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CONCEPTUAL APPROACHES TO THE PROBLEM OF DUAL-USE TECHNOLOGY

Mitchel B. Wallerstein, Ph.D.

Deputy Executive Officer, National Research Council

During the past twenty years, there has been a significant reversal of the post-WWII model for military technology development. Since the early 1970s, a growing fraction of the new technology required for the next generation of military systems has been derived from or closely related to commercial (i.e., civilian) development efforts, rather than programs strictly and separately supported by the military. Moreover, following the philosophy of ''spin on", largely pioneered by the Japanese, companies in the West are now actively looking for opportunities to apply commercially-developed technology to military systems, rather than the other way around, as in earlier days.

These changed conditions of technology development, combined with the rapidly growing and extremely widespread availability of many previously-controlled items such as personal computers, semiconductor chips, etc., makes it extremely difficult, if not impossible in some cases, to continue to enforce comprehensive restrictions on the export of sensitive dual-use technologies.

At the same time, it must be recognized that the export of these dual-use technologies is likely to be extremely important to the future health of the Russian economy. Thus, the lack of participation by republics of the former Soviet Union (FSU) in the international system of export controls will represent a serious obstacle to their economic recovery.

There are two continuing concerns. One relates to the continuing political, economic, and social upheavals in the FSU and the uncertainty about its future course. The other pertains to the possibility that states of the FSU may, for understandable economic reasons, become the source of export for many dual-use technologies to third countries seeking the means to produce or acquire weapons of mass destruction. Both of these concerns remain very real today in the United States and other Western countries, and they continue to figure prominently in the approach which these nations have taken towards assisting in the conversion of defense industries in FSU.

It is worth noting, in this regard, that we are collectively facing what is sometimes referred to as a "chicken or the egg" problem. In other words, it is not evident, at least not to policymakers in the West, which can or should come first: demonstrable evidence of the conversion of some significant fraction of the FSU defense industry to the production of civilian goods, or expanded access to advanced technology and capital needed to spur that conversion. One of the principal objectives of the NAS-RAS project



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Dual-Use Technologies and Export Administration in the Post-Cold War Era: Documents from a Joint Program of the National Academy of Sciences and the Russian Academy of Sciences CONCEPTUAL APPROACHES TO THE PROBLEM OF DUAL-USE TECHNOLOGY Mitchel B. Wallerstein, Ph.D. Deputy Executive Officer, National Research Council During the past twenty years, there has been a significant reversal of the post-WWII model for military technology development. Since the early 1970s, a growing fraction of the new technology required for the next generation of military systems has been derived from or closely related to commercial (i.e., civilian) development efforts, rather than programs strictly and separately supported by the military. Moreover, following the philosophy of ''spin on", largely pioneered by the Japanese, companies in the West are now actively looking for opportunities to apply commercially-developed technology to military systems, rather than the other way around, as in earlier days. These changed conditions of technology development, combined with the rapidly growing and extremely widespread availability of many previously-controlled items such as personal computers, semiconductor chips, etc., makes it extremely difficult, if not impossible in some cases, to continue to enforce comprehensive restrictions on the export of sensitive dual-use technologies. At the same time, it must be recognized that the export of these dual-use technologies is likely to be extremely important to the future health of the Russian economy. Thus, the lack of participation by republics of the former Soviet Union (FSU) in the international system of export controls will represent a serious obstacle to their economic recovery. There are two continuing concerns. One relates to the continuing political, economic, and social upheavals in the FSU and the uncertainty about its future course. The other pertains to the possibility that states of the FSU may, for understandable economic reasons, become the source of export for many dual-use technologies to third countries seeking the means to produce or acquire weapons of mass destruction. Both of these concerns remain very real today in the United States and other Western countries, and they continue to figure prominently in the approach which these nations have taken towards assisting in the conversion of defense industries in FSU. It is worth noting, in this regard, that we are collectively facing what is sometimes referred to as a "chicken or the egg" problem. In other words, it is not evident, at least not to policymakers in the West, which can or should come first: demonstrable evidence of the conversion of some significant fraction of the FSU defense industry to the production of civilian goods, or expanded access to advanced technology and capital needed to spur that conversion. One of the principal objectives of the NAS-RAS project

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Dual-Use Technologies and Export Administration in the Post-Cold War Era: Documents from a Joint Program of the National Academy of Sciences and the Russian Academy of Sciences is, of course, to identify and promote specific confidence-building measures that will permit technology transfer and capital investment with greater certainty that the new capabilities enabled will not in fact find their way into military systems or be incorporated into items for export to countries of proliferation concern. Finally, it is worth pointing out that change, if it is to come and if it is to be meaningful, will require new modes of behavior and intellectual approaches on the part of all parties. To be frank, there continue to be residual concerns in the U.S. and NATO military establishments that near-complete elimination of controls on technology exports to the FSU could look reckless and foolhardy, in retrospect, if there were to be serious political reversals in the Russian Federation and a resulting change of leadership and foreign policy. By the same token, the question must be asked whether the Russian national security establishment has yet fully accepted the idea that on-site verification of converted military-industrial enterprises—similar to the kind of verification agreed to in the terms of the INF, START I and START II agreements—will be necessary to promote greater confidence in the West. It is also unclear whether the Russian military is fully engaged in the process of formulating Russian controls on indigenously produced technologies and end products. Moreover, in recent site visits in Moscow, St. Petersburg, and Perm, it was indicated that some military-industrial enterprises that are in the process of converting are being required to retain their military manufacturing production capacity, or at least the capacity to reconvert to military production on a rapid basis in the event of an external threat. While every sovereign state must obviously have the capacity to mobilize its manufacturing resources in defense of the nation, it must be recognized that, for the next few years at least, any such reconversion involving dual-use technology acquired in the West would appear threatening to the COCOM countries. There are, at the same time, a number of hopeful signs that the situation is improving. Among the most important of these developments is the recent decree by President Boris Yeltsin that formally established an export control policy for sensitive dual-use technology. A second is the creation of an Export Control Council in conjunction with the Russian government, with major participation by representatives of the Russian Academy of Sciences. There also has been a series of potentially important proposals discussed within the context of the new COCOM Cooperation Forum in Paris. Before describing and commenting upon what has been proposed there, let me note that the licensing of sensitive dual-use exports to the FSU in the United States has already improved substantially. Just prior to coming to Moscow, I obtained from the U.S. Commerce Department the latest data on licensing case submissions to COCOM for the period from January 1991 through October 1992. As you may know, only the most sensitive cases must be referred to COCOM in Paris for multilateral review; the remainder are decided by national authorities on the basis of "national discretion."

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Dual-Use Technologies and Export Administration in the Post-Cold War Era: Documents from a Joint Program of the National Academy of Sciences and the Russian Academy of Sciences The data reveal that, during this nearly two-year period, there has been a significant increase both in the number of licenses sought—meaning that export of a larger volume of sensitive technology to the FSU is being pursued—as well as in the number of approvals granted. Indeed, the absolute number of so-called "favorable consideration" decisions is up nearly 300%, and the rate of overall approvals nearly doubled during this period. Perhaps more significantly, the number of license denials is now approaching zero; for the period from January-September 1991 there were a total of 4 COCOM case denials, while for the period of October 1991 to October 1992 there were only 2 licenses disapproved by COCOM. Now, it is certainly true that these raw numbers do not reveal that Western companies still do not attempt to obtain licenses for certain highly sensitive technologies above a specified performance thresholds. But the clear implication of the data is that the United States and other Western countries are already moving strongly in the direction of a policy of so-called "favorable consideration"—i.e., a presumption of approval—for all reasonable technology exports to the Russian Federation, the other states of the FSU, and other former member states of the Warsaw Treaty Organization. It is therefore no longer accurate to claim, in most cases, that technology is being withheld where civilian end use can be clearly demonstrated. This sets the stage for the historic, first meeting of the COCOM Cooperation Forum (CCF) in Paris. The CCF was agreed to by the seventeen member states of COCOM in late 1991 in recognition of the fact that the Cold War had ended and that fundamentally new security threats, related to the proliferation of weapons of mass destruction, now exist that are shared in common by a large group of nations, including many that were former adversaries. Forty-two nations, including all but three of the republics of the FSU, attended the first CCF meeting in November 1992. The objective of the Forum was to establish common ground between like-minded nations on the need to control the proliferation of weapons of mass destruction and, in the process, to develop modalities for accelerating the further reduction—and near elimination—of remaining controls on sensitive technology moving from the NATO countries, Japan, and Australia to the former Warsaw Treaty states. From reports I have received from those who attended on behalf of the United States, the meeting met or exceeded expectations. The Russian delegation was headed by Deputy Foreign Minister Grigory Berdennikov, who also held bilateral discussions with the United States while in Paris. The nations attending apparently agreed to cooperate more closely on measures to control the export from their territory of sensitive technology and end products to countries of proliferation concern. The delegations also discussed specific measures, which, if agreed to and implemented, would result in further relaxation and near elimination of the old West-East COCOM controls. The following proposals are now under consideration by the government of the Russian Federation and certain other nations attending:

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Dual-Use Technologies and Export Administration in the Post-Cold War Era: Documents from a Joint Program of the National Academy of Sciences and the Russian Academy of Sciences Demonstrate at the national level a strong, continuing political commitment to ensure the civilian use of sensitive technology in the domestic context and to regulate effectively the export of technology to other countries. Agree to permit pre-license checks of proposed importers to establish their bona fides and their capacity actually to use the items they are proposing to purchase. In addition, agree to permit post-shipment verification that the item in question is in place and is being used for the purposes described. These procedures would be supported by the so-called IC/DV procedure, which are pre- and post-licensing certifications routinely provided by the government of the importing country. Agree to establish a set of policies and procedures, and competent bureaucracy to process licenses, for the export of sensitive technology from the country. In most cases, this will require either the creation of new mechanisms or the substantial upgrading of existing structures and policies. In parallel with the above, agree to upgrade massively border controls and the capability of Customs authorities to enforce controls. (This particular problem relates to the so-called "weakest link" dilemma, wherein unscrupulous traders would attempt to seek out the state with the weakest border controls and enforcement mechanisms through which to sell items or technology to countries of proliferation concern.) The U.S. has offered up to $11 million in Nunn-Lugar funds to facilitate implementation of these proposals. Most of this money would go to the Russian Federation and to the other three republics of the FSU that produce or possess nuclear weapons and advanced dual-use technologies that contribute to weapons of mass destruction. In addition, the United States has offered to conduct workshops and tutorials, both in these countries and in the United States, to explain how to set up the necessary licensing procedures, and so on. This is similar to the activities that the U.S. government has undertaken in Hungary, Poland, and the former Czechoslovakia, with the result that licensing requirements for them have been relaxed and are in the process of being eliminated. These three countries are therefore held up as models. Hungary has already accomplished full decontrol by COCOM, and Poland and the former Czechoslovakia are near to achieving the same status. All three have established control measures and bureaucratic structures, and Hungary in particular has satisfied COCOM governments that it is now willing and able to undertake licensing and enforcement and to act responsibly with regard to the export of indigenously produced technology and end products.

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Dual-Use Technologies and Export Administration in the Post-Cold War Era: Documents from a Joint Program of the National Academy of Sciences and the Russian Academy of Sciences Although not an explicit quid pro quo, there is an implicit understanding that, if the proposals tabled at the CCF are implemented by the NIS republics and other former WTO states, the COCOM countries would, as a first step, move immediately to a status of full "favorable consideration" of licenses, as soon as each of the CCF cooperating states signs a letter of commitment. Once the measures are actually implemented, the next stage would be to move progressively to so-called "national discretion" licensing, wherein the government in question would be trusted to regulate most items on its own, with a very small so-called "general exceptions" list remaining that would still require approval of the exporting state. This is, essentially, the current situation with regard to Hungary, and will soon be the case for Poland, the Czech Republic, and Slovakia. The other major implication of the CCF discussions is an understanding that each of the participating nations is willing to be "a good global citizen" regarding its participation in the various proliferation control regimes.* Much remains to be done to bring the Russian Federation and the other three nuclear NIS republics in full compliance with these regimes, particularly the dual-use aspects of the Nuclear Suppliers Group and the MTCR. The FSU was a cooperating participant with—but not a member of—the MTCR, and the Russian Federation has asked for formal admission. At the same time, however, there have been recent problems, including for example, the U.S. sanctions imposed on Glavcosmos in the wake of its sale of cryogenic liquid rocket engines to India. Let me return, finally, to the "chicken or the egg" problem referred to above. There are probably at least two dimensions to this. First, the conversion of military-industrial enterprises in Russia and the other NIS republics obviously must continue and, to the extent that the severe economic constraints can be overcome, should be accelerated. This must be accompanied by a policy of openness and transparency that would include agreement to permit various types of inspections—possibly by third parties or under the auspices of the United Nations—to increase confidence that sensitive technologies and specialized end products are not being used in the production of military systems. (It is to be hoped that the recommendations agreed to as a product of the joint NAS-RAS expert committee will be helpful in this regard.) Second, there should be demonstrable evidence that the Russian military and defense establishment is supportive of and involved in controlling munitions and sensitive dual technologies, both with respect to their internal use within the FSU and their export to third countries. At the same time, the United States and the other COCOM countries must work to speed up the favorable consideration of licenses and help in other direct and indirect ways to facilitate defense conversion and economic development in the FSU. These steps, together with the bureaucratic measures outlined earlier, should create the possibility of a substantial further reduction, if not the virtual elimination, of the *   These regimes include the Nuclear Non-Proliferation Treaty, the London Suppliers' Group, the Australia Group (for chemical weapons control; soon to be replaced by the Chemical Weapons Convention), the Biological Weapons Convention, and the Missile Technology Control Regime (MTCR).

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Dual-Use Technologies and Export Administration in the Post-Cold War Era: Documents from a Joint Program of the National Academy of Sciences and the Russian Academy of Sciences restrictions on technology transfer that have for so long constrained trade and interaction between East and West.