Washington counters Soviet pilfering of its high-tech know-how
AMERICA'S counteroffensive against Soviet efforts to acquire strategic United States high technology is beginning to make a dent in what has been called the ''massive'' flow of Western goods and know-how to the Soviet Union.
The US push, begun in 1981 under the name Operation Exodus, has shifted into high gear in recent months. The nationwide effort has included the use of front organizations and sting operations to snare potential technology smugglers.
The results have made recent headlines:
* Last month, a federal judge fined a Swedish computer firm, Datasaab Contracting AB, $3.12 million for secretly selling the Soviets US radar and computer equipment. The equipment permitted the Soviets to upgrade their civilian air-traffic radar system, enabling it to detect US manned bombers and coordinate air attacks on West Europe.
* Federal agents in early April arrested members of an alleged computer smuggling operation that included companies in Arizona, New Hampshire, Canada, and Switzerland. The operation was said to have transshipped computers to Soviet-bloc nations without requisite export licenses.
* In January, two Americans in San Francisco were charged with shipping $170, 000 worth of high-tech equipment including minilaser range finders to the Soviet Union, Libya, and Cuba.
* Customs officials in Sweden and West Germany last November halted shipments of $1.5 million in advanced computer equipment which they said were headed illegally for the Soviet Union. The equipment had originally been shipped to South Africa with a valid export license. The VAX 11/782 computer system would have assisted in the Soviet manufacture of integrated circuits.
''We have been really pleased in the last few months,'' says William Rudman, director of the Customs Service's strategic investigations division. ''We've been told by the Defense Department and the intelligence community that we are having an impact.''
The impact has come about in part through the mobilization of many of the Customs Service's 900 special agents and the Commerce Department's 44 investigators. They have primarily targeted Soviet and East-bloc efforts to steal, smuggle, or divert US high technology.
''Probably 95 percent of our cases involve third-country diversion,'' says Mr. Rudman. He says the increased number of diversion cases shows that the Soviets have been forced to work harder and invest more time and money to acquire illicitly US technology than they did in the past.
''We know that we will never stop the outflow of critical US technology completely, but our goal is to slow the Soviets down,'' Rudman says.
The increased investigative activity includes a system of identifying from intelligence reports what goods and technologies the Soviets are seeking. Federal agents then try to head them off at the pass by monitoring US companies capable of supplying such goods and technologies.
In some instances, front organizations have been established by undercover federal agents to lure black-market businessmen into the open. Customs agents have also posed as free-lance businessmen trading in banned high-tech goods. In other cases, federal agents have infiltrated legitimate businesses - with the knowledge of one or two corporate executives - in an effort to expose Soviet or other approaches to corporate officials.
There are a few tip-offs that investigators use to help detect potential technology diversions. For instance, when the supposed end-users of technological equipment refuse the standard offer of free installation by the selling company it is considered a good indicator that the equipment may be slated for illicit diversion to another country.
Customs officials say another tip-off can be the type of packing used. If a shipment marked as a domestic US delivery is packed in special ''salt-free'' packing, which protects electronics from sea-air contamination, there is reason to suspect the cargo may ultimately be heading out of the country.
Since the beginning of Operation Exodus there have been 3,182 seizures of high-tech goods that were on their way illicitly out of the country. They are valued at $191 million, according to Customs officials. More than twice that number of shipments have been detained because they were suspected of being illegally exported.
DURING the same period the number of export-related cases has increased from a few during the 1970s to 13 individuals convicted in 1982 and 21 individuals convicted in 1983, according to Justice Department statistics.
But government officials still aren't satisfied that the export control system is doing more than scratching the surface.
The attempted diversion last November of a Digital Equipment Corporation VAX 11/782 computer system and other equipment to the Soviet Union through South Africa and Sweden demonstrates the complexity of technology smuggling operations. It also demonstrates the lengths to which high-tech smugglers will go to throw US law enforcement personnel off the track.
The case was broken as a result of a tip received by the US Customs attache in Bonn, according to a government report.
As a result of the tip, West German authorities in Hamburg boarded the Swedish freighter Elgaren and discovered and seized some 10 tons of US computer equipment. The equipment had originally been licensed by the Commerce Department for export to Microelectronic Research Institute of Cape Town, South Africa. A Customs Service investigation disclosed that MRI was being run by Richard Mueller, a West German wanted in the US on previous technology diversion charges. Since 1980, the Commerce Department had approved 16 export licenses to MRI valued at more than $8 million.
Following the equipment seizure in Hamburg, Swedish authorities detained 30 tons of similar equipment that had arrived in Stockholm from Hong Kong and Canada. In all, seven shipments were seized.
The investigation, however, revealed that there had been a total of 15 shipments of computer equipment. US officials suspect the other eight shipments were successfully diverted to the Soviet Union.
A Defense Department report says it is ''highly probable'' that the Soviets planned to use the equipment in computer-aided design efforts to manufacture sophisticated microchips.
''Those chips are at the leading edge of military technology and are the foundation of many new US weapon systems for the 1990s and beyond,'' the report says.
Publicity about the VAX case came at a time when the Defense Department and Customs Service were involved in a heated turf battle with the Commerce Department over strategic export controls and how they would be administered. The VAX case became a footnote in the deeper ideological debate over national-security export controls.
The Pentagon has traditionally argued for broader and tougher restrictions on so-called ''dual use'' technologies - those with both civilian and potential military applications. In addition, Pentagon officials have pushed to win a wider role in the license review process. They have complained that the Commerce Department is primarily a trade promotion agency and is thus not well suited to police illegal high-tech exports. The VAX computer case was cited as an example of how Commerce had fouled up.
Commerce officials have argued that the Defense Department lacks sensitivity to private-sector business concerns about the detrimental impact of national-security export controls on US international trade.
President Reagan settled the dispute in March by granting the Pentagon wider authority to review export-license applications for strategic goods. The decision expands the scope of Pentagon review to include some strategic exports to noncommunist nations. Previously, Defense officials could review export-license applications only to East-bloc states.
The President also determined - in an apparent concession to the Commerce Department - that the primary responsibility for export enforcement (investigations, seizures, and arrests) would remain within Commerce. The decision put to rest a proposal to shift the strategic export enforcement duties to the Treasury Department's Customs Service, which has a larger in-place staff throughout the US than the Commerce Department and agents in offices overseas.
But the battle within the Reagan administration isn't over, nor is the broader debate among Washington policymakers and industry officials. Still unresolved by Reagan's decision are two of the thorniest issues underlying the export controls issue. They are:
* How to determine as precisely as possible which goods and technologies are ''militarily relevant'' and thus must be controlled.
* How to identify which strategic goods cannot reasonably be controlled because they are already widely available on international markets.
How these issues are resolved will determine the tone and substance of US export controls for years to come.
The same basic debate is currently under way between the United States and its major trading partners, members of the Paris-based Coordinating Committee on Export Controls (Cocom). It is comprised of Japan and the NATO allies, minus Iceland.
The group is organized to mount a coordinated response to Soviet efforts to obtain sensitive Western goods and technologies. The multilateral effort is becoming increasingly important with the current proliferation of multicountry diversion schemes. US officials are discovering that they can no longer go it alone without the support of America's major trading partners.
The US maintains both multilateral (Cocom-endorsed) export controls, and unilateral controls on strategic goods and technologies. Unilaterally controlled items tend to be goods that either are unique to the US and thus of less concern , unknown to the other Cocom members, or items that the Cocom partners refused to agree to control because they felt they were not militarily relevant.
The problem is that in many cases, technologies that Washington has identified as being critical to national security have not been so identified in Paris, Bonn, or Tokyo. The result has been a lack of agreement and coordination within Cocom and resulting strains on the Western alliance. Restrictions on the sale of American oil and gas equipment for use on the Siberian gas pipeline has been cited as an example.
''There has been a widespread feeling among many members of Cocom and many officials in Washington that the US proposals in the past have been too broadly drafted,'' says William A. Root, former director of the State Department's Office of East-West Trade. Mr. Root, who resigned in September over policy differences within the administration, said past US proposals in Cocom have included ''imprecise language'' to facilitate broad controls in the debatable ''gray areas'' of export regulation.
''We need to be more selective and very clear about what it is we are controlling,'' Root says. ''The difficulty is in these gray areas.''
THE Cocom allies have traditionally placed trade considerations above nation security considerations in cases they consider of debatable military relevance. The US position has emerged as simply: when there is a question about whether an item is militarily critical, regulate it. The policy, as one observer put it, is , ''Better safe than sorry.''Among the toughest areas of negotiations between the US and its Cocom allies are computers, electronics, and communications equipment, with computers representing the most complicated and difficult set of negotiations. Because of years of disagreement in past negotiating sessions, the present controls are based on guidelines drafted in 1974. While the US and its allies agree that the control guidelines should be updated, they have not yet been able to agree on how to update them. The US is pressing for broad multilateral controls over even desk-top portable computers. Pentagon officials have argued that such compact computer systems are at present being used by NATO forces in Europe to coordinate battle plans. They say that if the Soviets obtain large numbers of similar computers, they too will use them to upgrade their battle-management capabilities.''We already see in Soviet literature that these computers will be used by the military if the Soviets can get their hands on them,'' says Stephen D. Bryen, deputy-assistant secretary for international economics, trade, and security policy at the Pentagon.''The real bottom line here is substantial diversion. What's going to equip a Soviet division is a few hundred computers or more,'' Dr. Bryen says.America's Cocom partners, anxious to compete internationally with US computer manufacturers, question whether it is realistic and economically sound to restrict desk-top computers that are already available internationally.There are indications, according to some observers, that the US may be showing greater flexibility this year than in past negotiations. This easing of US posture comes at a time when the Americans are trying to narrow their unilateral controls on goods and technologies while concentrating on bolstering the more effective multilateral controls.Customs' Rudman says coordination among the Cocom partners is essential to effective export enforcement efforts. ''Without foreign cooperation you can't make a case. There are a lot of cases you run into a stone wall,'' he says. ''They 'Yes' us to death and nothing will happen.''He says that while West Germany and Britain have cooperated and at times beefed up their enforcement efforts to help the Americans, other Cocom members have ''stonewalled'' American investigators on the trail of high-tech smugglers.