[Senate Hearing 108-589]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-589

                   INTERNATIONAL SMUGGLING NETWORKS:
                      WEAPONS OF MASS DESTRUCTION
                    COUNTERPROLIFERATION INITIATIVES

=======================================================================

                                HEARING

                               before the

     FINANCIAL MANAGEMENT, THE BUDGET, AND INTERNATIONAL SECURITY 
                              SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 23, 2004

                               __________

      Printed for the use of the Committee on Governmental Affairs



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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                      Amy B. Newhouse, Chief Clerk

                                 ------                                

     FINANCIAL MANAGEMENT, THE BUDGET, AND INTERNATIONAL SECURITY 
                              SUBCOMMITTEE

                PETER G. FITZGERALD, Illinois, Chairman
TED STEVENS, Alaska                  DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
ARLEN SPECTER, Pennsylvania          THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah              MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

                   Michael J. Russell, Staff Director
              Richard J. Kessler, Minority Staff Director
            Nanci E. Langley, Minority Deputy Staff Director
                       Tara E. Baird, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Fitzgerald...........................................     1
    Senator Akaka................................................     4
    Senator Lautenberg...........................................    10

                               WITNESSES
                        Wednesday, June 23, 2004

Mark T. Fitzpatrick, Acting Deputy Assistant Secretary for 
  Nonproliferation Controls, U.S. Department of State............     6
Hon. Peter Lichtenbaum, Assistant Secretary of Commerce for 
  Export Administration, U.S. Department of Commerce.............     8
David Albright, President and Founder, Institute for Science and 
  International Security.........................................    19
Michael Moodie, President, Chemical and Biological Arms Control 
  Institute......................................................    22
Leonard S. Spector, Deputy Director, Center for Nonproliferation 
  Studies, Monterey Institute of International Studies...........    24
Baker Spring, F.M. Kirby Research Fellow in National Security 
  Policy, The Heritage Foundation................................    26

                     Alphabetical List of Witnesses

Albright, David:
    Testimony....................................................    19
    Prepared statement...........................................    45
Fitzpatrick, Mark T.:
    Testimony....................................................     6
    Prepared statement...........................................    31
Lichtenbaum, Hon. Peter:
    Testimony....................................................     8
    Prepared statement...........................................    36
Moodie, Michael:
    Testimony....................................................    22
    Prepared statement...........................................    52
Spector, Leonard S.:
    Testimony....................................................    24
    Prepared statement with an attachment........................    62
Spring, Baker:
    Testimony....................................................    26
    Prepared statement with an attachment........................    86

                                APPENDIX

Chart submitted by Senator Akaka.................................   107
Questions and Responses for the Record from:
    Mr. Fitzpatrick..............................................   108
    Mr. Lichtenbaum..............................................   136
    Mr. Albright.................................................   145
    Mr. Spector..................................................   151
    Mr. Spring with an attachment................................   158

 
                   INTERNATIONAL SMUGGLING NETWORKS:
                      WEAPONS OF MASS DESTRUCTION
                    COUNTERPROLIFERATION INITIATIVES

                              ----------                              


                        WEDNESDAY, JUNE 23, 2004

                                     U.S. Senate,  
                  Subcommittee on Financial Management,    
                  the Budget, and International Security,  
                  of the Committee on Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 4:24 p.m., in 
room SD-342 Dirksen Senate Office Building, Hon. Peter G. 
Fitzgerald, Chairman of the Subcommittee, presiding.
    Present: Senators Fitzgerald, Akaka, and Lautenberg.

            OPENING STATEMENT OF SENATOR FITZGERALD

    Senator Fitzgerald. This meeting will come to order. I 
apologize for the delay in today's hearing. I think it was 
supposed to start at 2:30 p.m., and now it is almost 4:30 p.m. 
We got interrupted by a series of votes, and I appreciate our 
witnesses' patience. I was glad to see you were still here when 
I arrived.
    I would like to welcome the Subcommittee's Ranking Member, 
Senator Akaka, who is one of the leaders in the Senate on 
nonproliferation issues. I also would like to welcome our 
distinguished witnesses from whom we will hear shortly.
    Today we are conducting an oversight hearing to examine the 
clandestine trade of weapons of mass destruction and the U.S. 
programs and initiatives to counter this dangerous 
international security threat.
    Beginning late last year, we have seen a series of alarming 
discoveries regarding how weapons of mass destruction--nuclear, 
chemical, biologica,l and radiological--may be spread around 
the world.
    An editorial in the Chicago Tribune of February 1, 2004, 
entitled ``A Nuclear Weapons Wal-Mart,'' described the 
situation this way, ``For those who track nuclear weapons 
across the globe, developments over the last weeks have heads 
spinning like the special centrifuges that enrich uranium for 
nuclear bombs. That is, very fast.''
    What is particularly alarming about these discoveries is 
the apparent ease with which nations or terrorists wishing to 
do us harm may obtain these lethal materials. The editorial 
described the nuclear smuggling network that was established 
and directed by Pakistani nuclear scientist, Abdul Qadeer Khan, 
to transport nuclear weapons components and related materials 
around the globe. As the editorial mentions, upon learning of 
Khan's dealings, the head of the International Atomic Energy 
Agency, Mohamed ElBaradei, proclaimed that a ``Wal-Mart of 
private sector proliferation'' has existed for over a decade. 
The editorial concluded with this call on government leaders in 
the U.S. and abroad: ``It's not likely that any single 
initiative will completely shut down the nuclear Wal-Mart. But 
by cooperating on a global scale, law enforcement agents can 
make it a lot harder for nuclear black marketeers to do 
business.''
    This hearing builds on a hearing we conducted last year to 
examine North Korea's role in drug trafficking, counterfeiting, 
and weapons proliferation. During the hearing we heard 
disturbing testimony from our witnesses, including two North 
Korean defectors, about that country's weapons program and its 
export of dangerous weapons. This past February, Abdul Qadeer 
Khan, who is considered to be the father of Pakistan's nuclear 
weapons program, signed a detailed confession admitting to the 
sale and transfer of materials, designs, and technologies to 
produce fuel for nuclear weapons. The Khan trade network may be 
one of the most complex and successful efforts to evade 
international controls to prevent the spread of nuclear 
weapons.
    Abdul Qadeer Khan directed the trade network in conjunction 
with a small group of business associates. Together they 
coordinated the manufacture and shipment of nuclear components 
from a number of countries to Libya, North Korea, Iran, and 
possibly others. While the majority of the shipments were 
components for gas centrifuges that are used to enrich uranium 
for use in a nuclear weapon, the network also supplied uranium 
and nuclear weapons designs to Libya.
    The Khan network is disturbing for many reasons, most 
importantly for the opportunity it may have afforded rogue 
nations or terrorists to circumvent international controls to 
acquire not only materials, but also the technology, designs, 
and expertise necessary to build a weapon of mass destruction. 
The Khan network may already have helped terrorists in this 
regard. For example, Osama bin Laden has purportedly called it 
a ``duty'' for al Qaeda to develop a nuclear bomb.
    The Associated Press reported in March 2004 that al Qaeda 
leadership claims to have bought ``ready-made nuclear weapons 
on the black market in Central Asia.'' While much progress has 
been made in detecting the extent of the Khan network's 
operations, many questions remain unanswered. The Washington 
Post reported on May 29, 2004 that investigators had been 
unable to account for some sensitive parts Libya ordered for 
use in the construction of a uranium enrichment plant. The 
failure of these parts to arrive in Libya raises the 
possibility that the shipments may have been diverted, or that 
they were being manufactured by unknown suppliers that have not 
yet been revealed.
    According to the same news reports, investigators believe 
that not only have some suppliers of the network not been 
identified, but perhaps some customers as well.
    I look forward to hearing from our witnesses regarding the 
progress in dismantling the Khan network, as well as the 
implications this network has for U.S. and international 
efforts to stop black market proliferation. The threats posed 
by the proliferation of weapons of mass destruction and their 
delivery systems is increasingly acknowledged around the world 
to be a growing threat. In response, on May 31, 2002, President 
Bush announced the Proliferation Security Initiative (PSI), 
which seeks to combine the use of existing national and 
international legal authorities with enhanced intelligence 
sharing and multilateral coordination to improve the 
interdiction of WMD and WMD-related materials transported 
around the world. The goal of the PSI is to stop weapons 
shipments and deter state or non-state actors from engaging in 
the weapons trade.
    Thus far, 14 nations including Australia, France, Japan, 
Russia, the United Kingdom, Germany, Italy, and Singapore, 
among others, have joined the United States as core members of 
the Initiative, and over 60 nations have signaled their 
willingness to cooperate with the PSI in its interdiction 
activities.
    Additionally, Panama and Liberia, the world's first and 
second largest shipping registries, have signed boarding 
agreements indicating their willingness to permit ships 
carrying their flags to be stopped for inspection. The 
cooperation of these two nations in conjunction with the core 
member states will allow approximately 50 percent of the 
world's commercial shipping fleet to be subject to boarding, 
search, and seizure.
    As we will hear from our witnesses, the PSI is described as 
an activity rather than an organization. As I understand it, 
the administration believes that this approach, similar to a 
coalition of the willing, will prove more responsive and 
adaptable to changing threats than the alternative which would 
be the creation of a formal multilateral structure. It is 
believed that a formal organization could become bogged down in 
competing priorities and the time consuming nature of a 
bureaucracy.
    The PSI recently celebrated its one-year anniversary and 
was high on the agenda at the recent G-8 Summit in Sea Island, 
Georgia. Some outside experts, however, have raised concerns 
with the approach of the PSI, specifically the time-consuming 
nature of its activities and its overall effectiveness. We look 
forward to hearing the views of our witnesses on these issues.
    We are privileged today to have senior officials from the 
Departments of Commerce and State who will address the role of 
export controls and nonproliferation policy, and the work of 
the PSI and its future plans, respectively. I look forward to 
hearing from them on how these aspects of U.S. policy help 
prevent the spread of WMD and WMD-related materials throughout 
the world.
    We also have with us today a distinguished panel of 
independent experts in proliferation policy. I look forward to 
hearing their evaluations of current counterproliferation 
initiatives. I especially look forward to hearing their 
thoughts regarding the threat posed by WMD smuggling networks, 
as well as how efforts like the PSI may help detect and deter 
future networks from forming.
    Before I introduce our witnesses, I would like to recognize 
the Subcommittee's Ranking Member, Senator Akaka, who may wish 
to make an opening statement. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Chairman Fitzgerald, thank you very much for 
holding this hearing. It is a great tradition of this 
Subcommittee and the full Committee to focus on international 
security issues. This hearing is a very worthwhile contribution 
to the Subcommittee's continued efforts to improve the 
government's ability to address threats to our Nation.
    It was more than a year ago that President Bush announced 
the Proliferation Security Initiative, or PSI. Since then, 
there have been major developments in counterproliferation, 
most notably the decision by Libya to end its weapons of mass 
destruction programs. The Libya case brought into the open what 
was once only whispered about in the corridors of the 
intelligence community. That is the black market in WMD 
materials.
    Although much has been written about the A.Q. Khan network 
operating out of Pakistan, with tentacles in many countries, we 
still have not fully unraveled this network, and there are 
other people directing similar operations. Arresting Khan did 
not destroy this ``network.'' His was only one of many now 
facilitating the transfer of WMD-related materials. Never 
before has there been so much demand by so many for WMD 
materials. As an illustration of these extensive networks for 
nuclear, chemical, and biological weapons, I wish to point out 
a chart on either side of this room, prepared by my staff, 
based on published reports.\1\
---------------------------------------------------------------------------
    \1\ The chart referred to submitted by Senator Akaka appears in the 
Appendix on page 108.
---------------------------------------------------------------------------
    What these charts illustrate is that there is a web of 
relationships, some private, some governmental, that tie 
illicit activities by either rogue states or terrorist groups 
to legitimate companies and countries. To focus on stopping 
activities between rogue countries and terrorist groups would 
be to place a barrier only partway across the flood of 
destructive weapons. We need to broaden and intensify our 
efforts because it is only a matter of time before hundreds of 
thousands of people are killed in an attack by a weapon of mass 
destruction, nuclear, biological, or chemical. Yet, rather than 
aggressively doing all we can to prevent this, the United 
States, sends at best, mixed messages.
    For example, even though the Central Intelligence Agency 
has identified a bomb exploded by terrorists as a more likely 
threat than a missile launched by a rogue state, we are 
spending billions of dollars to develop a national missile 
defense system that may not work, and against a threat that 
does not yet exist.
    For example, even though countless reports have identified 
radioactive material in the former Soviet Union as providing 
the most ready source of material to terrorists, funding 
requests for programs to secure Russian nuclear materials and 
eliminate weapons grade plutonium production have decreased.
    Even as we decry the development of nuclear weapons by 
other states, this administration is investing millions in 
developing a new earth-penetrating nuclear weapon and millions 
in making new nuclear weapons easier to test.
    What we need to do is clear. A simple six-step program 
would have a tremendous impact: (1) Accelerate efforts of 
control at radioactive materials worldwide; (2) Accelerate 
negotiations with the Russians to reduce the number of nuclear 
warheads and the number of weapons on alert status; (3) Set an 
example by eliminating spending on new nuclear weapons; (4) 
Ratify the Comprehensive Nuclear Test Ban Treaty; (5) Negotiate 
a verifiable fissile material cut-off treaty; and (6) Develop 
and strengthen existing export control systems.
    These are only a few steps of a broader agenda, but they 
are critical components. What is so disappointing is how few of 
these obvious measures have been adopted.
    I am pleased that we have with us today such distinguished 
witnesses from the administration and the public to discuss 
these important issues, and I welcome them to the Subcommittee. 
Thank you, Mr. Chairman.
    Senator Fitzgerald. Thank you, Senator Akaka.
    Our first witness is the Hon. Peter Lichtenbaum, Assistant 
Secretary of Commerce for Export Administration at the U.S. 
Department of Commerce. In his role at the Department of 
Commerce, Mr. Lichtenbaum is responsible for policies regarding 
controls on the export of dual-use items for reasons including 
national security, nonproliferation, and foreign policy. He 
also manages the Bureau of Industry and Security's 
participation in multilateral export control regimes and chairs 
the Inter-Agency Advisory Committee on Export Policy. Prior to 
his work at the Commerce Department, Mr. Lichtenbaum was with 
the law firm of Steptoe and Johnson, where he practiced in the 
firm's international group. He also served in the Treasury 
Department, where he worked on international law and economic 
policy issues.
    Our second witness is Mark Fitzpatrick, who is Acting 
Deputy Assistant Secretary for Nonproliferation Controls at the 
U.S. Department of State. As Acting Deputy Assistant Secretary, 
Mr. Fitzpatrick oversees programs regarding countries 
potentially involved in proliferation, interdiction and 
sanctions cases, cooperative efforts on export controls and 
border monitoring, as well as other nonproliferation assistance 
programs. Prior to serving in his current position, Mr. 
Fitzpatrick served as Director of the Office of Regional 
Affairs in the Nonproliferation Bureau. The Nonproliferation 
Bureau compiles and coordinates policy on regional issues 
involving weapons of mass destruction in specific areas such as 
Iran, North Korea, and Libya.
    Again, I would like to thank you both for being here. I 
would like to especially thank you for your patience, given our 
votes this afternoon. In the interest of time, we will include 
your full statements in the record, and we would ask that you 
limit your opening remarks to 5 minutes if possible. I will let 
either of you begin as you choose, whoever wants to go first.
    Mr. Lichtenbaum. Thank you, Mr. Chairman.
    Mr. Chairman, Senator Akaka, and Members of the 
Subcommittee, we appreciate the opportunity to testify here 
today. Mr. Chairman, as you said, we are here to discuss a very 
important topic, the U.S. efforts to address the threat posed 
by international networks who are seeking weapons of mass 
destruction.
    With your permission, Mr. Chairman, I would like to defer 
to Mr. Fitzpatrick from the State Department to begin our 
discussion of the administration's counterproliferation 
initiatives and I will then discuss the role of export controls 
in promoting a nonproliferation policy.
    Senator Fitzgerald. That is fine. Mr. Fitzpatrick.

 TESTIMONY OF MARK T. FITZPATRICK,\1\ ACTING DEPUTY ASSISTANT 
         SECRETARY OF STATE, BUREAU OF NONPROLIFERATION

    Mr. Fitzpatrick. Thank you, Peter.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Fitzpatrick appears in the 
Appendix on page 31.
---------------------------------------------------------------------------
    Mr. Chairman, Senator Akaka, thank you for the opportunity 
to speak to you today about the status of efforts to prevent 
the proliferation of weapons of mass destruction, and in 
particular, the Proliferation Security Initiative. As you said, 
I have a prepared statement that has been submitted for the 
record, so I will confine my oral remarks just to some of the 
main points in that statement.
    The proliferation of weapons of mass destruction remains a 
serious challenge to our national security. The next steps in 
the administration's nonproliferation agenda were clearly 
established by President Bush's February 11 speech at the 
National Defense University, which also highlighted the reality 
that the path to proliferation does not always lie in a 
straight line between supplier and recipient.
    We continue to learn about black market operatives who deal 
in equipment and expertise related to weapons of mass 
destruction. The extensive network operated by Pakistani 
nuclear scientist, A.Q. Khan, and now being shut down by U.S. 
and UK led diplomatic and intelligence efforts is the starkest 
example of the problem--a shadowy black arms market in which 
the most dangerous of weapons technology, parts, and materials 
moved across four continents. Its existence alerts us to the 
dangers of whether there could be other networks still in 
operation. Moreover, the threat of onward proliferation is not 
limited to non-state actors such as A.Q. Khan, but extends to 
proliferant states cooperating between themselves. This 
compounds the danger.
    Against this backdrop the United States has taken a number 
of efforts to enhance our ability to detect and prevent illicit 
procurement or shipment of WMD missiles or related 
technologies. These efforts include strengthening multilateral 
regimes and treaties, enhancing export controls and enforcement 
measures, preventing nuclear smuggling, and taking decisive 
action against WMD missile and advanced conventional weapon 
procurements. In the interest of time I will not elaborate on 
these efforts orally, but note that I address them in detail in 
my prepared remarks.
    I would like to focus though on the Proliferation Security 
Initiative, PSI, which was announced by President Bush a year 
ago. The PSI, as you said, Mr. Chairman, is a set of 
activities, not an organization, activities that provides 
opportunities for groups of states to work together to address 
operational and information requirements for effective action 
against proliferators. Its emergence reflects the reality that 
even as we continue to support and strengthen existing 
nonproliferation treaties and regimes, proliferators, and those 
who facilitate procurement of deadly capabilities, are 
circumventing existing laws, treaties, and controls.
    The PSI was envisioned as a flexible instrument. Its 
statement of interdiction principles published last September 
serves as the blueprint for PSI activities. These principles 
make clear that all PSI activities are consistent with national 
legal authorities and relevant international law and 
frameworks.
    As the number of states participating in and supporting the 
PSI grows, we are focusing on concrete, practical activities to 
establish states' understanding of and capabilities for what 
will be involved in interdicting cargoes. States are becoming 
involved in PSI activities in a variety of ways. Some are 
participating in informational meetings. Others are 
participating in interdiction training exercises, and still 
others are stepping forward with new ideas to advance the 
Proliferation Security Initiative.
    For example, in August, Denmark will host a container 
security workshop, bringing governments and industry experts 
together to discuss how we can make water-based cargo shipping 
more secure against proliferation.
    Mr. Chairman, you asked about future plans. The United 
States is pursuing boarding agreements with key flag states to 
facilitate maritime interdiction cooperation. We have signed 
two agreements to date, with Liberia and Panama, and have many 
more under active discussion and consultation. Additionally, we 
are considering what mechanisms might facilitate cooperation in 
air and ground interdiction arenas.
    In part, because of the sobering lessons learned from A.Q. 
Khan's activities, the President in February called for the 
work of PSI to be expanded to focus on shutting down 
proliferation networks and bringing those involved to full 
justice.
    A year after its creation, the PSI is today a successful 
initiative that resonates with countries worldwide. Its simple 
tenets make good nonproliferation sense. States understand 
that, by working together, we will have a greater impact than 
by acting alone. Our partners are responding by establishing 
practical cooperative partnerships to defeat proliferation. As 
a result, the PSI is poised, through either actual interdiction 
or the deterrent of threatened interdiction, to impact 
significantly the international proliferation networks and 
supplier-recipient relationships among proliferators.
    In conclusion, let me emphasize that the proliferation of 
weapons of mass destruction, missiles, and related materials 
remains a challenge to international security. I hope my 
testimony has shown the resolve and commitment of the Federal 
nonproliferation community to develop solid creative responses 
to the danger of proliferation, and in particular, responses to 
illicit procurement of WMD and missiles.
    Thank you again for the opportunity to testify here today. 
I look forward to hearing more about your concerns and to 
addressing your questions.
    Senator Fitzgerald. Thank you. Mr. Lichtenbaum.

   TESTIMONY OF PETER LICHTENBAUM,\1\ ASSISTANT SECRETARY OF 
COMMERCE FOR EXPORT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Mr. Lichtenbaum. Thank you, Mr. Chairman.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Lichtenbaum appears in the 
Appendix on page 36.
---------------------------------------------------------------------------
    The mission of the Commerce Department's Bureau of Industry 
and Security, or BIS, is to safeguard U.S. national security, 
foreign policy, and economic interests through implementing 
U.S. export control policy on dual-use commodities, software, 
and technology. In addition, BIS is charged with enhancing 
compliance with those controls and enforcing them worldwide. We 
also promote the development of effective export and transit 
control systems in key countries and transshipment hubs, i.e., 
controls relating to foreign origin products in addition to 
U.S.-origin products. In that regard, clearly our work relates 
to what Senator Akaka mentioned about developing and 
strengthening existing export control systems.
    BIS's principal objective is to ensure that direct exports 
from the United States and re-exports of U.S.-origin items from 
third countries are consistent with national security and 
foreign policy interests, without imposing unnecessary 
regulatory burdens on U.S. exporters or impeding the flow of 
legitimate trade.
    When dealing with the international WMD networks which are 
our subject here today, it is critical to promote compliance 
abroad with our controls, and to that end Commerce has been 
very active. We conducted four international export control 
outreach seminars in 2003 with the goal of providing key export 
control related information to companies that use U.S. original 
parts for manufacturing, companies that use U.S.-origin system 
software technology to develop foreign-made products, and 
companies that re-export U.S. items.
    Over 1,000 people attended the BIS conferences which were 
held in Japan, South Korean, Singapore, and China, and came 
away with a better understanding of our rules.
    However, clearly, controlling the use of U.S. technologies 
alone is not sufficient to hinder procurement by international 
WMD networks, as many of the most sensitive items are available 
in countries throughout the world, and that is a critical 
challenge for our export control work.
    It is imperative, in my view, that the U.S. Government work 
with international suppliers in order to effectively control 
the export of these sensitive items. To that end, the United 
States is leading the efforts to strengthen the four 
multilateral regimes which are the traditional mechanism for 
international cooperation in this area. In particular, we are 
working to improve the control lists, for example, by ensuring 
that we control any item that is of particular interest to 
terrorists, and controlling the export of any item intended for 
use in a WMD program or delivery system through catch-all 
controls. We think we are making excellent progress working 
with the State Department toward those ends.
    But it is not enough to just work in the traditional export 
control regimes because only a small portion of countries in 
the world are members of these regimes, and therefore, BIS 
participates in U.S. Government efforts to build a more 
effective international system of export controls beyond these 
regimes and by assisting other countries to develop and enforce 
effective export controls. The importance of those activities 
is shown by the A.Q. Khan case, which involved technology and 
components exported from countries who were not members of the 
regimes.
    As part of the State Department's Export Control and 
Related Border Security Assistance Program, or EXBS, BIS 
conducts technical exchanges with more than 30 countries that 
need assistance in this area. Working with other U.S. agencies 
we design specific programs toward the needs of each country, 
and then give them training that is customized to their needs.
    During the last fiscal year, for example, we conducted 74 
bilateral technical exchange workshops and one multilateral 
conference, as part of the EXBS Program. We helped countries 
draft legislation and helped companies in those countries adopt 
effective compliance programs because, as Senator Akaka 
mentioned, it is not just a question of working at the 
governmental level, but also doing outreach to the private 
sector, who may be legitimate countries. There is a long list 
of countries that we have worked with, many of them in the 
former Soviet Union. We have developed software that is 
specifically designed to help companies comply with their 
national export control rules. We also developed software that 
helps Customs officials in these countries identify the 
products that are of most concern to us, because it is often 
the question of having the training to know when a product that 
is at the border is an item of concern.
    Russia, for example, has begun deploying this product 
identification tool that we developed in its regional Customs 
centers in preparation for deployment to more than 150 Customs 
posts.
    We also have another major initiative outside of the EXBS 
Program to strengthen controls in other countries. In 2002 we 
launched a Transshipment Country Export Control Initiative, or 
TECI, and that initiative focuses on transshipment hubs: 
Cyprus, Hong Kong, Malaysia, Malta, Panama, Singapore, Taiwan, 
Thailand, and the United Arab Emirates.
    Some of these countries do have export control systems in 
place, but none of them participate in all four of the 
multilateral regimes that I mentioned. All are major hubs for 
high tech products and they all operate near countries of 
concern. Some of them, as you mentioned, have been implicated 
in some of the recent developments of concern.
    Under TECI, BIS has already made significant progress. We 
have developed a public/private partnership on best practices 
for export controls. We have placed attaches in Hong Kong and 
Abu Dhabi, and we visited many of the TECI countries at senior 
levels, including Hong Kong (where I was a month ago), Malta, 
Panama, Thailand, and the United Arab Emirates, in order to 
emphasize the importance of strengthening export control 
systems.
    I think all of these efforts provide countries with the 
knowledge and the ability to fulfill their commitments to the 
United Nations. As you know, the United Nations recently 
passed, at the President's suggestion, UN Security Council 
Resolution 1540, which calls on countries to adopt effective 
export control systems.
    Finally, with respect to the PSI, which Mr. Fitzpatrick 
discussed, although the State Department and the Defense 
Department are properly providing most of the policy and 
operational leadership, we have participated actively in the 
development of the Statement of Interdiction Principles, the 
strategies for outreach to other governments, and particularly 
are focused on the outreach to industry because we think 
industry can really play a very important role in leveraging 
the resources of government in order to make the PSI effective.
    So that gives you an overview of our important initiatives, 
working with other agencies to counter proliferation of WMD 
technologies. We are strengthening export controls here at home 
and abroad, and I would be happy to answer any questions that 
Members of the Subcommittee may have.
    Senator Fitzgerald. Thank you very much. Senator 
Lautenberg.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. I will try to be brief, but I commend 
you for holding this hearing. I think it is a particularly 
important hearing and I commend the Chairman for holding it.
    In these days of lots of concerns about the capacity of 
rogue organizations, rogue countries, to be able to buy 
materials that are ultimately available to make weapons of mass 
destruction out of them, we know that delivery systems have 
been perfected in lots of places. We saw them used, as a matter 
of fact, in the first Gulf War when missile were fired from 
Iraq to Israel and Saudi Arabia as well. So we are concerned 
about the finding of the recent Harvard University report. The 
authors there found that not nearly enough is being done to 
keep nuclear fissile materials away from terrorists and rogue 
states, Iran, Libya, North Korea, to name just the most 
obvious. The principal conclusion of the authors is that fewer 
fissile materials were secured in the 2 years after the 
September 11 attacks then in the 2 years leading up to that 
horrific day. According to the authors, it will be well over a 
decade before nuclear fissile materials located in over 140 
countries worldwide are adequately secured. Until then such 
materials are vulnerable to acquisition by terrorists and 
nations that support them.
    In the post-September 11 world the prospect of terrorists 
acquiring nuclear weapons of mass destruction is particularly 
alarming. Counterproliferation efforts are urgently needed, and 
I am pleased that our G-8 partners pledged at the meeting in 
Sea Island earlier this month to address and curb the spread of 
nuclear fissile materials.
    And as we have learned from revelations about the A.Q. Khan 
network operating in Pakistan, once fissile and other dangerous 
materials are out on the world market, it is darn hard to track 
them down.
    I would like to raise several critical questions that our 
witnesses and we need to address with regard to 
counterproliferation efforts. First, how well we secured 
nuclear fissile materials outside of the former Soviet Union. 
At one point we appropriately focused on our nonproliferation 
efforts on that region with programs like the Nunn-Lugar 
Initiative. We cannot do that any longer. Our 
counterproliferation efforts cannot be limited to Russia or its 
neighbors any more, as we heard from----
    Senator Fitzgerald. Mr. Lichtenbaum and Mr. Fitzpatrick.
    Senator Lautenberg. Our counterproliferation efforts cannot 
be limited to Russia, or its neighbors any more. They must be 
extended to places like Malaysia and Sudan.
    And second, how well have we closed loopholes that let 
nations develop nuclear weapons programs under the cover of 
nuclear energy programs? Recently the International Atomic 
Energy Administration has been having problems getting Iran to 
cooperate with its inspections because Iranian officials claim 
they have the right to develop nuclear energy as they see fit.
    Third, how well are we developing a global network for 
border security? I am particularly concerned about export 
control at our seaports, where over 95 percent of all 
containers being shipped worldwide are not being inspected.
    Fourth, what are we doing diplomatically not only to reduce 
regional tensions but to send a stern message that smuggling 
nuclear fissile materials and weapons, or engaging in related 
trade, is totally unacceptable? I am afraid that the alienation 
of so many of our allies in other matters might come back to 
haunt us in this regard. I worry that we are going to have less 
cooperation in nonproliferation efforts as a result of our 
diminished credibility worldwide.
    Finally, I would like an update on Libya. I have had an 
active interest there since the downing of PanAm 103, and I 
have been suspicious from the start by Muammar Qadhafi's sudden 
desire to reform and to rehabilitate Libya's international 
standing. Libya's murderers, who went out and killed 38 of my 
constituents in 1988, along with 140 other Americans, nearly 
100 British citizens in the PanAm 103 attack--and I am cautious 
that Libya has destroyed some of its weapons programs--but I 
would like to hear from our witnesses about Libya's previous 
role in global smuggling networks and its ties to Khan and his 
nefarious deals.
    It is a useful hearing, Mr. Chairman, and if we can get 
answers to some questions, we will have made a good deal of 
progress.
    I thank you and I thank our witnesses for their testimony.
    Senator Fitzgerald. Thank you very much, Senator 
Lautenberg.
    I would like to direct this question to either of you. I am 
curious about the Proliferation Security Initiative. You both 
described it, or it has been described in many printed 
materials, particularly in this brochure that they put out, 
that the PSI is an activity, not an organization. Does that 
mean there is no organization to this activity? Do we not have 
to have somewhere an organization, a bureaucracy there? How do 
we get things done? Little League Baseball is an activity, but 
there is an organization. There are people organizing the 
activities that are part of it. So I am curious about that.
    Mr. Fitzpatrick. Mr. Chairman, in one sense you are looking 
at the organization. My colleagues in the State Department are 
part of what might be described as a loose organization among 
participating governments, the 14 core group countries, and the 
additional dozens of countries that have expressed an interest 
in working together in some part of PSI.
    We do not believe that it is necessary always to establish 
a formal bureaucracy, a secretariat in a foreign capital, where 
the focus can sometimes become more on the apparatus of the 
bureaucracy than on the actual functions involved. So we find 
that in bringing the core countries together, the experts 
together, the intelligence, the defense operational experts 
together in various settings, that we can create the 
wherewithal to be able to effectively interdict.
    We want to be able to create rapid response mechanisms, to 
know the points of contacts in the intelligence, law 
enforcement, and diplomatic communities, so that when we spy an 
activity, or one of the partners spies an activity, we can 
immediately coordinate resources of those countries that can 
bring resources to bear and take effective action.
    We did that in the case of the BBC China that you noted in 
October, and partly to address Senator Lautenberg's question 
about Libya.
    Senator Fitzgerald. Was this set up by an Executive Order 
or what created the PSI?
    Mr. Fitzpatrick. It was initiated by the President in a 
speech in Poland over a year ago. It has not required a great 
deal of additional financial resources because we have been 
putting together the structure through existing diplomatic 
resources.
    The State Department is the lead on the policy, but the 
Defense Department is the lead on many of the operational 
activities.
    Senator Fitzgerald. You only have 14 nations involved. That 
leaves a whole lot of nations that are not involved, and there 
are no formal treaty obligations behind this, so it is all 
voluntary. It almost seems like we are not taking this 
seriously enough. Do we not have to try and get as many nations 
as possible locked in under formal obligations if we are not 
going to let trafficking go on?
    Mr. Fitzpatrick. One of the areas of formal obligations 
that we are trying to lock nations into are the boarding 
agreements that we have been undertaking with the countries 
that are the largest flag state-nations--Liberia and Panama--as 
I mentioned, and a dozen or so other countries with whom we are 
now actively pursuing such formal legal arrangements. As a 
reult, if there is a vessel flying the Liberian flag that is 
known to be carrying, or thought to be carrying lethal weapons 
of mass destruction, we now have a legal basis for interdicting 
that ship. So I do not think there is any lack of 
organizational structure to this.
    The 14 countries are the ones who inaugurated it, but 
beyond these there is a spreading tier of other countries that 
we want to bring into it. The coastal states, the flag states, 
the transshipment states and the transit states, these are all 
the countries to whom we're reaching out. And as I noted, there 
were more than 60 countries that have expressed an interest. 
Over 60 countries attended the one-year anniversary meeting in 
Krakow last month.
    Senator Fitzgerald. How can we be assured that the PSI 
activities are receiving adequate resources, or that they are 
not diverting personnel and funds away from other important 
activities, if we have no organization that we can look at, see 
an organization chart, and fund through the annual budgetary 
process?
    I imagine you have many duties in the Department of State 
and this is just one of your duties. If there is no formal 
structure to the PSI, how do we know either that you are 
putting enough time into the PSI or that you are not shirking 
your other duties? I would imagine there would just be lots and 
lots of people involved. How many people in the administration 
through the Departments of Defense, Commerce, and State, would 
be involved in the PSI?
    Mr. Fitzpatrick. My colleague tells me it is probably three 
dozen or more, who on a daily basis are involved in this. I 
mean, obviously we have to shift priorities, and this is one of 
our greatest priorities, so the time that I personally used to 
spend on worrying about weapons of mass destruction in Iraq, I 
now spend on PSI, for example.
    Senator Fitzgerald. We do not have any PSI offices inside 
the government?
    Mr. Fitzpatrick. Under Secretary Bolton is the head of the 
effort of the State Department that overlooks PSI, and 
underneath him, Assistant Secretary John Wolf and my staff.
    Senator Fitzgerald. But there would be one person in charge 
at DOD and one person at Commerce? Is there any one person who 
is in charge overall?
    Mr. Fitzpatrick. Sir, the National Security Council-led 
Policy Coordination Committee for Proliferation Strategy is the 
mechanism that coordinates inter-agency, and I think we could 
point to one individual in each of the agencies that are 
responsible for this. I hesitate to do so outside the State 
Department though.
    Senator Fitzgerald. OK. I understand that you may have had 
some successes that you are reluctant to publicize, at least I 
hope you have had some cases where you have been successful in 
interdicting weapons of mass destruction, but I am wondering if 
you might be able to discuss any reasons for the reluctance to 
inform the public of any interdiction successes?
    Mr. Fitzpatrick. Sir, the reason for not publicizing some 
of the activities of the PSI is that intelligence sources are 
often the reason we know about activities, and so as not to 
jeopardize those intelligence sources and methods, this 
activity really cannot be discussed in this kind of a hearing.
    Senator Fitzgerald. OK. Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Lichtenbaum, the other day the Director General of the 
International Atomic Energy Agency stated, ``The present system 
of nuclear export controls is clearly deficient. The system 
relies on informal arrangements that are not only non-binding, 
but also limited in membership, and many countries with growing 
industrial capacity are not included. Moreover, at present 
there is no linkage between the export control system and the 
verification system.''
    A system that is deficient when it comes to nuclear 
material and weapons controls puts all humanity at risk. My 
question to you is what is the administration proposing to 
correct these deficiencies? Either one of you may answer that.
    Mr. Lichtenbaum. I think we may both answer, because it is 
an excellent question, Senator.
    With respect to the comment about the Nuclear Suppliers 
Group, which is the existing multilateral export control regime 
in the nuclear area, it is correct that theNSG has a limited 
membership. The goal is not to have a universal membership, but 
to have a membership among the countries who are significant 
nuclear suppliers. In part that is because that group operates 
by consensus, so that it is important to only have countries at 
the table who are significant nuclear suppliers, rather than 
having a global coverage in membership, and thus having every 
country in the world be able to have a veto over actions of the 
NSG.
    I might add that consensus rule has on occasion been very 
important to the United States, so we have historically been a 
strong supporter of a consensus rule that applies not only in 
the NSG, but also in the other multilateral regimes.
    I think the NSG and the other regimes have shown themselves 
able to adjust to changing world circumstances and the growth 
of countries and suppliers where necessary. They have 
established criteria for membership, and in the case of the 
NSG, I might draw to your attention the recent accession of 
China to the NSG, which obviously recognizes the reality of 
China's status as a nuclear power, its increasing acceptance of 
responsibility in the export control area, and therefore, 
properly includes them in the organization that deals with 
nuclear export controls.
    I think where necessary the NSG has shown itself able to 
include countries who are nuclear suppliers.
    With respect to the linkage between the NSG and the IAEA, I 
might defer to Mr. Fitzpatrick on that if he would care to 
comment, because I know he has a background with the IAEA, 
having served in Vienna, and it is a particular responsibility 
of the State Department.
    Mr. Fitzpatrick. Thank you, Senator Akaka. I think 
Secretary Lichtenbaum answered the question well. I might only 
add that in addition to the formal membership of regimes, many 
countries outside the regime conform their controls to regime 
standards, and this is often one of our bilateral diplomatic 
goals, to encourage a country--for example, India--to conform 
their regimes. They cannot be part of the nuclear suppliers 
group because they do not accept full scope safeguards, but 
they can conform their export controls to that of the regime, 
and we are encouraging them to do so.
    Regarding the linkage, I have to read more about what the 
Director General ElBaradei proposed. It is helpful that the 
Nuclear Supplier Group membership is centered in Vienna, in the 
same capital that the IAEA has its headquarters so that there 
are informal linkages. But it would probably be impossible to 
have too formal of a linkage. If all 100 plus countries that 
are part of the IAEA were in a suppliers group that operates by 
consensus, nothing would ever get done.
    What we are trying to do in the Nuclear Suppliers Group is 
plug the loopholes that have allowed some states to acquire 
nuclear weapons or to come near to acquiring nuclear weapons 
capabilities under a facade of pursuing peaceful programs. One 
of the initiatives that President Bush announced in his 
February 11 speech was to preclude states that do not now have 
enrichment and reprocessing capabilities from acquiring those 
capabilities. Draw a line beyond those that have it and no 
more, would prevent the likes of Iran, for example, from 
acquiring enrichment technology. And at the G-8 Summit last 
week in Sea Island, the G-8 countries, all of them, agreed that 
it would be prudent to, for at least 1 year, to suspend any 
expansion of technology to states that do not already have it 
in enrichment and reprocessing. We would like to make this 1 
year become a permanent moratorium.
    Senator Akaka. My time has expired. I have further 
questions, and I will have questions on China, too. Thank you, 
Mr. Chairman.
    Senator Fitzgerald. Senator Lautenberg.
    Senator Lautenberg. Thanks, Mr. Chairman.
    Mr. Lichtenbaum, are there amounts of dual-use technology 
and materials that we are aware of that U.S. companies are 
exporting throughout the world, and obviously if these things 
were to get into the wrong hands, they could be used to develop 
terrible weaponry. Do we have any ideas about how much of this 
dual-use material or technology is being exported by U.S. 
companies?
    Mr. Lichtenbaum. I guess there would be various ways to 
measure the volume of dual-use technology or items that are 
being exported.
    Senator Lautenberg. Even if we got it down to the incidents 
of this happening.
    Mr. Lichtenbaum. One way to answer it, and the only way 
that I can provide to you here, although I would be happy to 
provide more ways for the record, Senator, would be in terms of 
the overall U.S. GDP. My recollection is that the amount of 
licensed trade--that is, items that we require an export 
license for at the Commerce Department--is somewhere around 1 
percent of U.S. GDP, so it is very small as a matter of the 
overall U.S. economy.
    Senator Lautenberg. Yes, but the U.S. economy being the 
size that it is, if it is 1 percent, I mean we are talking 
about a substantial sum of----
    Mr. Lichtenbaum. That is certainly true.
    Senator Lautenberg. What do we do about that? I mean the 
biggest cover for these surreptitious activities is dual use, 
right? They say, ``We just want to use it for nuclear energy.'' 
And what the steps that follow are, I guess, traceable but not 
obvious. What do we learn if we do find out that material has 
been shipped in the belief that it is going to be used 
primarily on the energy side?
    Mr. Lichtenbaum. The dual-use items that you are talking 
about would be our items that are controlled for nuclear 
nonproliferation reasons, and those we would have subjected, 
when we issue a license, to license conditions. We license them 
not just in general for export, but for export to a particular 
end user for a particular end use. That is inherently part of 
the obligation of the exporter, to make sure that they comply. 
There may also be additional conditions that they are required 
to follow. Frequently we impose license conditions that talk 
about access to the item or disclosure of technology being 
limited to certain individuals within the foreign end user, 
etc. So we have, we think, a well crafted set of commitments 
that U.S. exporters have to comply with as a condition of 
exporting a nuclear item to another country.
    Certainly, we cannot, under any reasonable scenario, be 
monitoring every license all the time to make sure that those 
rules are followed. We do post-shipment verifications. Where we 
think there is especially sensitive items or end users that are 
particularly--we think they are worthy or we would not grant 
the license, but where we think there is a question perhaps, we 
would then go and do a post shipment verification, make sure 
the item is where it is supposed to be.
    Senator Lautenberg. I do not know how big the opening is 
there for skullduggery, but the fact is that, as you say, you 
cannot really monitor it once it is shipped and arrives 
someplace else. What about re-exportation, how can you verify, 
or can you verify that the listed recipient of the final 
destination for export is an accurate assessment of the 
shipment's ultimate use? It really is kind of the same 
question, and I guess I do not know what tools you have to do 
that, but it is something.
    When you describe, Mr. Fitzpatrick, the organization that 
is there to keep an eye on these things, it is a relatively 
small thing, but problems that might ensure are enormous.
    Let me go on to a different area. When Mr. Khan confessed 
that his network was engaged in smuggling weapons into Libya, 
North Korea, among other rogue nations, was the administration 
aware of these deals with these states considered to be 
sponsors of terrorism before Mr. Khan's confession, do we know?
    Mr. Fitzpatrick. Senator, I regret that the question 
inevitably strays into the area what we knew through 
intelligence information, and I am just not able to answer that 
question in this sort of a structured hearing.
    Senator Lautenberg. I see. The disclosures about weapons 
programs in Libya, are they accounted for in transactions that 
were made through A.Q. Khan network, the materials that were 
sent to Libya, was there an accounting of that material that we 
have an awareness of?
    Mr. Fitzpatrick. Sir, that is a question that we are 
intently focusing on right now. We want to be sure with as much 
confidence as we can, that Libya has accounted for all the 
materials that came into its possession. Considering all of the 
information that we have through intelligence, and through what 
the IAEA has reported about its own investigations, we need to 
be able to determine with a good deal of certainty that Libya 
has completely come clean on all of it.
    As you know, we have taken out of Libya the most dangerous 
materials, a planeload in February and a shipload in March. I 
am not able to tell you now, because we have not finished our 
consultations with Libya and with the IAEA, but I hope that in 
the coming months we will be able to give you an affirmative 
answer to that question, but it is very much the question that 
is on our minds.
    Senator Lautenberg. We would be very interested. I am 
suspicious, as are many of the families of PanAm 103 who lost 
loved ones, that there is a full intent to become a member of 
the family of nations that are on this side. So we thank you. 
We would ask that you inform us if you do get anything.
    Mr. Chairman, that concludes it for me, and I thank you 
very much. Thank the witnesses.
    Senator Akaka [presiding]. Thank you, Senator Lautenberg.
    Mr. Lichtenbaum, I said that I would return to China.
    China and the United States, after years of negotiations, 
recently concluded a new agreement on improved end use 
verification procedures to monitor the ultimate use of dual-use 
exports to China. The concern is this could allow for increased 
U.S. high technology exports to China. As you know, Chinese 
assistance is essential to restricting North Korean WMD-related 
exports, both because many of those exports may transit Chinese 
air or sea corridors. However, China has not yet become a 
member of PSI.
    I wonder what your view would be to conditioning U.S. high 
technology exports on a state's participation in the PSI? If 
our goal is universal adherence to the program, is this not one 
way to get it?
    Mr. Lichtenbaum. Thank you, Senator, for a very thoughtful 
question.
    The question of U.S. high technology exports to China is a 
very important one, as it has both significant economic 
implications for our country, given the size of the Chinese 
market, as well as national security implications in light of 
any potential that high technology items could be diverted, and 
therefore it is a question that the administration focuses on 
very intently, as I can testify from my personal experience 
since coming into office.
    I think the balance to be struck in the high technology 
area has to be developed on a case-by-case basis, so it is 
difficult to say that if you join PSI, therefore we will open 
the floodgates and allow you access to our high technology 
goods. From my own experience working the export control cases, 
case-by-case through the inter-agency process, it is critical 
that we make those judgments in order to protect U.S. national 
security on a case-by-case basis, and so I would be reluctant 
to see export controls used as the carrot to entice China to 
join the PSI.
    I would think that it would also be perhaps ineffective in 
terms of achieving the goal that we all want to achieve, which 
is China's strong participation in the PSI, and I would welcome 
Mr. Fitzpatrick's thoughts on this, but I would think that 
countries' participation in PSI would be most effective if they 
themselves believe in the program, and believe strongly that it 
makes sense in terms of their own security interests and the 
world's security interests for them to participate. Therefore, 
if they were to join in order to obtain some other benefit, but 
without fully being on board for the program, it might not be 
the most effective way to have them participate. So my view 
would be that it is important for the United States to continue 
its work with China to persuade them of the benefits of the 
PSI.
    Senator Akaka. Mr. Fitzpatrick.
    Mr. Fitzpatrick. Thank you. Once more I have to say that 
Secretary Lichtenbaum has put the point very well.
    China does support the goals and objectives of PSI, but the 
proof is in the pudding, and we can point to a factual basis 
for this. China has been willing to cooperate on a case-by-case 
basis in stopping proliferation, and in fact, cooperated on a 
particular case involving chemicals that were destined to North 
Korea's nuclear weapons program. This was a very high priority, 
to stop such material going to the North Korea program, and 
China cooperated in stopping this.
    Secretary Powell referred to this case in a recent speech 
in Texas. I wish I had the exact date, but this is, I think, 
something we can point to.
    That does not mean China's cooperation has been fulsome, 
but on a case-by-case basis they have been cooperative, and we 
are strongly encouraging them to do more.
    Senator Akaka. I really appreciate your responses, and I 
have further questions that we will submit for the record, and 
I will keep it open for another day for other questions from 
Members of the Subcommittee.
    But I want to thank you very much, Mr. Lichtenbaum and Mr. 
Fitzpatrick for your presence here. Thank you for being 
patient, and thank you for being helpful. This will help us 
determine what we need to do to help our country in PSI and in 
WMD matters. So thank you very much.
    Mr. Fitzpatrick. Thank you, Senator.
    Senator Akaka. Thank you very much.
    I would like to call forward the next panel. David 
Albright, Michael Moodie, Leonard Spector, and Baker Spring.
    May I ask the panelists to contain your testimony, and to 
keep it to 5 minutes.
    Our first witness on this panel is David Albright, 
President and Founder of the Institute for Science and 
International Security. The institute is a nonpartisan 
organization dedicated to informing the public of policy issues 
affecting international security. The Institute's work focuses 
in part on efforts to stop the spread of nuclear weapons and to 
enhance the transparency of nuclear arsenals throughout the 
globe. Dr. Albright has published numerous assessments of 
secret nuclear weapons programs around the world. From 1992 
through 1997, he actively collaborated with the International 
Atomic Energy Agency to analyze Iraqi documents and past 
procurement activities. In 1996 he was the first non-
governmental inspector of the Iraqi nuclear program.
    Next is Michael Moodie, who is President and Co-Founder of 
the Chemical and Biological Arms Control Institute, a research 
organization that addresses the challenges to global security 
and stability. The Institute's work focuses on the elimination 
of chemical and biological weapons and responses to emerging 
national security threats. Mr. Moodie has almost 30 years of 
experience working on international security issues in 
government, the policy research community and academia. For 
example, from 1990 through 1993 he served as Assistant Director 
of the Multilateral Affairs of the U.S. Arms Control and 
Disarmament Agency, where he advocated U.S. policy relating to 
arms control in the Geneva-based conference on Disarmament and 
the United Nations first committee.
    Our third witness is Leonard Spector. Good to have you back 
here. You were with Senator Glenn. Mr. Spector is Deputy 
Director at the Center for Nonproliferation Studies at the 
Monterey Institute of International Studies. Mr. Spector leads 
the Center's Washington office, and also serves as editor in 
chief of the Center's publications. Prior to joining the Center 
for Nonproliferation Studies, Mr. Spector served as Assistant 
Deputy Administrator for Arms Control and Nonproliferation at 
the National Nuclear Security Administration in the Department 
of Energy. While serving at the Energy Department Mr. Spector 
was responsible for the development and implementation of arms 
control and nonproliferation policy, domestic and multilateral 
export controls, civilian nuclear programs in the United States 
and abroad, as well as initiatives in regions of the world with 
proliferation activities.
    Our fourth and final witness is Baker Spring, who is the 
F.M. Kirby Research Fellow in National Security Policy at the 
Heritage Foundation. Mr. Spring's research focuses on U.S. 
national security issues, including arms control, 
nonproliferation policy and missile defense. Mr. Spring has 
written extensively on these topics and others, including 
nuclear proliferation in North Korea, transforming the U.S. 
military, and the future of the United Nations. Prior to 
joining the Heritage Foundation, Mr. Spring served as a defense 
and foreign policy expert in the offices of former Senator 
Paula Hawkins of Florida and Senator David Karnes of Nebraska.
    Again, I would like to thank our witnesses for taking time 
out from a busy schedule to be here today to testify. I did ask 
you to keep it to 5 minutes, and we will include your 
statements in the record. Let me call on Dr. Albright to begin.

    TESTIMONY OF DAVID ALBRIGHT,\1\ PRESIDENT AND FOUNDER, 
        INSTITUTE FOR SCIENCE AND INTERNATIONAL SECURITY

    Mr. Albright. Thank you for having this hearing and 
inviting me to speak.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Albright appears in the Appendix 
on page 45.
---------------------------------------------------------------------------
    One of the biggest surprises about the Khan network was its 
sheer audacity and scale. It intended to provide Libya a 
turnkey gas centrifuge facility, something typically reserved 
for states or large corporations in industrialized nations with 
full government support and knowledge. The plan called for the 
network to provide thousands of gas centrifuges, detailed 
project designs for the centrifuge plant, down to where the 
toilet paper would go in a bathroom, centrifuge designs, 
manufacturing equipment and technology to make more centrifuges 
indigenously, and ongoing technical assistance to help Libya 
overcome any obstacles in assembling and operating the 
centrifuges in the plant.
    If Libya had continued with its nuclear ambitions and the 
network had not been exposed, Libya could have succeeded in 
about 4 or 5 years in assembling its centrifuge plant and 
operating it to produce significant amounts of highly enriched 
uranium.
    Armed with this HEU, Libya would have known how to turn 
that HEU into nuclear weapons. The reason is simple. The 
network provided Libya with information to build a workable 
nuclear weapon. Libya received almost all of the detailed 
nuclear weapon component designs, component fabrication 
information, and assembly instructions for a workable nuclear 
device.
    Much remains to be discovered about this network before its 
operations are fully understood or its complete demise can be 
celebrated. It is necessary for governments and the 
International Atomic Energy Agency to be persevering in 
investigating this case. If these investigations are not done 
thoroughly, the risk will be greater that a similar network 
could rise again from the remnants of the disbanded Khan 
network.
    The first unfinished task is identifying all the network's 
key players and their activities. Many legal investigations of 
members of the network have started. Momentum may in fact be 
increasing around the world to prosecute the key players in 
this network. But a critical task remains, determining all the 
players and their activities. The ultimate goal should be 
prosecuting them as fully as possible under both export control 
laws and laws involving exports to terrorist states as Libya 
was labeled, and this process will likely take years.
    It is also critical to determine the network's customers, 
and this effort again will take considerable time. Although 
Khan has admitted that he provided centrifuge items to Libya, 
North Korea, and Iran, little has been reported about other 
recipients of centrifuge and nuclear weapons assistance. In 
addition, many details of this assistance remain unknown, 
particularly in regards to North Korea. A key question is 
whether Iran or North Korea also received nuclear weapons 
design information like Libya did. Questions remain whether 
Syria was a customer for centrifuge or nuclear weapons 
assistance, although Khan has denied selling anything to Syria. 
Finally, did terrorists receive any information or other 
assistance from the Khan network?
    Another unfinished task is understanding the entire supply 
chain of the network. In the case of Libya the network focused 
on making what are called P2 centrifuge components outside 
Pakistan. The Libyans have stated they placed an order for 
10,000 P2 machines, which translates into a total of about one 
million separate components, a staggering number of parts, 
given the sophistication of gas centrifuge components. The 
network was assembling a significant cast of experts, 
companies, suppliers, and workshops to make all these 
components. The organization of this project was quite 
impressive.
    But investigations of the supply chain of the network are 
unfinished. It is not known if all the key workshops and 
companies have been identified. Components may have been made 
but not delivered to Libya, and components may also have been 
made for customers other than Libya.
    The final task I would like to mention is the retrieving of 
centrifuge designs and manufacturing instructions from the 
network. The key to the success of this network was its virtual 
library of centrifuge designs and details manufacturing manuals 
and other types of instructions. A key task is to track down 
the members of this network who have this kind of a sensitive 
centrifuge information, prosecute them and try to retrieve as 
much of this information as possible.
    However, retrieving all the centrifuge information may not 
be possible since copies can be made and hidden for years if 
desired. Thus, even if the retrieval effort is reasonably 
successful, the centrifuge information may form the core of a 
future network aimed at secretly producing or selling gas 
centrifuges.
    A priority and a major point of discussion today is 
preventing other illicit networks similar to the Khan network 
and nuclear smuggling through less elaborate methods. In 
addition, steps are needed to increase the probability of more 
quickly discovering such efforts, and certainly the first 
priority is fully investigating and dismantling the Khan 
network. Investigations need to continue and intensify in a 
range of states including Malaysia, Switzerland, Britain, 
France, Italy, Spain, United Arab Emiates, Germany, and Turkey, 
to just name a few.
    More information is needed from states that benefited from 
this network, particularly Libya, Iran, and eventually North 
Korea. In addition, Pakistan's cooperation is critical. The 
Pakistani Government has provided useful information to the 
IAEA and other states, and it appears committed to providing 
more information. However, the Pakistani Government should 
permit the International Atomic Energy Agency and perhaps other 
governments direct access to A.Q. Khan and his associates 
involved in this network in Pakistan.
    The successes of the Khan network should shatter any 
complacency about the effectiveness of national and 
international nuclear related export controls to stop or sound 
an alarm about illegal of nuclear-related exports. Although the 
Proliferation Security Initiative is useful and important, it 
cannot fix the fundamental weaknesses of the current export 
control regime. The Khan network was masterful in identifying 
countries that had weak national export control laws, yet 
adequate industrial capability for the network's purposes. 
These countries were both inside and outside the Nuclear 
Suppliers Group.
    Although many suppliers to the network did not know the 
actual purposes of the materials they provided or the parts 
they were contracted to make, they were often in countries 
where the authorities were unlikely to carefully scrutinize 
exports or encourage curiosity about the actual end use of an 
item. The network also knew how to obtain for its illicit 
endeavors necessary subcomponents, materials, machine tools and 
other manufacturing equipment from countries in Europe with 
stringent export control systems.
    Certainly improvements can be made in the traditional 
export control system, including expanding the membership of 
the Nuclear Suppliers Group and sharing more information about 
actual procurements among NSG members and with the IAEA, but 
these steps are by themselves insufficient. The new UN Security 
Council Resolution 1504 is also an important step, but it does 
not go far enough to significantly reduce the risk posed by 
nuclear smuggling.
    The current system lacks an aggressive intrusive 
verification investigation organization that can provide 
greater confidence that states are implementing effective 
export controls and can devote its resources to detecting 
illicit nuclear and nuclear-related procurements.
    What is needed is a universal treaty-based system 
controlling nuclear export activities that is binding on states 
and includes a means to verify their compliance. Under such a 
treaty or agreement, countries would implement a set of nuclear 
and nuclear-related export control laws and regulations and 
criminalization procedures similar in nature to those required 
by UN Security Council Resolution 1540. The agreement, however, 
would also mandate the International Atomic Energy Agency to 
verify compliance, ensure the adequacy of those laws, and 
investigate illicit procurement activities. Signatories would 
inform the IAEA of all sensitive nuclear or nuclear-related 
exports, and the IAEA would have the mandate and legal rights 
to verify that the transactions are indeed legal. It would 
verify that a country's declarations about its nuclear or 
nuclear-related exports or imports is accurate and complete.
    Senator Akaka. Mr. Albright, will you try to wind this up?
    Mr. Albright. All right. The IAEA is a logical choice to 
undertake this role. It is already pursuing investigations of 
illicit procurement activities by Iran and Libya as part of its 
safeguards responsibilities under the Nonproliferation Treaty.
    By linking its safeguard system with export control 
verification and monitoring, the IAEA would be in a far better 
position to assure the absence of undeclared nuclear activities 
and detect cheating in a timely manner. By performing a task 
that governments have been unable to do, the IAEA, under such a 
treaty-based system, would significantly increase U.S. and 
international security. Thank you.
    Senator Akaka. Thank you very much. Mr. Moodie.

    TESTIMONY OF MICHAEL MOODIE,\1\ PRESIDENT, CHEMICAL AND 
               BIOLOGICAL ARMS CONTROL INSTITUTE

    Mr. Moodie. Thank you, Mr. Chairman, for the opportunity to 
appear before the Subcommittee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Moodie appears in the Appendix on 
page 52.
---------------------------------------------------------------------------
    I would like to begin by suggesting that perhaps I am 
something of an outlier on this panel. That is not because I 
think that the problem of the illegal transfer of materials and 
equipment related to chemical, biological, and nuclear weapons 
is not important, it is. But the chemical and biological 
dimension of this issue is a special challenge. Little 
information is publicly available on trafficking of chemical or 
biological agents of equipment, especially compared to 
trafficking of nuclear materials.
    More to the point, in my view it is not helpful to try to 
apply approaches used for dealing with a problem of nuclear 
trafficking to the issue as it relates to chemical and 
biological challenges. A chemical or biological equivalent of 
A.Q. Khan may exist, but he or she would be extremely difficult 
to identify. In my view three reasons argue for the need for a 
different approach to the chemical and biological problem.
    First, the inherently dual-use nature of chemical and 
biological materials and equipment. The requisite materials and 
technologies for making chemical and biological weapons are 
widely available. In the case of biological agents many can be 
found in nature. For both chemical and biological weapons key 
elements are readily found in legitimate biotechnology and 
chemical industries around the world where they are used for 
perfectly legitimate commercial and scientific purposes. This 
combination of availability and legitimate use makes it more 
difficult to identify potential CBW programs and track related 
illicit activities, including transfers. In the life sciences 
this problem is exacerbated by the very small quantities that 
may be needed to be transferred to bolster a weapon's 
capability. When snippets of protein are all that you need, the 
notion of controlling transfers of such material becomes a less 
than useful option.
    Second, the global diffusion of the capability to exploit 
such elements means the technology development and application 
no longer conform to natural patterns of the past. There are a 
number of key dimensions of the global technology diffusion 
phenomenon with potentially important security implications for 
the United States that I note in my statement. These 
developments have created new economic and commercial realities 
which in turn produce opportunities to overcome some of the 
traditional barriers to acquiring chemical and biological 
weapons and open new pathways to successful proliferation. But 
perhaps the most challenging problem related to technology 
diffusion is the latency of weapons development capabilities 
inherent in that diffusion with little or no safety margin for 
timely and effective responses to a decision by a potential 
proliferator to pursue breakout.
    Third, this latency highlights a third reality, that the 
problem is more and more about knowledge. This is again 
especially true with respect to the life sciences. Although it 
is still an exaggeration to claim that yesterday's Nobel prize 
winning research is today's standard bench practice and 
tomorrow's high school science fair project. It is becoming 
less and less of a stretch. If the necessary materials can be 
isolated from nature or gained for legitimate scientific and 
commercial purposes, and they can, and if the critical 
equipment is available to support business and other economic 
activity, and it is, then the crucial factor is what people 
decide to do with those capabilities. The challenge is shaping 
decisions about how science and technology will be used. The 
task is to manage the risks associated with the use of that 
science and technology in such a way that the potential for 
misuse is minimized.
    In this context it is still important to learn what we can 
from the historical experience we have available, and in my 
written testimony I discuss a number of historical examples. I 
also focus on some international initiatives to combat the 
illicit transfer or smuggling of weapons of mass destruction, 
including PSI, UN Security Council Resolution 1540 and the G-8 
Global Partnership. I do not have time to review these 
discussions in detail, so in conclusion let me summarize my 
observations based on looking at these two sets of issues.
    First, they further highlight the differences between the 
application of this approach and the nuclear field on one hand 
and in the chemical and biological arenas on the other. The 
fact of the matter is that controlling materials and equipment 
is more possible in the nuclear arena because they are 
significant in size and signature. One could also argue that it 
matters more in the nuclear arena because gaining access to 
nuclear materials remains a key hurdle to overcome in 
developing a nuclear weapons capability. This is not the case 
with respect to chemical and biological weapons for which 
access to the materials and equipment is not the problem, so 
much as a range of other technical and engineering challenges.
    Second, these cases often underline the difficulty of 
stopping illicit chemical and biological trafficking. The 
details of the illicit transfer in the three historical cases I 
looked at largely came to light only after the fact, suggesting 
how hard it is to be successful in stopping chemical and 
especially biological trafficking on a proactive basis, and it 
will only become more difficult as trends such as global 
technology diffusion continue.
    Third, these difficulties reflect a point made earlier, 
that in dealing with chemical and particularly biological 
weapons proliferation, the key factor is not material or 
equipment, but knowledge. With respect to both the life 
sciences and chemistry, it is a very different world from that 
which existed even a decade ago, and our knowledge in these 
fields and what we will be able to do with that knowledge will 
only accelerate in the period ahead. The resulting science and 
technology, however, is neutral, and the issue will be the uses 
to which that science and technology will be put. Because 
chemistry and biology will not disappear, we live in a world in 
which the potential misuse of these vital sciences is a 
permanent risk. The challenge to governments and the broader 
community is to find ways to manage those risks successfully. 
Efforts to control or eliminate the illicit trafficking of 
chemical or biological materials and equipment will make a 
contribution to risk management efforts, but they are unlikely 
to be decisive in and of themselves. To the extent they will 
matter, it will be to the degree that they reinforce other risk 
management efforts. Thank you.
    Senator Akaka. Thank you, Mr. Moodie. Mr. Spector.

TESTIMONY OF LEONARD S. SPECTOR,\1\ DEPUTY DIRECTOR, CENTER FOR 
 NONPROLIFERATION STUDIES, MONTEREY INSTITUTE OF INTERNATIONAL 
                            STUDIES

    Mr. Spector. Thank you, Senator, for the opportunity to 
testify this afternoon.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Spector with an attachment 
appears in the Appendix on page 62.
---------------------------------------------------------------------------
    Last week the Monterey Institute Center for 
Nonproliferation Studies released an important new book which 
is directly relevant to the hearings today, entitled ``The Four 
Faces of Nuclear Terrorism.'' A core conclusion of that study 
is that today the nuclear threat posed by other nuclear armed 
states is being eclipsed by a new type of threat, that of 
nuclear instruments in the hands of non-state terrorist 
organizations. This reality requires a profound change in the 
way the United States thinks about national security policy.
    It is fair to conclude that at this point in history 
terrorist organizations are the only entities that are seeking 
to rain nuclear destruction on the United States without regard 
to the potential consequences to themselves or to the 
innumerable innocent victims of such action. Moreover, even in 
those instances where nuclear assets in the hands of states 
cause U.S. policy makers deep concerns, in virtually all of 
these cases the foremost source of their apprehension is the 
possibility not that the states themselves will use these 
assets against us, but that these assets will come into the 
hands of terrorist groups, who are all too eager to do so.
    For this reason, as the Subcommittee analyzes the dangers 
posed by clandestine nuclear smuggling networks, it is crucial 
to focus, not only on the suppliers, but also on the customers 
for their dangerous wares.
    It appears that A.Q. Khan brought his network to his 
customers--Iran, Libya, and North Korea. There has been no 
evidence made public as yet to indicate that the Khan network, 
itself, provided nuclear wherewithal to al Qaeda or other 
terrorist groups, although it is known that certain individual 
scientists in Pakistan were working with al Qaeda.
    The U.S. and international response to A.Q. Khan's 
activities, which include pressing Pakistan and other states to 
close down his network, intensifying interdiction efforts 
through the Proliferation Security Initiative, and pursuing a 
series of diplomatic efforts to constrain Libya, Iran, and 
North Korea, are all to the good. But these efforts are not 
tailored to addressing the most crucial threat, which is 
nuclear terrorism.
    Here the customer is not really susceptible to diplomatic 
carrots and sticks, and the network that connects terrorists 
and nuclear materiel is as likely to be comprised of 
interlinked terrorist cells that reach into poorly secured 
nuclear centers, as it is to be comprised of unscrupulous 
nuclear companies, technicians, and middle men that offer their 
commodities on the international marketplace as Dr. Khan did.
    Moreover, terrorists are highly unlikely to seek to 
manufacture nuclear material. They are much more likely to try 
to find the material ready made at a poorly secured site, let 
us say in Russia or perhaps Pakistan, and to use that to 
fabricate and improvised nuclear device, or they may seek to 
acquire nuclear weapons themselves.
    For these reasons it is essential, even as we attempt to 
rollback networks, as David Albright and others have urged, 
that we also focus on securing these materials at the source. 
This means accelerating programs to secure, consolidate and 
eliminate weapons usable nuclear materials, and also 
intensifying efforts to consolidate nuclear weapons, and where 
possible, in line with existing arms control undertakings, such 
as the Presidential Nuclear Initiatives of 1991-92, to 
eliminate these weapons.
    In managing nuclear weapons material, moreover, it is 
crucial to recognize and to act upon the fact that terrorists 
will be most interested in highly enriched uranium, which they 
could fabricate far more easily into a nuclear weapon than they 
could fabricate plutonium. So we need to put HEU first when we 
try to go about securing these materials.
    We, in our study, thus urge the United States to 
dramatically revise its efforts to protect fissile materials 
abroad so as to make securing, consolidating and eliminating 
highly enriched uranium the leading and most urgent task, 
taking clear precedence over addressing the dangers posed by 
plutonium which nonetheless must remain an important priority. 
Our motto should be, put HEU, high enriched uranium, ``at the 
head of the queue'' I have also attached a chapter of the 
conclusions of our book to my testimony, which I hope you will 
be able to include in the record of this hearing.
    I would also add that UN Security Council Resolution 1540, 
adopted earlier this year, and which is binding on all UN 
member states, is an extremely valuable step forward because it 
addresses not only the export control dimension, but also the 
security of nuclear materials, and requires states to adopt 
strong measures in both of these areas. It remains to be seen, 
however, whether the resolution will be effectively 
implemented, and a particular concern is the lack of specific 
standards in the resolution that states would have to meet.
    Just to make one final point as I close, the U.S. 
Government now has a very wide range of initiatives aimed at 
trying to constrain the dangers that are the subject of this 
hearing. They are very effective or can be very effective when 
they all work together and form a web of initiatives, a multi-
layered defense, to protect this country from the ultimate 
nuclear danger. But we need our congressional oversight process 
to monitor these various and very diverse initiatives. This 
Subcommittee, being a part of the Governmental Affairs 
Committee, is uniquely placed to monitor how all of these 
different elements are interacting together, to identify the 
areas of success, and to probe for gaps and urge that they be 
addressed.
    Thank you, Senator Akaka.
    Senator Akaka. Thank you. Mr. Spring.

  TESTIMONY OF BAKER SPRING,\1\ F.M. KIRBY RESEARCH FELLOW IN 
       NATIONAL SECURITY POLICY, THE HERITAGE FOUNDATION

    Mr. Spring. Thank you, Mr. Chairman. I, too, appreciate the 
opportunity to testify, and I will try and be very brief, given 
the hour.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Spring appears in the Appendix on 
page 86.
---------------------------------------------------------------------------
    Mr. Chairman, the policy of the United States for combating 
the proliferation of weapons of mass destruction has used four 
tools. These tools are deterring attacks on the United States 
and its friends and allies with weapons of mass destruction, 
maintaining the ability to defend against such attacks, 
preemptive attacks against those that would threaten the United 
States and its friends and allies with weapons of mass 
destruction against whatever capabilities they may possess and 
arms control.
    The trick is to fashion these four essential tools into a 
coherent policy for combating proliferation that is properly 
suited to countering the capabilities that either now or in the 
future could be in the hands of rogue states and terrorist 
groups.
    The Bush Administration is pursuing a number of specific 
initiatives to attack the proliferation threat posed by 
international networks that traffic in weapons of mass 
destruction and weapons technology by limiting access to 
sensitive materials and interdicting relevant shipments in 
transit. These include the Proliferation Security Initiative, 
the Global Threat Reduction Initiative, the Container Security 
Initiative, the Customs Trade Partnership Against Terrorism 
Program, and the initiative under the International Shipment 
Port Security Programs. Obviously, it is a wide variety.
    I categorize several of these initiatives, and the PSI in 
particular, more as arms control activities because they are 
designed to keep weapons out of the hands of hostile actors, as 
opposed to direct defense activities.
    As we look at these kinds of programs, I think that we 
should have several guidelines that help us make judgments on 
what will be effective and how best to pursue these kinds of 
initiatives. The first of these is to make sure that we use the 
initiatives to foster a healthy competition with the 
institutions of the treaty-based nonproliferation regime. In 
other words, that they can go hand in hand, but we hope that we 
would spur strong actions on both sides.
    The second guideline is to resist the temptation to build 
these particular initiatives into cumbersome international 
bureaucracies. We have those international bureaucracies. They 
have strengths, but they also have important weaknesses, and 
having a diversity of institutions, some more bureaucratic than 
others, I think, is appropriate.
    The third guideline is to design the initiatives to harness 
the power of sovereign states. Former Secretary of State 
Schultz has spoken to this issue. I think that it is important 
that the state-based system be used to the fullest extent 
possible in terms of combating proliferation.
    The fourth guideline is to avoid what I call quid pro quo 
deals, particularly in these kinds of informal initiatives. 
They may be necessary in the context of the Atoms for Peace 
Program, for example, but in narrowly-pursued initiatives, I 
hope that we do not end up watering down what is the objective 
or purpose of these initiatives.
    Specifically, I have several recommendations, and most of 
these are particularly appropriate for the Proliferation 
Security Initiative among those that are being undertaken by 
the Bush Administration. The first is to focus on cracking down 
on the domestic sources of proliferation, inside cooperating 
states uncovered in the investigation of the A.Q. Khan network. 
Unfortunately, as it has been revealed in the press at least--
and I do not know how accurate they may be ultimately, but that 
PSI countries, for example, have been sources of technology 
that have gone to that network and then on to other suspect 
actors.
    The second is that with these initiatives I hope that we 
would forswear international employees and rely on the 
government employees to perform the bureaucratic functions of 
these initiatives. I know that the Chairman of the Subcommittee 
expressed concern about this, but I think it is actually a 
source of strength.
    The third recommendation is to establish new initiatives. 
The ones that I would be focused on are on international 
organizations or initiatives that would use individual member 
states to focus on dismantling weapons programs in countries 
that agree to that, like Libya, hopefully in the future like 
North Korea, instead of relying exclusively on the 
international bureaucracies in the Organization for the 
Prohibition of Chemical Weapons or the International Atomic 
Energy Agency. In other words, I would like to see some tiger 
teams go in and accompany the international bureaucracies in 
terms of dismantlement.
    The same would extend to another initiative that I envision 
on verification. That is, if the dismantlement process proceeds 
and other transparency measure are undertaken, that 
verification is not left up solely to the international 
bureaucracies.
    The final recommendation that I have is something that has 
been pursued in the PSI in terms of outreach to other states 
that are not core participants, but are cooperative in terms of 
their attitudes, and that is by pursuing it on a regional 
basis. I think the Japanese, in particular, did this very 
effectively with regard to the PSI in terms of fostering 
support from those countries in Asia that have agreed to at 
least cooperate with the overall initiative.
    My bottom line message, I think, Mr. Chairman, is that the 
international structure is still based largely on the nation 
state system, and to the extent that we can reinforce the 
nation state system in order to pursue these goals, as well as 
benefit from it, I think that the counterproliferation 
initiatives that the Bush Administration is undertaking will 
serve as a very useful, indeed, I think, indispensable element 
of a comprehensive policy for countering proliferation in all 
of the important categories that we have talked about here 
today.
    Senator Akaka. Thank you very much for your statements.
    I have questions for you, Mr. Albright. On June 24, 2003, 
the European Union issued a document entitled ``Basic 
Principles for an EU Strategy Against Proliferation of Weapons 
of Mass Destruction.'' I am certain you are familiar with this 
resolution. The EU detailed a plan of action that called for 
promoting universal adherence to multilateral agreements 
relating to weapons of mass destruction and their means of 
delivery, strengthening the biological and chemical weapons 
conventions, criminalizing the export or brokering of WMD 
related material, and strengthening export regimes, and there 
are others.
    I would appreciate any thoughts you might have, or any of 
the others might have on the EU plan, either now or for the 
record. Was there, for example, any recommendations you 
disagreed with? The Director General of the International 
Atomic Energy Agency has called for far-reaching changes to the 
nuclear nonproliferation regime, and one particular proposal is 
to make export controls which are now voluntary and legally 
binding. Again, what are your views on this idea, and do you 
see any drawbacks to adopting it?
    Let me stop with those two, and start with you, Dr. 
Albright.
    Mr. Albright. Thanks. I probably know less about the EU 
deal than you may think. I would say though that I think the EU 
is trying to put down a marker and a commitment to multilateral 
solutions, which in general I agree with. I think the idea that 
is prevalent here of a coalition of the willing driving our 
foreign policy just does not work. I think that has been our 
experience historically. You do need binding commitments that 
are legally enforceable to make progress in these areas, and I 
think the EU has the right idea.
    In terms of export controls, I think I do support trying to 
create a treaty-based system of export controls. I have been 
evaluating illicit procurement for 20 years, and it is just so 
difficult to stop it with the existing system. People like A.Q. 
Khan make fun of the existing system. You can look in his 
statements and find how he basically says, ``Whatever you do, I 
will get around it.''
    So I think we need a fundamental restructuring. I think 
what ElBaradei has proposed of a treaty-based system is very 
sound. In my testimony I have tried to convey support for that 
idea and begin to talk about it, particularly where the 
International Atomic Energy Agency is used as the verification 
and monitoring agency. The IAEA exists. It is actively working 
in this area now, working in Libya, Iran, and on the A.Q. Khan 
network. It probably has more expertise about the Khan network 
than any other body, including any government, about what that 
network was doing. I think those kind of activities at the IAEA 
should be generalized and the IAEA given a mandate to actually 
work in this area of export controls and monitoring.
    Senator Akaka. Mr. Moodie.
    Mr. Moodie. Thank you, Mr. Chairman. I think any step that 
reflects a commitment on the part of states to strengthen our 
ability to deal with proliferation is to be welcome. But I 
think that we have to be cautious in that because it is easy to 
talk a good game and harder to play it. I think that 
historically we have consistently had a problem with the 
response of the international community, including some of our 
friends in Europe, to problems of noncompliance. I think we 
have to be sure that the actions of our allies are matching 
their rhetoric when it comes to dealing with some of these 
issues.
    In that regard I think the question of how the Europeans 
will respond to what we are seeing in Iran is a very 
interesting case study, and how they will play this now that 
the IAEA has in a sense expressed its displeasure at the 
Iranian experience. What the Group of Three will do, what their 
colleagues in the European Union will do, I think is going to 
be a very interesting measure of how seriously they take their 
nonproliferation responsibilities.
    With respect to export controls, I think they continue to 
play an enormously helpful role in the overall structure of the 
nonproliferation efforts, but I think particularly in the 
chemical area and especially in the biological area, I think 
export controls over time will be of diminishing utility. They 
were created in a world with respect to the life sciences and 
how those sciences are applied commercially on a global basis. 
That is a world that does not exist any more, and that world is 
going to change even further, and therefore, the tools we have 
like export controls that were designed for that different 
world, I think we have to go back and do a very serious 
examination as to the nature of their utility in this new 
world.
    Senator Akaka. Thank you. Mr. Spector.
    Mr. Spector. I guess I would say we have a treaty that 
requires export controls in the nuclear field as well as in the 
chemical area, but let me just talk about nuclear. The 
Nonproliferation Treaty requires all member states to make any 
exports of nuclear goods under International Atomic Energy 
Agency safeguards. Thus, there is a requirement already that 
these goods be controlled and that certain restrictions apply. 
The actual list of items that is to be controlled is developed 
by the nuclear suppliers countries, but it is also applied by 
the Nonproliferation Treaty Exporters Group, and I would think 
that all parties to the Treaty are bound by this de facto, if 
not de jure. There is also now the Resolution 1540, which 
places a mandatory requirement for states to have effective 
export controls on weapons of mass destruction related 
materials and equipment.
    I think if you combine the two of these you have a treaty-
based system for virtually all states, with the handful of 
exceptions of the countries that are not in the 
Nonproliferation Treaty. But even they are now required, under 
Resolution 1540 to be mindful of their exports. So I do not 
know that we want to take this that much further. I think the 
IAEA has an awful lot to do right now just trying to manage its 
safeguards mandate and get this extended with the Additional 
Protocol and some of the other measures. So I would be hesitant 
to propose that it take on a major new initiative that would 
involve a new treaty. I think we would be better off working 
with the tools that are now in hand, including the treaty-based 
tools that I mentioned.
    Senator Akaka. Mr. Spring.
    Mr. Spring. I pretty much agree with what has been said 
here so far, both with regard to the European initiative and 
with regard to some sort of new treaty-based regime on export 
controls.
    I just have one comment or observation as it relates to the 
latter issues on export controls, and that is, that if we go 
down this road, we have to recognize that there are weaknesses 
in what I call the ``least common denominator'' decisionmaking 
process, especially with broad-based multilateral institutions. 
And to the extent that we fail to recognize that within these 
institutions--Iran, for example--is still for all intents and 
purposes a member in good standing of the IAEA, that we will 
lose sight of some of the other effective measures, I think 
that we can take, that would be among those narrower coalitions 
that are the subject of the administration initiatives, 
including the PSI.
    Senator Akaka. I have other questions for you, and I know 
the time is late, and I know we have delayed you here tonight. 
I would ask that we place these questions in the record for 
you, and you can respond to us. At this time I would want to 
keep the record open for additional materials until close of 
business next Wednesday, June 30.
    I want to thank you for your knowledge in these areas, and 
for your responses that will be helpful to us.
    So I would like to conclude with this panel. I want to 
thank you very much for your participation here, and look 
forward to being in contact with you again.
    If there is no further business, then on behalf of the 
Chairman, Senator Fitzgerald, the hearing is adjourned.
    [Whereupon, at 6:16 p.m., the Subcommittee was adjourned.]


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