CLINTON PROFITEERS SELL HIGH-TECH TO RED CHINA

PUBLISHED INSIGHT MAGAZINE - DECEMBER 22, 1997, PAGE 28 AND 29

Is the Clinton administration's dollar diplomacy to China compromising national security? Recently declassified documents and testimony of Commerce Department officials add to the mounting evidence that it is. Take the case of Richard Barth, a former White House official who used his personal influence in a successful effort to export technologically advanced communications equipment to China. Barth, an executive of Motorola and a former National Security Council, or NSC, director of Nonproliferation and Export controls under Presidents Bush and Clinton, wrote in 1995 to George Tenet, the NSC director for security, to request a waiver for Motorola to export encrypted radio equipment, highly sought by the Chinese military, to the People's Republic of China.

"Such a waiver would not reduce NSA's (National Security Agency's) oversight over all encryption containing exports to China," noted Barth in the fax addressed to Tenet. "Current controls remain, only the need to notify Congress of each sale is removed. We currently have about $100 million worth of two way radio business tied up by the lack of a waiver for China and face losing a market of about $500 million.... Finally while we now are not yet applying for licenses for encrypted systems for satellite positioning, we may within months be applying for such licenses for our Iridium (Inc.) systems."

Barth, who did not return calls requesting an interview, suggests in his letter that the administration should take into account the competitive advantage given some European vendors of encryption products by a British intelligence agency, General Communications Head Quarters, or GCHQ: "European firms have for a number of months been able to market and sell encryption in China as a result of a decision taken by the U.K. intelligence agency GCHQ. I understand that our National Security Agency is aware of this change in GCHQ's position and would support our request for a change in U.S. requirements for export licenses for China. The NSA has agreed that there should be a 'level playing field' in regard to China.... European firms, including Nokia, Erisson, Alcatel and Siemens, have for a number of months been able to market and sell encryption in China as a result of a decision taken by the U.K. intelligence agency GCHQ."

The letter gives evidence of the extraordinary access to the spy agency some private citizens have after leaving a high post in the Clinton administration. After all, which ordinary citizen can write to friends in the White House, quoting unnamed sources in the NSA saying there needs to be "a level playing field" for an American company that has business links with China? Motorola blames a U.K. intelligence agency - GCHQ - for its lost exports to China and suggests that the NSA be at least as accommodating to Motorola. Why, it would be asked, would the NSA, tasked by law with intelligence activities, be in the business of going to bat for a U.S. company trying to beat its foreign competitors? And, if the NSA is taking on the mission of helping U.S. based high-tech companies, why hasn't it said so publicly so that Motorola's competitors could be given the same opportunity?

It would appear that Motorola and the Clinton administration have a cozy relationship, to say the least. Motorola's chief executive officer flew with former secretary Ron Brown on a Far East trade mission in 1994. Motorola's Hong Kong vice president had coffee in the White House in 1996 with Clinton. And Motorola's CEO had dinner with Chinese President Jiang Zemin and Clinton in October in the White House. No small company could match this - neither the high paying lobbyist jobs, the Commerce trips to China, the White House coffees nor the state dinners.

Consider as well the personalities that have passed from the company to White House service. Hoyt Zia, an ex-Motorola employee and close friend of Democratic fund-raiser John Huang, was in charge of Commerce exports to China during 1995. Chief legal counsel of the Commerce Bureau of Export Affairs, or BXA, Zia was charged with overseeing sensitive exports, such as Iridium satellites and encrypted radios, for China at the time Barth wrote to Tenet in 1995. Note that Zia had spent more than six years at Motorola specializing in cellular and radio exports to Asia prior to taking his job in the Commerce Department. Zia stated under oath during a Judicial Watch deposition that he had contact with Motorola official and ex-Commerce Department employee Charlotte Kee on more than one occasion.

Several former Clinton administration officials now have high paying jobs with Motorola or Iridium, including Kee and Iridium's Lauri Fitz-Pegado. Pegado was a close associate of Brown and tripped with him to China. Pegado is employed as an executive at Iridium, even though she has admitted that she has little knowledge of satellite technology (see "Commerce-ial Espionage", Sept. 1). This revolving door exchange of personnel is like a game of musical chairs, with the players occasionally changing titles on six-figure jobs as they rotate from industry to bureaucracy to political staff and back again.

Besides being unfair to Motorola's competitors, there is a dangerous edge to this. In 1993, after the Soviet empire fell, China was facing a military-radio crisis. Chinese military communications were based on aging Russian radios - radios we defeated during the Persian Gulf War. In addition, satellite photos, communications, navigation, radio intercepts and warning systems helped the United State win big. Simply put, an army without satellites and secure radios is blind, deaf, dumb and lost on the modern battlefield.

Encrypted radio communications with satellites means secure world wide communications for military and commerce. Secure voice-communications was demonstrated to America by actor Tom Cruise in the recent film MISSION IMPOSSIBLE. Cruise's character simply slipped a special microphone into a pay telephone and said "Go secure". Modern radio systems used in jet fighters, such as the F-15 Eagle, also are digitally ciphered. These radios use special codes and high-speed chips so anyone without the code hears nothing but garbage. Chinese officials can use Iridium to call from anywhere on the globe and "go secure" just like the IMF team. The disadvantage of having the Chinese use this system is that any attempt to jam or take out the Iridium satellites also will shut off all communications of Iridium's U.S. customers, as well as consumers in Russia, Israel, Indonesia and Saudi Arabia who use Iridium satellite systems.

More worrisome is Barth's request to export encrypted satellite-positioning systems to China. Encryption for satellite positioning is used to secure the radio commands sent to satellites to move or change functions. Secure satellite control is consider an even more sensitive technology than MISSION IMPOSSIBLE cell phones, as such systems also control nuclear-tipped missiles. Export of this technology directly helps the Chinese military control their missile warheads with secure links back to the dictators in Beijing. It also helps Chinese warheads find their targets with amazing accuracy. This will not be comforting when their nuclear arms are aimed at us.

The administration's eagerness to facilitate deals between American companies and the People's Republic raises more concern about what became of the 2,000 pages of classified documents removed from the Commerce Department in 1996. Testimony taken in Judicial Watch's 1996 lawsuit against the Commerce Department show that Commerce employee Ira Sockowitz removed highly classified documents without permission, including secret materials on China, satellites and encryption. Sockowitz, a former Democratic National Committee fund-raiser involved with Huang, was appointed to his position by Clinton. Following the accidental death of Brown in 1996, Sockowitz left Commerce for a new job at the Small Business Administration, taking more than 2,000 pages of classified materials with him.

How classified were these materials? One document taken by Sockowitz is titled "A STUDY OF THE INTERNATIONAL MARKET FOR COMPUTER SOFTWARE WITH ENCRYPTION" and was compiled in July 1995. The report, if released, could cause international damage, according to NSA Chief of External Affairs Jon Goldsmith. The documents, according to Goldsmith, were based on information provided to the NSA by the communications intelligence services of U.S. allies around the world, including those of the United Kingdom, Australia, Germany, Canada, Israel, Italy, Spain, Denmark, Sweden, the Netherlands and Norway. The encryption market report is a military-industrial guide that would be of great value to China, North Korea, Russia and Iran, as well as companies such as Nokia, Ericsson, Alcatel, Siemens or Motorola. It reveals the loopholes, the buyers the sellers and all the players in every nation - prepared by local specialists and written by top NSA officials. In fact, according to testimony of Ian Baird, deputy assistant secretary for export administration, the report could be harmful to some of the friendly foreign contributors. Baird stated that "disclosure of foreign government information could damage the careers of foreign officials who had confided in United States representatives." What does damage mean? Well, the last government official who confided encryption secrets to Israel, Johnathan Pollard, had his career damaged to the tune of life in prison.

Yet, despite all the information, Attorney General Janet Reno refuses to open an investigation. However, a host of other U.S. allies are involved. Will friendly allies comply with similar NSA requests in the future? I doubt it. The damage already extends beyond our shores and threatens the security of many countries - damage soon to be measured in lost alliances or, perhaps, lost lives.


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