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A congressional investigation continues into whether the Clinton administration let a U.S. company do business in China in return for contributions to the President's re-election campaign. After a background report, Elizabeth Farnsworth leads a discussion.

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JIM LEHRER: Kwame Holman beings our China story.

KWAME HOLMAN: A handful of congressional committees is investigating whether the Clinton administration allowed a U.S. company to do business with China in return for campaign contributions to the Democratic Party. The committees also want to know whether U.S. companies illegally shared missile technology with the Chinese. In 1996, a satellite built by Loral Communications and Hughes Electronics was launched atop a Chinese rocket. It exploded shortly after takeoff. After the accident, Loral faxed the Chinese a report about what may have gone wrong with their rocket. Republicans say that information may have helped China's military improve its ballistic missile capability.

Republicans also point to an earlier failed launch of a Hughes satellite aboard Chinese rocket. In that case too the American companies shared a post crash report with the Chinese in violation of U.S. export procedure. Beginning in the Bush administration U.S. government policy encouraged American satellite makers to pay Chinese companies to launch the satellites into orbit. However, strict controls on American companies' sharing of technology with China have been in place since the 1989 Tiananmen Square uprising.

Earlier this year Loral Communications was granted a waiver for another satellite launch on a Chinese rocket. Republicans question whether Loral got that waiver because its chairman, Bernard Schwartz, was the largest individual contributor to the Democratic Party during the 1996 election. Schwartz denies there was any connection. But last week Senate Majority Leader Trent Lott launched into a point by point litany of China connection charges against the Clinton administration.

SEN. TRENT LOTT, Majority Leader: First, the Clinton administration's export controls of satellites are totally inadequate. They have not protected sensitive U.S. technology. NASA's fear and concerns are regularly downplayed and even ignored. Second, in violation of stated U.S. policy, sensitive technology related to satellite exports has been transferred to China. We know that is the case.

Third, China has received military benefit from U.S. satellite exports. Every day there continues to be additional information that comes out in this area. In fact, in today's, Washington Times there's a new article that says U.S. technology builds bridge for China missile. Fourth, the administration has ignored overwhelming information regarding Chinese proliferation and has embarked on a de facto policy designed to protect c and U.S. satellite companies from sanctions under U.S. proliferation law.

KWAME HOLMAN: At the White House Spokesman Mike McCurry dismissed Lott's charges.

MIKE McCURRY, White House Spokesman: Senator Lott today tried to conduct a lot of dots that frankly don't commit. And our judgment here is that that is not a serious statement by a serious person. It was a political argument made by a politician for political benefit.

We've addressed these issues and made it quite clear that if the license waivers granted by the Clinton administration pursuant to a policy developed by President Reagan and first implemented by President Bush have been consistent with U.S. interests and have been consistent with our desire to be competitive in the global satellite and technology market. And they have now had, I think, something like 18 hearings on the Hill. They've got more scheduled. There'd be administration witnesses from Commerce, from Defense, from the intelligence community, from the State Department, who have testified in excruciating detail about this matter, and made it quite clear that what this policy is and what it is not.

KWAME HOLMAN: Since Lott's charges a week ago, the administration turned over 6,000 pages of documents to Congress. But a spokesman for Lott says that's a long way from fulfilling the demands of investigators.

JIM LEHRER: And to Elizabeth Farnsworth in San Francisco.

ELIZABETH FARNSWORTH: Now, how all this looks to the chairman and vice chairman of the Senate Select Committee on Intelligence, which is playing a lead role in the investigations: Republican Senator Richard Shelby of Alabama and Democratic Senator Bob Kerrey of Nebraska. Senator Shelby, do you-the charges that we just heard from Sen. Lott reflect what your committee is finding?

SEN. RICHARD SHELBY, Chairman, Select Committee on Intelligence: Well, that might be a matter of opinion. I have said last week after Sen. Lott's statements that I, as the committee chairman and I think Sen. Kerrey is vice chairman, basically reiterated the fact that we're not going to make a conclusion until we've finished our inquiry, but I believe myself that a lot of the evidence support what Sen. Lott has said, but it's early.

We've only had, I believe, six meetings, six scheduled committee meetings. We have a number of them scheduled in the future. At the end of the day I don't know where we'll be. A lot of this is very troubling to me. Was it bad policy? Was it bad judgment? I think it's too early to make even preliminary judgment on it, but people do every day, and I have some reservations and some troubling thoughts on it, but it's just too early for us, I believe, to come out on it.

ELIZABETH FARNSWORTH: Sen. Kerrey, what was your response to the Majority Leader's remarks?

SEN. BOB KERREY, Chairman, Select Committee on Intelligence: Well, I thought he endangered national security as a consequence of decreasing the chances that Sen. Shelby and I through our committee will be able to produce a bipartisan report in the tradition of this committee. This committee has never been partisan. Going back to Barry Goldwater, it has been a committee that's evaluated the nation's security and kept the nation's security foremost in our sights. And in this case there is a national security question having to do with the decision to allow American satellites to be launched on Chinese missiles.

It has been a process that's been altered over the years, and we're taking a hard look both at the decision to allow this to happen and the process and the alteration of that process, and the question is: Was national security endangered? And can we make some recommendations to improve that process? And, secondly, did the Chinese effort to influence U.S. elections have an effect on national security? And I think this committee, if it's allowed to do its work in a bipartisan fashion, will produce a report that will enable us to increase national security.

ELIZABETH FARNSWORTH: Sen. Shelby, do you agree with that, that the remarks may have made it more difficult for your committee to do what it has to do?

SEN. RICHARD SHELBY: Well, I'm not going to criticize my leader. You know, I'm a good friend, and I support him. And I believe that what he said he had a right to say. I don't believe he endangered national security, but I do, like Sen. Kerrey, want to carry on the bipartisan nature of our inquiry and we're going to have to continue to work together to do that, and I believe we will at the end of the day.

ELIZABETH FARNSWORTH: And, Sen. Shelby, will the Senate delay confirmation of nominees from some of the agencies that Sen. Lott mentioned, which are not cooperating in the investigation, according to Sen. Lott? He mentioned Department of State, Defense, Commerce, Justice, White House, and some others.

SEN. RICHARD SHELBY: Well, Sen. Lott is the majority leader, and he's already spoken on that, but as far as the Intelligence Committee people that come before this committee, we have had hearings on their nominations, we've worked together, and we tried to move them. We moved some recently. I think we ought to move people on the merits.

SEN. BOB KERREY: And understand that, you know, in this entire process, I mean, there was substantial letters and pressure from Congress to transfer the authority from State Department to Commerce. Governor Pete Wilson of California sent a letter urging the administration to make this transfer over to Commerce.

A bipartisan group of members of Congress did the same. I mean, there was a lot of pressure coming from Congress to make this change. And the question is: Did the change and to the process of monitoring these satellite launches and did the original decision to allow satellites to be launched period on Chinese missiles increase their military capability and, as a consequence, decrease American security?

SEN. RICHARD SHELBY: I think during this inquiry we're going to find out if anybody in the National Security Council, anybody at the State Department-when I say anybody I use it loosely-really spoke up on national security as they spoke up for Commerce in general-we're all for commerce, and I think it's important, but we should never forget the national security interests of the American people.

ELIZABETH FARNSWORTH: Is that your main concern at this point, Sen. Shelby, that commercial interests were placed before national security interests?

SEN. RICHARD SHELBY: That is a troubling thought of mine. It's-whether it's backed up on all the facts we don't know yet, but it's very troubling.

SEN. BOB KERREY: Well, I understand this thing began with the Challenger disaster, and the United States at that point in 1988 had only the capacity to launch military satellites with domestic launch vehicles. And so what President Reagan decided in 1988 was to allow U.S. corporations to launch on a foreign satellite launch vehicle.

And what we have today before us, by the way, is the need to launch between sixteen hundred and two thousand commercial satellites between now and 2008. Those satellites have been tremendous value added to U.S. national security, as well as creating jobs for this country. So it's not as clear cut an issue as it might appear on the surface, and I think what this committee could do, if we are allowed to stay in a bipartisan mode, as we've been for years, what this committee can do is make some recommendations that enable the process to be improved so as to keep Americas safe.

ELIZABETH FARNSWORTH: Sen. Shelby--

SEN. RICHARD SHELBY: If Sen. Kerrey and I have our way, we're going to work together. We've worked together for-this is the second year on the committee-four years together on the Intelligence Committee-but we've worked on other committees, and if we can have our way, that is, and work together, I think before the end of the day will come up with a bipartisan report.

ELIZABETH FARNSWORTH: And, Sen. Shelby, what would you say to Americans who have been watching this and kind of want an update on where the investigations are right now? Is the conclusion that Sen. Lott gave are perhaps a bit early at least for your committee? Where would you say your investigation is at this point?

SEN. RICHARD SHELBY: Well, I'd say we're at the halfway point at best, but we'd like to pursue it. A lot of it will depend on information that we receive in our committee. You mentioned earlier all the documents that the White House released last week. Our committee is working on that. We should know something and be able to move when we get back in September.

ELIZABETH FARNSWORTH: And you have said you've expressed your concerns in remarks before the committee. You said, for example, the process is ad hoc and hasn't been--the monitoring process hasn't been adequate to prevent technology transfers. Is that the kind of thing that you're most concerned about, or you're very concerned about now?

SEN. RICHARD SHELBY: Absolutely. I've given you my opinions, and I'm sure other people share it. But I would not give a judgment as to what we would recommend. Sen. Kerrey and I talked privately about this but at the end of the day if we can get a report-and we hope we can-maybe we'll make some recommendations that will make this process work a lot better, more efficiently, in keeping first of all security and a balance of national security and commerce together.

ELIZABETH FARNSWORTH: Okay. I'm going to come back to the recommendations but Sen. Kerrey, what would you say to Americans who've been watching this and are very interested in where you are right now in the investigation?

SEN. BOB KERREY: Well, I think we're making progress. We're coming up with a report that will enable us to improve national security. But Americans ought to ask themselves the question: Are we less secure today than what we were in 1988, relative to China? We've learned a great deal from the Chinese. There's no question in my judgment the Chinese have gotten better at launching our satellites. We want them to get better. These satellites can cost $200 million a copy, and they're extremely important all by themselves for national security. It's not so easy to figure this thing out. If American businesses are not able to launch these communications satellites, it's not just commercial interests that suffer, it's also military interests that suffer as well.

ELIZABETH FARNSWORTH: Sen. Shelby, what are you thinking about in the way of changes? For example, a monitor for every license issued?

SEN. RICHARD SHELBY: I'm not sure yet. I think that we ought to wait till we finish our inquiry, but I believe-as I think you used the phrase that I used earlier-that I think it's an ad hoc system. I don't like some of the changes, but I think what we need to do on this committee working together is to make some positive recommendations to how they balance between national security and commerce. We're all interested in commerce. We're interested in jobs.

There's a need to launch satellites, Sen. Kerrey said. Why? Because we don't have the capacity here yet. I'd like to see us do it in America and do it all here, but we'll never be able to do it all. But when this inquiry is over, if we can make some positive recommendations-and I wouldn't telegraph 'em now-that would improve the process and take care of national security at the same time balance it with commerce, we will have done our work.

SEN. BOB KERREY: And the other thing is the Americans need to understand is that from 1988 to 1998 there's been a substantial change in the number of satellites that need to be launched. We have iridium; we have teledesics; you know, we were launching fifteen/twenty satellites a year in 1988. You know, that's gone up by a factor of ten or so. We have tremendous new demand.

ELIZABETH FARNSWORTH: Just briefly-

SEN. BOB KERREY: If you want to launch a satellite today, takes you three years to get a launch so-

ELIZABETH FARNSWORTH: And just briefly, Sen. Kerrey, do you want to telegraph any of the changes you think should be made?

SEN. BOB KERREY: No, I do not. I think it's inappropriate for me to be telegraphing any changes. Otherwise, you know, why would the Intelligence Committee take this thing on? No, I think we need to take it one step at a time and try to produce a report as we have done for the last 25 years or so, produce a report that people can trust.

ELIZABETH FARNSWORTH: Sen. Shelby, Sen. Kerrey, thank you.

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