Will Bush Team End the Ongoing Defense Fire Sale’?

(Washington, D.C.): This afternoon, the Committee on Foreign Investment in the United States (CFIUS) will meet to consider the proposed purchase of an American manufacturer of exceptionally sensitive and highly militarily relevant equipment by a Dutch company. As a column in today’s Washington Times by Center for Security President Frank J. Gaffney, Jr. makes clear, should CFIUS approve this transaction, the Nation would lose the world’s foremost innovator of lithography technology (used to manufacture top quality computer chips) and one of its principal suppliers of optical systems (used in state-of-the-art intelligence satellites and other defense hardware).

If past practice is any guide, the Dutch company, ASML, would probably move the bulk of the research and development and production performed by the American concern — Silicon Valley Group (SGV) and its subsidiary, Tinsley Laboratories — offshore. It may also make the fruits of such work available to clients in China and elsewhere.

Leading Members of Congress, including Senators Robert Bennett (R-UT) and Representatives Duncan Hunter (R-CA) and Jim Gibbons (R-NV), have urged that — given the stakes — a more in-depth investigation be performed over the next forty-five days, pursuant to the Exon-Florio Act, in order to assess the implications of the proposed SVG sale. This is especially desirable insofar as it seems the only way to ensure that officials who actually support President Bush’s agenda of rebuilding the military have an opportunity to participate in the associated deliberations.

These legislators are to be commended for seeking, in addition, oversight hearings on Capitol Hill to consider the proposed ASML purchase and the larger problem of reckless “fire sales” of U.S. technology — sales that were encouraged, or at least approved, by the Clinton-Gore Administration and many of its hold-overs who are currently trying to engineer the Bush Administration’s acquiescence to one more, ill-advised transaction.

The new Bush-Cheney team has rightly made rebuilding the U.S. military one of its top priorities. Unfortunately, its predecessor’s legacy is not only one of leaving the armed forces in a deplorable state requiring such repairs; Messrs. Clinton and Gore also did much to diminish — and, in many cases, to eliminate altogether — the defense industrial base that will be needed to effect the rebuilding.

This was not, as the Leninists say, “an accident, comrade.” Early in the first Clinton administration, then-Secretary of Defense Les Aspin convened what came to be known as the Last Supper for the Nation’s defense contractors. He advised them that there would not be enough work for all of them in the post- Cold War future. They were put on notice that there was going to have to be a significant contraction in the number and production capacity of their firms.

In the years that followed, some went out of the defense business; many others were gobbled up by a few conglomerates. Recent, grievous depreciation of stock values imperils the viability of one or more of even these giant concerns.

Perhaps even more troubling was the encouragement the Clinton team gave to foreign acquisition of U.S. defense contractors. This practice often conduced to the transfer of key research and development and manufacturing capabilities overseas — further exacerbating the worrisome trend towards ever-greater Pentagon dependence on overseas suppliers for its gear. At the Conservative Political Action Conference last Friday, Elaine Donnelly of the Center for Military Readiness, pointed out a relatively benign, if absurd, example this phenomenon: the black berets the Army has decided to issue to all its soldiers — despite nearly universal opposition to the idea of degrading this traditional symbol of the service’s elite Ranger units — will be bought from Communist China.

Unfortunately, there are many other instances in which far more sensitive military requirements are becoming reliant upon foreign manufacturers. These include: precision gears and gear boxes; certain types of sophisticated microchips used in guidance systems and other weapons applications; pan carbon fiber, the precursor to “stealth” composites; and computer monitors and printed circuit boards. There are obvious national security implications involved in having U.S. combat capabilities depend to a critical degree on companies — and, in some cases at least, countries — who may not prove reliable suppliers in time of need. As the military increasingly turns to commercial off- the-shelf technologies, this trend will only grow.

Matters are made still worse by another consideration: Foreign purveyors of sensitive dual-use technology (that is, equipment and know-how relevant to both military and civil applications) are, as a general rule, willing to sell their goods not only to the United States but to the military-industrial complexes of her enemies, as well.
The Clinton Defense Department’s response to such developments was like that of Mad Magazine’s Alfred E. Neuman: “What, me worry?” To the extent the subject received any policy consideration at all, the Administration’s willingness to promote trade and “globalization” at the expense of American sovereignty and prudent security practices usually was sufficient to trump misgivings expressed by more sober policy-makers in the executive branch and Congress.

Today, Clinton appointees who have burrowed into various agencies around town, including notably Pentagon official David Tarbell, will be meeting in the hope of adding yet another U.S. technology of critical importance to the American military to the list of foreign- supplied equipment. This afternoon, the Committee on Foreign Investment in the United States (CFIUS) will hold discussions with representatives of the Netherlands’ company known as ASML, the world’s second largest manufacturer of lithography machines used to produce high-quality silicon chips. ASML is trying to buy Silicon Valley Group (SVG) — the planet’s most creative innovator in lithography technology and the last American supplier of such equipment. If approved by CFIUS, the Dutch would also pick up SVG’s subsidiary, Tinsley Laboratories, which manufacturers state-of-the art mirrors and lenses for the Nation’s spy satellites and other military users.

Without assured access to the fruits of the work done by SVG and Tinsley, such priority Bush programs as effective missile defenses and information-based “revolutionary” weaponry would be rendered problematic. Should ASML wind up selling these companies’ high tech products to China — as the Dutch (and many others) have done — moreover, such technology could well wind up being used against American personnel and interests.

A growing chorus from Capitol Hill, led by Senator Robert Bennett and Representatives Jim Gibbons and Duncan Hunter, is calling on the Bush Administration to take charge of the CFIUS process on the SVG deal. This can most easily be done by taking another forty-five days to conduct a more formal investigation of this proposed transaction. This would, in addition, afford Donald Rumsfeld and his counterparts at other agencies a chance to put in place subordinates who share their commitment to rebuilding, rather than selling off, America’s defense capabilities. As today’s meeting of the CFIUS will underscore, there isn’t a moment to lose.