[Senate Hearing 107-557]
[From the U.S. Government Publishing Office]
S. Hrg. 107-557
RUSSIA AND CHINA: NONPROLIFERATION CONCERNS AND EXPORT CONTROLS
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HEARING
before the
INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL SERVICES SUBCOMMITTEE
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
JUNE 6, 2002
__________
Printed for the use of the Committee on Governmental Affairs
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COMMITTEE ON GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan FRED THOMPSON, Tennessee
DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska
RICHARD J. DURBIN, Illinois SUSAN M. COLLINS, Maine
ROBERT G. TORRICELLI, New Jersey GEORGE V. VOINOVICH, Ohio
MAX CLELAND, Georgia THAD COCHRAN, Mississippi
THOMAS R. CARPER, Delaware ROBERT F. BENNETT, Utah
JEAN CARNAHAN, Missouri JIM BUNNING, Kentucky
MARK DAYTON, Minnesota PETER G. FITZGERALD, Illinois
Joyce A. Rechtschaffen, Staff Director and Counsel
Richard A. Hertling, Minority Staff Director
Darla D. Cassell, Chief Clerk
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INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL SERVICES SUBCOMMITTEE
DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan THAD COCHRAN, Mississippi
ROBERT G. TORRICELLI, New Jersey TED STEVENS, Alaska
MAX CLELAND, Georgia SUSAN M. COLLINS, Maine
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
JEAN CARNAHAN, Missouri ROBERT F. BENNETT, Utah
MARK DAYTON, Minnesota PETER G. FITZGERALD, Illinois
Richard J. Kessler, Staff Director
Dennis M. Ward, Minority Staff Director
Brian D. Rubens, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Akaka................................................ 1
Senator Thompson............................................. 2
Opening prepared statement:
Senator Cochran.............................................. 33
WITNESSES
Thursday, June 6, 2002
John S. Wolf, Assistant Secretary, Bureau of Nonproliferation,
Department of State............................................ 4
Matthew S. Borman, Deputy Administrator, Bureau of Industry and
Security, Department of Commerce............................... 6
Leonard S. Spector, Deputy Director, Center for Nonprolifeation,
Monterey Institute for International Studies................... 19
David Albright, President, Institute for Science and
International Security......................................... 21
Gary Milhollin, Executive Officer, Wisconsin Project for Nuclear
Arms Control................................................... 23
Alphabetical List of Witnesses
Albright, David:
Testimony.................................................... 21
Prepared statement........................................... 51
Borman, Matthew S.:
Testimony.................................................... 6
Prepared statement........................................... 39
Milhollin, Gary:
Testimony.................................................... 23
Prepared statement........................................... 56
Spector, Leonard S.:
Testimony.................................................... 19
Prepared statement with an attachment........................ 44
Wolf, John S.:
Testimony.................................................... 4
Prepared statement........................................... 34
Appendix
Questions for Assistant Secretary Wolf from:
Senator Akaka................................................ 61
Senator Cochran.............................................. 67
Questions for Mr. Borman from:
Senator Akaka................................................ 71
Senator Cochran with attachments............................. 74
Questions for Mr. Albright from:
Senator Cochran.............................................. 88
Questions for Mr. Milhollin Albright from:
Senator Cochran.............................................. 91
RUSSIA AND CHINA: NONPROLIFERATION CONCERNS AND EXPORT CONTROLS
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THURSDAY, JUNE 6, 2002
U.S. Senate,
International Security, Proliferation and
Federal Services Subcommittee,
of the Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:35 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Daniel K.
Akaka, Chairman of the Subcommittee, presiding.
Present: Senators Akaka, Carper, and Thompson.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. The Subcommittee will please come to order.
Good afternoon, and welcome to our witnesses and all of you
here this afternoon.
Today's hearing will examine how well Russia and China
comply with nonproliferation agreements and enforce export
controls. We are holding this hearing on the eve of what the
whole world fears could be a nuclear war between India and
Pakistan. These states conceivably would have never developed
nuclear weapons or the means to deliver them without assistance
from Russia and China.
President Bush has labeled Iran, Iraq, and North Korea an
axis of evil, because of their weapons of mass destruction and
their aspirations. Last month, John Bolton, Undersecretary of
State for Arms Control, singled out Syria, Libya, and Cuba in
his speech entitled ``Beyond the Axis of Evil.'' Naming names
of rogue states is only one side of the story.
For every state seeking to buy or build a WMD capability,
there is also a state enabling it to do so. We have and should
spend some time discussing emerging proliferant states and
second-tier suppliers. But to make a real difference,
nonproliferation must start with Russia and China, the major
suppliers to proliferant countries.
Since 1992, the United States has sanctioned Russian
entities more than six times for the illegal export of missile
and nuclear technology, and chemical and biological dual-use
equipment. The United States has sanctioned Chinese entities at
least six times, including a few weeks ago for violations of
the 2000 Iran Nonproliferation Act. Some of the named Chinese
entities have been sanctioned before.
Multilateral export control agreements, diplomacy, and
sanctions are the tools the United States has used to address
the supply side of proliferation. They are imperfect
instruments in fighting the spread of weapons of mass
destruction, in part because two countries, Russia and China,
do not seem to share our view of the dangers, nor are they
willing to enforce their pledges to prevent proliferation.
Both Russia and China claim to have export controls and
agencies in place. Both can legitimately claim that the sheer
size of their industrial base, new administrative agencies,
growing private export companies, and confusion over new laws
make it hard for them to implement controls. But time and time
again, the United States identifies the same companies and the
same individuals involved in illegal activities. It is these
companies, these individuals, and occasionally government
officials, who proliferate.
Sometimes they do so illegally, but in many instances, we
are discussing transfers of restricted items that have been
condoned by official agencies.
Our witnesses today will discuss the different issues
surrounding this important topic. I would like to thank our
administration witnesses on the first panel for being with us
today. Ambassador John Wolf is the Assistant Secretary of State
for Nonproliferation. He has been asked to discuss Russian and
Chinese participation in multilateral export control agreements
and whether current proliferation concerns are consistent with
their compliance to these agreements.
Matthew Borman is the Deputy Administrator for the Bureau
of Industry and Security in the Department of Commerce. He will
address the export control regimes of Russia and China, and
U.S. assistance to their programs.
These are difficult issues, especially in light of our
expanding diplomatic relations with both of those countries.
But these are questions that need to be asked if we are to find
ways to make it better.
Senator Akaka. At this time, I would like to yield to my
friend and colleague Senator Thompson.
OPENING STATEMENT OF SENATOR THOMPSON
Senator Thompson. Thank you, Mr. Chairman, and thank you
for that excellent opening statement. I think you are right on
point. And with your indulgence, I will make a couple of
comments.
I think this is an extremely important hearing. Back a few
years ago, back in the 1990's, when we would have hearings in
this Subcommittee, the Judiciary, and other committees to talk
about a fellow by the name of Osama bin Laden and al Qaeda, and
the threat that he posed to this Nation, and the fact that the
American people were not being told all that they needed to
hear about that. The attendance by Members of the Committee was
not very great. The attendance by the press was not very great.
There may have been some mention in the press the next day
following the hearing. That is kind of the pattern of what was
going on back in those days.
I hope that we are not having a replay of that. I hope that
in years to come we do not look back and, instead of Osama bin
Laden, we can substitute the name of any particular rogue
nation that could do to us what bin Laden did to us on
September 11.
This hearing is important because it goes to the heart of
the issue of terrorism. While September 11 apparently was not
carried out by a nation state, all of the threats that we have
been hearing about for many years now, and we will hear about
again today, are still as prevalent and more so than ever
before. Just because we were attacked one way one time does not
mean that we will not be attacked in a much more devastating
way at another time by a nation state or those who are working
in concert with a nation state.
Russia and China are clearly proliferators. They are
clearly making this a more dangerous world. They are
proliferating technology, know-how, and capability for nuclear
programs and missile programs to rogue states and others. They
have outfitted Pakistan soup-to-nuts as far as their missile
program is concerned, entire missile systems.
We would not have a crisis today in Pakistan had it not
been for Chinese policies over the last several years. They
continue to supply Iran, who may be as dangerous to us. In
retrospect, we may conclude that Iran is as dangerous to us as
Iraq. And they continue apace in their activities, continuing
to develop long-range missile capabilities, with the carrying
out of their Shahab III missile and other nuclear capabilities,
which they claim they need domestically in that sea of oil that
they are sitting on, for their energy supply, which can so
easily be diverted.
But I think the hearing is also important because it is
going to point the finger at some of our policies in this
country that we have had now for some years and continue. It is
as if we really do not know what to do about this situation,
because clearly we know what these countries are doing. We are
trying to be friends with Russia and China, and we are also
trying to get them to move toward more moderate behavior.
And we sanction their companies from time to time. It has
done absolutely no good. We catch the same companies doing the
same thing. They are not concerned with our sanctions. Our
sanctions do not even address the things that might even
concern these companies.
Clearly, with regard to at least some important parts, the
nations themselves, the leaders of China and Russia, are aware
of very important things that are going on in terms of
proliferation activities.
A second set of policy issues has to do with our own export
controls. The United States supplies technology in the form of
high-speed supercomputers that, as one of our witnesses will
point out, is very helpful in terms of designing nuclear
weapons and missiles. We send that to China. China in turn
assists Pakistan and Iran with regard to their nuclear and
missile capabilities. So maybe someone can explain to me what
sense that makes. But that has been our Nation's policy now for
some time, and it is today.
So I think the American people should know this. The
American people should understand what Russia and China are
doing, that they continue apace, that they will continue to do
this. They will continue as we reach out to them and try to
assist them, in the case of Russia; as we try to bring them
into 21st Century trade patterns, in the case of WTO in China;
that they are becoming more and more a threat to world peace;
and that our policies in attempting to deal with this are
simply not working; and that we need to get about the business
of trying to figure out what might work.
So for all these reasons, this is a very important hearing.
And I appreciate your having it, Mr. Chairman, and I thank you.
Senator Akaka. Thank you very much, Senator Thompson.
Senator Carper.
Senator Carper. Thank you, sir. I have no comments, and I
am just here to hear these witnesses. I look forward to their
testimony.
Senator Akaka. Thank you very much. We are glad you are
here.
At this time, I would like to call on Ambassador Wolf for
your statement. Will you please proceed?
TESTIMONY OF JOHN S. WOLF,\1\ ASSISTANT SECRETARY, BUREAU OF
NONPROLIFERATION, DEPARTMENT OF STATE
Mr. Wolf. Thank you very much, Mr. Chairman, Senators. It
is my privilege to testify on behalf of the Department of State
on the important subject of proliferation concerns with Russia
and China. I have a longer statement, that I would request be
entered into the record, that addresses a number of the
questions that you posed.
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\1\ The prepared statement of Mr. Wolf appears in the Appendix on
page 34.
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Senator Akaka. Your full statement will be included in the
record.
Mr. Wolf. But let me first mention a few of the highlights.
I have just returned from a most recent trip to Europe over
the weekend, and I was delighted to hear in Berlin and in
Brussels at the European Union and at NATO that they share our
view that proliferation is one of the two galvanizing threats
that confront Europe. It is good to hear the views, but the
challenge with our partners in Europe and around the world
continues to translate to increasing understanding into a much
more effective action, as Senator Thompson was describing,
action that will complement and supplement a variety of actions
that the United States is taking in multilateral regimes, in
our plurilateral relationships, bilaterally, and, in some
cases, unilaterally.
Nonproliferation is one of the most important and complex
of America's foreign policy challenges. The President describes
nonproliferation not as one of many issues in our foreign
policy but as a central, focused issue around which other
things revolve. And this is one of those, like the war on
terrorism, where one needs to choose sides. You cannot sit on
the fence.
Now both Russia and China have helped in important ways in
the fight against terrorism in the wake of the September 11
attacks. Yet, significant differences remain between us on
critical nonproliferation issues. I would like to outline our
concerns and describe some of the steps that we have been
taking to deal with the problems.
I turn first to Russia, where the President's visit last
month cemented important parts of a new strategic arrangement
that we seek to reach. In addition to the dramatic treaty on
reducing strategic offensive weapons, which will shortly be
before the Senate, Presidents Bush and Putin agreed to
intensify efforts to combat the spread of weapons of mass
destruction. They went on to Rome for the creation of the new
NATO-Russia Council, which will also address proliferation
questions. And in implementing our efforts, succeeding would be
a major contribution to U.S. national security as well as to
global security.
But despite our deepening and our positive strategic
dialog, we remain concerned that Russian entities are providing
proliferant states with weapons of mass destruction and
missile-related technology. Russian entities continue to engage
in WMD and missile-related cooperation with a number of
programs in proliferant countries such as Iran, Libya, and
Syria. In addition, Russia is also a major supplier of advanced
conventional weapons for these states.
We have been working with the Russian Government for
several years to help cement its export controls and
enforcement. This assistance played a significant role in
creating the legal foundation for export controls that is now
in place in Russia.
Ultimately, however, the Russian Government must
demonstrate the political will and devote the necessary
priority and resources to use these capabilities effectively to
stop illicit transfers, as well as to set responsible policies
for what constitutes legitimate transfers. It has not done so
yet, and we continue to press Moscow to demonstrate such a
commitment.
With regard to China, it too is a partner in the fight
against terrorism. The President signaled this during his visit
to Beijing this spring, as well as his desire to develop a
broader relationship. But notwithstanding this and the
important steps that Beijing has taken through commitments to
multilateral proliferation regimes and bilateral arrangements
with us, and the announcement that they would promulgate a
variety of chemical-, nuclear-, and missile-related controls,
we continue to have concerns about their nonproliferation
behavior. The controls that they have announced for the most
part are announcements, but they are not actual laws. They need
to be laws, they need to be known, and they need to be
enforced.
We are particularly concerned that China complies fully
with its various pledges not to provide assistance to any
unsafeguarded nuclear facilities or programs anywhere. We are
concerned as well over possible interactions between Chinese
and Iranian entities, despite China's 1997 pledge to end its
nuclear cooperation with Iran. Chinese entities' assistance to
chemical programs in Iran and missile programs in Iran,
Pakistan, and elsewhere has been a persistent problem.
In the past 6 months, we have imposed sanctions on five
entities for sale of items that assisted covert chemical or
biological weapons programs. There are other laws that come up
periodically, and there are other cases that are under active
investigation.
China has failed to implement its November 2000 commitment
not to assist in any way any country in the development of
Missile Technology Control Regime-class missiles capable of
carrying nuclear weapons. It continues to export dual-use
missile-related items to several countries of proliferation
concern. This has been the subject of a number of high-level
discussions between U.S. and Chinese officials.
In short, there is a continuing gap between China's
commitments and its implementation of those commitments. And we
remain concerned about this, as we do about the gaps and
loopholes in China's export controls and about China's ability
to effectively enforce them. President Bush made clear at the
time of his summit that fulfillment of nonproliferation
commitments would be a major factor in determining how far a
new U.S.-China relationship can develop. It is the same point
that the President made last month during the summit in Moscow.
We are expanding our broad relationship. There are many
positive aspects. But with Russia, like with all of our
friends, the issues of nonproliferation are significant issues,
and they limit the ability of the United States to expand into
new areas that would be of mutual benefit.
The bottom line, Mr. Chairman, is that with both Russia and
China, we are working to develop broad, new relationships,
among other things, that will enable us to combat terrorism and
the spread of weapons of mass destruction.
We seem to agree that terrorism and weapons of mass
destruction are threats to each of us and to the world
collectively. The United States and a number of its friends and
allies are taking concerted action in a variety of ways to stem
these threats. We are working to strengthen the export control
regimes, like the Missile Technology Control Regime. We are
working for more effective enforcement of the Non-Proliferation
Treaty and strengthened IAEA safeguards.
But cooperation from China and Russia is inconsistent.
Policy implementation does not match public or private
assurances, and trade by entities in each country is
contributing directly and significantly to precisely the
threats that the Russian and Chinese Governments say they
oppose.
I would be delighted to expand further in questions and
answers and specifics in relation to your questions, Mr.
Chairman, or in my written text. Thank you very much.
Senator Akaka. Thank you very much for your statement,
Ambassador Wolf.
Mr. Borman, will you please proceed with your statement?
TESTIMONY OF MATTHEW S. BORMAN,\1\ DEPUTY ADMINISTRATOR, BUREAU
OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE
Mr. Borman. Mr. Chairman and Members of the Subcommittee,
thank you for the opportunity to testify at this hearing.
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\1\ The prepared statement of Mr. Borman appears in the Appendix on
page 51.
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The effectiveness of the export control systems of Russia
and China is an important subject made even more important by
the events of September 11. The Subcommittee is to be commended
for its attention to this topic.
My oral testimony will describe the dual-use export control
systems of Russia and China and the status of our assistance
efforts with those countries. My descriptions are based on the
Department of Commerce's involvement in those assistance
programs.
Russia's current dual-use export control system has
continued to evolve since its beginning in the early 1990's.
Russia is a member of the Wassenaar Arrangement, the Nuclear
Suppliers Group and the Missile Technology Control Regime.
Russia is also a member of the Exporters Committee, commonly
called the Zangger Committee, under the nuclear Non-
Proliferation Treaty. Russia is not a member of the Australia
Group. Russia is a state party to the Chemical Weapons
Convention and the Biological Weapons Convention.
In summary, Russia has, for export controls an export
control law that covers the export of dual-use items;
implementing regulations, including control lists and catchall
controls; interagency review of export license applications; an
outreach program to inform exporters of their responsibilities
under Russia's export control system; and, I would say, limited
enforcement capability.
Russia enacted its basic export control law in 1999. It
provides the authority to control the export of all the items
that are on the four multilateral regime lists, plus chemicals
subject to the Chemical Weapons Convention. It also provides
various other authorities, including the authority to have a
catchall control, and, in the related criminal administrative
codes, penalties for violations.
Russia has put significant amount of effort into educating
its defense enterprises on Russia's export control
requirements, and the United States has worked with Russia and
nongovernmental organizations to help facilitate that.
Russia's export control system is currently enforced by a
combination of agencies: The customs service, the intelligence
service, and the federal prosecutors. Russia has recently
indicated to us that they are interested in beefing up their
enforcement and in particularly looking at administrative
enforcement mechanisms. And in our own experience,
administrative enforcement is a critical part of an effective
export control system.
As Ambassador Wolf has mentioned, we have had an ongoing
export control cooperation program with Russia for several
years now. In the first few years, it was actually more of an
exchange of information. And certainly, we had to overcome some
skepticism on the part of Russian officials and exporters that
the United States was not really pushing export controls to
preserve market shares and market advantage for U.S. companies.
I think we are well past that, but clearly there is a lot that
Russia still needs to do.
As I mentioned, a large part of the effort has been
educating Russian defense enterprises on Russia's export
control system. Today under this program, several hundred
Russian defense enterprises have at least gone through a first
round of training, if you will. And a recent study of that
particular part of the program, the outreach program, by the
University of Georgia indicates that it has had some effect. It
has at least given exporters in the defense enterprises a basic
knowledge of Russia's export control system. Clearly, they need
to do more training.
One other thing I would like to mention on our cooperation
with Russia, the Department of Commerce does have an export
control attache stationed in Russia. That person has several
responsibilities, one of which is to do end-use checks when
U.S. goods are exported into Russia. But another important
responsibility of our attache is to work with Russian
officials, particularly the export control enforcement
officials, and provide information on ways that they might
improve enforcement of their own export control system.
Turning to China, I have less to say about China. The U.S.
Government has not had an ongoing export control cooperation
program with China. We have had some limited bilateral meetings
over the past few years, but those have really only been very
basic exchanges of information. China is not a member of any of
the multilateral export control regimes, save the Zangger
Committee, which is for nuclear trigger list items.
As Ambassador Wolf has mentioned, China has promulgated
some export control regulations, but we have not really engaged
in any dialog with them as to what those really mean or how
they are implemented.
With that, I think I will conclude my oral testimony, and,
again, also be happy to answer questions.
Senator Akaka. Thank you, Mr. Borman. Your full statement
will be included in the record.
Mr. Borman. Thank you, Mr. Chairman.
Senator Akaka. We have some questions for you.
Ambassador Wolf, the 2001 unclassified report to Congress
on the acquisition of technology relating to weapons of mass
destruction and advanced conventional munitions has a quote I
would like to read. The Central Intelligence Agency states
that, ``With respect to Pakistan, Chinese entities in the past
provided extensive support to unsafeguarded as well as
safeguarded nuclear facilities, which enhance substantially
Pakistan's nuclear weapons capability. We cannot rule out some
continued contacts between Chinese entities and entities
associated with Pakistan's nuclear weapons program subsequent
to Beijing's 1996 pledge and during this reporting period.''
If there are such contacts between Chinese entities and
Pakistan on nuclear weapons, Ambassador Wolf, do you believe
such contacts would have to involve official Chinese entities
and individuals? Do you believe that China continues to provide
assistance to Pakistan's nuclear weapons program? And if so,
what type of assistance?
Mr. Wolf. I think, Mr. Chairman, that I will stand with
what you read from the 721 report. This is an open hearing. And
the Department of State certainly concurs with the sentence
that you read that we cannot rule out some unspecified contacts
between Chinese entities and entities involved in Pakistan's
nuclear weapons development program.
Nuclear weapons tend to be a fairly regulated activity. But
here, it would not be helpful, I think, to speculate beyond the
language.
We are concerned. We have had conversations with China. We
do believe that it is absolutely essential that China live up
to all of the nonproliferation commitments it has given, none
more important than the set of nuclear commitments, not only in
terms of providing no help to any program or activity that is
absent safeguards, but also its commitments vis-a-vis Iran not
to provide any assistance to Iran beyond the two very limited
projects that were, for all intents and purposes, grandfathered
in 1997.
As long as you have read from the Central Intelligence
Agency's report, I think it is important to note, Mr. Chairman,
that it does actually provide an encyclopedic view
unclassified, sometimes with classified and sometimes not
classified annexes to the Congress. But I think we are one of
the few countries in the world that actually puts its cards
down on the table.
It does not solve the problems that you and Senator
Thompson have described, but I think it helps in the education
of the public. And that has been one of our challenges as we
work our way through our allies, trying to raise their
appreciation of the risks that proliferation poses to them. So
we use this report and we use our contacts to try and get this
up in the agenda dealing with nonproliferation.
To go back to what you all were saying, it is not something
we will achieve alone, because the dual-use technology that is
available not only from the United States or Western Europe but
increasingly from middle-tier countries makes the challenges
that we all face that much more difficult. Countries that were
receivers of technology, buyers of technology, now some have
become exporters of technology.
Senator Akaka. I do not think you have covered that part on
whether you believe that China is assisting Pakistan.
Mr. Wolf. We believe that--we are still concerned that
entities may be involved in their nuclear weapons development.
Senator Akaka. Ambassador Wolf, the same report states
that, ``President Putin, in May 2000, amended the presidential
decree on nuclear exports to allow the export in exceptional
cases of nuclear materials, technology, and equipment to
countries that do not have full-scope IAEA safeguards. The move
could clear the way for expanding nuclear exports to certain
countries that do not have full-scope safeguards, such as
India.''
Are there any indications of continued Russian official
contact with the Indian nuclear weapons program or assistance
to the military side of the Indian nuclear program?
Mr. Wolf. Mr. Chairman, I think it is important to clarify
that India is a rather different case on various lists than the
way in which it appears in the 721 report.
But it is clear India developed and, for the most part,
developed its own indigenous nuclear capability. This paragraph
has to do specifically with Russian assistance to the civilian
side of India's nuclear establishment.
There is nothing in this report that suggests that there is
Russian assistance to India's nuclear weapons capability. There
is ongoing contact, both in terms of nuclear fuel supply and
items below the NSG trigger list level, between Russia and
India. There are contracts for the sale of additional nuclear
reactors.
But India does not have full-scope safeguards. This has
been an item of very active discussion in the Nuclear Suppliers
Group, and we will not let it go.
Senator Akaka. Before I defer to Senator Thompson for his
questions, I have a question for Mr. Borman.
In your testimony, you state that discussions between the
United States and China on export controls have been limited.
Why have only modest steps been taken to help China identify
problems in their export control systems? Is it because of
Chinese reluctance to seek outside advice? Or have we been
reluctant to take action?
Mr. Borman. Well, in my experience at least, it is probably
been more the former. Clearly, to have this kind of cooperation
program, you have to have two governments that are interested
in moving forward. And I have not seen that indication,
although the State Department may want to comment on that as
well.
Mr. Wolf. I might add a little bit, Mr. Chairman, because I
have had an active dialog with certain Chinese officials, but
it has not gotten as far as we would like.
In the context of our discussions, and especially about the
November 2000 Missile Technology Control Agreement, China
agreed to publish comprehensive export controls for missiles.
During the course of our dialog about the lapse or breach of
that agreement, we have also had a chance to hear that China
intends to expand its current controls on Australia Group-
related export items and, indeed, to make their export lists
compatible with the Australia Group. We are not aware that the
law or a regulation on CBW has been promulgated.
Similarly, they have told us that they intend to publish
lists that would be compatible with the MTCR annex items. That
had been tied up in the discussions of the November 2000
agreement. In fact, in some conversations, it has appeared that
maybe it is not now.
The point for us is that China does not promulgate new
export control lists as a favor to the United States or to the
Australia Group or to the MTCR partners. China's policy, as
declared from the highest levels, is a policy that opposes
proliferation. And a policy that opposes proliferation needs to
be backed by rigorous regulations and rigorous enforcement of
the regulations. It is not enough just to have the regulations;
they need to be enforced. By enforcement, it is not enough to
just catch somebody and tell them not to do it again; there
need to be judicial sanctions.
So as we look at the direction that China is going, we are
encouraged by what we hear from every level of the Chinese
Government about commitment to nonproliferation. But we are not
as encouraged by the fact of what is there in terms of the
legislative and administrative arrangements. And we are
certainly quite less satisfied with the enforcement, because,
as in the CIA's report, Chinese entities are active all around
the world.
Now, does that or does that not have the government's
endorsement or support? We cannot answer that question as
easily as we can answer the point that enforcement is
insufficient to prevent Chinese entities from selling goods and
services to proliferators in a way that significantly enhances
those proliferators' programs.
Senator Akaka. Are there any other comments you would like
to make, Mr. Borman?
Mr. Borman. Well, I guess to amplify a little bit of what
Ambassador Wolf said. In the program we have had, at least with
Russia and some other countries, you initially have a political
commitment to engage in cooperation and then from that flows
the more technical discussions. As you have heard, we are not
to that point yet with China.
Mr. Wolf. With Russia, for instance, we have experts who
sit down. They review the list. We are working with Russia in a
variety of ways, in terms of working with the export control
part of the economic development ministry on things like
enhancing communications, expanding export control outreach, as
Mr. Borman described, but also education for judges and
prosecutors and legislators. We are helping to install
specialized radiation detection equipment at a number of border
posts. And we are engaging in a broader set of export control
talks, including on nuclear-related exports.
With Russia, we have that opening. With China, we are
interested in expanding our discussion, but it takes two hands
to clap.
Senator Akaka. Thank you, Senator Thompson, for your
questions.
Senator Thompson. Thank you, Mr. Chairman.
I hardly know where to start. It is clear that the State
Department and our export folks are doing what they can in
order to try to get Russia and China to come up with some
regimes of enforcement. Of course, I guess it was 1999 that
Russia passed an export control law. China has issued some
regulations and so forth.
Ambassador, I realize that you have to be diplomatic. You
are working with these people. And to the extent that you can
get them to come up with these regimes and comply maybe
sometimes with these regimes, more power to you.
And the same with you, Mr. Borman.
But we have seen here for several years now the State
Department and their export folks in Commerce and so forth
proceed along on the basis of taking at apparently face value
these political statements made from the highest authority.
Taking at face value their statements that they really do want
to control all this stuff. Apparently, this administration is
adopting that same approach. And I find it disconcerting, to
say the least.
We have all seen the classified information. We have to
rely on what is on the public record, and I look at the public
record and see things like this. According to a February 2002
unclassified summary of the Director of the Central
Intelligence report to Congress on the acquisition of
technology relating to weapons of mass destruction, Russian
entities continue to supply a variety of ballistic missile-
related goods and technical know-how to countries such as Iran,
India, China, and Libya. Iran's earlier success in gaining
technology and materials from Russian entities has helped to
accelerate Iranian development of Shahab III, a missile with a
capability to hit Israel. And continuing Russian assistance
likely supports Iranian efforts to develop new missiles and to
increase Tehran's self-sufficiency in missile production.
In January 2000, Moscow approved a draft cooperative
program with Syria that included civil use of nuclear power.
Broader access to Russian scientists and Russia's large nuclear
infrastructure could provide opportunities to solicit fissile
material production expertise and other nuclear-related
assistance if Syria decided to pursue nuclear weapons. During
the first half of 2001, Russian entities remained a significant
source of dual-use biotechnology, chemicals, production
technology, and equipment for Iran.
With regard to China, obviously they do not view export
controls as a national priority, to say the least. They use
them as a bargaining chip and have basically told us that as
long as we continue supporting Taiwan, and we will not approve
satellite sales and satellite launches, they are going to
continue to do pretty much as they please and have.
The administration in September 2001 imposed sanctions on
two companies that were found to have transferred ballistic
missile goods and technologies to Pakistan. More recently, in
January of this year, the administration imposed sanctions on
three more Chinese companies for transferring chemical and
biological technology to Iran. The CIA Director reports that
the PRC remains a key supplier of technology inconsistent with
proliferation goals, particularly missile or chemical
technology transfers. China contributes toward trends and more
ambiguous technical assistance, indigenous capabilities, and
longer range missiles and secondary proliferation.
Most recently, China has reportedly assisted Pakistan in
the development of its Shaheen II two-stage solid fuel medium-
range ballistic missile. In addition, firms in China have
provided dual-use missile-related items, raw materials, and/or
assistance to several other countries of proliferation concerns
such as Iran, North Korea, and Libya. Chinese firms continue to
be suppliers of dual-use chemical weapons production equipment
and technology to Iran.
I submit to you that is not cause for optimism. It is
clearly a continuation, if not acceleration, of what we have
been seeing over a period of years now.
It is clear that, in terms of Russia's situation, they lack
resources. They lack expertise. I think you point those things
out. And specialists, in some ways. We are trying to help them
there. We should. It is not like every item that they made,
they send to someone who is a bad actor. We are assisting them
with our Nunn-Lugar program and trying to do something with
regard to the nuclear stockpile.
But when it comes to the bottom line and they are making
money, they clearly continue to do these things and make the
world a more dangerous place.
I understand the position of both of you gentlemen. That is
why I am doing what I hate for us to do, and that is to make
statements instead of asking questions. But I can just express
that I hope that deep down inside you really do understand that
what these high-level officials of these two countries say
about proliferation is virtually meaningless, and what they
agree to do is virtually meaningless when it comes to them and
their national interests.
Over the years, you could almost say the same thing about
our European friends. I am glad you feel optimistic coming back
from talking to our EU friends, but their history there, when
profits were at stake, has been terrible. I mean, some of our
friends in the EU are in the process now of helping break
sanctions on Saddam Hussein.
I just think that it is good to have these public forum
discussions. You may disagree with most of what I say, but I am
talking about the public record and similar hearings that we
have over the years, and I am saying that the world continues
to be a more dangerous place. We continue to try to figure what
to do about it, but we are not making much headway with regard
to the two most prominent and persistent proliferators in the
world, Russia and China.
I am not saying that you gentlemen need to come in here
within a year or so and solve all these problems that have been
developing over several years. I am just saying that we would
be very naive, and it would be very dangerous for us to assume
that things are getting better, because things are getting
worse.
Mr. Wolf. Maybe I should take that as a question: Do we
agree?
Senator Thompson. That'll do. [Laughter.]
Mr. Wolf. Let me say that I think some things are different
in this administration, and we are not particularly diplomatic.
I will refer you to our European friends, or I will have John
Bolton come up and explain.
But we are not particularly diplomatic. The President has
been very clear, starting with his speech at the State of the
Union, and in every contact that we have with our friends on
whom we are hard, and those who are not as friendly, and those
who are on the other side. And we are not diplomatic with them.
There are no game preserves. We do not rule certain countries
in and out. We did sanction China a month before the President
was to go to Shanghai. We have sanctioned entities.
Senator Thompson. Chinese companies.
Mr. Wolf. We are continuing to sanction entities. I do not
believe, actually, that Russia lacks resources or expertise. I
think they lack will. But I think things have changed in
Russia.
Two years ago, I was the negotiator for Caspian energy. On
Caspian energy, the reception that the United States received
in the Caspian region is unlike the reception that the U.S.
military receives in Central Asia today.
Russia is moving, but has it made a decision at the highest
level to tell every other level to stop it? It is clear that
has not happened. And that is why the President engaged
directly with President Putin at the summit 2 weeks ago, to
make it clear that nonproliferation for the Bush Administration
is a core, central issue. And it is not tempered by cooperation
in the war on terrorism. It is not tempered by the desire to
develop an economic relationship. It is not tempered by a
personal friendship.
For us, support for countries--which, you are right, Iran
poses a direct threat not just to Israel and not just to
Russia. Iran and the programs that it has now, including the
Shahab missile, pose a direct threat to the United States by
the ability of that missile to hit U.S. forces in Turkey and a
direct threat to NATO by its ability to hit forces from NATO
countries in the Gulf region.
And that is the conversation we have with the Europeans. Do
not take wrong what I said about ``I come back optimistic.'' I
came back hearing that there is a greater recognition that
proliferation is one of two threats to European security, the
other being regional disintegration.
But we will be able to tell how real that appreciation is
when we see things like whether the Europeans tie their trade
relations talks to their concerns about nonproliferation.
We will see if Russia's commitment to ban the weapons of
mass destruction plays out in the marketplace. I was told by
the head of the space agency that they have a number of cases
under investigation, and I told them, ``That's good. That is
encouraging. We look forward to hearing how you proceed with
those investigations.'' He said, ``We found one guilty. We
fired him.'' I said, ``That's not enough. You must not slap him
on the wrist. Slap him in jail.''
For Russia and China, the question is whether or not the
government sends signals through the judicial process that are
sufficient to tell these renegade entities that the government
is serious. They have not done that yet. Our eyes are wide
open.
Senator Thompson. You are not suggesting they all are
renegade, are you?
Mr. Wolf. It is hard to discern whether or not they are
done with the support of the upper levels, or whether or not
they are done with the support of the entities.
Senator Thompson. Well, it is, I guess, most times hard to
discern, Ambassador Wolf. But I guess that is what I am getting
at.
Our primary overriding concern is the safety of our Nation
and our friends and our allies. If you have a pattern over the
years of this activity coming out of a country that we have a
relationship with and an improving relationship with, with
regard to a lot of other areas. If this pattern continues, and
you sanction a company here and a company there and maybe a
subsidiary or affiliated company does the work instead, where
should the burden lie?
Should the burden be on us to prove beyond a reasonable
doubt in a court of law? Or should we say to them, ``We cannot
prove beyond a reasonable doubt in a court of law who exactly
knew what, but it is your responsibility.''
And in many of these cases, they do not make any bones
about it. I mean, they say this is for peaceful nuclear
purposes and use these loopholes in the law to do things on top
of the table, not to mention the other.
But where should the burden lie? Should we not put the
burden on them, say regardless of who knew what, your policies
need to be directed toward stopping this or making substantial
progress towards stopping that?
Mr. Wolf. Senator, your talking points are exactly the ones
we use. The burden is with their leadership; their burden is
with their administrators.
We will be able to judge their commitment--either country--
their commitment to their nonproliferation rhetoric by the
degree to which they enforce and put in place wide-ranging laws
and then enforce them. If we do not see a pattern of enforce--
and we have laws and we have companies that try to violate our
export laws. And we count on a variety of U.S. administrative
means to identify those people, prosecute them, and hopefully
convict them, and that's what we count on.
In our dialog with the Russians, for instance, we say that,
``We understand you will not turn this off overnight. You are
right. This is years of behavior. But what we do not see is a
pattern of prosecutions, a pattern of companies being found in
violation''----
Senator Thompson. What does that tell you?
Mr. Wolf. It tells you that the political will is not there
yet.
Senator Thompson. Does that tell you that the leadership is
surprised and shocked to find that these companies are doing
this? Or does it tell you that perhaps they realize that these
companies needed funding, and it was in these countries'
interests to have these entities survive. And they were all up
against it financially, so they at least turned a blind eye.
What does that indicate to you?
Mr. Wolf. What it indicates to us is that they are not
effectively implementing their law. And what the President has
made clear, Senator, is that even as we try to move forward on
a broad relationship, and there are other areas with much more
economic significance than these sales, that we will not be
able to move in that direction, because the administration will
not choose to and the Senate and House will not support it.
And we are very clear that to expand the relationship, for
instance, with Russia, to take on a number of new activities in
terms of nuclear research or space cooperation, that there
needs to be an end to support for sensitive nuclear
cooperation--for instance, in Iran, an end to missile
cooperation in Iran, an end to advanced conventional weapons
sales.
Senator Thompson. Well, I am assuming that the President
had some very direct conversations with Mr. Putin, for example.
I feel confident that that is the case. And I like most of what
you say in our discussion, quite frankly.
I got kind of a different impression from your statement.
The President needs support from the State Department in
carrying out this message. And I would just urge you to
consider whether or not in your public statements, which they
are all very much aware of, that the thrust of what you are
saying is that things are looking up, we are going to watch
them carefully, but we are making progress, and we are
encouraged and all of that--in the face of our own CIA telling
us what has happened. I mean, I fear that the other side thinks
perhaps that we may be patsies somewhere up or down the line.
And I just would encourage you to consider that in your
public pronouncements, with regard to these issues.
We have a vote on. We will stand in recess until Senator
Akaka comes back.
[Recess from 3:33 p.m. to 3:38 p.m.]
Senator Akaka. The Committee will be in order.
Mr. Ambassador, I understand that Assistant Secretary of
Defense Peter Rodman will be traveling to China shortly to hold
bilateral talks with the Chinese on military and defense
issues. The question is, will the Departments of State and
Commerce be advising Secretary Rodman on issues concerning
proliferation and enforcement of export controls, which he
should raise with the senior Chinese officials? I think this
would be a good opportunity to reinforce the administration's
concerns, especially given Mr. Borman's testimony today,
indicating that we have had problems getting Chinese attention
on export control enforcement.
Is he going to raise some of these questions with the
senior Chinese officials?
Mr. Wolf. Mr. Chairman, I know that as one of his first
acts, President Bush promulgated a national security
presidential directive that established a nonproliferation
working group at the assistant secretary level. I am one of the
people on it, and so is Mr. Rodman, when issues come up related
to his activities.
And I am sure that Assistant Secretary Rodman will welcome
the advice of the ``PRO-STAT-PCC,'' we call it, on those issues
that are not directly defense--inherently defense. We try to
coordinate our activities, as we do when Defense has its
various dialogues.
I participated in a meeting a couple of weeks ago over at
the Department of Defense when there was a visiting delegation,
and I am sure Mr. Rodman will welcome advice from Commerce and
State. In any event, we will provide it.
Senator Akaka. Russian officials have stated that the
United States has a double standard when it comes to Russian
assistance to Iran. They claim that we condemn certain exports
from Russia but support sales of the same items from other
countries to Iran. They also claim that Russian work on the
Iranian nuclear power plant is the same as our assistance to
North Korea, through the Agreed Framework. Could you please
comment on these claims?
Mr. Wolf. We disagree. I'll expand.
Where we can identify American companies that are exporting
dual-use technology to prohibited entities and enemies, we
certainly rigorous enforcement action. Where we identify, for
instance, European entities that are exporting dual-use
technology to Iranian entities, we take rigorous action.
I can think of one case for one Western European country in
particular where I met with the ambassador, and I told him very
specifically that that company needed to choose: Was it going
to try to develop a market in Iran, or was it going to continue
to develop its market in the United States? It could not do
both.
Secretary Powell raised the same issues in his conversation
with the foreign minister and the economic minister of that
country. And in the end, the country chose to use its catchall
regulations to stop the export of an item which was not even
actually on the Australia Group list but which could have
contributed to a BW program in Iran.
We do that with our friends. We do it wherever we have
information. And where we can use the information without
compromising our sources in a serious way, we use that
information to try to halt the export.
Now, we have clear information--this is not just a
guesstimate--that Russian entities are providing critical
support for nuclear fuel cycle development in Iran. And Russian
entities or individuals are providing critical support for
missile development in Iran. And Russian entities and Russia
are selling advanced conventional weapons to Iran. And it is
our belief that that has to stop.
On the question of Bushehr, Bushehr is much more
complicated. Bushehr is in fact a light-water reactor. It is in
a country that is clearly conducting efforts outside of its
IAEA safeguards to acquire the capability to make fissile
material. It is a country where the program is moving forward.
It does not have an additional protocol. There will be no wide-
ranging IAEA inspection of all of the facilities, as would be
the case in North Korea.
The Iranian nuclear program and the nuclear fuel cycle is
not frozen, as we believe but we cannot confirm. And we remain
very vigilant, because we do not know whether it is or it is
not, the North Korean.
But Russia did not get any of those things, and Russian
entities are continuing to support the development of elements
of the nuclear fuel cycle which are incompatible with a light-
water reactor at Bushehr.
So the situations are completely different. And we believe
that with political will that we should be able to expect to
see much more consistent, much more effective implementation of
export controls. I mean, it is true for Russia, but it is true
for a number of countries.
There is a belief among some that if a country is, for
instance, an adherent to the NPT, and if it is a member of the
International Atomic Energy Agency, and if safeguards appear to
be intact, then therefore that recipient country is entitled to
all of the benefits of participation. We do not believe that.
There are countries that are wannabes, which are in compliance
with IAEA safeguards on the one hand, but which are conducting
clandestine activities on the other hand.
As the 721 report makes very clear, the CIA's report on
mass weapons and nonproliferation, Iran is one of those
countries. And therefore, one needs to be highly vigilant,
whether one is Russia, whether one is a member of the European
Union, or whether one is the United States of America, or
whether one is an island just to the south of us, because
exports of dual-use technology which can be diverted may well
be diverted. And without consistent, constant monitoring right
on the spot, one can never know. That is particularly true for
BW-related items, because they can be converted back and forth
in a matter of minutes.
Senator Akaka. Let me raise another possible issue. We are
concerned, as you have testified, about Russian assistance to
Iran's civilian nuclear program. Shouldn't we also be concerned
about the military implications of India's civilian nuclear
program?
Mr. Wolf. India's program?
Senator Akaka. Yes.
Mr. Wolf. We have been concerned, and our cooperation with
India is limited to three tiny safety projects, and we have not
cooperated with them for a very long time.
In 1998, when there was another explosion, we put in place
sanctions. When we lifted sanctions last fall, we said to the
Congress that we remained concerned about nuclear developments
in South Asia, and the events now make clear that we should be.
India is a quite different case than countries that are
mentioned in other parts of the 721 report. But we are
concerned about India's nuclear program, and we have raised in
the Nuclear Suppliers Group concerns about Russia's provision
of technology and fuel to India, absent full-scope safeguards
and in breach of the NSG guidelines.
We did not win that battle. The Nuclear Suppliers Group was
united with us; Russia chose to do otherwise.
But we will continue to try to maintain the NSG guidelines.
We believe full-scope safeguards are the only way that we can
limit the risks that are out there. And even with those
guidelines, the wannabes have found other ways to acquire
technology and expertise that help them move forward.
Mr. Borman. Mr. Chairman, if I could follow up a little bit
on the double standard issue. Certainly as far as U.S. origin
goods go, of course we have a unilateral embargo on Iran, so
there are very few things that go from the United States to
Iran, and those controls also extend to some extent to the re-
export of U.S. origin goods.
And as far as India's nuclear power program goes, even when
the sanctions were lifted to some extent, all of their nuclear
power activities remain on entity lists.
Mr. Wolf. And we do not supply them.
Mr. Borman. Correct.
Senator Akaka. Thank you.
The United States, Great Britain, and Norway are financing
a computer system for other nations to track nuclear components
and materials in real time, called Tracker. It is employed in
nine countries, including several former Soviet bloc countries.
This system relies on participating governments to input
information on export licenses into a computer. Each country
owns its own information and is solely responsible for its
accuracy.
The question is, have the United States and our partners
offered this system to Russia or China? If not, are there plans
to do so?
Mr. Wolf. That is one of my systems, Mr. Chairman, and I
should know the answer to whether we have offered it to Russia.
I believe we may have.
I have raised it in discussions with the Chinese. We would
be prepared to do that. The system is not quite as omniscient
as your first couple of sentences suggested. The system is, in
its current stage, basically a tool which we provide to
governments to help automate and give transparency to their
export control licensing process by inputting data and making
it available to the various entities around a government, the
various agencies that are involved in the export decision. It
is possible for the person in charge to know the status of an
export license. It adds a great deal of transparency.
Now, ultimately, if linked together--and I think this takes
it a little further than it is now--it would provide us a means
of exchanging information. We try to do that in a variety of
other ways. And we rely on other assets of the U.S. Government
for our own individual look at what is happening in the nuclear
trafficking world through the NSG or through our own
intelligence.
Senator Akaka. Thank you very much for your responses.
Senator do you have any questions?
Senator Thompson. Nothing further, thank you. Thank you,
gentlemen.
Senator Akaka. Thank you so much, Ambassador Wolf and Mr.
Borman, for your testimony. The Members of the Subcommittee may
submit questions in writing to you, and we would appreciate a
timely response to any of those questions. So thank you very
much. We really appreciate your responses.
Mr. Wolf. Thank you.
Mr. Borman. Thank you.
Senator Akaka. We will now proceed to our next panel of
witnesses.
I would like to call Leonard Spector, David Albright, and
Gary Milhollin to take their places at the witness table.
Mr. Spector is Deputy Director of the Center for
Nonproliferation Studies in the Monterey Institute for
International Studies. Mr. Albright is President of the
Institute for Science and International Security. And Mr.
Milhollin is Executive Officer of the Wisconsin Project for
Nuclear Arms Control.
I want to thank you gentlemen for being with us today. You
have been asked to discuss recent proliferation activity from
Russia and China, and how well their export systems address
these concerns, and how well both nations are complying with
their international commitments to nonproliferation.
I want you to know that your full testimony will be
submitted into the record, and we look forward to hearing your
statements.
Mr. Spector, will you proceed?
TESTIMONY OF LEONARD SPECTOR,\1\ DEPUTY DIRECTOR, CENTER FOR
NONPROLIFERATION, MONTEREY INSTITUTE FOR INTERNATIONAL STUDIES
Mr. Spector. Thank you, Mr. Chairman, and thank you for the
opportunity to testify this afternoon on this topic. I will
confine my remarks to the Russia case.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Spector with an attachment
appears in the Appendix on page 44.
---------------------------------------------------------------------------
Sadly, Mr. Chairman, history is repeating itself, and it
seems that Moscow has failed to absorb the unmistakable lessons
of the past. Just like the careless, profit-hungry exporters of
the 1960's, 1970's and 1980's that we had in the West, Russia
today is driven by the desire for income and is engaged in a
wide range of unwise exports, placing profits over
proliferation concerns. I have attached a table to my testimony
that highlights a number of these exports.
I will mention only the most troubling ones, and I will
leave out Iran, since we have just had testimony from the
administration on that. Russia has opened a nuclear Pandora's
box in Syria, providing Syria with its first research reactor;
it now will expand this cooperation to include power reactors.
It has enhanced the prestige of the military junta in Myanmar
by selling that country its first research reactor. It has
agreed to help refurbish the Tajoura research reactor in Libya.
And most troubling, at a time when the international community
is intensely concerned about the threat of nuclear war in South
Asia, Russia is assisting India to develop nuclear-capable
cruise and ballistic missiles and is seeking to cash in through
major sales to India's civilian nuclear power program, sales
all other nuclear suppliers have renounced.
These activities with India violate the long-standing rules
of the Missile Technology Control Regime (MTCR) and the Nuclear
Suppliers Group (NSG).
I would underscore, Mr. Chairman, that these exports that I
am describing are not inadvertent or the result of smuggling or
activities that bypass official controls. As explained in
greater detail in my written statement, not only are these
exports all blessed by officials in Moscow, but these same
officials have deliberately manipulated Russian export control
laws to permit the sales.
Apart from the case I have cited, of course, there are
smuggling cases to be concerned about. And I want to underscore
a point made by Assistant Secretary Wolf about the lack of
prosecutions. This is a very serious matter in the Russian
case. And it really is a pity that, at a time when we are
spending so much and working so hard to stop leakage of nuclear
materials from Russia, we do not have the benefit of being
reinforced by a tough Russian compliance effort.
In view of these patterns, it seems clear that the
fundamental problem is a lack of political will. Here I am also
echoing Assistant Secretary Wolf. It is a lack of political
will in Moscow to enforce a disciplined export control system.
How can we change the situation? The Bush Administration,
like the Clinton Administration, has tried a number of
approaches but with only limited success. It has raised U.S.
concerns at the highest political level, most recently at the
May 2002 summit. It has imposed sanctions against specific
Russian entities involved in improper exports. It has
publicized Russia's departures from international norms. It has
spent millions training Russians export control officials. But
despite these activities, the problems persist.
I would like to suggest several new avenues that might
reinforce these efforts to improve Russian export behavior and
give them additional substance.
The first is that I think it is time to indicate forcefully
that members of the Missile Technology Control Regime and the
Nuclear Suppliers Group are dissatisfied with Russia's
behavior. My first thought was to propose that the United
States actually seek to expel Russia from these groups for a
period of time. The Australia Group, after all, which
harmonizes chemical and biological weapon related export
controls, does not have Russia as a member, and it seems to
operate pretty effectively.
Administration officials pointed out to me that expelling
Russia from the MTCR and the NSG would involve quite a few
diplomatic headaches, not the least of which is the fact that
neither the MTCR nor the Nuclear Suppliers Group has
established rules for removing or suspending members.
So, at a minimum, I think a process is needed for the
future, so that these groups can discipline their wayward
members. A U.S. call for the establishment of such procedures
would be a step that everyone would know was initiated with
Russia in mind. I think it would be one more signal, even if we
did not go the full extent of expulsion, one more signal to
Russia of how serious we take the issue.
In the meantime, we might want to reinforce the public
shaming of Russia through what might be called the equivalent
of a nonproliferation ``scarlet letter.'' The idea, basically,
would be to make clear whenever we discuss the membership of
the MTCR and the NSG that Russia is not necessarily a member in
good standing and that issues have been raised about its
compliance.
A second approach that might help reinforce U.S.
nonproliferation efforts would be to take a leaf from domestic
law enforcement. Here it is common for Federal officials,
through the seizure of wrongdoers' assets or the imposition of
fines, to seek to deprive malefactors of the ill-gotten gains
of their illicit endeavors.
In addressing Russian export controls, the United States
should adopt a parallel policy, a strategy that would reduce,
dollar for dollar, assistance or benefits provided to Russia,
so as to offset the profits that it gains from the sale of the
Bushehr reactor to Iran, or the other various things that we
have been speaking about, including nuclear and missile sales
to India.
It might be possible, for example, when the United States
periodically rolls over Russia's sovereign debt, to reduce the
amount of debt that is postponed by an amount equal to Russia's
profits, so that, in the end, Russia would have to expend funds
to pay off a portion of its debt. Thus it would be disgorging
the illicit gains it had received, in order to pay off the
amount of debt accelerated.
This would be the flip side of what is receiving
considerable discussion now, that is, forgiveness of debt, if
Russia adopts strong nonproliferation policies. My approach
would be acceleration of debt to offset ill-gotten gains from
improper nonproliferation policies.
Finally, we have to ask ourselves, how do we lead Russian
officials to place nonproliferation over profit? In the end,
the issue is one of education.
For more senior officials, it seems, education must be
conducted in public, exposing them collectively to
international calumny for their inappropriate policies. But
more junior officials, those training to become officials, and
journalists who track this issue in Russia, can be taught
through more traditional means, for example, through mid-career
training efforts, degree-granting programs that stress
nonproliferation values, and through exchanges with Western
countries that have embraced and implemented such values.
So those are three fresh ideas to bolster existing U.S.
efforts: Do more public shaming through the processes of the
two multilateral groups; try to go after ill-gotten gains; and
reinforce nonproliferation education.
Thank you, Mr. Chairman. That concludes my remarks.
Senator Akaka. Thank you very much, Mr. Spector.
Mr. Albright, will you please proceed with your statement.
TESTIMONY OF DAVID ALBRIGHT,\1\ PRESIDENT, INSTITUTE FOR
SCIENCE AND INTERNATIONAL SECURITY
Mr. Albright. Mr. Chairman and Members of the Subcommittee,
thank you for the opportunity to testify today.
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\1\ The prepared statement of Mr. Albright appears in the Appendix
on page 51.
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Nuclear proliferation today depends on illicit foreign
assistance. Proliferant states are adept at exploiting weak or
poorly enforced export controls and supplier states. In the
past, many Western countries have been the source of items
vital to the nuclear weapons programs of developing countries
including Pakistan, India, Iraq, and Iran.
Russia must unfortunately be viewed as the current target
for proliferant states and terrorist groups in their quest to
obtain the ability to make nuclear weapons. Russia has made
great progress in creating nuclear and nuclear-related export
control laws and regulations following the demise of the Soviet
Union. And this legal structure has been developed with
extensive assistance from the U.S. Government and the
nongovernmental community.
Despite these positive steps, there are serious problems in
implementing this system. And I would like to just go through
some of the problems that in our own work we have been able to
identify in Russia; some of them have been identified before,
some not.
The first is overemphasis on obtaining sales and exports
without adequately weighing the security problems that could be
caused by a sensitive export.
There is a shortage of effective internal compliance
systems at Russian enterprises. Larger enterprises,
particularly those with nuclear exports, are creating internal
compliance systems, but they remain in need of assistance to
make them effective. Many smaller companies and enterprises,
particularly those outside Moscow, often lack rudimentary
knowledge of the laws and regulations of the state.
There is inadequate education and training opportunities
for employees at enterprises who must ensure that the exports
of their enterprise are legal.There is a dearth of information
at Russian enterprises that would enable sellers to check on
the end-users in foreign countries. One Russian export control
official told me that more than 90 percent of all Russian
enterprises do not have books or other resources to research
the companies buying their items. Thus, the seller has a
difficult time checking whether the information provided by a
customer is true or reliable.
There is also the inadequate enforcement of violators of
export control laws, which I think has been covered several
times.
Given all these problems, significant illicit or
questionable sales are bound to occur in Russia unless more is
done to strengthen its system. And at the minimum, one can say
that, under current conditions, the Russian Government may be
inadvertently encouraging the export of sensitive items to
clandestine nuclear weapons programs.
U.S. assistance has been critical to improving the export
controls in Russia. This assistance has reduced the risks that
states such as Iran and Iraq will obtain nuclear weapons.
Toward the goal of further improving export controls, the
United States and other Western governments need to continue
stressing that stopping the spread of nuclear weapons, other
weapons of mass destruction, and ballistic missiles is a key
goal of the United States and the international community, and
that effective national export control systems are a necessary
part of working toward that goal.
The United States also needs to commit additional funding
and expertise to help Russia implement its export control
system. I would disagree that there is sufficient expertise or
resources to deal with this problem in the places where it
counts most, namely within the entities, enterprises, and in
the bureaucracy in the government that deals with export
controls.
U.S. nonproliferation interests motivate cooperation with
Russian officials and experts to build a strong Russian nuclear
and nuclear-related export control system. Developing adequate
controls in Russia is challenging and will require extensive
U.S. assistance.
The major benefit is that states such as Iran and Iraq will
not find Russia the most attractive nuclear supermarket as they
shop the world for items needed in their quest to build nuclear
weapons.
Thank you.
Senator Akaka. Thank you very much, Mr. Albright.
Mr. Milhollin, will you proceed with your statement?
TESTIMONY OF GARY MILHOLLIN,\1\ EXECUTIVE OFFICER, WISCONSIN
PROJECT FOR NUCLEAR ARMS CONTROL
Mr. Milhollin. Thank you very much, Mr. Chairman. I am
pleased to appear before the Subcommittee to discuss the
important subjects of export control and arms proliferation.
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\1\ The prepared statement of Mr. Milhollin appears in the Appendix
on page 56.
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I was going to do two things. First, give an overall view
of what China and Russia has been exporting, but that's been
pretty much accomplished here already. Second, I would like to
make some recommendations concerning our sanctions laws.
The long list of exports by both Russia and China, I think,
elicited a sigh from Senator Thompson, and I have a lot of
sympathy for that. I look back over my own work, and I think I
have been testifying before this and other Congressional
committees for the better part of a decade and listing
outrages, and the list just keeps getting longer.
And our policy is failing. We are not succeeding in
changing this behavior. And it is simply not a rhetorical or
political-diplomatic problem. It has real effects on the
ground.
If we just look at India and Pakistan now, millions of
people are really facing the threat of mass annihilation in
those countries because of nuclear weapon and missile programs
that were produced by, primarily, Russian and Chinese exports.
If you subtract Russian and Chinese exports from these
programs, certainly they would not have progressed to the
extent that they did. It would have taken a lot longer, and
some of them might not have succeeded at all.
So these actions, even though they are incremental and they
happened over a long period of time, can work a great change in
world security. And if there is a nuclear war in South Asia, it
is a world problem. It is not going to be a regional problem.
There is no such thing as a regional problem any more, if there
ever was such a thing in the nuclear domain.
So what I would like to do is recommend some things that
Congress can do, some things that would be fairly
straightforward, that would show some commitment and might make
things a little more difficult for the proliferators.
First, I would recommend that we change the sanctions law
to forbid all trade with companies that commit violations.
Today, we do not forbid all trade with these companies. A
company that is on the list of companies sanctioned--for
example, the ones that have just been sanctioned last month--
are still free today to buy high-performance U.S. computers and
free today to buy high-performance U.S. machine tools and a
whole list of other very useful technologies for making nuclear
weapons and ballistic missiles because these products operate
just under the level that is controlled for export. The
proliferators are perfectly free to import this equipment, and
we do not even have a record-keeping system that tells us what
they are buying or what they are doing with it.
So step one would be just cut off all trade with these
companies and also cut off all of their exports to the United
States.
Second, we need to sanction more than just the organization
that commits the offense; very often, it is a subsidiary.
And I know of cases where we sanction a subsidiary or
indict a subsidiary, and the parent orders the same thing
through a different subsidiary in the same organization. This
has happened. And I am sad to say the Commerce Department
lobbied in favor of the export. It was blocked because, I'll
modestly claim, our organization publicized it.
But the point is that the sanctions do not have enough
teeth. If you want to discourage this behavior, you are going
to have to punish the parent company of these organizations
rather than just punishing the organization and its
subsidiaries. You need to go up the corporate chain as well as
down.
Third, we need to extend the duration of the sanctions.
Under the present law, the sanctions that we just applied to
the Chinese companies--many of whom were recidivists; they had
already been sanctioned or indicted before for the same
conduct. We need to extend the duration. Rather than just
forgetting about them after 2 years, we need to put them on
what is called the ``Entities List.'' That is a list that the
Commerce Department maintains of companies that require an
export license before anything significant can be sent to them.
It would be a simple matter to put their names on the list.
In the case of China, there are only 14 company names on
the list now. I gave this Subcommittee about a year ago a list
of 50 companies that I think ought to be on the list. They are
still not on the list.
It would be very simple to put more Chinese companies and
more Russian companies on the list.
Fourth, we could bar the employees of these companies from
entering the United States. In one case, one of the companies
that was just sanctioned had already been indicted for
diverting U.S. machine tools. Before it bought those machine
tools, it sent a team over to the United States, to Columbus,
Ohio, to look at the machine tools. That was the famous CATIC
case. It would have been better for us if those officials had
been stopped at the border.
One of the penalties for proliferation ought to be that you
cannot send your folks to the United States.
Fifth, when we sanction somebody, we should ask our allies
and trading partners to sanction them as well. We need to get
support. We need to make these companies into international
pariahs. And we need to ask for immediate assistance from our
trading partners.
These are all simple things we could do to show that we are
serious about this. There are other things that would be more
Draconian, more expensive, more attention-provoking, which we
probably should do, too.
But I think the solution to this problem is first to
acknowledge, as Senator Thompson has pointed out, that what we
are doing now is not enough; and, second, to look for things
that we can do that will make the existing laws more effective.
Thank you very much.
Senator Akaka. Thank you very much, Mr. Milhollin.
We have some questions for you, Mr. Spector.
Mr. Spector, other nations such as India have used the
civilian nuclear power capability to develop a nuclear weapons
program. Are there similarities in the development of India's
nuclear program in the 1970's to Iran's today? And how critical
to Iran's nuclear weapon program is Russian assistance to their
civilian nuclear reactors?
Mr. Spector. Well, I think there are some similarities, and
there are some differences. India took technology that it
acquired without oversight, without inspections or safeguards,
and then did use it very deliberately to develop a nuclear
weapon capability. I'm referring specifically to a research
reactor and plutorium separation technology. Later, I think
that they took advantage of again uninspected power reactors to
at least have the opportunity to produce plutonium for the
weapons program.
I think the situation is slightly different in Iran because
in Iran the power plant will be under inspection, so it will be
difficult to abuse that particular facility for a weapons
program.
But what the Russians are doing in Iran is training
hundreds of Iranians in the construction and management of
sophisticated nuclear facilities. You are training them in
operations. And all of that know-how can be transferred over to
other parallel programs that are behind the scenes. And that is
the process we saw in Brazil, for example.
So I think that remains a very serious case for concern.
As far as the details of what is being transferred to the
Iranians apart from the Bushehr facility, I do not have
additional details that I can provide. There was a case
involving lasers that were stopped at U.S. request. And I think
there was a mention of fuel-cycle facilities of one kind or
another that are getting support from Russia, which Secretary
Wolf mentioned just a while ago. I think the fine points are
still classified, so I really cannot discuss them.
Senator Akaka. Thank you.
Mr. Milhollin, I asked our administration witnesses about
the Tracker computer system used to track nuclear components
and materials. This system relies on participating governments
issuing export licenses to input information into a computer.
Do you believe that this type of system would be useful in
Russia or China? And do you think they would agree to adopt it?
Mr. Milhollin. Well, the Tracker system, as I understand it
now, is a computerized export control and processing tool that
countries use to simply decide which licenses to grant and then
to keep track of those licenses. So if you give this system to
the Russians and the Chinese, it is entirely possible that it
might improve their export control performance. That is, they
might be more efficient and effective at deciding what to
license and not to license.
But I must say that the problem in those countries is not
one of having enough tools. The problem is one of having the
will. And I think it is better to condition assistance to those
countries on a change in attitude, rather than go forward with
the assistance and hope that gratitude will produce the change
in attitude. I think we need to have them come over to our side
first in attitude and will, before we give them more export
control assistance.
Senator Akaka. Mr. Albright, in your testimony, you state
that you have observed the need for improved controls over the
sale of Minatom nuclear assets and tracking of items sold
within Russia that may be exported.
What nuclear assets is Minatom selling? And would they
cooperate with efforts to improve controls?
Mr. Albright. Yes. The example really refers to parts of a
reactor that were being sold to a person in Russia. It turned
out that, in this case, the officials discovered they did not
have adequate controls over what that buyer would do with the
item. There is a problem in Russia where things get bought by
somebody, and are sold, or passed on, and then the government
loses track of the item. It can end up God knows where. And so
the idea was to try to focus on developing a system that
creates a legal process that obligates the buyer, and a chain
of documents that then would allow an item to be tracked.
This is not policy across Minatom, as far as I understand.
It has been implemented at one nuclear site. But it is an issue
that the Russians need to address.
Can I add one thing on a slightly different subject? I
think it is very important when we look at Russia that we
distinguish between what may be deliberate decisions or, as
Senator Thompson put, turning a blind eye to exports to Iran or
other places. I think there is a much greater risk that Russia
is going to become a shopping market for illicit exports that
will be directly sought by proliferant states, such as Iraq and
Iran, that the Russian Government will not know about. And I
think if you look at the history of illicit procurement, those
types of sales typically are much more dangerous than
deliberate exports.
I mean, Sandy mentioned the issue of Canada providing India
a reactor, which they had then used to make its----
Senator Thompson. What is more dangerous?
Mr. Albright. I think it is more dangerous that exports
will happen out of Russia that the Russian Government will not
even know about and will be directly going to nuclear weapons
programs for that purpose.
And that was the concern in Germany in the 1980's. The
German Government turned a blind eye to many exports. It
supported the Bushehr reactor; it was building the Bushehr
reactor. It was a real problem.
But if you look at the Iraqi case, the real danger was what
was happening under the surface. That was direct aid to the
Iraqi nuclear weapons program that the German Government and
the export control officials were not knowledgeable about and,
because they had such a lousy system, were in no position to
catch.
And I think that I would like to distinguish here between
attempts to get Russia to do the right thing. I mean, we had to
force Germany to do the right thing, and I think they came
along. Russia needs to do the right thing on Bushehr and in
other cases--the Burmese reactor, several examples have been
given.
But at this time, we should not lose sight that Russia's
export control system needs help. And it could very well turn
out that the Iranian or Iraqi nuclear weapons program are going
to be directly benefited by the agents of those countries
working secretly in Russia to acquire the items they need to
make nuclear weapons. And those items will turn out to be much
more significant than some of the direct items that the Russian
Government has approved.
Senator Akaka. Before I defer to Senator Thompson, Mr.
Albright, in Mr. Borman's testimony, he stated that the
Department of Energy has an official in Moscow working with
Minatom to focus on export controls on nuclear technology.
Will this type of coordination and assistance improve some
of the controls and tracking over Minatom sales?
Mr. Albright. Yes, I think it can. I was hoping the
government witnesses would talk more about what they have
accomplished. We tend to see things more at the level of some
of the enterprises or some of the nuclear export control
laboratories in Russia. And what we see is that not enough is
being provided. There are real needs that the United States can
meet.
And I mentioned end-use. It is a serious issue, if you are
trying to do the right thing. You may have a bad attitude and
you may weigh sales over security. But if you are trying to do
the right thing, at least in principle, if you do not have any
idea about end-users, then a buyer comes to you, you are very
unlikely to disapprove that sale.
So there are some basic resource questions that I think
need to be addressed. I do not think the U.S. Government is
doing enough on that. And some of this, I think, is beyond what
Russia can do. I mean, they do not have a history of commercial
relationships with the rest of the world, and a lot of the
people who are getting into this business are seeking to make
money and need to be informed and held accountable.
Senator Akaka. Thank you. Senator Thompson.
Senator Thompson. Thank you, Mr. Chairman. You mentioned
the end-users, and the fact that Russia does not have any
ability to keep up with the end-users. But we do not either, do
we? I mean, are we doing much of a job at all in keeping up
with end-users of some of the dual-use technology that we are
exporting to China, for example?
Yes, Mr. Milhollin?
Mr. Milhollin. Could I respond to that? We could do a lot
better job than we do. We could help our exporters do a lot
better job.
The list I suggested to the Subcommittee is a list of end-
users. If the Commerce Department put that in the Federal
Register, our exporters would know who these people are.
Actually, many of the exporters already know who they are.
They have made a rather cold-blooded decision that they do not
officially know who they are until they are in the Federal
Register. Unfortunately, that is true for some companies--not
for many.
I have spent a lot of time on export controls, talking to
companies. And I have learned that there is a vast difference
among companies. There are companies that will skate right out
on the edge of what's legal and go over it, and other companies
who do not want any problems, and they will be conservative.
I have a friend who defends these companies. He has a case
right now in which a company made $15,000 on an export sale,
and they have already spent $250,000 on lawyers' fees, dealing
with the Federal Government. An intelligent company would want
to know who the bad guys are and would make the decision not to
go down that road, because it is not worth it economically.
But our government, for some reason, is not filling out
that list. And I was kind of hoping you would ask the Commerce
Department that when they were here, ``How come this list has
so few names on it?''
That would be a very easy thing to do. We can do it
overnight, and it should be done. In fact, we had a long list
of Indian and Pakistani end-users that we put on the list after
their tests.
Senator Thompson. But what about when we ship something to
a company that's not a designated company, not on your list,
but then is transferred from the company it is shipped to, to
one of these other companies, and we do not know about it? We
really do not have many people at all on the ground over there
doing any kind of inspections in terms of end use, do we?
Mr. Milhollin. We pick that up through intercepts. We pick
up the transactions through all of the tax dollars that we are
spending on listening to people. That is the only way we pick
those re-transfers up. We pick them up through intercepts or
penetration of a company or on the ground. But it is an
intelligence question. That is our only defense.
Mr. Albright. And one thing, what we do is much better than
what Russia has done.
Mr. Milhollin. Well, we at least want to do it.
Mr. Albright. Yes.
Mr. Milhollin. That's the big difference. We want to do it.
Some of the Chinese do not want to do it.
Senator Thompson. Our much-maligned intelligence
capabilities apparently are able to pick up all these transfers
that are taking place that the Russian Government and Chinese
Government say that they do not know about.
Mr. Milhollin. That is true.
Senator Thompson. We have apparently much better
intelligence than they do.
Mr. Albright. Than they do?
Senator Thompson. I doubt it, in China's case.
Mr. Milhollin. Sir, if I could make another point in
response to a previous question? I think there is an analogy
between Germany in the 1980's and China and Russia today. That
is, Germany in the 1980's, as we have already heard, was a
giant proliferation export problem. They supplied Iraq, they
supplied Iran, they supplied everybody.
What we did finally was humiliate the Kohl Government in
public over its sales to Libya of poison gas equipment, and
that changed the German Government's view of the subject from
the top. And when the view changed from the top, suddenly the
German export control agency hired 100 new full-time
equivalents. They had 1.5 FTEs working on export control before
we went public with the horribles about the exports to Libya.
And so I think the lesson there is that you have to change
the message at the top. And I think that's what Assistant
Secretary Wolf was implying, is that once the guy at the top
decides to send the message out, then it is a question of
implementation. But the first step is to change the message at
the top, which is what happened in Germany. We changed the
attitude at the top.
Senator Thompson. You would think it might have some effect
when we catch the Chinese sending cable systems to help shoot
down our airplanes in the no-fly zone. Doesn't seem to be
working there.
Mr. Spector, on the issue of what the Russian officials
know and when they know it, you seem to think, I hear in your
statement, that not only are some of these export activities
blessed by Russian officials in Moscow, but they have
deliberately manipulated Russian export controls to also permit
these sales.
Mr. Spector. Yes, I think that is true. I think all of us
are familiar with the case of the Tarapur fuel, the fuel for
the Indian nuclear power plant. Here there is a very, very
limited loophole that is permitted under the Nuclear Suppliers
Group basically to deal with an imminent radiological
catastrophe.
The Russians said, ``Well, fuel is something you need to
keep a reactor going, and we think a fuel export is really a
safety export.'' So that was a very deliberate
misinterpretation of the rules.
There is also a pattern here of skirting the MTCR
regulations in the case of some of their cruise missile
exports. The cruise missiles have capabilities that are just a
fraction below, what would be very heavily regulated under the
Missile Technology Control Regime. And it is not just missiles
that are being exported; it is the manufacturing know-how for
the missiles that is going as well.
We have a long history in India of taking that kind of
technology and then upgrading it to obtain greater capability.
Everyone is aware of this.
And I think, Russian officials, when they just fine-tune an
export to be below the threshold, that's not an accident. That
is done on purpose.
Thus I think I would really underscore the point that Gary
Milhollin made about some public shaming of some of the
officials and organizations involved. It was extremely
effective in dealing with Germany's exports to Libya's Rabta
chemical weapons plant, and I cite that episode, in fact, in my
testimony as well.
Senator Thompson. I agree with you. And that is kind of
what I was trying to suggest to our friends from the
administration, that putting a smiley face on all this stuff is
not the kind of message you ought to be giving. Just exactly
the opposite, they ought to be held accountable.
This is a little off-track, I guess, but we mentioned
Germany's history and so forth. How are our European friends
doing nowadays, as far as these issues are concerned? I
mentioned what is going on in terms of the Iraqi sanctions and
that sort of thing. I guess it is a slightly different issue.
But European countries are still exporting some troublesome
dual-use items, are they not, to some troublesome countries?
Mr. Albright. I think it is relative. I think they are
doing much better in places like Germany, Austria, and
Switzerland. And they have implemented pretty effective systems
within companies to try to help catch illicit exports or
discourage illicit exports.
The unfortunate thing is it is always a problem where, if
it is not getting better, it is getting worse. And so I think
vigilance is required, so I would not be surprised if there are
problems in some European----
Senator Thompson. Well, I am not talking really about
things that are slipping through the cracks. I am talking about
policies of countries that seem to, up until recently anyway,
not agree on the nature of the threat.
Mr. Milhollin. I might be able to respond.
Senator Thompson. Mr. Milhollin, what do you think?
Mr. Milhollin. My organization did a study recently of what
Saddam Hussein was able to get. The Iraqis, during the period
of the embargo against Iraq, broke the embargo by going to
Eastern Europe. The inspectors in Iraq went through the
documents there to see where Iraq was getting help. The lion's
share came from Eastern Europe. There was a little bit from
Western Europe but not much.
I think what happened was that the Western Europeans really
got burned as a result of what they sold before the Gulf War.
And so they have been more careful with respect to Iraq.
I am not so sure that is true in other cases. I think the
Germans are still selling a lot to Iran. I do not know the
details, but if you look at the statistics, a lot of controlled
commodities are going out of Germany to Iran, and they are not
making bubble gum.
So I think that is something, if I were a member of a
Senate sommittee that could be briefed with intelligence
information, I would ask that question. I would ask for a
briefing on what Germany is selling to Iran.
Finally, in the case of France, the French have pushed hard
against our holding up of things to Saddam Hussein under the
oil-for-food program. And I think that now that we have a new
regime in effect with looser controls, it would be nice to know
what the French sell between now and a year from now under the
oil-for-food program. I think that is another thing I would ask
to be briefed on, because I suspect that there are a lot of
companies waiting to get well as a result of the smoothed
sanctions on Iraq.
Mr. Albright. Can I add one thing? I think this threat
question on Iraq is a problem with the Europeans. They have
often resisted believing that Iraq could be getting nuclear
weapons any time soon.
I know when some have given their intelligence assessment,
they essentially discount the option that Iraq could obtain
fissile material in Russia and then relatively quickly, within
several months to a year, turn it into a nuclear explosive or a
weapon.
So I do think there is always a need to educate our
European allies about these threats, and I think it is
unfortunately much worse when these discussions happen in
Russia. I think Mr. Wolf mentioned, and I think others, that if
you bring it up in Russia, they say exports that are illegal
are not going to happen. I mean, forget the sanctioned ones.
They say that their system is perfect and, even if violations
do happen, those countries that would get them could not turn
those things into nuclear weapons in any case.
Senator Thompson. Thank you, Mr. Chairman.
Senator Akaka. Thank you.
Mr. Spector, some have suggested offering major financial
incentives to compensate Russia for the economic losses it
would suffer by ending assistance to Iran. Do you believe that
increased aid to offset financial losses could convince Russia
to end all nuclear cooperation with Iran? Could other Russian
interests, such as support for early entry into the World Trade
Organization or debt relief, be used instead of direct
financial assistance?
Mr. Spector. Well, I think one of the challenges that we
have had in dealing with some of the Russian exports is that
they are, in fact, very lucrative, and so we need to find a
financial mechanism for pulling Russia away from this. There
has been discussion of trying to provide compensation and a
couple of these ideas are not bad ones.
One idea that I thought deserved attention was the idea of
permitting Russia to import spent fuel for storage from places
like Taiwan or South Korea and charging a fairly high fee for
this, Russia is hoping to implement this program. We control a
lot of that fuel, and we could authorize these imports, if, in
return, Russia would stop their export activities with Iran.
So there might be a way to create new revenue streams for
Russia to compensate for some of these losses.
But I think there is a second approach we could also take,
which I was recommending today, and that is that, if they
persist in these exports, to deprive them of their ill-gotten
gains by, in effect, increasing their debt requirement. That
is, we would not allow them to roll over some of the sovereign
debt or, perhaps, find other aid programs that might be cut
back in a way that would make them no better off for having
engaged in these activities.
I want to be very careful before suggesting that our
nonproliferation aid programs is trimmed, because some of them
are really crucial to American security. But other areas could
be cut back.
Senator Akaka. Otherwise, Mr. Albright, the Russian export
control regime and entities authorized to implement the regime
have changed several times over the past decade. Do you believe
that it has become more effective through these changes?
Mr. Albright. I think that, given where they started from
in the early 1990's, I think the system is more effective,
although I think what you really have in place is a set of laws
and regulations, but it has not been implemented. I think that
is going to be the difficult challenge, to implement this
system so it becomes effective.
Senator Akaka. Mr. Milhollin, in your testimony, you list
several steps that Congress should take to punish Chinese
entities that continue to export sensitive material. You
suggest barring all American exports to those companies and
extending the duration of the sanctions. Would you suggest the
same steps for sanctioned Russian companies?
Mr. Milhollin. Yes. In my testimony, I did not mean to
limit that to Chinese companies. I think our law should apply
across the board to any company that is caught in an export
control violation. So, yes, I would apply that to Russian
companies, Chinese companies, Indian companies, companies from
any country.
Senator Akaka. Mr. Albright, do you think these measures
would be useful with sanctioned Russian companies?
Mr. Albright. I am not sure how useful they would be if
they were expanded. I do not see that as a way to force Russian
action. There may be no other choice, but I think it is
something that the Bush Administration has to press very hard
on with the Russian Government and make it clear that continued
cooperation with the United States will depend on how they
respond.
I worry a little bit on sanctions. You can sanction NIKIET,
for example. I guess it is still under sanctions. They live
with it. They are mad, but they live with it and continue. It
is sending one good signal, however, which is NIKIET becomes an
example to companies that want to do the right thing to not end
up like NIKIET. But I do not think it is changing the situation
dramatically.
And so I think it has to be dealt with directly between the
U.S. Government and Russia, and then see how Russia performs
and then take stock.
In any case, I think we do need to provide assistance to
the effort to improve the export controls in Russia. And I
would hate to see these things become intertwined to where,
unless Russia performs in a certain way, we cut off the
assistance.
Senator Akaka. I would like to thank all our witnesses for
their time and testimony.
Both Russia and China have pledged their support in the war
on terrorism. However, I am not convinced of their commitment
to nonproliferation.
I am concerned that they still believe that the war on
terrorism and the spread of weapons of mass destruction are not
linked. Granted, it took the events of September 11 to convince
many in this Nation and several of our international allies of
this link.
Do the leaders of Russia and China believe that it is in
their national interests to enable state supporters of
terrorism to development WMD? Do they believe that their
citizens will be immune from a terrorist attack with chemical
weapons or a radiological bomb?
I understand it would be easier to set aside many of these
issues discussed today while we are trying to define new
relationships with former adversaries. But we must raise the
difficult questions. Both Russia and China have established
laws and agencies to implement export control, but do they have
the will to forego a short-term economic gain and enforce their
export control regimes? As Mr. Milhollin suggested in his
testimony, Russia and China may lack the will to enforce their
own laws.
The United States should not have to stand alone in
convincing Russian and Chinese leaders of these dangers.
I agree with Mr. Milhollin's statement that, when we cut
off trade with a company because of an export violation, we
should ask our allies to do the same. Mr. Albright has told us
that many in Russia do not believe that proliferation is
possible or that the consequences are so grave. Then we must do
all we can to convince Russia and China that proliferation is
occurring and that the threat is real.
Gentlemen, we have no further questions at this time.
However, Members of this Subcommittee may submit questions in
writing for any of our witnesses. We would appreciate a timely
response to any questions. The record will remain open for
these questions and for further statements from my colleagues.
I would like to express my appreciation to all the witnesses
for their time and for sharing their insights with us. This
hearing is adjourned.
[Whereupon, at 4:40 p.m., the Committee was adjourned.]
A P P E N D I X
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PREPARED OPENING STATEMENT OF SENATOR COCHRAN
Mr. Chairman, I'm pleased to join you today for this very important
hearing. This Subcommittee has a long history of examining the threat
from the proliferation of weapons of mass destruction and missile
technology and especially the transfers of technology and knowledge
from Russia and China.
In all of our past hearings we received testimony about the
positive steps Russia and China were taking to curb and halt
proliferation from their countries. These steps included bilateral
promises to the United States and Russia and China's commitment to
abide by the international nonproliferation regimes. Despite this,
Russia and China continue to proliferate weapons of mass destruction
and ballistic missile technology in direct contravention of their
political commitments and legal obligations.
The threat from this proliferation and its consequences can clearly
be seen today in South Asia. Pakistan and India are dangerously close
to war. Because of technical assistance from Russia and China, both
countries are armed with ballistic missiles and nuclear weapons.
China has been and continues to be the main supplier of technology
to Pakistan. It is directly responsible for Pakistan's nuclear weapons
and ballistic missile programs. Despite our repeated efforts, we
continue to see troubling transfers and contacts between Pakistan and
China.
Russia is the main supplier of technology to India. Last year,
Russia began transferring nuclear fuel to India, in direct
contravention of its Nuclear Suppliers Group commitments, and Russia
remains a major source of technology for India's ballistic missile
programs.
And South Asia is only one manifestation of the problem. This
proliferation continues elsewhere, and if left unchecked, in 5 or 10
years, transfers of technology from Russia and China will result in
nations like Iran and Iraq gaining nuclear weapons and long-range
ballistic missiles. We must also be concerned about recipient nations,
like Iran, becoming secondary suppliers, something that is already
occurring.
I look forward to hearing from our witnesses and discussing what
actions can be taken to reduce this proliferation.
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