SOVIET THREAT OF AMERICAN TECHNOLOGY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88B00443R001003880057-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 20, 2016
• Document Release Date: March 6, 2007
• Sequence Number: 57
• Publication Date: June 24, 1981
• Content Type: MEMO

(Approved For Release 2007/03/06: CIA-RDP88B00443R00100388005
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Executive ecre ary
24 June 1981
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? SECRET ?
24 June 1981
MEMORANDUM FOR: Director, National Foreign Assessment Center
FROM: William J. Casey
SUBJECT: Soviet Threat of American Technology
Here are the materials I mentioned to you on the Soviet theft
of American technology. I think the piece in the Chicago Tribune
is the best. I certainly encourage you to go ahead along the lines
we discussed this morning.
Attachments
William J. asey
SECRET
 For Release 20: }j 88B00443R001003880057-3
,~ p,Y P_! r8~- ? 12 APRIL 1981
so nuticatea.riewiett-racKara model-sto
By. JJames Coates. A,- len by Soviet agents at a 1972 Swiss trade;
C' , Tribune Pt>a Servies show
e.
1VASEIIhG'T0N.--Through theft, black The. extremely: accurate inertial guid-
mail? and .bribery'-.with ati assist from, ance system --whichv allows Soviet mist:
American businessmen. eager- to,,, make: a sile, .crews ?to lob-their- warheads"down:
profit:--: Soviet.-.-age nts; have obtained the..-stovepipe" of U .S, siloes.--is made:
enough`FF.S. high: technology) to vastly
expand their military might;` at U. possible; by American neer wring tech-+
nology. Soviet engineers.=no use
expense ?=w; machines.'. called - Centalign:.B,;_bivought.,
That, is the view of manyxanktng.iTmem, from. a. New England, firm-under a. De=`
bens o . the . . a ace .commuru r partment of :Commerce, icense, to grind.
W110 -o say a e. ovie technology-,4 'bearings with a degree of, precision. of
f,~at ertng opera ton is costing American
lops.. : uc .o g Curren fered by.no other machine. The license
taxpayers
S189-billion _aefe nsebudgetts deeded!:was: ranted' despite intelligence com-
munity warnings.
to counter Soviet muscle acquired direct:,
military analyst disclosed that the
1v through
American techn6log
?_ the`
.
y
.
+ SS=18.guidance systems use an on board.,i: mirrors to q he, Soviets..A high::Commerce
add. ~. _ l
i
d
i
i
i
'
aser measur
ng
ev
ce acqu
red in Cal
Departmen source sT
-aiin a ineiw
ntrve
Sophisticated-111:&-technology, is,'reach-
ing the Soviet fornia'. by 'a KGB - (Soviet- intelligence),". what the CIA has found that the aser_
,armed'-forcesnearly ' as A1e
. Ain---A o<
Li
---- di
h
r
on
na
t
e
? . , a en
g _ g - is posing `as
sometimes on-the record and sometiihesA DR. MILES COSTICK, president of the, In u us
Institute on Strategic Trade here and a :: Soviet officials arrested Mare Andre De-
.As aresult,-Senate BankingaCammittees, frequent.debriefer of'Iron Curtaindefec- Geyser of.
, s he tried to
Chairman .Jake Gam GR 17;.Utalo- and- tors,.,'said -Russian engineers'hive _told' sell computer.-tapes-produced by Ameri-'
others warn; the U S.'must spend billions. -him in, interviews that they observed '~ can defense contractors for $500,000, The.
t
o counter Soviet mu,~ary m,ght..bnrrr,oi bearings from the Centalign ?B machines: "sup chi pneu the ues,gn for ouuaing a
U.S. technology bein? .installed in the SS-18s_ - .."super, chip"; technology that could be
ery that nearly-all the. engineeringbreak sion'grinders "ill advised".. and: noted:'
sile. : `The first immediate effect of increased
'thr~itighs: itrahe SovieS1 n ear-mist
. which>mak it'=acci rate:enougb, to'.. Soviet` 14IIRV, accuracy on. the American
imperil alts I,004 Ame>?icar a1inntensaa.peopleis the need to build and. deploy; the
if pt%r ciTlwa:iw.n {;,.~~:a-~;rre e?e.-s-a;-.e;.s?:., ICBM.; :which wil1'.cost over $30bi1~-
result. of buying and. stealing tF 5 tech-~ iron in constant clyaut ,aoitars. ,- U $ officials liave'..`coiicliided that in the'
.then the; Congressional:-Budget
Sine,-
nology.
-- i h - Office has estimated that the: M missile- last_19;.months the.:Soviets- have. gained
The-SS la:
l3
es: ap to
- th
acit
to b
ld
ic
o
e
s
-
pend slya uL,
e ~cap
yt
ui
roc
mputer
m
will Cost; $4O billiion ,
multiple-independently.-targ ?=nu t- chi3ttch'as those made:in California's
PS
S
b
uided , The
S -18 appears to
e the, costliest: x ~,
clear. warhKads
.
m
s
e graded b}ra.; oss to U.S interests, but. ttis far from Silicon Valley, south of Sair Francisco,
e
e
en e
r
computer. ;r
vers eng
ineered 3frorir a the only, case in which an ambitious and- ,which,has_ become' the`,world's -Ieading
er resarchand:.: development center-fOr.;
often illega} KGB operation hoc sa
pp
businessmen -.of technology. far more., build the components:-were: shipped, to
aideJhe? Soviet.bloc, Industries,- in boxes labeled "air
conditioners"' and-:::`'washing'machines '.',
.For-~.years,'American knowhow .and -equipment have,coptributed td'.
dviet,
military -might.- This is. the. `first ''of : a? three-part ':series.) examing; how the
F ussian -military: has taken advanta `e' of ? U.S.:technQlo
..-'Some other examples:.-
0 Commerce Departmentinrestigators
;found that the GEO Space Corp. 'of Hous-
ton exported seismographic equipment.
used for exploration of underground-oil,
and-gas to the Soviets-without obtaining
proper licenses:,. The computerized sens
ing equipment ;tiyas._adapted by,, rie'
Soviets,, for, use ,aboard Russian.. navai?
vessels, where it' can' detect a U.S: sub
=
marine- as. easily as.-.it can, a.Texas..gas
:.deposit:.- "? ,..
=Walter and Frances Spawr,? a? co~.pley
wbo operated; Corona; Cal:;-optical re-
search company, were indicted late last
year for, deliberately exporting-?sophisti-,
cated,.coppIpr-plated,; water-cooled' laser
'a
terrain-hugging '.Cruise missiles over.
Soviet territory.
Federal agents found a $450,004 letter
teed by Techmashimport,. a Soviet state
OONLtINO D
 Approved For Release 2007/03/06: CIA-R DP88B00443R001003880057-3
guaranteed through the:Moscow Narodng ': +INTER AL COMMERCE Departmenrj
Bank,.-.` zt; : ; ann L'TAstudiies have concluded tnat the
r4 ally Law eng S M rom ong ong. i o urn noies In ? U.. spy an ear y warn
ri i in e 1 ino satellites.
a ou aw }
.information oviet engineers apparently are study--.,
news publication,. "Tar a ,- an a s e
deal collapsed:
"MY- INFORMaTIUN`As., that- Law-
..other California banks-beca use bank own~,-
era carL-., get etail6d..'
ople,,',Wh6~.cirw~e 'in extortion
targets;"-Costick-=said.',`,.
`-At the- Co --c4-1 e a tin ere-~,
:'forrnants from. the, business.,communay,
un erwor ,:. e , ter o : an -o er
intelligence-gat er
eyexecu ive no e a :. rams is Swln
.--in - G13 ac ivity" irr-the-last year
cases, move through. New;Yo&andi about -
'
.Chicago is.:
.25, per.-,deht are. in California.,t~
'another e
He said that=the case involvingSpawr
ing the possibility of placing the Spawr ..
low the' targeted. U.S satellite while a
second: Soviet satellite orbits above the.
A. laser-beaiii: would-then be generated:
criminal?penaltiee?:imposed iiz?the-Spawr
case and irr"similar cases appear light;
' encouraged.'': because Walter Sbawr re-
:ceived a.10-year jail term Even though
all :but. six :months :was suspended. foi
ai adversaries }
- - -
have been trading partners throughout to bepartrpent of Comverce :figures;r.
hi
l
d
f
u
'
r
y one-t
. o
gh
this century, even before:the 1917 Bol-.;: That: amount: is- ro
shevik Revolution--A1980 Senate study the. trade-in 197.8 between the U S: and _i
noted, for example, that. In 1914 Singer Taiwan-
Sawing . Machine- Co had. holdings
=S:: goods.-sold`- ta the-
F. 1979, U:
worth more: than $100,000 in- Russian s were ?valued- at 519 billion; m a:
As partof. -the-1928-33` Soviet 'five Soviet
Year Pram;"'the=Arthur C: McGee Co: 1~8Q,7*after.;the Carter admtnistrahon
embargo imposedin-response,:Ea=the S
edbuiId'a large stee
of Cleveland help Soviet invasion-.of Afghanistan;'sale
piant-irrMagnitogorsk, USSR. The'mill' `,.
was :a--duplicate of the.United States ? plummeted 16 $85TTmillion, Commerce.-.
Stee' Corp Gary Works, according to iDepartment figures show "~r _ ~, ril
a: Senate' Permanent.-Investigations 'In.an`etfortto. prevent: damage:to
Subcommittee report:: 'Polytechnical; Institute?'to build a- device
called' an - accelerometer: ~:'.~._ ::_:... ,
s:? It ;measures -changes'-in ahe- pull of
gravity::on -an :airborne:'vehicle;. and is
crucial to:acjurate.flight_=form guided--1
 Approved For Releas "W1.~ R001003880057-3
elerometer project for the Soviet mis--
e program at: the time. he. was. sent as
an exchange. student to. Catholic,,Univer-.:
sity here to study, accelerometer .--coo-.
-structior- :i:`
Shortly after his return to-theU.S.S.R.,_
there was. a dramatic increases in- Soviet:-
missile accuracy.. Soon- after- that,' the-
Soviet Union. successfullyfired'a;,multi--;
ple-warhead missile. Costick~indicated-
that defectors' have told him that the first.
missiles breakthrough .came?.frbm'
Kochev'a- studies in the U .S z; ate s;
There-'are-indications that~.the'Soviet
drive to acquire U.S high-- technology is
moving away from the already successful"
missile project td; focus.on the-Arnerican.
:missile-carrying-Trident submarine fleet,;
which: still poses,a major threat'toaadver
The bigbreakthrough for the Soviets m;
.that area haabeen-the acquissition :of_tiny
electronic devices called array-. transform
processors from& Texas oil-exploration i
firm
_ These :components; called` APs; allow a
computer. to.;interpret_, almost. instantly
?millions of tiny variations in sounds being
bounced off.`deeply buried geologic' for
mations when 'explosives 'are detonated.
After the, devices were -acquired,
through GEO Space Corp. of Houston; it
was discovered that the Soviets . were
using them for computers to find American submarines by analyzing tiny. varia
Lions in sonar. signals, not for geological
.exploration.
Costick told a. Senate' committee:::"I
have interviewed; for two days aformer.
Soviet intelligence: specialist;, a- geologist
by profession; -who revealed to me than he.:
and Soviet Navy personnel-trained in
Houston-- had carried on. board- Soviet<
submarines.-'.'.. APs and> installed them=
'there next`-to .the' shipboard: computers."`;
Tuesday: How- Soviets use -the
American: system.. ":t . .
 For Release 2007/03/06: CIA-RDP88B00443R001003880057-3
CHICAGO TRIBUNE
0
By. James Coates ,,, W,a
CncaQo 7nbtm~ Proa~r Swvgs e i. a`' .. , f s: : E'Of tiAarc?., d..;,,a-- ~, . ' . ". #
x, r
S inmrary? might This th
is.. u`luIPMent have contrib
year United.: leasttw e' final article
ice"lase `rt the Russian mi(ita in a three-part uted to Soviet
seriesexamining how
Year United.States. officials-moved onI}~ ryhas taken advanta9 e.:-, S.
at the-last.rninute to h
tectinoto
lt
`
a
the shipmtP 9Y:
en o R r- _ -
mtary factory equipment to.the Soviet ;
Unlon 1 UN1jREDSOR
d
cut PERHAPS thous,an
esplt r WhiteansactionsHouse f:other limes V. lean
ordersto o ds Am workers
er
off all such:tr .. There
t r
S. technolo h as beena. roduce several ty It he vie
" - . jnc.c
On March} i iPassed ?.to- the it S:S.R. a bargain in t e e
es o ve ~c es
98~Commerce 5ecre- r basement rates: S
tar
r
Phil
y
m miss o
ipKlutmickto
me expt Hv
i a auncrers t
ersae com- ; . .5. s
at
sen custms agents. r puted"that it would- have cost-Moscow: gnanstan o'ra e
from here toyNew York -to.. mbargo-??rouahlv'slnn pv sate rtes oc in Af.;
frotm: - - - -
n m
atio
ltsasnucry..Experts current level of technological"expert :
had found that the equi
m
nt
Vr lj
p
e
told
would ct it had "tbl
ise ItAmericandeb debriefing off a sao
for Soviet helicopters--u--,no. otained it from the West numerous instances inat.east in half the overhaul time period As a~-result, Garn andotherexp.:-7 direct!
, i4IIG _ e which the maita ,Ame Tupolev bombers ins Afghanistan and with,a staggering U S ders are efense b dget of negotiators ins establishment e acquired cyF
high!
~else}vhere - gY hardware that. Russia
New ork
`_ ~? $189_ billion this-year and more nextyear : ` peaceful uses isted they wanted fo
'Officials ..had rem much of it needed to combat: Soviet ;- Soviet dissident Anatol
fused to stop the shlpmenf and the crates mllita '" .
were on pallets awaitlen r military Prowess acquired: directly from was charged, in
a>R y Shcharawith
shipment "when . U.S. sources.-. directly the agents arrived froi:rhere, accordin merican inteltlcence or aniiations . his country hadviolat U.S. D court with
to a report presented in-1984 to the Senate have traced Soviet. ac uisitions illegally. telling Western journalists than
Governmental Affairs -98G tee by pat t e R a from of Commerce a' ePartmentl
Jake Garr (R. fairs a an Ya com- ican computers in itms emili ay using Amer-
' :- ? __ _: uters w is are- 1rtua co res- t e
BM 36;
On _ 370 an E Series, to the Strella programs.:
May 6; 198P,-4~rmonths-afterSoviet: EACHfYEAR 11000 Soviet businessment
units swarmed otheAfghaaistan trop a e ie miss el. a copy o t e Red and roughly 6,000 visitors from Easterni
tier in. trucks; Itn over eii the American Eye weapon
designed and supplied-. aRiver U.S. sto a
plant,' FROM THE ROLLS-Royce engines mss to u iri r t co psr fan out officers across
and nd dis- they
in Russia, Pentagon agents final fo ng forced ~powerng Soviet troop transports to the- U.S. Commerce Department license. c
the bureaucracy.to halt thesh! went of a:;; . Pills. satin Q b technological items under
0-foot-long diesel engine_asipmey.Iine, United States Stet the 1930s, desi ed
Which would ha -engbled~the facto Corp., rWestern warned bus nessmenito be . warp, because!
? military
which t ~ s mow' m ne rywhere in the Soviet often these business' "weals" are simply a
.Experts, ruse
studying the-steady il>?auro
American technology- t44t Russian.-tanks , cap p : i the'1 I9 973 lion to through factories and obtain informal
t to
tured ;t h conversations:" ,
hrough pure the .Soviets Mideast wat, were found to be'i
oses;-- theft;;briberp us
- Such and -mopes and.other : equipme... mation ent m n fac a` is not a S
metimes simply- ooFyngfronr- Iamui-~ ? :tared: in th
so ovietipract ce alone U S offi.
s
g 1
ous o American ' e U.S U.S. Senate committee ; cials in the Soviet- Union: make similar
these two cases are ;note that ,was- told recently by Pentagon .official efforts. A to_ Navy source told, for exaan
are considered sucressfa) 'The Soviet's ZIL' lantses TI.S.-made ` Ple, of. the time U.S. Vice Adm.'H
in, that the transfer was -stopped yman
ui meat which is operated b teams of Rickover had his engineers design a tiny
:
- -=~~ radiation sensor inside :a'-fountain pen so-1
he could- carry-it-aboard a: Soviet vessel
on a ceremoniai:y-isit and. ferret.out reac-
tor secrets
-. ~._
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But. -intelligence' co ity experts
complain a i is much e Bier or ovie
operatives to--glean- information in the
en U.S. society than for Americans to
wor in the U.S.S.R. an astern bloc.
where no such freedom . is allowed.
IN TESTIMONY before the -Senate
Governmental Affairs. Committee, Com-
merce Department..officials outlined
ways that.Soviet businessmen. -elicit use-
ful data simply by`..vorking within the
American system..
One of the more effective. ways is to
approach several. competing U.S. firms
and to ask them to obtain alicense from
he Commerce Department for exports to
he. Soviet Union. The' license applica-
uons; which are shared :with' the- Soviets
)ut kept frord.-:U.S ..public .view, often
:obtain? key data,about the-process being
ought,, according to:testimony. by' 'dc
Hirscl:oirrr,.a .former' export chief at ~he-
agencya..=:-:.= .:. `,=' y< ` ?.- _ -
Another way to-obtain information is. to
apply for a patent.. The US.-government
wilt then make- a search of-other- patents
and report to "the applicant certain details
of. any industrial process-similar to -the
Dne' he . wants-. to patent,. Hirschorn -said.:
OFTEN. AS IN. the case of the aborted
March-, 1980,=shipmentof :aircraft
machinery, -the, free;:enterprise system
and. federal. bureaucracy become Soviet
allies in the technology drain:= >. "
In that case, Sermetel,:Inc:; a company
n- Limerick;.-Pa.;' Signed. . `a= contract 'to
export: to the Soviet. Uniorr-'a? patented
eramic-metallic .(CERMET) oxide treat=
mentprncess for the moving parts of jet
urbines- The-sale meant?millions to the
ompany -and it -was. approved and
icensed by-the Commerce. Department.
Concerned Departme . nt-of Defense offi-
ials' objected, that the'-sale?.would' give
he Soviets not only machines to- treat
heir planes fora couple- of years;. ?as
riginally intended; but also-the capabili-
y of creating. he-crnciM process them -
c
'The CERNIET-jsr`ocess_cdafs
i
t
,;.
c
l
c
t
L
o
t
machine-with- a preservative so tough-
engine parts-last several times-long-
that
er and. overhaul .dime is. "greatly . re-:.
duced