- The Washington Times - Tuesday, December 20, 2011

U.S. lawmakers and Obama administration officials say France has stymied a 3½-year State Department investigation into whether a French defense contractor illegally gave U.S. satellite technology to China.

The officials also say Obama administration political appointees derailed efforts by career State Department security officials to impose sanctions on Thales Alenia Space (TAS), fearing the penalties would undermine a White House-led effort to loosen technology export controls.

The officials, who spoke on the condition of anonymity because of their access to details of the investigation, said the French government has refused to allow the company to cooperate in the probe.

Congress was alerted to the case by security officials in the administration who are concerned about apparent interference from political appointees in the State Department opposed to sanctioning the French firm.

On Monday, three senior House Republicans wrote to Secretary of State Hillary Rodham Clinton stating that the satellite exports to China appear to be illegal under U.S. trade controls.

According to administration and congressional officials, the State Department’s investigation of Thales began in May 2008 and has been stymied by the French government’s refusal to allow the company to cooperate in the probe.

China was blocked from buying U.S.-origin military goods, including satellites, in 1989 after the Chinese military’s bloody crackdown on unarmed protesters in Beijing’s Tiananmen Square.

International Traffic in Arms Regulations (ITAR) also requires export companies to obtain licenses for sales of military-related U.S. goods to China directly or via re-export from third countries.

U.S. officials are concerned that China’s military will use the technology.

China’s space program is run by the Chinese military, which is building up space communications, intelligence, navigation and targeting systems for use with its anti-ship ballistic missiles and other high-tech weapons.

The investigation was launched by the State Department’s Directorate of Defense Trade Controls after Thales offered satellites for sale, specifically the Spacebus 4000 C2, as “ITAR-free,” or freely exportable under U.S. rules.

U.S. officials, however, say the satellites sold to China contain restricted high-tech parts that require licenses before they are exported to third countries.

A State Department official confirmed the investigation.

“The department continues to look into exports of items regulated under the U.S. Munitions List to Thales Alenia Space to see if there is any definitive evidence that would contradict claims that the satellites were ‘ITAR-free,’ ” the official told The Washington Times.

State Department technology security officials “met with TAS officials as recently as this month and continue gathering information with an eye toward resolution of this matter,” the official said.

House Republicans expressed in their letter to Mrs. Clinton concern for “efforts to protect the United States from the increasingly aggressive activity in space of the People's Republic of China.”

Members of the House and Senate were briefed twice this year on the probe, they said.

“Given that this investigation has been open since 2008, and State Department personnel appear to have concluded that there is a high probability that TAS illegally exported ITAR-controlled technology to China, when does the Department expect to take a final action which, under law, may include a denial of any licenses for the export of United States Munitions List (USML) technology?” the lawmakers wrote.

“The misperception that there is an ITAR-free satellite on the market is of deep concern to U.S. industry.”

A Thales spokesman referred questions to the company’s director of communications, Markus, Leutert, who did not return an email or telephone call seeking the company’s response.

TAS spokeswoman Sandrine Bielecki also did not return several calls and emails.

Spokesmen for the French and Chinese embassies could not be reached for comment.

The letter to Mrs. Clinton was signed by Republican Reps. Ileana Ros-Lehtinen of Florida, chairwoman of the House Foreign Affairs Committee; Michael R. Turner of Ohio, chairman of the House Armed Services strategic forces subcommittee; and Frank R. Wolf of Virginia, chairman of the House Appropriations subcommittee on commerce.

The lawmakers also asked the State Department to provide a copy of the Counter Space Technology List, which identifies technology that could be used in space warfare.

“As you know, China is actively engaging in cyberespionage against American companies and the U.S. government,” the House Republicans said.

China frequently uses this technology to bolster its military and to aid its commercial enterprises. That is among the reasons that the State Department’s enforcement of the U.S. export control regime, including the ITAR, is of significant importance to the national security and economic competitiveness of the United States.”

A congressional commission headed by then-Rep. Christopher Cox, California Republican, in 1998 determined that two U.S. satellite makers, Loral Space & Communications Ltd. and Hughes Electronics, damaged U.S. national security by illegally transferring space-launch and satellite know-how to China.

According to U.S. officials, satellite launches by or for China that contained embargoed technology since 2005 include the APSTAR 6, Chinasat 6B, Chinasat 9, Palapa-D, W3C, APSTAR 7 and APSTAR 7B.

A State Department cable made public by the anti-secrecy website WikiLeaks said that Thales would not provide details on three telecommunications satellites - APSTAR 6, Chinasat 6B and Chinasat 9 - sold to Chinese and Hong Kong companies because they were “constrained by French law and commercial secrecy considerations.”

A U.S. official said the State Department is “troubled by the perception of TAS’ continued lack of cooperation, particularly given that the SB 4000 C2 is not in fact ‘ITAR-free’ and was exported to China.”

Between 1999 and 2008, nearly 60 U.S. export licenses and agreements worth an estimated $42 million were approved for Thales to buy hardware and technology for Spacebus 3000 and 4000 series satellites.

A congressional aide said administration officials are blocking the imposition of penalties against Thales because they are concerned that it will undermine the effort to loosen controls on high-technology U.S. exports.

President Obama in August 2010 announced a major program to reform U.S. export controls as a way to increase U.S. competitiveness.

Security officials opposed to the reform effort say it will result in the loss of cutting-edge U.S. defense and commercial technology to adversaries.

A second congressional official also familiar with the probe said the Thales case highlights the difficulty of loosening controls on sensitive U.S. space technology.

“It shows what happens when sensitive U.S. technology leaves the country. Even France is incapable of controlling it,” the official said.