pending at the Commerce Department to help this company improve its ability to build high-speed switching and routing equipment, which would be ideal for an air defense network.

In the recent past, the Commerce Department has licensed a series of sensitive items to Huawei Technologies. Huawei was allowed to buy high-performance computers from Digital Equipment Corporation, IBM, and Hewlett Packard, and Sun Microsystems. In addition, Huawei got $500,000 worth of telecommunication equipment from Qualcomm. Other U.S. firms have helped Huawei by setting up joint operations. These include Lucent Technologies, AT&T, Motorola, and IBM.

As a result of all this American assistance, Huawei's sales are projected to reach $5 billion in 2001. This company began as a $1,000 start-up in 1988, so the result is that U.S. technology, some of which is controlled for export but licensed, and other technology going through joint operations, has built out of virtually nothing a Chinese company that now is able to help Iraq improve its air defenses and put the lives of U.S. servicemen and women at risk. These exports no doubt made money for American companies, but at a cost of threatening our pilots.

Huawei, unfortunately, is not an isolated case. There are two others mentioned in my testimony. One is a situation in which the Commerce Department approved exports to a company in China that supplied anti-ship missiles to Iran and was sanctioned for missile proliferation. We, the United States, sold that company computer equipment for simulating wind effects. If you are building anti-ship missiles, a computer to simulate wind effects is quite useful.

Also, only last month, the Washington Times reported that Iran was installing another large JY-14 radar near its border with Afghanistan. This radar is a very aggressive and powerful air defense radar. It was sold to Iran by a Chinese company called China National Electronics Import-Export Corporation. Before that sale occurred, the U.S. Government approved a series of exports to that company that would be very useful for making that very radar. So again, we are facing a situation where our pilots, if we ever get in a fight with Iran, will have to face equipment probably made with our own technology.

The second point I would like to make is that export controls are now being weakened. In response to the attacks on September 11, the U.S. Government dropped export control sanctions on a series of Indian and Pakistani companies. In my testimony, I provided descriptions and photographs of some of the companies that were dropped from the control list.

One of them is Hindustan Aeronautics. It makes major components for India's largest rockets. In my testimony, there is a photograph of nose cones made by that company.

Another company is Godrej and Boyce. It also makes components for India's largest rockets. It makes a rather powerful liquid fuel rocket engine, which is depicted in a photograph in my testimony. A third firm is India's National Aerospace Laboratory. It conducts missile research. In my testimony, I have a picture of a mis

And fourth, there is Walchandnagar Industries. It produces major components for Indian nuclear reactors that are not inspected by the International Atomic Energy Agency. The absence of inspections means that the plutonium that those reactors make is free for use in atomic bombs. This company, too, was dropped from export control sanctions.

So we have this serious situation where we have a terrorist attack on American soil, and in response to that attack, the U.S. Government drops export controls on companies in developing nations that are making weapons of mass destruction. It seems to me that this is a mistake. It is not the right way to respond to a terrorist attack.

Also, I would like to draw the Subcommittee's attention to the problem of export enforcement. It is very rare for a big company that breaks export control laws in the United States to be punished. I have cited two cases.

One involves the company Silicon Graphics. In 1996, it sold highperformance computers without the required export license to one of Russia's leading nuclear weapons laboratories. After the computers arrived, one of Russia's leading nuclear scientists announced that the Russians were going to start doing simulations like we did with computers instead of doing actual tests. This is a case where it is undisputed that the export needed a license. It was made without the license and nothing has happened. It went to a grand jury years ago and has simply disappeared.

More recently, in 1999, the Cox Committee found that Hughes Electronics and Loral Space Communications-I am sure the Subcommittee is familiar with that case-the Cox Committee found that they deliberately acted without the legally required licenses and violated U.S. export control laws. That case has been in a grand jury for nearly 4 years without any results.

Senator AKAKA. Dr. Milhollin, there is a vote that has been in progress. How much more time do you need?

Mr. MILHOLLIN. I need about 1 minute, perhaps 2 minutes. Perhaps I can do it in 1 minute.

Senator AKAKA. Yes. I have questions, but go ahead.

Mr. MILHOLLIN. I think there are things we can do which would be very easy. In my testimony, I have indicated that we could list the dangerous companies abroad that are trying to make weapons of mass destruction. We know who they are. Their names are well known. I have attached to my testimony a list of 50 Chinese companies that could easily be added to the Federal Register list of dangerous buyers. I recommend that be done as soon as possible. That concludes my testimony.

Senator AKAKA. Thank you very much, Dr. Milhollin.

I am so sorry. We have a rash of votes going on, so let me ask this question of Mr. Christoff and GAO. Has GAO ever looked at which items are of greatest concern for WMD? Is it your experience that an industry compliance program, voluntary or obligatory, can work?

Mr. CHRISTOFF. Mr. Chairman, let me just talk to you about what we have done in GAO. I think one of the important areas that

are the national security implications when you try to decontrol an item and balancing it against the market availability.

The work that we did for this full Committee on high-performance computers is a good example in the sense that Executive Branch agencies, I think, do a good job of determining that many of these high-performance computers are available elsewhere, but they do not look at the national security implications. As we said in the past, that is an important balancing act that oftentimes does not occur within the Executive Branch.

Senator AKAKA. Thank you.

Let me ask a final question so I have a few minutes left to get to the floor. Dr. Cupitt, in your written testimony, you made a strong argument for a comprehensive study of the anti-terrorist export control policies of key U.S. allies. Should we make changes in the way our current government agencies charged with dual-use export controls work? Do we need a new agency or new interagency process?

Mr. CUPITT. As you may know, I think S. 149, for instance, was going to set up an Office of Technology Assessment that would have as part of its mandate a requirement to assess the export controls systems of other countries. I think that might be an example of one of the things that might be done.

Even though we spend, I know at our Center, we spend a lot of time assessing other countries' export control systems, we are frequently asked, have you assessed country X, and we have to say, no, and we have to say, no one else has and, at least in a comprehensive or systematic way. And for us, I think, to make good policy decisions and good strategies in terms of building a coalition of partners that would have complementary export control systems, we need to know a lot more than what we currently do.

Related to that, I want to mention that I think Dr. Lewis's point about catch-all systems, one of the successes that we have had in recent years is to promote catch-all as a means of addressing some of the items that may not be listed or may have moved off the list, not only here in the United States but in other countries, and that has been an important step. But even there, we do not know that much about who is implementing the catch-all control policies.

Even very basic data like that, we do not really have a good idea, and I think that would be something that would be very useful. Again, I think that S. 149, setting up that Office of Technology Assessment in the Commerce Department, is an example of one of the ways that this might be achieved, that we might improve our data capabilities.

Senator AKAKA. Dr. Lewis, would you make any comments on the same question?

Mr. LEWIS. The question being, do we need a new export control agency? Was that the question?

Senator AKAKA. Yes, whether we need a new agency or new interagency process.

Mr. LEWIS. One thing that would help, Mr. Chairman, and thank you for the question, is that we could definitely use a new law. The law we have now dates from 1979, and so it is an interesting historical artifact, but it does not work very well and the system of

plicated and ineffective. So that would be one area that I hope the Congress will be able to return to next year.

We have looked in a couple of studies about whether or not there would be a benefit from having an individual agency that was responsible for export controls. I would agree with anyone who said that none of the agencies now do a particularly good job. It is very hard to get consensus on where you should move it. And a new agency may not have the power or the clout of an office that is linked to a cabinet member. So it probably would not hurt to shake up the system, but I am not sure we are ready to identify what the outcome would be.

Senator AKAKA. I have to go, but we have questions for you. We will send the questions to you for your responses. But I want to thank you so much for coming today and appearing as our second panel and for sharing your statements with us. There is no question, what you have said will help us do a better job here in the U.S. Senate. Thank you very much.

The meeting is adjourned.

[Whereupon, at 4:59 p.m., the Subcommittee was adjourned.]

COMBATING PROLIFERATION OF WEAPONS OF MASS DESTRUCTION (WMD) WITH NONPROLIFERATION PROGRAMS: NONPROLIFERATION ASSISTANCE COORDINATION ACT OF 2001

WEDNESDAY, NOVEMBER 14, 2001

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 2:31 p.m., in room SD-342, Dirksen Senate Office Building, Hon. Daniel Akaka, Chairman of the Subcommittee, presiding.

Present: Senators Akaka, Cleland, Domenici, and Cochran.

OPENING STATEMENT OF SENATOR AKAKA

Senator AKAKA. The Subcommittee will please come to order. The Subcommittee is here to discuss the threats we face from insecure critical equipment and discontented scientists from the former Soviet nuclear, chemical, and biological weapons complex.

I want to thank our colleague, Senator Hagel, for joining us today. I also wish to thank our other witnesses for being here, Ms. Gary Jones, the Director of Nuclear Nonproliferation Issues at GAŎ; Ms. Laura Holgate, Vice President of the Russian Newly Independent States Program of the Nuclear Threat Initiative; and Mr. Leonard Spector, Deputy Director of the Monterey Institute of International Studies Center for Nonproliferation Studies.

President Bush and President Putin yesterday announced historic cuts to the nuclear stockpiles in the United States and Russia. For the future of both our nations and the prospect of a more secure world, I hope they are successful in addressing another legacy of the Cold War, the materials, facilities, equipment, and people used to make these and other weapons in the former Soviet Union. We have faced a major national security problem since the 1991 breakup of the Soviet Union. Control of chemical, biological, and nuclear weapon materials was suddenly spread out among a number of newly independent nations. We could no longer be assured of adequate control of these weapons or the people who had designed them.

Prior to 1991, international nonproliferation policy stressed keeping weapons of mass destruction out of the hands of a few states. Since 1991, we have been faced with the possibility the information