Clinton backers grow wary Waivers for transfer of technology to China raise deep concerns

WASHINGTON — WASHINGTON -- Allegations that Democratic campaign contributions resulted in the transfer of sensitive ballistic missile technology to China have touched off congressional charges of the gravest kind: betrayal of the public trust, breaches of national security, even treason.

After years of trying to tar President Clinton with charges of misdeeds, arrogance and even law-breaking, his critics believe they have found an issue they can take beyond the partisan sniping that has deflated past scandals. Even Democrats are wary of defending the president against charges that he abetted the development of nuclear-tipped missiles aimed at the United States.


"These allegations are serious," said Rep. Lee H. Hamilton, an Indiana Democrat and respected voice on defense issues. "They're more serious [than other allegations against Clinton] just because of the national security implications."

That point was emphasized last week in a series of lopsided votes on the House floor in which Clinton's allies were few and far between. By a vote of 412-6, the House moved to bar the export of American-made satellites and technology to China. By a similar 414-7 tally, the House voted to prohibit U.S. participation in investigations of failed rocket launches. And Friday, the House voted 342-69 to urge Clinton to show more cooperation with an array of congressional investigations.


That U.S.-Chinese satellite cooperation began under President Ronald Reagan has not deterred Republicans on Capitol Hill from placing blame on Clinton. House Speaker Newt Gingrich hopes to hold hearings on the matter throughout the summer, under the auspices of a select committee he plans to form next month.

The latest development began Feb. 15, 1996, when a Chinese Long March rocket carrying an American-made satellite veered off course and exploded. The destruction of the Loral Space and Communications satellite came after similar Chinese launch failures in 1992 and 1995 that destroyed two Hughes Electronics satellites.

Panel findings

When Chinese engineers pinpointed the problem to a bad soldering connection, a consortium of underwriters that insured the launches for the satellite owners was dissatisfied. Before they would cover more Long March launches, the insurance companies demanded that Loral and Hughes assemble a panel of Western experts to examine the Chinese data.

According to both companies, the panel confirmed the Chinese findings. Then, in an apparent violation of U.S. export control laws that has triggered a Justice Department probe, a member of the group gave a copy of the preliminary report to the Chinese before it was cleared by the federal government.

Hardly 'high-tech'

Company officials insist that the report contained no sensitive information, only a confirmation of conclusions already reached by the Chinese themselves.

"Telling the Chinese we agree that it was a solder failure in a control unit is hardly a high-tech solution, and there was nothing that said, 'Here's how you designed [the rocket], and here's how you correct it,' " said Marcy J. K. Tiffany, a Hughes vice president and general counsel.


The Justice Department probe might prove otherwise, warned Gary Milhollin, director of the Wisconsin Project on Nuclear Proliferation.

"My impression is that in process of diagnosing this malfunction, more than just an empty solder joint may have been discussed," Milhollin said.

Such doubts have led Republican critics to charge that Chinese weapons have only just achieved the capability of striking the United States, and only achieved it with the help of the Clinton administration.

Capability since 1981

But according to testimony presented Wednesday to a Senate subcommittee, the Chinese have had nuclear-tipped ballistic missiles capable of reaching the United States since 1981, and a new class of long-range weapons is scheduled to be deployed after 2000 unrelated to the Long March missile.

"Irresponsible public claims to the contrary, China today has no capabilities to attack the United States that it did not have a year ago, or a decade ago," John Pike, of the Federation of American Scientists, told the subcommittee.


Still, there is plenty of grist for those with dark suspicions.

16th waiver since 1989

Loral was able to launch its satellite in China in 1996 only after Clinton signed a special waiver of U.S. export control law.

It was the 16th such waiver signed since 1989 by Presidents Bush and Clinton, but it came as Loral was donating more than $1 million to the 1996 campaigns, 81 percent of which went to Democrats.

Loral chief executive Bernard L. Schwartz personally donated more than $1 million to Democratic candidates and committees, including $581,000 to the Democratic National Committee.

What's more, Democratic fund-raiser Johnny Chung is alleged to have funneled nearly $100,000 to Democratic causes from a lieutenant colonel in the Chinese military, who was also an


executive of China Aerospace, the state-owned rocket-launch company that profits from lofting U.S. satellites into orbit.

There is evidence that pressure from defense contractors helped prod Clinton in 1995 to overrule his secretary of state and shift satellite exports from the purview of the State Department to the control of the Commerce Department, where aerospace companies believed they could get a better hearing.

Something in return?

A series of letters on satellite trade restrictions from Hughes Electronics Chairman C. Michael Armstrong to the president in 1993 makes the point that at least Armstrong expected something in return for his political support.

On Sept. 7, he wrote: "I was proud to support you in achieving the best [budget] package politically possible to reduce the deficit and incent investment. You can count on my continued support. However, I have a problem at Hughes and would appreciate your help."

Republican investigators are trying to find a link between corporate contributions and illegal Chinese campaign donations -- and a quid pro quo linking the contributions to the launch waiver and jurisdiction transfer.


Baltimore attorney Richard Bennett will shift much of his investigative efforts from the campaign finance investigation led controversial Rep. Dan Burton, an Indiana Republican, to the new committee, to be led by California Republican Christopher Cox.

So far, a top investigator conceded, they have not found a smoking gun.

That has not stopped Republicans from pouring on the charges, blaming Clinton for everything from a simple policy mistake to prompting India to test nuclear weapons and set off an Asian arms race.

"Every man, woman and child in the United States now is in jeopardy of nuclear incineration by the Communist Chinese because of technology that has been transferred to them with the help of this president," declared California Rep. Dana Rohrabacher. "Our country has been betrayed."

The companies and the administration have strongly defended their actions, and they say any change in satellite export policy would be counterproductive. Hughes' Tiffany said the Pentagon's knowledge of China's ballistic missile capabilities comes directly from China's cooperation with U.S. companies.

Consequence of ban


Banning such cooperation "will only drive our Chinese customers to our European competitors who have no [export] restrictions," she said.

"It will actually speed the spread of technology."

Republicans and Democrats alike say there is a very serious issue here, but it is probably not whether the 1996 Loral waiver and subsequent insurance report enabled the Chinese to work the glitches out of their ballistic missiles.

Analyzing long-term effects

Rather, it is the long-term effect of U.S. corporate cooperation with the Chinese rocket industry, cooperation that began in 1988, when then-President Reagan approved the launch of three U.S.-made communications satellites on Chinese Long March rockets.

"Focusing only on the Loral case would be a mistake," warned a paper by the Nonproliferation Policy Education Center, a group that opposes satellite cooperation. "It would unnecessarily make the harm done by U.S. satellite transfers to China seem much less than it really is."


Examining export policy

"There's a larger issue of missile and satellite technology here," said Martin C. Faga, director of the National Reconnaissance Office in the Bush administration. "More than likely there's nothing really to the Loral story, but it raises questions about broader export policies."

Opponents of satellite exports contend satellite launches in China keep the Chinese military in practice, provide China with much-needed U.S. currency, and transfer American know-how, since it is in the financial interest of U.S. satellite companies to make Chinese rockets more reliable.

"It's very simple, and for 10 years this madness has been going on," said Michael Ledeen, a defense analyst at the American Enterprise Institute.

"We ensured China has a reliable missile force, and we want the Chinese to have an unreliable missile force."

Pub Date: 5/24/98