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Review of Cox Report
By George Koo, 6/14/99

The House of Representative Report 105-851 known as "Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China" and more commonly known as the Cox Report is no run of the mill Congressional report. It is slick, well written, organized to be easily digested containing photos, colorful graphics and red and black headings. Free of wordy bureaucratic-speak, the three-volume report is surprisingly easy to go through.

Reading the report, I am constantly reminded of the humorous story about the feuding captain and the first mate. To retaliate against the captain, when it was his turn to make an entry in the ship's log, the first mate said, "The captain is sober tonight." Absolutely true statement with bedeviling implications. Reading the Cox Report, one will find frequent use of this technique of mixing factual information with implications. Other times the report simply contains statements that smack of hyperbole.

Others have criticized the Cox Report for its many inaccuracies. In my review I will concentrate on passages with disingenuous intentions and let their words speak for themselves. My comments will appear in [brackets].

Vol. 1, Chapter 1 (On PRC acquisition of technology), page 19

Professional intelligence agents from the MSS (Ministry of State Security) and MID (Military Intelligence Department) account for a relatively small share of the PRC's foreign science and technology collection. The bulk of such information is gathered by various non-professionals, including PRC students, scientists, researchers, and other visitors to the West.

Ibid., page 23

Wang (Jun) is publicly known in the U.S. for his role in the 1996 campaign finance scandal and for Polytechnologies' indictment stemming from its 1996 attempt to smuggle 2,000 Chinese AK-47 assault rifles into the United States.... He was also connected to over $600,000 in illegal campaign contributions made by Charlie Trie to the U.S. Democratic National Committee.

Vol. 2, Chapter 5, page 87

Trie, his family and his businesses contributed a total of $220,000 to the Democratic National Committee between 1994 and 1996.

[The Cox committee apparently had trouble keeping their figures consistent between Chapter 1 and Chapter 5. If my memory serves, some individuals, residents in the Bay Area, were indicted for the smuggling of the AK-47's, not Wang or his company.]

Vol. 1, Chapter 1, page 34

...The State Department said it could identify only two PLA (People's Liberation Army) companies that were doing business in the United States, while the AFL-CIO identified at least 12, and a Washington-based think-tank identified 20 to 30 such companies. The Select Committee has determined that all three figures are far below the true figure.

The Select Committee has concluded that there are more than 3,000 PRC Corporations in the United States, some with links to the PLA, a State intelligence service or with technology targeting and acquisition roles.

[No details given to justify the considerable uptick in the estimate.]

Ibid., page 39

One estimate is that in 1996 alone, more than 80,000 PRC nationals visited the United States as part of 23,000 delegations.

Almost every PRC citizen allowed to go to the United States as part of these delegations likely receives some type of collection requirement, according to official sources.

Ibid., page 41

It is estimated that at any given time there are over 100,000 PRC nationals who are either attending U.S. universities or have remained in the United States after graduating from an U.S. university.

The Select Committee judges that the PRC is increasingly looking to PRC scholars who remain in the United States as assets who have developed a network of personal contacts that can be helpful to the PRC's search for science and technology information.

The PRC has also acquired technological information through open forums such as arms exhibits and computer shows.

[The Select Committee made no distinction between those that remain behind with green cards or those that become U.S. citizens and others with full intentions of returning to China.]

Ibid., page 53

PRC scientists have been pressured to reverse-engineer U.S. high technology rather than purchase it, even though this means that it may be difficult to maintain because of the lack of service, training, and documentation.

....The PRC seems willing to pay this cost in order to avoid long-term dependence on U.S. technology.

[Huh? The report spends greater part detailing PRC's effort to steal U.S. technology and then the above statements.]

Vol. 1, Chapter 2 (PRC theft of nuclear data), page 78

The PRC is one of the world's leading proliferators of weapons technologies.

[This sentence is considered a self-evident truth not supported with any discussion in this report.]

Ibid., page 87-89

[Peter Lee is first mentioned in Chapter 1, page 38 as a "classic non-intelligence service operation. In this section, his role in passing secret information was detailed.]

Lee was sentenced to 12 months in a halfway house, a $20,000 fine and 3,000 hours of community service.

[Compare with Jonathan Pollard, serving life imprisonment for spying for Israel. How come no Select Committee on activities of Israel?]

Vol. 1, Chapter 3 (high performance computers), page 143

....To illustrate the size of the individual purchaser segment of the PRC's PC market, it is estimated that only 5 million individuals out of the PRC's 1.2 billion have the expendable funds required to purchase a low-end PC in the PRC.

[Clearly out of date. Within the last two years, Legend, a local PRC company has overtaken western company for market share leadership and Dell expects China to become the second largest market within next 5 years. The Cox report's intent on downplaying the individual market is to emphasize the purchase of computers by PRC government organizations.]

Vol. 1, Chapter 4 (PRC missile & space forces), page 177-179

[Role of Qian Xuesen in China's missile development is discussed within these pages. Others have already pointed out that Qian could not have worked on the Titan missile because he was under house arrest and then allowed to leave for China during the inception of this program.]

During the 1950's, the allegations arose that Qian was spying for the PRC. He lost his security clearances and was removed from work on U.S. ballistic missiles. The allegations that he was spying for the PRC are presumed to be true.

....There were additional allegations that Qian attempted to ship classified documents to the PRC before he left in 1955.

[Iris Chang objected to the Committee's use of her book to justify above conclusions. The Committee never mentioned that Qian was put under house arrest in 1950 due to Joe McCarthy and the hearings of his committee and finally permitted to leave 5 years later. He had planned on taking copies of scientific papers he wrote with him. Even though his son and nephew eventually came back to the U.S. for graduate school, Qian turned down many opportunities to visit the U.S. after normalization, he was so embittered by his experience.]

Ibid., page 192

Following the detonation of its first nuclear weapon in 1964, the PRC publicly declared that it would never use nuclear weapons first against the homeland of a nuclear power or a non-nuclear nation.

....the intercontinental-range CSS-4s are deployed in their silos without warheads and without propellants during day-to-day operations.

Strategic doctrine, however, can change, and the PRC's movement towards a nuclear missile force of several kinds of mobile, long-range ballistic missiles will allow it to include a range of options in its nuclear force doctrine.

[In other words, don't believe PRC's public statements but believe the Committee's worst case scenario.]

[Most of Volume 2 deals with possible leakage of technical information by satellite makers Hughes and Loral to PRC who provided the launch services.]

Vol. 2, Chapter 5 (Hughes), pages 1-92 [This chapter covers Hughes involvement in China and can be summarized as follows: Hughes is in the satellite business. The world's launching capacity is tight. PRC offers their launching services at below international price. When a launch failure occurred in December 1992, Hughes was motivated to solve the problem before any other satellites are launched in China.

Hughes identified the faulty fairing as the source of the launch failure. "Fairing" is the nosecone cover that protects the satellite during launch. In a missile, the nosecone cover is called a "shroud."

On December 18, 1998, the State Department issued a "sensitive but unclassified memorandum," produced in full on pages 76-84, which concluded that PRC benefited from the information provided by Hughes based on their investigation and analysis. Below are selected quotes from the memo.]

Vol. 2, Chapter 5, page 84

Essentially, the APSTAR II failure investigation (and to some extent, the investigation of the Long March 3B) served as a tutorial for the Chinese, allowing them to improve on areas in which their spacelift program was weak.

The impact and extent of any damage to U.S. national security as a result of the Hughes accident investigation into the APSTAR II launch failure is difficult to quantify.

[The Select Committee came to a different conclusion. They note that because of the large size of the communication satellite, the required fairing is "hammerhead" in shape, in which the diameter of the fairing exceeds the diameter of the last stage of the launch rocket. Below are selected quotes from their analysis.]

Vol. 2, Chapter 5, page 92-93

....However, ballistic missiles with multiple reentry vehicles (MRVs) and multiple independent reentry vehicles (MIRVs) usually do have shrouds, although with advanced nuclear weapon design, the density of the payload is high and the volumes to be enclosed are usually smaller than for communication satellites. Consequently, hammerhead designs do not seem to have been used for the shrouds on ballistic missile systems carrying multiple warheads.

Although the detailed configuration of ballistic missile fairings may be substantially different from the fairings used on rockets, the methods for determining quasi-steady as well as vibratory and acoustic noise-generated flight loads, and for designing the structure to resist these loads, would be the same.

Thus, the PRC experience and knowledge of the aerodynamic and other loading conditions and environments on rocket fairings, and the structural design process taking these conditions into account, would stand them in good stead in developing fairings (or shrouds) for ballistic missiles.

[The above statements of the Committee seems contradictory to me but I would leave this to someone with real technical expertise to judge. First they indicate that information on hammerhead fairing is not particularly pertinent to missile shrouds, but then they insist that China gained something useful nevertheless.]

Vol. 2, Chapter 6 (Loral), pages 96-215 [This chapter deals with Loral, another major satellite maker, and China. In their case, the launch went bad immediately and the rocket went sideways and crashed killing unknown number of civilians in a nearby village.

On page 115, the U.S. Government concluded that the committee formed by Loral may have helped China more quickly find the cause and thus prevent future failures, could "reinforce or add vigor to the PRC's design and test practices, improve PRC rocket and missile reliability" and "exposure of the PRC to a Western diagnostic process."]

Vol. 2, Chapter 6, page 115

The interagency review also noted that the Long March 3B guidance system on which Loral and Hughes provided advice is not a likely candidate for use in future PRC intercontinental ballistic missiles. The Long March 3B guidance system is well suited for use on a rocket.

[The report spends next 56 pages detailing how the Government came to the above conclusions and the Select Committee offers no other conclusions. In other words, Loral and Hughes may have provided assistance in violation of export license procedure but the information is not likely to be applicable to guidance systems of ICBMs.]

Vol. 2, Chapter 6, page 173-4

[Under the heading "PRC Launches are Subsidized" the report describes the agreements between the U.S. and China whereby China must charge prices either on par or within 15% of Western prices for their launch services. The report then describes bids from China that were substantially less that Western bids. I could not find an explanation in the report on what they mean by the heading. Apparently in this case, we do not believe in market forces for the launch business.]

Vol. 2, Chapter 6/Technical Afterward, pages 194-215

[One of aspects of the launch failure involving the Loral satellite is the report's emphasis that Loral personnel were barred from entering the crash site for 12 hours and that the encryption boards were never recovered. On pages 210-211, the report once again reviews the matter of not retrieving the encryption boards. In earlier sections, the implication is that the Loral personnel may not have been diligent and the Chinese absconded with same. The following paragraphs are illuminating.]

Ibid., page 211

The two FAC-3R encryption boards used on the Intelsat 708 satellite were mounted near the hydrazine propellant tanks and most likely were destroyed in the explosion. Additionally, the two FAC-3R boards had no distinguishing markings other than a serial number, making it extremely difficult to locate them amongst the crash debris.

It is not known, however, whether the FAC-3R boards were recovered by the PRC. If they were, it would be difficult for the PRC to determine the cryptographic algorithm that was imprinted on them. [Bold face were by the Select Committee.]

Reverse-engineering of a damaged board would be even more difficult. Any successful reverse-engineering would be resource intensive for the PRC.

If the PRC were able to determine the cryptographic algorithm contained on the FAC-3R board, it would gain insight into the state of the U.S. military in the 1960s, although such algorithms remain in use today.

[Wow. You have to handed it to the "worst case scenario-ists" on the Committee.]

Vol. 2, Chapter 7 (Launch site security), page 224

[This page contains two color photos showing an underground tunnel and mounds of dirt and ditches. The inscription indicates that they were taken at Taiyuan space launch center and purport to show how easy it is to sneak under buildings for the purpose spying on where U.S. satellites are prepared for launch.]

Ibid., page 226 ....If the PRC had unrestricted access to a U.S. communication satellite for at least two hours, the PRC military could gain valuable information that is not otherwise available in the public domain.

Ibid., page 236

In another instance, a Defense Department monitor indicated that he deliberately attempted to break into the satellite processing building in the PRC to determine whether he would be detected. The monitor was able to penetrate the facility and approach the security supervisor undetected until tapping him on the shoulder.

[Chapter 8 discusses the role of space insurance companies.]

Vol. 3, Chapter 9 (U.S. Export Policy), pages 1-76

[This chapter seems to zero in on Executive Order 12981 issued on December 5, 1995. I view this chapter as setting the stage for future battle between the Republicans and Democrats, known as pinning the blame game. The following paragraph raised my curiosity.]

Ibid., page 43

The State Department processes over 150 sales of major defense equipment per year. The State Department must clear these cases with Congress before it may allow the export. In 1997, Congress was sent approximately 140 cases, about 40% of the dollar value of all the U.S. munitions List cases. These received considerable scrutiny and were reviewed widely, with some going to the congressional armed services committees.

[The report did not reveal how Congress disposed of these cases.]

Ibid., pages 73-76

[These pages deal with John Huang and related subjects.]

Ibid., page 73

[Nicholas Eftimiades is attributed as the source that describe China Resources as "an agent of espionage, economic, military, and political." Appendix F is a Glossary of Proper Names that identify all the people mentioned in the report. Eftimiades does not appear in this appendix. The statements from the report below are on John Huang.]

While at the Department of Commerce, Huang was provided with a wealth of classified material pertaining to the PRC, Taiwan, and other parts of Asia. He had Top Secret clearance, but declined suggestions by his superiors that he increased that clearance to the Sensitive Compartmented Information level (the level held by his predecessor).

....While Huang's predecessor was briefed weekly, Huang received approximately 2.5 briefings per month.

....The Office of Intelligence Liaison representatives indicated that Huang was not permitted to keep or take notes on raw intelligence reports and did not ask many questions or otherwise aggressively seek to expand the scope of these briefings.

No record exists as to the substance of the cables that were reviewed by Huang. Huang could have upgraded the level of the cable traffic made available to him to include Top Secret information, but never did so.

...The three Office of Intelligence Liaison representatives who were interviewed by the Senate Committee on Governmental Affairs indicated that they were not personally aware of any instance in which Huang mishandled or divulged classified information.

Huang met with PRC Embassy officials in Washington, D.C. on at least nine occasions. Six of these meetings were at the PRC Embassy.

[The Select Committee served Huang with a subpoena on 12/1/98 and his attorney responded on 12/3/98 that he would only testify pursuant to a grant of immunity. None granted and he did not appear. The other negative item in the Cox report on Huang refers to his use of an office across the street from DOC which apparently no one within DOC knew about.]

Vol. 3, Appendix A, (Investigative issues), pages 206-213

[Some interesting tidbits can be found in this Appendix. The Select Committee was established in June 1998, and operated effectively from July 1998 to end of the year.]

....The CIA ...without the prior knowledge of the Select Committee, advised Hughes not only that the Select Committee might seek to interview these employees, but also of the lines of questioning that the Select Committee probably would pursue.

The Select Committee was unable to conduct a thorough evaluation of the validity of these concerns due to time limitations and the lack of cooperation by the Defense Department. The Defense Department refused to allow the Select Committee to interview DTSA personnel on these matters unless a Defense Department observer was present.


Charles Custer
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