In a coordinated move hours after Soviet President Mikhail Gorbachev left the United States, the U.S. and British governments yesterday vetoed competing proposals by two major telephone companies in their countries to build a modern fiber optic communications line across the Soviet Union.
The move came despite repeated calls by Gorbachev during his visit here for increased investment and aid from the West to help modernize the Soviet economy.
Bush administration officials said the actions were timed to signal to U.S. allies that the United States and Britain have come together on the eve of a multinational meeting today in Paris to discuss loosening restrictions on technology exports to the Soviet Union and Eastern Europe.
Under pressure from allies and U.S. business, the Bush administration has agreed to greatly liberalize export controls on machine tools and computers. But up until now it has stood firm on telecommunications, although administration officials said a compromise is possible during the meeting of the 17-nation Coordinating Committee on Multilateral Export Controls (Cocom).
Regional phone company US West Inc. of Denver, which heads an international consortium that wants to build a $500 million line, said the Commerce Department had informed it that the U.S. government would oppose its application on national security grounds.
Laird Walker, US West's vice president for federal relations, said the company would appeal the ruling. "The extension of communications to the Soviet Union is inevitable in the world market," he said.
An administration source said the British government had delivered a similar message to Cable & Wireless, a British telecommunications company that heads another group that proposed to build a similar but less technically advanced line.
Both would run from Japan to Western Europe, crossing the Soviet heartland, and would carry both international and domestic Soviet calls and data communications. The projects' proponents say it would help economic development in the Soviet Union, as well as a cross-border flow of democratic ideas.
The United States has taken the toughest line on keeping export controls tight, arguing in meetings of Cocom that security of the West still requires limits on exports. Fiber optics, in which voices are transmitted as bursts of light, could give away technology with important military applications, the United States has said, and is also used in controling missiles.
Administration sources said the U.S. position was also influenced by the National Security Agency, which said it would have a harder time listening in on communications in the Soviet Union and Eastern European nations if they had fiber optic cables and advanced digital switching gear.
West Germany has opposed this argument, saying that Cocom was designed to protect Western technology, not to make spying easier. Further, U.S. telecommunications companies feared that the government of Prime Minister Margaret Thatcher, which had balked previously at U.S. attempts to control the movement of other technology to Eastern Europe and the Soviet Union, might approve the Cable & Wireless project on its own if the United States acted against US West.
The latest U.S. proposal to loosen export controls would allow the sale of more advanced computers to the newly democratic Eastern European countries of Czechoslovakia, Hungary and Poland rather than to the Soviet Union. Britain opposes this arrangement on the grounds that Gorbachev should be rewarded for allowing these countries to step away from communism.
But the cooperation between Washington and London in squashing efforts by U.S. and British companies to lay fiber optic cable across the Soviet Union suggests that the differences over computers are likely to be patched up.
Complicating the situation, however, were reports circulating among the U.S. telecommunications companies that South Korea is interested in the Soviet contract. Seoul has the technical capability, U.S. industry sources said, and is not a Cocom member, although it has pledged to cooperate with Western export control restrictions.
South Korean President Roh Tae Woo flew to San Francisco Monday specifically to meet with Gorbachev with the aim of normalizing relations between the two countries. Gorbachev reportedly would like to tap into Korean technology to help modernize the Soviet Union.