Disarmament Diplomacy

Issue No. 27, June 1998

Satellite Controversy Continues in Build-Up to US-China Summit

The build-up to the China-US Summit in Beijing (25 June - 3 July) was dominated by growing controversy in Congress and the media over the possibility that lax US satellite export policy and scrutiny may have led to a US company - Loral Space and Communications - providing China with sensitive information concerning ballistic missile technology and guidance systems. Two particular incidents are exciting the controversy: failed launches of Chinese rockets carrying Loral satellites in February 1996 and January 1995. Waters are further muddied by the issue of significant payments to the Democratic Party by Chinese donors and Loral's Chief Executive Bernard Schwartz; and by claims that President Clinton gave the go-ahead for further launches after the February 1996 incident in the knowledge that doubts existed within his own Government concerning the legality of Loral's contacts with China. See Disarmament Diplomacy No 24 & Disarmament Diplomacy No 25, and Documents and Sources in this issue for background and further details.

Both Loral and the President strongly deny any impropriety; on 10 June, Clinton described his decision to allow a further launch in 1998 was "pretty routine". On 18 June, the House of Representatives voted, by 409 to 10, to immediately commence a major investigation into all the allegations. The Senate is also holding hearings on the issue. On 24 June, State Department spokesperson James Rubin insisted that even if information had inadvertently seeped out following the failed launches, it would not be likely to harm national security or boost China's missile development programme:

"There is some chance that a third party could examine recovered devices to gain some knowledge... But we believe that the impact on national security would not be significant. We are not talking about the technology that is used by American military satellites... The encryption-device involved here is decades-old, and even if reverse-engineered, would only tell somebody where we were years ago."

However, Henry Sokolski, Deputy Secretary of Defense in the Bush Administration, told a joint session of the House National Security and International Relations Committees on 17 June: "The House and Senate should insist that no further satellite transfers be allowed until its investigations and deliberations over this matter are complete." On 25 June, Peter Leitner, an official at the Defense Department's Defense Technology Security Administration (DTSA), told the Senate Governmental Affairs Committee:

"Over the past six years the formal process to control exports of dual-use items has failed its stated mission - to safeguard the national security of the United States. ... [T]he presumption of denial has turned into a presumption of approval... [I]n 1992, there began to be a tremendous reluctance to escalate any issues."

During the 1992-8 period, Leitner argued, the Department of Defense "abandoned its traditional role and instructed DoD employees to side with the Commerce Department and isolate the State Department and the Arms Control and Disarmament Agency [ACDA]..."

On 18 June, it was revealed during House hearings that John Holum - ACDA Director, Acting Under-Secretary of State and one of the witnesses before the National Security and International Relations Committees (see Documents and Sources) - had written a confidential memo in 1997 questioning US China policy with regard to the use of satellites as a 'carrot'. Holum wrote:

"Although it is true that the US has, in the past, seen approval of space launches and related exports as an incentive for Beijing to exercise restraint in its missile-related exports, there has been no evidence to date that this policy is having any effect... It is time to reassess this policy... Carrots have gotten us nothing."

Reports: Clinton says China decision routine, Associated Press, 10 June; Suspend China launches, experts testify, United Press International, 17 June; China implements nuclear export controls, Reuters, 17 June; Congress urged to end China satellite launches, Reuters, 17 June; House backs China satellite probe, Associated Press, 18 June; Memo eyed in China satellite probe, Associated Press, 19 June; 1995 China rocket accident probed, Associated Press, 24 June; US plays down technology loss in satellite crash, Reuters, 24 June; US defense official sees poor technology controls, Reuters, 25 June.

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