Congressional Research Service
The Library of Congress
TECHNOLOGY TRANSFER AND NATIONAL SECURITY ISSUES
The transfer of technology from the West to the East has been an
issue of serious debate since the introduction of detente in the 1970s.
Recent disclosures by the Central Intelligence Agency (CIA) indicate
that the Soviet and East European intelligence services have,been so
successful in acquiring U.S. technology that there now exists a significant threat to the national security of the United States. The CIA
speculates that the Soviets and East Europeans will increase their
efforts for legal and illegal acquisition of U.S. technology in several
systems designs, concepts, hardware and software
complete industrial processes and equipment
for Soviet military requirementa
optical, pulsed power and other laser-related components
for laser weapons
air defense radars for missile systems
The Reagan Administration has proposed a package of countermeasures
to curtail the flow of military-related technology. This includes:
strengthening U.S. export controls, increasing efforts against foreign
industrial espionage, expanding the list of "military critical technologies" which should not be exported, and influencing the academic
community to reduce Soviet access to U.S. research through the free
exchange of information.
This Info Pack provides unclassified, background information and
analysis of the politico-military impact of technology transfers on the
United States and the NATO allies. It contains proposals by the Reagan
Administration to redress the problems posed to the national security
by the loss of U.S. technology to the Soviet Union.
Soviet Acquisition of
Western ~ e c h n o l o ~ ~
United S t a t e s Central I n t e l l i g e n c e Agency
Soviet Acquisition of Western Technology:
- - A National-Level Program
Soviet Mechanisms for Acquiring Western Technology
Soviet Acquisitions and Benefits
Outlmk for the 1989s
Projected Soviet Technological Needs and Aquisition Targets
Through the 1980s
Reprinted by the Library of Congress, Congressional Research Service,
Soviet Acquisition of
The United States and its Allies traditionally have
relied on the technological superiority of their weag
ons to preserve a credible counterforce to the quantitative superiority of the Wanaw Pact. But that
technical superiority is eroding as the Soviet Union
and its Allies introduce more and more sophisticated
weaponry-weapons that all too often are manufactured with the direct help of Western technology.'
Stopping the Soviets' extensive aquisition of military-related Western technology-in ways that,are
both effective and appropriate in our open society-is
one of the most complex and urgent issues facing the
Free World today.
This program accords top priority to the military and
military-related industry, and major attention is also
given to the civilian sectors of Soviet industry that
support military production.
The Soviets and their Wanaw P a a allies have o b
tained vast amounts of militarily significant Western
technology and quipment through legaI and illegal
means. They have succeeded in aquiring the most
advanced Western technology by using, in part, their
scientific and technological agreements with the West
to facilitate access to the new technologies that are
emerging from the Free World's applied scientific
research efforts; by spending their scarce hard currency to illegally purchase controlled equipment, as well
as to legally purchase uncontrolled advanctd Western
This report describes the Soviet program to aquire
technologies having military-industrial applications;
US and Western technology, the aquisition mechanisms used, the spectrum of Wcstern aquisitions that and by tasking their intelligence services to aquire
have contributed to Soviet military might, the project- illegally those US and Western technologies that are
ed Soviet priority needs for Western technology, and classified and export controlled.
the problems of effectively stemming the transfer of
Western technology that could someday find applica- The Soviets have b u n very successful in aquiring
Western technology by blending acquisitions legally
tion in weapons used to threaten the West.
and illegally acquired by different government organizations. The Soviet intelligence services-the Soviet
Soviet Acquisition of Western Technology:
Committee for State Security (KGB) and the Chief
A National-Level Program
~ Soviet Union has devoted Intelligence Directorate of the Soviet Gcncral Staff
Since at least the 1 9 3 0 ~the
the primary responsibility for collecting
vast amounts of its financial and manpower resources (GRU)-have
Western classified, export-controlled, and proprietary
to the aquisition of Western technology that would
enhance its military power and improve the efficiency technology, using both clandtstine and oven collecof its military manufacturing technology. Today this tion methods. They in turn make extensive use of
Soviet effort is massive, well planned, and well man- many of the East European Intelligence Services (see
aged-a national-level program approved at the high- inset, p. 2); for their efforts in aquiring Western
technology, these countries are paid in part with
est party and governmental levels.
Soviet military quipment and weapons.
' While there are numerous intcrpreklions of "technology" lor
weapons. it is defintd in this rcport as the application olrcientDc
knowledge, technical information. know-how, critical rnateriars,
keystone manufacturing and 1 s t equipment, and end produrn .
which'are arcntial to the restarch and development as well as the
wries manufaaurc of modem highqualily weapons and military
cquipmcnl. Western technology is defined as that t&nobgy
'dmlopcd by the Free World.
Clandestine acquisition of the West's most advanctd
military-related quiprnent and know-how by the
KGB and GRU is a major and growing problem.
They have major responsibilities for both legal and
illegal acquisitions and purchases; they work closely
with the KGB and GRU in arranging trade aiverIn the late 1970s aformer East European intelligence sions. East European trade companies assist them in
oflcer revealed organizational and iargeting details clandestine and illegal acquisition operations.
related to Soviet-directed arquisirions 4/ Western
Official Sovid and East European science and ttchtechnology by East European intelligence sentices,
nology (S&T) organizations also play a major role in
parricularly military-indunrial many/acturingboth
open and clandestine acquisition of Western
related ~echnologiesihar were given the highest priortechnology.
Tbe Soviet State Committee for Scicna
ity for collection by ar least one East European
(GKNI) is the key player in amngand
intelligence service. Many technologies were acquired
s c i t n a and *echnolrhrough dummy firms established in Western Europe
ogy apttcments to facilitate a-s
to and the acquisithat were succesdul in securing some d r h e most
advanced iechnologies in the West, including comincluding those just emerging from W s t m univeniputer, microelectronic, nuclear, and chemical
ties, laboratories, and high-technology firms. It is the
G m that oversets tbe aUocation of scarce Soviet
hard currency for the legal purchase by various Soviet
In microelectronics,for example, many LISfirms
of selected Western ~ o l o g for
were targeted through their ut7iliates in Western
Europe; scientists, technicians, and commercial r e p
open or legal
resentorives also were succesdully recruited ro promeans, it tasks Soviet intelligence to clandestinely
vide irJotmation during their trips to Europe. Alaquire
though most d r h e milirary and defense-industrial
East European Intelligence Services Arquire
Technologiesfor rhe Soviet Union
idormation acquired by East European ituelligence
services wen1 to the Soviets, much d i l was used by
r he East Europeans themselves to bc&t their military and civilian indunries. The computer, micre
electronic, and photographic areas were priority targets. The East European countries bendfiled considerably from microelectronic acquisitions, and
could nor have achieved the present level of develop
men1 in their computer indusrry withour illegal
acquisitions of Western technology.
It is the well-organized and w&coordinated use of all
these organizations that has made the Soviet program
to acquire Western technology so succssful. As a
result, the Soviets have acquired militarily significant
technologies and m'ticaIly important industrial Western technologies that have benefited every major
Soviet industry engaged in the research, dcveiopment,
and production of weapon systems.
Soviet MechPnisms for Acquiring Western Technology
Soviet aquisition mechanisms include: legal means
through open literature, through legal trade channtis,
These intelligence organizations have b u n so success- and .through student scientific and ttthnoiogical exful at acquiring Western technology that the manchanges and conferences; illegal means through trade
power levels they allocate to this effort have increased channels that evade US and Western (is. CoCom)'
significantly since the 1970s to the point where there export controls, including aquisitions by their intelliare now several.thousand technology c~llectionoffigence services through recruited a p t s and industrial
cers at work. These personnel, under various covers
'~ho-~oordinati'ngCommittee ( C o h ) was established in 1949 to
ranging from diplomats to journalists to trade offiserve as the forum for Watcrn efforts to dmlop a system of
cials, are assigned throughout the world.
strategic txpon amtrois. It is compostd af the Unitcd S u ~ athe
United Kingdom, Turkey, Portugal, Norway. the Nclherhndr,
Luxcmbou~g.Japan. luly. G=,
France, the Federal Republic of
Soviet foreign tjade organizations, or enterprises,
although quasi-independent entities, are partially sub- Gcnruny, Denmark Canada. and Belgium.
ordinated to the Ministry of Foreign Trade, and their
activities are closely coordinated by this Ministry.
espionage. While a large volume of technology is
acquired by nonintelligence personnel, the overwhelming majority of what the United States considers to be
militarily significant technology acquired by and for
the Soviets was obtained by the Soviet intelligence
services and their surrogates among the East European intelligence services. However, legal aquisitions
by other Soviet organizations are important since it is
often the combination of legally and illegally aquired
technologies that gives the Soviets the complete military or industrial capability they need.
microelectronics is the critical basis for the present
wide-ranging enhancements of Soviet military systems and for their continuing sop;histication.
Acquisitions through illegal trade channels often have
both industrial and military applications, and tbus are
important in the near term. Illegal aquisitions of
technology fall into two general categories, botb of
which are extremely difficult to detect and monitor.
One is the diversion of controlled technology from
legitimate trade channels to proscribed destinations.
This is done through US and foreign firms that are
Because of the priority accorded to the military over willing to engage in profitable impropriety; through
the civilian sectors of the Soviet economy, Western
agents-in-place in US or foreign firms or foreign
dual-use technology-ix., technology with both mili- subsidiaries of US firms; through Soviet- and East
tary and civilian applications-almost always finds its Europcan-owned firms locally chartered in tbe
way first into military industries, and subsequently
West; and through foreign purchasing agents (including arms dealers). For instance, to evade the US
into the civilian sectors of industries that support
embargo on microelectronic technology exports to the
military production. Thus, Soviet assurances that
Soviet Union, the Soviets and their surrogates have
legally purchased dual-use technology will k used
solely for civilian applications can seldom be accepted set up dummy corporations in the West that purchase
sophisticated microclcctronics manufacturing cqdp
at face value.
ment. This quipment is then shipped and reshipped,
sometimes with the knowledge of individuals in the
Legal aquisitions generally have their greatest imcompanies, to disguise its ultimate destination-tbe
pact on the Soviets' broad industrial base, and thus
Soviet Union or Eastern Europe. Botb the Soviet and
affect military technology on a relatively long-term
Warsaw Pact intelligence services are in the mainbasis. The Soviet Kama Truck Plant, for example,
was built over some seven yeais with massive imports stream of this illegal technology trade flow. The other
type of diversion is an in-place diversion, in which
of more than f 1.5 billion worth of US and West
European automotive production quipment and tech- legally acquired technology and equipment-in the
computer area, for example--are put to military end
nology. Large numbers of military-specification
trucks produced there in 198 1 are now being used by uses not authorized in export license applications,
Soviet forces in Afghanistan and by Soviet military
units in Eastern.Europc opposite NATO forces. Simi- The aquisitions that most directly a f f m Soviet
military development have come from intelligence
larly, large Soviet purchases of printed circuit board
technology and numerically controlled machine tools collection and related illegal trade diversions. Soviet
from the West already have benefited military manu- Bloc inte!ligence services have concentrated their
effort in the United States, Western Europe, and
Japan. These scrvices target defense contractors and
The Soviets give priority to those purchases that meet high-technology firms working on advanced technology (both classified and unclassified), foreign firms
the direct needs of the Soviet military-industrial
complex by paying for them in hard c~rrency.~Over and subsidiaries of US firms abroad, and international organizations with access to advanced and/or
the past 10 years, the Soviets legally and illegally
proprietary technology, including access to computer
purchased large quantities of Western high-technoldata base networks throughout the world.
ogy microelectronics quipment that has enabled
thtrri to build their own military microeltctronics
industry in a short time. This acquired capability in
Major Fields of Technology of Interest to
Soviet and East European Visitors to the United States
Lrvr and Optics
N u d a r Pbysics
CAD (Computer-Aidcd Design)
Image Processing Design
Radio Wave Propagation
Gas h e n
Both legal and illegal acquisitions of US and Western
technology and quipment are coordinated with information obtained through the complex network of
international governmental scientific and technical
agreements and exchanges that the USSR maintains
with the advanced industrial nations. These include
know-how, equipment, and computer data base collection activities of Soviet scientists and engineers who
participate in academic, commercial, and official
S&T exchanges. Visiting Soviet and East European
technical and student delegations to the United States
generally consist of expert scientists, many of whom
are connected with classified work in their home
countries. Such was the case with the Soviet scientist
who managed-to get assigned to fuel-air explosives
work. When he finished his US study programs, he
almost ccr&nly returned to the USSR to work on
related weapons. Other Soviet and East European
scientists have come to the United States to work in
N/C (Numcricaliy Controlled)Units
N / C Machine Tools
SAW (Surface Acoustic Wave) Devim
the aerohydrodynarnic, cryogenic, optic, laser, cornputtr, magnetic bubble computer memory, nuclear,
microelectronic, and structural and electronic rnateria1 areas. Given the military importancc of these fields
to the Soviet Unian, it appears likely that a high
percentage of these scientists will work on militaryrelated programs in these areas after they return
From the beginning, Soviet candidates in various
academic and scientific exchange programs have
nearly always proposed research activities involving
techpblogies in areas that have direct military applications and ill which the Soviets are technologicaliy
deficient. Table 1 provides a list of the key hightechnology fields that Soviet and East European
Over the past few years there has been an increased
use of Soviet- and East European.+wned firms locally
chartered in the United States and abroad to exploit
Western-controlled and military-related technology.
There are more than twenty Soviet- and East
European+wned firms in the United States, and near,
the end of the 1970s there were more than 300 similar'
firms in Western Europe. In addition to the United
States, heavy concentrations are in the United Kingdom, Sweden, the Netherlands, Italy, the Federal Republic of Germany, France, Canada, Belgium, and
Austria. These firms are avenues for Soviet aquisition of advanced Western technologies, as was shown
Thc Soviets correctly view the United States and
when the US engineer arrested in late 1981 was
several other Western countries as a continuing
charged with selling US secret documents to an East
source of important and openly available scientific
European intelligence officer employed by a Polishand technical information, which they take every
opportunity to obtain access to. Some of the unclassi- owned firm chartered in Illinois (see inset, p. 6).
Furthermore, firms chartered in the United States
fied documents so acquired are previously classified
materials which had been downgraded to unclassified can legally purchase controlled US technology and
through US procedures providing for automatic de- . study it without actually violating US export controls
classification after a stipulated period. When w l l a - unkss they attempt to export the equipment or related
technical data from the United States without a
ed on a massive scale and centrally processed by the
Soviets, this information becomes significant because license.
it is collectively used by Soviet weapons designers and
Soviet Acquisitions and Benefits
weapons countermcasure experts.
Today's recognition of the crucial role of Wtstern
technology in the development and production of
The Soviets also regularly attend high-technology
trade shows, and attempt to visit commercial firms in Soviet wcapon systems and related military quip
the West, particularly small and medium-sized firms ment is not unique. Soviet dependence on Western
that are active in developing new technologies. These technology was visible and clear-cut in the yean
immediately after World War 11, when tbe Soviets
apparent trade promotion efforts often mask Soviet
Western nuclear secrets leading to tbcir develop
attempts to acquire emerging Western technological
of a nuclear weapon capability, and copied a US
know-how before its military uses have been identified
in its entirety leading to production of their
and government security controls have been applied.
achieve major improvements in tbeir miliEmerging technologits are particukrly vulnerable to
tary capability quickly, they exploited captured scjenforeign collection efforts of this type.
tists and industrial plants and resorted to a combination of espionage, stealing, and copying Western
Soviet intelligence continues to place a high priority
on the collection of S&T information on genetic
engineering and futuristic weapons such as lasers and
Since that early period of near-complete reliance in
particle beam weapons. The Soviets have been s t e p
the 1 9 5 0 ~the Soviets' dependence on Western techping up their efforts to acquire new and emerging,
nology to devtlop their weapons has decreased. Nevtechnologies such as very-high-speed integrated-c6ertheless,
despite several decades of Soviet priorities
cuit (VHSIC) and very-large-scale integration (VLST)
science, technology, and weapon systems,
technology from Western universities and commercial
the Soviets, because of their inability to be innovative
laboraiories for both military and commercial
visitors come to the United States to study, research,
or discuss, many of which are on the US Militarily
Critical Technology Lisl today. In cach of the past
two years, more than a third of the 50 program
proposals offered under the Graduate Student/Young
Faculty Program of the International Research and
Exchanges Board (IREX) has been completely unacceptable in terms of prospective technology loss,
and many other programs needed to be modified or
have access constrained before the exchanges could be
US Radar Expert Passes Over 20 Significant Clussified Reports on Future US Weapon ~yiremsto Intelligence Agent
William H. Bell, a radar project engineer for a hightechnology US ddensefirm was recruited by an
intelligence officer who operated under cover as a vice
president d t h e Polish firm caNed Polamco. This
firm is a subsidiary of the Polish Government Corporation and is incorporated in Illinois and Delaware. It
began as an importer/exporter d machinery, parts
and tools and as a consultant tofirms exporting these
products to Poland. The recruitmenr began as a
simpleJriendship between neighbors with mutual
sporting interests, grew quickly to include theirfamilies, rhen to proving Bell's credentials by showing a
classified document to the agent, and then to passing
microfilm copies of classified reports at meeting
places in rhe US, Switzerland, and Ausrria. Mr. Bell
was in financial srraits and was easily iduenced by
the cash pr0flered-a total dSll0,OOO over a threeyear period. In all, over 20 highly classified reporls
on advanredfuture US weapon systems or their
components were passed to rhe Polish Intelligence
Service and probably evenrually ro the Soviet Intelligence Service.
Among rhe classified reports, those of prime importance to the West included: the F-I5 look-downshoor-down radar system, the quiet radar system for
the BI and Stealth bombers, an all-weather radar
system for tanks, an experimental radar system for
the US Navy, the Phoenix air-to-air missile, a ship
borne surveillance radar, the Patriot surjace-to-air
missile, a rowed-array submarine sonar system, a
new air-to-air missile, the improved HAWK surjaceto-air missile, and a NATO air-ddense system. The
idormation in rhese documents put in jeopardy existing weapons and advanced future weapon systems q f
the United ~ t a t e and
s its Allies. The acquisition d
mhis idormation will save rhe Polish and Soviet
Governments hundreds dmillions d dollars in R&D
d o r t s by permitting them to implement proven designs developed by the Unired States and by fielding
operarional counterpart systems in a much shorter
time period. Sp'ecifications on current and future US
weapon systems will emble rhem to develop ddensive
and effectively apply new technology to weapons
developments, still depend on Western technology and
quipment to develop and manufacture some of their
advanced weapon systems more quickly.
Today, Soviet military designers carefully choose the
Western designs, engineering approaches, and q u i p
ment most appropriate to their deficiencies and needs.
These needs are still substantial and pervade almost
every area of weapons technology and related manufacturing quipment. Table 2 lisu classes of Western
technology acquired by the Soviets and East Ebopcans and illustrates the wide range of Swiet military
technology needs. In the following paragraphs of this
section, Soviet Bloc acquisitions have been grouped
according to their likely applications: stratepic systems, aircraft systems, naval systems, and ~ c t i c a l
systems. Also cited are acquisitions in the microelectronic and computer areas that have broad application
to military and industrial programs. In certain of
these areas, notably the development of microeltctronics, the Soviets would have '=n incapable of
achieving their present technicai level without the
aquisition of Western technology. In other areas,
aquisitions have allowed the Soviets to reduce the
indigenous effort they would otherwise have had to
The Soviets' strategic weapons program has benefited
substantially from the aquisition of Western technology. The striking similarities between the US Minuteman silo and.the Soviet SS-13 silo very likely resulted
from aquisition of US documents and expedited
deployment of this, the first Soviet solid-propellant
ICBM.The Soviets' ballistic missile systems in particular have, over the riast decade, demonstrated
qualitative improvements that probably would not
have been achieved without Western acquisitions of
ballistic missile guidance and control technology. The
most striking example of this is the marked improvement in accuracy of the latest generation of Soviet
ICBMs-an improvement which, given the level of
rele~intSoviet technologies a d h d e ago, appears
almost .ceflahly to have been speeded by the acquisition of Western technology. Their improved accuracy
has been achieved through the exploitation and development of good-quality guidanct components-uch
Selected Soviet and East European Legal and Illegal Acquisitions
From the West Affecting Key Areas of Soviet Military Technology
Key Technology A m
Purchases and aquuitions of complete syslem designs. concepts, hardware and software, including a
wide variety of Western general purpose computers and minicomputm. for military applicatiom.
Complete industrial proccsra and semiconductor manufacturing equipment capabk of d n g all
Soviet military requirements, if aquisitions were combined.
Aquisitions of prowsing quipment and know-how.
Acquisitions of automated and precision manufacturing quipment for elcnronicr,matamls. a d oplial
and future laser weapons technology; aquisition of information on manufacturing technology r e h t d to
weapons. ammunition. and aircraft pans including turbine blades, cornputen. and electronic
components; aquisition of machine tools for cutting large g u n for ship propulsion systems.
Aquisitions of low-power, low-noise, high-~mitiYityreceivers.
Acquisitions of optical, pulsed p o w source, and other laser-related annponenrs, including s p c i r l
optical mirrors and mirror technology suitable for future laser -porn.
Acquisitions of marine and other navigation ruriven, advanced intrrirl-guidmcccomponents,including
miniature and hser gyros: acquisitions of missile guidancc s u b s t e m s ; acquisitions of precision
machinery for ball b r i n g production for missile and other applicatioar; acquisition of missile la n n g e
inunrmcatnlion s y s t e m and docvmmtation and precirm eimtfnodolina for collecting data critical to
portflight ballisti; missile analysis.
Purchases and acuuisitions of Western titanium alloys. welding quipment, and,funvca for producing
titanium plate of large size applicable to submarine construction.
Missile technology; some ground propulsion !ahnology (diesels, turbim. and muria): purchases and
squisitions of advanced jet engine fabrication technology and jet engine daipn informalion.
Acquisitions of underwater navigation and diration-finding equipment.
Acquisition of information on satellite technology, laser m n g c h d m , and u n d m r t a low-light-Id
television a m e m s and systems for remote operation.
Acquisitions and exploitations of air defense radars and antenna designs for m k i l c systems.
Guidance and Navigation
as gyroscopes and accelerometers. The quality of
these instruments, in turn, depends to a considerable
degree on the quality of the small, precision, highspeed bearings used.
er than would have be.; likely through indigenous
devciopment. The Soviets probably could have used
indigenous grinding machines and produced the required quaIity of bearings over a long period by
having an abnormally high rejection rate.
Through the 1950s and into the l96Os, the Soviet
precision bearing industry lagged significantly behind While some of the Soviet acquisition in the aircraft
area appears directed toward the development of
that of the West. However, through legal trade
puiciiases in the 1970s. tbe Soviet Union acquired US countermeasures against Western systems, the Soviets
appear to target data on Western aircraft primarily to
precision grinding machines for the produdion of
the technology. Furthermore, while the Sovismall, high-precision bearings. Similar grinding maets
acquired a large amount of hardware and
chines, having lower production-rate capabilities,
were available from several foreign countries. Only a data from planes downed or captured in Vietnam and
elsewhere, they continue to attempt to aquire the
few of these machines, either US or foreign, would
have been sufficient to supply Soviet missile designers most advanced technologies through both legal and
'illegal transactions with the West. Assimilation of
with all the quality bearings they neded. Thtse
p u r c h a s ~provided the Soviets with the capability to
manufacture precision bearings in large volume soon-
Western technology has been of great benefit to both
their military and commercial aircraft development
programs-to the extent that aircraft from certain
Soviet military design bureaus are to a significant
degree copies of aircraft of Western design. Soviet
military aircraft designers have "ordered" documents
on Western aircraft and gotten them within a few
months, including plans and drawings for the US
C-5A giant transport aircraft early in its development
cycle; these plans, although dated now, have contrib
uted to current Soviet development of a new strategic
military cargo plane. Designers were in particular
n d of data on US technological advances, but more
importantly, they needed information on aerospace
Soviet aircraft designers have been interested in US
military transports and wide-body jets and probably
have managed to accelerate the development programs for their IL-76 Candid and IL-86 transports.
The IL-86 looks much like the Boeing 747 and the
IL-76 resembles the C-141. Neither system is an
The IL-76 also is used by the Soviets as the platform
for their new AWACS (Airborne Warning And Control System), which is expected to be operational in
the mid-1980s. This system will provide the Soviets
with a major improvement in attacking low-flying
missiles and bombers. The Soviet AWACS is strikingly similar in many ways to the US AWACS, and is a
major improvement over their old AWACS.
The Soviets' acquisition effort in the naval systems
area reflects well the two major factors that motivate
their requirements: the aquisition of technology not
readily available to them-yet critical to their programs-and the acquisition of quipment which,
while producible in the Soviet Union, allows them to
divert resources'to more pressing naval programs. The
Soviets appear to have concentrated their acquisitions
in areas related to aircraft carriers, deep sea diving
capabilities, sensor systems for antisubmarine warfare
and navigation, and ship maintenance facilities. In the
maintenance a k a , two huge floating drydocks purchased from the West for civilian use by the Soviets
have beendiverted to military use. Drydocks are
critical for both routine and fast repair of ships
damaged in warfare. In 1978, when the Soviets took
possession of one of the drydocks, they diverted it to
the Pacific Naval Fieet. The other was sent to the
Northern Fleet in 1981.
These drydocks are so large that they can carry
several naval ships. More importantly, they are the
only drydock facilities in either of the two major
Soviet fleet artas--Northern or Pacific--capable of
servicing the new Kiev-class V/STOL aircraft sarriers. Soviet advanced submarines carrying balistic
missiles, Soviet Kiev aircraft camers, and Soviet
destroyers were among the first ships repair& In these
drydocks. It is important to note that the drydocks
themselves are so large that no Soviet shipyard would
have been capable of accommodating their construction without major facility modifications, associated
capital expenditures, and interruptions in present
weapons programs. n c i r importance will be even
more pronounced when the Soviets construct the stilllarger &rriers (for high-performance aircraft) projectcd for the 1990s. The Soviets even have acquired
Western aircraft carrier ca@pult equipment and documentation for this larger carrier; catapult technology, though relatively common in the West, is outside
the Soviet experience.
Within the past few years, the USSR also has sontracted for or purchased foreign-built oceanographic
survey ships quipped with some of the most modern
Western-manufactured quipment. In place of US
quipment that was embargoed, other Western equip
ment has been installed on the ships. This modernization of what is the world's largest oceanographic fleet
with Western technology will help support the development of Soviet weapon system programs and antisubmarine systems against the West.
Although the Soviets have a strong indigenous technology base that could suppsrt the development of
much of their tactical weapons systems, this does not
pregint them from maintaining an ambitious program
for acquiring and benefiting from Western technology
in this area. In some cases, their acquisitions satisfy
deficiencies in Soviet technology; smart weapons technology and electro-optical technology are examples of
Microelectronic Equipment and Technology
Legally and Illegally Acquired by tbe Soviet Bloc
Equipment or Technology
Procas Technology for
R o w Technoiogy for
Producing Circuit Marks
Equipment for Device
Assembly and T a t Equipment
The Soviets haw acquired hundreds of specific picas of quipment related to wafer preparation,
including expitaxial growth furnaces. crystal pullen, r i m / d r y m slicers. and iapping and polishing
Many acquisitions in this area include computer-aided design toftware, pttcrn generators and
compitcrr, digital plotters, photorrpcaim, contact printers, mask comparators, elcclron-beam gener- ,
atom. and ion millinn muiament.
Many hundreds ofacquisitions in this area have provided the W c t r with mask alignm, diffusion furnacu, ion implanters, toam,etchm, m d photocbmical pmccs lines.
Hundreds of items of Western equipment, including scriben, bonden, ptok t m , md final t a t
equipment have b a n aequircd by the Soviets.
this. Signal and information-processing technology,
particularly for Soviet air defense systems, is another.
More often, however, technology is exploited to speed
up a developmental program or to improve upon
original Western designs in an expeditious manner.
The Soviets appear to have concentrated their tactical
systems aquisitions on Western tank, antitank, and
air defense-related technology and equipment in order to derive concepts and know-how to benefit their
weapons programs and to design countermeasures to
the Western systems. The Soviet SA-7 heat-seeking,
shoulder-fired antiaircraft missile contains many features of the US Redeye missile. Such aquisitions
have enabled the Soviets to obtain advanced tactical
weapon capabilities sooner than otherwise would have
systems for decades. The acquired quipment and
know-how, if combined, could meet 100 percent of the
Soviets' high-quality microelectronic needs for military purposes, or 50 percent of all their microelectronic netds.
Table 3 identifies the microelectronic productionrelated equipment that has been aquired by the
Soviet Bloc. These aquisitions have been grouped
into areas related to the four steps required to produce
a microchip: wafer preparation, circuit-mask making,
device fabrication, and assembly and testing,
Soviet computer technology has long been limited by
fabrication and production technology problems and
by difficulties in software development. Since 1969
the USSR and East European countries have been
developing a family of general purpose computers
Western equipment and technology have played a
as the Ryad series. These computen; which
very important, if not crucial, role in the advancement
virtually the total Soviet and East European
of Soviet microelectronic production capabilities. This
general purpose computen, have been
advancement comes as a result of over 10 years of
and will continue to be used in a wide variety of civil
successful acquisitions-through illegal, including
clandestine, means--4 hugdreds of pieces of We.tern and military applications. Western technology has
rnicroekctronic qujpment worth hundreds of millions been important tp development of the Ryad series by
of pollars to equip their military-related manufactur- providing proven design directions both at the system
and component levels. The architectural designs of the
ing facilities. These aquisitions have permitted the
SoSiets to systematically build a modern microelectronics industry which will be the critical basis for
enhancing the sophistication of future Soviet military
Ryad computers, for example. are patterned after
those of the highly suCCCSsfu1 mass ~ r d u IBM
d 360 ~
~y ~ ~ ~ ~saved
~h i ~~ ~
ij ~l ~i ~ ~
and 370 series, computers that are used in a wide
Hundreds of Millions of Rubles
tange of applications and are highly serviceable in the
A .former Soviet inrelligence oflcer revealed that
idormarion on Wcclern military-relared rechnology
by fhe Sodel inldljgence serVjces sOYCdthe
eliminatd many of the risks involved in undertaking
military indusrry hundreds dmillions
the development and production of a new series of
rubles. The aquisition d Western technology opergeneral purpose computers, and saved considerable
ationally was assigned she highest priorityfor collecamounts of manpower and lime. Since the early 1970s lion by local rerideIICiesin luy WenEuromn
the Sovieu and
have legally purcountries because d r h e relarively easy a c m to
much US and Wesrern rechnology in Europe and ihe
which art now being used in military-related organipraise being received by the servicesfor their aquisizations. Furthermore, they a n also developing minition d o n s .
mmputen that are direct copies of Western models.
and bn E u r ~ n
These acquisiiions were directed by the jlirary
sfltcmshas kn aided
the Council dMj,,jsand illegal, including clandestine-for acquiring the
rers, and there was intense competirio~herwcrn rhe
needed ttchnical know-bow.
intelligence services to q u i r e Warern lerhnolopy
needed for wapotu dcvelopmcnt programs. OjparThus, the Soviets and their Warsaw Pact allia have
ricvlar Ned by
derived significant military gains from their aquisiacquisition knowledge on special
mlotions of Western technology, particularly in the strably the weaving dcarbonfilamenrs in a three
tegic, aircraft, naval. t a c t i d , mi==l=mni=, and
the sewices were
computer areas. This multifaceted Soviet aquisitions lasled to
program has allowed the Soviets to:
carbon-carbon weaving technology are ustful for abSave hundreds of millions of dollars in RBD costs, blive hear shields for high rlociry reentry rhiclrr
and years in R&D development lead time (set inset).
(rhe warhead part d ICBMs and S U M S )and for
Mdcrnize critical sectors of their military industry
poniom drockel moror5~or
and reduce enginefine
Or copyThe Soviet aqujsirjon dsome
thereby limiting the
likely ro enable them to ewntually gain a capability
rise in their military production cotu.
/or increased military options against the West-+
Achieve greater weapons performance than if they
capability that orherwise would haw taken them
had to rely solely on their own'technology.
several addirional years to develop themselves. The
inrelligence services also worked closely wirh sciem
early in the development.of their own weapon
ris~sfromthe Soviet military mandacturing indusprograms.
tries and even planned joint operarions against WestThese gains are evident in all areas of military
ern Trade and Equipment Fairs in order to acquire
weapons system. While difficult to quantify, it is
clear that the ~ e s t e r nmilitary expenditures netded
to overcome or defend against the military capabilities
derived by the acquisition of Western technology far
outweigh the West's earnings from the legal sales to
the Soviets of its quipment and technology.
Outlook for the 1980s
The Soviets' military R&D and weapon test-andevaluation efforts are continuing at a rapid pace.
Several hundred development projects for weapons
systems and major system elements are now under
way, and it is expected that through the 1980s the
number of new or modified advanced Soviet weapon
systems emerging from these projects into production
and deployment will remain at the high levels of the
last two d w d e s - s o r n e 200 weapon systems per
Despite these economic difficulties, there are no s:3h5
that the Soviets are shifting resources away from t ne
military sector or slowing down development of w w p on systems that will be entering the production ste e
by middecade. New generations of Warsaw Pact 4
weapons will require selected critical component a114
modern manufacturing technologies. It k in these
artas that Soviet illegal acquisitions of Western tecnnology, complemented by legal acquisitions, are more
likely to be concentrated over the next five to 10
Soviet military manufacturing capacity increased by a
significant 80 percent during the 19605 and 1970s,
and new plant expansion now under way at one-fourth
of their key weapons manufacturing facilities will add
considerably to their capabilities. These new facilities
will be ready to produce weapons in the next four to
10 years. Plant expansion is in the following areas:
ground warfare vehicles, including new tanks; avi- .
ation, including facilities for a ncw B-1-type bomber
and a new long-range military transport aircraft
having strategic airlift capabilities; naval shipbuilding, including submarines for ballistic missiles and
cruise missiles, as well as full-size aircraft carriers for
high-performance aircraft capable of competing with
the United Stata in global operations; and electronic
and microelectronic manufacturing facilities throughout the USSR.The development and production of
new Soviet weapons at these facilities is sure to be
more complex and costly than during the 1970s.
Among the more important tcchnologies arc micra
electronics, computers, and signal processing. Micro
electronics will play a vtry significant role in advanc
in computers and signal promsing, and all of thew
technologies will be important in developing advanc c
Soviet missile, aircrafr, naval, and tactical weapon
systems, and associated detection systems. Additiond
projected Soviet technological netds related to sucf
systems art presented in the append=
As the m l t of both tactical and strategic force
modernizations, Soviet and Warsaw Pact military
manufacturen are inmasingly pressed by large-scab
production requirements and the d a t e d n a d to
control manufacturing and materials costs. Thus,
particularly critical for the 1980s are Soviet .needs t o
improve their manufacturing capability. To a large
cxtcnt, the level of manufacturing technology in Sovi
et plants determines the Soviets' capability to move
new technology from R&D into military app1icatio:r.
All of this military development and plant expansion Manufacturing technologies play a significant role n
only in tbe development of advanced component tech
activity, however, is taking place at a time when the
Soviet economy has reached its lowest level of growth nologies, such as microel~ctronicsand computers, b 3
since World War 11. Soviet arinual GNP growth may also in tbt actual production of modern military
well be limited to an average of 1 to 2 percent by the systems.
mid-1980s. Stagnation in industrial sectors that are
Futurc Soviet and Warsaw Pact acquisition effortskey to both the civilian and the military sectors wiIl
acquisitions by their intelligence servicesmake it increasingly difficult for tbe Soviets to satisfy
concentrate on the sources of such
theeneeds of.both. Thus, Soviet leaders will have to
make tough choices among defeqse, jnvestment, and
consumption; the competition among rival claimants
for rtsourccs will become intense. Under these condiDefense contractors in the United States, Western
tions, it may be impossible for the Soviets to maintain
Europe, and Japan wbo are the repositories of
curknt growth in military production without hurting
military development and manufacturing
the civilian economy.
General producers of military-related auxiliary
manufacturing equipment in the United States,
Western Europe, and Japan.
Small and medium-size firms and research ceniers
that develop advanced component technology and
designs, including advanced civil technologies with
future military applications.
inttlligence services. But the most alarming aspect of
this commercial focus by Soviet Bloc intelligence
services is that as a result of these operations. the
Soviets have gained, and continue to gain. access to
those advanced technologies that are likely to k u s 4
by the West in its own future weapons systems.
The Soviet intelligence effort against Western defense
contractor firms poses a serious problem in itself.
With more than 11,000 such firms in the United
The combination of pan Soviet acquisition practices
and projected Soviet military needs indicates that the Slates and hundreds of subsidiaries abroad, US munterintelligena efforts are stretched thin. Pro:mion of
United States and its Allies are likely to experience
US firms abroad from hostile intelligence threats is
serious counterintelligence and related industrial security and export control problems over the next five the responsibility of host governments, but they too
are feeling the burden of well-orchestrated Soviet
to 10 y e n .
Bloc efforts. The Soviet intelligence threat and the
illegal trade problem appear to be severe in Japan. It
The task of stopping Soviet Bloc intelligence operations aimed a t Western military and industrial tech- appears that Western industrial security-both defense and commercial-will bt severely tested by the
nologies already poses a formidable counterintelligence problem, both in the United States and abroad. Soviet intelligence smicts and their surrogates
But that task is likely to become even more difficult in among the East European intelligence services during
the future as several trends identified in the 1970s
continue into the 1980s:
Western industrial nations also can expect increased
Soviet Bloc intelligence activities directed ax the
First, since the early 1970s. the Soviets and their
aquisition of their key industrial technologies. Wcstsurrogates among the East Europeans have been
ern export controls arc presently Being updated and
increasingly using their national intelligence serbroadened; the CoCom allies have recently agreed to
vices to a q u i r e Western civilian technologies-for
strengthen controls and to enhance their enforcement.
example, automobile, energy, chemicals, and even
Moreover, serious hard currency shortages, along with
generally increased restrictions on Soviet S&T visitors
Second, since the mid-1970s. Soviet and East Euro- to the United States, will make the Soviets men more
dependent on intelligence and other illegal efforts to
pean intelligence services have been emphasizing
the collection of manufacturing-related technology, aquire the goods and equipment they will need.
in addition to wsapons technology.
The massive, well-planhed, and well-coordinated SoThird, since the late 1 9 7 0 there
~ ~ has been increased viet program to aquire Western technology through
emphasis by these intelligcnce services on the acqui- combined legal and illegal m a n s poses a serious and
growing threat to the mutual security interests of the
sition of new Western technologies emerging from
United States and its Allies. In response, the West
universities and research centers.
will need to organize more effectively than it has in
Tbe combined effect of these trends is a heavy focus the past to protect its military, industrial, commercial,
by Soviet Bloc intelligence on the commercial sectors and scientific.cornnunities.
in the West--sectors that are not normally protected
from hostile intelligence services. In addition, the
security provided-by commercial firms is no match for
the human penetration operations of such foreign
Projected Soviet Technological
Needs and Acquisition Targets
Through the 1980s
Given the dynamic nature of their collection program,
it is expected that the Soviets will continue their
attempts to acquire a broad range of Western technologies. Certain areas, however, represent priority collection targets for them; these areas are critical to the
Soviets' enhancement of their weapons capability.
Western solid rocket propulsion technology also will
be a high-priority Soviet acquisition target in the
1980s. While the Soviets have vast expcrienc. with
the liquid-propellant systems which represent the bulk
of their ballistic missile force, they are shifting their
emphasis to solid propulsion systerns, which have
practical advantages over liquid systems in a variety
Over the past decade, the Soviets' most pronounced
of applications. At the zame time, the Soviets have
improvements in strategic weaponry have been in the had only limited success with the progress of their
solid-propulsion program. They probably will pursue
development of a MIRV ballistic missile capability
and a significant improvement in the accuracy of.their the aquisition of information on solid-propellant production procedures, and propellant grain design, moICBMs. The former capability was made possible
tor case, and rocket nozzle technolog~s. .
largely through the introduction of onboard digital
computers and the latter through tbe improvement in,
The Soviets' ABM R&D effort has axhued apace
the quality of the missile guidance systtms and the
procedures used to calibrate them. Technology a q u i - since the 1960s. As a result, they have gained considerable expertise in the development of large fixed-site
sitions from the West contributed significantly to
radars for early warning, tracking, and engagement,
these improved capabilities.
and their interceptor technology has also improved
substantially over the years. Areas m a i n , however,
The Soviets probably will continue to make their
highest priority the aquisition of Western microelec- in which the Soviets will still seek and would benefit
from sophisticated Western ABM technology. These
tronics and computer technology for in-flight guidinclude signal processing for detection, discriminaance computers. This aquisition effort will be motivated by a desire to overcome reliability problems and tion, target assignment, and sensor technology, particularly in the long-wave infrared portion of the
also to provide the on-board processing capability
required for the development of new guidance options electromagnetic spectrum applicable toward improving their launch detection capability.
with the potential for extremely high accuracies.
The Soviets will also give top priority to acquiring
information on the latest generation of US-inertial
components upon which the MX ICBM and the
Trident SLBM guidance systems are based. Despite
the past accuracy improvements of Soviet ICBMs,
these two US systems incorporate technologies beyond -present Soviet technological capabilities. Moreover, their SLBM accuracies are significantiy behind
those of US systems. In addition to information 06
hardware, the Soviets are expected to seek calibration
sofiware algorithms which, as the guidance instrument.4 themselves reach their practical performance
limit, would allow for continued improvement in
weapon system accuracy.
Priority Soviet targets in the aircraft area will include
Western materials technology, particularly composite
materials to allow weight-efficient designs. The Soviets would also benefit from the acquisition of certain
engine technologies, in particular those critical to the
development of nigh-bypass turbofans for large strategic airlift type of aircraft. While, in general, Soviet
avionics technology appear adequate, the Soviets have
yet to demonstrate a capability to deploy reliable,
accurate airborne inertial navigation systems for longrange navigation and weapons delivery. Thus,while
long used in the West, these systems are still prime
candidates for aquisition.
Very high priority probably will bc given to the
aquisition of computer-aided aircraft design technol, ogy, an area in which the Soviets are clearly im.
pressed by US progress. In general, they also will
continue to benefit from the aquisition of efficient
aircraft production technology from the West to
r c d u a costs.
Much of the Soviet aquisition effort in the area of
tactical weapons is likely to bt targeted against s u k n
and sensor technology for tactical missiles and prccision-guided munitions. Tbe Soviets will apply considerable effort in particular to aquiring advanced
Western electro-optical technology including that related to antitank weapons. As in other weapons areas,
the signal proctssing and microclectronia technolWhile the Soviets have a strong indigenous air defense ogies supporting tactical weapon systems will also be
radar and missile technology, their general lag in
priority aquisition targets. Technical documentation
microelectronics and microprocessing will direct them on entire weapon systtms, if obtained, will k used to
to attempt whmver possible in the West the aquisi- develop countermeasures.
tion of advanced signal-processing hardware and
In the micraelectronics area the USSR is now at the
stage of implementing its LSI (large-scale integration)
The Soviets will continue to emphasize the aquisition technology to high-volume production. Despite the
of naval-related technologies applicable to improving large acquisitions of Western ttchnology and productioh"tquipment over the past 10 yean which have
their antisubmarine warfare capabilities, an area in
wbich much Western technology is superior to theirs. brought them to the LSI level, additional acquisitions
Thus, a significant effort to acquire acoustic sensor
from the West are needed for the m m sophisticated
weaponsprojtcts of the future. Ever-intnasing medt
technology can be expected, in particular that techfor higher precision Western equipment wiIl uctend at
nology applicable to the development of large towed
least through the 1980s.
acoustic arrays that would assist the localization of
Western submarines in open waters. They probably
In addition, the Soviets will require considerable
will also target the aquisition of Western signalexpansion of their microelectronic material base to
processing hardware and software rquired to fully
support continutd expansion of integrated-circuit proexploit the detection capabilities of these sensors.
duction. In this regard, the USSR is seeking Western
help to build two or three poly-silicon plants that will
Another critical problem area to which the Soviets
more than double current Soviet capacity for military
will direct aquisition is that of submarine quieting.
Here also the Soviets lag the West significantly. As a applications. Also, with increasing advances in the
result, not only arc their submarines more vulnerable technology, the USSR already will be seeking addito detection, but the self-generated noise reduces the tional Western assistance in key complementary technologies such as packaging and printed circuit h a r d
efftctiveniss of their own acoustic sensors.
An area in which the Soviets have historically lagged
The USSR is expected to focus its future acquisitions
behind the West is precision submarine navigationin particular, in the development of submarine inertial efforts on the emerging techno1ol;iu related to verynavigation systems. The need for improvements here high-speed integrated circuits (VHSIC)and verywill bccome more pressing as the Soviets develop long- large-scale integration (VLSI). It is important to note
that, while VHSIC is thought of as a military develrange cruise missiles for land attack which require
opment program, and VLSI as a civilian technology,
precise knowledge of launch location.
therds little difference between the two as far as
SO& produ'ction needs are concerned. The same
Tbe Soviets also will continue to target technologies
related to the design and construction of large aircraft materials, production, and test quipment will be used
carriers (for high+crformancc aircraft) to reduce the to produce both. in both of these ttchnological arcas,
the USSR has dcveloptd effe~tivemeans for illegally
likelihood& poor design choices that would arise in
what is for them an entirely new type of construction aquiring Western advanced products.
Prime Soviet collection efforts in computer technology
through the 1980s are likely to include large-scale
scientific computers such as the US-built CRAY-1
Computer. Computers of this class offer significant
improvements ovq Soviet models in weapons-systems
design and simulation and in tbe processing of numerical data for many military applications. Other
hardware targets will include: very dense randomaccess memory chips; high-capacity disk drives and
packs; the so-called"superminicomputer" class of
machines; and the latest in general purpose computer
. technology. All of the above targets offer opportuni&s for significant performance improvements and
' represent technologies of substantial Sovia lag.
In computer software, the Soviets will continue to
attempt to collect IBM programs and programs of
other vendors written for these machines because of
past Soviet decisions related to copying IBM computers. The large and growing number of IBM-compatible computers in the USSR means tbat collection
activity in this area can be expected to increase. The
compelling attraction of computer networks also
should spur great Soviet interest in acquiring network-control software and other programs related to
marines are zmtrxhsly noisier than
US. subs-so noisy that
this sigHow far htis the Soviet lhion gone
m challenging America's
there have bben
fnte~ceAgency*EOaitical areas where Moscow still hgs behind and is making an all-out e&nt to
Smmnarizing a topserret kt&gencestudyina-to-
t h e c I A s a y s s e v e r a i ~ ~
o g y ~ o n ~ s a r e ~ i u a
"massive,well p k w d d d oaordinated Soviet program to q u i r e
Western technology throagh cornh i n e d ~ a n d ~ ~ ~
M o ~ r x r w b a s ~ i a i t s ~ ~
their way and that sdmndne-
hnmched*~-because sub slclppers cannot be sore exacdy where they are under the water.
The CIA expects the Soviet Union to
give t o p p r i o r i t y t o ~ d e t a i l s o f
n f&xtmmk and computer devices ad forin-ftightguidance ofmissilessndof-*
Reproduced by Congressional Research
Service, Library of Congress with
Permission of Copyright Claimant
%*pest aadc.rs rhe s l y measure,
br qpddraroe of getting
it seeks. Prethat, wams the
%&, 'Yr ume ofthe most
CI.S.UEWS 6 WORLD REPORT. May 3. 1982
Reproduced by Conzressional Research
S e ~ i c e , Library of Congress with
PemisSiwt of Copyright Claimant
31 January 1982
Soviet espionage siphons U,S. know-how
Following the military crackdown in Poland,
five other influential Democrats, including such liberal spokesmen as Senaton Gary Xart of Colorado
Washington-As a target for g- amdry, to ever-greater efforts to
Pad Carl Levin of Michigan, both members of the
pionage, William Holden Bell was obtain secretly and illegally what
Senate Armed Services Committee, urged Mr. Reatextbook perfect.
gan to halt all technology transfers to the Kremlin,
LIoreow ance might have Pcqnired
Then 59 years old md trying to
particularly those that would aid the Kremlin's enkeer, pace with a w w wife 25 years WY.
his jvnior, he was bitter about a rela- all, ke the .cquisition of oattide
If there are differing views about the consequentively warewarding cmwx d dcs- technology as vitnl to Moscow's
c e of technology transfers to the Soviets, there is
penbely in need of a h to
a haps of coatianag its military comgeoeral agreement on one thng: It continues, deliitstyle gf travel and leisme.
spite publicly expressed concern at both ends of
petitha with the United States and at
Pennsylvania avenue. By and large, the Kremlin is
In short, Bell, a xyhr
thenmctimc.d~~itsowninable to acquire mPch of what it wants, from the laexpert for H y h c s Anarft
ny, a major U.S. defame -or,
I f t b e y w e r e n o t a M e t o u ~ I a t a n ~test
- in computer chips to radar technology to the
was ripe for the picking. And w
d lror as a aort of "quick fir,"some of these experts latest advancements m space-age rc~paruy.
m,the ,%vie& would mnfrout a Santiaaing se- "Soviet leadas have learned they have access to
Before the FBI m
t op with ties of d i f f i i trade-offs, paltlcularly in allocat- Western techwlogy both t)armgh legal and illegal
him last summer,Bell, in ffing prccioPs rtscarcb a d development nsancg, channels," Richard N. Ferle, aspistant secretary of
for about $119,000, haied
to intryingtomeetbothttnirdd~.oddrmcstic ddcllse for international security policy, says of
the ariomacas of the problem.
P of b~ hl w
l ~. t1 iCmQ g c t . r.ane
s i f i eofd ttRe , l t d s .
"Under the guise of pmchases for benign, civilIbe West "is oirtually wrbsidtnng M e t mili, have obtained a wide
West's most closely @laded mqt- tary power," ups Dr. Miles CoJticlr, who rmrs the ian o b ~the ~Soviets
of quipment critical to their military proom Systelns, ilxhdhg the skdth -W
Mitute for Strateg~cTrade and rtsge
Where they have failed to get what they
aasioPPlly acmes as a m o l r P l c o n d t u l t gram.
want openly, they have resorted to a well-coordito offset the W a m w W s m-onE8st-westtrade.
cal superiority in EmPp.
?bse .re some, including a few members of mfe&illegal acquisition program. "
The Bell case is tbe rbdf of spy aPlgas, who believe the extent to which the
Speaking on the threat of Soviet espionage last
drama in an era in rhich y Kremlir~dies on Western technology is greatly ex- maath, Attorney General Smith told a Los Angeles
interestsbavecometooutwughtbe aggerated by a Reagan administration that tends to group that because the United States relies so highview most foreign policy questions in East-West Iy on superior military technology, the current
First of t h ~ e ea ? t d e a
This w d d seem to be a minority view, how- casts to national acPrity through such losses are
political mothawb of earlier
The Bell case,which led last fall to his convicRqmsmtative Jonathan B. Bingham (D,
c b i m u n of t8e House Foreign Affairs sobconrmit- Uan and.that of his Polish confederate, Marian W.
s!ored m =wQt=
bce tbpt uwxxm US. trade poky, .asatS flatly ZIChMti. 01) arpioeage charges, illustrates the
technology that goes into a child's t h t t k R r P m , ~ t i l m b a s ~ t e d t hkind
e of sensitive tnilhy information that stimuelectronic bprhlt game, .ad smhlmem of the problem to the United states, lates such contacts as the Polish link to Bell:
The FBI still will not discuss certain details of
dummy corporatiinm p h y 88 great a p a r t m k l y the amtributim the west has made to
role as do secnt Mta drops Pad tbe Soriets t&rough over-thecormter sllcs of ~ D O W - the case, or describe in detail the extent of the narnidmght rendezvous.
More ai9nifirint. tk coc ilhrsot)las,indadmgmmtoppollcy-mplrcrsmthe Evidace and tatirhoay at Mr. Zachanki's trial,
t r a z what law a
M i - uealtiw m,
question Washin%on's ahility to however, indicated that auxmg the secrets obtained
cials in the United ~-~
cWreofftilchaports,emnifmcha@iswar- by Polish intellrgeace (and, US. officials assume.
by the KGB) was information about the Stealth
Attorney CmerPl William Frcach rurtcd.
project, a new; rapid-firing. radar-conSmith and FBI I)nator William H.
~ i s n o c b u b t t h a t ~ c s t e r n t e c h d o l o g y h abomber
Webster-see as a change in tPetia W some impact," says William A. Root, director trolled antiaircraft and antitank gun; a sophisticatby the Soviets in a cancerted effort of the Office of East-West R a d e a t the a t e De- cd antitank missile, and the socalled "look-down.
to obtain data about Amuican ad- pPrtmcat, but "if you take the line that any trade shootdown" radar of America's most sophsticated
vances in military and indmrtrial free nrmrcg for military production, that h i - fighter plane.
The Stealth bomber is the super-secret aircraft
a l l y is a fommla for a totaleuhqp, arid this s
While espionage in the United an idea no& being pmsued under present cbmn- being dcsigaed to replace the B-52 and the planned
5 1 bombers as the airborne component of this
States certainly is mWng new for
camtry's nuclear triad. The plane is so named bethe Soviets, the law enfolrcmeot ofcause of its hoped-for invulnerability to Soviet raficials see the Kremlin turning more
than ever to claadestiDe means of
The other weapons systems are e:emen& of
gaining scientific hardware d &ed liberal credentials.
know-how, since bans on wa-theSenator Joseph R. Biden, Jr. (D,Del.) for exam- NAlWs conventional deterrent forces in Europe.
counter traasfers rere adaed by ple, says Western technology, princip~llyfrom the aad provide tbe West with technology to counter
Residents Carter and Rugon.
United Stam, has beem of "slgnificaat benefit" to the massive numerical superiority in tanks,planes
mldien of the Warsaw Pact nations.
President Carter orrkred a par- tbe Sovie& and their Eastern Bloc allies,aad
. .he is andThe
"lookdown, sbwtdown" radar, for examtial ban on techoology sales to Mos- & t j d of rh.t he sees as a r a v a i n g dmKUStraple, is destgned to permit US. F-15 fighters to
cow dter the Ikcember, 1979, Soviet tiancfforttoebbrbeflow.
iuvasion of AfghanMan. Last month,
"It seems to me the administrption loves can- counter cwmy airuaft that fly low to the ground
President Reagan s e t to torrghcn merce more than it hates colmnonm." be says, to avoid detection by ground-based surveillance
the embargo following the military citing a Mmller of large, govermaentopproved systems.
Soviet radar technology is believed to be much
crackdown in Poland, which he bas mles to the Soviets since Mr.
version of "looksaid was inspired by the Rremlin.
marc than a year ago, and a lack of law enforce- Aess advanced than the -can
The Reagan a ' '
tion's ac- imzmt
in b a l m illegal acquisiof industion, federal l
s offi- trial aod technical know-how.
5 v Walter Taylor
~ a s h ~ n ~ ~t o
u rne a u
of The Sun
ckts believe, is likely to spur the
KGB and the GRU, the two Soviet in-
: ; y o d w e d by C o y r e s s i o n 3 1 Research
Ser4cc, Library of' C o n : w s with
~crvi-:;on of Ccpyri:bt
1 February 1982
cocmtrkr-thc moakr SS-18 mhik,
t h e ~ h t b c a o v w I ~ u r t
Y u c h o f t L L , ~ w u o b
t.tnsd DL% by Y a c m ' s a b l e o@omgedfat but over tk counter. Tk
military krdmm, o p n l y
Second of thm artidca
2 F e b r u a r y 1982
U S . acts to stem technologyflow to Soviet
Ry Walter Taylor
Washington Bureau of The Sun
Washington-In the snmmer of.
1979, Lawrence J. Brady. then acting
director of the Carter adminiiration's Office of Export Administration, became an overnight cause
celebre for critics of &mornic detente with the %viet Union.
Mr. Brady, appearing as an administration witness, told a coagressiollpl oversight committee what
skeptics had bem maintaining all
along: The Nixan-Fordpolicy
of relatively open trade with the
Russians w t only had accomplished
little toward its goal of moderating
tee Knmlia's internatiavl daugm,
Last of a series
but in fact was abtting efforts to
U.S.safewards against the diversion Of sophist~cated technology of
potential military use to the Russians had only "marginal utility," aserted Mr. Brady. Intemationa1 efforts by thc West. hr said, were even
His cathartic testimony m y have
won him a rrpot in the hearts of conservatives, bat it alsn m u n t political
purgatory at the bands of thc Carter
White House.Mr. Brady lost his positi00 ia tbe cammem Dcportmmt,
and in January, 1980, a month after
Soviet troops began rolling into Afghanistan on trucks manufactrncd at
a Ural Mcmntain foundry outfit* by
an American company, be ratgnd
from the govenmwnt .
Today Mr. Brady is b c k . &nt s t q + % r y + r
&de admmstrd Ion e 1s in charge
of efforts by the R a g a n White H ~ U K
to refashion American rad Western
export policy in a way thnt would deprive the Soviets of the rterdy diet of
Western technology thcy have enjoyed for most of the l a d -&.
Unlike rerent govetmmnts,
Reagan administration vkrs the,
control of trade, p a r t i d & in the
area of high technology. as a Strat* '
gir weapon that ran deprive the RW 1
sians of assistanc.0 vitally mcdcd to
modernize their military-industriel
- .baTechno\oc)., ~ r Rrady
said in a
intervie=, "is i h r one t d . the
hook ae'se had siWwld War
11 , . . that wuld c a m
stra\m in the Sovivt Svstem.
to weave a
Along with its effV ~ C Yumt'would emrather than mon' -mercc
Soviet BIW. the Reagan a d m l s t r a -
ti0n has stepped up law cnfomment
and counterintelligence efforts to red~ the logs of American b - b o w
through ilkgal traIISfers and espiomee.
The US. M o m s Seroice, traalLioarlly @!and to prevent material
from Coming into the country rather
than leaving it, rcrrntly began a progun dubbed "Operation Exodus" deskoed to s c r u ~
cugo boaad far the East.
T%e FBI and tbe Justice Departmmt, for their parts, have embarked
on a m p p r campaign to make the
public more aware of the espionage
peril. Actor Efmn Zimbalist, Jr., star
of the old FBI television series, h a
been doing looselips-sink-ships spots
on radio and TV in California, where
more than 1,000 companies doing
sensitive work for the U.S. gwernment are headquartered.
Concern for the problem is by no
muas limited to the
administration. Servitor SPm N u n (D,Ca.),
tbe senior Democrat on the Permaaeat Subcommittee on Investigations,
has assigned his entire subcommittee
staff to an invcstigatioa of possible
kgislPtive s t e ~ zto cut off the flow of
information to the Soviets, with an
eJic towar6 public hearings in April.
Nunn, in an interview,
tenncd the transfer of technology "a
very srriops problem," and openly
qaestiaacd the ability of the government, as currently organized, to addnss it effectively. Without providmg
specifics, be said a number of legislative remedies were possible at the
conclusion of his panel's probe.
So far, autboritles acknowledge,
the new federal effort on this front
has fallen far short of stopping the
flow of illegal diversions to the Soviet
Union and its Iron Curtain allies, despite a few spectacular successes.
Officials of some enforcement
agencies complain of a lack of funds,
manpower and, perhaps even more
crucial to their efforts, the expertise
necessary w e n to recognize tbe sophiktication or potential value of material finding its way to tbe Russians.
"How does the average customs
inspector recognize the difference between a microchip you can buy at Radio Shack and one that tbe Soviets can
plug into a military computer?'' asks
om! beleaguered federal official involved in efforts to stop the flow.
Moreover, amid the competition of
commercial, political and bureaucratic interests both inside and outside the government, there is still less
than total unanimity about the need
and deslrabilitv of a policy of pre-
venting trade with the Russians.
Representative Jonathan B. Bing(D,N.Y.),chairman of the House
F m i g n Affairs subcommittee that
U.S. trade policy, contends.
for e m m P k that the administration
kas vastly 'exaggerated the deg'pe to
which the Russians m n d on the
He described as "utter wrrsense"
tbe as6ertion that transfers from the
United States bave played a significant role in Soviet technological advancement, and charges that adrninistration statemeats about tbe seriousness of the problem "verge on tbe
On the academic f m t , a number
of scientists and university administrators, citing the cause of intellectual freedom, have baked a t Reagan
administration efforts to restrict access to technology during visits to.
Some academicians also have bristled at suggestions last 'month by
Adm. Bobby Inrnan, deputy d i m t o r
of the CIA, that American scientists
should voluntarily submit their work
for possible government cepsorship in
cases where it is to be published.
Some American businessmen also
complain, though I g s openly than
they owe might have. One who has
w t tempered IS outspokenness is
Robert D. Schmidt, vice c h a i n of
Control Data Corporation and an 4vocate of continued economic dett ,te
with tbe Russians. He complains that
Reagan poiicy merely serves to spur
the Kremlin to develop its own technical capability, accomplishing little
of strategic value to the West but
costing US. companies valuable werseas markets.
In general, there is one major area
of agreement among experts on the
subject within and outside the government. Given recent history, however,
this also bodes ominously for U.g efforts .@-cut the eastward trafflc in
q t is worth bearing in mind that in
the total volume of Western hightechnology exports to the Soviet
Union, the United States is a small
player," notes a recent Rand Corporation study, underscoring the point
b a d e by others that there is little
Washington can do unilaterally.
~.S..experts,notes Thzne Custafson, author of the Rand report and an
expert in the field, amount to only
about a tenth the level of advanced
machinery and equipment sent annu-
France and Jamn aione.
"The chart& of g a k R such s u p
port from other countries for an expanded system of export controls are
small and growing smaller, for
among the nations conducting hightechnology trade with the Soviet
Union one fiads not only NATO a h s
(whose relucllnce to apply stiffer expott controls is of long standing), but
a h countries like AasLnlia and
Switzerland, which are onlikely to
operate at all."
A similar wpm? by the cargr&
Office of Technology A s e ~ ment, which focused specifically on
the role of Western nations in development nf S-rint Energy mfies,
reached hke conclusions.
The lack of support for Resident
Reagan's trade sanctions against tbe
Soviets in the ongoing Polish crisb,
and two years nRn in the wake of the
Afghanistan Invasion, would seem to
support such pessimism.
in its first mapr initiative in this
area, the Reagan advmistration, following up on dwussions bekun
amcwp, allled badem last s o m w at
the Clttasa r v ~ n o m i csummlt. Sought
allied support tor pnriwly these
kinds of restr~rlionsin early ~anuary.
Representatives of COCOM, an Organization of NATO e m t r i e s created
to control exports to the Communist
blw. agreed, at Washington's urging.
to tighten the list of embargoed technology, particularlv in the field of
computer know-how, to the Russians.
Since tbe deliberations of tlre
group nre'secret, it remains difficult
to ktermiw bow this a g c a a e a t will
play out ia terms of streagtbcaing
d e r ; rcstriaions.Tbe North Atlantic
Treaty Organization members made
clear, for example, that tbey plumed
to go ahead witb sales to 1Yaclcon to
The S,soo--mile pjpcliw, rhicb
moM supply Soviet gas to W c S t a n
Some experts question whether
M is any longer a useful vehicle
for creating barriers to technology
&s. Ow arch specialist, a bank rep-ti=
who asked not to be identifii, noted that most of the participating Western nations do not even
include military experts in their
c o c o M dekgations.
"How tbe bell can tbey decide
rkther amwthg will cantribute to
the Soviet military if they don't know
.nytbiag .bout tbe military?" he
E m a p e ~ ~ r t r o a g ~ ~ a p p a s e d b g ~ asks.
comrtries such 8s
aa tbe Kremlin, and thus PsEcptible
to political bloduruil. Mr. Rug.n, as
that it rill make
against lrQBcor after tlK military
crackdown m PolPad, ordered a total
aid the Soviets to dewlop t k i r cmr-
The pipeline issue highlights the
differing perspectives in tbe West on
the tcetmology question even after tk
events in Poland.
The director of East-West tmle at
tbe State Department, William A.
Root, .clmaorkdgcd in an interview
that there continues to be no consensus .mong the allies on preci9ely
w h t they obould seek to deny tbe
'The concept is not at issue." he
nid. "It is the questmn of nhat constitutes aid that remains under de-
*mninatration officials, citing an
immwe in government rejections of
proposed U.S. sales to the Soviets
even W o r e tbe Polish crackdown.
try the United Slates is prepared to
p it .low if the allies don't cooper-
One smior Pcntrgon official, Under Secretary of Weme Fred Ikle,
bas said that if it comes to this. the
United Strtes might have no choice
but to try to restrict U.S. tecbnology
ttlffle!rSeven toallied nations.
"We h v e to establish a boundary
beyond which we will not permit
sensitive technology to trayel." Mr.
Ikle told the Reutrrs news, agency
"We would like to have this boundary
include not just our allies 'but our
friends and other coantries that we
But. he warned. Washington would
stop selling its technology to friend]!
nations if they let it &p Into Soviet
and East-West Trade
cwmrn or WE u*mo
WASHINGTON. D. C. 20510
Reprinted by the Library of Congress,
Congressional Research Service, June, 1982.
Definition and Measurement
Discnssions of tbe economic consequences of trade in technology for both
the United States and the Communist world have been hampered by conceptual
and pmctial difficulties in gathering and interpreting data. There is no universally accepted defiition of "technology," and in many critical instances, useful
data ie eimply unavailable. Any attempt to assess the economic importance of
this trade must therefore inch& a discussion of the nature of technology and
technology transfer and the ways in which they can be measured.
Technology must be differentiated from
science on one hand and from products on
the other. Science is the pursuit of knowledge, whereas technology is the specific application of knowledge to the production of
goods and services. Science flows freely
across international boundaries, and even if
it were possible to effectively control this
flow, the prospect of doing so raises a t the
very least grave Constitutional questions.
Some control of technology, however, is both
desirable and necessary in the interests of
national security because of the military or
strategic capabilities it may provide.
The distinction between technology and
products is more troublesome. If technology
is broadly defined to mean the knowledge
necessary to design, create, or implement a
process; the process itself; or any services
related to the process, the problem of how to
treat the resulting product remains. Often
this will be a "technology intensive" product, one that might be said to "embody"
technology or from which the technology
may be extracted through a process known
as "reverse engineeringw--the deduction of
the techniques of manufacture from exarnination of the product itself. Often too tech-
nology-intensive products have military applications that cause them to pose as severe
a problem to national security as the design
and manufacturing know-how that went into
For commercial purposes, "technology"
usually refers either to equipment and processes that transform raw materials into
goods and services, to the training that accompany these, or to final products like computers that embody high technology. But
there is little agreement, in the United
States or abroad, as to exactly which products and process should be included in these
categories. There are, furthermore, problems
of measurement within each category. The
cost of equipment or of the licenses for rights
to processes, for instance, may not necessarily reflect the value to the buyer in terms of
the quality, output, innovativeness, and
profitability of the final product. The value
of a purchase, which includes the skills of the
workplace-the training required to operate
machines, to achieve practical familiarity
with the theoretical aspects of equipment,
and to become able to adapt and extend the
operation of the equipment-is difficult to
quantify. Finally, there is disagreement over
Technology and East- West Trade
which products qualify as "high technology
To these empirical problems must be
added the difficulties engendered by the fact
that a number of both commercial and noncommercial vehicles exist through which
technology of potential economic value is exported to the East. Commercial vehicles of
technology transfer include turnkey factories (i.e., a factory built in the recipient
country by a foreign firm, which is turned
over to the recipient only when it is ready to
"turn the key" and start production); licensing (with and without training programs):
joint ventures; technical exchanges; training
in high-technology areas; sale of processing
equipment; provision of engineering docu-
mentation and technical data; consulting;
proposals (documented and undocumented);
and sale of products that embody technology. Noncommercial vehicles include visits
in both directions of students, scientists,
and businessmen or managers; the use of unclassified published technical data and
patents; the reverse engineering of single
machines or components; and clandestine activities. All of the latter modes of technology
transfer cost negligible amounts of hard currency and, for the most part, have been beyond Government control. Communist
states have made the most of these techniques, although they are by no means
unique in this regard. These channels of
technology transfer have historically been
and will continue to be of great importance
to market and nonmarket nations alike.
PROBLEMS OF MEASUREMENT
COMMERCIAL TRADE IN
The most common forms of commercial
technology transfer are the direct sale of
products embodying high technology and
various forms of industrial cooperation
The U.S. Department of Commerce re.
cently attempted to isolate trade in high
technology through the examination of err.
ports in selected categories of the Standard.
International Trade Classification (SITC).
This classification scheme summarizes trade
information for approximatelv 10.000 different items by or&nizing it into commodity
groupings. The Commerce study selected 2F
categories of products which, -it contends,
contain all those goods that reflect best practice in critical technology sectors-machinery and transport equipment and professional, scientific, and controlling instruments (see table 14).This effort is by far the
most precise and comprehensive attempt to
use trade statistics to measure techn01ogy
There are problems with the Commerce
list, however. Aside from quarrels over what
constitutes a "high technology" good, no list
based on trade data can be sufficiently detailed to precisely distinguish between levels
of technology. This could be accomplished
only through a caseby-case examination of
individual exports in light of an accepted set
of criteria defining "high technology." The
Commerce Department classifications are
therefore overly inclusive; they "catch"
items which do not in fact embody "high"
technology, if by that is meant state-of-theart or items unobtainable in the East. This
means that calculations of high-technology
trade based on these categories are inflated.
Second, techniques used to value and d e
scribe exports a t point of origin in the
United States cannot reflect the contribution of third nations. U.S. technology embodied in products originating froin American subsidiaries in Europe or Japan appears
in the trade statistics of these countries and
Ch VI- Technology Transfer: D e t ~ n i t i o nand Measurement
Photo credlt 8ureau ot East West Traae U S Department
U.S.4J.S.S.R. technology transfer through the mechanism of trade fairs
Technology and East-West Trade
Table 14.-High-Technology Items
Jet and gas turbines for aircraft
Calculating machines (including electronic
Statistical machines (punch card or tape)
Parts of office machinery (including computer
Machine tools for metal
Pumps and centrifuges
Machine tools for wood, plastic, etc.
Parts and accessories for machine tools
Cocks, valves, etc.
Telecommunicationsequipment (except TC a radio
Primary batteries and cells
Tubes, transistors, photocells, etc.
Electrical measuring and control instruments
Electron and proton accelerators
Electrical machinery, n.e.s. (including
electromagnets,traffic control equipment,
signaling apparatus, etc.)
Aircraft, havier than air
Special purpose vessels (including submersible
Image projectors (might include holograph
Measuringand control instruments, n.e.s.
SOURCE: 0uentific.rion of Western Expons of High Technology ~roductsto
Communisl Countries. prepared by John Young. Industry and Trade
Offlce of East.West Pollcv and Plannlna. US. DeDart.
ment of Commerce, Prolect No. 0.41
not in those of the United States. Finally,
customs valuations are determined by the
price of the sale. Price does not necessarily
reflect the full market value of the commodity, however; some firms deliberately underprice an initial sale in order to break into
With these reservations, and in the absence of alternative superior measures, the
Commerce system has been used in chapter
I11 to analyze U.S.and industrialized world
exports of high-technology products to the
Industrial Cooperation Agreements
Industrial cooperation agreements have
become increasingly common in East-West
trade. In its most general sense, the term
refers to a broad charter extending wer a
number of years to conduct commercial relations between a Western firm and a centrally
planned economy. Industrial cooperation includes a wide variety of possible relationships, ranging from the sale of licenses and
patents to coproduction agreements and
turnkey plant sales. The comprehensive list
incorporated into table 15 summarizes the
basic mechanisms and techniques utilized in
these ventures. These frequently involve relationships between trading partners which
extend beyond simple sales of goods and
services, to continuous and close contacts
between trading partners, training, and technical assistance programs. I t can be expected that these agreements lead to considerable communication of technicalknow-how
congruent with sales of plant and capital
Activities in this area are extremely difficult to measure. Cooperation agreements
are often complex and their values particularly difficult to establish because many
East-West transactions involve countertrade rather than cash (see chapter 111).
Chantertrade is particularly attractive to
Eastern nations with scarce hard-currency
resources and a need to foster exports to the
West. But while its importance in Communist countries is becoming increasingly apparent, little data on such agreements exist.
The US. Department of Commerce estimates that in Poland, 40 to 50 percent of
electrical products and machinery exports to
the West in the 1980's will be part of
countertrade agreements; and 38 percent of
Soviet trade turnover between 1976 and
1980 will be generated through countertrade.' There are no comprehensive studies
of the full range of countertrade transactions, although the Organization for Economic Cooperation and Development
(OECD)has studied individual categories of
'See U.S. bpartment o f Commerce, East-West Counter
tmdP Pmchces. An Intmductory Gurde for Busrness, Indust r y and Tmde Administration. August 1978.
'Organization for Economic Cooperation and Develop
ment. Countemode Pmctices in East-West Economic RehZions. Paris.Mar. 23,1978.
Ch. VI- Technology Transfer: Definition and Measurement
Tabh 15.-Types of Contnctwl Amngemonts
Included in Different Definitionsof East-West
1. Sale of equipment for complete production systems, or
tumkey plant sales (usually including technical assistance).
2. Licensing of patents, copyrights, and production knowhow.
3. ~ i a n c h i s i n
of~trademarks and marketing know-how.
4. Licensing or franchising with provision for market sharing and quality control. 5. Cooperative sourcing: long-term agreement for pur.
chases and sales between partners, especially in the
form of exchanges of industrial raw materials and intermediate products.
6. Subcontracting: contractual agreement for provision of
production services, for a short term and on the basis of
7. Sale of plant, equipment, andlor technology (1-3 above)
with provision for complete or partial payment in resultinp or related products.
8. production contractings: contractual agreement for production on a continuing basis, to partner specifications,
of intermediate or final goods to be incorporated into
the partner's product or to be marketed by him. In contrast to subcontracting, production-contracting usually
is on the basis of a partially transferred production capability, in the form of capital equipment andlor technology (on basis of a license or technical assistance contract).
9. Coproduction: mutual agreement to narrow specializb
tion and exchange components so that each partner
may produce and market the same end product in his r e
spective market area. Usually on the basis of some
10. Product specialization: mutual agreement to narrow the
range of end products produced by each partner and
then to exchange them so that each commands a full
line in his respective market area. In contrast to coop
erative sourcing, product specialization involves adiustment in existing product lines.
11. Comarketing: agreement to divide market areas for
some product(s) andlor to assume responsibilities for
marketing and servicing each other's product(s) in r e
spective areas. Joint marketing in third markets may be
12. Project cooperation: joint tendering for development
projects in third countries.
13. Joint research and development: joint planning, and the
coordinated implementation of RBD programs, with provision for joint commercial rights to all product or process technology developed under the agreement.
14. Any of the above in the framework of a specially formed
mixed company or joint venture between the partner
firms (on the basis of joint equity participation, profit
and risk-sharing,joint management).
SOURCE: Offlce of Technology Assessment.
Table 16 summarizes one of the most r e
cent attempts to classify types of cooperation agreements by frequency. I t shows that
in 1976 coproduction based on the principle
of specialization accounted for more than 38
percent of East-West agreements. This kind
of transaction involves the transfer of an entire production activity to a new location,
usually in Eastern Europe. After coproduction, the next most common agreements
were turnkey plant sales and the sale of
Coproduction.-Under this kind of agree
ment, each partner specializes either in the
production of certain parts of a finished
product, which is then assembled by one or
both partners; or in the manufacture of a
limited number of articles in the production
range, which are exchanged so that each
partner can offer a full range of products.
The technology is usually provided by one of
the partners, but in some cases may be the
culmination of joint R&D effort, Generally,
coproduction and speualization agreements
also include cooperative marketing arrange
ments. Usually the product bears the trademark of both partners, each of which has exclusivity for the market in its own area but
shares the market in other countries. In c e
operative agreements with the Soviet Union,
the Western partner usually has priority for
selling in the industrialized West, and the
Soviet Union confines its sales to Warsaw
Pact nations and possibly certain developing
The attraction of such agreements for
both the Western and Eastern partners is
obvious. The Western firm may acquire raw
materials and/or labor in the East. The
Eastern country expands its repertoire of
manufacture, its markets, and often its potential for earning hard currency.
agreements, turnkey transactions are perhaps the most effective means of technology
transfer. Although technology may in m y
cases be purchased or Ieased through
straightforward transactions in the marketplace, turnkey projects afford the possibility
of acquiring whole production systemsfrom feasibility studies, construction, and
training through technical assistance during
the initial run-in period. Further, most trans-
Technology and East- West Trade
Table 16.-Classification of East-WestIndustrial CooperationAgremnents
S u m y of June 1,7976
Bulgaria . . . . . . . . . . . . . . . . . . .
Czechoslovakia . . . . . . . . . . . . .
East Germany ..............
Hungary . . . . . . . . . . . . . . . . . . .
Tobl CYEA countries
1975. . . . . . . . . . . . . . . . . . . . . . .
June 1,1976. . . . . . . . . . . . . . . .
coproduction Subcontracting and other
CMEA = Cwncil for Mutuai E m i c Assistance or Comecorn.
%wly of license in ac(in part at least) for productsor components
SOURCE: Ecommic Commission for Europe. United Nations.
actions guarantee an ongoing relationship
with the supplier, opening the possibility of
access to developing technology. The continuity of these relationships is universally
regarded as the most important single ele
ment affecting the success of a technology
Turnkey projects in their pure form, involving purchase of an entire installation
from one firm or one country, are relatively
rare-at least in the case of the Soviet Union.
Most often, a Communist nation contracts
with many Western firms for particular components of a complex, including marketing
and subsidiary services. The Soviet Kama
River truck plant is a good example. Here,
the U.S.S.R. dealt with Western firms in
several countries, assembling its own sophisticated mixture of goods and services to fit
its own specifications.a
Licenses and Patents.-The acquisition of
technology through licenses accelerates indigenous technological progress and enhances potential export capabilities in the
East. According to one estimate, the purchase of a license may cause technological
progress in the affected field to leap by 7 to 8
.See Marian S. Finer, Howard Gobstein, and George D.
Holliday, "KamAZ: U.S.Technology Ransfer to the Soviet
Union," in Hemy R. Nau, ed.. Technology ltansfer and U.S.
Foreign Policy (NewYork: Praeger Publishers, 1976).
years, compared to only 3 to 5 years with the
purchase of know-how and 1 to 2 years for
coproduction.' Often the acquisition of a license creates requirements for other improvements, more imports, further licenses,
and the promotion of exports. Licenses may
be miid for in either currency or in products
thr-ougfi cuuntertrade z&&tm&ts.
Eastern Europe,the latter predaminate.6
Licensing arrangements are varied, ranging from a straightforward authorization to
exploit an individual patent to complex
agreements on industrial cooperation. These
may provide for the grant of licenses for
using patents linked with the importation of
certain capital goods; of licenses to use
know-how and technical assistance in build-.
ing turnkey plants or other industrial installations; and of licenses to use trademarks.
I t is apparent that the diversity of modes
through which technology is transferred and
the complex interdependence of activities,which are directly or indirectly involved
in the process, make it extremely difficult to
accurately measure the value of technology
that flows to the East in commercial transac4See Jozef Wilczynski, "License in the West-East-West
Transfer of Technology." Journal of World Trade Law,
'The US. Perspective on Enst-West Zndus trial Coopem
60%International Development Centre of Indiana Universi.
ty (Blwmington, Ind., 1975).
Ch. Vl-Technology Transfer Definition and Measurement
tions. No extensive statistical analysis of the
transfer function in this respect has been
made, and available data can support only
crude analyses of overall volumes and
trends. Any comprehensive assessment of
the economic importance of these transactions would require data of a sophistication
Open and regular contacts between the
scientific and engineering communities of
the United States and the Soviet Union have
received official encouragement through a
number of bilateral agreements. In July
1959, a formal agreement was concluded b e
tween the U.S. National Academy of Sciences (NAS)and the Academy of Sciences in
the U.S.S.R.; in the same year the International Research and Exchanges Board
(IREX) began a program that sent American
graduate students and young instructors to
the U.S.S.R. In 1972, the U.S.1U.S.S.R.
Agreement on Cooperation in the Fields of
Science and Technology (S&T) was completed, instituting bilateral cooperative programs in a number of scientific fields. The
S&T agreement is predicated on the idea of
building and maintaining a world scientific
community through open channels of communication. More recently, exchanges with
the People's Republic of China (PRC)have
begunThe role that such contacts have in transferring American technology with potential
commercial value is the subject of considerable disagreement.
Two recent studies of the S&Tagreements
and the exchanges program by NAS have attempted to assess the value to both sides of
the information exchanged in these prog r a m ~Both
. ~ concluded that exchanges with
BNational Academy o f Sciences, Review o f the
U.S./U.S.S.R.Agreement on Coopemtion in the Fields o f Science and Technology, National Research Council, May 1977,
and Review of U.S./U.S.S.R. Zntemcademy Exchanges and
Relations, National Research Council, September 1977.
the Soviet Union were worthwhile, although
their value to U.S. participants may be limited by American scientists' lack of familiarity with the Soviet Union's unique style of
science and engineering and by the lack of
Soviet candor regarding weaknesses in many
areas of its research. Both programs were
plagued by the rigidity of the Soviet bureaucracy (although problems with the US.
bureaucracy seemed to rank a close second)
and by erratic attendance on the Soviet side.
In 1978, for example, NAS extended invitations to 44 Soviet scientists; only 4 participated.
A review of the two studies indicates that
while the initial contacts provided some
useful information about Soviet research
(especiallyin the fields of medicine, weather
forecasting, accelerated drug testing, nucle
ar fusion, magnetohydrodynamics, superconducting magnets, and earthquake prediction), the primary value of the U.S.1U.S.S.R.
exchanges to America has been one of educating the scientific and engineering community about the nature of the Soviet scientific
Not only do U.S. scientists and engineers
have the opportunity of acquiring at first
hand new ideas and new perspectives from
their Soviet colleagues, they also become
more familiar with the relevant Soviet scientific literature and are alerted to particular
Soviet scientists and engineers whose future
publications likely merit special attention. . . . m e Soviets] have probably r e
ceived more technical value in computer
topics, in econometrics, and in management
science than has the U.S., largely because
the U.S. is more advanced in these areas.
But the most significant value to the U.S.
. . . lies in better U.S. understanding of the
Soviet planning and management process,
and of Soviet status and approaches in economics, management science and computer
science.' It is nevertheless true that the
United States has, on the whole, taught the
Soviets more than it has learned from them.
The NAS expects the future balance to shift
toward greater equal it^.^
'Ibid., Agreement on Coopemtion, pp. 7,43.
'Ibid.. Zntemcademy Exchanges andRelntions, p. 3.
Technology and East-West Trade
According to NAS. the risk of inadvertently communicatingimportant technology
through scientific exchange is minimrrl. The
Commerce Department's Office of Export
Administration regularly briefs U.S. scientists on topics they should not discuss in the
exchange programs. and "except in certain
narrow and welldelimated fields, problems
of technology do not loom large. . . The
Soviets have not managed to translate into
practice the wealth of American technical
data already available to them t h . u g h the
open literature [and as a result] their technology is unlikely to benefit greatly from
any further technical data we might disclose
except certain specific data which are proprietary or classified.
A different mstibenefit balance may exist
in the student exchanges between the
United States and the U.S.S.R. These can
result in the transfer of technology that is
difficult to quantify or even identify. Since
about 1972. Soviet "students." who are
usually exprienced engineers. scientists,
and managers of R&D establishments, have
concentrated on study programs in the
United States in semiconductor technology.
'Ibid, inkmcademy Exchanges, p. 4; Agreement on Coop
amtion, p. 43.
Photo credit: U.S. &p.rtmenr of Energy
mtvea in th.6 n * t union
p.rt of th.U . S N S S . R . Coop.Rtk" R q p . m
Ch. VI-Technology Transfec Definition and Measurement
computers, and other fields related to problems of applied research. Large numbers of
Chinese "scholars" are similarly beginning
to appear in the West. Data reflecting the
number of such students and the institutions they attend tell little of the nature and
amount of the technology they carry back
with them. I t has been alleged that this in-
formation carries potential military significance. As far as can be determined, however,
no systematic attempt has ever been made
to quantify its value in either military or
commercial terms. Any complete assessment of such exchanges must weigh both
strategic and potential commercial losses
against their political and cultural value.