PENTAGON'S FIRM CONTROL OVER EXPORTS LICENSES MAY LESSEN IN FACE OF POLITICS, BIG TRADE GAPS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000302500001-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 27, 2016
• Document Release Date: November 13, 2012
• Sequence Number: 1
• Publication Date: March 13, 1987
• Content Type: OPEN SOURCE

Declassified in Part - Sanitized Copy Approved for Release 2012/11/13: CIA-RDP90-00965R000302500001-4
WALL STREET JOURNAL
ARTICLE APPEARED 13 March 1987
ON PADS s4
Pentagon's Firm Control Over Export Licenses
May Lessen in Face of Politics, Big Trade Gaps
By Tr%i CARRINGTON
And RoB BERGER
Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON-In six years, the Pen-
tagon's export-control office burgeoned
into one of Washington's most feared bu-
reaucracies. Its small army of computer
whiz kids and military sleuths bullied other
bureaucrats and antagonized business ex-
ecutives in blocking hundreds of export li-
censes on grounds that they would help the
Soviets gain militarily useful Western tech-
nologies.
"They're on an ego trip. What really
bothered me (during a visit) was that they
had a brigadier general serve me a cup of
coffee," complains George Kachajian, a
New Jersey businessman whose efforts to
sell to Eastern bloc countries has been tan-
gled in red tape for nearly three years.
Many other companies complain that
the Pentagon office has snarled up billions
of dollars in proposed sales to noncommu-
nist countries by refusing export permis-
sion outright or by insisting that foreign
buyers honor U.S. curbs governing reex-
port to the Soviet bloc.
But now, politics and huge trade deficits
have combined to shift the momentum
away from the export-control office. Presi-
dent Reagan, stressing a theme of compet-
itiveness, is calling for fewer restraints on
trade. Congress is responding with a flurry
of legislation to streamline regulations and
pare back the Pentagon's grip on export
controls. And Richard Perle, a skilled bu-
reaucratic infighter who oversees the Pen-
tagon operation, plans to leave govern-
ment soon.
Now it's the Pentagon group's turn to
feel under siege. "I'm very much con-
cerned that under the rubric of competi-
tiveness there will be a push to relax the
restrictions that are intended to prevent
the Soviets from using Western technology
for military purposes," says Mr. Perle, the
Defense Department's assistant secretary
for international security policy.
Other Pentagon officals aren't so de-
spairing, but they concede that competing
priorities have captured center stage. In
what many of the Pentagon's critics con-
sider a coup, President Reagan empha-
sized trade in his January State of the Un-
ion address, calling for the government to
do "everything possible to promote Ameri-
ca's ability to compete." And the National
Academy of Sciences issued a report
charging that the Pentagon's crackdown
on exporting technology had gone too far
and calling for "a more balanced policy-
making process."
Adds Secretary of Commerce Malcolm
Baldrige, who is trying to regain from the
Pentagon primacy over exports to other
Western countries: "For too long the bick-
ering in Washington has been one more un-
fair trade barrier interfering with the flow
of legitimate trade."
Among the bills that Congress will be
considering is a House measure that would
rescind a presidential directive that gave
the Defense Department the right to veto
export licenses to Western countries as
well as Eastern bloc nations. "We've felt
very strongly about this for a number of
years," says an aide to Rep. Bill Frenzel
(R., Minn.), the bill's sponsor. "But this is
the first time we've felt the momentum is
heading our way."
The drive to humble the powerful Pen-
tagon office also is fueled by the accumu-
lated resentment of bureaucrats and busi-
ness executives. A former Commerce De-
partment official who specialized in export
controls recalls a protracted fight with the
office over whether ailing International
Harvester Corp. could sell Moscow blue-
prints for building a combine-producing
factory. He says the Pentagon officials ar-
gued that the Soviets would use it to build
armored personnel carriers.
Mr. Kachajian, the New Jersey busi-
nessman, knows first hand how effectively
the Defense Department can block exports
to communist nations. His company, Sili-
con Technology Corp., converts silicon
rods-the raw material of computer
chips-into smaller wafers that are used in
manufacturing. He asserts that the Penta-
gon since 1985 has been blocking sales to
Eastern Europe by arguing over technical
details, despite a change in the trade law
that was supposed to permit such sales if
the product is available from other sup-
pliers.
Paul Freedenberg, assistant commerce
secretary for trade administration, says
foreign manufacturers are avoiding use of
American parts in products they design.
"Foreign companies don't want to fool
with American parts if that means they
have to go through this rigorous licensing
process" before exporting the product, he
says.
Stephen Bryen, who runs the Pentagon
office, concedes that it has barred pro-
posed exports of items such as urinalysis
equipment and even gloves for meatcutters
because these items contained materials or
parts that are used in military equipment.
But he argues that other U.S. agencies
haven't shown adequate national-security
concerns for some proposed exports. Last
year, for example, the Pentagon office
blocked the sale of $6 million of combat ra-
dios sought by a "fig farm" in Libya. Mr.
Bryen says that when he suggested that
the actual recipient was probably the Lib-
yan army, Commerce Department officials
protested and argued for the sale to go
through.
And sometimes seemingly innocuous
products have military uses. For example,
the Pentagon once overruled a Commerce
Department approval of a plan to sell the
Soviet Union equipment to test the hard-
ness of concrete. Although the Soviets said
the equipment would be used for apart-
ment construction, defense experts discov.
ered that it could also be used to test the
hardness of missile silos.
The Pentagon technology experts have
had some clear investigative successes.
Several months ago, they tracked down a
sophisticated sonar device that a Japanese
firm had bought in the U.S. and sold to a
Norwegian intermediary who sent it on to
Japan. Waiting at the end of this complex
chain of filters was the Soviet navy. The..
Pentagon group used intelligence leads to
hunt down the sonar device and recently
intercepted it through Japanese customs
officials. The equipment helps surface
ships locate vessels on the ocean oor, and
was used by the U.S. Navy in locating t e
Titanic,
Amftued
Declassified in Part - Sanitized Copy Approved for Release 2012/11/13: CIA-RDP90-00965R000302500001-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/11/13: CIA-RDP90-00965R000302500001-4
The Pentagon estimates that if its pro-
gram didn't exist, the Soviets could save
between $4.6 billion and $12 billion by ac-
quiring from noncommunist nations the
technologies needed to modernize their
military. And in response to the Soviet
gains, the U.S. and its allies would have to
spend between $5 billion and $13.2 billion,
the Pentagon says.
The National Academy of Sciences re-
port finds that export controls don't ad-
dress this problem. It says that "export
controls are not a means for controlling es-
pionage. which alone accounts fora high
proportion of successful Soviet acquisition
activities." Mr. Brven dismisses the
group's study as "a sloppy report."
Despite the signs that the Defense De-
partment is being nibbled at by critics,
many doubt whether the tough-minded I
group will actually give much ground. "I
see symbolic moves toward a balanced
program," says Rep. Don Bonkers (D.,
Wash.), chairman of the House Foreign Af-
fairs subcommittee on international eco-
nomic policy and trade. "My experience
has been that the Defense Department is
very effective at blocking any final deci-
sion or policy change. Secretary Baldrige
will proclaim victory but he'll get down to
the one-yard line and never cross the goal
line."
Declassified in Part - Sanitized Copy Approved for Release 2012/11/13: CIA-RDP90-00965R000302500001-4