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| SPIES AMONG US | |
 June 9, 1999 
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The Los Alamos case exposed major weaknesses in the protection of U.S. military and technology secrets against Chinese espionage. Intelligence experts provide their perspectives on Los Alamos and examine the problems facing current national intelligence operations.
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KWAME HOLMAN: The Cox Report -- released two weeks ago --
laid out a detailed case of how China acquired US nuclear technology.
 Today,
the House of Representatives debated more than two dozen of the report's
recommendations on how better to protect such sensitive information. The
report's authors, California Republican Christopher Cox and Washington
state Democrat Norm Dicks, offered legislation that would establish counterintelligence
programs at the Department of Energy; authorize the defense department
to monitor all overseas launches of US satellites; and place a moratorium
on foreign visitors to US nuclear laboratories until adequate security
measures are implemented. |
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| Tightening up on security. | ||||||||||||||||||||
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KWAME HOLMAN: The recommendations received unanimous support from the House.
KWAME HOLMAN: Meanwhile, Energy Secretary Bill Richardson told the Senate Select Intelligence Committee he already has begun implementing many new security procedures but warned against a Republican proposal he said would lead to greater military control of nuclear technology.
KWAME HOLMAN: Richardson says his plan for enhanced nuclear security already is 85 percent implemented, and should be completed by the end of the summer. |
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| Several levels of spying. | ||||||||||||||||||||
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JIM LEHRER: And to Margaret Warner. MARGARET WARNER: For perspective on how China was able to carry out the extensive spying described in the Cox Report, we turn to three experts in espionage. James Lilley was Assistant Secretary of Defense in the Bush administration, and, before that, US Ambassador to China. In the 1970's, he was the CIA's top China analyst. He is now a resident fellow at the American Enterprise Institute. Vincent Cannistraro worked in intelligence for 27 years, both as a CIA agent abroad and at various posts in Washington. He was director for intelligence programs at the National Security Council during the Reagan administration. He is now an international security consultant. And Paul Moore was the FBI's chief analyst for Chinese intelligence for more than 20 years. He retired last year, and is now a security consultant specializing in China.
JAMES LILLEY, Former US Ambassador, China: Yes. I think it was probably larger than we thought. But we were aware of this effort for years. We knew the levels on which the Chinese operated, we knew they had the classical penetration agent. We ran into this in Bangkok where we had the men trained in SW. MARGARET WARNER: You've got to explain these terms. JAMES LILLEY: Secret writing, surveillance, all these things. This
was the 1960's. We came across the Larry Wutai Chin case in 1985, more
or less a classical operation, handled outside the country, penetrated
the CIA. And then we had a case, numerous cases of people stealing technology,
MARGARET WARNER: So is it different from the way the Soviet spied, say, in the Cold War era? VINCENT CANNISTRARO, Former Intelligence Official: Well, to a certain degree it is. The Soviets had a tremendous proficiency in classic espionage operations. MARGARET WARNER: Meaning what?
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| Espionage, Chinese-style. | ||||||||||||||||||||
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PAUL MOORE, Former FBI Official: Well, in a nutshell, China has a different philosophy of intelligence; they use different strategies, different tactics to keep score in a different way. Unfortunately for us, we have a philosophy of counterintelligence, which we've designed to defeat the Soviet model. So in order to confront the Chinese and beat them, we actually have to unlearn some of the things that we learned against the Soviets, and we have to unteach people. MARGARET WARNER: But, go back, because we'll get to possible solutions in a minute, but go back to how it's different and just build on what Mr. Cannistraro said. PAUL MOORE: Okay. China does not believe in paying for its intelligence, if it can possibly avoid doing so, certainly not documents for dollars the way you would get in a classic Soviet case. So this creates immediate counterintelligence problems because you don't have a large bank account suddenly appearing explanation that you can link to somebody and go and question him about. China believes in focusing as much as of its intelligence collection as it possibly can on Chinese-Americans in the United States, even though Chinese-Americans are only 1 percent of the US population. So, it's woefully turning its back as much as it possibly can on 99 percent of the people in order to focus on one percent of the people. This makes it very difficult for a counterintelligence services to get in and also get at the Chinese because counterintelligence resources have also to be focused where the Chinese are focused. China believes in meeting its agents in China and having people deliver the information to them in China, in person orally, if they possibly can, not taking documents out. MARGARET WARNER: You mean, because they're only looking for a tiny little bit of information?
MARGARET WARNER: And is it fair to say that sometimes people who are giving this information, say business people or scientists or research people, they don't think of themselves as spies? JAMES LILLEY: No, they don't. I think what you have, though, is a much broader approach. What they do is they work, let's say, on loosening up your technology transfer capability. They find the vulnerabilities in your computers and they get right to that vulnerability and downgrade the high computer to get the low-grade computer. But then you've got this sort of bizarre business of Johnny Chung. He was the chief of Chinese military intelligence acting like a keystone cop. It was something out of Our Man in Havana. MARGARET WARNER: You're talking about the man -
MARGARET WARNER: So you're saying it's typical or not typical? JAMES LILLEY: No. I don't think it's typical. It's either a diversion or it's a bunch of ham-handed amateurs getting into the act. And it sort of threw us all down a different track while they were actually unloading the computers at Los Alamos or they're doing something else. It's a game -- or try to turn the Americans against the Chinese-American community to get us to begin to work against them and target them -- racial profile sort of thing. And we've got to be very careful not to fall into that trap. They are targeting them. But they are our good citizens and we have to treat them as such. |
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Unfair racial targeting? |
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 MARGARET
WARNER: And Chinese-Americans who are working in some of these labs are
already complaining, are they not, they are being unfairly put under suspicion?
I mean, how do you avoid that and yet meet the sort of targeting that
the Chinese government is apparently doing?
VINCENT CANNISTRARO: Clearly there is a problem of racial profiling and there is a sort of undercurrent in the Cox Report that kind of states that maybe the Chinese couldn't be as advanced as they are without stealing our technology and that's probably unfortunate. The fact is that the Chinese are successful to the degree that we are unsuccessful in counterintelligence, in protecting our secrets, the secrets that we need to protect. Laxity at the national labs was woeful over the past 15 years. It's only until Secretary Richardson got there that substantive steps were taken to tighten it up. That's our problem, rather than the Chinese problem. The Chinese do tend to focus on ethnic Chinese, because they tend to trust them more. They have figure that that's the same culture and it's easier to work with them. And as, as Paul said, they don't pay. They don't do the dollars -- the documents for dollars. But the Chinese are efficient in the sense that they have a lot more human resources to deploy against an individual target. So it doesn't make any difference if they are inefficient in a particular instance. Over the broad aggregate of their effort, they get what they need. MARGARET WARNER: Because they vacuum up so much? VINCENT CANNISTRARO: They vacuum up so much.
MARGARET WARNER: So as one of the -- would you, for instance, restrict
scientific and cultural exchanges? JAMES LILLEY: I think that's a bit unfortunate. And I think that -- at least they put a caveat on it. It would stop when they got the right security measures in place. And I think Secretary Richardson's going to do that. But let me give you one example, Margaret, of how they work. For instance, they've got four objectives. They want to develop a miniaturized missile that they can have multi-reentry capability with, they want to make it solid fuel so it takes -- can be fueled very quickly. They want it more accurate and they want it mobile. They can do the mobile business themselves. They can get the solid fuel from Russians. But they need the accuracy from us. And they get that through tech transfer manipulation, Loral-Hughes, that sort of thing. MARGARET WARNER: The satellite companies? JAMES LILLEY: That's right. And then with miniaturization, they have to get it through our Los Alamos lab through various means. So they use different techniques to get this. And they come up with a package and they are going to deploy a DF-31, Dong Fong-31, their intermediate range ballistic missile miniaturized, solid fuel by 2002. They'll probably test it this year. So they've succeeded by a variety of means in achieving a military objective. MARGARET WARNER: Briefly your thoughts on how to combat this.
MARGARET WARNER: All right. Well, thank you all three very much. |
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REP.
NORM DICKS, (D-WA): These measures are tough, but appropriate, and they
give Energy Secretary Richardson the authority he needs to solve the
problem. That should be our goal today. Let's stay away from the blame
game. 
REP.
HEATHER WILSON, (R-NM): This is a serious effort by serious people who
spent considerable time and thought on this problem, and I thank them
for their efforts to make our laboratories safe from our nation's adversaries.
BILL
RICHARDSON, Secretary of Energy: To demonstrate the dangers inherent
in changing our system, we need not only look at the Russian nuclear
weapons program, where nuclear weapons design and development is under
military control. Following such failed models is plainly not in our
national security interest. I strongly agree with the 1985 panel that
the disadvantages of such a transfer greatly offset any advantages.
Ultimately, this amendment is exactly the wrong tact to take in the
wake of the Cox Committee report. 
Welcome,
gentlemen. Mr. Lilley, were you surprised at the depth and the breadth
of the sort of Chinese spying effort that was outlined in the Cox Report?
which
the FBI and Customs handled very well. But there were so many of them
it was hard to get at them. But you have all sorts of levels of Chinese
operations. You have the willing cooperator; you have the co-opted merchant;
you have the MSS, Minister State Security officer. We caught them in
a number of technology-stealing operations. And these people either
have been pushed out of the country, or some of them are in jail. And
in one sting operation, which was pulled on the Chinese, their military
attaché was caught trying to give money to buy National Security
Agency documents; this was in 1987. So, we have very different levels
of how they work.
VINCENT
CANNISTRARO: That meant they looked for someone with vulnerabilities
to recruit. And they would exploit him; they would pay him money. Money
would be the water that would hold that operation together for them
-- not necessarily ideological reasons, although that was certainly
true say in the 40's and the 50's but not so much in the 80's and the
90's. The Chinese come at you in a much different way, a much more diffuse
way, much more organized way. And they appeal on an ethnicity basis
to a great extent. The Chinese are very content to work on co-opting
people, enticing them, using the carrots of business, using the carrot
of shared ethnicity. That is the -- the process I would call it more
seduction as a recruitment approach than the Soviets, who used espionage
more as a blunt instrument. 
MARGARET
WARNER: How would you describe the difference? 
PAUL
MOORE: It wants to create -- it wants to collect -- the model that China
has is to collect information - a little bit of information from a lot
of people. The model that the Soviets had was to collect a lot of information
from a small number of people. One of the great strengths from the counterintelligence
sense of Chinese intelligence operations is that they are inefficient.
It's very -- it's strange to think so but it's true. China asks the
same question of many people. It spends too much effort trying to get
the same amount of information, often a teeny, tiny bit of information.
The problem that counterintelligence has is how do you confront an intelligence
adversary that's acting in an inefficient manner, while yourself trying
to act in an efficient way?
JAMES
LILLEY: Johnny Chung, who they gave $300,000, gives it to -- the chief
of intelligence gives it to him through some loose cutout and sort of
whispers "My pseudonym is Shiu, don't call me anything but Shiu"
and the girl next to him tells his real name is Liu Chao-Ying, and this
sort of weirdo keystone cops thing.
PAUL
MOORE: That's right. See, they're inefficient but they're not ineffective
because they have a mass market approach to intelligence collection.
They target obsessively on Chinese-Americans but they're only occasionally
successful in winning their cooperation. But they get an aggregate amount
of assistance from them that they're quite satisfied with because like
mass marketers, they flood the whole zip code and the whole telephone
area code and they try to contact all the Chinese, ethnic Chinese that
they know, and get them to help in the certainty that at least some
of them will help them sometime, somewhere. And so they end up with
this product that is really quite effective, even though they're spending
a great deal of effort to do it.
Would
you restrict the ability -- you saw Congress today passed limitations
on foreign visitors to these research labs -- 
VINCENT
CANNISTRARO: I think that the security problem really is something that
we have to deal with on an educational basis; as well as security procedures
at the national labs, we have to educate businessmen that deal with
the Chinese, because we're not just talking about the theft of nuclear
technology; we're talking about economic espionage as well, which is
designed to make the Chinese economy more competitive and to short-circuit
the development process in technology. And we have a big educational
process to undertake with the American business community.