Moscow’s Technology Parasites

Dec. 1, 1984

The most productive, booming Soviet industry bends no metal and engages in only one kind of engineering, “reverse engineering,” meaning the art of figuring out how somebody else’s weapon systems are being produced and integrated. The sole function of this “industry” is the systematic, no-holds-barred acquisition of US and other free-world technologies with direct or indirect military application. Orchestrated by the Kremlin’s all-powerful Politburo, this massive, parasitic dragnet employs untold thousands of Soviet and other East European agents, hundred of ostensibly legitimate business fronts, and hordes of Western collaborators whose commitment to the profit motive is not swayed by laws, loyalties, or even logic.

Sen. William Proxmire (D-Wis.), hardly an alarmist on defense matter, thundered at a recent Senate committee hearing that “I will not quietly accept a situation in which we spend tens of billions [of dollars] to develop critical technologies and then, through feeble export controls, allow the Soviets to obtain these technologies for next to nothing.” Sen. William L. Armstrong (R-Colo.) was also dead serious when he complained that the US economy is “groaning under the strain of financing two military budgets — our own and a significant portion of the Soviet Union’s.”

The bitter irony, according to senior intelligence and other government experts, is that major portions of US defense spending are required just to offset Soviet weapons made possible by US technological breakthroughs. The CIA’s Deputy Director, John N. McMahon, bemoans the demoralizing effect on the US intelligence community “when we spend a lot of our effort to find out about Soviet weapons systems [only to discover that they are actually] ours.”

The purloining of Western technology is deeply rooted in Soviet doctrine and history. Vladimir Llyich Lenin bragged with considerable prescience more than sixty years ago that “the capitalists…and their governments will shut their eyes to the kind of activities on our side…and will in this manner become not only deaf mutes but blind as well. They will open credits for us… They will supply us with the materials and technology, which we need for our future victorious, attacks upon our suppliers. In other words, they will work hard in order to prepare their own suicide.”

CIA analyses stress that Moscow’s piracy of Western technology started to mushroom in the years immediately following World War II, when the Soviets stole Western nuclear secrets that led to the development of their own nuclear weapons. At about the same time, the Soviets copied a US bomber in its entirety and put it into production as their Tu-4. The pattern has remained the same since then: To achieve major improvements in their military capabilities quickly, they resort to a combination of espionage, stealing, and copying Western systems.

A $100 Billion Heist

Conservative estimates presented to Congress indicate that what is euphemistically called “technology transfer,” meaning the overt and covert hemorrhage of Western technology to the Soviet Union has demonstrably save the Kremlin far in excess of $100 billion in military research and development costs. According to the CIA, the acquisition of these technologies is well organized, highly centralized, and under the direct supervision of the highest organs of the party and the state, including the Politburo of the Communist Party and the Council of Ministers. The CIA’s congressional testimony suggests that primary control over technology acquisition and exploitation rests with the VPK, the Soviet Military Industrial Commission. This organization — which has been around in one form or another since the 1930s — is meant to ensure that the Soviet military gets the resources it needs.

In the late 1960s, the VPK mounted a steadily growing effort to purloin US and other Western defense technologies. According to the CIA, the VPK directly oversees the participation of the twelve Soviet industrial ministries that are involved n military production as well as in the assimilation of Western technology into Soviet military production programs. In addition to VPK, a shadowy organization called the Technical Center operates inside the State Committee for Science and Technology. According to US intelligence, this Center functions as a clearinghouse for technology acquisition and exploitation activities and is responsible for collecting the requirements and reports submitted to the VPK by the defense industrial ministries and for the intelligence in formation and materials acquired by the collecting agencies.

Well-Organized Piracy

The defense industrial ministries, according to US analysts, are required to report regularly to the VPK on their progress in assimilating pirated Western technology into their weapons programs. The “collection agencies” that work on specific technological “shopping lists” blessed by the VPK are the KGB (the Soviet Committee for State Security), the GRU (the chief Intelligence Directorate of the Soviet General Staff), the State Committee for Science and Technology, the Soviet Academy of Sciences, the Ministry of Foreign Trade, and the intelligence services and foreign trade missions of the Warsaw Pact allies. The KGB and the GRU are thought to account for about seventy percent of the most significant military-related items acquired from the West. This includes not only classified items, such as weapons system components, but also such key dual-use and export-controlled items as computers, microelectronics, fiber optics, power metallurgy, composites, lasers, and associated production technologies.

The covert espionage and other surreptitious acquisition efforts supporting the collection of Western technology data are large and growing. The Director of Central Intelligence, William J. Casey, warned in a forceful public alert that “there are now several thousand Soviet-bloc collection officers at work primarily in the United States, Western Europe, and Japan.” Augmenting the take from conventional intelligence operations are what Mr. Casey termed “sophisticated international diversion operations,” meaning a tangled, ingenious web of front organizations that are hard to trace and monitor and that divert high-tech products of military value from seemingly legitimate foreign buyers to the Soviet Union.

US intelligence, he said, has “identified some 300 firms operating from more than thirty countries engaged in diversionary schemes. And there are probably more that remain unidentified.” Most diversions, he suggested, occur through Western Europe, which “is why we have made such a strong effort to enlist the help of our European allies in combating illegal trade activities.” Dr. Stephen D. Bryen, Deputy Assistant Secretary of Defense for International Economic, Trade, and Security Policy, told this writer that the increasing blatancy of Soviet technology transfer operations has caused a closing of ranks on the part of most free-world countries, with the result that the acquisition by Moscow of complete “turnkey” systems will probably be slowed considerably. Presumably, this will force the Soviets to step up their espionage operations, which normally don’t produce as rich as intelligence yield as the wholesale diversion of operational hardware.

An Insidious Network

US intelligence was able to identify more than 30,000 samples of Western production equipment, weapons, and military components and well over 400,000 classified and unclassified technical documents acquired by Soviet intelligence operatives over a five-year period ending in 1982. The majority of the purloined material was of US origin. Most of this material was obtained via Western Europe and Japan. This “technology transfer” advanced and enhanced several hundred Soviet weapons programs, thereby helping significantly to reduce the US technological lead over the Soviet Union.

Assistant Secretary of Defense for International Security Policy Richard N. Perle emphasized in recent congressional testimony that Soviet piracy of Western computer and microelectronic technology over the past decade “has allowed the Soviets effectively to reduce the US lead in these technologies from ten to twelve years in the mid-1960s to the present three to five years.” Secretary Perle disclosed at the same time that “the most accurate intercontinental ballistic missile warhead in the world today sits not on an American but on a Soviet ICBM [because of diversion to the Soviet Union of specialized US ball-bearing manufacturing techniques] that have gone into [their] ICBM guidance.”

One of the major components of the Soviet network assigned to the piracy of Western technology, according to the CIA’s McMahon, is the Soviet Academy of Sciences, which — along with the State Committee for Science and Technology (GKNT) — works very closely with the Soviet intelligence services: “Soviet scientists traveling to the West are briefed by Soviet intelligence services on S&T [science and technology] intelligence requirements before they leave the country. They are also expected to assess their Western colleagues for their potential as intelligence agents. Moreover, an increasing number of intelligence officers [receive] S&T training to allow them to masquerade as scientists in part of these exchanges.”

Technology transfers involving illegal trade operations in general are handled by the Ministry of Foreign Trade (MFT). The Ministry operates a large network of trade offices, joint companies, and purchasing missions whose staffs and offices serve as a cover for KGB and GRU operatives. Most of the Soviet operatives expelled by Western countries for espionage are attached to these trade missions.

East European agents in the US and other Western countries are another key component of the Soviet technology transfer network. The reason is twofold, according to CIA analysts: “First, the East European countries generally have a better image in the West than the Soviet Union, and, thus, their intelligence collectors are often able to… operate more freely. Second, the Soviets must have multiple channels for acquiring Western technology so that none of their defense industrial ministries becomes dependent on a single channel.” The most active surrogates are East Germany, Hungary, Czechoslovakia, and Poland.

Another rich lode in the Soviet technology acquisition effort is the US-Soviet student-exchange program. According to US intelligence assessments, at least three-fourths of the Soviet students coming into the US are in scientific and engineering fields, while their US counterparts are primarily in the social sciences and humanities. The Soviets who come to this country under the graduate and young faculty program generally already have the Soviet equivalent of a US Ph.D. degree, average about thirty-five years of age, and have eight years of practical experience in their specialty. They are, without exception, capable scientists usually involved in military-related work in the USSR. Not too surprisingly, they seek out research activities involving technologies that have direct military applications in fields in which the Soviets are deficient.

One of the most glaring examples of how the Soviets exploit the student-exchange program involves one S. A. Gubin, who attended classes several years ago taught by a US Navy consultant on fuel air munitions. After Gubin returned to the USST, there was a marked increase in Soviet development and testing of these advanced-technology weapons.

The Hemorrhage of Strategic Technology

Each year, the US must spend hundreds of millions of dollars to offset the effects of the hemorrhage of military technologies to the USSR, according to Secretary Perle. He told Congress recently that “we have had to develop new generations of ballistic missiles, antiaircraft defenses, and other costly systems years earlier than we planned because of Soviet success in acquiring and deploying our own technology against us. In the case of modern tanks, we have had to increase our outlays per vehicle by 400 percent to cope with Soviet advances which were derived from Western technological strides in armor.”

Recent US intelligence analyses suggest, for instance, that the striking similarities between the US Minuteman ICBM silo and the Soviet SS-13 silo “very likely resulted from acquisition of US documents and expedited development of this, the first Soviet solid-propellant ICBM.” It is profoundly ironic that Soviet military aircraft designers, capitalizing on the gullibility of US bureaucracies, were able to “order” documents on Western aircraft designs and actually to receive them within a few months. Among the plans and drawings acquired legally by the Soviets — without need even to resort to subterfuge — were those of the C-5 Galaxy. As a CIA report points out, “These plans, although dated now, have contributed to current Soviet development of a new strategic military cargo plane. [Soviet] designers were in particular need of data on US technological advances, but, more importantly, they needed information on aerospace manufacturing techniques.”

The list of Soviet systems spawned by technology pirated form the US, according to the Director of Central Intelligence, “goes on and on” and includes the USSR’s soon-to-fly Space Shuttle, which, he said, is “a virtual copy of ours.” Both the Il76- and Il-86 air transports resemble US designs and, not surprisingly, were developed within a compressed gestation cycle. The Il-76 serves both as a military tanker and transport as well as the platform for the new Soviet AWACS (Airborne Warning and Control System) that US intelligence expects to become operational within about a year. This system will provide the Soviets with the means to attack low-flying bombers and cruise missiles reliably and under all weather conditions. The SU-AWACS is strikingly similar to the Air Force’s E-3A AWACS.

Rope to the Soviets

The new Soviet strategic bomber, code-named Blackjack and now undergoing flight-testing, borrowed heavily from the older B-1a of the US Air Force, according to Secretary Perle. The Blackjack, however, is larger than the US aircraft and can operate at supersonic speed. US aeronautical technology also played a seminal role in the design and production of the An-72 Coaler, a short-takeoff-and-landing aircraft that copied the Boeing YC-14 STOL prototype down to the latter’s pioneering use of upper-surface blowing engines. This similarity, Defense Department spokesmen stress, is the result of extensive and highly successful technology piracy carried out by the Soviets against a range of US aerospace companies.

The Soviet Navy, Secretary Perle told Congress earlier this year, succeeded in acquiring two floating dry-docks from Japan and Sweden, essentially by legal means: “The dry-docks, among the largest and most technically advanced in the world, are capable of providing out-of-the-water repairs of the largest ships in the Soviet Navy. These include Kiev-class aircraft carriers and the Typhoon and Oscar classes of missile-carrying nuclear-powered submarines.” US intelligence experts point out that the dry-docks themselves are so large that no Soviet shipyard would have been capable of accommodating their construction without major facility modifications, associated capital expenditures, and interruptions in weapons programs in progress.

These dry-docks will gain in importance when the Soviets begin — probably within a few years — the construction of large US-style naval carriers cable of accommodating high-performance combat aircraft. US analysts point out, incidentally, that the Soviets — with typical foresight — also acquired Western aircraft carrier catapult equipment and operating procedures for these new large carriers; catapult technology, though relatively common in the West, had been outside the ken of Soviet naval engineers in the past.

In support of its naval requirements, the USSR, within the past few years, has put foreign-built oceanographic survey ships equipped with some of the most modern Western-manufactured equipment on its technology transfer shopping list. Because some of this equipment was embargoed by the US, the ever-resourceful Soviet “purchasing agents” installed other Western equipment on these vessels. This surreptitious modernization of what has become the world’s largest oceanographic fleet with the best Western technology will help support the development of Soviet weapon system programs and antisubmarine systems whose targets are the US Navy.

The Kama River truck factory — a classic example of US and Western willingness to provide Moscow with what Lenin called “the rope we will need to hang Western capitalism with” — is the largest-capacity truck plant in the Soviet Union. Capable of producing 150,000 vehicles annually, its principal customer is the Soviet military, according to Secretary Perle, who told Congress that “the computers, machinery, and the financing to produce Kama trucks — the casting equipment for foundries, automatic engine-assembly lines, machine tool lines, and truck assembly lines — were obtained from the US and other Western countries.” He stressed that these very trucks were used in the invasion of Afghanistan and disclosed that the Kama plant is “now employing this Western technology to produce a new line of trucks to military specifications.”

A Compulsive Habit

US intelligence experts are quick to point out that the Soviet compulsion to pirate Western technology must not be construed as meaning that Moscow’s own technology base is intrinsically deficient. This is simply not so. The Soviet Union’s strong indigenous technology reservoir could support the development of a large modern arsenal without resorting to technological plagiarism. It is true that, in some cases, their acquisitions satisfy occasional deficiencies in Soviet technology, such as smart weapons and electro-optical guidance systems. Signal- and data-processing devices keyed to air defense functions also fall into this category. In most instances, however, the pirated technology is used to speed up development programs in progress, to reduce technological risk, or to improve on original Western designs in an expeditious manner.

In the conventional warfare arena, the Soviets appear to have concentrated their technological bootlegging on Western tank antitank, and air defense-related design approaches and equipment, with the idea of enhancing their own development programs while creating countermeasures to US and other Western weapons systems. The Soviet AA-2 Atoll family of air-to-air missiles, for instance, is copied from the US AIM-9 Sidewinder missile, while the Soviet SA-7 Grail surface-to-air missile is clearly derived from the US Army’s hand-held Redeye antiaircraft weapon.

In the case of Soviet computer, Secretary Perle told Congress recently that “we are caught up in the ironic position of approving exports which support Soviet RYAD computer systems entirely copied from US designs just a few years ago.” He explained that “by exporting advanced Western computers, we have helped the Soviets build a [quintessential] infrastructure and means for the indigenous development of advanced RYAD computers and other Soviet computer series, such as the SM-3.” This technology heist netted benefits for the Soviets across the spectrum of military functions. These include, according to DoD, command control and communications and an array of strategically crucial support functions that extend from nuclear weapon design to the automation of engineering design and manufacturing processes.

The single most important industrial technology acquired by the Soviets since the end of World War II involves Us microelectronics design and production, according to Mr. Casey: “In the late 1970s alone, Moscow acquired several thousands of pieces of Western microelectronics equipment worth hundreds of millions of dollars in all of the major processing and production areas, [to wit], wafer preparation, circuit mask processing, device fabrication, and assembly and test equipment, which they are most in need of.” These purloined technologies, according to the Director of Central Intelligence, have become the building blocks for modern microelectronics industry: “For example, the Zelenograd Science Center, the Soviet equivalent of Silicon Valley, was equipped, literally from scratch, with Western technology. All [their] monolithic integrated circuits are copies of US designs, [down to] the imperfections contained in some of the US samples.”

The VAX Caper

In a welcome break from the long string of successful diversions of US equipment to the Soviet Union, West German and Swedish customs officials seized several advanced VAX computers and thirty tons of computer peripheral equipment late in 1983 and early this year that were being smuggled to the USSR by, to quote Mr. Casey, “the notorious illegal trader Richard Mueller.” This interception, the CIA admits, represents but the tip of the iceberg, with “much larger quantities of computing and electronic equipment [having] been successfully diverted to the USSR.” The Defense Department’s Dr. Bryen told Congress that the “VAX computer case represents the single largest attempted diversion to date of militarily sensitive equipment.” Less than half of the equipment — seven out of fifteen containers — was recovered; the bulk of the equipment, he told Air Force Magazine, got through the Soviets. Conservatively estimated, Moscow gained five years in terms of research and other savings in resource development in computer technology, data communications, computer software, and integrated-circuit technology as a result.

The equipment intercepted by the Germans and Swedes in literally the last few minutes before its irretrievable transfer to the USSR “was state-of-the-art computer hardware which would have supported and accelerated Soviet military modernization programs.” Dr. Bryen told Congress that “this computer system had a configuration identical to a number of highly classified US defense system.” Some of the unclassified application of this US VAX system include, according to Dr. Bryen’s testimony:

• Simulation of the operation of military systems, such as missile targeting, at faster than real time (the time it takes for a missile to hit its target).

• Simulation of terrain-following radar for cruise missiles and of flight paths of intercontinental ballistic missiles.

• Command and control for targeting guns and missiles of antiaircraft batteries.

• The design and manufacture for very-high-speed integrated circuits. This technology, essential for the manufacture of “smart weapons,” is totally embargoed to the Soviet Union and Eastern Europe.

The mastermind behind the diversion of the two seized US VAX 11/782 computers and related equipment, according to the CIA, was a West German by the name of Richard Mueller. Deputy CIA Director McMahon termed him a “master at proliferating a maze of front companies with no ostensible connection to himself, and I must say that personally I stand in awe of his ability.”

Up to six free-world countries served as unwitting conduits to launder the VAX computers’ odyssey from the US to a Mueller front company in South Africa, from there to another one in Germany, and then on the Sweden, final jumping-off point to their ultimate destination in the Soviet Union. Even though he did not use them in the VAX case, Mueller, who now operates from behind the Iron Curtain, is known to control a network of more than sixty companies. Another West German “buyer” for the Soviet Union, Werner Bruchhausen, according to the CIA, has operated as many as fifty “front companies” in Austria, France, the United States, Switzerland, West Germany, and the United Kingdom. Both Bruchhausen and Mueller were indicted by a US federal court in 1977 for illegal trade activities. But because illegal trade activities are not an extraditable offense, the two men remain at large.

The Bell-Zacharski Case

Espionage, rather than illegal trade diversions, was the means by which the Soviets obtained more than twenty significant classified reports on new US weapon systems, according to a detailed report by the Senate’s Permanent Subcommittee on Investigations, William H. Bell, a radar project engineer employed by Hughes Aircraft Co., according to the subcommittee’s report, was “burdened with debts and back taxes, family tragedy, and a job with no future.” Enter an empathetic neighbor and tennis partner, one Marian Zacharski, a Polish national and the West Coast Manager of the Polish-owned machine manufacturing firm Polamco, incorporated in Delaware and Illinois and with offices in Chicago, Detroit, and Los Angeles. Snaring Bell with the prospect of lucrative employment with Polamco, and by providing him with cash to pay overdue taxes and to make a down payment on a condominium, Bell soon wound up in the clutches of the Polish intelligence agent.

According to the subcommittee report, Bell began photographing sensitive documents he brought home from Hughes. He went on four separate trips to Austria and Switzerland — all paid for by Zacharski — where he met with other Polish agents. These agents, Bell said at his trial, “knew exactly what they wanted, right down to the company identification numbers.” Because he was in financial straits, a subsequent CIA report pointed out, Bell was easily influenced by the cash “proffered — a total of $110,000 over a three-year period.”

Among the classified reports Bell turned over to the Polish Intelligence Service, according to US intelligence, were: “The F-15 look-down/shoot-down radar system, the quiet radar system for the B-1 and Stealth bombers, an all-weather radar system for tanks, an experimental radar system for the US Navy, the Phoenix air-to-air missile, a shipboard surveillance radar, the Patriot surface-to-air missile, a towed-array submarine sonar system, a new air-to-air missile, the improved Hawk surface-to-air missile, and a NATO air defense system.

“The information in these documents put in jeopardy existing weapons and advanced future weapon systems of the United States and its allies. The acquisition of this information will save the Polish and Soviet governments hundreds of millions of dollars in R&D efforts by permitting them to implement proven designs developed by the US and by fielding operational counterpart systems in a much shorter time period. Specifications on current and future US weapon systems will enable them to develop defensive countermeasures systems.”

Bell, who, according to the Senate subcommittee report, said that his own security clearance with Hughes had not been reviewed in twenty-eight years, was convicted of espionage and was given an eight-year prison sentence. Zacharski was also convicted of espionage and was given a life sentence.

One of the most intense recent Soviet intelligence efforts ever mounted, according to the CIA, centered on the “acquisition of knowledge on special materials, notably the weaving of carbon filaments in a three-dimensional configuration, which the [Soviet intelligence] services were tasked to acquire. The end products from this 3-D carbon-carbon weaving technology are useful for ablative heat shields for high-velocity reentry vehicles…and for other portions of rocket motors for large missiles. The Soviet acquisition of some of this technology is likely to enable them to eventually gain a capability for increased military options against the West — a capability that otherwise would have taken them several additional years to develop.”

Among the dozens of flagrant technology transfer cases probed by the Senate’s Permanent Subcommittee on Investigations, that of the Spawr Optical Co. occupies a special niche. That company, which held a DoD facility clearance and had performed laser optics work for TRW, Rocketdyne, the Los Angeles National Laboratory, the Redstone Arsenal, the Naval Weapons Laboratory, and the Air Force Weapons Laboratory at Kirtland AFG, N.M., “sold illegally to the Soviet Union some of the high-energy laser mirrors” destined for US laser weapon programs. The husband and wife owners of the company were convicted of” conspiracy, submission of false statements, and illegal exportation” and given suspended prison terms. Air Force experts pointed out at the time of the trial that the Spawrs, for a paltry $60,000, had provided the Soviets with a technological treasure trove that saved Moscow millions of dollars and about 100 man-years in research and development.

Murder in Silicon Valley

At times, the line between conventional crime and espionage becomes murky, according to the subcommittee’s report. Quoting Douglas K. Southard, Deputy District Attorney in California’s Santa Clara County (which includes “Silicon Valley”), the report brings out details about the theft and disappearance of about $3.4 million worth of late-model integrated circuitry with military applications from a high-tech firm in Sunnyvale, Calif. Prosecution of the case was stymied because “one prosecution witness was beaten savagely by a stranger and was unable to testify. Another prosecution witness was murdered execution-style and his body dumped into a shallow grave in the Santa Cruz Mountains.” The subcommittee’s report quotes Southard to the effect that, “to date, the trail of investigation is littered with dead bodies, assault, sophisticated thefts, drug sales, and more.” The Deputy District Attorney speculated that, “undoubtedly, it will take years before the investigation is completed and prosecutions culminated.”

One of the most interesting witnesses called by the Senate Subcommittee on Investigations was an émigré who came to the US in 1979. Testifying behind a screen and using the assumed name of Joseph Arkov to protect himself and his family, he was identified as a former Soviet engineer who had worked on “reverse engineering” and other technology transfer programs managed by the Kremlin. “Arkov” testified that the Soviet government wants to develop its ability to produce high-technology military equipment similar to that manufactured in the West. He said the Soviet Union seeks Western military technology for two reasons. One objective is to study the equipment with the intention of imitating and duplicating it. The second objective is to use it in the manufacture of other high-technology components.

The US intelligence community told Congress that the Soviet can be expected to continue their efforts to acquire a broad range of Western technologies in the years ahead. Most of their efforts will probably continue to concentrate on such high-technology areas as microelectronics, in-flight guidance computers, ballistic missile guidance, ballistic missile defense, and antisubmarine warfare technologies. There is reason to believe, however, that the task of Soviet intelligence operatives is going to become more difficult.

As Secretary of Defense Caspar Weinberger told Congress earlier this year, the “Administration has reversed the tide of a decade of neglect and naïveté and has made technology transfer control a key element of national security policy.” But translating policy into working arrangements — not only in the US but throughout the free world — will, no doubt, take time and vigilance.