Technology Transfer And National Security Issues

Congressional Research Service

n

0

-.

2.

The Library of Congress

Washington, D.C. 20540

TECHNOLOGY TRANSFER AND NATIONAL SECURITY ISSUES

IP0209T

The transfer of technology from the West to the East has been an

issue of serious debate since the introduction of detente in the 1970s.

Recent disclosures by the Central Intelligence Agency (CIA) indicate

that the Soviet and East European intelligence services have,been so

successful in acquiring U.S. technology that there now exists a significant threat to the national security of the United States. The CIA

speculates that the Soviets and East Europeans will increase their

efforts for legal and illegal acquisition of U.S. technology in several

areas :

o Computers -- systems designs, concepts, hardware and software

o Microelectronics -- complete industrial processes and equipment

for Soviet military requirementa

o Lasers -- optical, pulsed power and other laser-related components

for laser weapons

o Radars -- air defense radars for missile systems

The Reagan Administration has proposed a package of countermeasures

to curtail the flow of military-related technology. This includes:

strengthening U.S. export controls, increasing efforts against foreign

industrial espionage, expanding the list of "military critical technologies" which should not be exported, and influencing the academic

community to reduce Soviet access to U.S. research through the free

exchange of information.

This Info Pack provides unclassified, background information and

analysis of the politico-military impact of technology transfers on the

United States and the NATO allies. It contains proposals by the Reagan

Administration to redress the problems posed to the national security

by the loss of U.S. technology to the Soviet Union.

Congressional Reference

Division

Soviet Acquisition of

Western ~ e c h n o l o ~ ~

United S t a t e s Central I n t e l l i g e n c e Agency

Contents

Introduction

Soviet Acquisition of Western Technology:

- - A National-Level Program

Soviet Mechanisms for Acquiring Western Technology

Soviet Acquisitions and Benefits

Outlmk for the 1989s

Page

1

1

2

5

11

Appeadix

Projected Soviet Technological Needs and Aquisition Targets

Through the 1980s

Reprinted by the Library of Congress, Congressional Research Service,

May 1982.

13

Soviet Acquisition of

Western Technology

Introduction

The United States and its Allies traditionally have

relied on the technological superiority of their weag

ons to preserve a credible counterforce to the quantitative superiority of the Wanaw Pact. But that

technical superiority is eroding as the Soviet Union

and its Allies introduce more and more sophisticated

weaponry-weapons that all too often are manufactured with the direct help of Western technology.'

Stopping the Soviets' extensive aquisition of military-related Western technology-in ways that,are

both effective and appropriate in our open society-is

one of the most complex and urgent issues facing the

Free World today.

This program accords top priority to the military and

military-related industry, and major attention is also

given to the civilian sectors of Soviet industry that

support military production.

The Soviets and their Wanaw P a a allies have o b

tained vast amounts of militarily significant Western .

technology and quipment through legaI and illegal

means. They have succeeded in aquiring the most

advanced Western technology by using, in part, their

scientific and technological agreements with the West

to facilitate access to the new technologies that are

emerging from the Free World's applied scientific

research efforts; by spending their scarce hard currency to illegally purchase controlled equipment, as well

as to legally purchase uncontrolled advanctd Western

This report describes the Soviet program to aquire

technologies having military-industrial applications;

US and Western technology, the aquisition mechanisms used, the spectrum of Wcstern aquisitions that and by tasking their intelligence services to aquire

have contributed to Soviet military might, the project- illegally those US and Western technologies that are

ed Soviet priority needs for Western technology, and classified and export controlled.

the problems of effectively stemming the transfer of

Western technology that could someday find applica- The Soviets have b u n very successful in aquiring

Western technology by blending acquisitions legally

tion in weapons used to threaten the West.

and illegally acquired by different government organizations. The Soviet intelligence services-the Soviet

Soviet Acquisition of Western Technology:

Committee for State Security (KGB) and the Chief

A National-Level Program

~ Soviet Union has devoted Intelligence Directorate of the Soviet Gcncral Staff

Since at least the 1 9 3 0 ~the

the primary responsibility for collecting

vast amounts of its financial and manpower resources (GRU)-have

Western classified, export-controlled, and proprietary

to the aquisition of Western technology that would

enhance its military power and improve the efficiency technology, using both clandtstine and oven collecof its military manufacturing technology. Today this tion methods. They in turn make extensive use of

Soviet effort is massive, well planned, and well man- many of the East European Intelligence Services (see

aged-a national-level program approved at the high- inset, p. 2); for their efforts in aquiring Western

technology, these countries are paid in part with

est party and governmental levels.

Soviet military quipment and weapons.

' While there are numerous intcrpreklions of "technology" lor

weapons. it is defintd in this rcport as the application olrcientDc

knowledge, technical information. know-how, critical rnateriars,

keystone manufacturing and 1 s t equipment, and end produrn .

which'are arcntial to the restarch and development as well as the

wries manufaaurc of modem highqualily weapons and military

cquipmcnl. Western technology is defined as that t&nobgy

'dmlopcd by the Free World.

Clandestine acquisition of the West's most advanctd

military-related quiprnent and know-how by the

KGB and GRU is a major and growing problem.

They have major responsibilities for both legal and

illegal acquisitions and purchases; they work closely

with the KGB and GRU in arranging trade aiverIn the late 1970s aformer East European intelligence sions. East European trade companies assist them in

oflcer revealed organizational and iargeting details clandestine and illegal acquisition operations.

related to Soviet-directed arquisirions 4/ Western

Official Sovid and East European science and ttchtechnology by East European intelligence sentices,

nology (S&T) organizations also play a major role in

parricularly military-indunrial many/acturingboth

open and clandestine acquisition of Western

related ~echnologiesihar were given the highest priortechnology.

Tbe Soviet State Committee for Scicna

ity for collection by ar least one East European

(GKNI) is the key player in amngand

Tahnology

intelligence service. Many technologies were acquired

ing

government-to-government

s c i t n a and *echnolrhrough dummy firms established in Western Europe

ogy apttcments to facilitate a-s

to and the acquisithat were succesdul in securing some d r h e most

as

well

as

new

technologies,

tion

of

established

advanced iechnologies in the West, including comincluding those just emerging from W s t m univeniputer, microelectronic, nuclear, and chemical

ties, laboratories, and high-technology firms. It is the

rechnologies.

G m that oversets tbe aUocation of scarce Soviet

hard currency for the legal purchase by various Soviet

In microelectronics,for example, many LISfirms

of selected Western ~ o l o g for

y !b

organizations

were targeted through their ut7iliates in Western

viet

m

i

l

i

t

a

r

y

panposts.

If

the

GKNT

is

unable

to

Europe; scientists, technicians, and commercial r e p

acquirr

tbe

r

y

kchnolopy

by

open or legal

resentorives also were succesdully recruited ro promeans, it tasks Soviet intelligence to clandestinely

vide irJotmation during their trips to Europe. Alaquire

the technology.

though most d r h e milirary and defense-industrial

East European Intelligence Services Arquire

Technologiesfor rhe Soviet Union

idormation acquired by East European ituelligence

services wen1 to the Soviets, much d i l was used by

r he East Europeans themselves to bc&t their military and civilian indunries. The computer, micre

electronic, and photographic areas were priority targets. The East European countries bendfiled considerably from microelectronic acquisitions, and

could nor have achieved the present level of develop

men1 in their computer indusrry withour illegal

acquisitions of Western technology.

It is the well-organized and w&coordinated use of all

these organizations that has made the Soviet program

to acquire Western technology so succssful. As a

result, the Soviets have acquired militarily significant

technologies and m'ticaIly important industrial Western technologies that have benefited every major

Soviet industry engaged in the research, dcveiopment,

and production of weapon systems.

Soviet MechPnisms for Acquiring Western Technology

Soviet aquisition mechanisms include: legal means

through open literature, through legal trade channtis,

These intelligence organizations have b u n so success- and .through student scientific and ttthnoiogical exful at acquiring Western technology that the manchanges and conferences; illegal means through trade

power levels they allocate to this effort have increased channels that evade US and Western (is. CoCom)'

significantly since the 1970s to the point where there export controls, including aquisitions by their intelliare now several.thousand technology c~llectionoffigence services through recruited a p t s and industrial

cers at work. These personnel, under various covers

'~ho-~oordinati'ngCommittee ( C o h ) was established in 1949 to

ranging from diplomats to journalists to trade offiserve as the forum for Watcrn efforts to dmlop a system of

cials, are assigned throughout the world.

strategic txpon amtrois. It is compostd af the Unitcd S u ~ athe

,

United Kingdom, Turkey, Portugal, Norway. the Nclherhndr,

Luxcmbou~g.Japan. luly. G=,

France, the Federal Republic of

Soviet foreign tjade organizations, or enterprises,

although quasi-independent entities, are partially sub- Gcnruny, Denmark Canada. and Belgium.

ordinated to the Ministry of Foreign Trade, and their

activities are closely coordinated by this Ministry.

,

espionage. While a large volume of technology is

acquired by nonintelligence personnel, the overwhelming majority of what the United States considers to be

militarily significant technology acquired by and for

the Soviets was obtained by the Soviet intelligence

services and their surrogates among the East European intelligence services. However, legal aquisitions

by other Soviet organizations are important since it is

often the combination of legally and illegally aquired

technologies that gives the Soviets the complete military or industrial capability they need.

microelectronics is the critical basis for the present

wide-ranging enhancements of Soviet military systems and for their continuing sop;histication.

Acquisitions through illegal trade channels often have

both industrial and military applications, and tbus are

important in the near term. Illegal aquisitions of

technology fall into two general categories, botb of

which are extremely difficult to detect and monitor.

One is the diversion of controlled technology from

legitimate trade channels to proscribed destinations.

This is done through US and foreign firms that are

Because of the priority accorded to the military over willing to engage in profitable impropriety; through

the civilian sectors of the Soviet economy, Western

agents-in-place in US or foreign firms or foreign

dual-use technology-ix., technology with both mili- subsidiaries of US firms; through Soviet- and East

tary and civilian applications-almost always finds its Europcan-owned firms locally chartered in tbe

way first into military industries, and subsequently

West; and through foreign purchasing agents (including arms dealers). For instance, to evade the US

into the civilian sectors of industries that support

embargo on microelectronic technology exports to the

military production. Thus, Soviet assurances that

Soviet Union, the Soviets and their surrogates have

legally purchased dual-use technology will k used

solely for civilian applications can seldom be accepted set up dummy corporations in the West that purchase

sophisticated microclcctronics manufacturing cqdp

at face value.

ment. This quipment is then shipped and reshipped,

sometimes with the knowledge of individuals in the

Legal aquisitions generally have their greatest imcompanies, to disguise its ultimate destination-tbe

pact on the Soviets' broad industrial base, and thus

Soviet Union or Eastern Europe. Botb the Soviet and

affect military technology on a relatively long-term

Warsaw Pact intelligence services are in the mainbasis. The Soviet Kama Truck Plant, for example,

was built over some seven yeais with massive imports stream of this illegal technology trade flow. The other

type of diversion is an in-place diversion, in which

of more than f 1.5 billion worth of US and West

European automotive production quipment and tech- legally acquired technology and equipment-in the

computer area, for example--are put to military end

nology. Large numbers of military-specification

trucks produced there in 198 1 are now being used by uses not authorized in export license applications,

Soviet forces in Afghanistan and by Soviet military

units in Eastern.Europc opposite NATO forces. Simi- The aquisitions that most directly a f f m Soviet

military development have come from intelligence

larly, large Soviet purchases of printed circuit board

technology and numerically controlled machine tools collection and related illegal trade diversions. Soviet

from the West already have benefited military manu- Bloc inte!ligence services have concentrated their

effort in the United States, Western Europe, and

facturing sectors.

Japan. These scrvices target defense contractors and

The Soviets give priority to those purchases that meet high-technology firms working on advanced technology (both classified and unclassified), foreign firms

the direct needs of the Soviet military-industrial

complex by paying for them in hard c~rrency.~Over and subsidiaries of US firms abroad, and international organizations with access to advanced and/or

the past 10 years, the Soviets legally and illegally

proprietary technology, including access to computer

purchased large quantities of Western high-technoldata base networks throughout the world.

ogy microelectronics quipment that has enabled

thtrri to build their own military microeltctronics

industry in a short time. This acquired capability in

Table 1

Major Fields of Technology of Interest to

Soviet and East European Visitors to the United States

Computers

Materas

Stmiconductors

Communiatiom, Navigatiw,

and Gmtroi

Vcbicular/Transportatmn

Lrvr and Optics

N u d a r Pbysics

Microbioh

Architecture

Automatic Control

CAD (Computer-Aidcd Design)

Cybernetia/Artificial lntcll~gencc

Data Basts

Image Processing Design

Image Processing/Retrieval

Amorphous

CAD

Composites

Cryogenics

Deformation

CAD

Circuits

..

Defects

Devim

Antennas

Microwav+/Millimeter Waves

Radio Wave Propagation

Marine System

Fikr Optics

Gas h e n

Cryogenics

Fusion

Materials

MHD (Magnetohydrodynamics)

Gencuc Enginur~ng

Both legal and illegal acquisitions of US and Western

technology and quipment are coordinated with information obtained through the complex network of

international governmental scientific and technical

agreements and exchanges that the USSR maintains

with the advanced industrial nations. These include

know-how, equipment, and computer data base collection activities of Soviet scientists and engineers who

participate in academic, commercial, and official

S&T exchanges. Visiting Soviet and East European

technical and student delegations to the United States

generally consist of expert scientists, many of whom

are connected with classified work in their home

countries. Such was the case with the Soviet scientist

who managed-to get assigned to fuel-air explosives

work. When he finished his US study programs, he

almost ccr&nly returned to the USSR to work on

related weapons. Other Soviet and East European

scientists have come to the United States to work in

Memories

N/C (Numcricaliy Controlled)Units

Networks

Pattern Recognition

Programming

Robots

Software

Metallurgy

N / C Machine Tools

Powder Metals

Superconducton

TatinglNDT won-Destructive)

Design

Ion lmplanution

Production Technology

SAW (Surface Acoustic Wave) Devim

Salcllitc Co~rnun~aticns

Signal Proce+rinp

felccommunicaticrrs

Shipbuilding

Optics

Tunable Lawn-*

Rcanws

Structural Designs

Superconductan

the aerohydrodynarnic, cryogenic, optic, laser, cornputtr, magnetic bubble computer memory, nuclear,

microelectronic, and structural and electronic rnateria1 areas. Given the military importancc of these fields

to the Soviet Unian, it appears likely that a high

percentage of these scientists will work on militaryrelated programs in these areas after they return

home.

From the beginning, Soviet candidates in various

academic and scientific exchange programs have

nearly always proposed research activities involving

techpblogies in areas that have direct military applications and ill which the Soviets are technologicaliy

deficient. Table 1 provides a list of the key hightechnology fields that Soviet and East European

Over the past few years there has been an increased

use of Soviet- and East European.+wned firms locally

chartered in the United States and abroad to exploit

Western-controlled and military-related technology.

There are more than twenty Soviet- and East

European+wned firms in the United States, and near,

the end of the 1970s there were more than 300 similar'

firms in Western Europe. In addition to the United

States, heavy concentrations are in the United Kingdom, Sweden, the Netherlands, Italy, the Federal Republic of Germany, France, Canada, Belgium, and

Austria. These firms are avenues for Soviet aquisition of advanced Western technologies, as was shown

Thc Soviets correctly view the United States and

when the US engineer arrested in late 1981 was

several other Western countries as a continuing

charged with selling US secret documents to an East

source of important and openly available scientific

European intelligence officer employed by a Polishand technical information, which they take every

opportunity to obtain access to. Some of the unclassi- owned firm chartered in Illinois (see inset, p. 6).

Furthermore, firms chartered in the United States

fied documents so acquired are previously classified

materials which had been downgraded to unclassified can legally purchase controlled US technology and

through US procedures providing for automatic de- . study it without actually violating US export controls

classification after a stipulated period. When w l l a - unkss they attempt to export the equipment or related

technical data from the United States without a

ed on a massive scale and centrally processed by the

Soviets, this information becomes significant because license.

it is collectively used by Soviet weapons designers and

Soviet Acquisitions and Benefits

weapons countermcasure experts.

Today's recognition of the crucial role of Wtstern

technology in the development and production of

The Soviets also regularly attend high-technology

trade shows, and attempt to visit commercial firms in Soviet wcapon systems and related military quip

the West, particularly small and medium-sized firms ment is not unique. Soviet dependence on Western

that are active in developing new technologies. These technology was visible and clear-cut in the yean

immediately after World War 11, when tbe Soviets

apparent trade promotion efforts often mask Soviet

stole

Western nuclear secrets leading to tbcir develop

attempts to acquire emerging Western technological

ment

of a nuclear weapon capability, and copied a US

know-how before its military uses have been identified

bomber

in its entirety leading to production of their

and government security controls have been applied.

TU-4.

To

achieve major improvements in tbeir miliEmerging technologits are particukrly vulnerable to

tary capability quickly, they exploited captured scjenforeign collection efforts of this type.

tists and industrial plants and resorted to a combination of espionage, stealing, and copying Western

Soviet intelligence continues to place a high priority

systems.

on the collection of S&T information on genetic

engineering and futuristic weapons such as lasers and

Since that early period of near-complete reliance in

particle beam weapons. The Soviets have been s t e p

the 1 9 5 0 ~the Soviets' dependence on Western techping up their efforts to acquire new and emerging,

nology to devtlop their weapons has decreased. Nevtechnologies such as very-high-speed integrated-c6ertheless,

despite several decades of Soviet priorities

cuit (VHSIC) and very-large-scale integration (VLST)

focused

on

science, technology, and weapon systems,

technology from Western universities and commercial

the Soviets, because of their inability to be innovative

laboraiories for both military and commercial

applications.

visitors come to the United States to study, research,

or discuss, many of which are on the US Militarily

Critical Technology Lisl today. In cach of the past

two years, more than a third of the 50 program

proposals offered under the Graduate Student/Young

Faculty Program of the International Research and

Exchanges Board (IREX) has been completely unacceptable in terms of prospective technology loss,

and many other programs needed to be modified or

have access constrained before the exchanges could be

allowcd.

US Radar Expert Passes Over 20 Significant Clussified Reports on Future US Weapon ~yiremsto Intelligence Agent

William H. Bell, a radar project engineer for a hightechnology US ddensefirm was recruited by an

intelligence officer who operated under cover as a vice

president d t h e Polish firm caNed Polamco. This

firm is a subsidiary of the Polish Government Corporation and is incorporated in Illinois and Delaware. It

began as an importer/exporter d machinery, parts

and tools and as a consultant tofirms exporting these

products to Poland. The recruitmenr began as a

simpleJriendship between neighbors with mutual

sporting interests, grew quickly to include theirfamilies, rhen to proving Bell's credentials by showing a

classified document to the agent, and then to passing

microfilm copies of classified reports at meeting

places in rhe US, Switzerland, and Ausrria. Mr. Bell

was in financial srraits and was easily iduenced by

the cash pr0flered-a total dSll0,OOO over a threeyear period. In all, over 20 highly classified reporls

on advanredfuture US weapon systems or their

components were passed to rhe Polish Intelligence

Service and probably evenrually ro the Soviet Intelligence Service.

Among rhe classified reports, those of prime importance to the West included: the F-I5 look-downshoor-down radar system, the quiet radar system for

the BI and Stealth bombers, an all-weather radar

system for tanks, an experimental radar system for

the US Navy, the Phoenix air-to-air missile, a ship

borne surveillance radar, the Patriot surjace-to-air

missile, a rowed-array submarine sonar system, a

new air-to-air missile, the improved HAWK surjaceto-air missile, and a NATO air-ddense system. The

idormation in rhese documents put in jeopardy existing weapons and advanced future weapon systems q f

the United ~ t a t e and

s its Allies. The acquisition d

mhis idormation will save rhe Polish and Soviet

Governments hundreds dmillions d dollars in R&D

d o r t s by permitting them to implement proven designs developed by the Unired States and by fielding

operarional counterpart systems in a much shorter

time period. Sp'ecifications on current and future US

weapon systems will emble rhem to develop ddensive

countermeasure systems.

and effectively apply new technology to weapons

developments, still depend on Western technology and

quipment to develop and manufacture some of their

advanced weapon systems more quickly.

Today, Soviet military designers carefully choose the

Western designs, engineering approaches, and q u i p

ment most appropriate to their deficiencies and needs.

These needs are still substantial and pervade almost

every area of weapons technology and related manufacturing quipment. Table 2 lisu classes of Western

technology acquired by the Soviets and East Ebopcans and illustrates the wide range of Swiet military

technology needs. In the following paragraphs of this

section, Soviet Bloc acquisitions have been grouped

according to their likely applications: stratepic systems, aircraft systems, naval systems, and ~ c t i c a l

systems. Also cited are acquisitions in the microelectronic and computer areas that have broad application

to military and industrial programs. In certain of

these areas, notably the development of microeltctronics, the Soviets would have '=n incapable of

achieving their present technicai level without the

aquisition of Western technology. In other areas,

aquisitions have allowed the Soviets to reduce the

indigenous effort they would otherwise have had to

expend.

The Soviets' strategic weapons program has benefited

substantially from the aquisition of Western technology. The striking similarities between the US Minuteman silo and.the Soviet SS-13 silo very likely resulted

from aquisition of US documents and expedited

deployment of this, the first Soviet solid-propellant

ICBM.The Soviets' ballistic missile systems in particular have, over the riast decade, demonstrated

qualitative improvements that probably would not

have been achieved without Western acquisitions of

ballistic missile guidance and control technology. The

most striking example of this is the marked improvement in accuracy of the latest generation of Soviet

ICBMs-an improvement which, given the level of

rele~intSoviet technologies a d h d e ago, appears

almost .ceflahly to have been speeded by the acquisition of Western technology. Their improved accuracy

has been achieved through the exploitation and development of good-quality guidanct components-uch

Selected Soviet and East European Legal and Illegal Acquisitions

From the West Affecting Key Areas of Soviet Military Technology

Key Technology A m

Notable Success

Computm

Purchases and aquuitions of complete syslem designs. concepts, hardware and software, including a

wide variety of Western general purpose computers and minicomputm. for military applicatiom.

Complete industrial proccsra and semiconductor manufacturing equipment capabk of d n g all

Soviet military requirements, if aquisitions were combined.

Aquisitions of prowsing quipment and know-how.

Acquisitions of automated and precision manufacturing quipment for elcnronicr,matamls. a d oplial

and future laser weapons technology; aquisition of information on manufacturing technology r e h t d to

weapons. ammunition. and aircraft pans including turbine blades, cornputen. and electronic

components; aquisition of machine tools for cutting large g u n for ship propulsion systems.

Aquisitions of low-power, low-noise, high-~mitiYityreceivers.

Acquisitions of optical, pulsed p o w source, and other laser-related annponenrs, including s p c i r l

optical mirrors and mirror technology suitable for future laser -porn.

Acquisitions of marine and other navigation ruriven, advanced intrrirl-guidmcccomponents,including

miniature and hser gyros: acquisitions of missile guidancc s u b s t e m s ; acquisitions of precision

machinery for ball b r i n g production for missile and other applicatioar; acquisition of missile la n n g e

inunrmcatnlion s y s t e m and docvmmtation and precirm eimtfnodolina for collecting data critical to

portflight ballisti; missile analysis.

Purchases and acuuisitions of Western titanium alloys. welding quipment, and,funvca for producing

titanium plate of large size applicable to submarine construction.

Missile technology; some ground propulsion !ahnology (diesels, turbim. and muria): purchases and

squisitions of advanced jet engine fabrication technology and jet engine daipn informalion.

Acquisitions of underwater navigation and diration-finding equipment.

Acquisition of information on satellite technology, laser m n g c h d m , and u n d m r t a low-light-Id

television a m e m s and systems for remote operation.

Acquisitions and exploitations of air defense radars and antenna designs for m k i l c systems.

Microclcctronia

Signal Pracssing

Manufacturing

Communications

Lten

Guidance and Navigation

Structural Materials

Propulsion

Acousticll Senson

Eleclrosptical Sensors

Rahn

as gyroscopes and accelerometers. The quality of

these instruments, in turn, depends to a considerable

degree on the quality of the small, precision, highspeed bearings used.

er than would have be.; likely through indigenous

devciopment. The Soviets probably could have used

indigenous grinding machines and produced the required quaIity of bearings over a long period by

having an abnormally high rejection rate.

Through the 1950s and into the l96Os, the Soviet

precision bearing industry lagged significantly behind While some of the Soviet acquisition in the aircraft

area appears directed toward the development of

that of the West. However, through legal trade

puiciiases in the 1970s. tbe Soviet Union acquired US countermeasures against Western systems, the Soviets

appear to target data on Western aircraft primarily to

precision grinding machines for the produdion of

aquire

the technology. Furthermore, while the Sovismall, high-precision bearings. Similar grinding maets

have

acquired a large amount of hardware and

chines, having lower production-rate capabilities,

were available from several foreign countries. Only a data from planes downed or captured in Vietnam and

elsewhere, they continue to attempt to aquire the

few of these machines, either US or foreign, would

have been sufficient to supply Soviet missile designers most advanced technologies through both legal and

'illegal transactions with the West. Assimilation of

with all the quality bearings they neded. Thtse

p u r c h a s ~provided the Soviets with the capability to

manufacture precision bearings in large volume soon-

-

8

Western technology has been of great benefit to both

their military and commercial aircraft development

programs-to the extent that aircraft from certain

Soviet military design bureaus are to a significant

degree copies of aircraft of Western design. Soviet

military aircraft designers have "ordered" documents

on Western aircraft and gotten them within a few

months, including plans and drawings for the US

C-5A giant transport aircraft early in its development

cycle; these plans, although dated now, have contrib

uted to current Soviet development of a new strategic

military cargo plane. Designers were in particular

n d of data on US technological advances, but more

importantly, they needed information on aerospace

manufacturing techniques.

Soviet aircraft designers have been interested in US

military transports and wide-body jets and probably

have managed to accelerate the development programs for their IL-76 Candid and IL-86 transports.

The IL-86 looks much like the Boeing 747 and the

IL-76 resembles the C-141. Neither system is an

identical copy.

The IL-76 also is used by the Soviets as the platform

for their new AWACS (Airborne Warning And Control System), which is expected to be operational in

the mid-1980s. This system will provide the Soviets

with a major improvement in attacking low-flying

missiles and bombers. The Soviet AWACS is strikingly similar in many ways to the US AWACS, and is a

major improvement over their old AWACS.

The Soviets' acquisition effort in the naval systems

area reflects well the two major factors that motivate

their requirements: the aquisition of technology not

readily available to them-yet critical to their programs-and the acquisition of quipment which,

while producible in the Soviet Union, allows them to

divert resources'to more pressing naval programs. The

Soviets appear to have concentrated their acquisitions

in areas related to aircraft carriers, deep sea diving

capabilities, sensor systems for antisubmarine warfare

and navigation, and ship maintenance facilities. In the

maintenance a k a , two huge floating drydocks purchased from the West for civilian use by the Soviets

have beendiverted to military use. Drydocks are

critical for both routine and fast repair of ships

damaged in warfare. In 1978, when the Soviets took

possession of one of the drydocks, they diverted it to

the Pacific Naval Fieet. The other was sent to the

Northern Fleet in 1981.

These drydocks are so large that they can carry

several naval ships. More importantly, they are the

only drydock facilities in either of the two major

Soviet fleet artas--Northern or Pacific--capable of

servicing the new Kiev-class V/STOL aircraft sarriers. Soviet advanced submarines carrying balistic

missiles, Soviet Kiev aircraft camers, and Soviet

destroyers were among the first ships repair& In these

drydocks. It is important to note that the drydocks

themselves are so large that no Soviet shipyard would

have been capable of accommodating their construction without major facility modifications, associated

capital expenditures, and interruptions in present

weapons programs. n c i r importance will be even

more pronounced when the Soviets construct the stilllarger &rriers (for high-performance aircraft) projectcd for the 1990s. The Soviets even have acquired

Western aircraft carrier ca@pult equipment and documentation for this larger carrier; catapult technology, though relatively common in the West, is outside

the Soviet experience.

Within the past few years, the USSR also has sontracted for or purchased foreign-built oceanographic

survey ships quipped with some of the most modern

Western-manufactured quipment. In place of US

quipment that was embargoed, other Western equip

ment has been installed on the ships. This modernization of what is the world's largest oceanographic fleet

with Western technology will help support the development of Soviet weapon system programs and antisubmarine systems against the West.

Although the Soviets have a strong indigenous technology base that could suppsrt the development of

much of their tactical weapons systems, this does not

pregint them from maintaining an ambitious program

for acquiring and benefiting from Western technology

in this area. In some cases, their acquisitions satisfy

deficiencies in Soviet technology; smart weapons technology and electro-optical technology are examples of

Table 3

Microelectronic Equipment and Technology

Legally and Illegally Acquired by tbe Soviet Bloc

Equipment or Technology

Procas Technology for

Mirroclcnronic Wafer

Preparation

Comments

.

R o w Technoiogy for

Producing Circuit Marks

Equipment for Device

Fabrimtion

Assembly and T a t Equipment

The Soviets haw acquired hundreds of specific picas of quipment related to wafer preparation,

including expitaxial growth furnaces. crystal pullen, r i m / d r y m slicers. and iapping and polishing

units.

Many acquisitions in this area include computer-aided design toftware, pttcrn generators and

compitcrr, digital plotters, photorrpcaim, contact printers, mask comparators, elcclron-beam gener- ,

atom. and ion millinn muiament.

Many hundreds ofacquisitions in this area have provided the W c t r with mask alignm, diffusion furnacu, ion implanters, toam,etchm, m d photocbmical pmccs lines.

Hundreds of items of Western equipment, including scriben, bonden, ptok t m , md final t a t

equipment have b a n aequircd by the Soviets.

this. Signal and information-processing technology,

particularly for Soviet air defense systems, is another.

More often, however, technology is exploited to speed

up a developmental program or to improve upon

original Western designs in an expeditious manner.

The Soviets appear to have concentrated their tactical

systems aquisitions on Western tank, antitank, and

air defense-related technology and equipment in order to derive concepts and know-how to benefit their

weapons programs and to design countermeasures to

the Western systems. The Soviet SA-7 heat-seeking,

shoulder-fired antiaircraft missile contains many features of the US Redeye missile. Such aquisitions

have enabled the Soviets to obtain advanced tactical

weapon capabilities sooner than otherwise would have

been possible.

systems for decades. The acquired quipment and

know-how, if combined, could meet 100 percent of the

Soviets' high-quality microelectronic needs for military purposes, or 50 percent of all their microelectronic netds.

Table 3 identifies the microelectronic productionrelated equipment that has been aquired by the

Soviet Bloc. These aquisitions have been grouped

into areas related to the four steps required to produce

a microchip: wafer preparation, circuit-mask making,

device fabrication, and assembly and testing,

Soviet computer technology has long been limited by

fabrication and production technology problems and

by difficulties in software development. Since 1969

the USSR and East European countries have been

developing a family of general purpose computers

Western equipment and technology have played a

known

as the Ryad series. These computen; which

very important, if not crucial, role in the advancement

make

up

virtually the total Soviet and East European

of Soviet microelectronic production capabilities. This

effort

in

large

general purpose computen, have been

advancement comes as a result of over 10 years of

and will continue to be used in a wide variety of civil

successful acquisitions-through illegal, including

clandestine, means--4 hugdreds of pieces of We.tern and military applications. Western technology has

rnicroekctronic qujpment worth hundreds of millions been important tp development of the Ryad series by

of pollars to equip their military-related manufactur- providing proven design directions both at the system

and component levels. The architectural designs of the

ing facilities. These aquisitions have permitted the

SoSiets to systematically build a modern microelectronics industry which will be the critical basis for

enhancing the sophistication of future Soviet military

Ryad computers, for example. are patterned after

Ofleer Rmals

those of the highly suCCCSsfu1 mass ~ r d u IBM

d 360 ~

~y ~ ~ ~ ~saved

i soviet

~h i ~~ ~

ij ~l ~i ~ ~

and 370 series, computers that are used in a wide

Hundreds of Millions of Rubles

tange of applications and are highly serviceable in the

field.

A .former Soviet inrelligence oflcer revealed that

idormarion on Wcclern military-relared rechnology

With lhis

the

and

EurO~eans

by fhe Sodel inldljgence serVjces sOYCdthe

eliminatd many of the risks involved in undertaking

military indusrry hundreds dmillions

the development and production of a new series of

rubles. The aquisition d Western technology opergeneral purpose computers, and saved considerable

ationally was assigned she highest priorityfor collecamounts of manpower and lime. Since the early 1970s lion by local rerideIICiesin luy WenEuromn

the Sovieu and

Eu-ns

have legally purcountries because d r h e relarively easy a c m to

lhan390W

minimmputen' 'Ome

much US and Wesrern rechnology in Europe and ihe

which art now being used in military-related organipraise being received by the servicesfor their aquisizations. Furthermore, they a n also developing minition d o n s .

mmputen that are direct copies of Western models.

and bn E u r ~ n

mmPuter

These acquisiiions were directed by the jlirary

sfltcmshas kn aided

mennr--fegal ma&acluringj,,duslrjes

the Council dMj,,jsand illegal, including clandestine-for acquiring the

rers, and there was intense competirio~herwcrn rhe

needed ttchnical know-bow.

intelligence services to q u i r e Warern lerhnolopy

needed for wapotu dcvelopmcnt programs. OjparThus, the Soviets and their Warsaw Pact allia have

ricvlar Ned by

weawm

been lhe

derived significant military gains from their aquisiacquisition knowledge on special

mlotions of Western technology, particularly in the strably the weaving dcarbonfilamenrs in a three

tegic, aircraft, naval. t a c t i d , mi==l=mni=, and

dimeNionol CortligrrrariOn

the sewices were

computer areas. This multifaceted Soviet aquisitions lasled to

The endproducrJJrom

3-D

program has allowed the Soviets to:

carbon-carbon weaving technology are ustful for abSave hundreds of millions of dollars in RBD costs, blive hear shields for high rlociry reentry rhiclrr

and years in R&D development lead time (set inset).

(rhe warhead part d ICBMs and S U M S )and for

Mdcrnize critical sectors of their military industry

poniom drockel moror5~or

large missilUU

and reduce enginefine

Or copyThe Soviet aqujsirjon dsome

drhjs

is

jng mn

thereby limiting the

likely ro enable them to ewntually gain a capability

rise in their military production cotu.

/or increased military options against the West-+

Achieve greater weapons performance than if they

capability that orherwise would haw taken them

had to rely solely on their own'technology.

several addirional years to develop themselves. The

wcams

lncomrrate counarmeasures

inrelligence services also worked closely wirh sciem

early in the development.of their own weapon

ris~sfromthe Soviet military mandacturing indusprograms.

tries and even planned joint operarions against WestThese gains are evident in all areas of military

ern Trade and Equipment Fairs in order to acquire

weapons system. While difficult to quantify, it is

rechnoloD,

clear that the ~ e s t e r nmilitary expenditures netded

to overcome or defend against the military capabilities

derived by the acquisition of Western technology far

outweigh the West's earnings from the legal sales to

the Soviets of its quipment and technology.

~

l~

~

Outlook for the 1980s

The Soviets' military R&D and weapon test-andevaluation efforts are continuing at a rapid pace.

Several hundred development projects for weapons

systems and major system elements are now under

way, and it is expected that through the 1980s the

number of new or modified advanced Soviet weapon

systems emerging from these projects into production

and deployment will remain at the high levels of the

last two d w d e s - s o r n e 200 weapon systems per

dwde.

Despite these economic difficulties, there are no s:3h5

that the Soviets are shifting resources away from t ne

military sector or slowing down development of w w p on systems that will be entering the production ste e

by middecade. New generations of Warsaw Pact 4

weapons will require selected critical component a114

modern manufacturing technologies. It k in these

artas that Soviet illegal acquisitions of Western tecnnology, complemented by legal acquisitions, are more

likely to be concentrated over the next five to 10

Soviet military manufacturing capacity increased by a

significant 80 percent during the 19605 and 1970s,

and new plant expansion now under way at one-fourth

of their key weapons manufacturing facilities will add

considerably to their capabilities. These new facilities

will be ready to produce weapons in the next four to

10 years. Plant expansion is in the following areas:

ground warfare vehicles, including new tanks; avi- .

ation, including facilities for a ncw B-1-type bomber

and a new long-range military transport aircraft

having strategic airlift capabilities; naval shipbuilding, including submarines for ballistic missiles and

cruise missiles, as well as full-size aircraft carriers for

high-performance aircraft capable of competing with

the United Stata in global operations; and electronic

and microelectronic manufacturing facilities throughout the USSR.The development and production of

new Soviet weapons at these facilities is sure to be

more complex and costly than during the 1970s.

Among the more important tcchnologies arc micra

electronics, computers, and signal processing. Micro

electronics will play a vtry significant role in advanc

in computers and signal promsing, and all of thew

technologies will be important in developing advanc c

Soviet missile, aircrafr, naval, and tactical weapon

systems, and associated detection systems. Additiond

projected Soviet technological netds related to sucf

systems art presented in the append=

As the m l t of both tactical and strategic force

modernizations, Soviet and Warsaw Pact military

manufacturen are inmasingly pressed by large-scab

production requirements and the d a t e d n a d to

control manufacturing and materials costs. Thus,

particularly critical for the 1980s are Soviet .needs t o

improve their manufacturing capability. To a large

cxtcnt, the level of manufacturing technology in Sovi

et plants determines the Soviets' capability to move

new technology from R&D into military app1icatio:r.

All of this military development and plant expansion Manufacturing technologies play a significant role n

only in tbe development of advanced component tech

activity, however, is taking place at a time when the

Soviet economy has reached its lowest level of growth nologies, such as microel~ctronicsand computers, b 3

since World War 11. Soviet arinual GNP growth may also in tbt actual production of modern military

well be limited to an average of 1 to 2 percent by the systems.

mid-1980s. Stagnation in industrial sectors that are

Futurc Soviet and Warsaw Pact acquisition effortskey to both the civilian and the military sectors wiIl

including

acquisitions by their intelligence servicesmake it increasingly difficult for tbe Soviets to satisfy

are

likely

to

concentrate on the sources of such

theeneeds of.both. Thus, Soviet leaders will have to

component

and

manufacturing technologies,

make tough choices among defeqse, jnvestment, and

including

consumption; the competition among rival claimants

for rtsourccs will become intense. Under these condiDefense contractors in the United States, Western

tions, it may be impossible for the Soviets to maintain

Europe, and Japan wbo are the repositories of

curknt growth in military production without hurting

military development and manufacturing

the civilian economy.

technologies.

General producers of military-related auxiliary

manufacturing equipment in the United States,

Western Europe, and Japan.

Small and medium-size firms and research ceniers

that develop advanced component technology and

designs, including advanced civil technologies with

future military applications.

inttlligence services. But the most alarming aspect of

this commercial focus by Soviet Bloc intelligence

services is that as a result of these operations. the

Soviets have gained, and continue to gain. access to

those advanced technologies that are likely to k u s 4

by the West in its own future weapons systems.

The Soviet intelligence effort against Western defense

contractor firms poses a serious problem in itself.

With more than 11,000 such firms in the United

The combination of pan Soviet acquisition practices

and projected Soviet military needs indicates that the Slates and hundreds of subsidiaries abroad, US munterintelligena efforts are stretched thin. Pro:mion of

United States and its Allies are likely to experience

US firms abroad from hostile intelligence threats is

serious counterintelligence and related industrial security and export control problems over the next five the responsibility of host governments, but they too

are feeling the burden of well-orchestrated Soviet

to 10 y e n .

Bloc efforts. The Soviet intelligence threat and the

illegal trade problem appear to be severe in Japan. It

The task of stopping Soviet Bloc intelligence operations aimed a t Western military and industrial tech- appears that Western industrial security-both defense and commercial-will bt severely tested by the

nologies already poses a formidable counterintelligence problem, both in the United States and abroad. Soviet intelligence smicts and their surrogates

But that task is likely to become even more difficult in among the East European intelligence services during

the 1980s.

the future as several trends identified in the 1970s

continue into the 1980s:

Western industrial nations also can expect increased

Soviet Bloc intelligence activities directed ax the

First, since the early 1970s. the Soviets and their

aquisition of their key industrial technologies. Wcstsurrogates among the East Europeans have been

ern export controls arc presently Being updated and

increasingly using their national intelligence serbroadened; the CoCom allies have recently agreed to

vices to a q u i r e Western civilian technologies-for

strengthen controls and to enhance their enforcement.

example, automobile, energy, chemicals, and even

Moreover, serious hard currency shortages, along with

consumer electronics.

generally increased restrictions on Soviet S&T visitors

Second, since the mid-1970s. Soviet and East Euro- to the United States, will make the Soviets men more

dependent on intelligence and other illegal efforts to

pean intelligence services have been emphasizing

the collection of manufacturing-related technology, aquire the goods and equipment they will need.

in addition to wsapons technology.

The massive, well-planhed, and well-coordinated SoThird, since the late 1 9 7 0 there

~ ~ has been increased viet program to aquire Western technology through

emphasis by these intelligcnce services on the acqui- combined legal and illegal m a n s poses a serious and

growing threat to the mutual security interests of the

sition of new Western technologies emerging from

United States and its Allies. In response, the West

universities and research centers.

will need to organize more effectively than it has in

Tbe combined effect of these trends is a heavy focus the past to protect its military, industrial, commercial,

by Soviet Bloc intelligence on the commercial sectors and scientific.cornnunities.

in the West--sectors that are not normally protected

from hostile intelligence services. In addition, the

security provided-by commercial firms is no match for

the human penetration operations of such foreign

Appendix

Projected Soviet Technological

Needs and Acquisition Targets

Through the 1980s

Given the dynamic nature of their collection program,

it is expected that the Soviets will continue their

attempts to acquire a broad range of Western technologies. Certain areas, however, represent priority collection targets for them; these areas are critical to the

Soviets' enhancement of their weapons capability.

Western solid rocket propulsion technology also will

be a high-priority Soviet acquisition target in the

1980s. While the Soviets have vast expcrienc. with

the liquid-propellant systems which represent the bulk

of their ballistic missile force, they are shifting their

emphasis to solid propulsion systerns, which have

practical advantages over liquid systems in a variety

Over the past decade, the Soviets' most pronounced

of applications. At the zame time, the Soviets have

improvements in strategic weaponry have been in the had only limited success with the progress of their

solid-propulsion program. They probably will pursue

development of a MIRV ballistic missile capability

and a significant improvement in the accuracy of.their the aquisition of information on solid-propellant production procedures, and propellant grain design, moICBMs. The former capability was made possible

tor case, and rocket nozzle technolog~s. .

largely through the introduction of onboard digital

computers and the latter through tbe improvement in,

The Soviets' ABM R&D effort has axhued apace

the quality of the missile guidance systtms and the

procedures used to calibrate them. Technology a q u i - since the 1960s. As a result, they have gained considerable expertise in the development of large fixed-site

sitions from the West contributed significantly to

radars for early warning, tracking, and engagement,

these improved capabilities.

and their interceptor technology has also improved

substantially over the years. Areas m a i n , however,

The Soviets probably will continue to make their

highest priority the aquisition of Western microelec- in which the Soviets will still seek and would benefit

from sophisticated Western ABM technology. These

tronics and computer technology for in-flight guidinclude signal processing for detection, discriminaance computers. This aquisition effort will be motivated by a desire to overcome reliability problems and tion, target assignment, and sensor technology, particularly in the long-wave infrared portion of the

also to provide the on-board processing capability

required for the development of new guidance options electromagnetic spectrum applicable toward improving their launch detection capability.

with the potential for extremely high accuracies.

'

The Soviets will also give top priority to acquiring

information on the latest generation of US-inertial

components upon which the MX ICBM and the

Trident SLBM guidance systems are based. Despite

the past accuracy improvements of Soviet ICBMs,

these two US systems incorporate technologies beyond -present Soviet technological capabilities. Moreover, their SLBM accuracies are significantiy behind

those of US systems. In addition to information 06

hardware, the Soviets are expected to seek calibration

sofiware algorithms which, as the guidance instrument.4 themselves reach their practical performance

limit, would allow for continued improvement in

weapon system accuracy.

Priority Soviet targets in the aircraft area will include

Western materials technology, particularly composite

materials to allow weight-efficient designs. The Soviets would also benefit from the acquisition of certain

engine technologies, in particular those critical to the

development of nigh-bypass turbofans for large strategic airlift type of aircraft. While, in general, Soviet

avionics technology appear adequate, the Soviets have

yet to demonstrate a capability to deploy reliable,

accurate airborne inertial navigation systems for longrange navigation and weapons delivery. Thus,while

long used in the West, these systems are still prime

candidates for aquisition.

Very high priority probably will bc given to the

Much of the Soviet aquisition effort in the area of

aquisition of computer-aided aircraft design technol- tactical weapons is likely to bt targeted against s u k n

, ogy, an area in which the Soviets are clearly im. and sensor technology for tactical missiles and prccipressed by US progress. In general, they also will

sion-guided munitions. Tbe Soviets will apply considcontinue to benefit from the aquisition of efficient

erable effort in particular to aquiring advanced

aircraft production technology from the West to

Western electro-optical technology including that rer c d u a costs.

lated to antitank weapons. As in other weapons areas,

the signal proctssing and microclectronia technolWhile the Soviets have a strong indigenous air defense ogies supporting tactical weapon systems will also be

radar and missile technology, their general lag in

priority aquisition targets. Technical documentation

microelectronics and microprocessing will direct them on entire weapon systtms, if obtained, will k used to

to attempt whmver possible in the West the aquisi- develop countermeasures.

tion of advanced signal-processing hardware and

In the micraelectronics area the USSR is now at the

software.

stage of implementing its LSI (large-scale integration)

The Soviets will continue to emphasize the aquisition technology to high-volume production. Despite the

of naval-related technologies applicable to improving large acquisitions of Western ttchnology and productioh"tquipment over the past 10 yean which have

their antisubmarine warfare capabilities, an area in

wbich much Western technology is superior to theirs. brought them to the LSI level, additional acquisitions

Thus, a significant effort to acquire acoustic sensor

from the West are needed for the m m sophisticated

weaponsprojtcts of the future. Ever-intnasing medt

technology can be expected, in particular that techfor higher precision Western equipment wiIl uctend at

nology applicable to the development of large towed

least through the 1980s.

acoustic arrays that would assist the localization of

Western submarines in open waters. They probably

In addition, the Soviets will require considerable

will also target the aquisition of Western signalexpansion of their microelectronic material base to

processing hardware and software rquired to fully

support continutd expansion of integrated-circuit proexploit the detection capabilities of these sensors.

duction. In this regard, the USSR is seeking Western

help to build two or three poly-silicon plants that will

Another critical problem area to which the Soviets

more than double current Soviet capacity for military

will direct aquisition is that of submarine quieting.

Here also the Soviets lag the West significantly. As a applications. Also, with increasing advances in the

result, not only arc their submarines more vulnerable technology, the USSR already will be seeking addito detection, but the self-generated noise reduces the tional Western assistance in key complementary technologies such as packaging and printed circuit h a r d

efftctiveniss of their own acoustic sensors.

production.

An area in which the Soviets have historically lagged

The USSR is expected to focus its future acquisitions

behind the West is precision submarine navigationin particular, in the development of submarine inertial efforts on the emerging techno1ol;iu related to verynavigation systems. The need for improvements here high-speed integrated circuits (VHSIC)and verywill bccome more pressing as the Soviets develop long- large-scale integration (VLSI). It is important to note

that, while VHSIC is thought of as a military develrange cruise missiles for land attack which require

opment program, and VLSI as a civilian technology,

precise knowledge of launch location.

therds little difference between the two as far as

SO& produ'ction needs are concerned. The same

Tbe Soviets also will continue to target technologies

related to the design and construction of large aircraft materials, production, and test quipment will be used

carriers (for high+crformancc aircraft) to reduce the to produce both. in both of these ttchnological arcas,

the USSR has dcveloptd effe~tivemeans for illegally

likelihood& poor design choices that would arise in

what is for them an entirely new type of construction aquiring Western advanced products.

program.

,

Prime Soviet collection efforts in computer technology

through the 1980s are likely to include large-scale

scientific computers such as the US-built CRAY-1

Computer. Computers of this class offer significant

improvements ovq Soviet models in weapons-systems

design and simulation and in tbe processing of numerical data for many military applications. Other

hardware targets will include: very dense randomaccess memory chips; high-capacity disk drives and

packs; the so-called"superminicomputer" class of

machines; and the latest in general purpose computer

. technology. All of the above targets offer opportuni&s for significant performance improvements and

' represent technologies of substantial Sovia lag.

In computer software, the Soviets will continue to

attempt to collect IBM programs and programs of

other vendors written for these machines because of

past Soviet decisions related to copying IBM computers. The large and growing number of IBM-compatible computers in the USSR means tbat collection

activity in this area can be expected to increase. The

compelling attraction of computer networks also

should spur great Soviet interest in acquiring network-control software and other programs related to

networking.

8'

s&ehg.

Soviet sub-

marines are zmtrxhsly noisier than

US. subs-so noisy that

this sigHow far htis the Soviet lhion gone

m challenging America's

%?rq&pxsttA,deaset*)4.r4.4

Saviet surface

-,*-kootlcentrat-

kadinmilitarytEchbbByT

Whatevergeinsthe&rrpi.nnlPlwe

madg-wd

' "--*.opy

there have bben

Cbftad

fnte~ceAgency*EOaitical areas where Moscow still hgs behind and is making an all-out e&nt to

catch up.

Smmnarizing a topserret kt&gencestudyina-to-

t h e c I A s a y s s e v e r a i ~ ~

o g y ~ o n ~ s a r e ~ i u a

"massive,well p k w d d d oaordinated Soviet program to q u i r e

Western technology throagh cornh i n e d ~ a n d ~ ~ ~

TheSeazetfaeo3leps*CU33aiiclsla

M o ~ r x r w b a s ~ i a i t s ~ ~

gian~havemane

their way and that sdmndne-

hnmched*~-because sub slclppers cannot be sore exacdy where they are under the water.

The CIA expects the Soviet Union to

give t o p p r i o r i t y t o ~ d e t a i l s o f

w

e

s

t

e

r

n f&xtmmk and computer devices ad forin-ftightguidance ofmissilessndof-*

44

Reproduced by Congressional Research

Service, Library of Congress with

Permission of Copyright Claimant

%*pest aadc.rs rhe s l y measure,

br qpddraroe of getting

~b~

it seeks. Prethat, wams the

%&, 'Yr ume ofthe most

CI.S.UEWS 6 WORLD REPORT. May 3. 1982

Reproduced by Conzressional Research

S e ~ i c e , Library of Congress with

PemisSiwt of Copyright Claimant

-...

1

-

Pg. 1

31 January 1982

BALTIMORE SUN

Soviet espionage siphons U,S. know-how

B

1 5 v Walter Taylor Sun

Following the military crackdown in Poland,

five other influential Democrats, including such liberal spokesmen as Senaton Gary Xart of Colorado

~8geaciesoperatmginthis

Washington-As a target for g- amdry, to ever-greater efforts to

Pad Carl Levin of Michigan, both members of the

pionage, William Holden Bell was obtain secretly and illegally what

Senate Armed Services Committee, urged Mr. Reatextbook perfect.

gan to halt all technology transfers to the Kremlin,

LIoreow ance might have Pcqnired

Then 59 years old md trying to

particularly those that would aid the Kremlin's enkeer, pace with a w w wife 25 years WY.

=w

programs.

S

a

w

e

r

p

a

t

s

,

b

o

t

b

y

m

m

e

a

n

s

his jvnior, he was bitter about a rela- all, ke the .cquisition of oattide

If there are differing views about the consequentively warewarding cmwx d dcs- technology as vitnl to Moscow's

c e of technology transfers to the Soviets, there is

penbely in need of a h to

a haps of coatianag its military comgeoeral agreement on one thng: It continues, deliitstyle gf travel and leisme.

spite publicly expressed concern at both ends of

petitha with the United States and at

Pennsylvania avenue. By and large, the Kremlin is

In short, Bell, a xyhr

thenmctimc.d~~itsowninable to acquire mPch of what it wants, from the laexpert for H y h c s Anarft

tulaalarmanic problem.

ny, a major U.S. defame -or,

I f t b e y w e r e n o t a M e t o u ~ I a t a n ~test

- in computer chips to radar technology to the

was ripe for the picking. And w

e

d lror as a aort of "quick fir,"some of these experts latest advancements m space-age rc~paruy.

he was.

m,the ,%vie& would mnfrout a Santiaaing se- "Soviet leadas have learned they have access to

Before the FBI m

t op with ties of d i f f i i trade-offs, paltlcularly in allocat- Western techwlogy both t)armgh legal and illegal

him last summer,Bell, in ffing prccioPs rtscarcb a d development nsancg, channels," Richard N. Ferle, aspistant secretary of

for about $119,000, haied

to intryingtomeetbothttnirdd~.oddrmcstic ddcllse for international security policy, says of

the ariomacas of the problem.

P of b~ hl w

m

l ~. t1 iCmQ g c t . r.ane

s i f i eofd ttRe , l t d s .

"Under the guise of pmchases for benign, civilIbe West "is oirtually wrbsidtnng M e t mili, have obtained a wide

West's most closely @laded mqt- tary power," ups Dr. Miles CoJticlr, who rmrs the ian o b ~the ~Soviets

of quipment critical to their military proom Systelns, ilxhdhg the skdth -W

Mitute for Strateg~cTrade and rtsge

Where they have failed to get what they

aasioPPlly acmes as a m o l r P l c o n d t u l t gram.

want openly, they have resorted to a well-coordito offset the W a m w W s m-onE8st-westtrade.

cal superiority in EmPp.

?bse .re some, including a few members of mfe&illegal acquisition program. "

The Bell case is tbe rbdf of spy aPlgas, who believe the extent to which the

Speaking on the threat of Soviet espionage last

drama in an era in rhich y Kremlir~dies on Western technology is greatly ex- maath, Attorney General Smith told a Los Angeles

interestsbavecometooutwughtbe aggerated by a Reagan administration that tends to group that because the United States relies so highview most foreign policy questions in East-West Iy on superior military technology, the current

First of t h ~ e ea ? t d e a

This w d d seem to be a minority view, how- casts to national acPrity through such losses are

- tams.

"iucalcnable."

ever.

political mothawb of earlier

The Bell case,which led last fall to his convicRqmsmtative Jonathan B. Bingham (D,

N.Y.),

-.

Today. spb..e.~~p~~ll,*

c b i m u n of t8e House Foreign Affairs sobconrmit- Uan and.that of his Polish confederate, Marian W.

s!ored m =wQt=

bce tbpt uwxxm US. trade poky, .asatS flatly ZIChMti. 01) arpioeage charges, illustrates the

technology that goes into a child's t h t t k R r P m , ~ t i l m b a s ~ t e d t hkind

e of sensitive tnilhy information that stimuelectronic bprhlt game, .ad smhlmem of the problem to the United states, lates such contacts as the Polish link to Bell:

The FBI still will not discuss certain details of

dummy corporatiinm p h y 88 great a p a r t m k l y the amtributim the west has made to

role as do secnt Mta drops Pad tbe Soriets t&rough over-thecormter sllcs of ~ D O W - the case, or describe in detail the extent of the narnidmght rendezvous.

tionnlrecmitybrtpch.

how.

More ai9nifirint. tk coc ilhrsot)las,indadmgmmtoppollcy-mplrcrsmthe Evidace and tatirhoay at Mr. Zachanki's trial,

t r a z what law a

d

M i - uealtiw m,

question Washin%on's ahility to however, indicated that auxmg the secrets obtained

cials in the United ~-~

cWreofftilchaports,emnifmcha@iswar- by Polish intellrgeace (and, US. officials assume.

by the KGB) was information about the Stealth

Attorney CmerPl William Frcach rurtcd.

project, a new; rapid-firing. radar-conSmith and FBI I)nator William H.

~ i s n o c b u b t t h a t ~ c s t e r n t e c h d o l o g y h abomber

s

Webster-see as a change in tPetia W some impact," says William A. Root, director trolled antiaircraft and antitank gun; a sophisticatby the Soviets in a cancerted effort of the Office of East-West R a d e a t the a t e De- cd antitank missile, and the socalled "look-down.

to obtain data about Amuican ad- pPrtmcat, but "if you take the line that any trade shootdown" radar of America's most sophsticated

vances in military and indmrtrial free nrmrcg for military production, that h i - fighter plane.

The Stealth bomber is the super-secret aircraft

technology.

a l l y is a fommla for a totaleuhqp, arid this s

While espionage in the United an idea no& being pmsued under present cbmn- being dcsigaed to replace the B-52 and the planned

5 1 bombers as the airborne component of this

States certainly is mWng new for

camtry's nuclear triad. The plane is so named bethe Soviets, the law enfolrcmeot ofcause of its hoped-for invulnerability to Soviet raficials see the Kremlin turning more

dar detection.

than ever to claadestiDe means of

The other weapons systems are e:emen& of

gaining scientific hardware d &ed liberal credentials.

know-how, since bans on wa-theSenator Joseph R. Biden, Jr. (D,Del.) for exam- NAlWs conventional deterrent forces in Europe.

counter traasfers rere adaed by ple, says Western technology, princip~llyfrom the aad provide tbe West with technology to counter

Residents Carter and Rugon.

United Stam, has beem of "slgnificaat benefit" to the massive numerical superiority in tanks,planes

mldien of the Warsaw Pact nations.

President Carter orrkred a par- tbe Sovie& and their Eastern Bloc allies,aad

. .he is andThe

"lookdown, sbwtdown" radar, for examtial ban on techoology sales to Mos- & t j d of rh.t he sees as a r a v a i n g dmKUStraple, is destgned to permit US. F-15 fighters to

cow dter the Ikcember, 1979, Soviet tiancfforttoebbrbeflow.

iuvasion of AfghanMan. Last month,

"It seems to me the administrption loves can- counter cwmy airuaft that fly low to the ground

President Reagan s e t to torrghcn merce more than it hates colmnonm." be says, to avoid detection by ground-based surveillance

the embargo following the military citing a Mmller of large, govermaentopproved systems.

Soviet radar technology is believed to be much

crackdown in Poland, which he bas mles to the Soviets since Mr.

Loot office

version of "looksaid was inspired by the Rremlin.

marc than a year ago, and a lack of law enforce- Aess advanced than the -can

The Reagan a ' '

tion's ac- imzmt

in b a l m illegal acquisiof industion, federal l

a

w

s offi- trial aod technical know-how.

~ a s h ~ n ~ ~t o

u rne a u

of The

ckts believe, is likely to spur the

KGB and the GRU, the two Soviet in-

m-

-

1

I

1

- -

: ; y o d w e d by C o y r e s s i o n 3 1 Research

Ser4cc, Library of' C o n : w s with

~crvi-:;on of Ccpyri:bt

Cl~irnznt

BALTIMORE SUN

1 February 1982

PG. 1

US.technology enhances

Soviet weaponry

-t&unitul(#rte#iadoSLcrwrtan

cocmtrkr-thc moakr SS-18 mhik,

t h e ~ h t b c a o v w I ~ u r t

MI.

Y u c h o f t L L , ~ w u o b

t.tnsd DL% by Y a c m ' s a b l e o@omgedfat but over tk counter. Tk

SgpietU~LU~~MCtOo#.in

-

wotantnm-bor,uNlia*mKcrrs

military krdmm, o p n l y

Second of thm artidca

Uldtdwmd-.Rc

BALTIMORE SUN

-

2 F e b r u a r y 1982

PE. 1

U S . acts to stem technologyflow to Soviet

-

Ry Walter Taylor

Washington Bureau of The Sun

Washington-In the snmmer of.

1979, Lawrence J. Brady. then acting

director of the Carter adminiiration's Office of Export Administration, became an overnight cause

celebre for critics of &mornic detente with the %viet Union.

Mr. Brady, appearing as an administration witness, told a coagressiollpl oversight committee what

skeptics had bem maintaining all

along: The Nixan-Fordpolicy

of relatively open trade with the

Russians w t only had accomplished

little toward its goal of moderating

tee Knmlia's internatiavl daugm,

Last of a series

--

but in fact was abtting efforts to

achieve them.

U.S.safewards against the diversion Of sophist~cated technology of

potential military use to the Russians had only "marginal utility," aserted Mr. Brady. Intemationa1 efforts by thc West. hr said, were even

worse.

His cathartic testimony m y have

won him a rrpot in the hearts of conservatives, bat it alsn m u n t political

purgatory at the bands of thc Carter

White House.Mr. Brady lost his positi00 ia tbe cammem Dcportmmt,

and in January, 1980, a month after

Soviet troops began rolling into Afghanistan on trucks manufactrncd at

a Ural Mcmntain foundry outfit* by

an American company, be ratgnd

from the govenmwnt .

Today Mr. Brady is b c k . &nt s t q + % r y + r

for

&de admmstrd Ion e 1s in charge

of efforts by the R a g a n White H ~ U K

to refashion American rad Western

export policy in a way thnt would deprive the Soviets of the rterdy diet of

Western technology thcy have enjoyed for most of the l a d -&.

Unlike rerent govetmmnts,

Reagan administration vkrs the,

control of trade, p a r t i d & in the

area of high technology. as a Strat* '

gir weapon that ran deprive the RW 1

sians of assistanc.0 vitally mcdcd to

modernize their military-industriel

- .baTechno\oc)., ~ r Rrady

.

said in a

intervie=, "is i h r one t d . the

hook ae'se had siWwld War

11 , . . that wuld c a m

real

stra\m in the Sovivt Svstem.

to weave a

Along with its effV ~ C Yumt'would emrather than mon' -mercc

Soviet BIW. the Reagan a d m l s t r a -

*

-

,

,

rithththe

ti0n has stepped up law cnfomment

and counterintelligence efforts to red~ the logs of American b - b o w

through ilkgal traIISfers and espiomee.

The US. M o m s Seroice, traalLioarlly @!and to prevent material

from Coming into the country rather

than leaving it, rcrrntly began a progun dubbed "Operation Exodus" deskoed to s c r u ~

morc claeeiy

cugo boaad far the East.

T%e FBI and tbe Justice Departmmt, for their parts, have embarked

on a m p p r campaign to make the

public more aware of the espionage

peril. Actor Efmn Zimbalist, Jr., star

of the old FBI television series, h a

been doing looselips-sink-ships spots

on radio and TV in California, where

more than 1,000 companies doing

sensitive work for the U.S. gwernment are headquartered.

Concern for the problem is by no

muas limited to the

administration. Servitor SPm N u n (D,Ca.),

tbe senior Democrat on the Permaaeat Subcommittee on Investigations,

has assigned his entire subcommittee

staff to an invcstigatioa of possible

kgislPtive s t e ~ zto cut off the flow of

information to the Soviets, with an

eJic towar6 public hearings in April.

-tor

Nunn, in an interview,

tenncd the transfer of technology "a

very srriops problem," and openly

qaestiaacd the ability of the government, as currently organized, to addnss it effectively. Without providmg

specifics, be said a number of legislative remedies were possible at the

conclusion of his panel's probe.

So far, autboritles acknowledge,

the new federal effort on this front

has fallen far short of stopping the

flow of illegal diversions to the Soviet

Union and its Iron Curtain allies, despite a few spectacular successes.

Officials of some enforcement

agencies complain of a lack of funds,

manpower and, perhaps even more

crucial to their efforts, the expertise

necessary w e n to recognize tbe sophiktication or potential value of material finding its way to tbe Russians.

"How does the average customs

inspector recognize the difference between a microchip you can buy at Radio Shack and one that tbe Soviets can

plug into a military computer?'' asks

om! beleaguered federal official involved in efforts to stop the flow.

Moreover, amid the competition of

commercial, political and bureaucratic interests both inside and outside the government, there is still less

than total unanimity about the need

and deslrabilitv of a policy of pre-

venting trade with the Russians.

Representative Jonathan B. Bing(D,N.Y.),chairman of the House

F m i g n Affairs subcommittee that

U.S. trade policy, contends.

for e m m P k that the administration

kas vastly 'exaggerated the deg'pe to

which the Russians m n d on the

West.

He described as "utter wrrsense"

tbe as6ertion that transfers from the

United States bave played a significant role in Soviet technological advancement, and charges that adrninistration statemeats about tbe seriousness of the problem "verge on tbe

hysterical."

On the academic f m t , a number

of scientists and university administrators, citing the cause of intellectual freedom, have baked a t Reagan

administration efforts to restrict access to technology during visits to.

American campuses.

Some academicians also have bristled at suggestions last 'month by

Adm. Bobby Inrnan, deputy d i m t o r

of the CIA, that American scientists

should voluntarily submit their work

for possible government cepsorship in

cases where it is to be published.

Some American businessmen also

complain, though I g s openly than

they owe might have. One who has

w t tempered IS outspokenness is

Robert D. Schmidt, vice c h a i n of

Control Data Corporation and an 4vocate of continued economic dett ,te

with tbe Russians. He complains that

Reagan poiicy merely serves to spur

the Kremlin to develop its own technical capability, accomplishing little

of strategic value to the West but

costing US. companies valuable werseas markets.

In general, there is one major area

of agreement among experts on the

subject within and outside the government. Given recent history, however,

this also bodes ominously for U.g efforts .@-cut the eastward trafflc in

know-how.

q t is worth bearing in mind that in

the total volume of Western hightechnology exports to the Soviet

Union, the United States is a small

player," notes a recent Rand Corporation study, underscoring the point

b a d e by others that there is little

Washington can do unilaterally.

~.S..experts,notes Thzne Custafson, author of the Rand report and an

expert in the field, amount to only

about a tenth the level of advanced

machinery and equipment sent annu-

...

ContinueL

-;~~lWTDiest

Germanv.

France and Jamn aione.

"The chart& of g a k R such s u p

port from other countries for an expanded system of export controls are

small and growing smaller, for

among the nations conducting hightechnology trade with the Soviet

Union one fiads not only NATO a h s

(whose relucllnce to apply stiffer expott controls is of long standing), but

a h countries like AasLnlia and

Switzerland, which are onlikely to

operate at all."

A similar wpm? by the cargr&

si-I

Office of Technology A s e ~ ment, which focused specifically on

the role of Western nations in development nf S-rint Energy mfies,

reached hke conclusions.

The lack of support for Resident

Reagan's trade sanctions against tbe

Soviets in the ongoing Polish crisb,

and two years nRn in the wake of the

Afghanistan Invasion, would seem to

support such pessimism.

in its first mapr initiative in this

area, the Reagan advmistration, following up on dwussions bekun

amcwp, allled badem last s o m w at

the Clttasa r v ~ n o m i csummlt. Sought

allied support tor pnriwly these

kinds of restr~rlionsin early ~anuary.

Representatives of COCOM, an Organization of NATO e m t r i e s created

to control exports to the Communist

blw. agreed, at Washington's urging.

to tighten the list of embargoed technology, particularlv in the field of

TECHNOLOGY

computer know-how, to the Russians.

Since tbe deliberations of tlre

group nre'secret, it remains difficult

to ktermiw bow this a g c a a e a t will

play out ia terms of streagtbcaing

d e r ; rcstriaions.Tbe North Atlantic

Treaty Organization members made

clear, for example, that tbey plumed

to go ahead witb sales to 1Yaclcon to

.idiatbe-~nofaMberiannaturalgaspipeltmto~.

The S,soo--mile pjpcliw, rhicb

moM supply Soviet gas to W c S t a n

Some experts question whether

M is any longer a useful vehicle

for creating barriers to technology

&s. Ow arch specialist, a bank rep-ti=

who asked not to be identifii, noted that most of the participating Western nations do not even

include military experts in their

c o c o M dekgations.

"How tbe bell can tbey decide

rkther amwthg will cantribute to

the Soviet military if they don't know

.nytbiag .bout tbe military?" he

O

E m a p e ~ ~ r t r o a g ~ ~ a p p a s e d b g ~ asks.

Rcog~n.dnrinistrptionomtofaffan

that it rill make comrtries such 8s

WcstGamuryardFr~acedepemknt

aa tbe Kremlin, and thus PsEcptible

to political bloduruil. Mr. Rug.n, as

partofBispmgramofPnctioos

against lrQBcor after tlK military

crackdown m PolPad, ordered a total

US.banoa~tedmo10gytbltdd

aid the Soviets to dewlop t k i r cmr-

w-.

The pipeline issue highlights the

differing perspectives in tbe West on

the tcetmology question even after tk

events in Poland.

The director of East-West tmle at

&&t

tbe State Department, William A.

Root, .clmaorkdgcd in an interview

that there continues to be no consensus .mong the allies on preci9ely

w h t they obould seek to deny tbe

.aviets.

'The concept is not at issue." he

nid. "It is the questmn of nhat constitutes aid that remains under de-

-

*mninatration officials, citing an

immwe in government rejections of

proposed U.S. sales to the Soviets

even W o r e tbe Polish crackdown.

try the United Slates is prepared to

p it .low if the allies don't cooper-

ate.

One smior Pcntrgon official, Under Secretary of Weme Fred Ikle,

bas said that if it comes to this. the

United Strtes might have no choice

but to try to restrict U.S. tecbnology

ttlffle!rSeven toallied nations.

"We h v e to establish a boundary

beyond which we will not permit

sensitive technology to trayel." Mr.

Ikle told the Reutrrs news, agency

"We would like to have this boundary

include not just our allies 'but our

friends and other coantries that we

cooperate with."

But. he warned. Washington would

stop selling its technology to friend]!

nations if they let it &p Into Soviet

hands.

I

-

(excerpt from)

Technology

and East-West Trade

cwmrn or WE u*mo STATES

-0fhdndoglr.rrrrrmu.t

WASHINGTON. D. C. 20510

hrernbmber,

Reprinted by the Library of Congress,

Congressional Research Service, June, 1982.

1qV

CHAPTER VI

Technology Transfer:

Definition and Measurement

Discnssions of tbe economic consequences of trade in technology for both

the United States and the Communist world have been hampered by conceptual

and pmctial difficulties in gathering and interpreting data. There is no universally accepted defiition of "technology," and in many critical instances, useful

data ie eimply unavailable. Any attempt to assess the economic importance of

this trade must therefore inch& a discussion of the nature of technology and

technology transfer and the ways in which they can be measured.

DEFINITIONS

Technology must be differentiated from

science on one hand and from products on

the other. Science is the pursuit of knowledge, whereas technology is the specific application of knowledge to the production of

goods and services. Science flows freely

across international boundaries, and even if

it were possible to effectively control this

flow, the prospect of doing so raises a t the

very least grave Constitutional questions.

Some control of technology, however, is both

desirable and necessary in the interests of

national security because of the military or

strategic capabilities it may provide.

The distinction between technology and

products is more troublesome. If technology

is broadly defined to mean the knowledge

necessary to design, create, or implement a

process; the process itself; or any services

related to the process, the problem of how to

treat the resulting product remains. Often

this will be a "technology intensive" product, one that might be said to "embody"

technology or from which the technology

may be extracted through a process known

as "reverse engineeringw--the deduction of

the techniques of manufacture from exarnination of the product itself. Often too tech-

nology-intensive products have military applications that cause them to pose as severe

a problem to national security as the design

and manufacturing know-how that went into

them.

For commercial purposes, "technology"

usually refers either to equipment and processes that transform raw materials into

goods and services, to the training that accompany these, or to final products like computers that embody high technology. But

there is little agreement, in the United

States or abroad, as to exactly which products and process should be included in these

categories. There are, furthermore, problems

of measurement within each category. The

cost of equipment or of the licenses for rights

to processes, for instance, may not necessarily reflect the value to the buyer in terms of

the quality, output, innovativeness, and

profitability of the final product. The value

of a purchase, which includes the skills of the

workplace-the training required to operate

machines, to achieve practical familiarity

with the theoretical aspects of equipment,

and to become able to adapt and extend the

operation of the equipment-is difficult to

quantify. Finally, there is disagreement over

100

Technology and East- West Trade

which products qualify as "high technology

items.

To these empirical problems must be

added the difficulties engendered by the fact

that a number of both commercial and noncommercial vehicles exist through which

technology of potential economic value is exported to the East. Commercial vehicles of

technology transfer include turnkey factories (i.e., a factory built in the recipient

country by a foreign firm, which is turned

over to the recipient only when it is ready to

"turn the key" and start production); licensing (with and without training programs):

joint ventures; technical exchanges; training

in high-technology areas; sale of processing

equipment; provision of engineering docu-

mentation and technical data; consulting;

proposals (documented and undocumented);

and sale of products that embody technology. Noncommercial vehicles include visits

in both directions of students, scientists,

and businessmen or managers; the use of unclassified published technical data and

patents; the reverse engineering of single

machines or components; and clandestine activities. All of the latter modes of technology

transfer cost negligible amounts of hard currency and, for the most part, have been beyond Government control. Communist

states have made the most of these techniques, although they are by no means

unique in this regard. These channels of

technology transfer have historically been

and will continue to be of great importance

to market and nonmarket nations alike.

PROBLEMS OF MEASUREMENT

COMMERCIAL TRADE IN

TECHNOLOGY

The most common forms of commercial

technology transfer are the direct sale of

products embodying high technology and

various forms of industrial cooperation

agreements.

High-TechnologyProducts

The U.S. Department of Commerce re.

cently attempted to isolate trade in high

technology through the examination of err.

ports in selected categories of the Standard.

International Trade Classification (SITC).

This classification scheme summarizes trade

information for approximatelv 10.000 different items by or&nizing it into commodity

groupings. The Commerce study selected 2F

categories of products which, -it contends,

contain all those goods that reflect best practice in critical technology sectors-machinery and transport equipment and professional, scientific, and controlling instruments (see table 14).This effort is by far the

most precise and comprehensive attempt to

use trade statistics to measure techn01ogy

transfers.

There are problems with the Commerce

list, however. Aside from quarrels over what

constitutes a "high technology" good, no list

based on trade data can be sufficiently detailed to precisely distinguish between levels

of technology. This could be accomplished

only through a caseby-case examination of

individual exports in light of an accepted set

of criteria defining "high technology." The

Commerce Department classifications are

therefore overly inclusive; they "catch"

items which do not in fact embody "high"

technology, if by that is meant state-of-theart or items unobtainable in the East. This

means that calculations of high-technology

trade based on these categories are inflated.

Second, techniques used to value and d e

scribe exports a t point of origin in the

United States cannot reflect the contribution of third nations. U.S. technology embodied in products originating froin American subsidiaries in Europe or Japan appears

in the trade statistics of these countries and

Ch VI- Technology Transfer: D e t ~ n i t i o nand Measurement

Photo credlt 8ureau ot East West Traae U S Department 0 1 Commerce

U.S.4J.S.S.R. technology transfer through the mechanism of trade fairs

107

102

Technology and East-West Trade

Table 14.-High-Technology Items

Jet and gas turbines for aircraft

Nuclear reactors

Calculating machines (including electronic

computers)

Statistical machines (punch card or tape)

Parts of office machinery (including computer

parts)

Machine tools for metal

Glassworking machinery

Pumps and centrifuges

Machine tools for wood, plastic, etc.

Parts and accessories for machine tools

Cocks, valves, etc.

Telecommunicationsequipment (except TC a radio

receivers)

Primary batteries and cells

Tubes, transistors, photocells, etc.

Electrical measuring and control instruments

Electron and proton accelerators

Electrical machinery, n.e.s. (including

electromagnets,traffic control equipment,

signaling apparatus, etc.)

Aircraft, havier than air

Aircraft parts

Warships

Special purpose vessels (including submersible

vessels)

Optical elements

Optical instruments

Image projectors (might include holograph

projectors)

Measuringand control instruments, n.e.s.

SOURCE: 0uentific.rion of Western Expons of High Technology ~roductsto

Communisl Countries. prepared by John Young. Industry and Trade

Administrat~on.

Offlce of East.West Pollcv and Plannlna. US. DeDart.

ment of Commerce, Prolect No. 0.41

not in those of the United States. Finally,

customs valuations are determined by the

price of the sale. Price does not necessarily

reflect the full market value of the commodity, however; some firms deliberately underprice an initial sale in order to break into

Eastern markets.

With these reservations, and in the absence of alternative superior measures, the

Commerce system has been used in chapter

I11 to analyze U.S.and industrialized world

exports of high-technology products to the

Communist nations.

Industrial Cooperation Agreements

Industrial cooperation agreements have

become increasingly common in East-West

trade. In its most general sense, the term

refers to a broad charter extending wer a

number of years to conduct commercial relations between a Western firm and a centrally

planned economy. Industrial cooperation includes a wide variety of possible relationships, ranging from the sale of licenses and

patents to coproduction agreements and

turnkey plant sales. The comprehensive list

incorporated into table 15 summarizes the

basic mechanisms and techniques utilized in

these ventures. These frequently involve relationships between trading partners which

extend beyond simple sales of goods and

services, to continuous and close contacts

between trading partners, training, and technical assistance programs. I t can be expected that these agreements lead to considerable communication of technicalknow-how

congruent with sales of plant and capital

equipment.

Activities in this area are extremely difficult to measure. Cooperation agreements

are often complex and their values particularly difficult to establish because many

East-West transactions involve countertrade rather than cash (see chapter 111).

Chantertrade is particularly attractive to

Eastern nations with scarce hard-currency

resources and a need to foster exports to the

West. But while its importance in Communist countries is becoming increasingly apparent, little data on such agreements exist.

The US. Department of Commerce estimates that in Poland, 40 to 50 percent of

electrical products and machinery exports to

the West in the 1980's will be part of

countertrade agreements; and 38 percent of

Soviet trade turnover between 1976 and

1980 will be generated through countertrade.' There are no comprehensive studies

of the full range of countertrade transactions, although the Organization for Economic Cooperation and Development

(OECD)has studied individual categories of

contract^.^

'See U.S. bpartment o f Commerce, East-West Counter

tmdP Pmchces. An Intmductory Gurde for Busrness, Indust r y and Tmde Administration. August 1978.

'Organization for Economic Cooperation and Develop

ment. Countemode Pmctices in East-West Economic RehZions. Paris.Mar. 23,1978.

Ch. VI- Technology Transfer: Definition and Measurement

Tabh 15.-Types of Contnctwl Amngemonts

Included in Different Definitionsof East-West

IndustrialCoopemtion

1. Sale of equipment for complete production systems, or

tumkey plant sales (usually including technical assistance).

2. Licensing of patents, copyrights, and production knowhow.

3. ~ i a n c h i s i n

of~trademarks and marketing know-how.

4. Licensing or franchising with provision for market sharing and quality control. 5. Cooperative sourcing: long-term agreement for pur.

chases and sales between partners, especially in the

form of exchanges of industrial raw materials and intermediate products.

6. Subcontracting: contractual agreement for provision of

production services, for a short term and on the basis of

existing capabilities.

7. Sale of plant, equipment, andlor technology (1-3 above)

with provision for complete or partial payment in resultinp or related products.

8. production contractings: contractual agreement for production on a continuing basis, to partner specifications,

of intermediate or final goods to be incorporated into

the partner's product or to be marketed by him. In contrast to subcontracting, production-contracting usually

is on the basis of a partially transferred production capability, in the form of capital equipment andlor technology (on basis of a license or technical assistance contract).

9. Coproduction: mutual agreement to narrow specializb

tion and exchange components so that each partner

may produce and market the same end product in his r e

spective market area. Usually on the basis of some

shared technology.

10. Product specialization: mutual agreement to narrow the

range of end products produced by each partner and

then to exchange them so that each commands a full

line in his respective market area. In contrast to coop

erative sourcing, product specialization involves adiustment in existing product lines.

11. Comarketing: agreement to divide market areas for

some product(s) andlor to assume responsibilities for

marketing and servicing each other's product(s) in r e

spective areas. Joint marketing in third markets may be

included.

12. Project cooperation: joint tendering for development

projects in third countries.

13. Joint research and development: joint planning, and the

coordinated implementation of RBD programs, with provision for joint commercial rights to all product or process technology developed under the agreement.

14. Any of the above in the framework of a specially formed

mixed company or joint venture between the partner

firms (on the basis of joint equity participation, profit

and risk-sharing,joint management).

SOURCE: Offlce of Technology Assessment.

Table 16 summarizes one of the most r e

cent attempts to classify types of cooperation agreements by frequency. I t shows that

in 1976 coproduction based on the principle

103

of specialization accounted for more than 38

percent of East-West agreements. This kind

of transaction involves the transfer of an entire production activity to a new location,

usually in Eastern Europe. After coproduction, the next most common agreements

were turnkey plant sales and the sale of

licenses.

Coproduction.-Under this kind of agree

ment, each partner specializes either in the

production of certain parts of a finished

product, which is then assembled by one or

both partners; or in the manufacture of a

limited number of articles in the production

range, which are exchanged so that each

partner can offer a full range of products.

The technology is usually provided by one of

the partners, but in some cases may be the

culmination of joint R&D effort, Generally,

coproduction and speualization agreements

also include cooperative marketing arrange

ments. Usually the product bears the trademark of both partners, each of which has exclusivity for the market in its own area but

shares the market in other countries. In c e

operative agreements with the Soviet Union,

the Western partner usually has priority for

selling in the industrialized West, and the

Soviet Union confines its sales to Warsaw

Pact nations and possibly certain developing

countries.

The attraction of such agreements for

both the Western and Eastern partners is

obvious. The Western firm may acquire raw

materials and/or labor in the East. The

Eastern country expands its repertoire of

manufacture, its markets, and often its potential for earning hard currency.

Turnkey Plants.-Of

all cooperation

agreements, turnkey transactions are perhaps the most effective means of technology

transfer. Although technology may in m y

cases be purchased or Ieased through

straightforward transactions in the marketplace, turnkey projects afford the possibility

of acquiring whole production systemsfrom feasibility studies, construction, and

training through technical assistance during

the initial run-in period. Further, most trans-

104

Technology and East- West Trade

Table 16.-Classification of East-WestIndustrial CooperationAgremnents

by Percent

Total

S u m y of June 1,7976

Bulgaria . . . . . . . . . . . . . . . . . . .

Czechoslovakia . . . . . . . . . . . . .

East Germany ..............

Hungary . . . . . . . . . . . . . . . . . . .

Poland ....................

Romania ...................

U.S.S.R.. ...................

Tobl CYEA countries

1972.......................

1975. . . . . . . . . . . . . . . . . . . . . . .

June 1,1976. . . . . . . . . . . . . . . .

Supply of

ticensea

Delivery of

plant

17.1

27.3

25.7

100.0

100.0

100.0

100.0

100.0

100.0

100.0

29.5

21.7

19.4

3.2

23.5

16.3

24.2

25.5

20.4

100.0

100.0

100.0

28.2

26.1

17.1

11.9

21.7

20.5

-

Specialization

Joint venturing

coproduction Subcontracting and other

-

CMEA = Cwncil for Mutuai E m i c Assistance or Comecorn.

%wly of license in ac(in part at least) for productsor components

SOURCE: Ecommic Commission for Europe. United Nations.

actions guarantee an ongoing relationship

with the supplier, opening the possibility of

access to developing technology. The continuity of these relationships is universally

regarded as the most important single ele

ment affecting the success of a technology

transfer.

Turnkey projects in their pure form, involving purchase of an entire installation

from one firm or one country, are relatively

rare-at least in the case of the Soviet Union.

Most often, a Communist nation contracts

with many Western firms for particular components of a complex, including marketing

and subsidiary services. The Soviet Kama

River truck plant is a good example. Here,

the U.S.S.R. dealt with Western firms in

several countries, assembling its own sophisticated mixture of goods and services to fit

its own specifications.a

Licenses and Patents.-The acquisition of

technology through licenses accelerates indigenous technological progress and enhances potential export capabilities in the

East. According to one estimate, the purchase of a license may cause technological

progress in the affected field to leap by 7 to 8

.See Marian S. Finer, Howard Gobstein, and George D.

Holliday, "KamAZ: U.S.Technology Ransfer to the Soviet

Union," in Hemy R. Nau, ed.. Technology ltansfer and U.S.

Foreign Policy (NewYork: Praeger Publishers, 1976).

years, compared to only 3 to 5 years with the

purchase of know-how and 1 to 2 years for

coproduction.' Often the acquisition of a license creates requirements for other improvements, more imports, further licenses,

and the promotion of exports. Licenses may

be miid for in either currency or in products

thr-ougfi cuuntertrade z&&tm&ts.

In

Eastern Europe,the latter predaminate.6

Licensing arrangements are varied, ranging from a straightforward authorization to

exploit an individual patent to complex

agreements on industrial cooperation. These

may provide for the grant of licenses for

using patents linked with the importation of

certain capital goods; of licenses to use

know-how and technical assistance in build-.

ing turnkey plants or other industrial installations; and of licenses to use trademarks.

I t is apparent that the diversity of modes

through which technology is transferred and

the complex interdependence of activities,which are directly or indirectly involved

in the process, make it extremely difficult to

accurately measure the value of technology

that flows to the East in commercial transac4See Jozef Wilczynski, "License in the West-East-West

Transfer of Technology." Journal of World Trade Law,

March-April1977.

'The US. Perspective on Enst-West Zndus trial Coopem

60%International Development Centre of Indiana Universi.

ty (Blwmington, Ind., 1975).

Ch. Vl-Technology Transfer Definition and Measurement

tions. No extensive statistical analysis of the

transfer function in this respect has been

made, and available data can support only

crude analyses of overall volumes and

trends. Any comprehensive assessment of

the economic importance of these transactions would require data of a sophistication

presently unavailable.

NONCOMMERCIAL

TECHNOLOGY TRANSFER

Open and regular contacts between the

scientific and engineering communities of

the United States and the Soviet Union have

received official encouragement through a

number of bilateral agreements. In July

1959, a formal agreement was concluded b e

tween the U.S. National Academy of Sciences (NAS)and the Academy of Sciences in

the U.S.S.R.; in the same year the International Research and Exchanges Board

(IREX) began a program that sent American

graduate students and young instructors to

the U.S.S.R. In 1972, the U.S.1U.S.S.R.

Agreement on Cooperation in the Fields of

Science and Technology (S&T) was completed, instituting bilateral cooperative programs in a number of scientific fields. The

S&T agreement is predicated on the idea of

building and maintaining a world scientific

community through open channels of communication. More recently, exchanges with

the People's Republic of China (PRC)have

begunThe role that such contacts have in transferring American technology with potential

commercial value is the subject of considerable disagreement.

Two recent studies of the S&Tagreements

and the exchanges program by NAS have attempted to assess the value to both sides of

the information exchanged in these prog r a m ~Both

. ~ concluded that exchanges with

BNational Academy o f Sciences, Review o f the

U.S./U.S.S.R.Agreement on Coopemtion in the Fields o f Science and Technology, National Research Council, May 1977,

and Review of U.S./U.S.S.R. Zntemcademy Exchanges and

Relations, National Research Council, September 1977.

105

the Soviet Union were worthwhile, although

their value to U.S. participants may be limited by American scientists' lack of familiarity with the Soviet Union's unique style of

science and engineering and by the lack of

Soviet candor regarding weaknesses in many

areas of its research. Both programs were

plagued by the rigidity of the Soviet bureaucracy (although problems with the US.

bureaucracy seemed to rank a close second)

and by erratic attendance on the Soviet side.

In 1978, for example, NAS extended invitations to 44 Soviet scientists; only 4 participated.

A review of the two studies indicates that

while the initial contacts provided some

useful information about Soviet research

(especiallyin the fields of medicine, weather

forecasting, accelerated drug testing, nucle

ar fusion, magnetohydrodynamics, superconducting magnets, and earthquake prediction), the primary value of the U.S.1U.S.S.R.

exchanges to America has been one of educating the scientific and engineering community about the nature of the Soviet scientific

system:

Not only do U.S. scientists and engineers

have the opportunity of acquiring at first

hand new ideas and new perspectives from

their Soviet colleagues, they also become

more familiar with the relevant Soviet scientific literature and are alerted to particular

Soviet scientists and engineers whose future

publications likely merit special attention. . . . m e Soviets] have probably r e

ceived more technical value in computer

topics, in econometrics, and in management

science than has the U.S., largely because

the U.S. is more advanced in these areas.

But the most significant value to the U.S.

. . . lies in better U.S. understanding of the

Soviet planning and management process,

and of Soviet status and approaches in economics, management science and computer

science.' It is nevertheless true that the

United States has, on the whole, taught the

Soviets more than it has learned from them.

The NAS expects the future balance to shift

toward greater equal it^.^

'Ibid., Agreement on Coopemtion, pp. 7,43.

'Ibid.. Zntemcademy Exchanges andRelntions, p. 3.

106

Technology and East-West Trade

According to NAS. the risk of inadvertently communicatingimportant technology

through scientific exchange is minimrrl. The

Commerce Department's Office of Export

Administration regularly briefs U.S. scientists on topics they should not discuss in the

exchange programs. and "except in certain

narrow and welldelimated fields, problems

of technology do not loom large. . . The

Soviets have not managed to translate into

practice the wealth of American technical

data already available to them t h . u g h the

open literature [and as a result] their technology is unlikely to benefit greatly from

any further technical data we might disclose

except certain specific data which are proprietary or classified.

A different mstibenefit balance may exist

in the student exchanges between the

United States and the U.S.S.R. These can

result in the transfer of technology that is

difficult to quantify or even identify. Since

about 1972. Soviet "students." who are

usually exprienced engineers. scientists,

and managers of R&D establishments, have

concentrated on study programs in the

United States in semiconductor technology.

'Ibid, inkmcademy Exchanges, p. 4; Agreement on Coop

amtion, p. 43.

Photo credit: U.S. &p.rtmenr of Energy

-RI.gnaohydroclrurnictu~~)t~

mtvea in th.6 n * t union

p.rt of th.U . S N S S . R . Coop.Rtk" R q p . m

Ch. VI-Technology Transfec Definition and Measurement

computers, and other fields related to problems of applied research. Large numbers of

Chinese "scholars" are similarly beginning

to appear in the West. Data reflecting the

number of such students and the institutions they attend tell little of the nature and

amount of the technology they carry back

with them. I t has been alleged that this in-

107

formation carries potential military significance. As far as can be determined, however,

no systematic attempt has ever been made

to quantify its value in either military or

commercial terms. Any complete assessment of such exchanges must weigh both

strategic and potential commercial losses

against their political and cultural value.