AMERICAN ELECTRONICS ASSOCIATION TEXAS COUNCIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89G00720R000700960001-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 11
• Document Creation Date: December 23, 2016
• Document Release Date: August 20, 2012
• Sequence Number: 1
• Publication Date: February 16, 1988
• Content Type: MISC

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AMERICAN ELECTRONICS ASSOCIATION TEXAS COUNCIL
16 FEBRUARY 1988
TECHNOLOGY TRANSFER
BY ROBERT M. GATES
DEPUTY DIRECTOR OF CENTRAL INTELLIGENCE
I WOULD LIKE TO TALK TODAY ABOUT TECHNOLOGY TRANSFER,
SPECIFICALLY, TECHNOLOGY TRANSFER TO THE SOVIET UNION AND OTHER
WARSAW PACT STATES, WHILE THE UNITED STATES AND ITS ALLIES
HAVE SOUGHT TO PREVENT THE EXPORT OF MILITARILY USEFUL
EQUIPMENT AND TECHNOLOGY TO THE WARSAW PACT FOR SOME 40 YEARS,
TECHNOLOGY TRANSFER CONTINUES TO BE THE SUBJECT OF DEBATE AND
DISHARMONY HERE AT HOME AND ABROAD. THE SUCCESS THE SOVIETS
HAVE ENJOYED IN USING OUR KNOW?HOW TO DEVELOP AND ENHANCE THEIR
OWN SYSTEMS POSES A GENUINE THREAT TO OUR NATIONAL SECURITY.
NOW, TECHNOLOGY TRANSFER IS NOTHING NEW TO RUSSIA. PERHAPS
THE EARLIEST EXAMPLE OF MASSIVE TECHNOLOGY TRANSFER TO
STRENGTHEN RUSSIA MILITARILY WAS DURING THE REIGN OF PETER THE
GREAT AT THE END OF THE SEVENTEENTH CENTURY. PETER HIMSELF
TRAVELED TO THE WEST -- TO SWEDEN, GERMANY, HOLLAND AND ENGLAND
-- WHERE HE DREW THE PLANS OF WESTERN FORTIFICATIONS; WORKED IN
A SHIPYARD; BOUGHT TWENTY FACTORIES, HIRED SOME 800 TECHNICAL
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SPECIALISTS; AND TOOK HOME REMARKABLE KNOWLEDGE AND EXPERTISE
ON MILITARY RELATED TECHNOLOGIES. THIS HAS BEEN REPEATED TIME
AND AGAIN IN THE FOLLOWING THREE CENTURIES, RIGHT TO THE
PRESENT DAY.
FROM THE SCOPE AND VOLUME OF TRANSACTIONS WE HAVE OBSERVED,
IT IS CLEAR THAT THE SOVIET APPETITE FOR WESTERN TECHNOLOGY IS
ENORMOUS. FOR EXAMPLE:
TO IMPROVE DESIGNS OF FUTURE WEAPONS SYSTEMS AND TO
HELP DEVELOP COUNTERMEASURES FOR WESTERN SYSTEMS, THE
SOVIETS COLLECTED 6,000 ? 10,000 HARDWARE ITEMS AND
100,000 DOCUMENTS EACH YEAR IN THE LATE 1970S AND EARLY
1980S.
TO BOLSTER THE ACTUAL PRODUCTION OF WEAPONS SYSTEMS,
THE SOVIETS ACQUIRED -- ILLEGALLY -- HUNDREDS AND IN
SOME CASES THOUSANDS OF MACHINE TOOLS, COMPUTER, AND
MICROELECTRONIC MANUFACTURING EQUIPMENT.
-- TO ENHANCE THEIR OWN EQUIPMENT AND IN SOME CASES WEAPON
SYSTEMS, THEY ILLEGALLY ACQUIRE AT LEAST 50 MILLION
INTEGRATED CIRCUITS EACH YEAR.
IT IS IMPORTANT TO NOTE THAT ABOUT 60 PERCENT OF THE
DOCUMENTS AND HARDWARE ACQUISITIONS CONSIDERED TO BE THE MOST
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SIGNIFICANT TO THE SOVIETS ARE OF US ORIGIN. THESE
ACQUISITIONS, HOWEVER, ARE NOT NECESSARILY COLLECTED IN THE
UNITED STATES.
THE BENEFITS OF WESTERN TECHNOLOGY FOR THE WARSAW PACT HAVE
BEEN TREMENDOUS.
IN THE EARLY 1980S, FOR EXAMPLE, MORE THAN 5,000
MILITARY RELATED PROJECTS IN THE SOVIET UNION BENEFITED
FROM WESTERN HARDWARE AND TECHNICAL DOCUMENTS EACH
YEAR. OVER HALF OF THESE PROJECTS WERE IN THE
ELECTRONICS AND THE ARMOR AND ELECTRO?OPTICS INDUSTRIES.
IN TERMS OF SPECIFIC WEAPONS SYSTEMS, WE HAVE SEEN THE
IMPACT OF PURLOINED WESTERN TECHNOLOGY IN SOVIET
RADARS, GUIDANCE SYSTEMS, CRUISE MISSILES,
ANTI?SUBMARINE WEAPONS, LASER?GUIDED ARTILLERY SHELLS,
AND ANTI?TANK MISSILES, TO NAME ONLY A FEW.
THE SOVIET ACQUISITION EFFORT CONSISTS OF THREE DISTINCT,
BUT SOMEWHAT OVERLAPPING CHANNELS. THE FIRST WE REFER TO AS
THE OPEN SOURCE CHANNEL. WE ESTIMATE THAT EVERY YEAR NEARLY
HALF A MILLION UNCLASSIFIED DOCUMENTS ON TECHNICAL SUBJECTS ARE
ACQUIRED BY THE SOVIETS. THIS CHANNEL IS THE LEAST IMPORTANT
IN TERMS OF MILITARY CRITICALITY, BUT IT IS USED TO SUPPORT AND
IMPROVE THE TARGETING OF THE OTHER CHANNELS. OTHER THAN A MORE
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THOROUGH REVIEW OF UNCLASSIFIED GOVERNMENT PUBLICATIONS, THERE
IS LITTLE WE CAN DO TO PREVENT THE LOSS OF KNOW?HOW THROUGH
THIS CHANNEL. THIS IS SIMPLY THE COST OF DOING BUSINESS IN A
FREE SOCIETY.
IN TERMS OF DIRECT IMPACT ON STRATEGIC ISSUES, THE SECOND
AND THIRD CHANNELS ARE MORE IMPORTANT. THE SECOND CHANNEL,
WHICH FOCUSES ON THE DESIGN PHASE OF WEAPONS, IS RUN BY THE
USSR MILITARY INDUSTRIAL COMMISSION AND SUPPORTS THE DEFENSE
INDUSTRIAL MINISTRIES. THIS ACQUISITION CHANNEL OR APPROACH
TARGETS SEEK ONE?OF?A?KIND MILITARY AND DUAL?USE HARDWARE,
BLUEPRINTS, PRODUCT SAMPLES, AND TEST EQUIPMENT TO IMPROVE THE
TECHNICAL LEVELS AND PERFORMANCE OF SOVIET WEAPONS AND MILITARY
EQUIPMENT. THIS PROGRAM, ON WHICH THE SOVIETS SPEND ABOUT $1.4
BILLION EACH YEAR, INVOLVES ESPIONAGE BY HOSTILE INTELLIGENCE
OFFICERS -- PRIMARILY KGB -- OVERT COLLECTION BY BLOC
OFFICIALS, ACQUISITION BY SCIENTIFIC EXCHANGE PROGRAM
PARTICIPANTS, AND ILLEGAL TRADE?RELATED ACTIVITY. IN THE LATE
1970S AND EARLY 1980S, THIS PROGRAM REDIRECTED SOVIET TECHNICAL
APPROACHES IN ABOUT 100 PROJECTS EACH YEAR FOR ONGOING WEAPONS
SYSTEMS AND KEY MILITARY EQUIPMENT. IT ALSO INITIATED SEVERAL
HUNDRED NEW RESEARCH PROJECTS ANNUALLY ON TOPICS THAT HAD NOT
BEEN UNDER CONSIDERATION. THE PROGRAM RAISED THE TECHNICAL
LEVEL OF SEVERAL THOUSAND DEVELOPMENTAL PROJECTS EACH YEAR.
MOREOVER, IT ALLOWED ELIMINATION OR SHORTENED DEVELOPMENTAL
PHASES OF MORE THAN A THOUSAND MILITARY RESEARCH PROJECTS EACH
YEAR.
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THE THIRD CHANNEL OR PROGRAM, FOCUSES NOT ON ACQUIRING
TECHNOLOGY RELEVANT TO THE DESIGN PHASE BUT RATHER ON
PRODUCTION ITSELF. THIS PROGRAM INVOLVES THE SOVIET MINISTRY
OF FOREIGN TRADE AND SOVIET INTELLIGENCE SERVICES. THEY MANAGE
AN ELABORATE TRADE DIVERSION PROGRAM TO OBTAIN -- LEGALLY AND
ILLEGALLY -- DUAL?USE MANUFACTURING AND TEST EQUIPMENT FOR
DIRECT USE IN SOVIET PRODUCTION LINES. THIS PROGRAM SEEKS
EXPORT CONTROLLED COMPUTERS, MICROELECTRONICS, MACHINE TOOLS,
ROBOTICS, AND OTHER EQUIPMENT TO INCREASE THE OUTPUT OF SOVIET
DEFENSE?RELATED INDUSTRIES. THE SOVIETS USE WESTERN
BUSINESSMEN AND TRADE BROKERS, DUMMY FIRMS, DECEPTIVE EQUIPMENT
DESCRIPTIONS, FALSE LICENSES, AND OTHER METHODS TO ACQUIRE THIS
EQUIPMENT.
THE SOVIET UNION HAS MADE GREAT STRIDES IN MICROELECTRONICS
OVER THE LAST FEW YEARS BY RELYING ON THESE SCHEMES. THIS
SOVIET PROGRESS HAS REDUCED THE OVERALL WESTERN LEAD IN
MICROELECTRONICS FROM 10-12 YEARS IN THE MID-1970S TO 4 TO 6
YEARS TODAY.
AGAIN, IT IS IMPORTANT TO KEEP IN MIND TWO POINTS ABOUT THE
SECOND AND THIRD CHANNELS I HAVE DESCRIBED:
-- FIRST, THE MILITARY INDUSTRIAL COMMISSION PROGRAM HAS
ITS BIGGEST IMPACT IN THE DESIGN STAGE OF A SOVIET
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WEAPON, WHILE THE TRADE DIVERSION EFFORT HAS ITS IMPACT
IN THE PRODUCTION/DEPLOYMENT STAGES.
SECOND, BECAUSE OF WHAT THEY COLLECT AND WHO COLLECTS
IT, THE BEST DEFENSE AGAINST THE MILITARY INDUSTRIAL
COMMISSION PROGRAM IS GOOD COUNTERINTELLIGENCE AND GOOD
INDUSTRIAL SECURITY. THE BEST DEFENSE AGAINST THE
TRADE DIVERSION PROGRAM IS EXPORT ENFORCEMENT.
I'D LIKE TO TURN NOW TO THE AMERICAN INTELLIGENCE
COMMUNITY'S ROLE IN STEMMING THE FLOW OF MILITARILY?USEFUL
TECHNOLOGY TO THE SOVIETS.
OUR PRIMARY ROLE HAS BEEN AS COLLECTORS AND ANALYSTS OF
INFORMATION. TWICE IN THE PAST FEW YEARS WE HAVE MADE A LARGE
VOLUME OF FACTS OPENLY AVAILABLE ABOUT THE SOVIET EFFORT TO
ACQUIRE TECHNOLOGY, AND WE HAVE PROVIDED ANALYTICAL CONCLUSIONS
ABOUT THE IMPACT OF THIS EFFORT ON THE EAST?WEST STRATEGIC
BALANCE. SOME OF OUR ANALYSIS HAS MADE PEOPLE ANGRY, SOMETIMES
AT US. FOR EXAMPLE:
OUR DISCOVERY AND ANALYSIS OF THE MORE EGREGIOUS TECH
TRANSFER CASES -- INCLUDING A RECENT ONE THAT HELPED
THE SOVIETS QUIET THEIR SUBMARINES -- HAS CONTRIBUTED
TO THE CONGRESSIONAL DRIVE TO MAKE COMMITTEE ON
MULTILATERAL EXPORT CONTROLS (COCOM) A MORE EFFECTIVE
ORGANIZATION.
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OUR RESEARCH SHOWING THAT KEY COCOM COUNTRIES LACK THE
MEANS AND IN SOME CASES THE WILL TO ENFORCE EXPORT
CONTROLS DID NOT MAKE US MANY FRIENDS OVERSEAS.
OUR DATA SHOWING THAT THE SOVIETS STILL WANT US
TECHNOLOGY AND EQUIPMENT MORE THAN ANY OTHER SOURCE IS
CERTAINLY A VOTE OF CONFIDENCE TO US INDUSTRY. BUT IT
NECESSARILY UNDERCUTS INDUSTRY EFFORTS FOR WIDESPREAD
DECONTROL OF THEIR PRODUCTS.
OUR CONCLUSIONS HAVE EVOKED DIFFERENT REACTIONS FROM
AMERICAN SCHOLARS, INTELLIGENCE OFFICERS, POLICYMAKERS, AND
BUSINESSMEN. ALMOST EVERYONE AGREES, HOWEVER, THAT INDUSTRIAL
ESPIONAGE -- WHERE THE WARSAW PACT ACTUALLY STEALS MILITARY AND
MILITARY RELATED TECHNOLOGY -- IS HARMFUL AND US ACTION TO STOP
IT AND PUNISH OFFENDERS IS NOT ONLY APPROPRIATE BUT NECESSARY
AND LAUDABLE.
BEYOND THAT, THE AGREEMENT STOPS. THE GREAT DEBATE TENDS
TO FOCUS ON WHAT AND HOW TO CONTROL DUAL?USE, UNCLASSIFIED
TECHNOLOGY, EQUIPMENT, COMPONENTS, AND PRODUCTS. THIS GROUP IN
PARTICULAR PRESUMABLY FEELS STRONGLY ABOUT PROBLEMS RELATED TO
EXPORT CONTROLS.
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OUR ROLE IN THIS DEBATE -- A ROLE THAT HAS GROWN MARKEDLY
IN RECENT YEARS -- IS MAKING JUDGMENTS ON THE IMPORTANCE MOSCOW
ATTACHES TO DIFFERENT TYPES OF MILITARILY CRITICAL TECHNOLOGY,
NOW AND IN THE FUTURE. CIA'S WORK SHOWS THAT ILLEGAL ACCESS TO
WESTERN TECHNOLOGY THROUGH VIOLATIONS OF EXPORT CONTROL LAWS
HAS HAD A SIGNIFICANT IMPACT ON SOVIET WEAPONS SYSTEMS. THERE
ARE MANY EXAMPLES.
-- WESTERN MACHINE TOOLS ARE HELPING PRODUCE SOVIET
SUBMARINE PROPELLERS AT A RATE AND QUALITY FAR BEYOND
SOVIET CAPABILITIES.
ACCESS TO WESTERN MICROELECTRONIC PRODUCTION EQUIPMENT
HAS SOLVED SOME OF THE MAJOR QUALITY CONTROL AND YIELD
PROBLEMS THE SOVIETS HAD FOR MILITARY?SPECIFIC
INTEGRATED CIRCUITS (ICS).
-- WESTERN COMPUTERS AND SOFTWARE HAVE GIVEN MOSCOW THE
ABILITY TO DESIGN THEIR OWN MILITARY?SPECIFIC ICS.
FINALLY, AND PERHAPS MOST IMPORTANT, WE BELIEVE MOSCOW'S
APPETITE FOR THIS TECHNOLOGY IS GROWING, PARTICULARLY IN THE
AREA OF INFORMATION TECHNOLOGY. THE SOVIET STRATEGY APPEARS TO
BE MODERNIZING THE ELECTRONICS?BASED SECTOR OF THE ECONOMY
BEFORE MOVING TO INVEST MORE HEAVILY, IN THE 1990'S, IN
MILITARY PRODUCTION FACILITIES.
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IN THE EARLY 1980S, CONGRESS DIRECTED THAT CIA ENSURE THAT
ALL RELEVANT INTELLIGENCE WAS BEING FACTORED INTO EXPORT
LICENSING DECISIONS. IN RESPONSE TO THIS, THE TECHNOLOGY
TRANSFER ASSESSMENT CENTER AT CIA SET UP AN EXTENSIVE
ALL?SOURCE DATABASE ON FOREIGN DIVERTERS OF TECHNOLOGY WHICH WE
USE TO ADVISE THE COMMERCE DEPARTMENT AND OTHERS IN THE EXPORT
CONTROL COMMUNITY ON THE RISKS OF DIVERSION.
OUR SOURCES ARE VARIED AND EXTENSIVE. THROUGHOUT THE
EXPORT CONTROL COMMUNITY, THE KEY SOURCES ARE US BUSINESSMEN
WHO PROVIDE TIP?OFFS ON POTENTIAL DIVERTERS AND QUESTIONABLE
SALES INQUIRIES. WITHOUT THIS INFORMATION THE COMMUNITY WOULD
BE SERIOUSLY HANDICAPPED.
NEITHER THE UNITED STATES NOR COCOM CAN STOP THE SOVIET
UNION FROM ACQUIRING WESTERN TECHNOLOGY. RATHER, THE GOAL IS
TO SLOW THE ACQUISITION OF MILITARILY CRITICAL TECHNOLOGY BY
THE SOVIETS TO A RATE THAT MORE CLOSELY RESEMBLES THE PACE OF
INDIGENOUS DESIGN, DEVELOPMENT, PRODUCTION, AND DEPLOYMENT IN
THE SOVIET UNION. THE KEY ASSUMPTION, HOWEVER, IS THAT COCOM
-- PARTICULARLY THE UNITED STATES -- CAN DETERMINE "WHAT IS
CRITICAL" SO AS TO DETERMINE WHAT CAN AND SHOULD BE CONTROLLED.
WE HAVE DEVELOPED A MEANS TO SIMULATE THE SOVIET
DECISIONMAKING PROCESS FOR WEAPONS DESIGN, DEVELOPMENT,
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PRODUCTION, AND DEPLOYMENT, WHICH OVER RECENT HISTORY HAS BEEN
FAIRLY PREDICTABLE. USING THIS SIMULATION, WE HAVE FORMULATED
A LIST OF SOVIET MILITARY SYSTEMS -- CURRENT ONES TO BE
ENHANCED OR NEW ONES ABOUT TO ENTER PRODUCTION OR TESTING. CIA
WEAPONS ANALYSTS THEN DEVELOPED A LIST OF TECHNOLOGIES -- IN
PRIORITY ORDER -- NEEDED TO ACHIEVE PERFORMANCE LEVELS. FROM
THAT LIST, CURRENT SOVIET CAPABILITIES ARE SUBTRACTED TO
DETERMINE WHAT MOSCOW NEEDS FROM THE WEST. WHAT IS LEFT IS A
LIST THAT COCOM SHOULD CONSIDER CONTROLLING, IN A PRIORITY
ORDER OF IMPORTANCE FROM MOSCOW'S VIEW. THE FINAL COMPOSITION
OF THE LIST IS A POLITICAL DECISION.
OUR EVIDENCE SHOWS A STRONG UNDERPINNING OF SUPPORT FOR A
CONTROL SYSTEM THAT US BUSINESS BELIEVES IS FAIR AND THAT
CONTROLS MILITARILY CRITICAL ITEMS. THE SAME HOLDS TRUE FOR
OUR ALLIES. WHENEVER THE UNITED STATES HAS APPROACHED COCOM
WITH EVIDENCE THAT A PRODUCT OR TECHNOLOGY IS BEING USED OR
COULD BE USED IN A SOVIET WEAPONS PROGRAM OR MILITARY SYSTEM,
WE HAVE RECEIVED STRONG SUPPORT.
LIKEWISE, WE NEED YOUR CONTINUED SUPPORT, BOTH AS A SOURCE
OF INFORMATION ON TRADE DIVERTERS AND AS A SOURCE OF
INFORMATION ON TECHNOLOGICAL ISSUES. WE NEED TO TALK TO PEOPLE
WHO ACTUALLY TRANSLATE TECHNOLOGY INTO ENGINEERING DIAGRAMS AND
PRODUCTION EQUIPMENT. WE NEED TO HAVE ACCESS TO PEOPLE WHO
ACTUALLY BUILD WEAPONS SYSTEMS WITH THE DUAL?USE EQUIPMENT ON
THE CONTROL LIST.
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CIA WILL CONTINUE TO PLACE A HIGH PRIORITY ON THE
TECHNOLOGY TRANSFER ISSUES. AS I INDICATED, WE HAVE EVERY
REASON TO BELIEVE THAT SOVIET INDUSTRIAL ESPIONAGE WILL
INTENSIFY IN THE 1990'S. AND THE SOVIETS WILL CONTINUE TO
DEVOTE WHATEVER RESOURCES AND MANPOWER ARE NECESSARY TO FULFILL
THEIR MOST CRITICAL MILITARY COLLECTION REQUIREMENTS.
YOUR CONTINUED SUPPORT AND COOPERATION IN STEMMING THE FLOW
OF CRITICAL TECHNOLOGY TO THE SOVIET UNION AND OTHER WARSAW
PACT STATES IS A KEY PART OF OUR EFFORT. THANK YOU.
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