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[MichaelP <papadop@PEAK.ORG> (by way of "John H.St.John" <homer@abac.com>)]

Journal of Commerce: Mon, 4 May 1998 
   High-tech industry fumes as activist reveals confidential export data
   
   The industry demands an inquiry into how a nuclear arms foe got
   Commerce data, which he used to accuse the administration of watering
   down export controls.
   
   BY MICHAEL S. LELYVELD
   JOURNAL OF COMMERCE STAFF
   
   The high-tech industry is fuming over government leaks to an
   anti-nuclear activist who has charged the White House with watering
   down controls designed to keep supercomputers out of the hands of
   foreign weapons producers.
   
   Industry advocates want Gary Milhollin, director of the Wisconsin
   Project on Nuclear Arms Control, brought before a grand jury to find
   out who gave him confidential information supplied by U.S. computer
   companies to the Commerce Department on sales to such countries as
   Russia, China and India.
   
   The leaked information formed the basis of a New York Times op-ed
   article last Friday in which Mr. Milhollin accused the Clinton
   administration of "circumventing" export curbs on faster computers
   that were passed by Congress and signed into law last November.
   
   Conflicts within the bureaucracy have apparently led to massive leaks
   of confidential sales data in one of the nastiest disputes between
   non-proliferation and pro-business forces in recent years.
   
   A White House official denied any intention to subvert the controls,
   but he also attributed the decision on sign-offs to a concern that
   objections "raise a burden on U.S. exporters."
   
   Under the export law, companies must notify Commerce 10 days before
   shipping computers with speeds more than 2,000 million theoretical
   operations per second (MTOPS) to any of 50 countries considered to be
   nuclear risks. Commerce shares the information with other agencies
   that may lodge objections within the 10-day period to trigger a
   license requirement.
   
   But because of a White House decision that an undersecretary must
   approve any agency objection, some departments have reportedly been
   unable to move against risky sales in time to stop them, Mr. Milhollin
   said.
   
   "It's a blatant attempt to sabotage the process," he said of this
   procedure in an interview. But Mr. Milhollin's own efforts have come
   under fire.
   
   "The dissemination of this information by a public employee, which
   this undoubtedly is, is a violation of the Trade Secrets Act," said
   Eric Hirschhorn, a former Commerce Department official who represents
   high-tech companies at Winston & Strawn in Washington.
   
   Playing with fire
   
   "If I were a U.S. attorney, I'd have him down before the grand jury
   this afternoon. He's playing with fire here. This stuff is protected,"
   he said.
   
   The detailed disclosures are "very disturbing and upsetting to many
   people," added David Calabrese, government relations manager for the
   Electronic Industries Association.
   
   A list of 56 export notifications obtained by The Journal of Commerce
   includes case numbers, shippers, consignees, shipment value and
   computer speeds for planned sales of high- performance computers to
   countries that included Israel, Egypt and Oman.
   
   Exporters on the list include Digital Equipment Corp., IBM, Siemens
   Corp., Silicon Graphics Inc. and Sun Microsystems Inc. Spokesmen
   stressed that the companies have obeyed the new law.
   
   MTOPS with Digital
   
   In his article, Mr. Milhollin cited a Digital notice for a planned
   sale to India's Nuclear Power Corp., as an example. The company
   operates civilian reactors but has been identified by intelligence
   reports as a proliferation risk. According to the notification list,
   Digital planned to sell Nuclear Power a $250,000 computer running at
   speeds of 4,032 MTOPS.
   
   "We follow all the rules very thoroughly and very carefully," said
   Patrick Ward, a Digital spokesman in Maynard, Mass. "We would export
   for commercial purposes, as the rules provide."
   
   The evidence on the entire list of exports is inconclusive, making it
   difficult to determine whether the law is working or not.
   
   William Reinsch, Commerce undersecretary for export administration,
   cautioned against assuming that computers on the notification list
   have actually been shipped. While some have been the subject of
   interagency objections that halted sales, others were for deals under
   negotiation that have yet to take place, he said.
   
   The list is also not complete. A White House official, who spoke on
   condition of anonymity, said there have been 158 advanced
   notifications of high-performance computer sales to the nuclear risk
   countries in the past three months. Fifteen prompted objections. The
   official cited the 9.5% challenge rate as a sign that implementation
   is working.
   
   But the conflict that led to the leak is a clearer sign that policy
   problems will continue.
   
   Congress enacted the controls last year in response to reports that
   Silicon Graphics and IBM supercomputers had fallen into the hands of
   Russian nuclear weapons labs after President Clinton decided to allow
   license-free sales in 1995.
   
   Lawmakers tried to reimpose full-blown license requirements, but only
   succeeded in imposing the notification rule after heavy lobbying by
   the administration.
   
   Going to another level
   
   Once the notification was in place, industry pushed for a process
   under which inter-agency objections to proposed sales would be
   approved at a higher level, requiring a sign-off by a department
   undersecretary.
   
   Previously, proliferation watchdog agencies like the Defense
   Technology Security Administration had been able to slow sales down.
   
   In a Jan. 23 memo, also obtained by The Journal of Commerce, DTSA
   director Dave Tarbell argued against the sign-off plan. But it was
   cleared by the National Security Council and the president after
   approval by the secretaries of the Defense, State and Energy
   departments.
   
   Officials say the unusual hurdle for interagency objections was
   created when the new curbs were forced on the administration by
   Congress.
   
   Are more leaks coming?
   
   "My sense is that these are people who haven't agreed with any
   administration policy in the past 15 years," said Mr. Reinsch of
   Commerce. "Probably, the people who are making the leaks are people
   who think they ought to be making the decisions."
   
   Congress will address the issue when the administration makes its next
   recommendation for easing computer controls on even faster machines to
   keep pace with technology.