Royce got his large and vicious story to replace the Ginsburg headlines in the Long Island edition on November 8, 1989. He told me later that he was not in charge of the headlines which painted the dire story of a major loss to the Russians with me being the key figure.
The Long Island Newspaper
November 8, 1987
FULL FRONT PAGE HEADLINES
"The Story of CARBON-CARBON
A SPECIAL CASING USED ON U.S. NUCLEAR WARHEADS MAKES THEM MORE ACCURATE AND HAS GIVEN THE UNITED STATES A DECIDED ADVANTAGE.
BUT A U.S. OWNED FIRM HAS SOLD THE SOVIETS THE MEANS TO HELP MAKE THE VITAL MATERIAL, AND EXPERTS SAY THE SOVIETS MAY HAVE GAINED 5 YEARS OR MORE IN RESEARCH AND DEVELOPMENT TIME.
WITH THIS MATERIAL THE COULD IMPROVE MARKEDLY THEIR FIRST STRIKE CAPABILITY. THE SALE, FOR WHICH THE SOVIETS PAID NOTHING, HAS BEEN CALLED A "NATIONAL BLUNDER"
A TRANSFER OF CRUCIAL TECHNOLOGY
AN AMERICAN-BASED FIRM IN SCOTLAND SELLS THE SOVIETS THE MEANS TO IMPROVE THE ACCURACY OF NUCLEAR WARHEADS, AND THE U.S. AND BRITAIN FAIL TO STOP THE DEAL IN TIME
By Knut Royce and Earl Lane
Newsday Washington Bureau
November 8, 1987
An American-owned company in Scotland has provided the Soviet Union with vital equipment for the processing of a material that can significantly improve the accuracy of nuclear warheads, Newsday has learned.
This transfer of technology, for which the Soviets have paid nothing, is described by a Democratic congressional leader as "a national blunder" and by a former Reagan administration official as "among the most serious cases that have come to light."
Similar specialized equipment is used in the United States for a classified process to manufacture a durable and heat-resistant material called carbon-carbon. Experts said that such equipment might save the Soviets five years or more in research and development time and help give them an ability to manufacture advanced materials with a variety of military and aerospace uses. "This is one where they (the Soviets) are going to pick up time," said Adm. Bobby R. Inman, former deputy director of the CIA.
Since 1978, carbon-carbon has been used on the nose tips of America's newest strategic warheads on the MX, the Trident D-5 and the Minuteman 3 missiles, according to nuclear weapons experts. In the United States, carbon-carbon also is used in rocket nozzles, for the nose and wing edges of the space shuttle, and in brakes of high-performance aircraft. It is being explored for use in next-generation space planes and as a shielding for satellites against laser attack. Nuclear weapons specialists said carbon-carbon nose tips help make the free-falling warheads more accurate than those equipped with preceding generations of nose tips. The material burns off - or ablates - in a slow, predictable manner as the warheads re-enter the atmosphere. There is less "wobble" in the trajectory of the warhead as it nears its target, experts said.
The possibility of a surprise or "first strike" by either of the superpowers, with pinpoint attacks on missile silos and command centers, remains the subject of spirited debate.
But the potential vulnerability has led both sides to spend billions on "hardening" bunkers and developing mobile strategic weapons. The threat of a first strike is a major topic in current arms negotiations between Washington and Moscow.
"Improving warhead accuracy helps increase the danger of a nation being successful in a preemptive nuclear strike," said Sen. John Kerry (D-Mass), who sits on the Senate subcommittee that oversees international trade issues.
The equipment sent to the Soviet Union slipped through a loose net of inadequate regulations and confused actions by the governments of the United States and Great Britain between 1982 and 1985. A Commerce official said that the department on occasion fails to spot critical technology and that this may have been such an instance. U.S. Customs and the FBI have since investigated the case according to principals who were interviewed by the two agencies, but no charges have been brought. Company officials, noting that the sale was legal under British rules, said they believed the equipment would be used for nonmilitary purposes.
In a report to Congress last year, the Pentagon claimed that quick action by President Ronald Reagan and Prime Minister Margaret Thatcher had thwarted the transfer in early 1985 "literally as a Soviet ship was coming into Britain to pick it up."
However, Newsday has learned that the equipment already had reached the Soviets and that Western technicians were later permitted to supervise the assembly of the equipment in the Soviet Union.
Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Committee said Friday that his staff had sought an explanation after being queried by Newsday and had been told that the Pentagon report was in error.
"Contrary to the administration's claim that this is a 'good news' story -- this was a national blunder," Dingell said. "We have been told by a top administration official that in its attempt to stop the sensitive export, they only caught the 'tip of the rat's tail.' The evidence bears this out. "It appears the administration clearly attempted to mislead Congress."
Richard Perle, at the time assistant secretary of defense and the Pentagon's chief watchdog on technology transfer matters, said he had been told by his staff that the crucial equipment had not been shipped.
The official to whom Perle had given the day-to-day responsibility for halting the transfer of militarily critical technology, Stephen Bryen, declined several requests for an interview on the carbon-carbon case. It was Bryen's Office of Trade Security Policy that issued the report to Congress claiming the transfer has been aborted.
Perle now compares the transfer to the sale by Japan's Toshiba Corp. and Norway's Kongsberg Co. of milling machines and computer controls that may help the Soviets produce quieter submarine propellers. "It certainly would be in the same category as Toshiba," Perle said of the carbon-carbon transfer. "If you set up categories of 'serious', 'most serious', etc., this would be a 'most serious' case."
Kerry, who said he would look into the matter, said, "This appears to be an outrageous failure to protect United States national security."
The three-month investigation by Newsday was based on a review of contracts between the seller, Consarc Engineering Ltd., and the Soviet buyers, as well as interviews with current and former Consarc employees, British engineers currently working at the Soviet plant, experts in the field and U.S. and British officials.
Consarc Engineering is the subsidiary of Consarc Corp. in Rancocas, N.J. Both are controlled by another Rancocas company, Inductotherm Industries, whose chief executive describes himself as a staunch anti-communist and Reagan Republican.
"THIS APPEARS TO BE AN OUTRAGEOUS FAILURE TO PROTECT UNITED STATES NATIONAL SECURITY"
Sen. John Kerry (D.Mass)
"IF YOU SET UP CATEGORIES OF 'SERIOUS', 'MOST SERIOUS', ETC.,THIS WOULD BE A 'MOST SERIOUS' CASE."
Richard Perle,ex-defense aide
KEY TECHNOLOGY GOES TO THE SOVIETS
The equipment is located at a Soviet plant named "Elektroizolit" in Khotkovo, a town about 40 miles north of central Moscow.
Among Newsday's findings:
- U.S. intelligence officials had been aware of the sale months before the first shipment left Scotland, yet Washington appears to have alerted England only after much of the equipment was already in Soviet hands. Then, while officials of the two countries argued for three months about what action to take, the buyer rushed the last major shipment through.
- When England, on Feb. 8, 1985, finally restricted the sale of the machines and seized and destroyed what the seller would later describe as "scrap ... of no value whatsoever," it unwittingly picked up the obligation to pay most of the $11 million cost of the plant. Under the contract, the Soviets were required to pay only after the final shipment was delivered. The company had insured all of the equipment with a British national insurance agency. So the seizure of the equipment freed the Soviets from making payment and triggered an insurance settlement to Consarc by the British government.
- Despite the concerns that led to their unsuccessful embargo, both countries later allowed technicians to travel to the USSR to help make the factory operational. The U.S. Commerce Department permitted the architect of the sale, an American, to work on the machines at the Soviet plant, though it later rescinded that approval. Great Britain is still permitting British engineers to work at the plant.
What was delivered, according to the contracts and company officials, were specialized industrial furnaces and presses that can heat and compress pitch, a petroleum by product, into woven carbon fiber forms to produce carbon-carbon. In all, there were nine vacuum induction furnaces and two isostatic presses, together with the cooling equipment, insulation, controls and other components required to make them work. Experts said the equipment also would be useful in processing other advanced composite materials.
R. Judd Diefendorf, a pioneer in the carbon-carbon processing technology, reviewed Consarc's contracts with the Soviet Union for Newsday and concluded the equipment represents "the best facility (for processing carbon-carbon) anywhere in the world in one place."
Diefendorf is on the faculty at the Rensselaer Polytechnic Institute in Troy, N.Y. He said that under good weather conditions, carbon-carbon nose tips offer three times better accuracy than warheads fitted with nose tips made with the composite it replaces, carbon phenolic.
But the key architect of the sale James Farol Metcalf, insists that the machinery itself "won't take the wobble out of rockets." Metcalf, in one of several interviews that spanned nearly 10 hours, agreed that the equipment "can cook anything." But he said, "You're not a French chef just because you've got a frying pan."
At the same time, Metcalf admitted that he suspected all along that the machinery might be useful for processing the high-grade carbon-carbon required for strategic components such as the hot parts of rocket motors and nose tips.
"At what point did I recognize that the equipment could be used to make the high-strength product that could be used in rocket motors?" he said in one interview." Probably always. Probably always."
In a letter to Newsday last month he defended the sale but acknowledged, "I have never doubted that the customer (the Soviet Union) did intend a wide range of carbon and graphite products, including...if he was qualified, to produce military and aerospace products."
Industry officials agree that the equipment cannot be put to efficient use unless the Soviets understand the processing technology, which involves carefully controlled heat and pressure parameters.
In addition, before the material is processed in the furnaces, the underlying fibers must be woven in complex patterns to help provide the shape and durability required for such products as warhead nose tips and rocket nozzles.
Diefendorf and industry officials with firsthand knowledge of Soviet efforts over the past decade to acquire carbon-carbon technology and equipment said they believe much of that weaving technology may now be in Soviet hands.
Jacob Vydra, a Soviet emigre who worked on materials research, said the Soviets have been making a big push on composite materials in recent years. He said he has "no doubts" that the Soviets have a technical understanding of the carbon-carbon process. Vydra is technical director for ASIST, an Ohio firm, that assesses technical developments in the East bloc. Vydra said his files contain several hundred Soviet technical papers on aspects of carbon-carbon.
Perle said the transfer of furnaces and pressure vessels by Consarc Engineering Ltd. involved "generic technology."
"This is not a widget, the acquisition of which teaches you nothing," he said. "It's technology from which they will now gain hands-on experience. In that sense it is the most serious type of technology transfer, and the technology happens to be a militarily critical one. So in both respects it's very damaging."
Inman said the Soviets have mounted a determined effort in recent years to obtain manufacturing equipment to make numerous copies of a particular product rather than trying to acquire just the end product itself. "That is something they have been organizing to do," Inman said.
It could not be learned what the Soviets are now processing at the Khotkovo plant. A British source who frequently visits the site told Newsday that he is never allowed there when the equipment is in operation.
Thomas Dick, Consarc Engineering's managing director at the time of the sale and now head of a firm that dispatches Scottish engineers to the Soviet plant, said that it is not yet fully operational and will manufacture only commercial products.
Yet in its report to Congress touting what it claimed was an "attempted diversion," the Pentagon said the Soviets intended to use the machines to "manufacture critical components (which would) provide greater accuracy and throwweight for its strategic missiles."
Metcalf, who admits he had the equipment built in Scotland instead of New Jersey, in part, because of "uncertainty of USA policy on exports to the USSR," said he had doubts even the managers of the Soviet plant knew precisely what they intended to do with the factory.
As for himself, he said, "I do not, did not want, and will never know all the uses."
Metcalf, who at the time was a director of Consarc in Scotland and New Jersey and vice president of the New Jersey firm, said the sale was fundamentally a commercial enterprise, albeit one with "expectations of high profits."
Ray Roberts, president of Consarc in New Jersey, agreed that the company saw the sale as an innocent commercial venture that violated no American laws. He said the Soviets had claimed the machines would be used only for commercial products.
Henry Rowan, president of Inductotherm, said he is a Reagan Republican who has avoided bidding on other Soviet orders that "looked sensitive." On this order, he said, "We were pretty much convinced it was for commercial application."
The isostatic presses were designed to fall just short of the pressure benchmark that would have required licensing at the time for export to the Soviet bloc. Toward the end, Metcalf said, he fretted he may have violated one of the U.S. export control regulations. But he said he was reassured by his attorney that the sale was by the book.
Metcalf, a savvy entrepreneur who prefers to describe himself as a "hillbilly," is clearly contemptuous of the regulations and the regulators.
"The (export-control) law intends a purpose," Metcalf said, "but it don't know how to enforce it and don't know how even to write it."
The United States, in fact, had long been aware of the strategic value of carbon-carbon. The State Department's Office of Munitions Control had banned the export, without a license, of technical data useful for the manufacture of carbon-carbon. Vernon Edler, president of a California engineering firm bearing his name, was successfully prosecuted under the Munitions Control legislation in 1976 for having sold carbon-carbon technical data and services to two French companies. The French and the United States are considered the leaders in the military uses of carbon-carbon, though other nations - including West Germany and Japan - are considered knowledgeable on the process.
Export of the industrial hardware for making carbon-carbon falls under the jurisdiction of the U.S. Commerce Department. Commerce regulates the sale and resale abroad of a wide range of "dual use" items that can be used for both civilian and military purposes.
Commerce and its British counterpart, the Department of Trade and Industry, operate under a list of common export regulations adopted by an alliance that includes most of NATO and Japan. The alliance, which meets periodically to update its control list, is called the Coordinating Committee for export controls (COCOM).
At the time of initial Consarc shipments to the Soviet Union, the specific type of furnaces and pressure vessels being shipped were not under restriction by either the United States or its COCOM partners, according to Commerce Department officials.
After Britain passed an emergency law on Feb. 8, 1985, to restrict the sale of the furnaces and presses sold by Consarc Engineering, the United States and the rest of COCOM adopted similar restrictions.
While the alliance shares a common list of controlled commodities, its members vary broadly on interpretation of that list and on enforcement. As one British defense source put it, with only some exaggeration, "There is no CoCom."
British officials declined, however, to discuss the case on the record, citing that country's Official Secrets Act.
Perle reacted to the news of the transfer with a bitter allusion to a statement often attributed to Vladimir Lenin: "Capitalism will sell us the rope with which we hang it."
"Lenin was right," Perle said."
The following is another story in Newsday the same day.
MORE THAN JUST A BUSINESS TRANSACTION
By Knut Royce and Earl Lane
Newsday Washington Bureau
November 8, 1989
To the seller in the deal, it was just another business transaction, a chance to provide merchandise to an eager customer.
But the seller was the Scottish subsidiary of an American company and the buyer was the Soviet Union.
The merchandise was equipment useful for the production of an advanced, heat-resistant material that can increase the accuracy of nuclear warheads.
The Soviets - who acquire much western know-how by stealth - were acquiring valuable technology right under the eyes of unwary export control agencies.
They were already well-known to each other, the energetic American entrepreneur and the Soviet trade officials. James Farol Metcalf had more than a decade of experience selling industrial equipment to the USSR. In early 1982, he was just finishing a sale of equipment to a steel plant in the Urals for Consarc Engineering Ltd., the Scottish subsidiary of a large New Jersey firm.
A Russian acquaintance approached him with a new proposal. The Soviets were interested in buying some furnaces and other equipment for a factory in a little town called Khotkovo, about 40 miles north of central Moscow.
The stated purpose of the equipment was the heat-treatment of materials such as electrodes used in power plants and other electrical facilities.
It also had possible military uses. According to one of Metcalf's friends in the materials industry, who asked not to be identified, Metcalf did not have enough technical background to assess these uses. Metcalf says now that he had suspicions all along.
In any case, the deal sounded like a winner. Consarc Engineering Ltd., Metcalf's employer in Scotland, was eager for export business. The Scottish economy had fallen on hard times and the proposed Soviet project - eventually worth about $ 11 million - would be the biggest export sale in the firm's history, according to company sources.
Although the Conservative government of Prime Minister Margaret Thatcher supported President Ronald Reagan's "get tough" military approach toward the Soviets, British firms and the British political leadership had long treated the Soviet Union as just another business market rather than an "evil empire."
Consarc officials in Scotland discussed the proposed deal with the parent company, Consarc Corp. in Rancocas, N.J. Metcalf said a decision was made to handle the Soviet project from Scotland because costs were cheaper, exports were eligible for government backed insurance and - perhaps most importantly - there was an "uncertainty of USA policy on exports to the USSR."
British export regulations at the time allowed the sale. The U.S. Commerce Department's control list also allowed shipment of virtually all the equipment. But the U.S. regulations didn't really matter. Although Consarc was American-owned, the equipment was to be built and shipped from outside the United States. Under international agreement, the American rules did not apply.
Still, the Soviets were well aware of the complexities of western export regulations and how quickly the trading climate can change. Machinoimport - the Moscow-based agency that was to serve as the buyer in the deal - asked Metcalf to get a written OK from the British government on the acceptability of the proposed sale.
In an August 13, 1982 letter to the British Department of Trade and Industry, Consarc listed the equipment it wanted to sell: Nine high-temperature furnaces, and one hot isostatic press (two presses eventually were shipped). The letter specified that the isostatic press would operate well below the pressure ceiling of 5,000 pounds per square inch specified in the U.S. and British export regulations.
The Consarc letter was signed by managing director Thomas R. Dick, a salty-tongued Scot who, along with Metcalf, was to become one of the major players in the deal with the Soviets. Dick handled the engineering specs for the plant during negotiations with the buyers, according to Metcalf. Dick's letter to the British trade department gave no hint that there was anything extraordinary about the equipment to be shipped.
R. Judd Diefendorf, an American carbon-carbon specialist who reviewed copies of the letter and other Consarc documents obtained by Newsday, said the letter seemed written in a way that would not set off any alarm bells. Two of the furnaces were described as "laboratory" design. The letter did not mention that Consarc was going to supply a pitch impregnating station, which would have required an export license had it been shipped from the Untied States. Such equipment is important for a preliminary step in the processing of high-strength materials known generically as carbon-carbon.
Also, the pressure limit on the isostatic presses was stated as 300 kilograms per square centimeter, comfortably below the cutoff of 351 kg/cm2 - or 5,000 pounds per square inch - contained in the American regulations. The maximum operating temperature for the isopresses was said to be 600 C (l,112 F).
But the contract documents obtained by Newsday tell a different story. They show that Consarc agreed to provide the Soviet buyers with an isopress capable of temperatures up to 2,012F - a more useful range for working on carbon-carbon products. And the pressure limit was specified to be 351 kg/cm2 - or just one kg/cm2 below the level that would have required Consarc apply for an export license.
Also, there was room for confusion on the size of the furnaces. In the letter to the Department of Trade and Industry, Consarc stated that the "charge" -the maximum size of the product to be cooked - would be "500 mm3 _ Taken literally, Diefendorf said, that would mean a lump about the size of a sugar cube. Company officials said that there was no intent to deceive and that they had meant that 500 millimeters to refer to the length of the side of the charge, or a cube about a foot and a half long on each side.
The contract documents specify work zones that are nearly seven feet in diameter, 6-1/2 feet high. The large size of the furnace chambers was permitted by the export regulations. But if the size had been spelled out explicitly in Dick's letter, it might have alerted export officials about the scope of the planned facility. As several experts have pointed out, the furnaces are large enough to "cook" just about anything the Soviets desired -- from nose tips to heat shields to large segments of wing edges or other structures.
Still, the equipment fell within the letter of the law. The Department of Trade and Industry - the British counterpart to the U.S. Commerce Department - approved the proposed deal on Oct. 18, 1982, a few months after receiving Consarc's letter. The department told Consarc that "our technical advisers have now confirmed that all of the items specified in your letter are not subject to embargo restrictions and does (sic) not require export licensing."
To play it safe, Metcalf says, he also told the U.S. Commerce Department about the impending deal on Feb. 2, 1983, during a visit to Washington. Metcalf says he told a Commerce aid that he was planning to sell up to five furnaces to the Soviets at a cost of $3 million to $10 million. Metcalf said he was told that the furnaces and pressure vessels he planned to sell did not require any U.S. licenses.
Thus reassured, Metcalf entered into final negotiations with the Soviets in early 1983. "In Moscow, we wrote up a document saying it looks like we can do the job if we design it right." he said. That meant, among other things, keeping the pressure in the isostatic press just under the legal limit. The Soviets were satisfied. The contract was signed on March 23, 1983.
"So that was that," Metcalf said. " We had a nice banquet. Called the gypsies in. Spent $1,500 entertaining my new clients."
"The Soviets had stipulated in the contract that they would not be responsible for any payments on the plant until it was fully delivered and checked out. But Consarc was protected. The firm had signed up with a British government program designed to shield exporters from any sudden changes in government regulations, among other things."
"For a premium of about $150,000, the company was able to insure 90 percent of its $11 million Soviet deal with the Export Credits Guarantee Department, and agency of the Department of Trade and Industry. So when the British government eventually moved to seize a shipment of Soviet-bound equipment, Consarc avoided ruinous losses. thanks to a handsome insurance settlement from an arm of the same government agency that decided to impose the embargo."
At the time of the contract signing, however, the future looked bright. A company source said the firm's largest previous sale had been a $2.5 million order from China in 1980 for industrial furnaces. (That was a year before Consarc bought the firm, then known as Scot-Vac.) With the Soviet deal, Consarc Engineering was entering the big time."
At a long, blue warehouse in an industrial suburb outside Glasgow, Consarc engineers set to work on the furnaces shortly after the March contract signing. It takes 15 to 18 months to build the furnaces from scratch, a company official said. As was customary, key components were purchased from other companies - automatic controls were bought from Eurotherm International of England; cooling equipment from Baltimore Air Coil; furnaces switch gears, starters and relays from Siemens of West Germany; General Electric capacitors were used in the power supplies, and so on.
Metcalf made no secret of his big score with the Soviets and word started to spread within the tight little community of specialists who manufacture and use high-temperature furnaces. A source with knowledge of the pending sale notified technical experts in the Pentagon in mid-1983 that Consarc was preparing to ship nine vacuum induction furnaces to the Soviets and that the sale was worth investigating further.
The American intelligence community would eventually raise an alarm about the deal. But apparently there was little sense of urgency at the outset, even though the United States had long sought to protect carbon-carbon technology and, in 1976, successfully prosecuted an American contractor for giving technical data and advice on the process to two French firms."
It is possible that warnings from the CIA or others were hung up within the bureaucracy, said Richard Perle, former assistant secretary of defense for international security policy. "This happens rather more often than one would wish," he said. "The agency (CIA) or someone in the intelligence community has information and does not pass it.
At the same time, Metcalf's early contacts with the Commerce Department apparently failed to stir questions. Lee Mercer, who helps direct export policy at the Commerce Department, said such contacts might easily have been overlooked. "We meet with exporters continually who come in asking technical questions," Mercer said. He said busy department aides rarely write reports on such contacts, particularly if no export license is being sought.
Metcalf said he visited Commerce for a second time in early December, 1983, to ask whether pending technical changes in U.S. export regulations had any impact on his contract with the Soviets. Metcalf said he received little guidance and "felt I had wasted company money on a visit."
Metcalf describes the Commerce Department officials he dealt with as being even less familiar with the potential military uses of the Consarc equipment than he was.
One industry source, who asked not to be identified, said the CIA was starting to ask American experts questions about the Consarc deal by late 1983.
Whatever the discussions by technical experts, top policy officials within the Pentagon and Commerce Departments said they did not learn about the case until late in the game. Perle said that his office did not know the full scope of the deal until late 1984. "The moment we knew about it, we did what we could" Perle said.
The administration mounted a belated and increasingly frantic effort to convince the Thatcher government that the Consarc deal was unwise. The induction furnaces and isostatic presses, many specialists agreed, could be adapted for use in processing high-strength carbon-carbon materials for nose tips of warheads, rocket nozzles, aircraft brakes and other uses.
Even Metcalf now acknowledges that the equipment could be modified to "to cook anything." But as U.S. agencies started to take increasing interest in the deal, Metcalf was more concerned about money matters. "I told the Russians ... 'we are at the point right now if I can't get this job closed and shipped and get our money, I run the risk of going bankrupt' Plus, I said, 'I'm feeling the governments are going to embargo this stuff.'"
Metcalf's instincts were right. In late September or early October, Consarc was visited by engineers from a research arm of the British Ministry of Defense. The engineers ostensibly were seeking a technical briefing on Consarc's product line, but Metcalf believes the visit was no coincidence. The engineers were particularly interested in looking at a furnace similar to the ones that were being shipped to the Soviet Union. The visitors crawled all over the machine, Metcalf said.
According to a U.S. intelligence source, who asked not to be identified, the Pentagon's Defense Intelligence Agency sent an urgent cable to London on October 31, 1984, warning British authorities that "an entire plant" for the processing of carbon-carbon composite materials was being delivered to the Soviets by Consarc.
A delegation of British authorities traveled to the United States and met with American officials on Nov. 12, according to the source. The British apparently resisted U.S. efforts to halt the sale but agreed to study it further. An authoritative British source said the decision to block further shipments was difficult because the sales were authorized and the government was under pressure from Parliament not to restrict exports. It was clear, however, that officials were starting to take an unusual interest in the deal with the Soviets. In late November, a team of British customs officials paid a visit to the Consarc plant, Metcalf said. One of the visitors suggested that the company delay any further shipments. But on December 3, the Department of Trade and Industry confirmed again to Consarc that shipment were legal.
Metcalf left a few days later on a scheduled trip to the Soviet Union to help oversee installation of furnaces that had been shipped during autumn. He was feeling pressure from the Soviet side as well. The equipment was not operating properly and the Soviet buyer with whom Metcalf dealt was getting anxious for results. "Unbelievable pressure he's putting on me," Metcalf said. In addition, three Soviet engineers who had been serving as go-betweens at the Consarc plant in Scotland were getting restless and wanted to return home.
Metcalf tried to convince an official at the Soviet plant that the finished factory would give him technology "that's worth millions to you." But he hedged his grand appeal with a bit of business realist. "I agreed to bring him a security system for his automobile, especially designed so he would get an alarm up in his room in case someone messed with his car," Metcalf said. Through such promised favors, Metcalf was able to retain his influence with the Soviets.
While Metcalf was trying to soothe his Soviet customers, discussions about his project continued back in Britain. On Dec. 7, the British Department of Trade and Industry informed the United States that Consarc was shipping equipment that did not require an export license and was not considered militarily sensitive. A week later, British customs officials also informed the U.S. that "95 percent of the order has already been shipped."
A group of American officials, still anxious to halt what they could, arrived in London on Dec. 19. The discussions, according to one source familiar with them, were strained. Customs officials in both Britain and the United States had been attempting to determine just what sort of equipment was being shipped by Consarc. But officials on both sides were reluctant to disclose to their counterparts all that they knew. The Americans were initially reluctant to press the British on the matter, the source said.
"When you have a contact that is so good to you on so many levels, you avoid asking the question that can become embarrassing or make him uneasy," the source said." "The rule of thumb over there was maybe if it was a violation of both country's laws, maybe we would have gotten involved. If it's sensitive at all, forget it. That's what we had to live under." Still, according to another source familiar with the discussions, cables from Washington to London regarding the Consarc deal became angrier in tone. "There are nasty dialogues that went back and forth between our government and theirs," said an official familiar with the cable traffic.
The U.S. delegation was headed by Michael Maloof of the Pentagon's export monitoring office on Dec. 20, they met with British counterparts. U.S. customs officials had no authority to investigate cases in Britain. When they requested permission to visit the Consarc plant in Scotland, British authorities refused, the source said.
Even after the British later impounded a shipment of spare parts and other gear headed for the Soviet Union, tension between British and U.S. customs officials continued. Customs officials on both sides met and apparently had similar instructions. "Don't answer any questions until the other side answers," the source said. "So you had a Mexican standoff you couldn't believe." Several sources said British customs authorities declined to provide the United States with a list of the goods seized. (The Americans were to learn what was seized through other sources, according to one official knowledgeable about the deal.)
While U.S. and British customs officials were having their showdown in London, James Metcalf was taking care of business. On Dec. 20 - the same day U.S. and British officials were meeting - Metcalf signed an amended contract with the Soviets in Moscow. It gave him more time to fix the equipment that already had been delivered and allowed him to ship the bulk of the remaining equipment as soon as possible. Metcalf said the shipment went out by the end of the month. He and his Russian wife stayed in Moscow over the holidays, a relaxed time that Metcalf always enjoyed on his visits to the Soviet Union.
When Metcalf returned to Scotland in January, a British customs agent was waiting, accompanied by several defense aids. They visited the Consarc plant near Glasgow on January 23 to ask Metcalf what he was up to. When Metcalf saw the uniformed customs inspector, he said, "I went into an absolute fright." He cooperated with them, and told them that the next shipment of equipment was scheduled to leave Feb. 4 on a Soviet freighter. It was not until Feb. 8 that British customs officials passed emergency regulations and moved to seize the shipment, which had been delayed several days at the dock. The Soviet ship Mekhanik Yevgrafov was en route to pick up the furnaces when the authorities finally acted. Metcalf said he suspects that British officials were not as keen to stop the equipment as their American counterparts.
But once the seizure was made, the British tried to portray its importance in much the same light as the United States. "When we realized there was, in fact, a gap in our security controls, we acted to close that gap in the interest of national security," a British government spokesman said at the time of the seizure. In a report last year to Congress on the effort to keep high-tech secrets from the Soviets, the Pentagon claimed similarly that quick bilateral action with Britain had averted the "attempted diversion ... Literally as a Soviet ship was coming into Britain to pick it up."
A British government spokesman said at the time of the seizure that "although 95 percent of the contract had been fulfilled, it's the remaining 5 percent which is vital equipment necessary for the (Soviet) plant to operate."
In fact, Metcalf, other company officials and two intelligence sources agree; the most vital equipment already had been shipped. The seized goods included substandard furnace insulation, a roll of nichrome heating wire that Metcalf said was of poor quality, plastic mixing barrels and pieces of steel that fit on the bottom of the isostatic presses.
What was really necessary for the plant to operate was a continuing infusion of western expertise. For that, the Soviets were able to turn to some of the same people - including Metcalf and Thomas Dick - who had shipped them the equipment in the first place.
Newsday attempted to teach us in a sidebar story the same day.
"HOW CARBON-CARBON MAKES MISSILES DEADLIER
November 8, 1989 in Newsday.
Carbon-carbon is a composite material that is lighter and tougher than steel. It can withstand extremely high temperature, and when it burns it does so at a steady rate that is easier to predict. The steadiness of the burning reduces the warhead's wobble as it encounters drag in the atmosphere, and that means warheads can be targeted with greater precision."
The first sketch showed to circles one 800 feet and around it one 1,250 feet. Warheads tipped with carbon were headed for the circles. The small circle said - "With carbon-carbon nose tips, a Minuteman 3 missile can hit within 800 feet of target." The larger circle says - With graphite tips, the missile can hit within 1,250 feet of target
Other sketches show cute little airplanes.
IT'S USED IN AIR - AND SPACECRAFT, TOO
"On the space shuttle's wings and nose. . ."
"For brakes on high-performance aircraft. . ."
"And possibly in the planned "Orient Express" aerospace plane"
Another technical story was printed on the same day for the non-technical readers which included those in governments This very technical story by Royce and Lane is a composite of true but misleading technical facts, woven with related and unrelated statements by identified and unidentified so-called experts.. The adhesive is the sales propaganda from companies who sell this product to the Pentagon at very high prices. (Bull manure is also rich in carbon.)
HIGH-TECH RECIPE FOR MAKING A BATCH
By Knut Royce and Earl Lane
Newsday Washington Bureau
November 8, 1987
The furnaces and presses acquired by the Soviet Union can be used to process a material that has helped change the face of American aerospace technology during the past two decades experts said.
The material, called carbon-carbon, can be made lighter and tougher than steel, able to withstand temperatures hotter than a blowtorch and capable of being formed into structures that will hold their shapes under tremendous stress.
Carbon-carbon - a composite or hybrid material - has been used in the rocket nozzles and the nose tips of U.S. long range missiles. It is ideal for brakes on high-performance aircraft. It is used on the leading edges of the space shuttle wings. It is being studied for extensive use in the planned "Orient Express", or National Aerospace Plane, a craft that would be able to fly into orbit at speeds up to 17,000 miles an hour. The material also is being studied for Star Wars uses, such as to shield satellites from laser attacks.
Carbon Molecules tend to form strong, stable chemical bonds among themselves that can withstand extremely high temperatures and pressures. Moreover, the rate at which carbon-carbon burns off- or ablates -at high temperature is steady and predictable, experts say. There is less "wobble" in the warhead as it encounters atmospheric drag. That allows engineers to better calculate the flight path of a warhead as it heats up on re-entry into the Earth's atmosphere.
Assuming good performance by the rocket and its warhead guidance systems, the use of carbon-carbon nosetips can add an extra margin of accuracy that turns a good missile into a great missile. One carbon-carbon expert, who has worked on the manufacture of American warhead nosetips, said the Minuteman 3 missile warheads can strike within 800 feet of a target using carbon-carbon tips, compared to 1,250 feet using graphite tips. He said that under ideal conditions, the newer MX missile can lob its 10 warheads into a football stadium from more than 6,000 miles away, thanks in part to the use of carbon-carbon warhead tips.
While all nuclear warheads have devastating effects, the potential to land one within 300 to 400 feet of a target gives much better odds of knocking out reinforced missile silos and other hardened targets in a "first strike" attack.
Composite materials - of which there are many - have two essential components: a bundle of woven fibers and an adhesive in which the fibers are embedded. Fiberglass, perhaps the most familiar composite, consists of short glass fibers embedded in polyester.
Scientists have long known that when a material is produced in the form of thin fibers, its strength can be greatly increased. A pane of glass readily shatters under stress. But spun fibers of glass can have a tensile strength of more than a half-million pounds per square inch (or six times the tensile strength of steel).
A bundle of fibers alone - no matter how strong - has no structural value, however. You can't build a rocket nozzle out of rope. In composite materials, scientist harness the strength of the fibers by surrounding them with a material that can be solidified.
In the case of carbon-carbon, the fibers come from carbon rich yarns such as rayon. The surrounding adhesive is also a carbon-rich material such as pitch.
The methods of making carbon-carbon were derived from those used for other composite materials. They have been evolving since the early 1960's. Key information on the process is classified, but the general methodology has been described in open scientific literature.
Scientists have long known that when a material is produced in the form of thin fibers, its strength can be greatly increased. Spun fibers of glass can have a tensile strength six times more than steel.
A review of the Consarc deal, several experts said, suggests the Soviets were able to order a flexible facility that is capable of all the important steps in making carbon-carbon materials, except the weaving of the fibers into three-dimensional shapes.
Although Consarc does not make such weaving equipment, several experts interviewed said it is possible the Soviets have obtained that capability from other western firms or have developed it themselves. Even in the United States, the woven "preforms," in some cases, are made by hand by workers using long needles. Complex geometric patterns have been devised to minimize the amount of space among the fibers in the preforms. But machine weaving methods can be adapted from the textile industry, several specialist said.
Experts consulted said there is little question that the Soviets can produce preforms into finished carbon-carbon products using the furnaces and other equipment obtained from Consarc, although one specialist said the equipment might simply be intended for traditional processing of graphite powder into high-quality industrial graphite.
But, R. Judd Diefendorf, a carbon-carbon specialist at Rensselaer Polytechnic Institute in Troy, N.Y., said it is more likely the furnaces can be used for carbon-carbon processing. Dick Williams, vice president for manufacturing graphite at Poco Graphite in Decatur, Texas, agreed. "You don't need vacuum induction furnaces to process graphite," Williams said. The underlying technology for that was invented in the 1880's, he said.
Assessing the impact of any technology acquired by the Soviets necessarily involves a degree of uncertainty. Obtaining the equipment is one thing; making proper use of it is another. James Metcalf, who put together the Consarc deal, maintains that the project was plagued by poor equipment design and faulty execution. But a source who has recently visited the plant said the furnaces are working better than their design specifications.
Told of the equipment the Soviets obtained, Paul Rolincik, a carbon-carbon specialist at Avco Systems in Wilmington, Mass., said, "From my viewpoint, I would say this is definitely useful for carbon-carbon processing ." But he added, "The question is did they get the specs on how to operate it. If they didn't, they could spend ten years" trying to develop the process.
Jacob Vydra, a Soviet emigre who assesses technology developments in the East bloc, said the Soviets have published numerous research papers on properties of carbon-carbon and other composites. "They do okay for small research projects," Vydra said. He said the Consarc equipment "will give them a chance to leap from the research stage" into development and production. "That's what they need," Vydra said.
There are different grades of carbon-carbon. They range from high-density materials of great strength and durability to low-density materials that have excellent heat resistance but can be broken apart with bare hands.
The properties of a specific carbon-carbon product are determined by the raw materials selected - the type of carbon fiber, the complexity of the weave, the type of impregnant - and the quality of the processing. Even a few minutes at the wrong temperature can destroy the batch, experts said.
High-temperature applications such as rocket nozzles and warhead nose tips require carbon-carbon that is generally more dense than that used for aircraft brakes or wing edges. The Consarc equipment, as outlined in company contracts obtained by Newsday, should allow the Soviets to "densify" carbon-carbon materials to suit a range of uses, experts said. (Several spoke only on condition that they not be identified. One government scientist described the Consarc sale and its aftermath as "a very touchy issue.")
The major equipment obtained by the Soviets and its potential uses:
o Impregnation tanks for soaking the preformed fibers in pitch. The Soviets received six "vacuum pitch degassing and prefilling stations," according to the contracts. The setup included a vacuum pumping station and a control station.
In the equipment, pitch is melted under vacuum in a heated reservoir. At the same time, the fiber bundles are heated to the same temperature in an adjacent tank. The hot pitch is then transferred via pipes into the tank containing the fiber bundles, also called preforms. This process is done at normal, atmospheric pressure and typically yields material that is 50 percent carbon by weight after all the processing has been completed.
o Two isostatic presses. Under high pressure, the pitch will be squeezed deeply into a bundle of carbon fibers. Such high-pressure methods yield materials that are even denser in carbon. The Soviets received two isostatic presses capable of operating pressures of just under 5,000 pounds per square inch (p.s.i.) during the impregnation of the fibers with pitch. The system includes gas storage tanks, high-pressure gas transfer lines, compressors and controls.
The pitch-soaked fiber bundles are placed into metal containers and then put into the isostatic press (isostatic means simply that the pressure on the containers will be applied uniformly from all directions).
The temperature in the press typically is raised to a range from 550 degrees to 650 degrees Centigrade while the pressure also is increased. The thin metal can holding the fiber bundles acts like a "rubber bag," transmitting pressure to the pitch-soaked products within. Typically, it will take about 24 hours to complete a single processing cycle in the press. The final carbon densities using this method are more than 90 percent by weight, ideal for military uses.
Metcalf said the isostatic presses were not operating properly in 1985, shortly after delivery. The current status of the presses could not be learned. The Soviets had bought hot isostatic presses previously from ASEA, a Swedish firm, and sources said those presses - while apparently intended for other uses - could be adapted for the Consarc-supplied facility if needed.
o Nine vacuum induction furnaces. These furnaces can be used to heat and solidify material at very high temperatures. Unlike standard furnaces that have electric-resistance heating elements like those on a household stove, an induction furnace has a heating element - called a susceptor - made of a material like graphite that can withstand extreme temperatures without melting. Powerful coils induce currents in the susceptor, causing it to heat up.
The heating of carbon-carbon composites takes place in two phases. The first is carbonization, when the pitch soaked assemblage is charred, like wood being converted to charcoal. The non-carbon materials in the pitch are vaporized. The result is a material rich in a form of carbon called coke.
The soaking and heating steps can be performed a half-dozen times or more. Each time the material becomes more and more dense. Carbonization is carried out by controlled heating in a range from 650 degrees to 1,100 degrees Centigrade.
While this heating step can be carried out within an isostatic press, it usually is done in a separate furnace that allows slow, even heating. Consarc sold the Soviets three bell-shaped retort furnaces that experts said would be suitable for carbonizing the products after they come out of the isostatic press.
The final stage of heating is called graphitization, when the carbon-dense composite is heated to a very high temperature and changes its molecular structure to the semi-crystalline form of carbon called graphite. This step is carried out in an induction furnace at temperatures in the range of 2,600 degrees to 2,750 degrees Centigrade. A source who has seen the Consarc furnaces in the Soviet Union said at least several have been operating at temperatures as high as 2,950 degrees Centigrade.
An alternative method to deposit carbon among the fibers of the preform is called chemical vapor deposition or CVD. Rather than using a liquid pitch, the manufacturer uses a hydrocarbon gas such as methane. The gas is pumped into a vacuum furnace. Carbon molecules in the gas are liberated by heating. They infiltrate the woven fiber structure and build up a matrix of carbon.
Chemical vapor deposition yields materials of somewhat less density but better mechanical properties than the standard pitch impregnation process. According to one description, such materials have a 50 percent better tensile strength and more than double the flexural strength of carbon-carbon that has pitch as the impregnant. Chemical vapor deposition techniques also can be combined with other densification processes, depending on what properties are desired for the final product.
It is unclear whether the Soviets have modified the furnaces to do chemical vapor deposition. But specialists said the task would be simple enough. The engineers would have to install a methane gas line or modify one of the three existing gas lines to the furnace. "That's something you can do in a half-hour," one technician said. The susceptors that were shipped with the furnaces are of a "log cabin" design that is not particularly suited for chemical vapor deposition work. But replacement susceptors using commercial grade graphite can be readily installed, several specialists said.
One carbon-carbon expert with long experience on American military contracts said he was disturbed by the scope of the equipment that was shipped. "No matter what disclaimers are made, that kind of processing equipment is nicely suited for carbon-carbon materials," the expert said. He said the dimensions of the furnaces are considered very large by specialists in the field. The working zones are 82.7 inches in diameter by 76.8 inches in height. "Nine units of that capacity are a nice production operation," the expert said. "That's not the kind of equipment that is tied to exploratory technical development."
Diefendorf and others said it is likely that the Soviets could develop carbon-carbon production lines on their own. (And one specialist said the Soviets made no secret that they were interested in acquiring technical data on the process from western journals and scientific meetings.) But Diefendorf said the ability to get proven equipment from western suppliers could prevent costly mistakes in setting up a production line. "You can't afford to fail," he said. A furnace-load of carbon-carbon materials can cost $1 million, Diefendorf said. Being able to take shortcuts on the development costs could save millions of dollars, he said.
In another sidebar story Newsday tries to become technical. This part also had sketches to define the carbon process.
Newsday November 8, 1987
THE MAKING OF CARBON-CARBON
One method used in the U.S.
1. Fibers derived from carbon-rich materials such as rayon are woven into semi-rigid bundles called preforms.
2. The preforms are immersed in a carbon-rich adhesive such as pitch, which soaks into the open spaces within the weave.
3. The pitch is squeezed more deeply into the bundle of carbon fibers in a vessel called an isostatic press, which created uniform pressures of 2,000 pounds per square inch or more.
4. The pitch-soaked weave is charred in a furnace, like wood being converted to charcoal. The cooking process vaporizes any non-carbon materials. The carbon molecules in the weave bind to the carbon molecules in the pitch, creating an extremely strong, stable material.
5. The carbon-dense composite is heated in a special induction furnace to temperatures of more than 2,600 degrees C. The molecular structure of the material changes to the even more durable, semi-crystalline form of carbon called graphite.
Steps 3 through 5 can be repeated a half-dozen times or more, increasing the material's density and heat resistance.
Another article published that day was: 109-Hillbilly.html
The news kept coming in Newsday the next day while Royce took a little holiday after all his hard work on this story. Including 100-Aftermath.html
In another article Royce gave us the list of characters in his saga.
Some principle characters in the carbon-carbon drama
James Farol Metcalf
A 56-year-old, self-styled North Carolina "hillbilly" who engineered the sale of the carbon-carbon processing plant to the Soviets. At the time, he was director of Consarc Engineering in Scotland, as well as vice president and director of its New Jersey parent, Consarc Corp. Metcalf, who completed one year of college, married his Soviet wife, Vera, on Christmas Day, 1979.
Thomas R. Dick
A salty-tongued, 64-year-old Scot who was managing director of Consarc Engineering at the time of the sale. Today he runs Vacua-Therm, an engineering firm that dispatches British technical personnel, with Britain's approval, to the Soviet plant. He, too, married a Soviet woman, Alla, last December.
A senior official of the Moscow-based buying house, Machinoimport, who was chief Soviet negotiator for the plant purchase. Well-versed in western export regulations, Ivanov prodded Metcalf into signing new contracts for spare parts and technical assistance even after Britain and America embargoed the already-delivered machines.
Deputy assistant secretary of defense for international economic, trade and security policy, and the lead U.S. official in the failed attempt to prod the British into stopping the shipment to the Soviets. In a report to Congress last year, his office declared that quick action by Prime Minister Margaret Thatcher and President Reagan thwarted the transfer of the equipment "literally as a Soviet ship was coming into Britain to pick it up."
A Reagan Republican who dislikes the Soviet system and who is CEO of Inductotherm Industries, which controls both Consarc Corp. in New Jersey and its Scottish subsidiary, Consarc Engineering. Rowan approved the sale because he believed the equipment would be used for commercial products. Then, reacting to indecision and flip-flops by the United States and Britain in 1985, he directed his subsidiaries to halt their work on the contract with the Soviet plant.
President of Consarc Corp. Roberts also approved the sale by the Scottish subsidiary. He said he told U.S. intelligence officials about the equipment before the first shipment went out in mid-1984. According to Metcalf, Roberts ordered him to sell BEPA Ltd. to Consarc after BEPA had obtained a new and potentially lucrative Soviet contract to assemble the plant after the British and the U.S. embargoes of the equipment.
A chronology of events to allowed readers follow the story line was published the day after the headline story. The reporting was reasonable but not complete.
A TRANSFER OF TECHNOLOGY
Aug. l3, 1982: Consarc Engineering asks the British Department of Trade and Industry whether the machines it wants to ship to the Soviet Union require licenses.
Oct. 28, 1982: Consarc is told it can ship the machines without a license.
Feb. 2, 1983: James Farol Metcalf, Consarc director and key architect of the sale, visits the U.S. Commerce Department and describes what he will ship. He elicits no response.
March 23, 1983: Consarc Engineering and Machinoimport of Moscow sign an $11 million contract for delivery and installation of the equipment - isostatic presses and vacuum induction furnaces.
July - December, 1984: The equipment is delivered.
Oct. 31, 1984: The Pentagon advises the U.S. embassy in London that "an entire plant" for processing carbon-carbon is being shipped to the Soviet Union.
Nov. 12, 1984: British delegation arrives in Washington. The machinery transfer is discussed.
Late November 1984: British Customs officials for the first time inspect the Consarc plant and ask for a delay in further shipments. A few days later, the request for delay is lifted.
Dec. 13, 1984: British Customs tells its American counterpart that "95 percent of the order has already been shipped."
Dec. 19, 1984: A U.S. team of Pentagon, CIA and Commerce Department officials arrive in London and meets the following day with British officials to try to get the remaining shipments halted.
End of December, 1984: The final major shipment is rushed to the Soviet Union by Metcalf, who is now afraid of an imminent embargo.
Feb. 8, 1985: Britain passes emergency regulations blocking sale of the equipment, although it has all been shipped. The government seizes and destroys a shipment composed mostly of substandard insulation. British national insurance has to pay most of the $11 million contract for equipment already shipped.
February, 1985: Several days after the embargo, Metcalf and another company official travel to Moscow to explain the seizure. The Soviets say they expect the contract to be honored.
April 3, 1985: U.S. Commerce Department imposes an embargo similar to the British one.
July 8, 1985: Commerce Department tells Metcalf he can go to the Soviet Union and assemble the equipment.
July 25, l985: Metcalf, using a new company he controls, signs a new contract with Machinoimport to supervise the installation and adjustment of the equipment.
August, 1985: Consarc Engineering delivers a shipment of spare parts to the Soviet plant. Again, British national insurance picks up the tab.
Sept. 21, 1985: Commerce Department reverses, telling Metcalf he can't go to the Soviet Union to work on the machines. Metcalf then writes to ask whether he can work on equipment at the plant not controlled by the Coordinating Committee for export controls, but gets no reply.
Oct. 4, 1985: Henry Rowan, president of Inductotherm, Consarc's parent company, miffed at all the flip-flops by England and U.S., orders his companies to do no more work for the Soviet plant.
Feb. 1986: Under a contract signed before Rowan's edict, a Consarc affiliate in Scotland, Calcarb, ships the Soviet plant $700,000 of what Metcalf calls substandard insulation.
Current: Britain cannot restrict the movement of its engineers, so Thomas Dick, former Consarc official, has provided engineering services to the Soviet plant through a firm he formed after the embargo.
If Royce had a moral to his story, it was printed in Newsday on November 9, 1989.
POLICING THE FLOW OF TECHNOLOGY
By Knut Royce and Earl Lane
Newsday Washington Bureau
November 9, 1989.
While the United States has sought to prevent militarily useful equipment and know-how from reaching the Soviet Union since the Cold War, the system for policing such technology transfer has been the subject of sharp and continuing debate.
The Consarc case, involving shipment of furnaces useful in making carbon-carbon composites and other advanced materials, offers a glimpse at some of the issues.
o The complexity of the regulations. Critics complain the control lists are too cumbersome and involve many obsolete items. The sheer volume of transactions subject to review, one study found, sharply limits the ability of regulators to focus on the more critical items.
o Inherent tensions between the Defense Department, which wants to clamp down on sales of technology, and the Commerce Department, which wants to encourage U.S. trade.
o Dissatisfaction among American allies, who view the U.S. control effort as too restrictive and who sometimes allow shipment of technology against American wishes.
While there have been efforts to simplify and streamline the rules governing technology exports, the case-by-case application of those rules still can lead to uncertainty and confusion, experts said.
The Commodity Control list administered by the Commerce Department contains 128 pages of items in 240 general entries. There are several hundred pages of supplementary opinions and rule changes. The list contains items that can be shipped only with an export license (even to allies) and specifies which items cannot be sold to East bloc nations.
The list covers the commonplace ("horses for export by sea") and the bizarre ("specially designed implements of torture.") The descriptions range from the very specific ("'digitally controlled' equipment capable of automatic X-ray orientation and angle correction of double-rotated stress compensated crystals . . . with a tolerance of 10 seconds of arc maintained simultaneously in both angles of rotation") to the very general ("other electronic and precision instruments, including photographic equipment and film, not elsewhere specified. . .')
James F. Metcalf, the architect of the Consarc Engineering Ltd. deal, says he received mixed signals from the Commerce Department after the British had decided to restrict further shipments of furnace equipment to the Soviet Union in early 1985. When Metcalf asked one Commerce official whether he - as an American citizen - would be allowed to provide technical advice on assembly of the equipment that already had been shipped, Metcalf says he was told he would face a jail term if he did. Two months later he received a letter from Commerce giving him permission to proceed. That permission was revoked three months later.
But many of the complaints deal with the scope of the regulations rather than their interpretation. "We've been trying to stop so much that its just impossible," said Ray Roberts, president of Consarc's American parent company, Consarc Corp. "You read those export regulations - it's hundreds of pages of detailed text. The other problem is that the way government draws a line and describes something, a good technologist can always find a way around those regulations."
The Pentagon maintains its own detailed list - the Militarily Critical Technologies List - that is kept secret. It's serves as the government's technical reference on items the military wants Commerce to embargo. Small business firms complained that the classified nature of the list often made it impossible for them to determine what items were being considered for embargo. The Pentagon now releases a non-classified version of its list.
A research panel of the National Academy of Sciences, in a report released earlier this year, found "no effective mechanism" for weeding out products and technologies that have ceased to be strategic or that have become so widely available that control for all practical purposes, is impossible. "The momentum is to add, not delete," the report said.
"I think the United States errs in its administration of export controls by having too inclusive a list." said Lew Allen, head of the academy panel and director of the Jet Propulsion Laboratory in California. "You have to pick a few items that are of real importance and then work very hard to convince your allies that they should join with you in controlling those."
The question of just what technology exports to approve always has been a touchy one. The State Department's Munitions Control Office (with input from the Pentagon) licenses sales of arms and military equipment while the Commerce Department licenses "dual use" technologies which can have both civilian and military applications. The problem is that virtually all modern technologies can be dual use.
The Soviets bought a western-built air-traffic control system for a Moscow airport. It can also be used for air defense and control of fighter aircraft. Precision ball bearings bought from a Vermont firm were used in the production of warhead guidance systems. The Kama River truck plant - built with western technology - can build military as well as civilian vehicles.
While not quarreling with the underlying intent of export controls, many business groups have complained that the execution of the policy has been cumbersome and discourages U.S. sales abroad. The Electronic Industries Association estimates that export controls are costing the United States $9 billion a year in lost business as foreign firms fill orders that American companies are unwilling or unable to take. For 1985, the academy panel found, 5 percent of the 122,606 applications for export licenses required processing times of more than 100 days. Lee Mercer,. a top official in Commerce's export administration office, said the agency's processing times have dropped substantially, particularly for shipments to western allies. He said such shipments can be approved in five working days.
The Commerce Department is developing a system to allow firms to make applications electronically via computer links to further speed the processing times, Mercer said. Commerce officials say they also are doing a better job in rendering timely opinions on whether a particular item is widely available from foreign sources. The Pentagon has been computerizing its processing of export cases to provide prompter opinions.
Still, there remains widespread dissatisfaction with the licensing process. One expert who serves as a consultant to the Customs Bureau said, "The government doesn't have the people to technically evaluate applications . . . industry knows what's high tech and what's not because they compete against each other." The expert who asked not to be identified, said that the quality of the Pentagon's review process has dropped since Frank Carlucci - formerly deputy defense secretary and now national security advisor and Secretary of Defense -designate - gave final authority to policy staffers rather than the engineering and technical staff.
Allen agreed. "I believe there have been more errors since it was taken away from the technical people than there were before," he said.
Without whole-hearted allied cooperation, as the Consarc case suggests, the United States can do little to stem the flow. "The United States cannot succeed in its efforts to block Soviet acquisition of militarily sensitive western technology unless it has the full cooperation of the (increasing number of) other technologically advanced countries," the academy report found.
At the same time, the United States - far more than its CoCom allies - uses export controls as a tool of foreign policy, according to Robert Kerr of the International Institute for Strategic Studies in London. European countries are more dependent upon international trade for economic survival, Kerr said.
Even without requesting exceptions, entrepreneurs can find ways around the export regulations. They can ship equipment to front corporations in approved countries and then re-sell the equipment to East bloc buyers. Determined sellers can write up orders that remain within the letter, if not the spirit, of the law.
"There's a judgment call involved," said one Commerce official, who asked not to be identified. "It really depends on what the person comes and tells you. It's how it is portrayed."
"When it finally comes down to it, you've got to rely almost on the people to look after themselves and say, 'All right, what's the potential use of this stuff,'" said R. Judd Diefendorf, a carbon specialist at Rensselaer Polytechnic Institute.
I was angry at Diefendorf and Royce for that closing remark. I told Royce in the first interview that the publication and research people like Diefendorf were the real give away artists when it comes to new technology. They obtain government money to do research and rush to publish it. When the American government tried to clamp down on those publications they cried about the freedom of speech. I wrote Diefendorf a letter asking him to confirm the statements in Newsday, but he never replied.
The following story was printed on the same page as the AFTERMATH story in Newsday on November 9, 1987. The reporter and editor could not resist bragging that their investigative reporting had prompted a hearing by the Congress
CONGRESSIONAL PANEL TO PROBE SALE
By Knut Royce and Earl Lane
Newsday Washington Bureau
November 9, 1987
Washington - A congressional panel has launched an investigation into a sale to the Soviet Union by an American firm in Scotland of machines that can be used for processing a material that improves the accuracy of nuclear warheads.
The House Commerce subcommittee on oversight and investigations also wants to learn why the Pentagon, which took the lead in the failed attempt to block the transfer, told Congress last year that the transfer had been thwarted.
Rep. John D. Dingell (D-Mich.), chairman of the committee, said, "It appears that the administration clearly attempted to mislead Congress. The subcommittee will be holding hearings on this matter in the near future."
Subcommittee sources said they have asked the Commerce Department to turn over all its records on the sale of the equipment by the Scottish subsidiary of Consarc Corp. in Rancocas, N.J.
The panel's investigation was prompted by reports in Newsday yesterday that the United States failed to prod Britain to ban the sale of the machines that process the material, known as carbon-carbon, before they were all shipped.
Newsday disclosed that when the Thatcher government finally acted in 1985, it seized a shipment consisting mostly of substandard insulation, but as a consequence had to pay for most of the machines already delivered to the Soviet plant.
Newsday also reported that the U.S. Commerce Department, which followed Britain in restricting the sale of the equipment, then allowed the American architect of the sale, James Farol Metcalf, to return to the Soviet Union and help assemble the machines.
Committee aides said they will seek records from the Defense Department and the CIA.
One of the main reasons why the Pentagon was guiding the press began to surface with the story printed in Newsday on November 10, 1987. Every time our government met the other CoCom members they made sure that the current press was full of bad news about the Soviets importing from the West.
WESTERN COUNTRIES PLAN EXPORT-CONTROL TALKS
By Earl Lane
Newsday Washington Bureau
November 10, 1987
Washington - Commerce Secretary C. William Verity Jr. said yesterday that officials of the United States and its trading partners will meet early next year to discuss ways to strengthen controls on the export of western technology to the East Bloc.
"This is something that we take extremely seriously," Verity said in remarks after a speech at the National Press Club. He mentioned the upcoming meeting in response to a question about the 1984 acquisition by the Soviet Union of furnaces and other equipment useful in the making of an advanced material called carbon-carbon. The material can significantly improve the accuracy of nuclear warheads and has other military applications.
Newsday disclosed on Sunday that Consarc Engineering Ltd., an American-owned firm in Scotland, had shipped the processing equipment to the Soviets, who wound up paying nothing for it. The report told how a belated British embargo on the transfer of the equipment, at the urging of U.S. officials, had failed to stop the shipment.
The Commerce Department "has done a marvelous job in the last year-and-a-half of tightening up our control mechanisms," Verity said. "One of our problems has been the cooperation that we get from . . . our trading allies in Europe and Japan. And that is something we are working aggressively on now."
Richard Perle, a former assistant secretary of defense, has described the Consarc case as comparable in impact to the sale of sophisticated milling machines to the Soviets by a subsidiary of Toshiba, the Japanese firm. The milling machines, and Norwegian-built computer controls, may help the Soviets make quieter propellers for their submarines.
Verity said he did not favor trading sanctions against Toshiba. "I think the important thing in the Toshiba case is that the company itself . . . has done all the things that need to be done to make sure that what happened can't happen again," Verity said. He added, "There are other guilty parties, and I think that our goal should be to do whatever is necessary to make sure that Japan puts the necessary control system in place."
By Knut Royce and Earl Lane
Newsday Washington Bureau
Washington - The Pentagon official in charge of monitoring the transfer of western technology to the East bloc said yesterday that furnaces and other equipment shipped to the Soviets by a U.S.-owned firm in 1984 had been installed in a military factory.
"The factory is regarded as a military factory," said Stephen Bryen, deputy undersecretary for trade security policy. "I don't think it has any other purpose." The plant is in Khotkovo, about 40 miles north of Moscow.
Newsday disclosed during the weekend that Consarc Engineering Ltd., a Scottish subsidiary of an American firm, had shipped equipment useful in the manufacture of an advanced material called carbon-carbon. The heat-resistant material can significantly improve the accuracy of nuclear warheads and has other military and aerospace uses.
Company officials have said they were unaware of the potential military uses of the equipment, which was shipped legally under British export rules.
Bryen, who declined previous requests for an interview, yesterday defended the action of U.S. and British authorities in the Consarc case. "My counterparts [in Britain] really made a hell of an effort" to stop it once they knew of it, Bryen said.
The Pentagon had been alerted in September or October 1984, that the Soviets were trying to acquire carbon-carbon processing equipment, Bryen said. But it was not until December 1984, that Consarc Engineering Ltd. was identified as the seller. The British imposed an embargo in February, 1985, and seized a Soviet-bound shipment of Consarc material. Company officials and intelligence sources have told Newsday that the most essential equipment already had been shipped by then.
But Bryen maintained, as have the British and U.S. governments since 1985, that customs officials had stopped transfer of the vital equipment. "One of the critical elements was the heating elements for the furnaces," Bryen said. "They had not delivered those."
James F. Metcalf, the principal architect of the deal, said, however, that heating elements for the high-temperature furnaces had been delivered and installed before the embargo. He said the seized items included furnace insulation that the Soviets can buy elsewhere. Also seized were heating plates for use in a pressure vessel - called an isostatic press - delivered to the Soviets. Metcalf said the heating plates were of poor quality anyway and the Soviets probably have the ability to make their own.
Regarding the equipment, he said, "I don't doubt that they [the Soviets] can make them run. The question is can they make them run correctly and accurately" to produce useful products. "There I have some doubts."
The House Commerce subcommittee on oversight and investigations has begun an inquiry to determine what was delivered to the Soviets.
Newsday also reported that western technicians had helped to assemble the equipment even after the embargo. Bryen said his office "went berserk" in July, 1985, when it learned that the Commerce Department was allowing Metcalf to continue work at the Soviet plant. Commerce revoked its permission three months later. Bryen said he has asked the British government to stop allowing British technicians to work at the Soviet plant. But he said British law does not prohibit engineers from selling their skills abroad, even for work on equipment that itself may be embargoed.
Royce was on holiday for the week and should have not been given credit for the story, unless it was a grand plan to have the Pentagon add its weight to the truth of the Newsday articles.
My attempt to give the Pentagon and the Department of Commerce the real facts for the CoCom meetings failed on every attempt. I faxed Lane seventy two corrections and misquotes in the Royce and Lane articles. He understood my objections, but apparently did not believe me. The guard at the plant north of Moscow was a grandmother who let down a dog chain gate to allow passage of people who did not wear badges. Soviet military plants do not allow Soviet people to pass without strict security.