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  •   Panel Faults Space Aid to China

    Rep.Cox & Rep.Dicks, AP
    Special committee leaders Rep. Christopher Cox (R-Calif.), left, and Rep. Norman Dicks (D-Wash.) speak to reporters Wednesday. (AP)
    By John Mintz
    Washington Post Staff Writer
    Thursday, December 31, 1998; Page A1

    Two American aerospace companies damaged U.S. national security when they provided Chinese space engineers with technical rocketry data that could have assisted Beijing's ballistic missile program, a House committee concluded yesterday in a classified 700-page report.

    The panel's report is the most comprehensive review so far of evidence that Hughes Electronics Corp. and Loral Space & Communications Ltd. shared sensitive U.S. technologies as they pursued commercial relations in China. The committee's findings appeared to include detailed criticism of the Clinton administration's policy of loosening high-tech export restrictions as a way to promote trade.

    In a rare show of bipartisanship on what for months has been a divisive issue, the special panel chaired by Rep. Christopher Cox (R-Calif.) voted 9-0 yesterday to endorse the secret five-volume study and send it to congressional leaders and the Clinton administration.

    The panel is expected to release a shorter, unclassified version of its findings within a few months, after it is reviewed by government agencies. Several other congressional committees and the Justice Department are conducting separate investigations of the same and other allegations of technology transfers to China.

    The panel's report contains 38 recommendations, most aimed at tightening the rules governing American technology exports to China, congressional sources said. Among the proposals are granting more export licensing authority to the Pentagon and the State Department and reducing the role of the pro-export Commerce Department. American high-tech industries have warned that such a move would hurt exports of U.S. electronics and computers and favor U.S. competitors in Europe and Asia.

    Loral and Hughes have consistently denied they harmed American security in doing business in China. In finding otherwise, the Cox panel endorsed a conclusion by Air Force intelligence in its reviews of two separate incidents in which Chinese rockets exploded while carrying U.S. satellites.

    In 1995, after the explosion of a Chinese Long March rocket and destruction of the Hughes satellite, Hughes officials discussed with the Chinese ways of improving the rocket. After a 1996 rocket mishap that demolished a Loral satellite, a Loral engineer faxed to the Chinese the results of a corporate review into the cause of the accident.

    The Central Intelligence Agency partly disagreed with the Air Force, saying Loral did not give China much useful information. Adm. Joseph W. Prueher, chief of the U.S. Pacific Command, recently said the U.S. launches helped Chinese ballistic missile capabilities "only incrementally, not [by] any quantum leaps."

    Cox hinted to reporters at the Capitol yesterday that the Loral and Hughes cases were less significant than other Chinese attempts to acquire restricted U.S. technology. "We were rapidly led to considerably more serious national security problems than the Loral-Hughes cases," he said.

    Congressional sources said the panel had focused on efforts by Chinese intelligence agents to acquire a range of U.S. military technologies over the last 20 years, including high-performance computers. Cox referred to these computers last month, when he told a trade publication that the panel had uncovered new information "of grave concern to all members of the committee, in both parties," congressional staff members said.

    The allegations involving the aerospace companies have been potentially damaging to the Clinton administration, which made it easier for U.S. firms to export sensitive technology. The sensitivity of the charges was heightened for the White House because the chairman of Loral, Bernard Schwartz, has been a major donor to Democrats.

    Republican leaders initially predicted the panel's probe would damage Clinton's standing in the midst of the Monica Lewinsky scandal. House Speaker Newt Gingrich (R-Ga.) said allegations that President Clinton had backed the China deals as a favor to Schwartz were "the closest thing to an impeachable offense." But the Republicans eventually decided against including the satellite issue among subjects to be taken up in the House Judiciary Committee's impeachment hearings.

    Cox, 45, who represents conservative Orange County, Calif., said the panel's deliberations were a model of bipartisanship even during late-night negotiating sessions this week, and the ranking Democrat, Rep. Norman D. Dicks (D-Wash.), agreed.

    "This is a solid bipartisan product," Dicks said. "Chris Cox . . . was willing to work with all members. We had a very fair and deep look at this very important national security issue."

    While declining to comment on the substance of the findings, Cox said, "I'm very anxious to declassify as much of this report as possible."

    Democrats pointed out that the panel, made up of five Republicans and four Democrats, didn't ask the Justice Department to open any new investigations of the matter. But industry executives found little comfort in the panel's overall conclusion.

    "If the report takes steps to take [export laws] back to times like the Cold War, that's a mistake," said Mark Rosenker, spokesman for the Electronic Industries Alliance, a trade group.

    © Copyright 1998 The Washington Post Company

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