AND SOURCES AND METHODS OF FOREIGN NATIONALS ENGAGED IN ECONOMIC MILITARY ESPIONAGE THURSDAY, SEPTEMBER 15, 2005 HOUSE OF REPRESENTATIVES, The Subcommittee met, pursuant to notice, at 2:26 p.m., in Room 2141, Rayburn House Office Building, the Honorable John Hostettler (Chairman of the Subcommittee) presiding. Mr. HOSTETTLER. The Subcommittee will come to order. We pride ourselves on being an open society in America. We allow millions of foreign nationals to come to our shores each year as tourists, business visitors, and students. Unfortunately, some of these business visitors have come here to take advantage of our openness and engage in economic and military espionage. Earlier this morning in a closed session, the Subcommittee heard a disturbing report given by the Nation's top counterintelligence official regarding economic and military espionage by foreign nationals in the United States. We will shortly hear a sanitized version of this testimony. In the past few months alone: American University researcher and Chinese national Zhan Gao pled guilty to illegally exporting technology that can be used in missile guidance and airborne battle management systems for a $590,000 payment from China. Chinese nationals, Jian Guo-qu and Ruo Ling Wang, were arrested in Milwaukee for conspiring to illegally export more than $500,000 in restricted electronic military radar components to China. Iranian Abbas Tavakolian was sentenced to 57 months incarceration for attempting to export F-4 and F-14 jet parts to Iran. Kwonhwan Park, a Korean national, pled guilty in November to illegally exporting Black Hawk helicopter engines to China through a Malaysian front company. Month after month, publications such as TIME magazine and the Washington Times have run stories concerning the theft of critical American technologies by foreign nationals embedded at research facilities. Nationals of many nations come to the United States to engage in espionage. Our closest allies are not excluded from this list. However, all evidence indicates that certain nations are the most egregious violators. 2 There is no nation that engages in surreptitious illegal technology acquisition for purposes of both commercial piracy and military advancement on a scale that approaches that of the People's Republic of China. The Wall Street Journal reported last month that thousands of Chinese military front companies are operating in the United States-some as contractors for the United States military-and that hundreds of thousands of Chinese tourists, business executives and students entered the United States last year. Many of these visitors, even when they are visiting for legitimate purposes, are tasked with obtaining whatever technological information they can. There are currently at least 115 students here from China, studying nuclear engineering, and thousands more studying computer, electrical, civil and chemical engineering. As an engineer myself, I must ask how can we be sure that they are not bringing back American technological secrets to their home country? And what about Iran, a country we suspect of endeavoring to make nuclear weapons? There are now at least four Iranian nationals actively studying nuclear engineering in the U.S., according to the Department of Homeland Security, as well as 350 electrical engineers, 12 biochemists and a host of other Iranian students studying in technical fields here. What is true of all these individuals is that they came to the United States after being approved for visas. They undergo Visa Mantis security checks which are designed to weed out those visa applicants likely to use these visits to the U.S. to acquire sensitive technology. However, the State Department's focus over the last several years seems to have been devoted to reducing the inconvenience of the Visa Mantis security checks for visa applicants as much as possible and to be as generous as possible in the issuance of multipleentry visas. Now, we all want to facilitate the swift issuance of visas to legitimate applicants. But, I am concerned that we might not be paying adequate attention to the inherent security risks, that we may be being generous to a fault. At jeopardy are our military superiority and our economic competitiveness. Today we will ask a number of questions including: what can be done to enhance the existing security systems in place to track foreign nationals at our research facilities? Do background checks for visa applicants need to be improved? And should aliens suspected of being involved with piracy or illegal technology transfer be automatically ineligible for a visa to the United States? At this time I turn to my colleague, the Ranking Member from Texas, Ms. Jackson Lee, for purposes of making an opening statement. Ms. JACKSON LEE. Thank you very much, Mr. Chairman, I want first of all to associate myself with the intent of this hearing and what I believe the Chairman's intent is and, of course, associating myself and joining him with that intent, the purpose of this hearing. That would be the legislative road map, the guidepost, if you will, to help us effectively become the America that we all know and have come to love; a country that respects both the invest ment-both investment and, of course, the contributions that immigrants have made over the long history of this Nation. I have always begun these hearings over the last year that I have had the honor of serving my colleagues and the American people, saying that we are a nation of immigrants and a nation of laws, and of course, that immigrants do not equate to terrorists. So as we look to the witnesses who are before us, let me ask you to keep in mind that it would be, I believe, an impractical nonreality to suggest that we would close the door to all students, all researchers, and all nationals, international persons attempting to do business in the United States. The subject of this hearing is foreign nationals engaged in economic and military espionage. According to the National Counterintelligence Executive report to the Congress this year, individuals from almost 100 countries attempted to acquire sensitive United States technologies in fiscal year 2004. The report concludes that foreign access to sensitive information with both military and conventional applications has eroded the United States military advantage and the greater U.S. intelligence community's ability to provide information to policymakers and undercut U.S. industry. It goes to my point that we must separate sort of the weak from whatever else is engaged. It is interesting that when all of us travel aboard-abroad on behalf of our respective Committees, particularly in this instance, the Homeland Security Committee that I am also on, are also interacting with heads of government who are thanking you for the opportunity of many of their own nationals to engage in training activities and opportunities-and research opportunities with those in the United States. You will constantly hear from your constituents, mostly in the medical and science professions, technology professions, the importance of the exchange and the ability to interact with those from other countries. This report states, however, that we are vulnerable to espionage because the United States has provided foreign entities with easy access to sophisticated American technologies. Many people thought that we were on the wrong side of the issue when many of our voices rose to oppose the sale of Unocal to a Chinese energy company. I happen to be one of those, and I come from what is called the energy capital of the world, but frankly I do believe there should be a fire wall in terms of important technology-and had the opportunity to speak to the head of China's petroleum company at the time that the sale was being pulled, if you will, and indicated that we hope we have the opportunity to do other business efforts with that company, but there had to be a line in the sand on important technologies. New electronic devices have vastly simplified the illegal retrieval of storage information, of massive amounts of information, including trade secrets and proprietary data. Globalization has mixed foreign and American companies in ways that have made it difficult to protect the technologies that these firms develop or acquire, particularly when that technology is required for overseas operation. Mr. Chairman, I just a few days ago took my son back to college, interacted with a few college students for a couple of hours, not a whole day, but I was amazed with the level of sophistication and the eagerness to come back and use either the school's technology or their own to develop new expertise-maybe something like what Bill Gates did a decade or more ago-dealing with now the new Microsoft, this new technology called Facebook, which the college students themselves designed. We know technologies are being fostered all over America, and the simplicity of being able to access some of our most delicate information is something we should be concerned about. Lastly, sophisticated information systems that transmit-store and transmit systems have become increasingly vulnerable to cyber attacks, an issue that my colleague Congresswoman Lofgren has been a leading force on. Apparently, the counterintelligence community is uncertain about exactly how much of its intelligence collection effort-some intelligence collection effort is directed by foreign governments and how much is carried out by private businessmen and women, academics or scientists, for purely commercial or scientific purposes. It is clear, however, that some foreign governments do employ state actors. This includes their intelligence services as well as commercial enterprises. Most of the foreign governments that are attempting to acquire American technology employ tools and techniques which are easy to use, inexpensive, low risk and sometimes legal. In most cases, foreign collectors simply ask for the information by e-mail, a phone call, a fax, a letter or in person. The report asserts further that increased demand for foreign labor in the United States, high-tech industries and the sharp rise in foreign investment in the United States over the past decade have given foreign governments increased access to American businesses and consequently to U.S. trade secrets. In addition, recognizing neutral benefits of an unhindered exchange of information, the United States has opened its military bases, national laboratories and private defense suppliers to foreign visitors. Mr. Chairman, I am going to ask that the entirety of this statement be submitted as I come to a close, and I ask unanimous consent that the rest of my statement be submitted into the record. Mr. HOSTETTLER. Without objection. Ms. JACKSON LEE. But let me conclude by saying, we know the problems, but we also know the value and the benefits that have been received by the American people that have been our longstanding commitment and our values to the opportunity of bringing those who are persecuted to the shores, but also those who have talent, who are contributors and those who just have brawn, who have literally built America. Let us not close the door to the opportunity of foreign students who—again, as I met with in meetings in China and elsewhere, who have learned both our democratic principles but also to share in technology and the ability to build systems that will benefit not China, not Germany, not the new Iraq, not South and Central America or the continent of Africa, but humanity. Let us not in our effort to avoid the transmittal of important technologies and important concepts here in America, not draw technology-draw legislation so restrictive, Mr. Chairman, that we cannot find a way to en sure that America benefits from the talent of this world. And let us make sure that the legislation is reflective of the security needs, but also the needs of the American people to be a friend to the world. And I yield back. Mr. HOSTETTLER. I thank the gentlelady. Do any other Members have opening statements? Ms. LOFGREN. Mr. Chairman, I will not take the full 5 minutes. Mr. HOSTETTLER. I recognize the gentlelady from California. Ms. LOFGREN. Clearly, every Member of Congress is interested, concerned and opposed to espionage in our country. So that is a given. The question is how to protect ourselves without doing damage to ourselves, and I think it is important to recall. I was in elementary school in 1957 when Sputnik went up, and we got a little wake-up call that the country was in trouble and we were in a huge competition with the Soviet Union, and we were behind. We pulled up our socks, and we ultimately won that competition. I think in a way we are in a similar spot today, the American Electronic Association used this phrase: It is the difference between then, which was throwing the frog in the boiling water; now the frog is in the water as it heats up, and a lot of Americans don't realize that we are in this competition that is very serious in terms of science and technology and engineering talent. We have slipped in the number of engineering Ph.D.'s awarded in this country. We are falling behind; India and China and the EU are emerging as ever more vibrant competitors. The AEA—again, they just did a terrific report-cite the U.S. graduating 60,000 engineers a year, India graduating 82,000 engineers a year, and China graduating four times as many engineers a year as the United States. Now, the Ph.D. level—the National Academy of Sciences tells us that 65 percent of the Ph.D. candidates in engineering are foreign students, and many of them stay on and become Americans with us, and that benefits us greatly. In fact, I come from Silicon Valley, and about 40 percent of the start-ups in Silicon Valley are from people who were born someplace else and became Americans. And so we need to keep in mind that if we have to have strength in systems to make sure that we are protected, that we don't end up shooting ourselves in the foot economically, and I would say also militarily, because the new Americans, the best and brightest, also help immensely in terms of the technology that ultimately is used, not just in the commercial world, but also in the defense effort. I hope that as we talk further about this, we can think about what systems we might put in place, smart systems, so that rather than creating bulky systems that have the result of deterring people we might want to have come in, and maybe not deterring the bad guys, we come up with streamlined systems that really target what we need in a way that is efficient and does not do damage. So that is what I am very interested in, and I yield back the balance of my time. Mr. HOSTETTLER. I thank the gentlelady. Without objection, all Members will have-will be allowed to have their opening statements be made a part of the record. Mr. HOSTETTLER. At this time, I would like to introduce Members of our panel. |