A Formula For Disaster: Computers For The Soviet Military

This week, the Commerce Department announced that it would facilitate the Soviet bloc’s ability to acquire advanced desktop computers. It issued new regulations in the Federal Register and initiated consultations with the allies in the Coordinating Committee on Export Controls (COCOM) designed to permit the export without license of "personal" computers (PCs) with ten times the computing power(1) of those currently available for unlicensed sale to users behind the Iron Curtain.

Personal or desktop computers affected include all IBM’s AT models and the PS II Model 55 with its SX386 chip. Also affected would be AT-compatible computers such as those manufactured by Hewlett-Packard Co., Compaq Computer Corp., and Unisys Corp. The order would also decontrol systems with equivalent capacity based on other architectures such as Apple Computer Inc.’s MacIntosh Plus and MacIntosh SE models.

It should be noted at the outset that it is rather misleading to call many of the more sophisticated of the systems proposed for decontrol "personal" computers. These items processing capability are far in excess of most individual’s needs; in any event their cost would be in excess of a year’s earnings for an ordinary Soviet bloc citizen.

How Militarily Significant Are These Computers?

A comparison of the performance characteristics of personal computers the Soviets will be able to procure if the Commerce Department’s action is allowed to stand and those the Defense Department plans to buy is extremely revealing:

Key Performance Characteristics of Personal Computers

The bottom line is appalling: The effect of the Commerce Department’s recommended decontrol initiative would be to allow the Soviet Union to "leapfrog" the U.S. armed forces in the application of quite powerful PCs for military purposes. How the Department of Commerce came to ignore this fact — and disregard strenuous Defense Department objections to the decontrol action — is a frightening case study of how export control policy is being made by the Commerce Department to the detriment of U.S. security interests.

How Could the Commerce Department Take Such an Irresponsible Action?

Three factors contributed to this dangerous decision by the Commerce Department: 1) a grossly misleading assessment of the foreign availability of such powerful computers; 2) a high-handed bureaucratic power-play that effectively disenfranchised the Defense Department in decision-making concerning this decontrol action; and 3) erroneous assumptions about the significant U.S. personal computer sales that would follow should decontrol be authorized.

A Preposterous Assessment of Foreign Availability

The Law: The Export Administration Act(2) requires that controlled goods and technology be decontrolled only if an item is found to be available to a controlled country (e.g., the USSR) "in sufficient quantity and of comparable quality sufficient to meet the military needs of proscribed destinations" such that export controls are essentially ineffective in safeguarding militarily critical technologies.

In other words, the Commerce Department must be able to demonstrate that the item in question is either produced indigenously in the controlled country, or available from a third country which does not maintain stringent export controls. In this case, Commerce was supposed to show that the desktop computers in question are available in the Soviet Union from indigenous or third country sources.

The law permits evidence of such foreign availability to include manufacturers’ catalogues, manuals, brochures, articles from trade publications, photographs, and eyewitness accounts. It is important to bear in mind, however, that the intent of Congress in drafting this provision was not to make such evidence the sole criteria for a foreign availability assessment; it was, instead, to make clear that such evidence could not be rejected out of hand, as had been done on occasion in the past. Such representations may nonetheless be rejected if they are contradicted by reliable evidence, including scientific examination, expert opinion, or intelligence information.

The Facts: In this case, the Commerce Department’s assessment of the foreign availability of these powerful desktop computers depends critically upon circumstantial evidence such as advertisements and occasional eyewitness sightings. There is ample basis for contesting the conclusions drawn from this data. Consider the following:

Indigenous Soviet Capabilities: The Soviet Union clearly does not have the indigenous capability to manufacture significant quantities of comparably capable PCs to those now planned for decontrol by the United States. A 1988 report(3) prepared by a team of distinguished, independent experts starkly describes the hapless state of the Soviet computer industry:

 

• "The Soviet Union has a minuscule number of PCs…there are now about 50,000 personal computers there or one for every 5,600 people." (This compares to the more than 30 million in the United States, or one for every 8 people.)

 

• "The Soviets have been unable to mass produce a reliable personal computer on the order of the IBM-PC, and support service is questionable at best."

 

• "Reliability of computers in the Soviet Union is also a large problem. Some 30 percent of the PCs delivered by the three main producing ministries — Minelektronprom, Minradioprom, and Minpribor — do not work on delivery."

 

• "Given the rates at which countries in the Pacific Rim have managed to master the production of PC clones, it is not inconceivable that the Soviets will finally be able to put together mass production of reliable PCs, but this has not yet happened….The total domestic output of PCs would have to double in each of 1988, 1989, and 1990 to come close to the production of 1 million PCs, and this now appears highly unlikely.)"

Third-country Availability: The case for foreign availability from third countries is not much better. The Commerce Department’s study concluded that comparable quality computers to those proposed for decontrol are available to the Soviet Union in significant quantity from 19 countries. Of these, all but two are either members of COCOM, non-COCOM nations with existing agreements (or policies) designed to limit technology flows to the USSR, or in the process of negotiating such agreements. The two nations that have no domestic policy or obligations under international agreements that could impede transfers of such computers are Czechoslovakia and Hungary.

There is no evidence that either of these countries has the ability to produce computers up to the standard contemplated by the Commerce Department decision, let alone to do so in significant quantities. While both engage in extremely limited assembly of computer parts acquired elsewhere, this hardly constitutes the kind of capability or availability contemplated by the Export Administration Act.

In short, the Commerce Department’s conclusion that there is foreign availability — the pretext for its decision to decontrol extremely powerful desktop computers — is simply false. The foreign availability study calls into question both the competence of those who performed it and the prudence of policies predicated upon such an analysis.

This should not come as a surprise, given the fact that the Commerce Department is woefully ill-prepared to perform the kind of rigorous analysis required. As the authors of Global Trends in Computer Technology put it:

• "Although the Department of Commerce monitors foreign availability and performs competitive assessments, its limited resources appear to be stretched quite thin….To monitor global technology trends well, the government must invest in perhaps 100 or more additional, highly skilled people who are knowledgeable not only in computer technologies and their applications but also in international market trends and foreign languages."(4)

No Effective Interagency Process — Shades of FSX

Efforts by other agencies to challenge and, where necessary to correct, the shortcomings of the Commerce Department’s foreign availability study were repeatedly rebuffed by its authors. As a result, errors of fact and unfounded conclusions went uncorrected despite persistent attempts to effect improvements by the Defense Department and, to a lesser degree, the intelligence community.

It is ironic that, only a few short months after the Commerce Department complained bitterly about its inability to play a coequal role with Defense in mapping out government policy concerning a West-West technology transfer issue — namely, the FSX — Commerce is denying sister agencies an opportunity to play a comparable part in fashioning a sensible approach on East-West technology flows. Whenever such bureaucratic sandbagging is permitted to occur, the checks and balances inherent in an effective interagency process do not operate and the public interest is poorly served.

Indeed, the FSX example should serve as a guide for resolving the present conflict between Defense Secretary Dick Cheney who has gone public with his vehement opposition to this decontrol action and Commerce Secretary Robert Mosbacher. The President should direct a new interagency review of the issue before permitting the new regulations to become final.

Unwarranted Expectations about U.S. Sales

A final factor in the decision to decontrol advanced desktop computers was the belief that substantial commercial benefits are likely to accrue to American computer manufacturers from this action. In fact, for several reasons, such expectations are vastly overstated.

While the potential Soviet bloc market for desktop computers is theoretically huge, in reality, it is sharply constrained. The fact is that the hard currency resources with which such systems might be procured in quantity simply do not exist behind the Iron Curtain. This gives rise to two conclusions:

First, the people of Eastern Europe — who President Bush has pledged to help in their efforts to achieve greater liberties — are not likely to benefit from the new access to vastly more capable computers. Those who are unable to obtain soap, milk, sugar and other basic staples are improbable consumers of advanced technology like computers. This reality reinforces Secretary Cheney’s judgment that the most significant end-users for the new, more powerful PCs now envisioned for decontrol will, instead, be the Soviet bloc’s military and intelligence organizations.

Second, such sales of computers as do take place behind the Iron Curtain will almost certainly require the seller to extend credit to the purchaser. A number of leading American computer manufacturers appreciate that their competitors — especially the Japanese — are better positioned to make sales under these circumstances than are U.S. companies. When combined with the real prospect that such competitors may also be willing to "dump" PCs at a loss in order to secure substantial market shares and to underwrite sales further by offering below-market financing terms, the potential for significant Soviet bloc sales by firms from the United States appears even less.

Conclusion

The United States has made a serious strategic mistake in so broadly decontrolling computer sales to the East bloc. If permitted to proceed, this action will greatly facilitate the enhancement of the military capabilities of the Soviet Union and its allies. Moreover, it will do so without necessarily creating new economic opportunities for American manufacturers or aiding those in Eastern Europe struggling to transform the oppressive political and economic systems still operating there.

This decision is the more worrisome for its coming on the heels of another step taken by the Bush Administration to eroded the mechanisms for denying potential adversaries access to sophisticated, militarily-relevant technologies. Just last month, the United States announced that it would abandon the "no-exceptions" policy — the arrangement by which the United States and its allies have since 1981 categorically opposed the transfer to the Soviet bloc of certain classes of "dual-use" technologies without exception.

These steps are dangerous both in their own right and for what they portend for the Bush technology security policy down the road. Accordingly, the following steps must be taken at once:

 

• An independent foreign availability assessment should be performed by the President’s Science Advisor, and if necessary by the General Accounting Office, taking full account of all information sources — including intelligence data.

 

• Until such time as this assessment is completed, the proposed personal computer decontrol measures should be held in abeyance. If, as seems likely, the assessment finds that the foreign availability determinations of the Commerce Department are vastly overstated, an immediate effort should be made to determine some other, lower level of capability that could be established so as to permit some upward adjustment in the control standards without imperilling national security interests.

 

• A rigorous interagency procedure must be established for vetting foreign availability studies and for holding those who produce them accountable. This will require, among other things, the creation of a strong organization in the President’s Science Advisor’s office capable of serving as an honest-broker, ensuring that every relevant agency is able to participate fully in decision-making affecting technology transfer and related issues.

 

• Finally, Congress should amend the foreign availability provision of the Export Administration Act to require the concurrence in these assessments of the Secretary of Defense — whose responsibilities include on-going evaluations of Soviet military needs and the extent to which those needs are being met by acquisitions of foreign technologies.

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1. Prior to this decontrol decision, the maximum capability permitted in personal computers allowed to be sold abroad without a license has been a Process Data Rate (PDR) –a measure of processing capability used by the export control community — of 6.5. The new regulations would permit an increase to 68.

2. P.L. 96-72, as amended by P.L. 100-418, the Omnibus Trade Act of 1988, Section 5(f).

3. The sponsors of this report, Global Trends in Computer Technology and their Impact on Export Control (1988), were the Committee to Study International Developments in Computer Science and Technology, the Computer Science and Technology Board, the Commission on Physical Sciences, Mathematics, and Resources, and the National Research Council. Participants included representatives from major U.S. computer manufacturers like IBM, Digital Equipment Corp, and Unisys. Passages from the book have emphasis added.

4. General Trends, p. 234.