<DOC> [108th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:94774.wais] NONPROLIFERATION: ASSESSING MISSILE TECHNOLOGY EXPORT CONTROLS ======================================================================= HEARING before the SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING THREATS AND INTERNATIONAL RELATIONS of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS SECOND SESSION __________ MARCH 9, 2004 __________ Serial No. 108-165 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform ______ U.S. GOVERNMENT PRINTING OFFICE 94-774 WASHINGTON : DC ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 COMMITTEE ON GOVERNMENT REFORM TOM DAVIS, Virginia, Chairman DAN BURTON, Indiana HENRY A. WAXMAN, California CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland DOUG OSE, California DENNIS J. KUCINICH, Ohio RON LEWIS, Kentucky DANNY K. DAVIS, Illinois JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri CHRIS CANNON, Utah DIANE E. WATSON, California ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California NATHAN DEAL, Georgia C.A. ``DUTCH'' RUPPERSBERGER, CANDICE S. MILLER, Michigan Maryland TIM MURPHY, Pennsylvania ELEANOR HOLMES NORTON, District of MICHAEL R. TURNER, Ohio Columbia JOHN R. CARTER, Texas JIM COOPER, Tennessee MARSHA BLACKBURN, Tennessee ------ ------ ------ ------ ------ ------ ------ BERNARD SANDERS, Vermont (Independent) Melissa Wojciak, Staff Director David Marin, Deputy Staff Director/Communications Director Rob Borden, Parliamentarian Teresa Austin, Chief Clerk Phil Barnett, Minority Chief of Staff/Chief Counsel Subcommittee on National Security, Emerging Threats and International Relations CHRISTOPHER SHAYS, Connecticut, Chairman MICHAEL R. TURNER, Ohio DAN BURTON, Indiana DENNIS J. KUCINICH, Ohio STEVEN C. LaTOURETTE, Ohio TOM LANTOS, California RON LEWIS, Kentucky BERNARD SANDERS, Vermont TODD RUSSELL PLATTS, Pennsylvania STEPHEN F. LYNCH, Massachusetts ADAM H. PUTNAM, Florida CAROLYN B. MALONEY, New York EDWARD L. SCHROCK, Virginia LINDA T. SANCHEZ, California JOHN J. DUNCAN, Jr., Tennessee C.A. ``DUTCH'' RUPPERSBERGER, TIM MURPHY, Pennsylvania Maryland ------ ------ JOHN F. TIERNEY, Massachusetts ------ ------ Ex Officio TOM DAVIS, Virginia HENRY A. WAXMAN, California Lawrence J. Halloran, Staff Director and Counsel J. Vincent Chase, Chief Investigator Member Robert A. Briggs, Clerk Andrew Su, Minority Professional Staff Member C O N T E N T S ---------- Page Hearing held on March 9, 2004.................................... 1 Statement of: Borman, Matthew S., Deputy Assistant Secretary of Commerce for Export Administration, Department of Commerce; Robert W. Maggi, Managing Director of Defense Trade Controls, Department of State; Lieutenant General Tome H. Walters, Jr., USAF, Defense Security Cooperation Agency, Department of Defense, accompanied by Vann H. Van Diepen, Director, Office of Chemical, Biological and Missile Nonproliferation, Department of State; and Lisa Bronson, Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation, Department of Defense..... 97 Feickert, Andrew, Specialist in National Defense, Congressional Research Service; Joseph A. Christoff, Director, International Affairs and Trade Team, U.S. General Accounting Office; and Dennis M. Gormley, senior fellow, Monterey Institute, Center for Nonproliferation Studies.................................................... 8 Letters, statements, etc., submitted for the record by: Borman, Matthew S., Deputy Assistant Secretary of Commerce for Export Administration, Department of Commerce, prepared statement of............................................... 100 Bronson, Lisa, Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation, Department of Defense, prepared statement of............... 154 Christoff, Joseph A., Director, International Affairs and Trade Team, U.S. General Accounting Office, prepared statement of............................................... 34 Feickert, Andrew, Specialist in National Defense, Congressional Research Service, prepared statement of...... 11 Gormley, Dennis M., senior fellow, Monterey Institute, Center for Nonproliferation Studies, prepared statement of........ 52 Maggi, Robert W., Managing Director of Defense Trade Controls, Department of State, prepared statement of....... 114 Ruppersberger, Hon. C.A. Dutch, a Representative in Congress from the State of Maryland, prepared statement of.......... 6 Shays, Hon. Christopher, a Representative in Congress from the State of Connecticut, prepared statement of............ 3 Walters, Lieutenant General Tome H., Jr., USAF, Defense Security Cooperation Agency, Department of Defense, prepared statement of...................................... 135 NONPROLIFERATION: ASSESSING MISSILE TECHNOLOGY EXPORT CONTROLS ---------- TUESDAY, MARCH 9, 2004 House of Representatives, Subcommittee on National Security, Emerging Threats and International Relations, Committee on Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 2:05 p.m., in room 2154, Rayburn House Office Building, Hon. Michael Turner (vice chairman of the subcommittee) presiding. Present: Representatives Shays, Turner, Burton, Duncan, Ruppersberger, and Tierney. Staff present: Lawrence Halloran, staff director and counsel; J. Vincent Chase, chief investigator; Robert A. Briggs, clerk; Anna Laitin, minority communications and policy assistant; Earley Green, minority chief clerk; Jean Gosa, minority assistant clerk; and Andrew Su, minority professional staff member. Mr. Turner. A quorum being present, the Subcommittee on National Security, Emerging Threats and International Relations, entitled, ``Nonproliferation: Assessing Missile Technology Export Controls,'' is hereby called to order. Cruise missiles and unmanned aerial vehicles [UAVs], pose a growing threat to U.S. interests at home and abroad. Available, affordable and versatile, these technologies offer rogue nations and sub-state actors access to strategic capabilities previously beyond their reach. The burgeoning global marketplace of military and commercial systems means our battlefield and homeland defenses will face profound challenges from the thick catalog of pilotless machines some call the poor man's air force. According to the Congressional Research Service, as of last year, 161 UAV production programs operated in 50 nations. The arsenals of 75 nations currently contain 131 different types of cruise missiles. By one estimate, an enemy with $50 million to spend could buy just one or two advanced tactical fighters, 15 ballistic missiles or 100 off-the-shelf, ready-to-fire cruise missiles, each carrying a substantial conventional payload. Slower and small UAV systems from model airplanes to GPS- enabled rotary wing craft can be effective purveyors of chemical or biological weapons. A standard sized cargo container on the deck of a freighter approaching our coast could conceal a cruise missile and launcher. Numerous commercial UAV applications and the ready availability of dual-use components like guidance systems make controlling the spread of sensitive technologies extremely difficult. Many of the systems sought by proliferators literally and figuratively fly under the defensive radars arrayed against them. To prove the point, a New Zealander with only limited aerospace expertise was able to obtain all of the components needed to build a homemade cruise missile last year. He apparently broke no laws while procuring an airframe, propulsion plant and guidance and control systems for less than $5,000. The dimensions of this rapidly emerging threat compel us to ask, what is being done to keep these lethal technologies from falling into the wrong hands? Are cold war era counterproliferation strategies focused on system range and payload limits relevant against a post-September 11 threat characterized by rapid technology innovation, miniaturization and a highly adaptable enemy? Do national and international export control regimes effectively limit the flow of the most advanced components that define our current technological advantage in the cruise missile and UAV fields? To help us address these issues, we asked the General Accounting Office to assess international counterproliferation efforts and evaluate U.S. programs to verify that UAV and cruise missile technology exports are used as intended. The GAO findings released last week point to gaps in export license reviews and post-shipment monitoring. GAO recommends far more aggressive use of end-use verification and inspections by the Department of Commerce, Defense and State. We will hear testimony this afternoon from two panels of experts. The first will describe the scope of the problem. The second panel will discuss the complex international and interagency export control process used to limit the diversion of critical UAV and cruise missile technologies. We appreciate the experience and insight of all of our witnesses and what they bring to our oversight of these issues, and we look forward to their testimony. Now I would like to recognize my colleague, Mr. Ruppersberger. [The prepared statement of Hon. Christopher Shays follows:] [GRAPHIC] [TIFF OMITTED] T4774.001 [GRAPHIC] [TIFF OMITTED] T4774.002 Mr. Ruppersberger. Thank you, Mr. Chairman. At the center of today's discussion is the inherent tension between national security and commercial concerns. This conflict has always existed, but a world more complicated by global trade and terrorism only makes the divide more complicated. Export controls and the laws created to deal with them, both domestic and international laws, are based on states dealing with states. Much of this is based on knowing who our friends are and who our enemies are. This is the way the world once was, but it is not that way anymore. I understand the business concerns. They need to keep manufacturing lines running and retain highly skilled employees. International trade has allowed many in this industry, including the AAI Corp., the developer and manufacturer of the Shadow UAV located in my district, Maryland's Second Congressional District, to keep production going when U.S. purchases have been sporadic. When export controls are cumbersome or ineffective, U.S. businesses struggle to remain competitive. At a time when we need to grow the American economy and create more jobs, I understand the business perspective well. But I also understand the national security concerns. Technology improves every day, and the success found in recent conflicts make American products attractive to our enemies as well as our allies. With so many questions about who we are selling to, how what we sell will be used, and potential dual uses of this technology, we cannot ignore threats to our servicemen and women serving abroad or our homeland defense. My experience on the House Intelligence Committee gives me another perspective on the national security aspect. It leads me to question whether the Intelligence Community provides a satisfactory assessment of the cruise missile and UAV threat to support export control decisions. It makes me wonder if our current export control regimes are sufficiently adaptable to take into account any new threats from cruise missiles or UAVs. I don't believe GAO included these questions in the scope of their investigation. However, I believe these questions are critical to this discussion and hope they will be a part of today's or future discussions on this topic. I would like to thank all the witnesses today for their hard work in this area. I look forward to your testimony. Continuing these conversations is critical to strike the right balance between commerce and security. Thank you, Mr. Chairman. [The prepared statement of Hon. C.A. Dutch Ruppersberger follows:] [GRAPHIC] [TIFF OMITTED] T4774.003 [GRAPHIC] [TIFF OMITTED] T4774.004 Mr. Turner. Thank you, Mr. Ruppersberger. I ask unanimous consent that all members of the subcommittee be permitted to place any opening statement in the record and that the record remain open for 3 days for that purpose. Without objection, so ordered. And I ask further unanimous consent that all witnesses be permitted to include their written statements in the record. Without objection, so ordered. I'd like to recognize our first panel, which includes Mr. Andrew Feickert, Specialist in National Defense, Congressional Research Service; Mr. Joseph A. Christoff, Director of the International Affairs and Trade Team, U.S. General Accounting Office; and Mr. Dennis M. Gormley, senior fellow, Monterey Institute, Center for Nonproliferation Studies. Gentlemen, we do swear in our witnesses in this committee. If you wouldn't mind standing, please. Please raise your right hands. [Witnesses sworn.] Mr. Turner. Note for the record that the witnesses responded in the affirmative. We're going to begin our testimony with Mr. Feickert. We're going to ask that your comments be somewhere in the range of 5 to 10 minutes. We do have the light, so we'll show you when the 5-minute period is concluded, and then you'll have additional time after that to wrap up your comments. STATEMENTS OF ANDREW FEICKERT, SPECIALIST IN NATIONAL DEFENSE, CONGRESSIONAL RESEARCH SERVICE; JOSEPH A. CHRISTOFF, DIRECTOR, INTERNATIONAL AFFAIRS AND TRADE TEAM, U.S. GENERAL ACCOUNTING OFFICE; AND DENNIS M. GORMLEY, SENIOR FELLOW, MONTEREY INSTITUTE, CENTER FOR NONPROLIFERATION STUDIES Mr. Feickert. Mr. Chairman, thank you for the opportunity to appear before you today to discuss the growing cruise missile threat as delivery systems for both conventional weapons and weapons of mass destruction. Cruise missiles and UAVs are no longer the exclusive domain of a few select countries. They are widely available throughout the world. At present there are reportedly about 130 cruise missile types---- Mr. Turner. Mr. Feickert, I appreciate that you've turned on the microphone. Could you also move it just a little bit closer, please? Mr. Feickert. Yes, sir--in the hands of about 75 different countries. According to experts, there are 161 operational UAV programs in 50 different countries. Because pilots and aircraft are not put at risk, cruise missiles and UAVs are very attractive systems---- Mr. Shays. I'm sorry, Mr. Chairman. Could you just please move the mic a little closer? Mr. Feickert. Is that better, sir? Mr. Shays. Yes. Mr. Turner. I think it's a little bit directional. Perhaps if you'd put it in front of you and point it directly out, it might allow us to all hear better. Thank you. Mr. Feickert. Because the pilots in aircraft are not put at risk, cruise missiles and UAVs are very attractive systems, particularly in countries with small or less than capable air forces. Some analysts believe that countries with cruise missiles and UAVs might be more inclined to conduct high-risk operations against better equipped countries such as the United States. These systems are easy to build or acquire. One report predicts that 6,000 to 7,000 land attack cruise missiles could be sold by the year 2015, excluding United States, Russian and Chinese sales. Despite MTCR restrictions, many countries produce cruise missiles which fall just under the regime's parameters or modify missiles proscribed by the MTCR to produce a less capable variant. If acquiring a land attack cruise missile proves to be too difficult or too expensive, it is possible to convert an antiship cruise missile such as the SS-N-2, Styx, which is found in the inventories of more than 20 different countries. UAVs, which are also covered under the MTCR, can be acquired on the international market as complete, ready-to-fly systems or can be built from scratch or by converting an existing manned aircraft. Most experts agree that any country or group with even a modest aerospace program can readily build UAVs with common dual-use aviation technologies. These systems are very affordable. As previously noted, a country with $50 million to spend by can buy 1 or 2 advanced tactical fighters, 15 ballistic missiles or 100 cruise missiles. The chart before you helps to further illustrate this point. In addition to being affordable, these systems are accurate. Cruise missiles with global positioning system or GPS guidance can strike their targets within a few meters of their intended aim point. Both cruise missiles and UAVs are versatile. Cruise missiles can be launched from an aircraft which can significantly extend the range or they can be launched from surface ships, submarines or also from ground positions. The UAV's versatility as a dual-use system is why many experts believe that it could be very difficult to regulate them under nonproliferation or export control regimes. But unlike the cruise missile, which has little utility outside the military arena, there are a host of nonmilitary uses for UAVs. Cruise missiles are very difficult to defend against because of their small size and their ability to fly unpredictable routes at low altitudes. Defending against cruise missiles is further complicated if the cruise missile employs stealth technologies which are available worldwide and are being incorporated into a number of new designs. Cruise missiles also challenge missile defense systems. According to defense officials, the Patriot system when currently employed in its ballistic missile defense mode, has limited ability to detect and engage incoming targets at 100 meters or less. UAVs offer their own defensive challenges. Smaller propeller-driven UAVs flying slower and closer to the ground may escape detection by ground and air based radars. Higher flying larger UAVs can employ stealth technologies which can improve their chances of penetrating hostile airspace. Even though cruise missiles and UAVs offer a variety of challenges, it is important to note that the majority of these systems pose only a local or regional threat. Currently only a few cruise missiles and UAVs have a range of 1,000 kilometers or more. A wide variety of conventional munitions have been developed for cruise missiles. A less extensive array of warheads is currently available for UAVs. This is due to the payload capacity of most of today's UAVs, which were originally intended to serve as information gathering platforms. United States and foreign efforts to develop unmanned combat aerial vehicles [UCAVs], will likely expand the conventional weapons utility of UAVs. The United States has developed the majority of special payloads that are currently available for cruise missiles. In 1991, the United States reportedly used Tomahawk cruise missiles filled with chemically treated carbon graphite filaments to short out Iraqi electrical transformers and switching stations. Special payloads under consideration for UAVs include microwave weapons as well as ballistic missile defense interceptors. Other nations could also develop special warheads for their own systems. Cruise missiles can deliver nuclear weapons. Currently only the United States and Russia have nuclear cruise missiles, although China is reportedly developing a new cruise missile with nuclear potential. Many analysts agree that nuclear cruise missiles are currently outside the technical range of most countries, as most Third World nuclear warhead designs are too large and too heavy for cruise missile use. UAVs could also be used to deliver a nuclear weapon, but in addition to size and weight constraints, the UAV's ability to penetrate air defenses might be somewhat limiting. Both cruise missiles and UAVs could be effective for delivering biological agents because of their ability to dispense payloads at subsonic speeds, thereby ensuring survivability of the biological agent. Cruise missiles that use advanced guidance systems and onboard sensors could alter their flight profiles to respond to local terrain and weather conditions to provide optimum target coverage. While this advanced capability may at present be within the grasp of only a few countries, less sophisticated attacks with biological agents using cruise missiles and UAVs are certainly within the capabilities of most countries or nonstate actors that could produce or gain access to such weapons. Cruise missiles and UAVs can also dispense chemical agents. Chemical agents are generally more survivable than biological agents, but larger chemical payloads may be required to achieve the same level of lethality or area of coverage. Most analysts believe that developing a simple chemical warhead for a cruise missile or UAV is well within the technical capabilities of most countries that have these programs and quite possibly within the capabilities of technically adept nonstate groups. Mr. Chairman, this concludes my remarks. Thank you for the opportunity to appear before you today, and I welcome any questions that you might have. [The prepared statement of Mr. Feickert follows:] [GRAPHIC] [TIFF OMITTED] T4774.005 [GRAPHIC] [TIFF OMITTED] T4774.006 [GRAPHIC] [TIFF OMITTED] T4774.007 [GRAPHIC] [TIFF OMITTED] T4774.008 [GRAPHIC] [TIFF OMITTED] T4774.009 [GRAPHIC] [TIFF OMITTED] T4774.010 [GRAPHIC] [TIFF OMITTED] T4774.011 [GRAPHIC] [TIFF OMITTED] T4774.012 [GRAPHIC] [TIFF OMITTED] T4774.013 [GRAPHIC] [TIFF OMITTED] T4774.014 [GRAPHIC] [TIFF OMITTED] T4774.015 [GRAPHIC] [TIFF OMITTED] T4774.016 [GRAPHIC] [TIFF OMITTED] T4774.017 [GRAPHIC] [TIFF OMITTED] T4774.018 [GRAPHIC] [TIFF OMITTED] T4774.019 [GRAPHIC] [TIFF OMITTED] T4774.020 [GRAPHIC] [TIFF OMITTED] T4774.021 [GRAPHIC] [TIFF OMITTED] T4774.022 [GRAPHIC] [TIFF OMITTED] T4774.023 [GRAPHIC] [TIFF OMITTED] T4774.024 [GRAPHIC] [TIFF OMITTED] T4774.025 Mr. Turner. Thank you. Mr. Christoff. Mr. Christoff. Mr. Chairman, members of the committee, I am pleased to be here today to discuss GAO's recent report on U.S. efforts to limit the proliferation of cruise missiles and UAVs. Last year this committee asked us to assess United States and international efforts to limit the proliferation of cruise missiles and UAVs. In a report we released 2 weeks ago, we addressed three key areas: First, the nature and extent of the proliferation; second, the tools used to address proliferation risks; and third, U.S. efforts to verify the end use of these sensitive technologies. In summary, we found that nonproliferation tools and end- use monitoring efforts are not keeping pace with the growing threat from cruise missiles and UAVs, and let me now summarize our findings and our recommendations. First, we found that cruise missiles and UAVs pose a growing threat to U.S. national security interests. They are accurate, inexpensive delivery systems for conventional, chemical and biological weapons. They are difficult to detect, difficult to defeat and are available worldwide. For example, at least 70 nations possess about 75,000 cruise missiles, mostly antiship cruise missiles armed with high explosive warheads. China and Russia have sold cruise missiles to Iran, Iraq, Libya, North Korea and Syria. In addition, commercial items such as global positioning systems and lightweight engines are increasingly available worldwide. These items have allowed countries to expand the range and accuracy of their cruise missile systems. The Chinese Silkworm missile you see on your left was found in Iraq after the first Gulf war. In October 2003 the United States found 10 additional Silkworm missiles that the Iraqis had modified to become land attack cruise missiles. As a result, the range of the missiles increased from 100 to 180 kilometers. The second picture you see on your left is the U.S.-built Predator UAV. UAVs are pilotless vehicles that operate like airplanes. They have primarily been used for reconnaissance. Countries worldwide are increasingly interested in acquiring and developing UAV technology; 32 nations are developing or manufacturing more than 250 models of UAVs. We also assessed tools the United States uses to reduce the proliferation of cruise missiles and UAVs. First, multilateral export control regimes are voluntary arrangements among supplier countries to restrict exports of sensitive technologies. Between 1997 and 2002, the Missile Technology Control Regime accepted six U.S. proposals to expand the list of cruise missile and UAV technologies subject to international controls. Regime members are expected to scrutinize the listed items before approving an export license. However, these lists do not preclude countries from exporting sensitive items. In addition, regime members have disagreed over the sales of cruise missiles to countries of concern. For example, the U.S. disagreed with France's 1997 decision to sell its Black Shaheen cruise missile to the United Arab Emirates. In addition, nonmembers such as China and Israel continue to export cruise missiles and UAV technology to countries of concern. The United States also uses its national export control laws to address missile proliferation but finds it difficult to identify and track commercially available items not covered by control lists. In addition, a gap in U.S. regulations has allowed nonstate actors to acquire cruise missile or UAV technology without violating U.S. laws. This gap is illustrated by the 2003 case of a New Zealand citizen who illegally obtained U.S. dual-use items to develop a cruise missile. Current regulations prohibit the sale of unlisted dual-use items to 12 missile proliferation projects and 20 countries of concern. This regulation does not apply to individuals or nonstate actors. We recommended that the Secretary of Commerce determine whether the regulations should be modified to close this gap. Finally, we review the results of end-use monitoring checks completed between 1998 and 2002 by the Departments of State, Defense and Commerce. We found that the departments conducted few checks to confirm the recipient's cruise missiles and UAVs complied with U.S. license conditions. The State Department conducted checks on only 4 of the 786 licenses it issued for cruise missile and UAV-related technology. The Department of Defense conducted no checks on the more than 500 cruise missiles and related items transferred to other countries. And the Department of Commerce conducted checks on only 29 of nearly 2,500 cruise missile or UAV-related licenses it approved. We recommended that the departments conduct a comprehensive assessment of the nature and extent of compliance with license conditions on these technologies. This assessment should include additional end-use checks. Mr. Chairman, members of the committee, that concludes my statement, and I will be happy to answer your questions. [The prepared statement of Mr. Christoff follows:] [GRAPHIC] [TIFF OMITTED] T4774.026 [GRAPHIC] [TIFF OMITTED] T4774.027 [GRAPHIC] [TIFF OMITTED] T4774.028 [GRAPHIC] [TIFF OMITTED] T4774.029 [GRAPHIC] [TIFF OMITTED] T4774.030 [GRAPHIC] [TIFF OMITTED] T4774.031 [GRAPHIC] [TIFF OMITTED] T4774.032 [GRAPHIC] [TIFF OMITTED] T4774.033 [GRAPHIC] [TIFF OMITTED] T4774.034 [GRAPHIC] [TIFF OMITTED] T4774.035 [GRAPHIC] [TIFF OMITTED] T4774.036 [GRAPHIC] [TIFF OMITTED] T4774.037 [GRAPHIC] [TIFF OMITTED] T4774.038 [GRAPHIC] [TIFF OMITTED] T4774.039 [GRAPHIC] [TIFF OMITTED] T4774.040 Mr. Turner. Thank you, Mr. Christoff. Mr. Gormley. Mr. Gormley. Mr. Chairman, members of the committee, I'm honored to appear before you today to illuminate how cruise missiles and unmanned aerial vehicles pose a threat that could affect both U.S. interests and the American homeland. The timing of this hearing and the release of the GAO report on improvements needed to better control technology exports could not come at a more propitious time. We are at a crucial turning point, in my view, in the proliferation of cruise missiles and UAVs, one precipitated via events during Operation Iraqi Freedom as well as by growing evidence of terrorist plans for using UAVs. The GAO report interestingly mentioned at least five times that cruise missiles and UAVs pose an emerging threat to U.S. interests abroad as well as at home. Permit me in these brief remarks to illustrate how, and I would ask that my longer statement and accompanying journal article be placed in the record. First, in regard to threats to the U.S. homeland, cruise missiles or UAVs might be launched from concealed locations at modest distances from their targets or brought within range and launched from freighters or commercial container ships; in effect, two-stage forms of delivery. Al Qaeda is believed to possess at least 15 freighters. In the aftermath of the September 11, 2001 terrorist attacks on the U.S. homeland, key U.S. decisionmakers began to take such two-stage threats more seriously. The 2002 National Intelligence Estimate on the ballistic missile threat to the United States drew attention to the covert conversion of a commercial container ship as a launching pad for a cruise missile. Even a large bulky cruise missile like the ones Iraq used to fire at coalition forces last year could be equipped with a small internal erector for launching and still comfortably be fit within a standard 12-meter shipping container. Indeed, the 2002 National Intelligence Estimate argues that because such a delivery system, among several others, is less costly, easier to acquire and more reliable than an intercontinental ballistic missile, a cruise missile attack against the American homeland is more likely to occur than a ballistic missile attack. The notion that a terrorist group might entertain using UAVs is by no means far-fetched. One recent accounting of terrorist activity notes 43 recorded cases involving 14 terrorist groups in which remote control delivery systems were either threatened, developed or actually utilized. Model airplanes were used or planned for use by al Qaeda to kill leaders at the 2002 G-8 summit in Genoa, Italy. Moreover, according to the London Independent newspaper, a British national held at Camp Delta, Guantanamo Bay, Cuba has confessed to being part of an al Qaeda plot to acquire a drone to attack the House of Commons with anthrax. Let me now turn to threats--conceivable threats that might affect our regional interests. Operation Iraqi Freedom demonstrates powerfully how cruise missiles and UAVs might threaten our overseas interests. Patriot missile batteries performed immensely better than they did during the first Gulf war. All nine of Iraq's most threatening ballistic missile launchers were successfully intercepted and destroyed, but the second Gulf war saw the first use of enemy land attack cruise missiles against Patriot in combat. American and Kuwaiti Patriot batteries failed to detect any of Iraq's low-flying cruise missiles, one of which came perilously close to striking a U.S. Marine encampment on the war's opening day. What's more, at least two Iraqi ultra light aircraft, which were feared capable of carrying chemical or biological agents, were detected only after flying over thousands of U.S. troops, equipment and command facilities prior to a U.S. Army's divisional advance on Baghdad. Iraq's use of cruise missiles and slowflying air vehicles, which were manned but needn't have been, also contributed to the Patriot's unfortunate series of friendly fire incidents, two of which led to the loss of two coalition aircraft and the deaths of three crew members. America's adversaries are bound to draw important lessons from the performance of U.S. missile defenses against Iraq. Referring to Iraq's use of cruise missiles, the Chief of Staff of the 32nd Army Air and Missile Defense Command told the New York Times, ``this was a glimpse of future threats. It is a poor man's air force; a thinking enemy will use uncommon means such as cruise missiles and UAVs on multiple fronts.'' At least two reasons account for why we should anticipate an acceleration of interest in acquiring cruise missiles and UAVs. First, countries wishing to deter U.S. military interventions were unlikely to invest heavily in cruise missiles until American missile defenses performed decisively better against ballistic missiles than they did during the 1991 Gulf war. Patriot's success against Iraqi ballistic missiles in 2003 coupled with problems coping with cruise missile attacks increases the incentive to acquire difficult to defend against cruise missiles and UAVs. Second, American's adversaries are likely to appreciate the operational advantages of combining ballistic and cruise missile launches to maximize the probability of penetrating even the best American missile defenses. Converting small airplanes or UAVs into weapons-carrying missiles offers a particularly attractive poor man's option. When these in large numbers are combined with more expensive and sophisticated ballistic and cruise missiles, they raise the stakes enormously for American missile defenses. Consider, for example, the dire and unfavorable cost exchange arithmetic associated with current U.S. missile defenses and conceivable adversary missile threats. The guidance upgrade alone on the Patriot PAC-2 guidance enhanced missile costs $400,000 per missile, and each new PAC-3 interceptor roughly costs $3.5 million dollars per interceptor. A flock of cruise missiles or converted airplanes, several orders of magnitude cheaper, could readily saturate most economically feasible missile defense architectures. Thus, controlling the quantitative spread of cruise missiles and UAVs through improved nonproliferation policies is an absolute necessity to guarantee confidence in our missile defense expenditures. Beyond the excellent set of recommendations offered by the GAO in its report, I would be pleased to discuss additional proposals during our question and answer time. I thank you, Mr. Chairman. [The prepared statement of Mr. Gormley follows:] [GRAPHIC] [TIFF OMITTED] T4774.041 [GRAPHIC] [TIFF OMITTED] T4774.042 [GRAPHIC] [TIFF OMITTED] T4774.043 [GRAPHIC] [TIFF OMITTED] T4774.044 [GRAPHIC] [TIFF OMITTED] T4774.045 [GRAPHIC] [TIFF OMITTED] T4774.046 [GRAPHIC] [TIFF OMITTED] T4774.047 [GRAPHIC] [TIFF OMITTED] T4774.048 [GRAPHIC] [TIFF OMITTED] T4774.049 [GRAPHIC] [TIFF OMITTED] T4774.050 [GRAPHIC] [TIFF OMITTED] T4774.051 [GRAPHIC] [TIFF OMITTED] T4774.052 [GRAPHIC] [TIFF OMITTED] T4774.053 [GRAPHIC] [TIFF OMITTED] T4774.054 [GRAPHIC] [TIFF OMITTED] T4774.055 [GRAPHIC] [TIFF OMITTED] T4774.056 [GRAPHIC] [TIFF OMITTED] T4774.057 [GRAPHIC] [TIFF OMITTED] T4774.058 [GRAPHIC] [TIFF OMITTED] T4774.059 [GRAPHIC] [TIFF OMITTED] T4774.060 [GRAPHIC] [TIFF OMITTED] T4774.061 [GRAPHIC] [TIFF OMITTED] T4774.062 [GRAPHIC] [TIFF OMITTED] T4774.063 [GRAPHIC] [TIFF OMITTED] T4774.064 [GRAPHIC] [TIFF OMITTED] T4774.065 [GRAPHIC] [TIFF OMITTED] T4774.066 [GRAPHIC] [TIFF OMITTED] T4774.067 [GRAPHIC] [TIFF OMITTED] T4774.068 [GRAPHIC] [TIFF OMITTED] T4774.069 [GRAPHIC] [TIFF OMITTED] T4774.070 [GRAPHIC] [TIFF OMITTED] T4774.071 [GRAPHIC] [TIFF OMITTED] T4774.072 Mr. Turner. Thank you, Mr. Gormley. We'll move to a series of question periods of--we'll do 5 minutes and then a rollover of additional 5 minutes for additional questions, recognizing Mr. Ruppersberger. Mr. Ruppersberger. Sure. OK. Can you tell me how from your perspective, all three, whoever wants to answer, the authority agencies involved interact with the intelligence community to determine who and what the current threats are and how often are lists of who we sell to and who we will not sell to updated on this intel data? Mr. Christoff. The intelligence community and the data is used in the licensing process. In addition to doing what the departments refer to as prelicense checks, they look at the bona fides of the companies or the countries that are--we're selling our cruise missiles and UAVs to and they also incorporate intelligence information into the interagency process. Mr. Ruppersberger. Do you think it's effective and it's working, the relationship with getting the data? Mr. Christoff. We haven't looked in detail about that part of the licensing process. I don't think I'd want to comment on that. Mr. Ruppersberger. OK. The way I see that you've looked at your report, there are three stages. That's before we sell. That's the actual transfer. And I think the focus of your report was more of the end-use compliance. Is that correct? Mr. Christoff. Correct. Mr. Ruppersberger. Now, do any of you believe that the current authority provided to State and subsequently to Commerce and DOD is adequate and do you think the GAO findings are the result of--the GAO findings the result of inadequate authority or failure to exercise authority they already have? Mr. Christoff. I think it's a failure to exercise existing authority, because the one main point that we want to make in our recommendation to do this comprehensive assessment is that you need better information. If you only have conducted 33 post-shipment verifications out of 4,000 licenses, it's difficult to really thoroughly assess the risks associated with not doing more, and therefore by doing more PSVs, you will be able to determine what the potential risk is and be able to determine what your priorities are, where you should be placing your resources and how best to use that information in prelicensing decisions as well. Mr. Ruppersberger. Well, then what would you recommend? Mr. Christoff. Well, the recommendations that we made are the ones that we made in the report. First is that the paucity of the number of post-shipment verifications that the three agencies have done is insufficient. It doesn't give them a basis for believing, as State does, that there is no problems that have occurred in the post-shipment verification process. So doing more, going back to the 4,000 and doing as DOD suggested to us, a statistically valid random sample, will give you good information about the problems in the past and then conducting more PSVs in the future as well and to commit to that. Mr. Ruppersberger. Do you think it needs more resources or money? Mr. Christoff. It needs more information, No. 1, to then make decisions about where the priorities and resources should be targeted. Mr. Ruppersberger. Where are you going to get the information? Mr. Christoff. Going to look at the prior PSVs that have not been---- Mr. Ruppersberger. And that's the only area you recommend, looking at the prior from a random point of view? Mr. Christoff. Looking at that, and also we recommended for the Commerce Department to look into the existing catchall regulations to determine whether or not the scope of those regulations should be broadened. Mr. Ruppersberger. Sometimes you need one boss, one person in authority. Do you see any problems between DOD and Commerce working that through? Mr. Christoff. We've issued prior reports that have talked about the interagency process and the need for three departments to work more closely together to use the intelligence information that they have available, to make sure that they are transferring information from one department to the other. So, yes, the interagency process can always be improved considerably. Mr. Ruppersberger. Well, then, the purpose of this hearing is to find out how and why. How would you improve it? And I'd like to hear from the other two also on these questions that I'm asking. Mr. Gormley. Well, let me make one comment in regard to how one might improve it. It strikes me that all of the recommendations are necessary but not sufficient, particularly with respect to this growing concern about a poor man's air force. When you look at the necessary elements to put together a poor man's air force--there is the concern about effects on commercial enterprise--one can certainly not conceive of regulations that make it more difficult for people interested in, for example, recreational aircraft to require a case-by- case review for that. That's inconceivable, and I couldn't imagine that occurring. But when one thinks about the challenges associated with turning that recreational aircraft requiring a man to fly it into a fully autonomous cruise missile, there are serious transformation requirements associated with it, the most notable being the creation of a fully autonomous flight control system to guide that system to the intended target without a man piloting it. And there are on the marketplace today--and it's a recent phenomenon over the past 5 years--I would imagine less than 10 companies which are largely spin-offs of the large aerospace firms that are now producing what are called variable autonomy flight control systems. They provide the complete flight management solution for turning a manned aircraft into an unmanned air vehicle, and it seems to me that the impact on placing some case-by-case reviews on these UAV flight management systems would make immense sense in terms of making that transformation hurdle more difficult for an individual or a terrorist group who might be interested in turning that recreational aircraft into a weapon of terror. There was an attempt in 2003 by the U.S. Government to introduce an antiterrorism proposal that focused on this particular poor man's issue of turning airplanes into terror weapons, and because it was not sufficiently detailed with respect to precisely what kind of technology should be controlled, I understand that it was rejected within the Wassenaar Arrangement where it was introduced. Now, my recommendation would be to clean up that proposal, focus specifically on the technologies that ought to receive case-by-case review and consider it not only within the Wassenaar Arrangement but within the Missile Technology Control Regime as well, because they have better, you know, no denial, no undercut rules that I think would provide for a more effective basis for monitoring these transfers. Mr. Ruppersberger. OK. And what I'm trying to get to, and I think you're answering some of it, and what I'd like to hear from all three, though, why do you think that there are problems now? Lack of resources, direct funding or manpower, time, all of that, or do you believe it's a lack of just prioritizing? I mean, whenever we have funding issues and what's going on now, sometimes it's a matter of prioritizing. Would you expand on that, Mr. Feickert? Mr. Feickert. I'm really not privy to the interagency process or what goes on in terms of regulating exports, but one solution might be examining some of the more critical enabling technologies that---- Mr. Ruppersberger. Like you referred to, Mr. Gormley? There's eight groups? Mr. Feickert. Well, there's present technologies. For example, your small fuel-efficient gas turbine engines that have commercial applicability for business jets, guidance systems, perhaps the seekers, which are the actual guidance system used in the terminal phases of cruise missile flight. Some analysts have suggested that looking out into the future, things like fuel cell technology which could be incorporated into cruise missiles and UAVs to increase their range might be something worth considering. Mr. Ruppersberger. Any other comments on that? Mr. Gormley. Let me add one additional comment. I haven't been in government service for over 20 years, so I don't have direct experience, but I have talked to many people involved-- -- Mr. Ruppersberger. That might make you an expert. Mr. Gormley [continuing]. In this process. Mr. Ruppersberger. No offense. Mr. Gormley [continuing]. And I would say that what I hear consistently from people who have--or are charged with responsibility for dealing with this area in the interagency process is being overwhelmed by largely the issue of maintaining an awareness of rapid technological change and how that technological change affects current regimes, and they're simply understaffed in my view. So it is a matter of staffing priority from---- Mr. Ruppersberger. That's the point I was trying to get out of you, that---- Mr. Gormley. And I would also say a matter of priority as well. Mr. Ruppersberger. Mr. Christoff, anything further from your perspective? Mr. Christoff. I think also focusing on the multilateral export control regimes. Two years ago when we looked at these different regimes, specifically the Missile Technology Control Regime, the Wassenaar Arrangement, we had several recommendations about how to improve those regimes themselves. Keep in mind these are voluntary, nonbinding, consensus-based regimes, and so it's important to try to have some type of accountability mechanisms put into these different regimes. Just getting them to share information among countries using an automated information system so that you have timely reporting of denials is something that's lacking, for example, on the MTCR. So the regimes can be--an important focus on the regimes is trying to strengthen them as well. I think it's important. Mr. Ruppersberger. I'm sure the State Department--you don't have to answer the question, but do you see any possibility of strengthening the regime cooperation? I mean, that seems to be a huge letdown, and it's just voluntary. And I understand if one--there's one violation, then everyone should abide and not deal with that group, and that's not the case and that happens I'm sure on a regular basis. Do you see that? Do you see any way we could strengthen the regime issue? Mr. Christoff. Well, I think in some of the recommendations we made, just in terms of getting the regimes to be a little more efficient and effective in sharing information from one country to another. When it takes anywhere from 3 and 6 months for one country to send a denial notice to another country in the MTCR, that's not quick enough. That's important information that should be transmitted immediately, such as what the nuclear suppliers group does. Mr. Ruppersberger. What leverage do we as the United States have to effectuate that, or would working with other countries to effectuate that type of situation---- Mr. Christoff. Well, I think the example of the six out of the eight proposals that the United States pushed through on the MTCR is an excellent example of how we got more items on the control list that just occurred in the past few months. Mr. Ruppersberger. But you don't have China a part of the group. Right? Mr. Christoff. No. Mr. Ruppersberger. Who else? What other major countries are not part of that, that we need to worry? Mr. Christoff. Well, China is obviously the most important nonmember of the MTCR. I mean, they've sold cruise missiles to Iran, Iraq, North Korea, Pakistan. That's a critical secondary proliferator. That's important. You have other--those countries, those secondary proliferators are also not members of the MTCR. So they're important countries that have the capability and currently manufacture cruise missiles. They're on the cusp of exporting cruise missiles, and they're not member of the MTCR. Mr. Ruppersberger. OK. Thank you. Mr. Turner. Thank you. Now to our chairman, Mr. Shays. Mr. Shays. Thank you, gentlemen. Thank you, Mr. Feickert and Mr. Christoff and Mr. Gormley, for being here. First, which is the greater threat to national security, the UAV or the cruise missiles? Mr. Gormley. Today I would say that just looking at Operation Iraqi Freedom, as I mentioned, where a crude first- generation antiship cruise missile called a Seersucker from the Silkworm family of antiship cruise missiles was used quite effectively and undetected by our Patriot batteries and also created complications by virtue of changing the rules of engagement so that Patriot radars had to look both for high- angle ballistic missile--incoming ballistic missiles and low- flying cruise missiles, which complicates the whole issue of separating friendly returning aircraft from low-flying cruise missiles. So I think that event suggests to me that existing inventories of cruise missiles, however crude, represent a serious threat, particularly when they're combined with the use of ballistic missiles. Now, UAVs is an interesting and more recent phenomenon, I think, accelerated by virtue of the very effective use and prominent use and prominent public display of the effectiveness of the Predator in Afghanistan, initially after September 11th, and then its increasing use in other conflicts and the arming of Predator to demonstrate that what had heretofore been a seemingly innocent reconnaissance system now had the capacity to deliver a payload to a rather significant range. So I think I would argue that existing inventories of cruise missiles represent the near-term threat and the longer term threat comes from the UAV and particularly the opportunity that adversaries have to turn very small manned aircraft into so-called cruise missiles or UAVs armed with weapons of mass destruction. Mr. Shays. Would either of you gentlemen care to add something? Mr. Feickert. Yes, sir, I do. I'm going to look at it from two perspectives, a security threat posed by foreign militaries and a security threat posed by nonstate actors. I think if you look at it from the foreign military perspective, I believe that probably cruise missiles would pose a more immediate threat. Although they're available and they're relatively unsophisticated, it still requires an infrastructure, mission planning and your various mapping technologies. The fact that they can also penetrate most known air defenses also lends itself to military use. In terms of nonstate use, if you look at some of the cruise missiles--excuse me, UAVs that are available out there, nonstate groups tend to be a little more unsophisticated. Perhaps it might be a little easier for them to acquire the UAV which in some cases can be nothing more than an upscale model aircraft, radio-controlled aircraft, and perhaps employ either conventional or weapons of mass destruction with that particular vehicle. Mr. Shays. Mr. Christoff. Mr. Christoff. Just to cap what Dennis and Andy said was the order of priority would obviously be anticruise ship missiles. The predominant of the 75,000 cruise missiles out there, most of them are antiship cruise missiles. The emerging concern are land attack cruise missiles because of the capabilities of converting--as Iraq proved, taking an antiship cruise missile and turning it into a land attack capability. And then the emerging threat that I would agree is UAVs. You couple that with nonstate actors, chem/bio concerns, and you definitely have an emerging threat. Mr. Shays. You all pretty much agree, it seems to me. I've been kind of wondering how we respond--tell me the justification--I mean, I know why we want to do it, but tell me the justification of a country that has cruise missiles deciding that no one else can have them. How do we sort out the logic of that, and how are we able to convince others that makes sense? Let me back up and say are we basically saying to those who have them, you have them, so let's make sure more don't have them? Is that our logic so we're just arguing to those who have? Or are we trying to make an argument to the world as well that it won't be in your best interest to have them because your neighbor will have it too? Walk me through that kind of philosophical question. Mr. Christoff. Well, it's the philosophy of all other regimes, for example. You know, these regimes that I've been referring to, the missile technology control regime, Wassenaar, etc., these are regimes that are supplier based regimes. The belief that the existing possessors of these missiles, these dual-use items, these nuclear materials, etc., have an obligation and a commitment to try to reduce the supply and to educate those nonmembers about the reasons why it's not in their best breast to obtain these sensitive technologies. So it's a two-prong approach of reducing the supply, and that's the philosophy within all the regimes, and trying to educate other regime members about the bad effects of having those types of sensitive technologies. Mr. Shays. Do either of you care to add anything? Mr. Feickert. Yes, sir. In this particular case we may be a victim of our own success. Our research has indicated that a lot of countries now consider these an integral part of their national security framework, just as in past generations new systems like tanks and aircraft carriers developed along those lines. There's been some criticism by some countries of the MTCR, that it is sort of a have and have not situation, where certain countries are allowed to have missiles and UAVs and other countries are not. There's no really easy answer to that. I mean, we certainly have a vested interest in keeping these systems out of the hands of people that intend to do us harm, but at the same time it's very difficult to try to convince these countries, for example, like India and Pakistan, to become members of the MTCR. That's been one of the central arguments of those two countries for a long time as to why they don't want to join that particular agreement. Mr. Shays. Because I look at the UAVs and I wonder at the challenge that's going on in our own air force--and this is somewhat of an aside, but I'm thinking of Mitchell trying to convince our military that we should be able to use airplanes to bomb ships, and what he did was--at least I think I recall he basically brought his planes in lower and knocked them all out and was ultimately court-martialed, but there was this tremendous resistance on the part of the military to use airplanes in this way. Do you sense from any of your work that there's a reluctance on the part of the Air Force to acknowledge that this type of weapon may in fact make manned flight somewhat obsolete? Mr. Gormley. I think that is dissipating very rapidly as a byproduct of the lessons learned that come from both Afghanistan and Operation Iraqi Freedom, but your point is well taken. If one simply looks at the development of the Tomahawk cruise missile, I can recall as a--while I was in government service in the late 1970's, there was enormous resistance at first both within the U.S. Air Force and the U.S. Navy to promoting the Tomahawk for various missions, not least because the alternative was to deliver munitions by manned aircraft. The whole development program for the Tomahawk took an enormous amount of time before it was well accepted that the Tomahawk could play a dominant role, and indeed not until the 1991 Persian Gulf war where the Tomahawk in the initial attack demonstrated that it could open up corridors and increase dramatically the effectiveness of follow-on manned aircraft attacks, where it truly demonstrated that unmanned cruise missiles had an enormously important role to play. Mr. Shays. Let me ask you, from all three of your testimonies, I am struck by the fact that you are saying to us that cruise missile and UAV technology is not all that cutting edge anymore. Is that correct for the most part? So the answer basically by nodding heads was yes. And therefore I begin to wonder what about the sharing of the technology, because basically they're going to be able to bypass this anyway. In other words, do you get the gist? So tell me how--so we do a great job. We don't share what we know, but so what? Respond to that. Mr. Feickert. In terms of our technology sharing from just---- Mr. Shays. I'm going to ask you to speak a little louder. Mr. Feickert. Yes, sir. In terms of technology sharing, to use cruise missiles for example, there are a number of cruise missile systems out there that have been developed by more than one country. Certain countries bring certain expertise. For example, the Indian-Russian Brahmos, an antiship cruise missile, a supersonic cruise missile which is going to be entering service in the near future, capitalized on the strengths of the Russian propulsion system and India's guidance system. The French Apache has had various foreign involvement. Mr. Shays. So what you would be arguing to me would be that they can have much more sophisticated weapons if they are able to get the technology of others, but the bottom line is that they can get the basic concept. So are you saying, in essence, it would be kind of like a 1934 Ford as opposed to a 2004 Ford? It would just be that kind of difference? It would still be a car, but it wouldn't be as good, still be a cruise but not as good? Is that your point? Mr. Feickert. Sir, there are varying levels of technology in cruise missiles. For example, you've got your Silkworm or your STICs missiles, which are roughly equivalent to a Scud ballistic missile. I mean, they've been around for a long time. They were developed in the late 1950's, and they're very adaptable. They're found in the inventories of many, many Third World countries. And then you have some leading-edge cruise missiles like the French Apache, the South African Torgos cruise missile, which was supposed to make a debut either in 2004 or 2005, is very state-of-the-art. Some of these foreign cruise missiles are in a sense almost as capable as our current Tomahawk cruise missile. Mr. Shays. Mr. Chairman, I know I have a red light. Just let me ask this question if I could. Thank you. So what am I to infer? Let me ask you this to close. You're basically saying there are some very sophisticated technologies in cruise and Predator systems, but can I--and therefore the sharing of technology there would enable people to advance more quickly, but can I infer that a fairly simplistic cruise missile or Predator could still do a hell of a lot of damage? Mr. Christoff. Yes. Mr. Feickert. Yes, sir. Absolutely. Mr. Shays. OK. Thank you, Mr. Chairman. Did you want to say anything, Mr. Gormley? Mr. Gormley. I would simply add that the qualitative--what you're referring to is the qualitative spread of cruise missile and UAV technology, and the interesting way to look at it from my view is to suggest that the MTCR has been enormously effective in terms of qualitatively controlling the spread of ballistic missiles. If it could become as effective in terms of controlling the qualitative spread of cruise missiles and UAV technology, it will have done an immense job at achieving a slow, steady, more controllable environment within which we can improve our missile defenses to become more effective against emerging threats. Mr. Shays. But ultimately these folks are going to get these weapons? Mr. Gormley. Well, I would hope, for example, that the case of the French transfer of the Storm Shadow version of--called the Black Shaheen--to the United Arab Emirates was an isolated incident, and that a missile with a radar cross-section like that missile had would not occur again. Now, that happened within the existing regime, where France and the UK permitted that transfer to occur, notwithstanding objections from various members. If we can prohibit or control those kinds of high quality transfers, then we'll be doing an important job. Mr. Shays. Thank you, Mr. Chairman. Mr. Turner. Thank you, Mr. Chairman. I want to recognize Representative Burton from Indiana, Representative Duncan from Tennessee and Mr. Tierney from Massachusetts, who have joined us. Mr. Burton. Do you want to go with Mr. Tierney first, or do you want me to go ahead? OK. I just have a couple of questions. You know, nuclear proliferation that has been taking place over the past couple of decades scares the pants off everybody. We're worrying about North Korea right now and others, and after I saw the Hellfire first missile that was fired from that Predator that took out some of Osama bin Laden's top people, I think I came to the realization like a lot of people that this is something--it's a weapon of the future that could be used for a whole host of things, and it was something that ought to be looked at with a jaundiced eye. And one of the things that concerns me, and you touched on it a minute ago, was the Chinese and others selling advanced missile technology, and I don't know about the kind of technology we have in the UAV, but to a lot of countries that we might be very concerned about like Iran and others in the somewhat hostile world. I don't know if there's anybody in the administration that's here or not that can give us an idea on what kind of pressures we could use to bring about some changes in the policies of these other countries and in particular countries like China that are selling this technology to our potential adversaries. What can be done or what is being done to stem the tide of this technology getting out of hand? I don't think we're going to see the end of wars in our lifetime, and I'd like for the United States to be a few jumps ahead of the potential enemies. And I'd like to know if anybody can answer what we're doing to try to make sure that the kind of proliferation we're talking about doesn't continue and what kind of pressure we can be bringing to bear on our friends like the Chinese, ``who are selling this technology.'' Any of you want to take a shot at that? Is there anybody in the State Department or the administration that might want to take a shot at that? Mr. Turner. Mr. Burton, we do have the second panel which perhaps they should---- Mr. Burton. Should I reserve that question for them? Mr. Turner. They certainly could respond on behalf of the-- -- Mr. Burton. Well, if you're out there and I have to leave, I hope you do answer that question. I'll try to stick around. Mr. Shays. I'll ask it. Mr. Burton. OK. Thank you. I think that was the only question I have. I was just listening and I said my gosh, how do we get a handle on this thing. Thank you, Mr. Chairman. Mr. Turner. Thank you. Mr. Tierney. No questions. Gentlemen, when we're talking about end-use verification and post-shipment verification, one of the things that strikes me obviously from your testimony is that we're not doing a good enough job in those areas and that we can improve it. Mr. Christoff, you talked about the recommendations that were made in your report, which included using the existing authority we have and expanding it on a very limited basis that we're conducting, what would be prudent or would be necessary. But in listening to the discussion about that, it strikes me as it almost seems as if the end use verification process would be a cradle to grave process, that even if we just look at the initial transaction that occurs, any verification that occurs there would not really give us assurances that in the future that technology is not going to be further transferred. I'd like each of you to talk about just the process of end user verification, the post-shipment verification process, how you can see it can be enhanced and really the issues and difficulties that we have of being able to have an effective process. Mr. Feickert. Mr. Feickert. Yes, sir. In terms of enhancements, because there's such a vulnerability in terms of diversion, it would be very easy the day after a team comes and inspects. Let's say, for example, gas turbine engines that were destined for commercial aircraft, it wouldn't be that hard the day after that team leaves to perhaps divert those or even copy those for use in cruise missiles, or even UAVs. Perhaps one approach might be on the intelligence side of the house is actual--the intent of the customer or the country or the group, what is the intent? I would imagine they would sort of have a feel as to whether or not these countries are even interested at all in cruise missiles or UAVs, or possibly they want these things for legitimate aerospace use. So I would suggest the possibility of going a step further and looking at intent. Is there a possibility that they're being diverted to a military program or are they going to be used for peaceful purposes? Mr. Christoff. I would just reiterate what we found in our report. We can talk about additional things to do in end-use monitoring, but I think the first thing is to do it. When you have done only 4 out of 786 by the State Department, 29 out of 2,490, zero out of 500 for DOD, that suggests that there isn't much information to even base decisions on about, is this a problem? Is it a risk? PSVs are important. They are important because they're the primary vehicle that you have to check on whether or not an item is being used as intended after it leaves our shore. It's important because it's good feedback into the prelicensing decision. If you know that a country or you know that a company is not adhering to the license conditions, then that should feed back into any future decisions about that license or future exports that you would permit. Mr. Gormley. I would really defer to Mr. Christoff's reaction, but it seems to me--in reading the GAO report, I can't help but think that the issue of staffing and sufficient moneys to be consistent in end-use assurances is an important issue; and it seems to me, providing those resources to get involved in more than the number that have historically been the case would be a sensible approach. So the resource issue is something that ought to be looked at closely. Mr. Turner. Mr. Gormley, when you were talking about the petition and its limitations and the threat of the cruise missiles and UAV, I was struck by the fact that we've undertaken a huge investment in air defenses, antimissile technology. Can you give us additional thoughts as to what our current strategies are as we approach these issues and our design of our current defenses? Mr. Gormley. Yes, Mr. Chairman. We have a huge investment that the Department of Defense has made in U.S. air defenses since the early 1950's. But the advent of the cruise missile threat largely makes those investments, while necessary, not nearly sufficient to deal with the emerging cruise missile and UAV threat, and that is largely because these threats fly low under the radarscope, so to speak. And not only do they fly low, but once they reduce their radar cross-section or add countermeasures, they impose severe difficulties on existing U.S. missile defenses, as they did in Operation Iraqi Freedom. And then there's another perverse issue and that is, when systems fly slow, our modern legacy, airborne and some ground- based radars actually eliminate slow-flying objects that are close to the ground in order to permit their signal processing and display systems to operate more effectively. So there are-- critically, it seems to me--some defense priorities that we need to turn to, and one is creating a single, integrated air picture to use and link together in a connected system all of the radars that are looking at these threats, including returning friendly aircraft, so that we have coverage, a common, single view of multiple aspect angles out to a large geographic region, so that we can be in a better position to discern friend from foe. The second area is simply to increase our battle space by producing better sensors on our airborne platforms and better missile seekers for our ground-based surface-to-air missile systems and air-to-air missile systems. And finally, we need to make cruise missile defenses cheaper. I referred to the unfortunate arithmetic associated with the cost of Patriot missiles and even the guidance upgrade for the PAC 2 system in comparison to the cost of an investment in a large number of cheap cruise missiles or UAVs; and until we get the costs of our seekers down, then we are going to have a difficult time as time passes, as the quantitative threat emerges, unless we can get the cost of our missile defenses down. And there are existing programs that are looking at trying to radically reduce the cost of seekers, which represent about 65 percent of the cost of an intercepter. Mr. Turner. Mr. Christoff, you've mentioned the number of end-use verification inspections that had been conducted, which, of course, is a quantification. Did you notice anything about the end-use verification process when an inspection had been undertaken that related to the quality of the threat? Did you notice any anticipation of an end user that might represent a greater threat for proliferation versus nonproliferation? Mr. Christoff. You mean in terms of whether or not they set priorities on the few that were done? Mr. Turner. Yes. Mr. Christoff. The Commerce Department, for example, does focus on certain choke-point technologies when it goes out and tries to determine where it's going to be doing its end use monitoring, and I think that's good process, good criteria that they're applying. So I think that's one good example of the 29 that they did do, that does undergo the process of looking at what are the most important aspects of the technologies or the technologies that they want to focus on. Mr. Turner. Very good. Mr. Ruppersberger. Mr. Ruppersberger. One question. Regarding the end-use monitoring for compliance, I think, Mr. Christoff, you said that there were only 33 licenses out of 4,000 that were checked for compliance. Out of those 33, what did you find? Mr. Christoff. You mean, what did the departments find? Mr. Ruppersberger. What did the departments find? What did you find when you investigated the departments---- Mr. Christoff. I'd like to submit for the record all the details. I can't recall all the details of the 33 licenses, but in some of them they did find that they were, ``unfavorable checks'' in a few of the cases. Some of them did result--I think in two instances it resulted in some criminal penalties being applied to individuals that had not dealt with the technology appropriately. There were also ones in which they had favorable checks in which there were no problems. Mr. Ruppersberger. What did you find? You're telling me what was bad or not. What did you actually find from a factual point of view---- Mr. Christoff. We found that the process--when the process for end-use monitoring is conducted, the departments do go out and look thoroughly at the extent to which the end-use efforts that the departments are doing are accurate. They are looking at whether or not the item is where it's supposed to be, there is adequate security, and whether or not the item's being used as intended. So when the results are applied, they're important results and they do provide good information back to the licensing process. Mr. Ruppersberger. What happens when you find that there are bad results? What action is taken---- Mr. Christoff. It depends on the actions. Congress can--for example, can undertake civil penalties against the company that may be violating some of the terms and conditions of the license. Others, such as the Customs Department, can engage in criminal penalties as well. Mr. Ruppersberger. Do you know if that was done? Mr. Christoff. Yes. Mr. Ruppersberger. It was done? Mr. Christoff. Uh-huh. Mr. Ruppersberger. Let me ask you this, too. It seems to me that 33 out of 4,000 is not much, and that is not really a good sampling of the entire program. Do you think there needs to be a change in the 33 out of 4,000 as far as the random checking that is done? Mr. Christoff. Absolutely. And when we broached our concerns with the departments, our original recommendation was go back and do a comprehensive assessment. Well, we realized that would be difficult to do, going back to all 4,000, so go back and do a sample, take a statistically valid sample of those 4,000 and conduct PSVs---- Mr. Ruppersberger. What would that be? What number do you think that would be? Mr. Christoff. I don't know. Mr. Ruppersberger. I'm asking your opinion. Mr. Christoff. I don't know. Mr. Ruppersberger. You're not going to talk for Mr. Gormley. He's telling me he's nongovernment. What do you think? Mr. Christoff. I know. And here I'm from the accounting office. Mr. Ruppersberger. That even makes it worse. Give it a shot then. We won't hold it against you. Mr. Christoff. Right. Actually, statisticians will tell you precisely what is a statistically valid sample based on a sample size of 4,000, and I don't really know what it is, but certainly it has to be more than 29 from one department and four from another department. Mr. Ruppersberger. What do you feel the reason is that we're not doing more? Mr. Christoff. We're not doing more? What the department stated to us was that, No. 1, the resource constraints in terms of being able to go out there and do additional ones, and the priority, it's not as high a priority as let's say Stinger missiles and AMRAAMs, those kinds of checks as well. Mr. Ruppersberger. OK. So then it gets down to resources and priority? Mr. Christoff. Yes. Mr. Ruppersberger. Fine. Thank you. Mr. Turner. Mr. Chairman, additional questions? Mr. Shays. I don't have a lot of questions, but I'd like to know, why were licenses for cruise missiles and UAV-related technology issued to non-MTCR members? Mr. Christoff. That's a good question, I think, to direct to the next panel; but 15 to 30 percent of those licenses that we looked at out of 4,000 went to non-MTCR countries. Mr. Shays. But you don't know why? Mr. Christoff. No. Mr. Shays. And there were no arguments presented. What countries should the United States be most concerned about regarding cruise missile-UAV proliferation? Mr. Christoff. China is No. 1. Clearly, China, having sold cruise missiles to particular countries of concern: Pakistan, Iran, Iraq, North Korea. And also I think I referred to these emerging markets where you have certain countries that currently manufacture cruise missiles, but they're not exporters and they are also not members of the MTCR such as Egypt, Israel, Oman, Iran as well, Pakistan. Mr. Shays. So they're making their own---- Mr. Christoff. Yes. Mr. Shays. But they're not exporting. Mr. Christoff. Not yet. Mr. Shays. But they've probably got technology to enable them to create their weapons? Mr. Christoff. Yes. Mr. Shays. Thank you, Mr. Chairman. Mr. Turner. Thank you. Do any members of the panel have anything else they wish to add before we move on to the next panel? We thank each of you for participating. Moving on to our second panel, which will include Mr. Matthew Borman, Deputy Assistant Secretary for Export Administration, the Department of Commerce; Mr. Robert Maggi, Managing Director of Defense Trade Controls, Department of State, who is accompanied by Mr. Van Diepen, Director, Office of Chemical, Biological and Missile Nonproliferation, Department of State; Lieutenant General Walters, U.S. Air Force, Defense Security Cooperation Agency, Department of Defense, and Ms. Lisa Bronson, Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation, Department of Defense. We appreciate your attendance today, and participation. Before you all get comfortable, perhaps you would all stand, please, so we can administer the oath. [Witnesses sworn.] Mr. Turner. Please note for the record that the witnesses have responded in the affirmative. We will begin this panel with the testimony of Mr. Borman. STATEMENTS OF MATTHEW S. BORMAN, DEPUTY ASSISTANT SECRETARY OF COMMERCE FOR EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE; ROBERT W. MAGGI, MANAGING DIRECTOR OF DEFENSE TRADE CONTROLS, DEPARTMENT OF STATE; LIEUTENANT GENERAL TOME H. WALTERS, JR., USAF, DEFENSE SECURITY COOPERATION AGENCY, DEPARTMENT OF DEFENSE, ACCOMPANIED BY VANN H. VAN DIEPEN, DIRECTOR, OFFICE OF CHEMICAL, BIOLOGICAL AND MISSILE NONPROLIFERATION, DEPARTMENT OF STATE; AND LISA BRONSON, DEPUTY UNDER SECRETARY OF DEFENSE FOR TECHNOLOGY SECURITY POLICY AND COUNTER-PROLIFERATION, DEPARTMENT OF DEFENSE Mr. Borman. Thank you, Mr. Chairman and members of the committee. Mr. Turner. Mr. Borman, would please move your microphone in front of you. As we said in the last panel, these do appear to be directional. So if you have it in front of you, it would be helpful. Mr. Borman. How does that sound? Thank you. Mr. Chairman, Mr. Vice Chairman, and members of the committee. It's a pleasure to be here to testify before you on this important topic. I have a short oral statement and ask that my full written testimony be entered into the record. The Department of Commerce's Bureau of Industry and Security is responsible for administering controls on U.S. Dual-use exports for reasons of national security, foreign policy, nonproliferation, and short supply. In this regard, the Bureau vigorously administers and enforces missile technology and anti-terrorist controls to stem the proliferation of systems that can be used to deliver weapons of mass destruction. We carry out our mission working closely with the Departments of Defense, State, Energy, Homeland Security, and Justice, as well as the Intelligence Community. National security is the primary focus of Commerce's Bureau of Industry and Security. We are keenly aware that our Nation faces significant threats both from terrorist groups and from countries seeking to acquire weapons of mass destruction and the means to deliver them. Although the export controls we administer cannot solve all of these problems, they do have a crucial role in denying terrorists and proliferators some of the tools they need for their hostile operations. As requested, I will address how the Department of Commerce mitigates the proliferation risks posed by cruise missile and UAV technology, paying particular note to the General Accounting Office's recent report. We appreciate GAO's work on this issue and note that the GAO did not conclude that U.S.-origin items are contributing to the proliferation of cruise missile and UAV technology. Although we do not believe GAO fully analyzed all of these issues, we are nonetheless in the process of addressing the two recommendations in the GAO report. Export controls are most effective when implemented on a multilateral basis. The Missile Technology Control Regime [MTCR], is the primary multilateral organization that addresses exports of items which can be used in cruise missiles and UAVs. The MTCR currently has 33 member countries, including many of the key manufacturers and exporters of cruise missiles and UAVs. The MTCR is highly focused on stemming the spread of missile systems capable of delivering weapons of mass destruction. Important steps the MTCR has recently taken include amending its guidelines to address concerns regarding terrorism, adopting new definitions for missile range and payload to sharpen the regime's focus on missile systems with WMD delivery capability, expanding controls to include short- range unmanned aerial vehicles which could have applicability in spreading chemical and biological agents, and also adopting catch-all controls. I also note that two of the other multilateral export control regimes, the Wassenaar Arrangement, which deals with conventional arms and dual-use items related to conventional arms, and the Australia Group, which deals with chemical and biological weapons, agents and precursors, are undertaking efforts within their jurisdictions to enhance controls related to cruise missiles and UAVs. Continuing to work within the multilateral framework is essential to the success of our nonproliferation goals, including stemming the proliferation of cruise missiles and UAVs that could deliver weapons of mass destruction. Consistent with our MTCR commitments and nonproliferation objectives, the United States implements an extensive export control system intended to stem the proliferation of weapons of mass destruction and their delivery systems. The Department of Commerce has jurisdiction for the export of dual-use items, items that have civilian and military applications, including items both enumerated on the Commerce list, as well as uncontrolled items. Commerce's controls directed to preventing the proliferation of cruise missile and UAV technology include inclusion on the Commerce control list of all items on the MTCR annex that are not covered by the Department of State's munitions list, additional unilateral antiterrorism controls on lower-level items that have missile or other weapons applications, catch-all controls that require exporters to obtain a license for the export of any item, even an uncontrolled item, if they know or are informed that the item will be used in or by certain countries for prohibited weapons of mass destruction or missile delivery activities. I would note that these catch-all controls also extend to nonexport activities, such as contracting, servicing or financing of U.S. persons anywhere in the world, regardless of whether any U.S. origin items are involved. And under this provision, a U.S. person was criminally convicted of violating the Export Administration regulations by failing to apply for a Commerce license to broker the transmission of material to be used as a missile propellant in Iraq; and it is important to note that in that case the material was of foreign origin and did not even enter U.S. territory. So the catch-all controls really have quite an extensive territorial reach. We also publish the entity list, which is a list that identifies specific end users in countries throughout the world that pose a proliferation concern. A license is required for all exports for most entities on the entity list. We also prohibit exports and reexports of any U.S.-origin items to persons designated by the Department of the Treasury as specially designated global terrorists, specially designated terrorists or foreign terrorist organizations. In addition, a critical component of our export control success is our outreach program to U.S. industry. We have an extensive outreach program to inform U.S. industry of their export obligations. Thus, we have an extensive set of controls to prevent the proliferation of missile technology, including cruise missiles and UAVs; and this set of controls covers sensitive items, sensitive uses of uncontrolled items, weapons of mass destruction-related activities and terrorists. Let me now turn to what we are doing to enhance these already robust controls. We are in the process of reviewing our existing missile catch-all controls and have identified options for further enhancement of these controls. The options we have identified will be submitted for interagency review shortly by the Department of Commerce. I would also note in this regard that our engineers, who have extensive experience and expertise in both commercial and military aerospace applications, are skeptical that a functioning cruise missile could be constructed out of uncontrolled parts and components. We also will undertake an assessment of dual-use exports related to cruise missiles and UAVs to determine if U.S. exporters and foreign end users are complying with license conditions. In conclusion, while we have an extensive system of controls that I think minimizes the likelihood of proliferation of cruise missiles and UAVs based on U.S.-origin technology, dual-use technology, we are taking steps to reduce that likelihood even further. Thank you for your attention to this important issue, and I will be pleased to answer any questions you have after the other witnesses have testified. Thank you. Mr. Turner. Thank you. [The prepared statement of Mr. Borman follows:] [GRAPHIC] [TIFF OMITTED] T4774.073 [GRAPHIC] [TIFF OMITTED] T4774.074 [GRAPHIC] [TIFF OMITTED] T4774.075 [GRAPHIC] [TIFF OMITTED] T4774.076 [GRAPHIC] [TIFF OMITTED] T4774.077 [GRAPHIC] [TIFF OMITTED] T4774.078 [GRAPHIC] [TIFF OMITTED] T4774.079 [GRAPHIC] [TIFF OMITTED] T4774.080 [GRAPHIC] [TIFF OMITTED] T4774.081 [GRAPHIC] [TIFF OMITTED] T4774.082 [GRAPHIC] [TIFF OMITTED] T4774.083 Mr. Turner. Mr. Maggi. Mr. Maggi. Mr. Chairman, Mr. Tierney, Mr. Shays, thank you very much for having us here today. It's a real pleasure to be here to talk about this very important issue and discuss the views from our colleagues at the General Accounting Office. As stewards of this Nation's defense trade controls and exports, we have no higher priority than ensuring that the recipients of defense articles and services comply with U.S. export control laws and regulations. As such, and there's so much at stake, I actually welcome views and practical suggestions on how we can be doing a better job. This is real important to us. I have a prepared statement, and with your permission, I'd like to have that submitted for the record, please, sir. To begin with, there's an awful lot we agree about with the GAO. They did a lot of hard work and we appreciate their views. First of all, we're welcoming the attention that they've put on the issue of post-shipment verifications. That's really important. We also share the concern of the report having to do with proliferation of cruise missiles as well as UAV technologies. We also agree that the capabilities and the use of cruise missiles and UAVs have expanded around the world and we need to be paying attention to it. Finally, we do agree that we need to be conducting more end-use checks, and we're on our way to doing that. But there are other areas where we're not in complete agreement. I'm not sure that we actually agree with the threat as presented in the report. I think that was quite a picture that we just heard from our colleagues on the prior panel, and that's a very worrisome issue, but I'm not sure that those are things that have occurred as a result of our system or our parts or our equipment. The picture was an accurate one, but I'm not sure it was driven be diversion of U.S. equipment. Additionally, I think that with regard to concern of the homeland danger, we'll have to be looking at that as well. Finally, we certainly don't agree with the views in the report having to do with the effectiveness of export controls. I believe that end-use verification is very important, but of singular impatience is the full range of activities that we take to make sure that defense goods and services are properly managed when they leave the United States; and I think it gives a misimpression of the full degree and the range and depth of the activities we take to make sure that the right stuff ends up in the right place. Mr. Ruppersberger started on a very good point about balance and tension between two priorities. For us, it's the tension between making sure that important weapons and technology stay out of the hands of people we don't want them to be in, while, at the same time, we help our friends and allies have in their possession the equipment and the technology available for them to help share the burden of world peace. That's real important for us. Strategic balance and regional stability are our major concerns. Last year, we adjudicated 55,000 cases worth over $90 billion. We are headed for zero defect. We need to get every single one of those right the first time, and to do that, we rely on a full spectrum of tools that go beyond just post- shipment verification. They include the actual licensing process, preshipment checks, compliance and enforcement activities, and very close work with other groups of folks and other agencies. The report, I think, could have given a little more credit to the full range of activities that we take, including how our registration process works, how our watch list works; how our flag system draws attention to suspicious activities; the vetting that we do within the Department of State and with the Department of Defense and the Department of Commerce; the work that's done by the Missile Tech Export Committee checking on whether or not these technologies should be going places. The idea of establishing and validating the bona fides of the end user and the confidence that we have in them is important for us to know to shape our views of who should be getting what sorts of things. I would make note that with the exception of six Predator UAVs for Italy, no complete systems were licensed by the Department of State, the vast majority of the cases that were reviewed of that 786 were spare parts for UAVs that were in the possession of known allies, and that the vast majority of the cases ended up in well-known programs that had very high levels of transparency. I would also make note that one of the things that allows us to track what the cases look like is a piece of our automated process called ``commodity codes,'' which we are updating. So sometimes what looks like the export of an actual piece of hardware turns out to be a license was for marketing or a spare part. To be clear, compliance and enforcement are critical. We've restructured. We took an organization and made a separate office just to focus on compliance. We've given them a lot of resources. We've upped our compliance staff from 3 to 30 people in the last 15 years. We added 5 in the past year; there will be 10 more this year. The growth of the people and keeping them on board will help us with the excellence of the quality of the cases that we're working on. We've now got a new automated system, so by doing this, augmented by computers and, particularly, attaching our computer work with that of the Customs folks now known as ICE, we will be able to see what actually leaves each day in a contemporaneous way and be able to see how we track that against the use of the end users. And our work with the other agencies continues to be important. Our end-use checks benefit from what goes on with, for example, Customs and Justice. Last year, we had 665 cases that we cooperated with the Justice Department and Customs on, for a total of over $100 million in seizures. We assessed over $63 million in fines to folks that violated the Arms Export Control Act and the international traffic in arms regulations. The report, in conclusion, addresses a very valid concern and we're concerned as well, but I don't think it gave a complete picture of how we do our business. Almost a third of my team is either active duty military or veterans. We're serious about weapons and we're serious about the technologies surrounding them. Every day we are mindful of our responsibility not only to the American taxpayer, but to the world community. We're not complacent. We also recognize the need to stay ahead of the emerging threat. While past performance is no guarantee of future success, it's worth noting that neither we nor the report are aware of any areas in which our technologies have left and have presented a threat back to us. Finally, three points: We pay special attention to cruise missile and UAV technology transactions. We are increasing the number and effectiveness of our end-use monitoring checks, and we are increasing the quality in the way we do our targeting on UAV and MTCR-related actions. Thank you for your attention. Mr. Turner. Thank you. [The prepared statement of Mr. Maggi follows:] [GRAPHIC] [TIFF OMITTED] T4774.084 [GRAPHIC] [TIFF OMITTED] T4774.085 [GRAPHIC] [TIFF OMITTED] T4774.086 [GRAPHIC] [TIFF OMITTED] T4774.087 [GRAPHIC] [TIFF OMITTED] T4774.088 [GRAPHIC] [TIFF OMITTED] T4774.089 [GRAPHIC] [TIFF OMITTED] T4774.090 [GRAPHIC] [TIFF OMITTED] T4774.091 [GRAPHIC] [TIFF OMITTED] T4774.092 [GRAPHIC] [TIFF OMITTED] T4774.093 [GRAPHIC] [TIFF OMITTED] T4774.094 [GRAPHIC] [TIFF OMITTED] T4774.095 [GRAPHIC] [TIFF OMITTED] T4774.096 [GRAPHIC] [TIFF OMITTED] T4774.097 [GRAPHIC] [TIFF OMITTED] T4774.098 [GRAPHIC] [TIFF OMITTED] T4774.099 [GRAPHIC] [TIFF OMITTED] T4774.100 [GRAPHIC] [TIFF OMITTED] T4774.101 [GRAPHIC] [TIFF OMITTED] T4774.102 Mr. Turner. General. Lieutenant General Walters. Mr. Chairman, distinguished members of the committee, thank you for the opportunity to appear before you today to discuss the Department of Defense's controls on items that we sell to our friends and allies. Mr. Chairman, I have a longer written statement that I have submitted for the record. The Defense Security Cooperation Agency manages U.S. foreign military sales. Those are government-to-government sales, typically, $12 to $13 billion annual. We do that to achieve very specific goals: to strengthen America's alliances and partnerships, to help our friends and allies defend themselves, to build trust and influence with those friends and allies in peacetime so that we can gain access in times of crisis and then be interoperable when we fight together. In all of this, there's a dynamic tension, on the one hand providing highly capable U.S. equipment to friends and allies, but at the same time making sure we protect ourselves, our forces around the world, and America. We fully recognize our responsibility to make sure the equipment we transfer only goes to the right hands and is only used for its intended purpose. We agree with the thrust of the GAO report to make sure foreign end users are complying with the conditions of the transfer. We've got an extensive process in the Pentagon to establish a trustworthiness of the end user before the transfer decision is made. It's focused on two key questions: Does the prospective user have the capability to protect our equipment as we would; and second, does he have the will to do that? There is no more vigorous debate over arms transfers than the one that goes on inside the Department of Defense before the transfer, for one simple reason: If we get it wrong, we're first in line to deal with the consequences. The GAO has recommended that we beef up postshipment verification after transfer, and we will do that. Now, the drafters of the 1996 amendment to the Arms Export Control Act chose their words with care when they told us to establish end-use monitoring programs to the extent practicable and to provide reasonable assurance that end users are complying with our requirements to protect the equipment we transfer. Since the GAO investigator spoke with us a year ago, we have published specific guidance designating manned portable air defense system, MANPADS; Javelin attack missiles; advanced medium-range air-to-air missiles, AMRAAM; night vision devices; TOW-B antitank and antibunker land attack missiles; and now cruise missiles and UAVs for increased postshipment verification. We've gotten Secretary of Defense approval for four additional manpower billets for this purpose, and we're in the process of hiring those people now. We have begun work to create an end-use monitoring data base application on a Web-based system; and we have reached agreement with the Defense Threat Reduction Agency to support our efforts in inspection visits with their manpower. I'll close by noting that the GAO report did not find any evidence of misuse or diversions of military equipment transferred through the foreign military sales system. That's a good sign that our processes are working now. But I do agree that we can and should do more to raise the end-use monitoring bar higher to be clear in our own minds that we have that reasonable assurance that those who receive our equipment are protecting and using it properly. Thank you, Mr. Chairman, and I look forward to the questions. Mr. Turner. Thank you, General. [The prepared statement of Lietenant General Walters follows:] [GRAPHIC] [TIFF OMITTED] T4774.103 [GRAPHIC] [TIFF OMITTED] T4774.104 [GRAPHIC] [TIFF OMITTED] T4774.105 [GRAPHIC] [TIFF OMITTED] T4774.106 [GRAPHIC] [TIFF OMITTED] T4774.107 [GRAPHIC] [TIFF OMITTED] T4774.108 [GRAPHIC] [TIFF OMITTED] T4774.109 [GRAPHIC] [TIFF OMITTED] T4774.110 [GRAPHIC] [TIFF OMITTED] T4774.111 [GRAPHIC] [TIFF OMITTED] T4774.112 [GRAPHIC] [TIFF OMITTED] T4774.113 [GRAPHIC] [TIFF OMITTED] T4774.114 [GRAPHIC] [TIFF OMITTED] T4774.115 [GRAPHIC] [TIFF OMITTED] T4774.116 [GRAPHIC] [TIFF OMITTED] T4774.117 [GRAPHIC] [TIFF OMITTED] T4774.118 [GRAPHIC] [TIFF OMITTED] T4774.119 Mr. Turner. Mr. Van Diepen. Mr. Van Diepen. Thank you, Mr. Chairman. I've got no statement, but I will be prepared to answer questions. Mr. Turner. Thank you. Ms. Bronson. Ms. Bronson. Good afternoon, Mr. Chairman. Thank you for the opportunity to appear before you today to discuss how the Defense Technology Security Administration [DTSA], formulates its recommendations to the Departments of State and Commerce in the development of export control lists to help prevent the spread of missile technology. I have submitted written testimony, which I ask be included in the record. The Defense Technology Security Administration is a defense field activity of the Office of the Under Secretary of Defense for Policy. In addition to my position as the Deputy Under Secretary of Defense for Technology, Security Policy and Counterproliferation, I serve as the Director of DTSA. DTSA provides technical assessments of license applications referred from the Department of State and the Department of Commerce. DTSA also works closely with these two organizations in the development of export control regulations and procedures. During the past 4 years, DOD has undertaken a comprehensive review of the U.S. munitions list. Two of the categories of the USML review are relevant to today's discussion. USML Category IV controls our missiles including cruise missiles. Category VIII, which controls military aircraft, also controls unmanned aerial vehicles or UAVs. The Category IV review began in June 2002, when the DOD working group for that category first met. Over the next 6 months, a total of seven meetings were held and included technical experts from DTSA, OSD Acquisition, Army, Navy, Air Force, the Missile Defense Agency, and the Institute for Defense Analyses. This working group closely examined the Category IV controls for cruise missile systems, components, materials, test facilities, manufacturing equipment and tooling, and associated technologies. The working group ultimately determined that the existing Category IV control is appropriate and no new control or definition was proposed for cruise missile systems. However, new control language was proposed for test equipment and facilities for manufacturing equipment and tooling specific to cruise missile development and production. Existing control language on [inaudible] and composite materials for heat shields or nozzles was also revised to better describe the items meriting export control. DTSA submitted the working group draft language for interagency review in October 2003, and the interagency agreement was obtained in December 2003. The Category VIII review was conducted in a similar fashion beginning in 2000. My written testimony describes the Category VIII review in detail. The Defense Technology Security Administration has provided technical advice in support of the development and modification of the Missile Technology Control Regime Technical Annex since 1991. As new threats evolve and technologies mature, our technical exports develop proposals to modify the Technical Annex and evaluate proposals submitted by other U.S. Government agencies, as well as by our MTCR partners. After the September 11 terrorist attacks, the threat from the use of crop-dusting aircraft or UAVs for spread of chemical and biological agents was highlighted. In response, DTSA recommended adding a new control in March 2002 at the U.S. Interagency Missile Annex Review Committee. A U.S. white paper, drafted by DTSA, was presented and discussed with our MTCR partners during the biannual MTCR Technical Experts Meeting in April 2002. Following the April Technical Experts Meeting, DTSA developed a formal USG proposal to control aerosol-dispensing UAVs and presented this proposal at the September 2002, multinational Technical Experts Meeting. New controls on UAVs equipped for aerosol spraying were ultimately adopted into the multinational Technical Annex in April 2003. Chairman Turner, in your opening statement, you asked whether in today's security environment, payload and range limits continue to make sense. The U.S. proposal to control aerosol-dispensing UAVs adopted by the multilateral MTCR does not have a range limitation. This was a significant shift in thinking for the Missile Technology Control Regime. The new controls on UAVs equipped for aerosol spraying is just one example of the improvements made to the Missile Technology Control Regime Technical Annex over the past 3 years. Other examples are included in my written testimony. Besides controlling specific hardware, it is important to control the underlying technology and the know-how that enables production of UAVs and cruise missiles. To identify future technologies that may yield military capabilities beyond that envisioned during the review of the current export controls, DTSA created an interdisciplinary team to identify emerging technologies that are likely to result in fundamental warfighting paradigm shifts. They began their work 6 months ago. While I must stress that our review is at the most preliminary stages, our initial internal review identified certain enabling technologies related to UAVs for further examination. Specifically, technologies related to miniature sensors, advanced data links, and micro-miniature guidance and navigation components have been identified as key enabling technologies for UAVs. Although these are only initial results, I believe that our ongoing review will underscore the importance of controlling these emerging systems and capabilities. Mr. Chairman, I trust my comments have addressed the specific question raised by your staff, how does DTSA formulate its recommendations to the Departments of State and Commerce concerning export control lists? I would be happy to answer any questions you may have regarding this subject. Thank you. [The prepared statement of Ms. Bronson follows:] [GRAPHIC] [TIFF OMITTED] T4774.120 [GRAPHIC] [TIFF OMITTED] T4774.121 [GRAPHIC] [TIFF OMITTED] T4774.122 [GRAPHIC] [TIFF OMITTED] T4774.123 [GRAPHIC] [TIFF OMITTED] T4774.124 [GRAPHIC] [TIFF OMITTED] T4774.125 [GRAPHIC] [TIFF OMITTED] T4774.126 Mr. Turner. Thank you. We will begin our questions with Mr. Tierney. Mr. Tierney. Thank you, Mr. Chairman. I thank the witnesses for their testimony today. Let me just start with a rather general question. The recommendations in the GAO report indicate that a gap in dual- use export control regulations could enable individuals in most countries in the world to legally obtain, without any U.S. Government review, U.S. dual-use items not on the Commerce control list to help make a cruise missile or UAV. Mr. Borman, do you accept that statement as accurate or do you have some issue with that? Mr. Borman. No. We are working, actually, to draft the regulatory change to address that, but I would note that the example that I think gave rise to that recommendation, this individual in New Zealand who had a Web site who claimed that he could make a cruise missile based entirely on uncontrolled parts and components. As I said, our engineers, who have a lot of experience in both commercial and military applications, are very skeptical that someone could truly build, in effect, a cruise missile solely through that method. But, nonetheless, we are looking to revise our regulations to close out that potential loophole. Mr. Tierney. When do you think that revision will be done? Mr. Borman. I would say within the next 6 weeks. Mr. Tierney. Mr. Maggi. Mr. Maggi. Yes, sir. Mr. Tierney. Do you accept that statement as accurate or do you have contrary feelings and opinions about that? Mr. Maggi. I'm fine with Mr. Borman's position. Mr. Tierney. Now, the other statement here that concerns me is that because the departments have conducted so few PSV visits to monitor compliance with the U.S. Government export conditions on transfers of cruise missiles, UAVs and related dual-use technology, the extent of the compliance problem is unknown. If I could just ask each of you, do you think that we have our hands around what the extent of the problem is, or do you think that there are large potentials out there for types of violations that we may not be aware of because there have been so few PSVs? Mr. Borman. I guess I can start from the Commerce perspective; and the first point I'd make is that certainly I've seen no information that leads me to believe that U.S.- origin items, at least dual-use items, are being diverted for cruise missile or UAV proliferation. So that's a starting point. Having said that, we are certainly again willing to go back---- Mr. Tierney. Can I interrupt? I hope you don't mind. Just that, is it that you have seen no information because we just haven't done the inquiry or we haven't made the visits or---- Mr. Borman. No. Well, there is information that is made available to us on a regular basis from the Intelligence Community that relates to these issues. So the actual checks are one part of the way we view compliance, but obviously there is other information that comes in to us that also helps us evaluate that. I can't say too much more in open session, but we don't rely solely on the end-use checks to determine whether particular licenses are being complied with. Mr. Tierney. With respect to the other means that you use to monitor the situations, how much after the delivery is made do they continue? Do they continue ad infinitum or do they stop for a period of time, so after that we would have a concern? Mr. Borman. Well, let me put it another way. Information comes to us on a regular basis not necessarily on specific transactions, but on actions of foreign parties that come to the attention of others in the U.S. Government. Mr. Tierney. So---- Mr. Borman. But let me then come back to also the GAO point. I think one of the things that GAO could have explored further in their report is that, as Mr. Maggi mentioned, in reviewing a license application, there's a whole range of things we look at. And so, for example, if the transaction is going to a foreign party that we have previously done an end- use check on, even though it otherwise meets the criteria for a check, we usually don't go ahead and do that again because we have a high degree of confidence that end user, particularly if it's a U.S. subsidiary, for example, will comply with the license conditions. In some cases, we get government-to-government assurances. And in some cases, there is technology transferred, and the technology transfer is obviously much more difficult to do an end-use check on. It's much easier to check on a thing than it is on technology. And so up front in the licensing process is where we really put a lot of emphasis in determining, is the foreign party reliable and likely to comply with the license conditions? So while we take GAO's point that we certainly should look at doing more of these, we take some issue with their view that so few of them are done we have no idea whether compliance is there or not. Mr. Tierney. Thank you. Mr. Turner. Thank you. One of the issues that was discussed was concerned the Missile Technology Control Regime and its restrictions. It seems as if a lot of the testimony we received indicated that there needed to be an effort to strengthen or curb proliferation through increasing the restrictions or at least the cooperation among the regime. Could each of you talk a little bit more about that issue, giving us some information from your perspective on the operation--the agreement among the regime and also ways in which you can see that it could be strengthened. Mr. Van Diepen. If I might start, Mr. Chairman, first of all, the critical function of the MTCR is to try and put in place coordinated export controls over the most threatening pieces of equipment and technology from a missile proliferation standpoint, and the regime members have put together the so- called ``annex,'' which is the list of specific equipment and technologies that all of them have agreed to control according to the regime's guidelines. The fundamental purpose is to make sure that these transfers get adequate scrutiny and that they are looked at to make sure that they don't inadvertently contribute to proliferation. So most items are subject simply to a case-by-case check against agreed nonproliferation factors, the end result being to try and make sure that they don't contribute to the delivery of weapons of mass destruction or to the activities of international terrorists, a new aspect of MTCR controls that's been added within the past 2 years. Certain systems and certain technologies are subject to what's called a ``strong presumption of denial,'' meaning that they are so sensitive that normally they will not be exported except on so-called rare occasions that are especially well justified in terms of the guidelines. And certain cruise missiles have been controlled by the MTCR from its advent in 1987. Additional cruise missiles and UAVs were added to control in 1993; and as Ms. Bronson noted in her testimony, still further UAVs were added to control within the last 2 years. In addition, this past year we got agreement that so-called ``catch-all controls'' that control items, including missiles not on the MTCR Annex when they are destined for WMD delivery, have now been made an MTCR-wide requirement. So what started as a U.S. unilateral control is now a multilateralized MTCR control. In addition, the MTCR technical experts continue to look for areas, including in the UAV area and the CBW delivery area which is related, where we continue to improve the controls. We're looking at things like, are there additional propulsion systems, additional guidance systems that should be added to MTCR control? And then, finally, there's a great deal of intelligence and information exchange including on cutting-edge threats such as cruise missiles and UAVs, including on the progress of missile programs of proliferation concern, including in the UAV area to help sensitize all the members to the threat to the methods that proliferators use to try and get equipment and technology. Thank you. Mr. Turner. Ms. Bronson, Mr. Gormley testified that the United States had unsuccessfully attempted to introduce a measure of control over additional technology when it introduced an antiterrorism proposal to the Wassenaar Agreement in early 2003. He stated, ``expressing concern about the possible terrorist use of kit airplanes or other manned civil aircraft'' as a poor man's UAV, the U.S. proposal sought export control reviews and international notifications for all equipment systems and specifically designed components that would enable these planes to be converted into UAVs.'' he goes on to recommend that the executive branch authority should redirect their efforts toward accomplishing this and redefining their proposal. Do you have any comments on his testimony? Ms. Bronson. He raises an area where we don't have controls, and the way in which we go ahead and work our process in the U.S. Government is to attend to get multilateral before we go ahead and add something to the CCL. From our perspective, adding the conversion kits for civil aircraft to the CCL is a desirable thing to do. The specifics on how we would go about modifying our proposal in the Wassenaar Arrangement are still under study, but it continues to be an area of concern, and we will take into account what we have heard today as we refine that process. Mr. Turner. Do you think it might be accomplished soon or are we pretty far away from a resolution of that? Ms. Bronson. It is very difficult to predict how soon one can get multinational agreement on a proposal in the Wassenaar Arrangement, so I wouldn't even attempt to predict whether or not that agreement could be achieved in a short period of time. Lieutenant General Walters. Mr. Chairman, if I could add one more point to that question and answer, it's my understanding that the components for these so-called ``conversion systems'' are already under control, principally MTCR-controlled items, and I think the issue we're talking about here is sort of an additional explicit control that controls them as conversion kits themselves in addition to the individual components that go into a conversion kit. Mr. Turner. Thank you. Mr. Maggi, you testified that end-user control and end-user verification, postshipment verification, is a process that you did agree with in the testimony that you had heard. It was something that needed to be enhanced, increased, and was desirable. Would each of you comment about your various agencies and what you're doing to increase what we might expect after this hearing in accomplishing both increased end-use verification and postshipment verification. Mr. Maggi. Yes, sir. Whether there had been a hearing or not, we had already been headed for about a 20 to 25 percent increase in the postshipment verification checks. We've already discussed that it is just one part of the full range of all of the activities we do to make sure that we understand how items are being used after they are transferred. Earlier, I believe it was mentioned that there was a thought about a cradle-to-grave requirement to be watching what was going on. That's a very good point; and part of how that happens in many areas is because our active duty folks from the Department of Defense are actually out there engaged with the folks that are using some of this equipment. So our goal from the direct licensing perspective is, in fact, looking to go from about 400 to about 500 postverification checks this year with actually a desire to go higher than that in the not too distant future. You had asked earlier, sir, about the requirement for more resources. From our perspective, I think we're in pretty good shape for what we have, but the folks that are actually doing our end-use postmonitoring checks or postshipment verifications are the country team people out at the embassies. So this will make them work a little harder. Mr. Turner. Mr. Borman. Mr. Borman. Again, we are in the process of reviewing both our protocol and--for doing end-use checks particularly on these types of items; and our records so far--and as I mentioned, it is important to take into account the other factors that come into play in doing the postshipment verifications, the up-front work--who the parties are, what the transactions that have been previously checked are to the same end users. Mr. Turner. Does anyone else want to comment on that? General, one of the points that our chairman had made is, regardless of what efforts the United States may undertake in controls or efforts to limit proliferation, this technology is technology that is going to at some point become dated and of age where it would be widely available and less subject to just our control or the control of those countries who are party with us currently to agreements. We heard in testimony from the previous panel about our efforts for our air defenses, the limitations of the Patriot missile, and anticipation that our efforts alone might not be successful in stopping the proliferation of these types of missiles or UAVs. What are some of the things that you would recommend that we look at in increasing--or anticipating a need to increase our air defenses in this area. Lieutenant General Walters. That's a very large question and I don't presume to be the expert in that area. I was at Asian Aerospace 2 weeks ago, at the Singapore air show. The first day, they had a UAV conference that was attended by many countries and hundreds of people. The numbers that we walked away with, GAO said, 32 countries, 250 UAVs. By our quick math, I think at that conference we calculated it to be 39 countries and 425 UAV systems. So UAVs right now are at about the Orville and Wilbur stage. Every mom-and-pop bicycle shop operated out there is basically trying to figure out how to put together a small engine and a set of wings and go fly those things. So horses are out of the corral when it comes to UAVs. Now, building one and operationalizing it is an entirely different matter and something meaningful, particularly something that's a threat to the U.S. homeland. The air defenses, to get back to your question specifically about the air defenses, trying to build--a previous witness testified to a single integrated air picture. We have spent a lot of long time doing that in this country, focused originally at a Soviet threat. I'm not sure that some of that system hasn't degraded since the fall of the Berlin Wall. The importance of having an integrated air picture that's capable of seeing very small cross-section vehicles is important to the United States. It's important for the homeland. It's equally or more important for forward deployed forces in theaters. So that's a body of work that the Pentagon is very hard at work on. The combined air component commander has that as a very high, high priority to do that. To give you a more expert opinion on the whole thrust of air defenses, I would have to turn to other experts in the Pentagon and ask them to give you more specific details. Mr. Turner [presiding]. Thank you, General. Mr. Ruppersberger. Mr. Ruppersberger. Yes. Mr. Maggi, I interpreted from your testimony that you felt that the GAO focused too heavily on the compliance process. Could you walk through the compliance process and tell how it works and also what you would do to change it? Mr. Maggi. I certainly am of the opinion that the report focused on the postshipment verification part of the compliance process too much. The entire activity that we do with regard to licensing from my perspective is in fact compliance. Making sure that in the first step the individual, the entity trying to export is registered with the Department of State, that's the first step toward compliance. Do we know who they are, do we know where they are, do we know the people that run the company, do we know their background? The second thing is, have they provided us--with regard to compliance, have they given us all the data that we need to know: What is it, where it's going to go, and why is it going there? The third part of this is as we're checking into the actual application, we have a watch list that we run names against. There's about 50,000 entities in that watch list, and that's the very first thing that happens before we go any further into the application process. Once we get through those parts of making sure that the application is compliant with law and regulation, we then look into the actual substance of what is it that they're trying to transfer, and through about a third of our cases we send them out to our colleagues in the Department of Defense and other places inside the State Department to get their views and recommendations on how that works. Let me back up. You were asking me about the blue lantern process and the postshipment verification. Well, as we go through the beginning and the front end of the checks on this and we look to see are there any extraordinary things that are going on, our teams are put together with regard to the commodities that they manage, so they're generally pretty familiar with who the people are that are in the industry. They also try to be pretty familiar with who are the shippers, because those are people that we're very concerned about: Who are the people that are actually moving these defense goods or services? So if a flag comes up or if this is an unknown entity, then we're very mindful of who those people are. The GAO folks did a great job in looking at the 786 cases, and made a good point about they're a very small number at the State Department that were actually looked at, but in conjunction to those, there had been in that same timeframe almost 100 checks that had been done against the same parties that were in those cases that came under scrutiny. Mr. Ruppersberger. Well, why wasn't that stated? So you're saying it's not 33 but it's 100 now? Mr. Maggi. No. What I'm saying is the words in the GAO report were absolutely correct. Of the 786 cases that they looked at, we did 3 special blue lantern, end-use monitoring, post-verification checks. But in conjunction with those, of the entities that were associated with those cases, there had already been another actually 97 checks done on the same parties in those cases in a timeframe--in that same timeframe. So we had--Mr. Borman was saying, we had already looked at some number of those folks in those cases having to do with another license for another commodity or another product going to the same end user. Mr. Ruppersberger. OK. Mr. Maggi. So you asked me what would I be doing. No. 1, compliance is life. Trust, yet verify. So we really believe in this stuff. We're automating. We're coming up with a new system called T-REX in which we'll be able to keep track of all of the compliance activities that are going on. It's going to be connected with our main licensing system called D-Trade which came online this year in full operation, and we're also interoperable with the AES, the Automated Export System that you can get from the Customs folks at Homeland Security. By seeing what goes out every day through this automated process, we think we will greatly improve our efficiencies and our knowledge of what we're doing. The next thing we'd do is continue to add more folks. Mr. Ruppersberger. OK. Thank you. General Walters, in your testimony page 11, you state that you rely on military departments to determine your priorities. How does that work with the State Department and the Intelligence Community? Lieutenant General Walters. We rely on the military departments to determine what's really--what are their crown jewels, what's important to them; what, if it was coming back in the other direction, would really bother them. We go through a very complex release process. First, we only sell to our friends. Kind of an important point to make to begin with. We look very hard at their capability and their track record and their will. And it's important to note that the service that's making the determination to sell something to a country is-- let's take antiship cruise missiles and let's take harpoon missiles that the United States makes and sells. U.S. Navy are the people that are deciding whether or not to sell the harpoon to another country, and they've got a track record with the countries. They're talking to the intelligence services. The intelligence agencies get a vote. If it's a higher-end process system and we go through an exceptions to national disclosure policy review, joint staff gets a vote. The U.S. Navy gets a vote. The intelligence agencies get a vote. State Department gets a vote. So all the players get a vote, and the most important player is, in the case of the harpoon missile, the U.S. Navy, which is the organization that's most concerned with what's going to happen if it comes back at me. And I can look you in the eye and tell you with absolute certainty that the U.S. Navy, in dealing with the cruise missiles, that it has worked with--and those are the majority of the ones that we're talking about here--is absolutely certain that it's maintained an edge and is not threatened by what it sold. Mr. Ruppersberger. OK. Now, bearing in mind this is an unclassified session, does the Intelligence Community provide a satisfactory assessment of the cruise missile and UAV threat to support export control decisions? Lieutenant General Walters. To my mind they do. For our purposes and to my mind, particularly when we're talking about a military threat back to us, I believe that they do. In terms of pieces and parts and technology transfer, I'll defer to the other witnesses. Mr. Ruppersberger. Well, Mr. Maggi, could you respond to that? Does the Intelligence Community provide a satisfactory assessment of the cruise missile and UAV threat to support export control decisions? Mr. Maggi. Yes, sir. Mr. Ruppersberger. Could you elaborate? Mr. Maggi. Well, you may have noticed I was smiling, because you can never have too much intelligence, and understanding what all the---- Mr. Ruppersberger. Are you talking about personal intelligence or--no, I'm kidding. Mr. Maggi. Well, that was my staff. Having that intelligence and understanding what it means is often very difficult, and knowing how to use it, particularly in the compliance area, is very complicated for us, because it then gets complicated with regard do what we know, what we can share with others, how we can go to other governments. We spoke earlier about how we induce others to do the right thing, and frequently we aren't able to share that data. Yes, we get the data we need. Mr. Ruppersberger. One of the reasons I ask the question, because there's an ongoing debate within the Intelligence Community of the volume that we're getting in intelligence that because of security clearances and issues like that, there's a lot of information that probably should be maybe unclassified, it needs to go to different agencies that is not in order for you to do your job. Mr. Maggi. Well, I think we get plenty of support at the classified level. Of course, I don't know what I don't know, but I think we get a pretty steady stream of data. My larger concern is not being able to share it with other governments, to be able to point out to them the shortcomings of people in their countries. Mr. Ruppersberger. OK. Thank you. Mr. Turner. Mr. Chairman. Mr. Shays. Thank you. I thank the gentlemen and the lady for being with us. I would like to first know from each of you the point you agreed with the most in the first panel and the point you disagreed the most. And by the way, I appreciate you all being here for the first panel. That's helpful to us. Mr. Maggi. May I start, sir? Mr. Shays. Yes. Mr. Maggi. The thing I agree with the most is that there's a threat out there, and we really need to pay attention to it. The thing I disagree with the most is that we're contributing to it. Mr. Shays. ``We'' being? Mr. Maggi. We, my organization, is contributing to that threat, the licensing process. Mr. Shays. Well, weren't they basically saying you're contributing, but you can take steps to do a better job? You don't disagree you can do a better job? Mr. Maggi. Sir, we can definitely do a better job, but I don't think we're contributing to the threat that we heard presented by the first panel. Mr. Shays. Mr. Borman. Mr. Borman. I have a similar reaction, and that is I think---- Mr. Shays. Is your mic on? Mr. Borman. The GAO report perhaps gives the impression that there are U.S. origin items, either dual use or munitions, going into this proliferation threat, and I just don't think there's any evidence for that. But certainly we agree that there are steps that we can take, both on the regulatory side and on the compliance side, to look to improve both our performance in both of those areas. Mr. Shays. General. Lieutenant General Walters. GAO does us a great service when they say they're--when they highlight the threat for both UAVs and cruise missiles. That's unarguable. And to the extent that they say you can do better--a better job in postshipment verification, yeah, we can. And so we'll work on that. But let me put that in context---- Mr. Shays. That's really not in dispute, is it? Lieutenant General Walters. No. Let me put it in context. I'm only focused on government-to-government foreign military sales. Well, we haven't sold any UAVs through the foreign military sale system, No. 1, for us, so I don't have anything to go count in the UAVs that we participated with. In the cruise missiles, GAO says 500 cruise missiles. Our best records show between 1998 and 2002, 317, of which 207 have been delivered. The countries that they've been delivered to are the United Kingdom, Canada, Denmark and Taiwan. I've got high trust and confidence in those countries and in our allies. The countries that we've sold but not delivered to include Imam and South Korea and the United Arab Emirates. So there's nothing for me to go count at this point. What the report doesn't say is that we sold over 3,000 earlier-model cruise missiles, primarily harpoon--simple model--simpler-model harpoons from many years ago. We did our first tiger team--we've done three tiger teams. We've done one to Egypt, and I was quite pleased with what happened. Mr. Leon Yates here, who was our end-use monitor when he went there, asked to go take a look at their harpoon missiles that we had sold. They're not part of this--the GAO's report. And the Egyptians were quite forthcoming, and they were quite happy that we were there to visit. They took him to their central storage facility. He went through all of their records. They willingly, happily, led him into the facility, and he was so impressed at the point, that he didn't feel the need to count serial number by serial number every single weapon that was in there, you know. So on the basis of a sample of one, with one country having gone out there, I've got pretty reasonable assurance that at least for that customer, that things are not seriously off track. We'll do more counting. There's a problem with accounting, and that is national sovereignty. Some of the--we have a right, and we make it very clear that we have a right to go in and count. We ask them to verify to us, and so they do when we sell some of these cruise missiles, for example, and other systems. But we tell them very clearly that we reserve the right to come in. But even so, if I go down to Australia or the U.K. or some of our friends, they say, come on guys; you know we're fighting side by side with you, is this really necessary? So there are some sensitivities out there, and we're going to have to bruise a few sensitivities and step on a few toes as we increase our sample size. UAVs and cruise missiles aren't the biggest problem that I have, and I don't think that what we, the United States, are selling in the UAV and cruise missiles are the problem. It's all those others. Mr. Shays. The others? Lieutenant General Walters. It's all the others. It's China and North Korea, and everybody else who is building other--both missiles and UAVs. So, yes, we can focus on ours, but it's kind of like we're looking through a soda straw at a small piece of the problem, and there's this carrier looming over my shoulder. And that's everybody else that's selling things out there, in my view. The biggest challenge I have in postshipment verification isn't the UAV and the cruise missile. It's actually my colleague, Ms. Bronson, who from the Defense Technology Security Agency, has asked me to go count all night vision devices. Now, that is a much bigger problem. Mr. Shays. I was a little confused when you said your biggest challenge was Ms. Bronson. Maybe we're onto something here. Lieutenant General Walters. She's asking me to go count night vision devices. Now, that's a problem on an order of magnitude harder. Mr. Shays. Mr. Van Diepen, do you have any point that you would strongly disagree or agree with that you wanted to highlight from the previous panel? Mr. Van Diepen. I would strongly agree with the first panel's emphasis on the novel and future aspects of the UAV and cruise missile threat, the possibility of combined ballistic missile and cruise missile attacks, the risk of nonstate actors acquiring. In terms of disagreement, I think there may be an overemphasis on export control as a way of dealing with this problem, particularly the nonstate actor problem, where, frankly, someone within the United States without exporting anything or importing anything could acquire the wherewithal to put together the kinds of rudimentary UAVs the panel was talking about here and use them to attack us here at home. And so export controls is only one of a whole series of tools that one has to use to try to impede the proliferation threat. Mr. Shays. Thank you. Makes you wonder, though, if we need to be keeping a better track on what's happening here, I mean, from the point you make. Ms. Bronson. Ms. Bronson. I would agree with two things in particular that I heard. First, I wholeheartedly agree we need to look to the enabling technologies as we think about what are the newer controls of the future. Second, I agree we need to do more postshipment verifications and end-user checks. I think that there's a bit of an overstatement of the effectiveness of the Iraqi cruise missile, and I want to look a little more closely at the data that informed that judgment. I'd also point out that the cruise missiles that are most capable are very, very difficult to build, and we have to be careful not to lump the ability to build the UAVs and the ability to lump effective cruise missiles together in the same category. Mr. Shays. Thank you. The first panel, as I heard them, said on the short-run cruise missile, their biggest concern. In the long run it's UAVs. And I think they said in the long run it's the UAVs for nongovernment organizations, terrorist organizations. Would you disagree with that basic position? How do we measure the success if people are able to get this stuff outside even the agreements we have? Mr. Maggi. I think, sir, the people that you're looking at in front of you, at least myself, we're fighting a holding action. Over time, technology is going to change. Over time, technologies will proceed in a way, and our goal is to maximize it being in the hands of our friends and allies and minimize it being in the hands of the enemies. And it's a job we work on every day, and over time it's just going to all change. Mr. Shays. You have this kind of--giving me this impression it's kind of like the finger in the dike. Is it that bad? Mr. Maggi. Well, it's not a finger in the dike. There's a whole load of people working on this; but over time, technology--earlier today you mentioned is this a 1938 Ford or a 2004 Ford. Well, colloquially, if I get hit by either one of them and get run over, I'm in trouble. So---- Mr. Shays. I hear you. I said I would ask a question--Mr. Burton's question, but it was really--I just want the record to note he asked what is being done to limit the proliferation of cruise. And you were asked, given that we have the multilateral agreements and we have the export controls and what else, and I think that question was pretty much answered. So I just want the record to show that it was answered. Is there anything that any of you would like to put on the record before we adjourn this hearing? Mr. Turner. If not, thank you, Mr. Chairman. We'll be adjourned. [Whereupon, at 4:19 p.m., the subcommittee was adjourned.] <all>