US finds military secrets harder to keep

Indictment of contractor shows how easy it is for foreign countries to

The US defense industry - mired in charges a defense contractor illegally sold China military equipment - may be losing its ability to keep the lid on sensitive technology.

Measures to control the export of military-use technology are becoming so strained, in fact, that "it's probably a simpler process to sell [an F-16] to a country like Israel" than it is to sell them a new Apple G-4 computer, says William Reinsch, the Commerce Department official in charge of dual-use technology exports.

Despite the highly publicized leakage of classified nuclear information to the Chinese, the real danger, analysts say, is in the spread of information about conventional weapons systems to potential enemies.

The indictment this week of McDonnell Douglas Corp. and the buyer, China National Aero Technology Import and Export Corp., shows how easy it is for foreign countries to get exactly what the US doesn't want them to have.

The problem, critics say, is that US agencies, often short on manpower and money, are ineffectively prioritizing what they let out of the country.

"There has to be some effort to define what kinds of technology need to be protected at all costs," says Robert Suetinger, a former CIA officer who works for the Brookings Institution here. "Certainly nuclear technology falls into that category, but dual-use issues are more problematic."

The two companies were fingered for withholding information about a transaction in which machine tools were sold to China. The equipment, thought to be for civil purposes, ended up in a plant that makes surface-to-surface missiles and fighter aircraft.

McDonnell Douglas, a unit of Boeing Co., got the massive machines put back in their intended destination. But, in what may be the most disturbing aspect of the case, the Chinese were able to buy a superior replacement, from Europe, shortly thereafter, according to a government official.

The indictment is thought to be a message to powerful companies that tread the fine line of export laws. But it also underscores the difficulty the government has regulating companies like McDonnell Douglas.

Critics like researcher Anna Rich are concerned that large defense-industry companies are given preferential treatment and allowed to export even to countries with dubious intentions. "The general attitude in both the Department of Defense and the State Department is that they're for promoting industry," says Ms. Rich of the Arms Sales Monitoring Project. "We worry that if you make economic concerns a factor, security concerns and human rights concerns are not a factor."

Need those research dollars

But the US government is in a difficult bind with the massive defense and technology companies that rely heavily on exporting. If borders are shut to them, they lose money and can't invest as much in research and development. The shortcomings can trickle down to the government.

Also, the US economy as a whole can suffer. "What is most in [US] national-security interests is having healthy companies putting profits into R&D, which eventually ends up [benefiting] the Pentagon," says Mr. Reinsch.

One ongoing dispute illustrates the problem. Lockheed Martin is trying to sell the United Arab Emirates, a US ally during the Gulf War, as many as 80 F-16 aircraft. The UAE, however, is balking because Lockheed cannot give up the aircraft's computer source code, akin to the operating system that runs a computer.

If the deal falls through, Texas, where the plane is made, could lose almost $8 billion and 117,500 new jobs.

While limits on strictly military-use exports may be getting looser to help defense contractors and the Pentagon, the Commerce Department is unable to help computer companies like Apple.

The Pentagon, for example, is concerned about the new Apple because it can be hooked together to act as a supercomputer and used to simulate nuclear explosions and missile launches.

Too fast to regulate

But it's nearly impossible for the Commerce Department to regulate computer exports because of the enormous gap between the rate at which technology improves and the pace at which the government acts. While President Clinton enacted a measure in July to allow exports of the latest personal computers, it won't kick in until Jan. 23. It takes only 18 months for computer capabilities to double.

Further complicating the task, exports to different countries have different standards. So equipment sold to a Latin American country can, in theory, be resold to a hostile country.

"It's kind of a fool's game," says Charles Ferguson of the Arms Sales Monitoring Project. "It's trying to curb something that will get out anyway. I don't think it's worth playing that game."

(c) Copyright 1999. The Christian Science Publishing Society