- The Washington Times - Wednesday, June 28, 2000

The State Department said yesterday it has barred China's state-run news agency from occupying an apartment building it bought June 15 near the Pentagon while the United States reviews the location's security implications.

"As of right now, the Xinhua News Agency has been put on notice by the department through the embassy of the People's Republic of China that they may not occupy or use the building they have purchased without first seeking department approval," said department spokesman Philip Reeker.

"We will continue to look at this. We take the issue very seriously," he said.

Meanwhile, State officials have informed senior lawmakers that the department intends to make a final decision to reject the purchase. A denial would force the Xinhua News Agency to find another site for its bureau and staff quarters.

"They have informed us on a staff-to-staff level that is their intent," said Dan DuBray, a spokesman for Rep. Harold Rogers, Kentucky Republican. Mr. Rogers is chairman of the Appropriations subcommittee that controls State Department spending.

Under the 1985 Foreign Missions Act, the final decision rests with Secretary of State Madeleine K. Albright, whom the law empowers to force a foreign mission to sell U.S. property.

Xinhua failed to seek U.S. approval to buy the seven-floor Pentagon Ridge Apartments, as required by the Foreign Missions Act. China experts say Xinhua is part of Beijing's extensive intelligence-collection network. China denies that Xinhua does any spying.

Mr. Reeker said that on Monday the Chinese Embassy produced a letter the mission said it sent on May 22 requesting permission.

Mr. Reeker said the copy was not addressed to any particular office and that the department cannot find the purported original. He said the department is treating the letter as China's belated request. The State Department now has 60 days, from Monday, to decide whether to approve or reject the sale.

"The State Department has no record of receiving the original of this notification letter," Mr. Reeker said. "I'll note again that Xinhua did not observe this requirement in making its decision to purchase the building."

The department's action comes the day after the House voted overwhelmingly to bar the use of State Department funds to approve the transaction. A Republican plans to introduce a similar version in the Senate.

"Beijing wants to set up its party propaganda organization and intelligence branch with a bird's-eye view of the Pentagon," said Sen. Robert C. Smith, New Hampshire Republican. "This administration has made a habit of pandering to the Chinese government. Although I am told that the State Department intends to disapprove this site for Xinhua 'news service,' I reserve the right to force their hand, if necessary, by offering a stronger version of the language approved yesterday by the House."

Sen. Richard C. Shelby, Alabama Republican and chairman of the Senate Select Committee on Intelligence, also joined the fray. He introduced a bill that would block a pending move by the Chinese Embassy in Washington until Mrs. Albright has forced Xinhua to sell the Pentagon Ridge building.

"The potential for this building to be a source of unparalleled espionage is not a theoretical matter," Mr. Shelby said.

While the House measure would not take effect until after the 60-day review period ends Aug. 26, Rep. David Vitter, Louisiana Republican, said his amendment was meant as a signal to State to disapprove the sale. The vote was 367-34. Only Democrats opposed it.

"This location allows the Chinese government to gather intelligence from the Pentagon using a variety of means," Mr. Vitter said.

The congressional pressure comes amid complaints that the Clinton administration has become lax in protecting U.S. secrets. The State Department, for example, admits it lost a laptop computer containing classified information. In another incident, a conference room wall was rigged with a listening device linked to a Russian diplomat monitoring conversations outside the building.

Under the Foreign Missions Act, the Defense Department and the FBI must submit recommendations to State during the Xinhua review.

Last week, Pentagon spokesmen downplayed any risk from having Xinhua as a neighbor after The Washington Times disclosed the sale.

Yesterday, Kenneth Bacon, spokesman for Defense Secretary William S. Cohen, said, "In making that recommendation, we will consider a number of things, including the state of our own passive defenses today, and what sort of threat we see from the Chinese occupancy of that building."

Mr. Bacon said the Pentagon is currently checking security measures in the wake of lapses at several agencies. Spy experts say China could use the Pentagon Ridge location to attempt to eavesdrop.

"I should point out that we review our passive defenses on a regular basis," Mr. Bacon said. "We review our security proceedings on a regular basis. We have done so with particular zeal in the last couple of months, after some of the other events in the government, and we will continue to do that."

In Beijing yesterday, the Communist government again attacked The Washington Times for quoting experts who say Xinhua is part of China's intelligence network. Over the weekend, a Xinhua spokesman called on the newspaper to "admit its mistake publicly."

Yesterday, Zhu Bangzao, a China foreign ministry spokesman, kept up the criticism.

"The purchase is a purely commercial activity," Mr. Zhu said at a regular briefing, according to an Agence France-Presse report. "The report by The Washington Times is based on ulterior motives. Xinhua news agency's foreign branches are legitimate establishments."

The Times has quoted four sources an author and congressional expert on China; a former CIA officer; a China expert and consultant; and a Pentagon intelligence analyst as saying Xinhua is involved in intelligence collection. Xinhua operates bureaus in more than 100 countries. In the United States, it owns property in California, New York and Northern Virginia.

State spokesmen say Xinhua knew of the law. Just two years ago, it applied for U.S. permission to purchase a building in California for its reporters and staffers.

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