A New Missile Crisis? Not If You Know Facts

If you read only The New York Times , you might be terribly worried about the harm inflicted on American national security when sensitive defense-related information was supposedly given to the Chinese by Loral Space & Communications Ltd. If you listened to the Republicans in Congress, you might believe that Loral–a New York-based company headed by a big Democratic contributor–actually helped China target American cities with nuclear warheads. You might even think that by signing a waiver for Loral to launch another satellite from China last February, the President had compromised national security in exchange for campaign contributions.

If you were fortunate enough to read The Washington Post , though, you would probably calm down–and wonder what significance, if any, there is to this latest Washington “scandal.”

Let’s stipulate that many large donations look like bribes under the prevailing rules of campaign finance, which allow rich citizens like Loral’s chief executive, Bernard Schwartz, to gain special access to the White House and Congress by making enormous gifts of so-called “soft money.” Although Mr. Schwartz appears to be more an ideological donor than a seeker of government handouts–he favored Democrats even when Republicans were in power–he is learning that the implication of legalized bribery is unavoidable for any contributor who does business with the government.

And let’s leave aside questions about the wisdom of the Clinton Administration’s “constructive engagement” China policy, which makes some technology transfer inevitable. Conservative critics seem to believe we should instead be preparing for armed conflict, or at least a new Cold War. But the Loral matter deserves to be examined, apart from the broader debate.

The Times accounts of the case suggest that U.S. security interests were damaged, although exactly how is not clear. The most recent Times dispatch, on June 1, alludes to Pentagon concerns about the “technological assistance” supposedly provided by Loral to the Chinese “because the rocket science involved in putting a satellite into orbit is similar to that needed to deliver a nuclear warhead.”

It isn’t easy to say whether Loral aided China’s missile program, however, because the issues are highly technical and because the Pentagon report on Loral is classified and thus not available to reporters.

But unlike readers of The Times , anyone who read The Washington Post on May 31 would at least understand the real context. As The Post explained (and The Times did not), the impetus behind Loral’s assistance to the Chinese lay with the insurance companies that provide coverage to satellite launches. (You didn’t think they shot $200-million TV satellites into orbit without insurance, did you?) After the disastrous crash of a Chinese Long March rocket in February 1996, the insurers insisted that an independent committee headed by Loral confirm Chinese assurances that a minor mechanical defect was at fault. Otherwise, they wouldn’t pay the claim or insure future launches of the Long March, which had a poor record of reliability.

No insurance, no launches. Under commercial pressure, the Chinese reluctantly agreed to allow the independent review of data on the February 1996 crash. At the time, this decision was praised as a departure from previously strict Chinese secrecy. As a result of this process, the U.S. may have learned, through Loral, more about China’s rockets than China learned about U.S. technology.

The review committee determined that the Chinese were right about the cause of the crash–basically, a bit of faulty soldering. A security breach did occur when a Loral employee gave the review committee’s 200-page report to a Chinese Government-run firm before clearing its release with the State Department. This action violated Loral’s own rules and possibly U.S. law. What The Post reported (and The Times also omitted) was that Loral executives tried to prevent that mistake, and then reported it to the State Department the same day it occurred. Justice Department prosecutors have been investigating the Loral incident for more than a year now, without any indictments being issued.

And as The Post also noted (again in contrast to The Times ), the same Pentagon agency that had charged Loral with breaching security in 1996 gave its approval to the now-controversial waiver signed by the President last February. The waiver’s language specifically said it did not exempt Loral from any possible criminal sanctions for its 1996 error.

Meanwhile, Post reporters couldn’t find a single member of Congress who had read the Pentagon report criticizing Loral. Perhaps their ignorance is what encouraged Republican members to alarm us with tales of purloined technology and nuclear warheads suddenly aimed at our homes. It’s an election year, and if Whitewater and Monica Lewinsky can’t get traction with the voting public, maybe the “China connection” will.

Or maybe, if all the facts emerge before November, it won’t. When experts testify before the Congressional committee investigating this scare, they will no doubt remind us that Chinese missiles have been capable of reaching American soil for almost 20 years–and that no campaign contribution or insurance report can be blamed for that longstanding threat. A New Missile Crisis? Not If You Know Facts