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2 Evidence on the Technology Transfer Problem INTRODUCTION The Intelligence Community plays a particularly significant role in decision making on national security export controls. This chapter ad- dresses what is known about technology acquisition efforts in the West by the Soviet Union, contributions to Soviet technological advancement (including military systems), the state of Soviet science and technology, and implications for national security export control policy. No less than in other areas of intelligence, data on these matters are incomplete and fragmentary. For example, evidence provided by the few cases uncovered to date of espionage and diversion of militarily signifi- cant technology in all likelihood offers only a limited-and perhaps not fully representative indication of the overall volume of such activities. Moreover, because intelligence often becomes available relatively late in the development of national security export control policy, it is not yet possible to assess the impact of the changes in national security export controls that have been undertaken during the past few years. Nonethe- less, despite the need for judgment and intuition to bridge information gaps, the data do provide a backdrop for assessing the need for and effectiveness of national security export controls. *The Intelligence Community is a collective term denoting the director of central intelligence and the U.S. intelligence agencies. 40

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 41 INTELLIGENCE EVIDENCE ON SOVIET TECHNOLOGY ACQUISITION Intelligence information reviewed by the panel confirms previous reports that the Soviet technology acquisition effort is massive, well financed, and frequently effective. Western technology has flowed to Warsaw Pact countries in recent years through three primary channels: espionage theft of classified information and/or items of direct relevance to military systems; diversion shipment of militarily significant dual use products and technology to unapproved end users, either directly through the export of controlled products without a license (i.e., smuggling), or indirectly through transshipment using a complex chain of increasingly untraceable reexports; and legal sales-direct trade with the Soviet bloc, usually after receipt of a license, that also includes some reexports (i.e., the legal transshipment of products or components by firms operating in countries that do not impose controls). The need for vigilance against unwanted transfer of Western technol- ogy was underscored by the so-called "Farewell affair," which occurred in France in 1981.2 Farewell was the codename for an officer of the Soviet Union's Committee for State Security (KGB) stationed in Paris during the 1960s. In 1981 this officer gave the West detailed information on the plans, organization, and financing of Soviet efforts to target and acquire Western high-technology equipment, blueprints, research and development data, and so on. Farewell provided an extraordinary opportunity to assess the effectiveness of the Soviet acquisition of Western technology as it is perceived by the Soviets themselves-extraordinary because information on Soviet intentions usually has been episodic and of insufficient quality or quantity to allow accurate assessments of the Soviet acquisition program. Although the panel recognizes that internal Soviet documents such as the Farewell papers must be viewed with caution (because of the possibility that the authors had an interest in inflating the successes of the acquisition program in their reports to superiors), the Farewell papers do set out a remarkable record of the scope and success of the Soviet acquisition effort. (The information contained in the Farewell papers, which contributes significantly to our current state of knowledge, was documented in the unclassified white paper Soviet Acquisition of Militar- ily Significant Western Technology: An Update, made public by the Department of Defense in 1985.) The Farewell papers indicate that, during the Tenth Five-Year Plan (1976-1980), the Soviet acquisition program satisfied more than 3,500

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42 BALANCING THE NATIONAL INTEREST specific collection requirements for hardware and documents for the 12 Soviet industrial ministries. Of the items acquired in the West, the Soviets estimated that approximately 70 percent were subject to national security export controls. This proportion was apparently much the same during the most recent 5-year plan (1981-1985) as it was during the previous 5 years (1976-1980), a period of relatively less restrictive Western controls. Moreover, the Soviet Union has established an elaborate administra- tive structure, involving tens of thousands of people, to satisfy its collection objectives. An outline of the Soviet institutional framework was published in 1983 by Henri Regnard, a pseudonym used by a senior French counterintelligence official.3 Regnard describes a bureaucracy composed of the Military-Industrial Commission (VPK), Chief Director- ate of Military Intelligence (GRU), State Committee for Science and Technology (GKNT), the KGB, and the Ministry of Defense.4 This structure administers the three main arms of the Soviet technology acquisition effort: espionage, diversions, and legal sales. ESPIONAGE In the discussion of illegal channels of transfer, it is important to make a sharp distinction between espionage and diversions. Espionage is covert activity to obtain classified information about products and technologies pertinent to military systems. Diversions, on the other hand, are illegal shipments of unclassified dual use items or unclassified military goods to unapproved end users. Diversion activity may occur at any stage of the export process: It includes fraud in prelicense or postlicense documenta- tion, theft during transshipment, and unauthorized postshipment reex port. There is little doubt that Soviet attempts to obtain equipment and technology in the West by means of espionage are extensive, particularly in light of the quite damaging instances of Soviet success revealed by recent Western counterintelligence efforts (e.g., the Walker espionage case). Indeed, it appears that many of the most significant losses to the Soviet bloc (e.g., look-down/shoot-down radar) were achieved through espionage, which is not effectively countered by export controls and thus was not a subject examined in detail by the panel. Espionage does, however, place limits on the effectiveness of any export control system. DIVERSIONS As noted above, diversions are illegal shipments of unclassified com- modities and technical data to unapproved end users. Diversion activities are often difficult to detect, in part because they may occur at many stages

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 43 of the export process and in part because the Soviets have devised sophisticated, multinational diversion mechanisms that frequently escape the attention of counterintelligence services of the countries in which the diversion is taking place. The Export Administration Amendments Act of 1985 gives the U.S. Customs Service primary responsibility for foreign investigation of all commercial export control violations including illegal diversions. In the diversion investigation process, the U.S. Customs Service receives information from all relevant government agencies, and the Intelligence Community assists in verifying charges. The U.S. gov- ernment also seeks the cooperation of the governments of countries in which it suspects diversions are occurring. It is worth emphasizing that many-perhaps most-diversions occur outside the United States and often involve goods and technology originating in other technologically advanced countries. The Intelligence Community has developed significant information on attempts by the Soviet Union and its allies to divert exports of Western high-technology equipment. Two recent examples of diversion activity help to illustrate the potential for the illegal flow of militarily useful technology to the Soviet Union. In July 1986 the U.S. government uncovered a diversion of a large shipment of computers and related sensitive equipment. (The shipment's estimated value was in the tens of millions of dollars.) The equipment, which is believed to have been destined ultimately for the Soviet Union, had been routed first to Belgium and then to a Turkish buyer in Austria where it was seized. (At the time of seizure, investigators report that some components already had been delivered to the Soviet Union.) Some of the products came from a U.S. company specializing in oscilloscopes, spectrum analyzers, and other scientific measuring instruments. Report- edly, acquisition by the Soviets of the U.S. equipment could enhance their electronic intelligence capabilities. As of January 1987 the investi- gation was still proceeding. Richard Mueller, a West German citizen, is still wanted today in that country and in the United States for a number of cases involving illegal exports to the Soviet Union of CoCom-controlled computers, microelec- tronics, and other products. Mueller's involvement with illegal technol- ogy acquisition on behalf of the Soviet bloc dates back to the early 1970s. For his network, he established numerous "dummy" and "front" firms to purchase products and technology; at one point, he reportedly had more than 75 firms operating in Western Europe and the United States. Between 1978 and 1983, Mueller used these firms to deliver to the Soviets advanced computers, peripherals, and microelectronics manufacturing equipment worth many millions of dollars.

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44 BA LANCING THE NATIONAL INTEREST Perhaps Mueller's best-known operation was his attempt to divert to the Soviet Union in late 1983 seven large VAX computers (and related hardware and software) manufactured by the Digital Equipment Corpo- ration. The VAX series of super minicomputers is valuable to the Soviets because of their computer-aided design applications for microelectronics fabrication. Mueller's front firms in South Africa and West Germany had purchased this equipment in the United States for eventual transshipment to the Soviets. Although much of it was seized by Swedish and West German authorities when the diversion was uncovered in 1983, some of the equipment is known to have been received in the Soviet Union. There is no doubt that many diversions evade detection. Moreover, the level and effectiveness of customs enforcement efforts to prevent diver- sions differ, both within CoCom and among other technologically ad- vanced Free World countries. There often is little likelihood that customs inspectors will identify violations once goods have left the original shipper and have been manipulated by experienced diverters because the volume of trade is great, the- number of inspectors is comparatively small, and the detection of mislabeled equipment requires sophisticated technical skills. Identifying diversions is especially problematic while goods are in transit through the bonded or customs-free zones maintained in most countries. Although there is informal international cooperation among customs officials to detect and prevent the diversion of goods in transit, these officials are reluctant to enter such zones and open bonded shipments without strong evidence of wrongdoing. In light of these facts, perhaps the most important means for reducing diversions arises from government cooperation with the private sector. U.S. businessmen- and businessmen in firms abroad are in a position to see inconsistencies in an individual's or company's behavior or the appearance of a suspicious new company that does not fit with their knowledge of the specific commercial context. Government officials for their part can promote a stronger sense of responsibility for reporting such circumstances by requesting information from the private sector. These requests, when presented appropriately, often produce useful cooperation including leads on possible diversionary activities. In gen- eral, however, government agencies have failed to alert private industry to the importance of this information and have not encouraged feedback. LEGAL SALES Some significant technology may be acquired by the Soviet bloc through legal purchases when foreign availability of the given technology exists. (The issue of foreign availability is discussed further in Chapter 5.)

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 45 For example, in light of the dispersion of sophisticated technology throughout the world, the Soviet Union and other Warsaw Pact countries have been (or may be) able to obtain controlled technology in Free World countries that do not participate in the national security export control regime established by CoCom. These countries could include both the industrialized neutral countries of Europe and many newly industrializing countries such as India, Singapore, and Brazil. Many of these non- CoCom countries either do not acknowledge or do not enforce restric- tions on the reexport of goods and technology obtained originally in CoCom countries. Moreover, many are striving to or have already become sources of indigenous high technology. Thus, there is an increas- ing likelihood that the Soviet bloc may be able to purchase certain categories of dual use technology (particularly at the lower end of the CoCom-designated threshold*) in some of the more advanced non- CoCom countries without ever having to resort to the use of covert methods. THE SIGNIFICANCE OF VARIOUS CHANNELS OF LOSS Based on the evidence reviewed by the panel, it appears that espionage is the most significant of the channels for technology loss. But as noted earlier, export controls do not represent an effective means to deter much less prevent espionage. Therefore, although the success of the Soviet espionage effort serves to reveal Soviet intent, it cannot be used to justify the change in export controls on dual use products. Indeed, an assessment of the policy significance of the Soviet bloc's collection activities, which requires examining the various channels for loss, would be improved by greater discrimination on the part of the Intelligence Community in categorizing different types of Soviet collection activities as espionage, diversion, or open acquisition. SOVIET UTILIZATION OF ACQUIRED WESTERN TECHNOLOGY It is only on rare occasions that the Intelligence Community can declare with relative certainty that the application of Western dual use technology has contributed substantially to Soviet military developments.t The *This includes the least-sensitive CoCom-controlled products and technologies (e.g., administrative exception note [AEN] 9/national discretion note items and AEN 12/favorable consideration note items). See Chapter 4 for an explanation of these provisions. tThis discussion deals with recent Soviet utilization of acquired Western technology. It is well known that the Soviets acquired European weapons technology as well as scientific knowledge and technical personnel at the end of World War II.

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46 BALANCING THE NATIONAL INTEREST necessarily fragmentary data used for these assessments most often seem to deal with the introduction of process equipment into manufacturing plants. There are also isolated examples of specific Western components, or copies of them, appearing in Soviet military equipment. One of the few recent instances in which solid evidence on Soviet technology acquisition was uncovered involved data from the Soviet Military-Industrial Commission (VPK). The VPK produces an annual report based on an evaluation of individual Soviet defense manufacturing ministries whose strategic technology needs have been satisfied through technology acquisition efforts in the West. It includes aggregate statistics on the number of technical documents and samples (hardware) obtained, gross ruble savings, and the number and priority of satisfied require- ments. Data from one of these reports (as noted earlier in this chapter) indicate that, during the Tenth Five-Year Plan (1976-1980), more than 3,500 requirements or 50 percent of the total were reported as fully satisfied worldwide. Roughly 60 to 70 percent of these were fulfilled by the Soviet intelligence services (KGB and GRU) and their surrogates among the Eastern European intelligence services. Furthermore, the VPK projected that, during the Eleventh Five-Year Plan, the number of fully satisfied requirements will exceed 5,000.5 The report also states that from 1976 to 1980 the Ministry of Defense Industry (armor and electro-optics) and the Ministry of Aviation Industry realized the greatest savings in research project costs. By the Soviets' own calculations, these savings equalled $800 million (in 1980 purchasing power equivalents) worth of comparable research activity. The equivalent Soviet manpower cost of these savings alone translates roughly into over 100,000 man-years of scientific research. These data on savings, however, may be conservative: The ruble figures probably reflect operating costs (e.g., salaries, elimination of test range activity) and exclude capital costs.6 Given such uncertainties about available data on Soviet costs and savings, the United States has had no persuasive analysis of either the value of Western technology acquisitions to the Soviet R&D process or the ruble expenditures avoided through such efforts. To supply such an analysis, the Department of Defense commissioned a study to estimate both the ruble savings to the Soviets for R&D expenditures foregone and the additional cost to the West to counter new Soviet military capabilities (discussed further in Chapter S); the report of this study, Assessing the Effect of Technology Transfer on U.S./Western Security A Defense Perspective, was published in 1985. Although the Defense Department report has been regarded generally as a useful first step, the panel and other experts it consulted have found the methodology employed and the conclusions reached to be unconvincing.

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 47 Part of the difficulty in assessment arises from the inevitable problems in putting a product or technology into effective use. The Soviets may attempt to reverse-engineer a product that is, use an item obtained in the West as a basis for producing the technology themselves for military systems. The panel believes that this strategy is generally unproductive for many types of items (such as high-density semiconductor devices) because often the ability to copy a technology depends more on techno- logical infrastructure and the capability of the manufacturing process than on the observable features of a particular device. Indeed, the experience of U.S. firms in setting up manufacturing facilities in foreign subsidiaries indicates that great care and considerable time are required to duplicate a product successfully at least in terms of quantity-even with full access to all manufacturing process details and equipment. This fact suggests that a loss through the diversion of a few units of most products is unlikely to have much military significance. Of course, in some cases the Soviets can gain insight into the function of a particular component through reverse engineering, which may aid them in the development of counter- measures or give them confidence that a specific design approach has been successful in the West. But this situation is likely to have signifi- cance only with regard to uniquely military items rather than with the dual use products that are the focus of this report. Nevertheless, there are certain key items of process control or manu- facturing hardware (so-called keystone equipment) that can provide the Soviets with substantial leverage even if only a few are obtained because they facilitate the production of quantities of other hardware. (Precision ballbearing grinders, which the Soviets acquired legally in the past, have been cited as an example of such equipment.) By the standards of Western productivity the Soviets are generally weak in automated manufacturing techniques. Consequently, a prevalent judgment in the United States, at least since the 1976 Bucy report, has been that the emphasis of national security export control policy should be on constraining the flow of essential technologies and manufacturing equipment incorporated in some turnkey plants rather than on the end products of the manufacturing process. Table 2-1 is one of a number of estimates published by the Department of Defense (DoD) that compare the state of the art of Soviet technology with that of the United States. Although in some cases different conclu- sions may be drawn, the panel has determined that for most types of dual use technology the Soviet Union is on average approximately 5 to 10 years behind the West and does not appear to be closing the gap. Despite an extensive acquisition effort, then, the Soviets in general have not succeeded in reducing the West's technology lead. Some of the reasons for this state of affairs are discussed in the next section of this chapter. It should be noted, however, that the situation is different for

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48 BALANCING THE NATIONAL INTEREST TABLE 2-1 Relative U.S. Versus USSR Standing in 20 Militarily Related Technology Areas Basic Technologies USSR Superior U.S./USSR U.S. Equal Superior Aerodynam~cs/fluid dynamics Computers and software Conventional warheads (including all chemical explosives) Directed energy (laser) Electro-optical sensor (including infrared) Guidance and navigation Life sciences (human factors/biotechnology) Materials (lightweight, high strength, and high temperature) Micro-electronic materials and integrated-circuit manufacturing Nuclear warheads Optics Power sources (mobile includes energy storage) Production/manufacturing (includes automated control) Propulsion (aerospace and ground vehicles) Radar sensor Robotics and machine intelligence Signal processing Signature reduction Submarine detection Telecommunications (including fiber optics) X X X X X X X X X X ~ X X X X ~ X X X X AX X NOTE: This list is in alphabetical order. Relative comparisons of technology levels depict overall average standing only; countries may be superior, equal, or inferior in subcategories of a given technology. Arrows indicate that relative technology levels are changing significantly in the direction shown. SOURCE: The FY1987 DoD Program for Research and Development (Statement by the Under Secretary of Defense, Research, and Engineering to the 99th Congress, Second Session, 1986). fielded military systems. Although the West generally remains ahead in the most advanced weapon systems, the strong Soviet emphasis on the development and production of military hardware has resulted in many items or equipment in the field that in many weapon system categories often are as modern as those deployed in the West. Assessing the significance of this fact for export controls is difficult, however; often, the technology in Western military hardware lags behind what is widely available in the commercial sector.7

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 49 In sum the Soviets generally continue to lag behind the West techno- logically although they have worked for years to close this gap, in part by obtaining new technology from the West. Instead of advancing the overall state of Soviet technological development, however, this practice, in tandem with problems inherent in the structure of Soviet science and technology, may have resulted in maintaining or perhaps even widening their lag due to dependence on generally outdated Western equipment and technology (particularly in the field of computer science). Although it would be foolhardy for the United States and the other technologically advanced countries of the West to facilitate Soviet access to militarily critical technology, the panel considers it unlikely that an influx of Western technology will enable the Soviet Union to reduce the current gap substantially as long as the West continues its own rapid pace of innovation. THE STATE OF SOVIET SCIENCE AND TECHNOLOGY8 It has long been known that the organizational structure and rigidities of Soviet science have a strong impact on both the effectiveness and efficiency with which the results of scientific research are transferred into technical application in the Soviet Union and on the assimilation of technical innovations acquired from the West. Soviet science and indus- try are characterized by: an incentive system that does not strongly support technical innova- tion and implementation; research activity that is highly concentrated, both organizationally and geographically; rigidly hierarchical lines of authority and communication; subjugation to political factors (i.e., party bureaucracy and military priorities); and difficulty in incorporating new scientific ideas into a development and production phase. The restricted communications that derive from the Soviet penchant for secrecy have resulted in the isolation of scientific entities within the system. This in turn has caused reduced cooperation among scientists, duplication of effort despite central planning, slow diffusion of new ideas and technologies, and errors due to inadequate peer review. The severe isolation of Soviet scientific institutes and laboratories from one an- other, from the design bureaus that actually use the data they produce, and from the West- and the separation of civilian and military research efforts severely hinder the process of cross-fertilization that has acceler- ated progress in science and technology in the West.

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50 BALANCING THE NATIONAL INTEREST It is especially difficult for the Soviets to incorporate new scientific ideas into development and production in the civilian sector. Formal review and approval must take place through several levels of manage- ment. Moreover, line managers often ignore ministry directives calling for innovation because they fear the consequences~of not meeting short-term quotas as specified in the current plan. Recently, additional changes reportedly have been made to encourage risk-taking through the imple- mentation of technical innovations; these changes allow production quotas in the current plan to be reduced for a period of time following the introduction of a new instrument or new process.9 Soviet defense projects consistently receive top priority in the alloca- tion of resources to research and development. The military has priority access to the best indigenous technology. It also has the power to encourage innovation and accelerate production. The military's formida- ble ability to obtain Western technical goods and information further facilitates projects under its sponsorship. When Soviet military equip- ment designers levy requirements for Western documents, blueprints, and test equipment and other hardware, the VPK reportedly utilizes a national fund of about half a billion rubles* to satisfy them.~ The acquisition of particular documents can command funding as considerable as that for hardware items. The Soviets reportedly spent over 50,000 rubles for documents on the U.S. shuttle orbiter control system; the same sum was committed to acquiring information on high-energy laser developments. More than 200,000 rubles was approved for acquiring selected research documents on U.S. antimissile defense conceptS.ll Besides substantial funding support, Soviet defense projects also appear to command substantial human resources, including those avail- able in the civilian sector. Although the Western Intelligence Community can only estimate the percentage of Soviet civilian scientists involved in military projects, some place the figure above 50 percent. Often, Soviet scientists are recruited temporarily and agree to work for the military simply to acquire access to choice equipment, which they then put to use on their own nondefense-related projects. A principal uncertainty with regard to the Soviet military's investment in science is whether it could one day present the West with an unexpected "Sputnik-like" surprise. The views expressed by U.S. sci- entists, Soviet emigre scientists, Western scientists who have worked in the Soviet Union, and Sovietologists, as well as those contained in *The U.S. government calculated that for 1980 the approximate conversion ratio was 1 ruble = $1.47.

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 51 unclassified U.S. intelligence assessments, do not yield a consensus on this question. General-Secretary Mikhail Gorbachev has stressed the role of scientific and technical progress in Soviet economic development. He has spoken of plans to focus Soviet scientific efforts more on applications and less on pure research aiming at the twin objectives of more rapid economic growth and a stronger military and he has given priority to computer science and education. Although the defects noted in Soviet science continue to be fundamental to their system and will not be altered easily or quickly, U.S. policy must be formulated in recognition of the possibil- ity of significant change. IMPLICATIONS OF INTELLIGENCE EVIDENCE The preceding discussion of the evidence on technology transfer to the Soviets yields a number of important implications for the formulation of an appropriately designed national security export control regime. Among the most significant are the following: 1. In the judgment of senior Western intelligence officials, espionage is the technology acquisition channel that is most valuable to the Soviets in enhancing their military capability, followed (to a lesser extent) by diversion of unclassified but controlled technology. Third in importance is the acquisition of uncontrolled Western technology. The U.S. national security export control regime does not provide solutions to the problem of espionage. 2. Based on its review of Intelligence Community evidence, the panel agrees that a legitimate need for appropriately designed export controls continues to exist. However, the significance of export controls alone in stemming losses should not be overestimated. 3. Because sources of products and technology increasingly exist elsewhere in the world, and because most diversions involve activities in other Western nations, the U.S. export control effort must be multina- tional. (See Chapter 6.) Attempting to develop an extensive system of controls centered in the United States appears futile in light of the fact that significant losses continue to occur elsewhere. Reduction of "high- end" diversion (i.e., diversion of the most sensitive CoCom-controlled products and technologies) requires the cooperation of CoCom and other non-CoCom Free World countries-cooperation that currently may not exist and that may require substantial diplomatic and private sector efforts to achieve. Nevertheless, improving the effectiveness of export enforcement in the current regime can make a substantial difference with respect to the control of unclassified dual use items.

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52 BALANCING THE NATIONAL INTEREST 4. Part of the U.S. concern about the Soviet technology acquisition effort relates to the current status of alternative technology sources around the world. Intelligence evidence indicates that U.S. dominance in various technology areas generally is decreasing (see Chapter 31. The diffusion of technology, the availability of controlled technology from outside the CoCom countries, the impossibility of an absolute embargo on any technology other than that contained in very high-cost items existing in small quantities (e.g., supercomputers) are all factors that contribute to U.S. policy formulation and that require reliable corroborating data. The Intelligence Community and the Department of Defense have endeavored to make intelligence information on Soviet technology acqui- sition activity available to the public. For example, various "white papers" have been issued by the Intelligence Community, an effort that is especially valuable because public awareness may be a key to stemming losses through espionage or diversion. There is a similar need for improved dialogue between the U.S. R&D community (industry, acade- mia, and government labs) and government officials charged with staying abreast of important developments in science and technolog~particu- larly those who must make export control decisions on the basis of their understanding of the technologies involved and their knowledge of the state of foreign science and technology capability. The utilization of information derived from such a dialogue can be invaluable in determining specific products or technologies that should be controlled or decon- trolled and in promoting a better general understanding of the worldwide state of the art in key technologies. l NOTES 1. U.S. Department of Defense, Soviet Acquisition of Militarily Significant Technology: An Update (Intelligence Community white paper) (Washington, D.C., September 1985). 2. Thierry Wolton, Le KGB en France (Paris: Editions Grasset ~ Fasquelle, 1986). 3. Henri Regnard (pseudonym), "The U.S.S.R. and Scientific, Technological, and Tech- nical Intelligence (English translation)," Defense Nationale (December 1983), pp. 107-121. 4. Regnard's statements are consistent with descriptions in the "Penkovsky papers" of 1965, which identified KGB participation in the foreign activities of GKNT. (Oleg Penkovsky, The Penkovsky Papers [London: Collins, 1965]. This book is based on the testimony of a Soviet double agent.) The white paper Soviet Acquisition of Militarily Significant Western Technology: An Update provides extensive discussion of the key Soviet organizations involved in the acquisition of Western technology. 5. U.S. Department of Defense, Soviet Acquisition, p. 60. 6. Ibid., p. 6. 7. This topic was thoroughly addressed in the recent Packard commission report, A Quest for Excellence: Final Report to the President by the President's Blue Ribbon Commis- sion on Defense Management (Washington, D.C., June 1986).

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EVIDENCE ON THE TECHNOLOGY TRANSFER PROBLEM 53 8. The data on which this section is based were drawn primarily from the 1985 report by the Foreign Applied Sciences Assessment Center (FASAC) entitled Selected Aspects of Soviet Applied Science. Coordinated by Science Applications International Corpora- tion, FASAC has produced a number of studies at the request of the U.S. government assessing the state of science and technology in the Soviet Union. The center has drawn on the expertise of more than 100 U.S. scientists and engineers to evaluate available Soviet literature in their fields and summarize the military, economic, and political implications of recent developments in the Soviet Union. The principal focus of the FASAC reports is on Soviet exploratory research, which seeks to translate develop- ments in fundamental research into new forms of technology with important application potential. 9. A Study of Soviet Science (Intelligence Community white paper) (Washington, D.C., December 1985), p. 10. 10. U.S. Department of Defense, Soviet Acquisition, p. 3. 11. Ibid., p. 4. 12. From a speech to the 27th Congress of the Communist Party of the Soviet Union, March 1986, reported by Gary Taubes and Glenn Garelik in '~Soviet Science: How Good Is It?" Discover (August 1986), p. 57.