Prepared Statement by Dr. Mitchel B. Wallerstein
I appreciate the invitation to appear before the Senate Armed Services Committee to discuss U.S. export control and non-proliferation policy and the role of the Department of Defense. I served from June 1993 to December 1997 as Deputy Assistant Secretary of Defense for Counterproliferation Policy and Senior Representative for Trade Security Policy. In those dual roles, I had responsibility for the formulation of Defense Department policy on both non-proliferation and counterproliferation--a distinction that I shall return to later in my testimony--as well as supervisory responsibility for the Defense Technology Security Administration, or DTSA. I might also note, Mr. Chairman, that before joining the Department of Defense I served as the deputy executive officer of the National Research Council (NRC), which is the operating arm of the National Academy of Sciences. While at the NRC during the late 1980s, I directed two major studies on national security export controls, which were requested by the Congress.
The Changed Circumstances of U.S. Export Controls
For more than forty years, the United States led a remarkably successful coalition of seventeen countries, under the banner of the Coordinating Committee on Multilateral Export Controls, or CoCom, to deny the former Soviet Union and the other Members of the Warsaw Treaty (and later, the Peoples Republic of China) access to militarily sensitive, dual use technology and munitions items. This coalition of like-minded states succeeded largely for two reasons: first, because the military threat posed by the Warsaw Pact was real; and second, because the CoCom states determined that, since they were unwilling to match the fielded troop and weapons strength of the Warsaw Treaty allies, they could only succeed 'in maintaining strategic parity through a technology ``force multiplier'' strategy. This strategy was highly successful in maintaining the peace in central Europe until the end of the Cold War, but it required that the CoCom states work together to deny the former Soviet Union and its allies access to computers and other advanced technology that would permit them to counter the military advantages enjoyed by the NATO alliance.
This ``technology denial''. approach succeeded extremely well until.the late 1970s, when for the first time high technology 'industry began to incorporate technology into commercial products at a rate faster than the same or similar technology was being incorporated into military systems. Over the ensuing period (i.e., up through the end of the Cold War), as the pressure to export continued to grow, the basic CoCom consensus was increasingly called into question. Indeed, had it not been for the Soviet invasion of Afghanistan and the declaration of marshal law in Poland, it is conceivable that CoCom might well have ended sooner.
In any case, with the breakup of the Soviet Union and the formal demise of the Warsaw Pact, the principal raison d'eAE3tre for CoCom ceased to exist. Moreover, by the beginning of the 1990s, much else had changed as well. Trade in high technology goods had expanded enormously, and many items, such as personal computers and micro chips, were available worldwide in such large quantities that they had, in effect, become commodities--and were essentially beyond control. And export-led growth had become a central feature of economic policy in the United States and most other industrialized countries. All of these factors--the end of the Cold War, the world-wide diffusion of high technology goods, and growing pressure to export--as well as growing indigenous technological expertise in many developing countries, including states of proliferation concern, confronted policymakers at the start of the Clinton Administration.
The Administration's Approach to Non-Proliferation and Export Controls
As the Clinton Administration took office, policymakers--particularly in the Department of Defense--were sobered by the lessons of the Gulf War. Although U.S. forces had performed brilliantly, it became clear in retrospect that the Gulf War Coalition had dodged a bullet, both literally and figuratively. From the revelations resulting from the UNSCOM and IAEA inspections, and information provided by two Iraqi defectors (who later paid with their lives), it became clear that Iraq had successfully evaded the provisions of virtually every extant nonproliferation regime. Iraq had succeeded in testing and weaponizing both chemical and biological weapons, improving the range of its Scud missiles and undertaking a covert, nuclear weapons development program. U.S. and coalition forces, meanwhile, lacked sufficient protective gear, sensors and other counter-NBC equipment. In retrospect, it may have only been the warnings of ``overwhelming and devastating consequences,'' issued by then-Secretary of State Baker and then British Prime Minister Thatcher, that may have dissuaded Saddam Hussein from employing the chemical and biological weapons which the Iraqis had forward deployed before the start of Desert Storm.
The Administration's response to these lessons was to pursue a two track approach: on the one hand, seek to prevent proliferation wherever possible through bilateral and multilateral diplomacy; and on the other hand be prepared to deter and defend against states possessing nuclear, chemical and biological weapons and missile delivery systems through improved defense planning and procurement of improved protective equipment. The Administration has enjoyed considerable success in both tracks.
In the domain of non-proliferation diplomacy, there have been a number of accomplishments during the last six years in both the multilateral and bilateral spheres. With respect to the former, these include: (1) the indefinite, unconditional extension of the Nuclear Non-Proliferation Treaty, (2) ratification and entry into force of the Chemical Weapons Convention, (3) signing of the Comprehensive Test Ban Treaty, and (4) strengthening of the Missile Technology Control Regime and the Biological and Toxins Weapons Convention. The Administration's bilateral, non-proliferation successes have included: (1) removal of weapons grade fissile material from Kazahkstan, (2) negotiation of the Agreed Framework with North Korea which stopped work on the DPRK's nuclear weapons program, and (3) bringing Russia and Ukraine into the MTCR.
The most sobering lesson of the experience with Iraq is that any country with sufficient economic resources and political will and even modest technological capabilities can, if it is sufficiently determined, obtain weapons of mass destruction and delivery systems. Thus, despite the successes of nonproliferation diplomacy over the past thirty-five years, it is accurate to state that we now live in a proliferated world. This realization led then-Secretary of Defense Aspin in 1993 to establish the Defense Counterproliferation Initiative. The purpose of this new policy and programmatic approach was to focus the attention of civilian and military defense planners on a range of new requirements for the development of new doctrine, equipment and training so that U.S. forces--and those of our friends and allies--can achieve their political and military objectives, even if threatened or actually attacked with WNM. The underlying objective of counterproliferation is to convince proliferant states that the political and military advantages they seek to attain from the acquisition of WMD will not be realized, due to the improved preparedness of U.S. forces, and that it is therefore not worth the economic cost or the security risk to attempt to do so.
Within the context of this two track approach to combating proliferation, all agencies of the executive branch endorsed the continuing importance of export controls as a means of slowing--and in some cases, still denying--access by proliferant states to sensitive, dual use technology and technical data. Given the changed economic and technological realities of the 1990s, however, all recognized that, to maintain their effectiveness, control procedures needed to be streamlined and control thresholds updated. It should be underscored that all elements of the Department of Defense, both military and civilian, fully supported these modernization and administrative reform efforts. Indeed, DOD moved from its traditional ``just say no'' posture to a new, more constructive position, utilizing its preeminent technical expertise to take a leadership role in reconceptualizing export control approaches and redefining control parameters.
Export Control Reforms
The administration developed a three-prong strategy to reform the export control system, which included: (1) eliminating unnecessary and effective controls; (2) streamlining the licensing process to make it not only more efficient, but also more effective; and (3) strengthening international cooperation, especially in multilateral regimes. All agencies--the Departments of Defense, State, Energy, Commerce, the Arms Control and Disarmament Agency (ACDA), as well as representatives of the intelligence community--participated in the NSC-led interagency working group to develop the policy Framework and specific proposals for reform of export controls. The initiatives were implemented primarily through the interagency process reviewing export control parameters for specific items, and as part of the Administration's 1994 proposed legislation to reauthorize the Export Administration Act
The first objective--to eliminate ineffective and outdated export controls--was necessitated by post-Cold War realities, and the fact that technology had advanced significantly in some important areas. To enhance the effectiveness of controls, the administration sought to focus controls on those items truly of a proliferation concern. By trying to control too much and casting the net too broadly, including goods and technology widely available from other countries, valuable resources were wasted and limited control efforts diffused. The strategy embraced by agencies was, therefore, to focus controls on narrowly proscribed proliferation activities or items required for weapons systems. By tailoring controls to particular proliferation risks and activities of greatest concern, the U.S. also increased the chances that the controls would be multilateralized--an important precondition for achieving non-proliferation goals.
Computer Export Controls
An example of the change of export control parameters necessitated by rapid technological developments is in the area of high performance computers. When the Administration took office, the control thresholds applicable to most computer exports was 12.5 MTOPS (millions of theoretical operations per second)--orders of magnitude less than most current desktop PCs found in American homes. The threshold had remained the same for several years, even though computers of greater power were available in local computer stores both here and abroad. To bring export controls into line with new developments in computer technology and the changing nature of our security threats, an interagency working group conducted a review of computer export controls. As a result, in late 1993, the threshold for most computer exports was changed to 500 MTOPS.
Recognizing that computer technology would continue to advance, the Administration initiated an even more comprehensive review of computer control levels in 1995. The Defense Department brought its considerable technical and security expertise to bear in leading the review of the National security and proliferation applications of high performance computers, and additional studies were undertaken to understand the rapid advance of computing capability abroad. The exhaustive and unprecedented review resulted in the Defense Department recommendation for a new policy framework and revised thresholds for computer export controls. The requirement for licenses was eliminated for most allied countries. For a number of other countries in South America and Central and Eastern Europe, licenses would be required only for computers of 10,000 MTOPS or greater. For other countries such as the Middle East, China, and Russia, computers exceeding 2,000 MTOPS would require a license if intended for military or proliferation end-uses, while exports of computers up to 7,000 MTOPS to civilian customers would not need a license.
I use high performance computers as an example of the challenges facing policymakers today. While we may want to control a broad range of goods, this is simply not realistic given the global spread (and speed) of technology diffusion and the rate of commercial technology obsolescence. The key objective, therefore, has been to target our export control resources on those areas that have significant national security or proliferation applications and that are not so widely available as to render controls ineffective. Trying to regulate the export of computers that are increasingly available in markets abroad is a recipe for an ineffective nonproliferation policy. It imposes serious regulatory requirements without improving our national security and diverts resources from the pursuit of other important nonproliferation objectives, especially in an era of down-sized government. The Administration's computer policy is a good example of a policy process and decision that has enhanced the effectiveness of our export control system, while at the same time protecting our national security.
Streamlining the Licensing Process
The second objective of the Administration's export control agenda was to streamline the licensing process. At times, the process was unnecessarily bureaucratic, costly and confusing, thereby burdening business without advancing nonproliferation or security objectives. Some cases are legendary for the gridlock associated with the bureaucracy's inability to provide answers in a timely manner. This situation was further exacerbated in the early 1990's as the multilateral consensus in CoCom eroded and allied countries eased export controls. In response, Congress repeatedly passed proposals eliminating controls, reducing the timeframe for licensing decisions, and limiting interagency referral of cases.
As part of the Administration's 1994 Export Administration Act proposal, significant steps were initiated for procedural reforms of the export control process. All agencies worked hard to address the difficult but important issues to improve the responsiveness, effectiveness and efficiency of the dual-use licensing system.
The single most important element of the Administration's approach, which represents a marked departure from the past, was to allow all relevant agencies (Defense, State, Energy, and ACDA) to review any dual-use license application. This was a critical development because it effectively ended the long-standing and destructive inter- agency battles over who got to see what, and it ensured that all agencies would bring their expertise--and their voices--to bear in addressing complicated proliferation and technology transfer questions. In addition, another change under the Clinton Administration was to routinely send dual-use applications to CIA's Nonproliferation Center for end-user reviews.
With broader review rights, however, also came responsibilities. The ``deal'' included strict timeframes for agencies to review license applications--no more than 90 days for decisions to be completed or referred to the President for resolution. This timeframe compares with the previous directive of 120 days, representing a reduction of 25 percent. We in the Defense Department were particularly concerned that all of the various elements that review licenses, including the services, the labs, and NSA, have adequate time to undertake their technical reviews. After giving the matter careful consideration, we concluded that the 90 day process, which included a full 30 days review by referral agencies, was sufficient for us to do our job. (This contrasts, by the way, with the 30-day timeframe in legislation pending at the time, and which subsequently passed the Congress. Defense strenuously objected to 30 days as being an unacceptably short amount of time in which to thoroughly review complicated applications.)
To establish accountability, a ``default to decision'' interagency process was established, which includes rules for interagency review and procedures for dispute resolution. Under this process, all agencies are afforded the opportunity to object to any proposed export and to escalate cases from the working level--all the way to the President if an agency considers it sufficiently important. I have heard some speculation that the five days provided for escalation between the working level Operating Committee and the Assistant Secretary-level Advisory Committee on Export Policy (ACEP) is insufficient. During my tenure at Defense, we did not find the time constraints to be a problem.
Although the Export Administration Act was not reauthorized in 1995, the Administration implemented the procedural reforms via executive order. Under EO 12981, each agency determines which license applications they wish to review, and has 30 days to review licenses once received from Commerce. From a Defense perspective, disputes on individual cases are generally handled in a satisfactory manner under the new procedure, often resulting in conditions being placed on licenses to provide greater assurances against the unauthorized transfer of technology.
The current system allows for the full range of national security, foreign policy, nonproliferation and commercial perspectives to be brought to bear in making decisions on dual-use exports. To my knowledge, all agencies have been satisfied that the current system protects their equities. It allows sufficient time to review licenses, including the ability to stop the clock or suspend license processing to obtain additional information when needed. In short, the changes implemented by the Clinton Administration have brought needed discipline and accountability to help make it a time-limited, transparent and inclusive process. As a result of these changes, I believe the export control process is stronger today and better able to address complicated technology transfer issues.
With regard to the third element of our export control agenda, significant efforts have been devoted over the past five years to strengthening the MTCR, Nuclear Suppliers Group, and Australia Group supplier regimes. Export controls remain a critical element of all these regimes, and cooperation has been enhanced and membership expended. The primary focus of the Administration's multilateral efforts has been to establish a successor to CoCom. As I indicated earlier, when the Soviet Union ceased to exist, CoCom's rationale disappeared and our closest allies called for an end to CoCom without any successor or continuation of CoCom controls. The Clinton Administration made a major diplomatic effort to create a successor organization, and it eventually succeeded in establishing the Wassenaar Arrangement, which adapts CoCom's philosophy to current threats to world peace posed by terrorist and/or proliferant states and destabilizing buildups of conventional weapons. The Wassenaar Arrangement, which was founded by 33 countries, including Russia and most other former Warsaw Treaty states as well as such diverse countries as South Korea and Argentina, controls sensitive dual use technology and conventional arms to countries of proliferation concern.
Conclusions and Future Approaches to Non-proliferation
Because the Clinton Administration was faced with dramatically changed circumstances as it took office, it simply was not an option to maintain ``business as usual'' with respect to export controls. The alternative was to reform the system or accept the continued deterioration in the viability and effectiveness of export controls as an instrument to combat undesirable technology transfer. Thus, with significant leadership from the Department of Defense, decisions on reform were taken, but 'in such a way as to balance technological and economic pressures with continuing national security requirements.
As Congress considers the future of efforts to combat proliferation, there are at least six important lessons to be draw from this experience:
1. While there have been a few, well publicized cases of diversion or improper behavior by companies, the existing policies and procedures have worked well in the overwhelming majority (98 percent) of cases. It is important that anomalous or unlawful behavior not be allowed to skew balanced policy making. Policy cannot and should not be made by case exception, especially cases where unlawful activity is involved.
2. The Cold War is OVER. We no longer have a monolithic adversary, and the security risks are qualitatively different. We must guard against the tendency to seek new enemies to substitute for old Cold War adversaries.
3. At the same time, the dangers posed by the proliferation of nuclear, biological and chemical weapons, their means of delivery and other advanced conventional weapons are real--and they are growing. In this regard, we must do everything possible to enhance the effectiveness of non-proliferation regimes while accelerating efforts to pursue counterproliferation defense planning.
4. With the end of the Cold War, much of the international consensus on the need for continued export controls has been lost. We must continue to work assiduously to build a NEW consensus on the need to prevent/slow transfer of sensitive technologies to countries of proliferation concern. In this regard, the Wassenaar Arrangement can and should be strengthened significantly, just as many of the other non-proliferation regimes have been further development after their establishment.
5. While the U.S. is the world's only remaining superpower, we too are increasingly dependent on foreign trade, particularly in high technology sectors. And healthy high technology sectors are, in turn, essential to the maintenance of the defense industrial base which has produced the ``revolution in military affairs'' of which we are now the beneficiary. We must remain in vigilant, however, because the enormous advantages we enjoy as a result of our technological preeminence can be seriously damaged by rigid, doctrinaire approaches an&or by over-reaction to events of the day that are taken out of context.
6. In the final analysis, it is essential that U.S. export and non-proliferation policies continue to balance the national interest between the need for economic growth and trade, on the one hand, and the need to protect militarily sensitive technology and maintain U.S. defense strength on the other. In this new era, however, we must be very clear that BOTH are important elements of U.S. national security.