News Fighting Proliferation

Chapter 7

US Commercial Satellite
Export Control Policy:
A Debate

Brian Dailey and Edward McGaffigan


Brian Dailey: It is a little disconcerting to hear so many people argue that the policy decision-making process has moved too quickly. Those of us who have been deeply involved in this process know that the presidential decision of 10 March 1994 is the result of many years of review and debate. A US government commercial remote-sensing policy was codified as far back as 1984 with the enactment by Congress of the Land Remote-Sensing Commercialization Act. This legislation opened up commercial remote sensing and was followed by several policy initiatives of the Reagan administration and, more recently, by revisions to the 1984 act in the Land Remote-Sensing Policy Act of 1992. So, to assert that the issues have not been extensively debated is simply incorrect. In short, the recent policy decision of the Clinton administration was not undertaken capriciously, as some have suggested.

I would also like to comment on an assertion to the effect that no commercial market exists for remote sensing. Several fairly sophisticated companies have extensively analyzed the market potential and have concluded that a significant market does indeed exist within a defined spectrum of image resolution.

What does today’s marketplace look like? There has long been a significant market among city planners, mapmakers, scientists, and oil and mining companies, among others, for high-resolution, highly detailed images of farms, roads, rivers, houses, and industrial areas. Until now, this demand has been met mostly by film-based images derived from airplane-mounted cameras, pieced together to form a corrected wide-area photo—a time-consuming, costly, and technically primitive process. Today the aerial photography market generates some $1.7 billion annually. When these images are fused with other data—street grids, property lines, utility distribution grids, or traffic patterns, for example—the result is a sophisticated and powerful information tool called a geographic information system (GIS), one of the new tools of the information revolution. This highly profitable market currently generates an additional $3–4 billion annually, but it is seriously constrained by its reliance on aerial imagery. When better quality, cheaper, digital, satellite-derived imagery that is more quickly adapted to GIS applications becomes available, this market will explode. Remote sensing will then begin to evolve into a dynamic element in the ongoing global information revolution.

In 1993 the Clinton administration took on the challenge of reassessing this dynamic issue in the post-cold-war environment and, in many ways, made the most significant contribution to commercialization of any administration to date. As noted earlier, much groundwork had already been laid, going back at least to 1984. In 1992, in the aftermath of the sweeping geopolitical changes that had taken place in the early nineties, the House Science Committee drafted the Land Remote-Sensing Policy Act of 1992. Congress had begun to focus on what it could do to promote commercial remote sensing and what kind of national security guidelines could be put in place to ensure that US national security interests would not be undermined.

Having served in the White House as the focal point for coordinating the administration’s policy on this bill and having worked extensively with Congress on this issue, I know that it was well supported by the defense community, the intelligence community, the State Department, the Commerce Department, and many other US government agencies. The issue was not so much about the degree of image resolution but about whether and how to control the data during times of national crisis or war. In the end, with the administration’s support, Congress passed the Land Remote-Sensing Policy Act of 1992—PL 102-555—which included a framework for assessing and addressing national security concerns.

Meanwhile, as defense contractors began to feel the effects of rapidly declining defense budgets, they started to search for opportunities to responsibly commercialize defense technologies and diversify their customer base. They began to focus on remote sensing—one of the areas in which Department of Defense (DOD) downsizing was beginning to have serious implications for the industrial base. Of increasing concern to the US government was the fact that many of the critical skills that had been amassed to design and build these systems over the years were beginning to atrophy. Unless industry was allowed to commercialize in this area, the skill base might simply disappear. Industry began to see business opportunities in the high-image-resolution area—as high as one meter—and asked the government to review its policy in this arena.

In 1993, Congress, working with industry and the administration, also undertook yet another examination of US policy in this area. It held hearings, beginning with one by the Senate Select Committee on Intelligence on 20 June 1993. The committee vetted the national security issues very carefully. Among other things, it took into account Russia’s announcement that it was commercially marketing two-to-three-meter-resolution imagery products and had the capability of offering .75-meter products, which it intended to market sometime in the future. The committee was also aware that the French were planning to deploy a five-meter system—SPOT 5—very soon and that other countries—Israel, South Africa, China, and India among them—were also working on high-resolution satellite systems. At that point, it was incumbent upon the US government to consider that if it tied the hands of US industry and thereby allowed these countries to dominate this new commercial space market, serious harm could be done to both US national security and economic interests.

The question before the committee was not whether high-resolution imagery would become available on the open market—that was a foregone conclusion. The real question was whether US industry would be allowed to dominate that market and, in the process, preserve this very important national security industrial base. The overwhelming determination, made on a bipartisan basis, was to take steps to encourage US industry to enter this market and to encourage the administration to help pave the way.

Subsequently, the Clinton administration moved very rapidly on this issue and initiated a very comprehensive interagency policy review. Participating were the Commerce Department, DOD, and the intelligence community, among others, who spent considerable time consulting with Congress and with the civil space community, looking at all issues associated with the worldwide availability of high-resolution satellite imagery products. The Joint Chiefs of Staff (JCS) and the intelligence community were satisfied that national security concerns could be adequately protected with the policy that was ultimately drafted. President Clinton approved that policy, which was issued as a Presidential Decision Directive (PDD-23) that prescribed guidelines for licensing US companies interested in operating commercial remote-sensing systems and marketing high-resolution imagery worldwide.

I think this background is critical to people in government or the private sector who are concerned with US industry’s ability to compete in the future with diversified products of a formerly classified nature. The government has encouraged US defense industry to commercialize and has designed funding initiatives to help this industry make the transition. Industry has accepted that challenge in the remote-sensing arena with the encouragement of both Congress and the Clinton administration and, subsequent to the approval of PDD-23, has begun investing its own cash—its own bottom-line profits—in commercial remote-sensing ventures. These companies will have the opportunity to leverage the application of new technologies to integrate vertically into the geographic information-system market and, in so doing, to dominate this high-technology arena. Congress understood this, and the Clinton administration gave its approval and continues to stand by industry on this issue.

If, on the other hand, the administration had imposed restrictions that did not convince potential international customers they would be guaranteed access to the imagery except in cases of extreme danger to national security, I am certain that few international customers would remain interested. They would choose, instead, to go to a non-US supplier, knowing they would encounter no restrictions or limitations—even in times of crisis or war. Because the administration understood this well, it carefully crafted a policy that protects US national security without having a chilling effect on international participation.

So, contrary to what some people have suggested, a very careful decision-making process did in fact exist. The executive branch, Congress, and industry reached what I think is a very satisfactory modus vivendi. Consequently, I am a little concerned about an attempt to rewrite history. One assertion I’m hearing is that there are no interested investors in any non-US systems and that this is evidence for the absence of a commercial remote market. Part of the reason investors are unwilling to put money in foreign systems is that they are aware of the immense technical challenge of building a one-meter system. But the argument I’m hearing that is of most concern is that going forward with high-resolution commercial systems will undermine US arms control interests. The fact of the matter is that by the turn of the century, all nations will have access to high-resolution data. The real issue is whether the US gets to the market first and gains control of it. If that happens, we can count on far less threat to the US than if other nations control the market.

Finally, on the issues of a multilateral mechanism for overseeing remote-sensing activity—similar to a Missile Technology Control Regime (MTCR) in this area—I would simply ask, Why? Do we have an MTCR type of concern in the telecommunications arena? Can’t terrorists—don’t terrorists—use the telecommunications network to plan and conduct their operations, not only for voice but for data and facsimile transmissions? What’s going to happen as the remote-sensing market moves from 30 meters to 10 meters to three meters to one meter? The history of the evolution of remote sensing suggests that countries will come to see this imagery, like telecommunications, as something of a public utility. The demand for data will increase dramatically when people see what an effective, money-saving tool it is in laying utility and cable lines, managing traffic, planning cities, and recovering oil and gas. Combined with infrared and multispectral technology, this market is unlimited in its application at this resolution value. For example, we do not know what the size of the three-to-four-meter infrared market will be since it has not yet been tested or exploited. But many industries—oil and mineral mining in particular—are keenly interested in its potential for cutting the cost of exploration.

If the “arms control process” is invoked in this arena, it will—if anything—end up harming US interests more than helping them. In the first place, proliferation of high-resolution data will probably result in more—not less—regional stability. Its general availability will result in greater transparency and will promote better decision making, thereby attenuating possible hostilities that might arise out of ignorance. But more importantly, people who want to slow down US industry to gain their own advantage will manipulate the process, and they will disregard those same issues once they have achieved their objectives.

The opportunity exists now for the US to dominate the commercial remote-sensing market. We should not jeopardize efforts now under way by US industry and hundreds of millions of dollars invested by several different companies. Industry is acting prudently and moving forward responsibly with the support of the US government. The defense industry has always respected the national security interests of this country and will not risk compromising those interests. Defense industry should be allowed to continue to move forward and diversify at a time when diversification is badly needed.

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Edward McGaffigan: I don’t think that the commercial remote-sensing policy in place at the moment will survive case-by-case decision making as the policy evolves and real cases come up. Before proceeding, I believe that an observation about policy stability is appropriate. In February 1995, the House voted to terminate the Technology Reinvestment Project (TRP), which had bipartisan origins in 1992 in the task forces of Sen Warren Rudman (R-N.H.) and Sen David Pryor (D-Ark.), as well as support by a broad bipartisan consensus. The vote in the Senate in favor of the program had been something like 95–2. The situation in the House had been similar. Unfortunately, that consensus has now evaporated for reasons I don’t have space to list. But those of us who care about that program are trying to save it in the Senate as the budget process proceeds.

Another area of consensus in 1992 was that Kirtland Air Force Base in Albuquerque, New Mexico, was an essential facility of the Air Force—that it was a “sunrise” as opposed to a “sunset” base, where new tenants would be consolidated. Unfortunately, that no longer held true in February 1995, when Secretary of Defense William Perry placed Kirtland on the DOD base closure list. Those of us in the New Mexico congressional delegation had to expend great energy to convince the secretary and the Base Realignment and Closure Commission that doing so was a mistake before finally succeeding in June 1995. For people in the private sector who get discouraged by the fact that the government does have a tendency to revisit various policies, I can only point out that high-resolution imaging policy is by no means the only area so affected.

The Eyeglass-Israel case was Sen Jeff Bingaman’s (D-N.Mex.) introduction to this policy area.1 Sixty-four senators obviously did not regard this whole area as settled policy. In the letter that they sent to Secretary of Commerce Ronald H. Brown in 1994, the senators pointed out that US government trade policy should not contribute to an intelligence race by providing sophisticated imagery that had not been previously available and that might not be necessary to civil applications. They thought it obvious that this was an international problem requiring international, cooperative, governmental solutions.

This letter surprised many people, who assumed that the policy had consensus support back in 1992. In fact, only a very small group constituted that consensus. Brian Dailey mentioned that he was involved with the executive branch at the time and that the policy was coordinated with everybody there. But I am certain that the Armed Services Committees and the Foreign Relations Committees of the two houses were not included. In fact, as this bill was hot-lined in October 1992,2 I remember asking someone, “What is this all about?” He said, “Oh, it’s just the LANDSAT bill. Don’t worry about it. It’s just another attempt to figure out how to run the LANDSAT program in an effective way.” None of the Armed Services Committees’ staff or members realized that the bill was making fundamental changes in the way we license high-resolution imaging satellites—spy satellites. So this policy was not a considered judgment of Congress—in contrast to TRP. There was no floor debate. There was no recorded vote. This was a hot-lined bill passed in the waning hours of Congress, when people like my boss, Senator Bingaman, and I were diverted on other issues.

The 1992 bill is a classic case of a legislative process in which a limited number of people in Congress pushed their agenda in partnership with allies in the executive branch and industry. The best way to push an agenda and get it all the way through the legislative process is to avoid a big debate that brings in other equities. Those equities—national security and foreign policy—may have been represented in the executive branch, but to some degree the 1984 law that Brian referred to may have prejudiced the executive branch process in the Bush administration. Although the 1984 bill effectively precluded commercial remote sensing (precisely the reason industry wanted the new law), it put the National Oceanic and Atmospheric Administration (NOAA) in charge of licensing in this area.

I don’t know much about the theory of government—I’m a physicist, after all—but one of the things we generally try to avoid is having technology regulated by agencies that are boosters of that technology. We don’t do that with health technologies; we don’t do it any more with nuclear power technologies; and we don’t do it with communications technologies. It’s just a matter of good public policy not to have the booster regulate the industry it is trying to promote. Without a doubt, NOAA is a big promoter of the “commercial” market for this technology. For at least the last decade, NOAA has been predicting that a $10 billion annual market for satellite imagery will be achieved within a decade. Reality has been somewhat short of NOAA’s predictions.

NOAA’s approach is that proliferation of high-resolution remote sensing is inevitable—that the only solution is for us to get way out in front of everyone else and take advantage of our multibillion-dollar investment in spy satellites to dominate the market. I understand this attitude: it’s technically sweet, and the US firms are ahead. But a fundamental question remains: Is the proliferation of this technology of enough concern to our military and allies that we should potentially treat it as we do uranium-enrichment technology or plutonium-reprocessing technology or missile technology? That is, should we seek ways to at least impede its transfer and seek international regimes that would set rules of the road for how it will proliferate?

Thinking about this as a proliferation or security problem that might lend itself to a suppliers’ arrangement such as we have in the nuclear, chemical, and missile arenas is very different from how Brian thinks about it. Dr Vipin Gupta of Lawrence Livermore National Laboratory has written a balanced, lucid analysis of this issue as a proliferation problem. Like Senator Bingaman, Dr Gupta is not inalterably opposed to high-resolution imaging. In fact, the final sentence in his paper says that in the areas of verification, peacekeeping, and other military applications, such imaging has great potential to be a useful technology—but only if an international regime regulates it properly.3

Both Senator Bingaman and Dr Gupta have called for negotiation of a stable international regime for this technology. The fact of the matter is that no one in the executive branch appears to have made any effort to think about what this international regime might look like. Everybody publicly takes the point of view that negotiating an international regime from a nonproliferation or national security perspective would only slow us down and allow the French to catch up. Unfortunately, people in the executive branch who work on other proliferation problems appear not to have been consulted as this policy was developed. Still, it has become clear to me that Dr Gupta and Senator Bingaman have allies in the national security apparatus who are concerned that the current policy is not balanced.

Further, if the main customer for this technology is not the commercial sector but foreign military and intelligence services, it is wrong to assume that Adam Smith economics will prevail and that our comparative advantage will drive everyone else out of the market. I believe that only a very limited number of potential suppliers of high-resolution imagery will be around for some time to come. It is utterly defeatist to wave around long lists of countries that might get into this market. In fact, the true list is not long at all—just France, Israel, and Russia at the moment and perhaps Japan and India in the longer run. All of these governments have security limitations on their high- resolution imagery satellites. Helios and Ofeq are military satellites, for example. We can deal with any other suppliers as they come along. I would point out that in the case of the Nuclear Suppliers’ Group or the MTCR, we did not give up in the face of far longer supplier lists. We worked out the first things first in a small group, and then we figured out how to bring others in. We should do the same here.

I think it’s pretty clear that the primary market for one-meter imagery is not urban planners or pipeline builders or telephone companies trying to figure out where to put their lines. If that were the market, it would be hard to understand the heart palpitations in industry and at the Commerce Department about greater control over the shutters of our commercial satellites for national security reasons. The people who are going to have problems with a greater degree of shutter control than we apparently have at the moment are the foreign military and intelligence services to whom our industry will be marketing.

The new generation of imagery satellites is fundamentally different from the current LANDSAT and SPOT generation in their utility for intelligence and national security applications. This fact has to be of concern to our military as it prepares for future Desert Storms in which—thanks to the lack of any international regime—it may no longer enjoy the information dominance it had in the Gulf War.

In chapter 5 of this book, Steve Berner points out that the conduct of the Persian Gulf War would have been very different had the Iraqis had access to this technology. There will be no big left hook next time if this technology has proliferated without controls and we don’t have means of dealing with it.

The issue fairly begs for a suppliers’ group solution. The proliferation of commercial, high-resolution imaging satellites is as much a national security issue as the proliferation of advanced weaponry, as Dr Gupta points out.4 We have regimes in place to deal with other advanced weaponry and reprocessing and enrichment technology, as well as ballistic and cruise missiles. Such suppliers’ groups work best when the number of suppliers is small and the entry costs are large—criteria that would seem to describe the current situation involving high-resolution imagery. At the moment, the rules of the road would involve only us, the Russians, the French, and the Israelis, with the prospect for new suppliers being very limited.

But just in case my solution of seeking a suppliers’ regime to ensure that our deployed forces are not put at risk by foreign imagery suppliers is not taken up or doesn’t work, I’d like to raise another insurance policy that I think is necessary—an antisatellite (ASAT) capability of some sort for this country. If a future General Schwarzkopf needs to achieve surprise to save American lives, he’ll need the capability to deal with foreign high-resolution imagery satellites that might be available to a future Saddam Hussein. In a sense, it’s a tragedy, given all the money spent on the Strategic Defense Initiative (SDI), that we don’t have a variety of capabilities available to our military commanders today. We should be able to force foreign satellites that might be cooperating with our foes to close their shutters when they are over our deployed forces. In extremis, we should be able to destroy those satellites.

A suppliers’ regime that tries to protect American deployed forces and ensures dominant battlefield awareness for our commanders—as we had in Operation Desert Storm—is well within the art of the possible for our negotiators. The harder case—the one first brought forth by the Eyeglass-Israel issue—is determining how a suppliers’ regime would deal with regional security concerns. Dr Gupta makes suggestions for this at great length in his paper.5

I don’t see an easy solution, but—like Dr Gupta—I’m convinced the problem will surely not be solved by an ad hoc US national policy that allows commercial remote-sensing firms in this country to forge ahead in the absence of any agreed international suppliers’ guidelines that address the security aspects of the competition. The Israeli case will be the first of many. Nations involved in regional hot spots will not want their defenses laid bare to adversaries. Do we want North Korea to be able to obtain imagery of South Korea and our forces there? How about Iraq obtaining imagery of our forces in Kuwait and Turkey? Is there to be no limit on Iraq’s, Iran’s, or Libya’s ability to utilize imagery in peacetime to prepare for future conflict?

I can easily imagine many other cases that will keep the secretary of state literally a prisoner in his office as he receives demarche after demarche from foreign ambassadors angry at the military potential bestowed on an adversary by one of our commercial firms. I am not even sure that our current policy will prevent clearly terrorist states—such as North Korea, Iran, Iraq, or Libya—from gaining access to our own high-resolution imagery to use against us and our allies. I guess it will be worked out case by case. The licenses issued so far by NOAA don’t deal with real-world cases. They simply protect everybody’s ability to argue about shutter control once real problems arise. This is procedure substituting for policy.

These are the sorts of issues that Dr Gupta discusses. He comes to the conclusion that a different sort of international suppliers’ regime, not one left purely to market forces, could produce national and international security benefits by facilitating regional arms control, strengthening international cooperation, unobtrusively assessing threats, and supporting peacekeeping.6 No one is trying to broker such a regime today, and that is very unfortunate. But I would predict with high confidence that that day will come, that the ultimate regime will not allow unfettered competition in the marketplace, and that there will be a much higher degree of shutter control on commercial high-resolution imagery satellites than Brian might like.

Notes

1. The American firm Eyeglass (now called Orbimage) proposed in late 1994 to enter into an arrangement with a Saudi Arabian firm to place a ground station in Riyadh. The station would be capable of receiving images of the entire Middle East—including Israel—from the Eyeglass satellites. Israel strongly objected to this arrangement on security grounds. In May 1995 Eyeglass “voluntarily” promised to ensure that Israel would not be imaged by its satellites. On that basis, the arrangement was approved by the Commerce Department.

2. “Hot-lining” is a procedure by which all Senate offices are contacted to clear noncontroversial bills, which are then passed by voice vote.

3. Dr Vipin Gupta, New Satellite Images for Sale: The Opportunities and Risks Ahead, UCRL-ID-118140, CSTS-47-94 (Livermore, Calif.: Lawrence Livermore National Laboratory, 28 September 1994), 34.

4. Ibid.

5. Ibid., 26–34.

6. Ibid., 34.