The latest scandal to implicate the Clinton White House revolves around accusations that the president gave aerospace giant Loral Space & Communications--headed by the Democratic National Committee's biggest donor in the 1996 campaign cycle--special permission to export satellites to China, despite Justice Department opposition. Even if there is no actual evidence of a quid (donations) pro quo (permission to export), these allegations raise questions. Why would a U.S. company launch satellites on Chinese rockets? Why not use American ones? And if the rockets that launch satellites and nuclear missiles are fundamentally the same, why would the United States authorize cooperation with China's national aerospace company, which has clear links to the military?
Background. In anticipation of a booming market, U.S. satellite companies began contracting launches with China in the mid-'80s. To punish China's 1989 Tiananmen Square crackdown, the U.S. government prohibited the launch of American commercial satellites on Chinese rockets, except with a presidentially granted exemption. The Bush administration, however, granted waivers to the sanctions that soon put most of the contracts back on track. Bush, urged on by Newt Gingrich and other Republican leaders on Capitol Hill, authorized the export of nine U.S. satellites for Chinese launch. (In fact, sanctions changed little. The export of satellites to any country has always required government approval.)
As a senator, Al Gore was the most vociferous critic of these waivers. (Click to read his criticisms from 1989.) Clinton campaigned against them. However, aggressive lobbying by satellite manufacturers persuaded Clinton and Gore to reverse their position. They have granted waivers for the launch of 11 more satellites. No application for a waiver has ever been denied--by any administration. Last month, before this scandal broke, Clinton aides told the Christian Science Monitor that they hoped that the administration would soon eliminate these sanctions altogether. (Click for a rundown of the specific actions by Loral that underlie the current controversy.)
Why do U.S. companies use Chinese rockets? American commercial satellite manufacturers (of which Loral is the third largest) do not rely on China for most of their launches. In the same two-year period that China sent two Loral satellites into space, Loral launched dozens of others on Russian, French, and American rockets. Although China currently launches relatively few satellites, Loral, like its competitors Hughes and Lockheed Martin, aims to increase its use of Chinese rockets for several reasons:
1) Cut-rate prices. China charges about half the rate of Russia--its least expensive competitor ($70 million vs. $140 for a comparable launch). Attribute this in part to massive government subsidies given to Great Wall, China's national aerospace company. More important, to restore business that China lost after a spate of rocket crashes in 1995 and 1996, Great Wall slashed launch prices. In the early '90s, the Chinese launched three to four satellites a year. Last year they only managed the successful launch of a single satellite (for the Philippines).
2) Rocket shortage. The proliferation of cell phones, digital television, etc., has caused the demand for launches to outstrip the supply of rockets. This shortage forces satellite companies to exploit all available opportunities. U.S. export policy exacerbates the dearth. To protect its aerospace industry, U.S. quotas for this decade allow American companies to arrange only 20 launches with each of the French, Russian, Ukrainian, and Chinese national aerospace companies.
3) NASA policy. Fixated on politically popular manned flights, NASA has devoted most of its resources to highly expensive Space Shuttle flights. NASA neglected development of the cheap, disposable, reliable rockets that other countries pursued. When the Reagan administration began authorizing commercial space launches in the mid-'80s, American aerospace companies, which typically collaborated on massive government projects, weren't equipped to build entire rockets for commercial use. The companies are still catching up and are not nearly as well stocked as their Russian and French competitors.
Is it dangerous for the United States to use Chinese rockets? It is indisputable that the technology used to launch commercial satellites is largely indistinguishable from the technology used to launch missiles. Like Russia and the United States, China ripped off its commercial space capabilities from its weapons program. China's commercial rocket, the Long March, and its intercontinental ballistic missiles use precisely the same rocket boosters and guidance systems. Great Wall is partly owned by the Chinese government and its upper management has intimate ties to the Chinese military's top brass.
U.S. manufacturers, moreover, inevitably acquire a vested interest in improving the accuracy and reliability of Chinese rockets, since failures, such as the 1996 crash that destroyed Loral and Hughes satellites, are very costly. In any case, in the process of launching U.S. commercial satellites, it is unavoidable that Americans will transfer some technology to the Chinese. To install a satellite, for instance, American engineers work with Chinese engineers to substantially rewire and reprogram the rocket. The law, however, requires that Defense Department officials supervise these procedures. At least one official remains with the satellite from the time it leaves the country until its liftoff.
The Clinton administration considers the risks of technology transfers negligible. Defense Department officials told Congress last week that the Chinese have not upgraded their ICBMs since 1981. And they don't need to--the 13 missiles they supposedly have aimed at the United States have always been judged capable of hitting U.S. cities by the Pentagon (though China's difficulty in commercial launches casts doubt on the Pentagon's assessment).
Did Loral harm national security? In the wake of the February 1996 Chinese rocket crash, an executive of a Loral subsidiary chaired a panel composed of other satellite manufacturers that reviewed the findings of Chinese investigators. Loral says the review was meant to reassure the insurance companies that indemnify their launches on Chinese rockets. Loral denies that its report to the Chinese divulged sensitive information about rocket guidance systems, as a Defense Department report claims. The 200 page report, the company says, merely pointed out that the Chinese rockets had faulty soldering. And this conclusion, Loral claims, was neither original nor based on first-hand investigation. Finally, the Chinese say that the State Department impounded the Loral findings before they ever reached them.
If you missed the links, click to read Gore's 1989 criticisms and for a breakdown of the Loral controversy.