the facts. I know, I was in the Pentagon. I did
nonproliferation for the Pentagon for 4 years. The problem is
not a lack of intelligence. It is a lack of will to use what
intelligence we have got.
I think with that, I will conclude except to put one ad for
one piece of legislation. I would not be useful if I did not
plug something. You cannot possibly not want to demand that the
worst proliferator not receive U.S. nuclear cooperation until
it has lived up to the nonproliferation obligations it has
admitted and others have admitted it has violated. I am talking
about North Korea. There is a piece of legislation that was
introduced yesterday by Congressmen Gilman and Markey, that
passed last fall overwhelmingly by 300 votes, it included a lot
of Democrats. I sure hope somebody picks that up over here.
That concludes my remarks.
Chairman Thompson. Thank you very much. Senator Lieberman,
do you want to start?
Senator Lieberman. Thanks. I have to go. I thank you for
your testimony. I will just take advantage of your courtesy to
ask one question which is the extent to which we can do a
better job engaging our allies in this effort and underneath
that is the question which I gather was being suggested by the
first panel, that we are at a point in the multipolar, post-
Cold War world where, yes, of course, we have overlap of
interest with our allies, but they are limited now when it
comes to both vision of some of these rogue nations that we are
very worried about and commercial interests.
So I guess my question is--because I think you are right
that we do need to more directly engage our allies on this--do
you feel that we have not adequately done it? In other words,
is there a gap here that is overcomeable, if there is such a
word?
Mr. Gaffney. Well, I might just kick it off by saying I
think that there is no getting around the fact that for many of
our allies, the syndrome that I tried to address in my
testimony concerning our own government is even more rampant.
That is the idea that really there is not any security problem,
period. And therefore there is no further impediment to doing
whatever feels good or whatever would be lucrative in terms of
either the company's quarterly bottom line or the country's
GDP.
I believe, Senator, that there are in most of the
governments that run our allies' nations these days still
people who appreciate that that is probably not true. I think
they are undercut, however, within their own councils when they
witness how our government conducts itself. Giving Secretary
Holum the benefit of the doubt about our government-to-
government representations, bilateral or multilateral, the
allies see that as sort of going through the motions in which
we say, we really don't think you should do that. Yet, they are
watching what is actually the policy of our government. And
this is why, whether we want to talk about it or not, what you
are going to be debating today and the next couple of days is
so important.
They are looking at what kind of laws will be enacted in
this government that will, in fact, make it harder still for us
to exercise export controls and to inject national security
into our decision-making about exports.
So I think that we must look to our own sins first and why
I am so proud really of what you all are trying to do here to
have some accountability in this area and to do some second-
guessing of judgments that are being made. I think that will
almost certainly help, at least at the point where we have a
U.S. Government that is willing forcefully to go in and not
just issue what my friend, Richard Perle, used to call
``demarshmellows'' but really raise hell with allies that what
they are doing is contrary not only to our security but to
theirs as well.
Senator Lieberman. Richard Perle never issued a
``demarshmellow.''
Mr. Gaffney. Not willingly.
Senator Lieberman. Mr. Sokolski, do you want to add
anything to that?
Mr. Sokolski. Yeah. You come at these questions that are
big usually at high and low levels. Let us start low because
that is easier.
Senator Lieberman. OK.
Mr. Sokolski. It would be useful for someone on this staff
to get the poor assignment--I notice everyone is looking back
there--how backed up are our denial notices and other's denial
notices, how are these things working, please? Because the no
undercut plus catch-all, in theory, can work. In practice, of
course, it does not. But it is up to you to find out how bad is
it. And if you do not ask, they will say it is working pretty
well. So that is point one.
Point two, I know that there is a book--this is ears-only
intelligence--that lists every piece of code word information
on every proliferation action that has taken place since I was
in office. I know because I created the book. That was back in
1990. It is there somewhere in the government. Go find it.
Because when you do, you will see mismatch between what we know
and what we do. And by the way, it is a bipartisan equal
opportunity critic machine. This is not going after this
administration. It is going after the system. You want to take
a look at that if you can find it.
Finally, Export-Import Bank and who we are exporting to? A
useful thing to look into. A nice bipartisan thing. Now that is
the low road.
High road. I served on a commission that had a name that
went on forever and ever. It was going to tell you how to
organize our government. It was pretty funny. The acronym was
so long, we did not use it. It was the Commission to Assess the
Organization of the Federal Government to Combat the
Proliferation of Weapons of Mass Destruction. OK. Big acronym.
One of the things that we did stumble into despite all of
our efforts not to look at it was that this country does not
have a long-term set of objectives, time phased goals, and
never mind strategy--let us leave that alone--with regard to
key countries that are troublemakers for us. When we asked the
State Department, and Mr. Holum, by the way, he was very candid
about this--I think he is a great man--when he came to the
commission, he admitted there was a problem. When we asked what
are our time-phased objectives regarding North Korea, he said,
well, we have got them written down, but they are not very
good.
And then he sent us a performance report produced because
of the laws coming out of this Committee that went 12 months
into the future. That was it. And you know what it was--
implementation of the Agreed Framework. That was all. If you do
not have more than that going with regard to North Korea and
can explain it publicly and privately, you are not going to get
any allies to do anything on the low road with you. But if you
do, it is amazing what you can get. But if you do not, there is
no hope.
You should be asking what our time phased objectives are
with regard any two countries--I do not care which ones they
are--that you think are important, get people up here in closed
and open hearings and see whether or not we've got a plan.
Senator Lieberman. Thank you. You have given our staff and
us some things to do. Thanks, Mr. Chairman.
Chairman Thompson. Thank you very much. Those performance
reports are supposed to be in March 31. I have not seen them
yet, but I am looking forward to it. Because for most agencies,
we found out that the goals they set out is how much paper they
are supposed to shuffle next year or how many phone calls they
are to answer--and not whether lives are being saved or whether
there are fewer proliferators than there were before, and so
forth. That is going to be another one of those long processes,
getting the Results Act to work.
Mr. Sokolski. Right.
Chairman Thompson. This is an area where it really could go
do some good because it will focus people on the fact, if
nothing else, that they have no real goals.
Mr. Sokolski. Absolutely. Our commission interviewed people
in the Department of Energy, who when talking about Nunn-Lugar,
said we have scientist-to-scientist programs and we asked how
many scientists do we need to reach by when? And they looked at
us like you must be crazy. Well, they said, a million. I said,
well how have you engaged? Well, they said, we have got 6,000
that we have touched. You got to do better than that. And
whether you are for that program or not, that is not a program
with serious time-phased goals. You cannot measure success or
failure.
Chairman Thompson. While we are on that subject, what do
you think about the Cooperative Threat Reduction programs and
Nunn-Lugar and all that? You have pointed out something here
that is extremely important. Of course, as far as I know,
nobody has ever developed so far a nuclear capability solely
based on what they have stolen--except perhaps the Soviets.
Unfortunately, they have developed it on what they have been
able to buy on the open market plus a little help from their
friends. But you pointed out the tremendous potential out
there, and that it is another one of those good case/bad case
scenarios.
The good case is that we are getting the START agreements.
The bad case is that the more we do there, the more we have got
stuff arriving from off the books and nobody knows how much and
where it is, or how rapidly it could be taken and put back in
to weapons. And we are spending hundreds of millions of dollars
trying to get some security and some fences around some places
and placating some scientists and things like that.
I think you are right. I am not sure that we have any feel
for how much good it is doing yet, but everybody agrees that
we've got to do something. So this is what we are doing. What
do you think about those programs?
Mr. Sokolski. Look at the charts. You see the highlighted
categories. Arms control as we know it, START, reduces the
number of deployed nuclear weapons. It takes the warheads and
puts them on a shelf and maybe it cuts up the missile or the
bomber. Nunn-Lugar takes whatever is declared by us and the
Russians as military surplus and tries--it has not done it
yet--tries to push this material to the last category which
makes it locked up in spent fuel or spent fuel equivalent,
either by irradiating it in mox or by literally taking it and
mixing it up with spent fuel and making it into logs.
You will notice our policies in toto, never mind
cooperative threat reduction, ignores all the other categories.
It does not do anything with regard to them. The civil
plutonium holdings, which I use very conservative figures, is
something I know you worked with. The numbers keep rising. We
have got conservatively five times the number of nuclear
weapons that could be made out of civil fuel, and we do not
even have the exact figure. And it hanging around and literally
floating around as it is being shipped between the Europe and
Japan. Talk about terrorism problems.
When you get to the United States and Russia, we can tell
you essentially what the U.S. surplus military fissile holdings
are. You can go Natural Resource Defense Council. They have
pretty good figures. Maybe we can make them a little bit
better, but even Tom Cochran, who I talk with a lot, says they
are pretty good. What we do not know is within--what is it--
23,000 advance weapons--what Russia's surplus holding are. An
advanced nuclear weapon is where you have two warheads mated
together to make one. So the real figure if you want crude
weapons is like--I don't know--50,000 weapons. I mean the mind
boggles. We have no idea of whether they have that breakout
capability.
Now it seems to me, whether you are a hawk or you are a
dove, whether you like nuclear weapons, whether you want to
test or you do not, whether you like missile defenses or you do
not, you want to reduce that certainty budget. You want to at
least fail at trying. We have not tried. We have not even
talked about this seriously or put it at the head of the list.
It is interesting. Apparently someone read an editorial of
mine--I think it was Paul Wolfowitz, and got Candidate Bush to
put that in his speech.
Now I am not so sure that Gore would not agree on that one.
Maybe if we succeeded, we do not have to spend so much money.
You know what we spend a year on nuclear weapons hedge? It is a
lot. I think it is like several billion dollars. What is it?
Eight billion? That could go to missile defense or something
else.
Mr. Gaffney. Senator, could I just add a point. This
Committee is especially well suited for what I think is
desperately needed in this area. I have worked with Senator
Nunn and Senator Lugar, as you have, for a long time, and I
think in no small measure out of a sense of respect for them,
as much as out of a sense of what else are you going to do,
this program has gotten precious little rigorous oversight.
There are a slew of General Accounting Office reports that
document what would under any other program I think be
considered to be at least abuse, if not fraud, and perhaps most
certainly waste.
We are in many cases I think building as you said yourself
higher fences, better padlocks, better surveillance systems,
and the like for some of the repositories of this stuff.
Unfortunately, this takes into no account at all, as best I can
tell, the underlying problem. And that is the guy who has got
the key to those better padlocks may be part of the problem.
Maybe what we are doing by enhancing the security of these
facilities is just maximizing his monopoly over the sale of
what is in them. But this is an area that I entreat you to take
a hard look at.
Chairman Thompson. Freeing up some of his resources to put
in another place.
Mr. Gaffney. Absolutely, fungibility.
Mr. Sokolski. Well, actually, fundamentally, we gave $12
billion over the next 20 years to Minatom for highly enriched
uranium. We have no idea where that money is going. If we are
lucky, it is going into dachas as just corruption. If we are
not, it is going into weapons or financing weapons sales to
Iran. We need to find out where the money is going.
Mr. Hadley. I think the issue here is not priority. I think
this ought to be--the Nunn-Lugar ought to be a priority. I
think the issue is effectiveness in the things that Henry and
Frank have raised. And in some sense, it is very important for
this Committee or others to look into the issue of
effectiveness because the program is too important not to be
effective--not to be doing as much as it can be doing as
effectively as it can do it. So I think the issue is not
priority or importance. It's effectiveness.
Chairman Thompson. OK. Mr. Hadley, you talked about taking
kind of a new look at this whole thing. We are about to start
the discussion on the Export Administration Act apparently. It
is kind of mind-boggling really when you think about it. I
guess people have been around here a lot longer than I have who
have spent a lot of time on this. I do not know. You have got a
committee called the Banking Committee that produces this and
the rest of us are kind of scrambling to read various
iterations of changes and so forth as it is going to the floor.
And we're all haggling over national security matters and
staffs are arguing with each other over stuff.
I wonder who if anybody has read it? You talk about the
high road and the low road. That is the real low road. On the
other hand, we have got all these grandiose multilaterals
agreements that we are trying to do. And people seem to think
that the more people we can get into them, the better,
regardless of fact that some countries spend all their time
trying to undercut us once they are in.
I am amazed, coming in from the outside, to find that
nobody has got a handle on all this stuff. I mean nobody really
knows. You know I started out thinking probably the more
controls the better--a pretty simplistic view, I suppose. But I
can see now that nobody really knows what the right answers is.
I mean we ought to have a plan. The government ought to have a
plan as to where we are trying to go in this world that we live
in while we all talk about catch-alls and so forth. But it
doesn't make sense to say that you cannot do any good in
restricting exports unilaterally--and that we should no longer
try--and then to complain that our own allies will not
cooperate with us multilaterally because they don't trust us
not to take unilateral trading advantage. How does that work?
Mr. Sokolski, with regard to the catch-all matter, how
would that work in practice? You would have some kind of a deal
that says when we do ``x'', the catch-all provision will kick
in. Clearly what is going on is a bilateral deal. I guess we
are doing that, and we will always be able to do that. It could
be coupled with a no undercut, I suppose. But how would that
actually work?
Mr. Sokolski. I can tell you how it has worked in the few
instances where I have worked it. First, before you go
anywhere, you do not simply go to some general forum, even as
general as NATO, you go bilaterally, MOD to MOD first, because
it's the ministries of defense that will either save or break
this. It is not the Commerce Departments. They will break it
but they will not make it. They will always say, no, it is a
bad idea to control.
And the state departments of the foreign ministries, they
are torn frequently. They are sort of in between. But if the
ministries of defense do not care about something, you can
count on the other two saying yes to some export. So you have
got to establish relations between ministries of defense. Now
we did that in the Bush administration. I set up threat
bilaterals with the only two countries that have ever bled with
us and projected force. That is France and Great Britain. And,
boy, were they interesting. They were telling us stuff we did
not know, telling us to pay more attention to this, this, and
this.
When it got to circumstance with regard to Brazil, it was,
where some French Viking liquid fueled engines were going to go
to Brazil. I went with my assistant secretary. I was just a
deputy dog. And we went and had a discussion with our French
counter parts. You know they never explicitly blocked the
export, but it never went. They said they had no authority to
block it, but the rocket engine never went.
So I see it working the same way. I have talked with some
of my former employees who are still in the bowels of the
Pentagon. They actually are telling me that we need to do more.
For example, recently there is a steel that is made for SCUDS,
apparently if you take one ingredient out, it is still pretty
good but it is not controlled. And guess what? Someone was
trying to sell it to the wrong person. That is stuff that was
not on the list.
Now in this case, the country in question was informed but
they chose not to act because they did not have catch-all
authority. Change that.
Mr. Hadley. Mr. Chairman, I think that is really the
answer.
Chairman Thompson. Give them legal cover to do what they
might want to do anyway.
Mr. Sokolski. Encourage it. Really pursue it.
Mr. Hadley. Right. And it is something, it is a marker you
can put down on your upcoming trip. The answer to Senator
Lieberman's question is to pick up Frank's point; there are
people in these governments that care about these issues. We
need to reach out to them and establish a dialogue with them to
in some sense empower them within their own bureaucracies. It
has got to be our intelligence communities having a dialogue
with their intelligence communities, our defense department
having a dialogue with their defense officials. It has got to
be at that level. Have a strategic dialogue about why we are
concerned about Iran. The kind of specific examples that Henry
Sokolski was talking about you can put in the hands of people
in the ministries of defense and intelligence communities
there.
Chairman Thompson. But how would it actually work? What
would the language be for a situation that is not on anybody's
control list but is a problem--and one ally goes to the other?
I mean what kind of language do you use to cover situations
like that?
Mr. Sokolski. Sure. Literally what happens is this. And we
had it occur during the Consare case, which was a furnace, an
induction furnace, which frankly was going to be used for
missile purposes, not nuclear, and we had to use a nuclear
catch-all law to get it. And essentially there was a German
firm that could make it as well. What we did after we did our
denial is we went to that country and said don't you dare send
yours to the same spot.
Now, with these regimes, Missile Technology Control Regime,
Australia Group, Nuclear Suppliers Group, they all have dual-
use items on their lists. In fact, if you put them all
together, what you have is not much different than Wassenaar.
But unlike Wassenaar, they have no undercut provisions. Work
it.
Mr. Hadley. Could you give him language that you would have
the Senate adopt that would give them the authority?
Mr. Sokolski. I do not think you have to give them
language. It is working now with like-minded countries. I will
tell you where the difference comes. When the French came to us
in 1990 and said you need to worry about Iran and they gave us
a better intelligence brief than we could give them, we were
able to work on a couple of things.
What you need and I think what both Steve and Frank have
raised is enough studies, enough public diplomacy, enough
analysis about what are the kinds of problems with China, for
example, and Russia so that you do not necessarily condemn the
whole country, but you get down to specific concerns such that
you then got the public diplomacy to do the no undercut and the
catch-all with like-minded countries.
There is a limit to what you can do. You cannot convince
people that do not agree with you, but we are not even trying
to convince people of what the problems are.
Mr. Gaffney. But on that point, Mr. Chairman, could I just
put in a word for unilateral steps, too. I do not think it is
correct to say we should rule them out. Even John Holum was
saying there are some places where you--we have a case right
now where Germany is reported to be providing phosgene
manufacturing capabilities to Iran, shades of the earlier
effort to provide, as it happens, a deeply buried manufacturing
facility we believe for poison gas in Libya.
Now, I do not think that foreign availability, taken to its
logical extreme, suggests we ought to be competing to do that.
The fact that we are not going to do it and the fact that we
could raise hell about them doing it on the basis of us saying
that is not in any of our interests gives us the kind of
leverage, moral suasion, behind the scenes, public diplomacy,
whatever you want to call it--that I think can help produce
results.
But I am afraid it is now increasingly pushed off the
table, witness what you are going to be debating this
afternoon. The very fact that foreign availability or mass
market availability is asserted is going to suddenly make it
fair game for anybody who wants to do anything in those areas.
That is just not right.
Chairman Thompson. And we are acting as if there is no
threat at a time when we are trying to convince our allies that
we need a national missile defense system, for example. We are
behaving in every respect as if we really perceive no problem
with regard to the threat from rogue nations and as if we do
not believe the Rumsfeld Commission or the Deutch Commission
results or any of these reports with regard to our failure to
impose sanctions on known proliferators.
Mr. Gaffney. To the contrary, we are actually rewarding, in
the case of North Korea most especially, we are now, as you
probably know, the largest purveyor of foreign aid to North
Korea in the world.
Mr. Sokolski. Yes.
Mr. Gaffney. Why is that? I suggest it is because they now
have a ballistic missile with which to threaten us, which we
assess--CBS, by the way, the other night, in ``Failsafe'' said
North Korea now has the bomb. If they do not, they shortly
will.
This is evidence, I am afraid, not only that we are not
taking the threat seriously. Steve Hadley and you are among
those who have been working on missile defense for a long time.
We feel frustrated that we are not doing something on that
front, but we are certainly signaling to our allies--look at
South Korea, Japan, Italy, European Union--that we want these
guys to engage with North Korea just as fully as they can. What
does that mean? Trade. What does that mean? More access to
precisely this kind of technology.
Chairman Thompson. And it tells our allies that we are in
less position to protect them. It tells other rogue nations
that all you need to be able to do is blackmail the United
States. Mr. Hadley, you talked about doing more to explain our
security risk to our allies. I have talked a long time to
people over in the State Department about this. I keep asking
why do not our allies understand what we understand? Don't our
allies read the public reports that we get in here, the CIA
assessments, the Rumsfeld Commission Report, and what have you?
The impression I get is that they think our allies fully
appreciate it, but they just don't care. And that our allies
just place trade above everything else. And that while they
appreciate the danger of what some of these countries are
doing, unless the particular export directly relates to the
production of weapons of mass destruction or their means of
delivery, our allies say it does not count.
Now obviously they would care if they thought that they
were delivering something that in the next few weeks would be
fashioned into a weapon to hit even us--maybe not them, but
even us, they would care about that. But where is the
disconnect there in your opinion? From your statement, you seem
to think that--and this was my first suspicion, and I guess it
still is--we are certainly not doing enough to convince our
allies of the nature of the threat or not doing enough to share
intelligence where we can share it. And there's also the fact
that our own behavior is sending the message that we do not
really think there is much of a threat.
Mr. Hadley. Right.
Chairman Thompson. What do you think?
Mr. Hadley. I think we have a disconnect in some sense
between our rhetoric of concern about proliferation and our
actual operational steps. I will give an example. If you have
an opportunity to meet with the commander-in-chief of our
forces for CENTCOM, one of the questions you might like to ask
him is does he have someone on his staff who everyday gets up
in the morning and asks themselves, ``What am I doing today to
set back Iran's efforts to get a nuclear weapon? Be it finding
out where Iran is are trying to acquire equipment or technology
and trying to intervene to stop it, whether it is
disinformation, whatever. I think we are not operationally
serious enough about the problem.
I think if we could establish these links between
intelligence communities, DOD people, uniformed military, with
our allies, we would start giving them the ammunition they need
to be able to make their governments more serious about it. The
allies, particularly Europeans, have a lot on their plate. They
are very regionally focused. They seem to think that
proliferation is a global problem and that it is our problem;
we have to handle it. But specifically----
Chairman Thompson. Or under more economic stress than we
are.
Mr. Hadley. Right. So that is the hurdle we have to, that
is the sort of barrier we have to break through. But, if you
just think about how we would have had to run the Gulf War if
Saddam Hussein had, for example, a long-range ballistic missile
that could have come down even with a conventional warhead on
one of their capitals, there could have been a different vote
in the Senate and would have been a different issue in terms of
the activities of our allies. And I think it is those kinds of
pointed discussions--plus the kind of particular intelligence
cases that Henry was talking about--that we need to use in the
discussion with our allies at every level and engaging all of
the relevant agencies. It is hard work. It is a full-time job.
But if we really believe, as everyone seems to say, that
proliferation--particularly of weapons of mass destruction--is
our No. 1 problem, then it seems to me that it is worth the
effort. That is the best answer I can give you.
Mr. Gaffney. Senator, the other part of this disconnect,
and I think Steve is exactly right, is one that is very much
within your purview. The president has said--he did not know
that he was saying it in a public forum, but he said it, that
when it comes to implementing pieces of legislation, famously
the Gore-McCain Act, but others as well, that require
certification when something is being done like transfer of
cruise missile technology to bad guys----
Chairman Thompson. He has to fudge the facts.
Mr. Gaffney. He has to fudge the facts. Now what signal
does that send to people who are at least as willing to
ignore--the phenomenon the psychologists call cognitive
dissonance, you are not seeing what you do not want to see. I
believe that they are very much keying off what they judge to
be a very cynical and commercially as well as politically
expedient policy on the part of the U.S. Government. They are
not going to be more righteous about this, by and large.
There are exceptions. I think the Japanese on the
supercomputer example, for instance, were more righteous than
we were and were undercut by our cynicism.
Mr. Sokolski. Actions that are successful speak louder than
words that fail. And in this regard, when you bend your law,
you waive your law concerning nonproliferation, that is
troublesome. One of the things I have actually publicly come
out in favor of, just to radicalize and zero--base the debate,
is to sunset all the sanctions. I will settle for you just not
subsidizing nonproliferators and freeing up those assets in the
intelligence community to pick two or three countries, get that
darn time-phased set of objectives and go hit the role and
operationalize.
By the way, a lot of people will probably vote for that
formula including the intelligence agencies. But then you
better have some time-phased goals so you can judge whether or
not you are getting your money's worth because otherwise you
will get baffle gabble. I do not care who is in office. They
will tell you everything is fine. I think finally that brings
everything back. If nonproliferation is just export control,
you are in a world of hurt, not simply because you cannot
control everything. It is because export control is not taken
seriously. Foreign policy is. And so if nonproliferation is not
at the tip of the iceberg of foreign policy, you are not going
to get very far. And that is, in essence, the problem. We have
so succeeded because of our victory in the Cold War, we do not
really want to talk about how we might have foreign policy
failures again and as a result, no one takes it seriously when
we do raise problems about the prospects of bad things
happening in the future.
Chairman Thompson. Do we need to take a whole new look at
our export control policies? What do you gentlemen think about
this EAA debate? You know we are down to the fine print again
and sometimes I wonder if we're just totally missing the point.
The whole thing needs to be shaken up. You know, some of our
allies at least have one agency controlling all this, a
separate agency.
Mr. Sokolski. Yes.
Chairman Thompson. You talk about Defense. Everybody has
got their own constituency.
Mr. Sokolski. Yes.
Chairman Thompson. Commerce obviously has got theirs. State
wants to keep peace among their allies. But even the Pentagon,
they want low cost weapons----
Mr. Sokolski. Right.
Chairman Thompson [continuing]. And things. Everybody has
got an interest except those components that have national
security solely in mind, I guess you might say. But we are
consolidating those components within others now in this
administration, so that they have less effect. And we're
putting the DTSA people out in Dulles and all of that. What
about our export policy in general, and as this EAA thing comes
up again?
Mr. Sokolski. I am sorry. Go ahead.
Mr. Hadley. I do not know. The answer to your question is
yes, we need a fundamental look. It is hard to stop the train
and stop the world while we do it, but it seems to me part of
any EAA ought to be a commitment and legislation that calls for
exactly the kind of look that would address the issues that you
have raised today and have a schedule for doing that. It seems
to me that is a minimum of something that ought to come out of
this EAA debate.
Mr. Gaffney. But would you not think you would start doing
it before you start legislating? I have got to reinforce the
point you made, Mr. Chairman, because it underscores the thing
I said at the outset. With all due respect to the Banking
Committee, it does not have the ability to take into account
all of the equities that are at stake here. The failure frankly
of other committees--I think rather less so yours, in part
thanks to your leadership--but other committees that have
jurisdiction and have responsibility in this area to ensure
that precisely this kind of oversight has driven a review and
has formed answers to the kinds of questions we are all
wrestling with here before you start legislating is maddening.
Chairman Thompson. Mr. Sokolski.
Mr. Sokolski. Having lived through so many extensions of
the EAA, I do not want to trivialize the difficulties raised by
Mr. Holum, but if you do not do your homework and you act
simply on those sets of concerns, even he admitted not a good
idea. I think, however, you cannot bureaucratically solve the
problem of what is the problem on this commission.
The first meeting, Mr. Deutch said, well, we have seven
solutions that are possible and he listed them, make the
national security adviser, have one agency, and other. I said
that is great. What is the problem? They had spent a year and a
half discussing solutions. What probably needs to be done in
doing a reevaluation is get those what we call green line/red
line studies. I mean who are your problems? It is probably
China. It is probably North Korea.
Mr. Gaffney. It is Russia.
Mr. Sokolski. It is Russia. Well, certainly parts of Russia
for darn sure. And so you then have to say, OK, what is it that
we have to worry? Now I do not think you want to have a list
and say, ah, this is all we have to control, but it gives you
some idea if you have a list of what you have to worry about.
And I think you need to have that work done.
Now one of the nice things that Congress can do and has
been doing and it has been doing really great work is that it
asks for certain certifications and sometimes some useful
reports. The difficulty is sometimes the staff reads the
reports and that is it. You, Senator, have a bully pulpit. If
you use it, do not underestimate what you can do.
Chairman Thompson. Mr. Hadley, I think you too in your
statement indicated that we might ought to concentrate on less
and do more. How does that translate? It is kind of what you
are talking about, I think, Mr. Sokolski. How does that
translate into a policy? What do we concentrate on with regard
to areas of concern and countries of concern? What do we do
with regard to that?
Let us say, on the other side of the ledger, you can take
some things off the dual-use control list and say they are not
controllable anymore. We are going to free up some people,
maybe free up some assets, some time. But in terms of
concentration, concentrating on the problem areas, it gets back
to a major political question. I mean it does not matter what
your rules and regulations say if you have an administration
who will not impose sanctions under any conditions and who will
certify that proliferators are not profilerating. But even with
regard to the rogue nations, if we adopted a policy more in
that direction, what would that mean in practical terms?
Mr. Hadley. You would have to have, I think, military
people, technologists, sitting down and asking what are the
kinds of capabilities that we need to have and that we do not
want our enemies to have, and list them. And this is what we
did in 1991 and 1992 and it was a shrunken list but an
important list. And then you say--let us assume it is stealth
technology. All right. What are the components that go into
giving another country having stealth technology?
What are those components? Who has got them? How hard are
they to get? And what are the really critical ones? And you may
find, as you do that analysis, that there is a variety of dual-
use items that are elements of stealth technology, but they are
too proliferated, you cannot control them. And what you hope is
that you can do a strategic analysis of stealth technology and
find the three, four, five things that are critical to the
capability that we have a shot at controlling. And you focus on
those.
And if you focus on those to give a focus for our own
export control approach, it gives you an agenda when you go to
your allies. But it is hard to give more than an example
because it is very nitty-gritty and you really need to get
technologists and military people who know this stuff in a room
sorting it out. That is the process I think we need.
Chairman Thompson. What do you think?
Mr. Sokolski. I would be most interested in the list of
capabilities. I would be very leery about how a quote-unquote
``critical list'' might be used and let me explain why. There
were numerous cases on my watch where folks just wanted to
control I think it was the State Department proposal. Well, we
really only have to worry about reentry vehicles they said, not
the rest of the missile. Now that is an extreme cartoon of how
these critical lists can go.
But clearly you are most concerned about controlling
against the capabilities and frequently that will mean going
outside of the current or latest list. I would say that the
listmaking is to be expansive, not focused so much, but
expansive so that you are flexible enough to go after things
maybe that are not on lists.
Chairman Thompson. If you had a catch-all approach, you
would not need to worry about that so much, would you?
Mr. Sokolski. Well, but the analysis that Mr. Hadley is
talking about needs to be done so that you are alert to that
kind of metal that one less ingredient from which still works
would be something you would want to control. But I would not
want to not have to have it on the list to control it. I would
want the list as the template for what to control, as some way
to keep bureaucrats alert to what they need to be paying
attention to.
Chairman Thompson. Did you want to comment on it?
Mr. Hadley. Yes, just on your effectiveness point. The
reason I think you want to take the kind of strategic approach
I described is, that if you have too many things on the list,
people show that they have a tough export control regime by how
many things they are controlling and how many licenses they
issue. But the question is are we preventing somebody from
getting critical capabilities? And I am concerned that if you
do not really try and focus on what is important and critical,
you will lose effectiveness. That is the concern I would have.
It is a tradeoff.
Mr. Gaffney. Mr. Chairman, we have been talking for a long
time frankly about smaller numbers of things and higher walls.
At some point I think we actually crossed over into having a
lot of things that are important outside of the walls. And
while I take the point that you got to have a rigorous process
and you have got to have people focused and so on, we are doing
exactly the opposite of that right now and your point about
DTSA is a perfect example.
Right now we have emasculated the one agency of the
government that at least during the Reagan years and I think
during the Bush years you could count on to be doing the kind
of focused serious national serious-minded analysis on export
contracts. It was not always perfect by any means, and in some
places it was downright uneven, but at least it was not subject
to the same kinds of pressures that as you say yourself are so
much in evidence elsewhere. That is just not the case today.
So where is the check in the check and balance? Where is
the focus, the wall on a variety of things, some of which are
now going through without any kind of controls at all?
Chairman Thompson. Good. One final area. This DSB Report.
When I hear about these reports, the first thing I always want
to know is who are the guys that wrote it and who do they work
for? I do not want to cast any aspersions on anyone, but there
are a lot of people out there who have a lot of interest in
maybe doing things differently.
And I look at what I understand it to be saying--and what
you say that it is saying--and that is that the name of the
game in the future should not be trying to develop new
technology and holding onto it, and keeping anybody else from
getting it. The name of the game in the future is to be able to
integrate that technology more rapidly into a military system
in good hands.
I can understand the second part, but why not have both?
Why not be able to rapidly integrate but also take steps to
maintain an advantage in those areas, weapons areas, in which
we have such advantages in so many ways? I mean, why not do
both?
Mr. Hadley. I think you should.
Chairman Thompson. I am asking you about the Report.
Mr. Hadley. Yes. I would do both, but again it is this
issue of what is strategic, what matters, and what can we
really realistically control? But I would try and do both. On
your question, that is one of the things I thought was
interesting about the study. I mean, we all have our lists, but
when I got it I went first to the list of who prepared it and
there were some names on that list that gave me some confidence
that it was a serious effort.
And thirdly, one of the reasons I think it is a good time
for a review of this issue is that two people who I read on
this subject are Bill Schneider and Richard Perle, and they
have both talked about--Bill Schneider, for example, was one of
the principal authors of parts of that Defense Science Board
Report. He has given some----
Chairman Thompson. That makes me feel better. I have a
great deal of respect for both of those gentlemen.
Mr. Hadley. I do as well. And Richard Perle has been
talking about the need, as he says, to focus more on the bad
actors and beefing up our ability to focus on the efforts by
bad actors to acquire things we do not want them to have. And
focusing on that end of the spectrum with better intelligence,
law enforcement and a whole host of other steps with a constant
program of interdiction and disruption. And that is the
question that I would have you put to CENTCOM, does he have
that kind of program, because I think that it is also a high
leverage opportunity for an updated approach to this whole
problem which we sort of say export controls, but it really is
the proliferation issue. It is a very hard issue. We have got
about ten things we have got to do of which export control is
one of them, an important one, but only one of them, and we
need to bring our allies along because we need their help on a
lot of them.
Mr. Sokolski. What makes nuclear weapons, missiles and to
some extent chemical and biological weapons and perhaps a
handful of other things that we can argue about different is
that staying ahead is not a real sure thing. In the immortal
words of one of the scientists in the Manhattan Project, a
better nuclear weapon in many instances does not neutralize a
worse one.
Now that is the nature of this beast, unlike the
competition of the Cold War. What you really want to do is slow
the other fellow down to have time to do something and I would
suggest if you want to think big, it is regime change in some
cases. That is what we are talking about. It is a Russia that
is orderly, that is not just democratic but orderly. It is a
China that is not communist, but finally not that at all; it is
liberal and democratic. It is a lot of things that are big
foreign policy.
So, first of all, you have got to have some time lines with
some big objectives. Iran may become a decent regime at the
rate it is going. Who knows? Iraq may not be under this maniac.
You have got to have those kinds of objectives. Figure out what
the time lines are. And one other thing. You got to start
acting now as if you might fail.
A lot of the things that you need to do if Iran gets a
nuclear bomb are the things you should be doing that make sure
it does not get one. It is getting closer to Turkey so it does
not decide to get a bomb. It is getting closer to Saudi Arabia
so it does not make a deal with Iran. It is making sure Egypt
does not get some crazy idea that it should get nuclear weapons
to take care of business.
Now it turns out doing these things now may actually help
you do nonproliferation, too. But I think we need to start
thinking what happens if there is failure and particularly act
where it is not at cross-purposes with nonproliferation and
then be ready for the event.
Finally, let us be optimistic. We won the Cold War. At
least the Soviets lost it. And the problem sets that we have
now frankly look trivial in comparison. We ought to be able to
get through to that better future. So let us not despair too
much, but let us get to work.
Chairman Thompson. We have got a window of opportunity here
now.
Mr. Sokolski. I think so.
Mr. Gaffney. Just the other thing that ought to be on his
list, and I know it is, is missile defense.
Mr. Sokolski. Well, clearly.
Chairman Thompson. I was thinking about that.
Mr. Gaffney. This is something that I consider to be a
tremendous export control technique in terms of curbing the
impact of these exports that are getting away from us.
Mr. Sokolski. Clearly.
Chairman Thompson. Gentlemen, thank you very much. This has
been extremely beneficial and helpful, and I hope that it lays
the groundwork for some future cooperation among ourselves. We
would certainly like to be able to call on you as we go forward
here. Thank you very, very much for your contribution.
[Whereupon at 12:45 p.m., the Committee was adjourned.]
A P P E N D I X
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