The ChinaGATE 1 "Scandal" -- the allegations that the Clinton Administration allowed U.S. missile secrets to leak to the Chinese -- is a classical Whitewater Smear. It begins with a series of allegations and accusations that first appear in the New York Times and which are usually written by reporter Jeff Gerth. It then continues with other articles in the Mainstream Media which repeat the same allegations and accusations, which by now are being mentioned daily by Republican politicians and pundits. After a month or so of this, a few articles will appear in the Mainstream Media which attempt to set the record straight, but these are usually ignored by a partisan Mainstream Media intent on reporting innuendo and shrill claims.

As you will read below, the ChinaGATE 1 "Scandal" was actually an outgrowth of a partisan Republican effort to "tar" the Clinton Administration and the Democratic Party with the accusation that the Chinese government was attempting to buy influence with that Administration and that political party.

Although you would be hard pressed to find this information in many of the news articles cited below, the decision to launch U.S. satellites on Chinese space launchers was made by the Reagan Administration following the Challenger tragedy. This policy initiative was continued in the Bush Administration and then into the Clinton Administration.

As you will also read below, the transfer of the authority over the satellites from the State Department to the Commerce Department was originally an initiative of the Bush Administration which did not take effect until the Clinton Administration.

Much of this factual information was not in the original ChinaGATE 2 posting to these web pages because of my ignorance. I did not know of an important National Security Council report and of four news articles which had been made part of the Minority Views in House Report 105-582 of June 16, 1998. until a fellow researcher, Tom Sawyer, found them and brought them to my attention.

The full text of the four articles and the National Security Council Report can be found on pages 22 to 38 of the text or PDF version of House Report 105-582 which you can reach via:

• "Launching Satellites in China is Good for the U.S." by National Security Advisor Samuel R. Berger, Wall Street Journal, June 3, 1998. pp. 22-24
• "Commerce Can Do the Job," by Secretary of Commerce William M. Daley, in the New York Times, June 5,1998. pp. 24-25
• "What Technology Went Where and Why," by Brent Scowcroft (National Security Advisor to Bush) and Arnold Kanter (Bush Department of State) in the Washington Times, June 5, 1998. pp. 26-29
• "Satellite Exports: Nobody was Overruled." by Ex-Secretary of State Warren Christopher, published in the Los Angeles Times, June 8, 1998. pp. 29-30
• A National Security Council Report on the Historical Documentation on the launching of U.S. Satellites on Chinese Space Launchers. pp. 30-38

On September 9, 1988, President Reagan approved a plan to allow the export of U.S. made communications satellites to China for launching on Chinese rockets. Reagan's State Department spokesman Charles Redman noted that the plan would ``protect legitimate U.S. national security interests . . .'' [Washington Post, September 10, 1998]

President Reagan made the decision to allow U.S. aerospace companies to launch U.S.-manufactured satellites on Chinese space launchers, because by using Chinese space launchers, the aerospace companies could save millions of dollars in launch costs every time they launched a satellite.

Last February [1998], the State and Defense Departments recommended, and President Clinton approved, such a waiver to allow a commercial communications satellite built by Loral to be launched into orbit by a Chinese booster. This was the eighth waiver--covering eleven launches--approved by the Clinton administration. Previously, the Bush administration approved three waivers covering the launch of nine satellites.

The satellites in question are civilian, not military. More important, ``no technology transfer'' is permitted in connection with these satellite launches, which are the space-age equivalent of having Federal Express deliver a package across the country. On the contrary, there are strict safeguards designed to confine Chinese access to the most basic information about the U.S. payload these rockets carry--for example, size, weight and other mating data needed to ensure that the satellite will fit on top of the rocket and can be boosted into the correct orbit. (The waivers in question relate to the application of Tiananmen sanctions--which are designed to punish the Chinese for human rights abuses--not the safeguards against technology transfer.)

Brent Scowcroft on Assistance to the Chinese Rocket Program (from the Washington Times article of June 5, 1998.). The Justice Department is investigating the unauthorized transfer of information to China by Loral and Hughes in connection with a 1996 review of the explosion of a Long March rocket launching a U.S. satellite. Because of the virtual identity between these Chinese ``space boosters'' and military missiles, assistance to the former could lead to improvements in the latter. Experts from Loral, Hughes and other companies became involved in this review at the insistence of the international insurance industry, which refused to insure more Long March launches until an ``outside'' team reviewed the Chinese analysis of, and remedies for, the malfunctions their rockets had been experiencing. Ironically, the Chinese initially resisted this proposal, and allowed the international team of experts to conduct their review only when they became convinced that these insurance problems would jeopardize their commercial space launch business.

The political history of this decision is unknown because of a lack of media coverage. We cannot tell, for example, if any of the aerospace companies involved in the satellite program attempted to influence the decision with political campaign dollars to President Reagan, to President Bush, to Republican candidates, or the Republican Party. Nor can we determine if China did the same with contributions to Democratic candidates or the Democratic Party during the same period.

President Bush: President Bush, on 3 separate occasions over 4 years, granted waivers to allow the export of a total of 9 separate commercial satellites for launch on Chinese rockets. On each of those occasions the President specifically reported to Congress that the waivers were ``in the national interest.'' [Public Papers of the President's, 1989 (Book II, p. 1721); 1991 (Book I, p. 446); 1992 (Book II, p. 1546)]

National Security Advisor Powell: In an October 20, 1988 letter to then House Foreign Affairs Committee Chairman Dante Fascell, then National Security Adviser Colin Powell wrote: ``Legislation may be offered to prohibit or delay issuance of licenses authorizing the export of U.S. satellites . . . for launch on Chinese vehicles. This would be a serious mistake. . . . I request your assistance in forestalling any last minute actions in Congress that could jeopardize the important commercial and national security interests we are seeking to advance in our approach.'' [House Foreign Affairs Cmte. Hearing on Proposed Sale and Launch of United States Satellites on Chinese Missiles, 9/28/88 (p. 100 101)]

Secretary of Defense Carlucci: Also in an October 20, 1988 letter to Chairman Fascell, Reagan Defense Secretary Frank Carlucci wrote: ``I remain concerned that another attempt may be made to block the export of these satellites. . . . Your support for this important national security issue can make a difference. I strongly urge you to support the administration's initiative to license these satellites to the Chinese.'' [House Foreign Affairs Cmte. Hearing on Proposed Sale and Launch of United States Satellites on Chinese Missiles, 9/28/88 (p. 122 123)]

Although the decision was made in the last years of the second Reagan administration, U.S. satellites were not authorized for export to China until the Bush administration. From January 1989 to January 1993, President Bush authorized the export of one GE, one Lockheed Martin and seven Hughes satellites to China for launching on Chinese Long March 2 (LM2) and the much larger and more powerful Long March 3 (LM3) space launchers. These nine satellites were launched from Chinese sites from April 1990 to December 1995.

(2) Transfer Of Authority To Grant Waivers From The State Department To The Commerce Department Was A Policy Decision Supported By:

President Bush in 1992: In a September 25, 1992 ``Message to Congress,'' President Bush noted ``the transfer from the State Department to the Commerce Department of licensing jurisdiction'' over certain civil aircraft equipment and added that ``this transfer of items formerly included in the State Department's United States Munitions List (USML) to the [Commerce Control List] CCL is ongoing.'' President Bush also predicted that: ``In the future, certain commercial telecommunications satellites, imaging technologies, and navigational technologies will be removed from the USML and added to the CCL.'' [Public Papers of the President's, 1992 (Book II, p. 1651; emphasis added)]

(3) President Bush Granted Waivers For Chinese Launch Of Loral-Made Commercial Satellites. National Security Was The Controlling Factor In Both Decisions.

President Bush: In a letter informing Congress of his decision to grant a waiver to Loral for its Intelsat VIIA project, Bush wrote that ``it is in the national interest of the United States to waive the restrictions'' on exporting to China. [``Message to the Congress on trade with China,'' Public Papers of the Presidents: George Bush, Book II, p. 1546]

Note: The Loral satellite launched as a result of President Bush's 1992 waiver exploded at launch in 1996--leading to the controversial ``industry review'' and subsequent Justice Department investigation.

Much of the political history of the exports authorized by President Bush is also unknown because of the lack of media coverage. No one in the media has attempted to determine the political contributions of Hughes, GE, or Lockheed Martin, or the employees of these corporations to the Republican Party or to Republican candidates during the Reagan or Bush administrations.

The only press coverage of ChinaGATE 1 during the Bush Administration evidently appeared in a SINGLE Washington Post article on the Bush "Scandals" by Michael Isikoff on July 4, 1992 during the 1992 presidential campaign. This article described, in passing, son Neil Bush's role in the looting of the Silverado S&L in Colorado, the awarding of an exclusive offshore oil drilling contract by the government of Bahrain to an inexperienced Dallas firm whose board of directors included son George W. Bush, and brother Jonathon Bush's difficulties with Massachusetts regulators because he was selling stocks in the state without registering there as a stockbroker. Somehow, reporter Isikoff missed the SINGLE Washington Post story on the FORGIVENESS of a $4.6 million dollar loan from FEDERALLY-INSURED S&L to Jeb Bush in 1990, or the alleged interference of the President himself in the 1984 investigation of a Florida S&L that failed in July 1985 with bailout costs of $680 million dollars to the American taxpayer.

But the Bush family was also active in China and Japan during this time. According to Isikoff:

The launches of the nine Bush-authorized satellites and the waiver for a tenth satellite later reaffirmed by Clinton are as follows:

(1) April 7, 1990 - Hughes Asiasat 1 satellite was launched into a geostationary orbit using a LM3 space launcher.

(2) July 16, 1990 -Hughes Badr A communications satellite for Pakistan into low orbit using an LM2 launcher. The launch failed.

(3) August 13, 1992 - the Hughes Optus B1/LM2E (geostationary for Australia)

(4) December 21, 1992 - the Hughes Optus B2/LM2E (failed) geostationary satellite for Australia.

(5) July 21, 1994 - the Hughes Apstar 1/LM3 (geostationary for China)

(6) August 27, 1994 - the Hughes Optus B3/LM2E (geostationary for Australia)

(7) January 26, 1995 - the launch (failed) of (7) the Hughes Apstar 2/LM2E geostationary communications satellite - Chinese domestic communications. The Hughes Apstar 2 exploded shortly after launch, killing six people.

(8) November 28, 1995 - the GE Asiasat 2/LM2E

(9) December 28, 1995 - the Lockheed Martin Echostar 1/LM2E on 28 December 1995.

(10) February 14, 1996 - the Loral Intelsat 708 /LM3B geostationary satellite for international communications. (The waiver to authorize this launch had been signed by President Bush in 1992.)

Because of U.S. sanctions imposed after the Tiananmen Square massacre in 1989, both President Bush and President Clinton have been required to sign waivers for each launch of U.S. satellites from Chinese launch sites using Chinese space launch vehicles. President Bush signed three waivers; President Clinton signed 10 waivers.

President Clinton, over 6 years, has granted waivers to allow the export of a total of 11 separate commercial satellites for launch on Chinese rockets. Each and every time, the President has notified the Congress that the waivers were ``in the national interest.''

(2) Transfer Of Authority To Grant Waivers From The State Department To The Commerce Department Was A Policy Decision Supported By

Former Republican Congressman Roth (1993-1996): Former Rep. Toby Roth (R WI) served as the ranking member and Chairman (1995 96) of the House Foreign Affairs Committee's Subcommittee on Economic Policy, Trade and Environment. Roth was an adamant proponent of shifting jurisdiction for commercial satellite exports from the State Department to the Commerce Department. Roth sponsored a 1995 bill (HR. 316) which--in its original form--included language stating that ``the export of commercial communications satellites . . . may be regulated only by the Secretary of Commerce.'' Roth also co-authored a July 18, 1994 New York Times op-ed with Rep. Gejdensen which was critical of ``prohibit[ing] American companies from selling communications satellites to China . . .'' [HR 361, 104th Congress, 1/11/95 (version 1)]

Republican Congressman Gallegly (1994): On May 17, 1994, Rep. Elton Gallegly (R CA) signed up as a cosponsor on HR 4276 sponsored by Rep. Jane Harman. The legislation function was ``to amend the Arms Export Control Act and Export Administration Act of 1979 to require that the export of certain commercial communications satellites and associated equipment be regulated solely by the Secretary of Commerce . . .'' Introducing her bill on April 21, 1994, Harman noted the bill ``completes a process that was initiated by the Bush Administration by shifting jurisdiction over these licenses from the State Department to the Commerce Department.'' Other cosponsors were Democratic Rep. Berman (CA); Beilenson (CA) and Edwards (CA). [Bill Tracking Report HR. 4276, 103rd Congress (Lexis/Nexis); Congressional Record, 4/21/94 (emphasis added)]

Republican Congressmen Gilman, Roth, Burton, Rohrabacher, et al: In 1994, the House Foreign Affairs Committee (May 18th) and its Subcommittee on Economic Policy, Trade, and Environment (March 10th) both passed by voice vote Legislation stating that) ``the export of commercial communications satellites . . . may be regulated only by the Secretary of Commerce.'' Members of the Subcommittee at the time of the March 10, 1994 voice vote included: Reps. Toby Roth, Dana Rohrabacher, Don Manzullo, Doug Bereuter, Jan Myers, and Cass Ballenger. And, in addition to those listed above, the members of the full committee at the time of May 18, 1994 voice vote included: Reps. Ben Gilman, Dan Burton, James Leach, Elton Gallegly, Chris Smith and eight other Republications. [103rd Congress, House Rep. 103 531, 5/25/94]

(3) President Clinton Granted Waivers For Chinese Launch Of Loral-Made Commercial Satellites. National Security Was The Controlling Factor In The Decisions.

President Clinton: On February 6, 1996 and February 18, 1998, President Clinton also told Congress that ``it is in the national interest of the United States to waive'' restrictions on exporting to China for Loral's Mubuhay and Chinasat 8 projects. [``Message to Congress on Satellite Exports to China,'' Public Paper of the Presidents: Bill Clinton, Book I, p. 177; Congressional Record, 2/24/98, p. H573]

As of August 1998, twenty U.S. satellites had been approved by two presidents for export to China. Nine (actually ten) of these exports had been approved by President Bush and eleven (actually ten) by President Clinton. The eleven satellites approved for export by President Clinton were launched on the following dates from February 1996 onward.

(1) February 14, 1996 - the Loral Intelsat 708 /LM3B geostationary satellite for international communications. (The original waiver to authorize this launch had been signed by President Bush in 1992.)

(2) July 3, 1996 - the Hughes Apstar 1A/LM3 - for geostationary Asia-Pacific communications.

(3) August 18, 1996 - the Loral Chinasat 7/LM3 (failed) - for geostationary Chinese communications

(4) August 19, 1997 - Loral Mabuhay 1/LM3B- for geostationary Philippines communications.

(5) September 1, 1997 - a pair of two Iridium test (non-payload) vehicles launched into low earth orbit on an LM2C-III launcher to test the feasibility of a low earth orbit communications system.

(6) October 16, 1997 - Hughes Apstar 2R/LM3B geostationary communications satellite for Asia-Pacific communications.

(7) December 8, 1997 - a pair of Iridium low earth orbit communications satellites launched on an LM2C-III space launcher.

(8) March 25, 1998 - a pair of Iridium low earth orbit communications satellites launched on an LM2C-III space launcher.

(9) May 2, 1998- a pair of Iridium low earth orbit communications satellites launched on an LM2C-III space launcher.

(10) May 30, 1998 - Lockheed Martin Chinastar 1/LM3B geostationary satellite was launched for China communications.

(11) August 19, 1998 a pair of Iridium low earth orbit communications satellites launched on an LM2C-III space launcher.

In contrast to the lack of media coverage on the contributions of U.S. aerospace companies to the Republican or Democratic parties from 1990 to the end of March 1998, what became known as the ChinaGATE scandal was heavily publicized after the initial story by Jeff Gerth in the New York Times of April 4, 1998.

To place the ChinaGATE scandal of 1998 into perspective, we should recall that the CEO of only one major U.S. aerospace company, Bernard Schwartz of Loral Space Systems, made major political contributions to the Democratic Party alone. The other aerospace companies, headed by "normally" politically conservative managements, divided their contributions between both parties, but with the bulk of their contributions to the Republican Party. As can be seen from the above list of the eleven satellites authorized for export by President Clinton, three of the satellites were manufactured by Loral, two by Hughes, and one by Lockheed Martin. In addition, there were five launches of pairs of small low-earth-orbit satellites which were manufactured by Motorola.

Almost a year after the story was broken in early April 1998, the Mainstream Media still has made no attempt to determine if, in addition to Loral, any other aerospace company or individuals working for aerospace companies involved in the China launchings made political contibutions to either political party.

The New York Times and the Washington Post coverage of this story were both particularly unfair and biased. With the information resources and reportorial capabilities of the Times and the Post, it would have been easy to establish the factual basis of an activity that had been started in the Reagan administration and continued on in the Bush and Clinton administrations (see above). Instead we have a series of stories which allege through innuendo and half-truths that a large contributor to the Democratic Party had received favored treatment from the Clinton administration in the matter of waivers for satellite launches. The Times and Post stories and the GOP Party line story were one and the same (see the ChinaGATE stories 6 and 7 below).

In addition, by April 1998, the Whitewater Smear Campaign had been underway for five years. An analysis of the individual smears coordinated between the GOP and the Mainstream Media in 1993, 1994, 1995, 1996, and 1997 shows the following pattern:

This is the very reason to establish a factual basis of information for the entire ten-year program. Anyone looking at the lists of launches or the table above would have logically begun to ask questions about the seven Hughes, one GE, and one Lockheed Martin satellites launched in China on Chinese space launchers prior to the end of 1995. If the White House and Schwartz of Loral were accused of a political shenanigans for Loral's three launches after 1996, what about political contributions from Hughes, GE, and Lockheed Martin from about 1988 on. Moreover, if Loral was paying off the Clinton White House, what about Hughes, Motorola and Lockheed Martin. Shouldn't the political contributions of all of these corporations be examined for the entire period from 1988 to 1998?

[Para 2] The two companies - Loral Space & Communications of New York and Hughes Electronics of Los Angeles, a division of General Motors - denied any wrongdoing.

[Para 3] At issue in the grand-jury probe is whether the two companies provided technology to China beyond that which federal law allows while taking part in a review of a 1996 explosion of a Chinese rocket carrying a Loral-built satellite.

[Para 6] Clinton's action is likely to draw scrutiny because Loral's chairman and chief executive officer, Bernard Schwartz, gave $100,000 last year to the Democratic National Committee, making him a major donor.

[Para 7] The inner-government conflict over assisting China with technology that could be put to military use reflects a long-running debate about the wisdom of such assistance.

[Para 11] The need for federal approval for such dealings with China came with the sanctions the United States imposed after the Chinese crackdown on dissidents during Tiananmen Square demonstrations in 1989.

CLINTON WELCOMES CHINA CASH PROBE (AP) May 17,1998

[Para 1] WASHINGTON (AP) -- President Clinton welcomed an investigation into whether he improperly signed a waiver in 1996 to approve exporting satellite technology to China. He said Sunday the decision was not swayed by six-figure donations from an executive who benefited.

CLINTON DEFENDS SATELLITE WAIVER; PRESIDENT SAYS DONATIONS WERE NOT A FACTOR IN EXPORT TO CHINA by DAN BALZ President Clinton said today that he supports a Justice Department investigation into possible efforts by the Chinese government to influence the 1996 U.S. political campaigns. But Clinton said no foreign policy decisions by his administration affecting China were influenced by political contributions. (WASHINGTON POST, 603 words ), May 18, 1998

CLINTON DENIES CHINA INFLUENCED POLICY by Dan Balz

[Para 1] BIRMINGHAM, England - President Clinton said yesterday that he supports a Justice Department investigation into possible efforts by the Chinese government to influence the 1996 U.S. political campaigns.

[Para 2] But Clinton said no foreign-policy decisions by his administration affecting China were influenced by political contributions.

[Para 9] Two firms are at the heart of the preliminary investigation: Loral Space and Communications and Hughes Electronic. Loral is headed by Bernard Schwartz, who gave more than $600,000 in "soft money" to the party in 1996, making him the Democrats' largest single donor.

[Para 13] All of the money was returned after the DNC determined it could not vouch for its origins.

CHINA ISSUE RESISTS USUAL WHITE HOUSE DEFENSES By JOHN M. BRODER (NEW YORK TIMES), May 20, 1998

[Para 3] The disclosures of the past week are of a wholly new sort than the other accusations Clinton has faced in his five and a half years as president. This is not about business deals in the murky Arkansas past or the president's extracurricular activities. In this case, the Justice Department is investigating whether Clinton's official acts as president altered American foreign policy and affected the nation's security.

[Para 5] Gore faces added scrutiny, as well, because he has for many years spoken of the dangers of proliferation of weapon and missile technology. One White House official said that he expected Republicans to try to exploit the inquiry into transfer of satellite technology to China to tarnish Gore's image.

[Para 2] The White House made clear it valued the friendship.

[Para 3] In the three months before Clinton signed a waiver in February allowing Loral's dealings with China, Schwartz attended three White House events with the president.

[Para 4] And when Loral was trying to expand into China in 1994, Schwartz got a personal introduction from a Clinton Cabinet member to a top official of China's Ministry of Post and Telecommunications -- the type of access that most company executives would covet.

[Para 12] Schwartz's contacts with the Clinton administration are under a microscope now as the Justice Department investigates how his company came to get the February waiver on China.

[Para 13 Justice officals are looking into whether Schwartz's nearly $1 million in donations to the Democratic Party since 1995 influenced the decision. The White House and Schwartz himself deny any such connection.

[Para 2] Still, those experts could not say exactly what the Chinese have learned or whether the alleged leak compromised U.S. security, as President Clinton's congressional critics have said in a week of threatened hearings and investigations.

[Para 3] Many of the industry observers testifying before a Senate committee yesterday said the Chinese probably gained little from their work with American satellite companies that would have caused China's missile capabilities to leap ahead.

[Para 7] "The integration of the payload requires an intimate knowledge of both the payload and the launch vehicle," Graham said. "This is not like putting a load into the back of a truck. A great deal of detailed technical information must be exchanged between the satellite's designers and the vehicle's designers."

[Para 9] The controversy is rooted in part in the high cost of launching multimillion-dollar satellites into space. Most of those launched in China are commercial, and involve uses such as transmitting television and digital-pager signals.

[Para 10] The Chinese, eager to build a lucrative industry, charge satellite-makers such as Loral Space and Communications and Hughes Electronics millions of dollars less per launch than their U.S. counterparts. American companies also avoid a waiting list for launches at home.

Para 12] The risk to the security of the United States was viewed as minimal until the February 1996 crash of a Long March rocket - the workhorse of China's growing space-launch industry. In that episode, the rocket came crashing back to Earth shortly after takeoff, with a satellite made by Loral and Hughes fixed in its payload.

[Para 1] WASHINGTON -- Earlier this week, the House overwhelmingly agreed to ban the export of American satellites to China, fearing that Beijing could glean technical expertise from the technology to improve the accuracy of its nuclear-tipped missiles.

[Para 4] "You will find that Hughes satellites are guarded around the clock by U.S. Government and Hughes personnel during their time in China," the lawmakers said in a letter dated Oct. 27, 1993.

[Para 1] In the six years that Bernard Schwartz built a friendship with President Clinton -- fortified with $1.3 million in campaign donations -- the 72-year-old New York aerospace executive insists that he never asked for special treatment.

[Para 2] "I consider him a friend, but not the kind of friend that you can call upon for favors," Schwartz said on Friday in a lengthy interview in the headquarters of his company, Loral Space & Communications, in midtown Manhattan.

[Para 1] Five months ago, White House aides fretted in classified memos about the reaction to allowing a U.S. firm under criminal investigation to export more satellites to China.

[Para 2] The aides urged President Clinton to approve the deal but predicted it would lead to criticism.

[Para 3] House and Senate committees are examining whether Clinton was helping a political supporter when he approved a satellite export to China by Loral Space and Communications, a company headed by Bernard Schwartz, one of the Democratic Party's most generous financial backers. Schwartz said he was unaware of any controversy last February when his company obtained a waiver to place a satellite atop a Chinese rocket.

[Para 4] Loral is under investigation for allegedly giving China sensitive military information in a 1996 satellite deal, and the Justice Department told White House aides this year that another export waiver for Loral might scotch any hopes of winning a conviction.

[Last Paragraph] On Feb. 13, Thomas Ross, Loral's vice president for government relations, wrote Berger that "If a decision is not forthcoming in the next day or so, we stand to lose the contract. In fact, even if the decision is favorable, we will lose substantial amounts of money with each passing day." Clinton signed the waiver five days later.

WASHINGTON (AP) -- The political storm over the export of U.S. missile technology to China takes in three federal investigations, House and Senate inquiries and a corporate public-relations campaign, and that's only the beginning. The complex story involves multiple players from big-dollar political donors to aerospace engineers to insurance companies to presidents past and present. Here are some questions and answers on the China satellite issue.

Q[1]: Who is under investigation and why?

Q[5] : Who gave permission for U.S. satellites to be exported to China?

[Para 1] When House members voted 364-54 this month to bar further U.S. satellite exports to China, Republicans and Democrats alike registered a deep fear that American technology might have improved Chinese missiles that, as one lawmaker put it, would "threaten every man, woman and child in this country with nuclear incineration."

[Para 6] The absence of details has left the field open to heated assertions by politicians, pundits and others that Loral's action and, indeed, a decade of contacts between U.S. satellite makers and Chinese launchers have enabled China to make improvements in its small force of nuclear-tipped, ocean-spanning missiles.

[Para 10] The basic case for linkage, according to those making it, comes in the similarity between China's Long March commercial boosters and its long-range missiles. The two have the same staging mechanisms, air frames, engines and propellants and employ similar payload separation procedures and guidance system hardware.

In 1988, President Reagan approved the export of U.S. satellites for launch by Chinese rockets, a policy that has enjoyed broad bipartisan support ever since. It serves important national interests: creating incentives for China to help us stop the spread of missile technology, improving American competitiveness in the global satellite business and helping broadcast Western ideas and values into China.

Since 1989, approval of license applications for commercial satellite launches on Chinese rockets has required a presidential wavier of the sanctions imposed following the Tiananmen Square massacre. The Bush administration issued waivers for nine satellite programs in three years. The Clinton administration has issued waivers for 11 programs over five years. Each was carefully scrutinized by the Department of Defense, the State Department and the Arms Control and Disarmament Agency. And each was reported to Congress.

The satellites exported to China for launch are not used for military purposes, not do they result in the transfer of missile technology. All are subject to strict controls and safeguards developed by the Department of Defense to prevent the transfer of technology that would improve China's missile capabilities.

In 1992, President Bush granted the Loral Corp. permission to launch a satellite on a Chinese rocket. The launch took place in February 1996, but the rocket exploded and destroyed the satellite. Loral allegedly worked with the Chinese to review why the explosion occurred and to prevent it from happening again. The Justice Department is investigating whether in that review--not in the launch--technology or know-how may have been provided improperly to the Chinese.

When President Clinton granted Loral a waiver in February 1998 for another launch, he did not ``overrule'' or ``ignore'' Justice Department views. (Wall Street Journal, June 3, 1998)

The Senate Intelligence Committee began its hearings this week on the American satellites launched by Chinese rockets. Among the issues are whether our export control laws were violated and whether private companies committed illegal acts in the aftermath of the 1996 Loral rocket launch in China. Those specific charges should be investigated thoroughly, and if there was any wrongdoing it should be punished. But it is simply untrue to suggest that the 1996 transfer of jurisdiction over communications satellites to the Commerce Department from the State Department jeopardized national security. In fact, that transfer completed a process begun by President George Bush in 1990 and encouraged by Congress. In 1990 and 1992, Congress passed legislation that would have transferred this jurisdiction, but the bills failed to become law because of other controversial provisions. (New York Times, June 5,1998)

The last few weeks have seen an avalanche of melodramatic charges about American ``technology transfers'' to China and claims that these actions have enhanced the capabilities of nuclear missiles aimed at the United States. In combination with confusing--and confused--media reporting and inept responses by the Clinton administration, these accusations threaten both to do needless damage to important U.S. national security interests and to impede the investigation of serious allegations of wrongdoing.

A great deal hangs in the balance. The consequences, if these allegations are proven, would be substantial. But the costs of accusations which turn out to be ill-founded--if not reckless--also can be great. Nowhere is this more clear than in the case of our relations with China. Not only is the character of our strategic relationship with China of fundamental importance to U.S. national security, but that relationship also is at an unusually critical and formative stage both bilaterally and with respect to larger issues ranging from North Korea to South Asia. (The Washington Times, June 5, 1998)

PENTAGON, CIA DIFFER ON MISSILE THREAT; AIR FORCE ALARMED ABOUT TRANSFER OF TECHNOLOGY TO CHINA by WALTER PINCUS The CIA determined more than a year ago that a controversial transfer to Chinese officials of an American technical report about a 1996 Chinese missile crash did not raise "proliferation concerns" that could harm U.S. security, sources said yesterday. (WASHINGTON POST, 755 words ), Jun 7, 1998

CIA REPORT CLAIMS '96 CHINA MISSILE AID NO THREAT TO SECURITY by Walter Pincus The Washington Post(as printed in the Seattle Times, Jun 7, 1998)

[Para 1] WASHINGTON - The CIA determined more than a year ago that a controversial transfer to Chinese officials of an American technical report about a 1996 Chinese missile crash did not raise "proliferation concerns" that could harm U.S. security, sources said yesterday.

[Para 3] Although the Air Force analysis has not been made public, a White House memo earlier this year said the Pentagon "concluded potentially very significant help" for improving missiles had been given to the Chinese. Another White House memo said the transfer "involved guidance system problems and based on initial evaluation appear to be serious."

When President Clinton decided to move the licensing authority to the Commerce Department, he did so with agreement by the interested parties, including the State Department. No one was overruled. The president's decision represented a melding of national security and business interests, a result advocated by the Bush administration as well as by American manufacturers involved in the satellite business.

The Facts: None of the satellite licenses or waivers authorizes thetransfer of sensitive missile technology to China. All are for commercial satellites, the licenses are subject to careful inter-agency scrutiny by the Department of Defense, the Department of State, the ArmsControl and Disarmament Agency (ACDA) and the Department of Commerce and are subject to strict controls and safeguards.

The Facts: China's Inter Continental Ballistic Missiles (ICBMs) have had the range and accuracy to reach U.S. cities since they were first deployed in the early 1980s. Thus, this capability existed before President Reagan approved the first exports of satellites to China in 1988.

The Facts: The Clinton Administration did not ``overrule'' or ``ignore'' Justice Department views, nor has granting the license compromised U.S. national security.

In 1992, President Bush granted a waiver which permitted the Loral Corporation to launch a commercial communications satellite on a Chinese rocket. The launch took place in February 1996, but the rocket exploded and destroyed the satellite. Loral and another U.S. company allegedly worked with the Chinese to determine why the explosion occurred and how to prevent such accidents in the future.

The Facts: President Clinton's decision to transfer licensing jurisdiction over commercial satellites to Commerce came at the end of a 6-month process. It ultimately enjoyed the consensus of Commerce, State and Defense because it provided for continued State licensing of technical data and assistance related to launch vehicles, and because of additional procedural protections added to the Commerce licensing process.

The Facts: The President's decision in March, 1996 to give the Commerce Department jurisdiction over commercial satellite exports did not decontrol or weaken the export of satellites nor allow the transfer of sensitive satellite technology to anyone.

The Facts: No campaign contributions affected decision-making on U.S. foreign policy or national security. The policy of licensing U.S. commercial satellites to be launched by Chinese rockets is bipartisan and pre-dates the Clinton Administration. It was instituted by President Reagan and further implemented by the Bush Administration. The Bush Administration approved three waivers over three years for nine U.S. satellites to be launched from China, the Clinton administration has approved ten waivers over five years covering eleven satellite programs.

The Facts: Loral's interest in prompt action on its 1998 licensing request had no effect on the substance of the Administration's licensing process or any effect on national security. American companies that need U.S. government approvals for business transactions should be able to expect an expeditious response, especially if they are operating under a specific deadline. They are not entitled to a positive response, but to a timely one. In the case of the 1998 Loral request, the Administration was aware of a deadline with important commercial implications and so tried to be responsive. But the decision whether or not to grant the waiver was based on the judgments of the agencies involved in reviewing the license and recommending the waiver. In fact, the Administration's decision occurred after the commercial deadlines identified by the company had passed, as government officials continued to gather the information needed to make an informed, judicious decision.

[Para 4] The CIA's National Resources Division, which interviews businessmen and other U.S. citizens returning from foreign countries of interest to intelligence officials, regularly met with scientists and executives working with China on commercial satellite launches, according to a senior industry official.

JUSTICE DEPARTMENT EXAMINES U.S. FIRM'S LINK TO CHINA by The Associated Press and The Washington Post (as printed in the Seattle Times June 24, 1998)

[Para 1] WASHINGTON - The Justice Department is investigating a second case in which a U.S. aerospace firm gave China technical advice after a Chinese rocket exploded - with no input by the Pentagon or the State Department.

[Para 9] That investigation concerns whether Loral Space & Communications and other industry representatives, including some from Hughes, illegally gave China an accident report on a 1996 Long March explosion - and whether, as the Pentagon alleges, the report contained information useful in improving missiles.

[Para 10] In another development at a joint House hearing, it was disclosed that the Pentagon in 1996 approved the export of equipment now being used by the Chinese military to encode communications being transmitted over U.S.-built satellites in orbit over Asia.

[Para 11] At one point yesterday, Rep. Curt Weldon, R-Pa., told Reinsch he had learned from the National Security Agency that a piece of encryption equipment that orients a satellite toward Earth was missing from the wreckage of a U.S. satellite that was destroyed in a Chinese rocket launch failure in 1996.

WASHINGTON - Senate investigators have determined that China received sensitive technology and military benefits from U.S. satellite exports, Senate Majority Leader Trent Lott asserted today. "The Clinton administration's export controls for satellites are wholly inadequate," he said.

While declining to elaborate on the "new information," Lott, R-Miss., told the Senate that information "should remove all resistance to naming an independent counsel" to determine whether China sought to influence the American political process.

[Para 2] High-ranking CIA officials, including the agency's general counsel, have agreed to testify next week before a federal grand jury in Washington about information

provided earlier this year to Hughes, a Los Angeles-based division of General Motors Corp., which has supplied the CIA with satellites and sophisticated communications equipment for decades.

[Para 3] Government sources say the CIA provided information to Hughes about the Senate Select Committee on Intelligence's technology transfer investigation that might have enabled the firm to anticipate the moves of congressional investigators.

[Para 4] The Justice Department initiated the obstruction probe at the request of the Senate committee, sources said. The committee became alarmed after learning that the CIA had informed Hughes of names of company officials that the agency had previously supplied to the committee to assist in its investigation, sources said.

[Para 4] A Hughes spokesman said no one at the company has seen the Air Force report. But spokesman Don O'Neal said Hughes ``stands by the conclusion that we transferred to the Chinese no information that could be used to improve their ballistic missiles. . . . There's a significant difference between intercontinental ballistic missiles and commercial rockets.''

[Para 01] WASHINGTON -- CIA officers in China told headquarters in March 1996 that a consultant for American aerospace companies had made payments to Chinese officials in hopes of getting lucrative contracts, U.S. intelligence officials say.

[Para 02] The allegation, made in a secret cable, should have set off alarm bells. U.S. law bars companies or individuals from paying bribes overseas to secure contracts, and the CIA has agreed to share information about potential criminal activity with the Justice Department.

[Para 03] But for reasons that remain unclear, the cable languished in CIA files for more than two years, the officials said. It was unearthed this year only after congressional committees began examining whether the Clinton administration had compromised national security in its zeal to promote high technology exports to China, the officials said.

[Para 04] The consultant is Bansang Lee, a Chinese-American who worked for Hughes Space & Communications and for Loral Space & Communications.

[Para 05] It is not clear whether the cable specifies on whose behalf Lee would have been making any payments to Chinese officials, or what kind of officials these were. Nor is it clear whose money the CIA believed it was, or how much money passed hands.

[Para 06] Administration officials say the Justice Department is now examining Lee's activities more closely.

[Para 07] His lawyer, Brian O'Neill, said his client "has never made any unlawful or improper payments of any kind to any Chinese official." Spokesmen for Hughes and Loral deny any wrongdoing but declined to discuss Lee's activities.

[Para 09] The incident also illustrates the pressures that confront American manufacturers as they compete with European companies for a share of a Chinese market in which individual satellite sales can be worth as much as $1 billion.

[Para 10] Lee was born in China but educated in the United States, receiving a doctorate from Princeton University in electrical engineering. Industry executives say he served as a crucial intermediary between American companies and Chinese aerospace officials who on one hand were buying Western satellites and on the other hand marketing their country's ability to launch these satellites with China's own rockets.

[Para 11] State Department documents and interviews with industry executives suggest that Lee appears to have had a hand in both endeavors. During his years working for Hughes, the company sold hundreds of millions of dollars in satellites and telecommunications equipment to Chinese concerns, and Loral made its first satellite sale to China after it hired Lee.

[Para 12] When he was working at Loral, Lee suggested that the company help Chinese rocket scientists understand the causes of a failed satellite launch in 1996, according to State Department documents. Loral sent technicians to China, and their dealings with Chinese scientists, carried out without U.S. government approval, are now the focus of a criminal investigation and Congressional inquiries.

[Para 13] A federal grand jury is examining whether Loral, in 1996, and Hughes, in an earlier accident investigation, illegally shared American expertise with China, helping it improve the reliability of their launchings of satellites and ballistic missiles. The companies deny any wrongdoing.

[Para 21] Lee told Hughes officials that no payments had ever been made, that he had disclosed the general outlines of the deal to the company previously and that the agreement was no longer active, former Hughes executives said. But some Hughes officials called for his immediate dismissal, the former executives said.

[Para 22] A spokeswoman for Hughes, Helen Sanders, would not discuss Lee's resignation, saying it was the subject of a confidential agreement. She said Lee had stopped working for the company in February 1995.

[Para 23] A few weeks later, Loral, which was trying to break into the Chinese market, hired Lee, aerospace executives said. Thomas Ross, Loral's vice president for government relations, said the company was not aware of any "allegations at the time" it hired Lee and knows of "no allegations of wrongdoing by Lee during the period he has served as a consultant to Loral."

[Para 24] A former Loral executive said Loral's chief of security had been concerned about Lee's close ties to Chinese officials. But other satellite executives said Loral had been pleased with Lee's work, especially his instrumental role in getting Loral to sell its first satellite to China, Chinasat 8.

[Para 25] Lee's activities in China appear to have attracted little attention in Washington, except for the neglected 1996 CIA cable. Intelligence officials said the cable mentioned both Hughes and Loral, but further details could not be learned.

[Para 26] The issue was dormant until 1998, when it was disclosed that Loral and Hughes were under investigation for possible illegal transfers of rocket expertise to China. Congress began its own inquiries, and a House select committee asked the CIA for information about Lee, bringing the 1996 cable to light.

[Para 27] About the same time, inquiries from the Senate Select Committee on Intelligence led to the discovery that a CIA scientist, Ronald Pandolfi, had learned about Hughes' sharing of expertise with the Chinese in 1995. Pandolfi wrote a draft intelligence estimate report warning about the military implications in April 1996, about a month after the cable arrived. The CIA decided not to distribute the classified report to select government officials, as is routinely done with intelligence estimates, saying it was insufficiently rigorous.

[Para 28] Both the cable and Pandolfi's report were written at a time when President Clinton was moving to ease restrictions on satellite deals and had shifted primary oversight of sales from the State Department to the Commerce Department.

[Para 30] And last week, the State Department's intelligence arm asserted in a separate report that China had significantly improved its ability to launch rockets reliably as a result of the help from Hughes, lessons inherently applicable to China's missile program, an administration official said.

[Para 31] The Pentagon and State Department have raised similar concerns about the help that Loral gave the Chinese in 1996 as it investigated another failed launch.

[Para 33] The outside review of that accident was organized by Liu, the China Aerospace chairman and associate of Lee. In February 1996, before the outside committee was formed, Lee asked the Chinese to include a Loral representative as part of the investigation, according to a State Department cable recounting what Lee told a U.S. diplomat at the U.S. Embassy in Beijing.

[Para 33] Several weeks later, when Liu specifically sought a top Loral executive to head the outside review, Lee relayed the Chinese request to the Loral executive, according to Loral documents.