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House Rebukes Clinton on China Satellite Export

By John F. Harris and Juliet Eilperin
Washington Post Staff Writers
Thursday, May 21, 1998; Page A01

In a series of nearly unanimous votes, the House yesterday said President Clinton failed to act in "the national interest" earlier this year when he gave permission for a Chinese satellite launch to a U.S. aerospace firm with close Democratic ties, and moved to block him from approving similar exports.

With all but a handful of Democrats joining the House GOP majority, legislators rebuked Clinton's handling of a critical aspect of U.S.-China policy -- commerce in militarily sensitive technology -- just a month before he is to make a long-planned trip to Beijing. One of the measures, effectively banning all further exports of commercial satellites to China, would terminate current and pending deals by U.S. companies valued at hundreds of millions of dollars.

The four separate House votes came after several days of escalating Republican allegations that Clinton has been too lenient in approving U.S. technology exports to China, and that approvals may have been linked to Democratic campaign contributions. The Justice Department is investigating those allegations, but senior Justice officials yesterday rejected an FBI suggestion to invoke the Independent Counsel Act in the case.

Both chambers of Congress have launched their own investigations. In the Senate, Majority Leader Trent Lott (R-Miss.) said yesterday he has created a special all-Republican task force on the matter; in the House, Speaker Newt Gingrich (R-Ga.) has already announced a bipartisan select committee.

With both the execution of its China policy and the motives behind it under assault in recent days, the Clinton administration yesterday began mounting a more vigorous defense. White House counsel Charles F.C. Ruff wrote Lott and Gingrich that Clinton's approvals of U.S. satellite exports follow a precedent set years earlier by President George Bush, and that his most recent approval, on Feb. 18, was "consistent with United States foreign policy and national security interests."

That February decision is central to the latest congressional furor. Under sanctions imposed after the 1989 Tiananmen Square massacre, the president must grant a "waiver" before U.S. firms can launch commercial satellites. This year, Clinton gave a waiver to a subsidiary of Loral Space and Communications Ltd. to send a communications satellite into space atop a Chinese missile.

Loral's corporate political action committee has been a generous donor to the Democratic National Committee, and its chief executive, Bernard Schwartz, gave more money to Democrats than any other individual in the 1996 election cycle.

Clinton's decision came despite warnings from the Justice Department that approving the deal might hurt a criminal probe into Loral it had started last year. Justice investigators have been examining whether Loral and Hughes Electronics Corp. may have violated laws against sharing sensitive information with the Chinese during the aftermath of a failed missile launch in 1996.

While acknowledging that the Justice Department flashed what one White House official yesterday called a "yellow light" to the latest satellite deal, the administration asserts that Clinton's decision was both justified and unexceptional. Ruff's letter said other agencies -- including the State and Defense departments, and the Arms Control and Disarmament Agency -- all assented to the February waiver.

Congressional leaders have complained that the White House has failed to release documents they have requested about the waiver decision, but White House officials said they expect to turn over documents by the end of this week.

White House press secretary Michael McCurry said Clinton approved the Loral waiver "because we don't presume guilt, we presume innocence." The spokesman said Clinton welcomed an investigation, which he said would show no wrongdoing, but accused Republicans of exploiting the controversy for partisan gain. "Now the problem we've got is, so much of the smoke and fire emanating from the speaker's direction sounds like it's politics as usual," McCurry said.

But yesterday's House votes, all on amendments to the annual defense authorization bill, made plain that Democrats, too, have concerns. By 364 to 54, lawmakers adopted Rep. Duncan Hunter's (R-Calif.) proposal for a flat ban on the export or re-export of satellites to China.

By a vote of 417 to 4, the House also passed a damning, although nonbinding, "sense of the Congress" resolution offered by National Security Committee Chairman Floyd Spence (R-S.C.) and International Relations Committee Chairman Benjamin A. Gilman (N.Y.). The resolution urged the president not to enter into new agreements with China involving space or missile technology during the upcoming summit in June. It also declared that the administration's decision to issue the Loral waiver this year was "not in the national interest of the United States," and instructed the president to indefinitely suspend all U.S. satellite exports to China, including the latest Loral deal.

The Senate is expected to take up a similar proposal, most likely next month, when it considers the defense bill, a Lott aide said.

"We have two conflicting pressures here. We have the domestic satellite industry, that wants to make money," Hunter said. "The second question, and concern of ours, is national security."

House International Relations Committee ranking member Lee H. Hamilton (D-Ind.), one of the few dissenters, warned it was unwise to block all commercial satellite launches in China. "I think this goes too far," Hamilton said. "We're creating some real problems for ourselves if this in fact becomes law."

Satellite firms warned of unintended consequences. The measures could jeopardize a number of pending satellite deals, including a Hughes launch agreement set for 2000 that is worth more than $600 million. Hughes vice president and general counsel Marcy J.K. Tiffany said that while it was "understandable" lawmakers were concerned about technology transfers, banning satellite exports would simply hurt U.S. businesses.

"The impact on American domestic producers will be significant," Tiffany said, "because it would cut us out of the competition of selling satellites not only to the Chinese, but to customers in other countries that want to launch in China."

Staff writer Helen Dewar contributed to this report.

© Copyright 1998 The Washington Post Company

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