E-mail: Benworks@AOL.Com

--Speak the Truth and Shame The Devil--

NOTE: This archive, intended for research purpose, includes copyrighted material included "for fair use only."

1. NY Times; Mar. 8, 1999; Wm. Safire; "American Defeat" --how it got so bad.
2. Reuters, Mar. 2, 1999; Albright in Beijing, Rights and WTO
3. Reuters, Mar. 2, 1999; Albright ends China trip upbeat on ties
4. Reuters, Mar. 3, 1999; No new U.S. plan for China WTO entry-Barshefsky
5. Reuters, Mar. 5, 1999; China president meets ex-U.S. defence secretary Perry
6. NY Times, Mar 6, 1999; China Stole Nuclear Secrets For Bombs, U.S. Aides Say
7. AP, March 6, 1999; U.S. Probing Reported China Spying
8. Reuters, Mar. 7, 1999; China warns US and Taiwan on [Aegis] missile defence plan
9. Bloomberg, Mar. 8, 1999; China's Spying Harmed U.S. More Than Tech Transfers, Dicks Says
10. Note, Mar. 9, 1999; Note to SIRIUS from a Satellite industry insider
11. Reuters, Mar. 9, 1999; US envoy seeks fresh approach to N.Korea -Seoul
12. Reuters, Mar. 9, 1999; U.S. Envoy Makes Whirlwind Taiwan Security Visit
13. NY Times, Mar. 9, 1999; U.S. Fires Nuclear Scientist Suspected of Spying for China
14. AP, Mar. 7, 1999; US Approves Missile Sale to Saudis
15. AP, Mar. 8, 1999; Intelligence Data for Gulf Allies
16. Reuters; Mar. 8, 1999; US scientist accused of passing data to China fired
17. BBC, Mar. 9, 1999; BBC World --China Espionage Scandal
18. Mar. 9, 1999; Gore Blames Previous Admins. For Spy problem
19. WS Journal, Mar. 9, 1999; G Melloan, With Clinton in Check, China Flexes Its Muscles
20. NY Times, Mar. 11, 1999; Albright Defends Policies on China as GOP Attacks
21. NY Times, Mar. 13, 1999; Prior Chinese Espionage Case
22. NY Times, Mar. 14, 1999; WIR- Seeing Spies is the Hard Part
23. NY Times, Mar. 15, 1999; Will the Chinese Nuclear Arsenal Remain Small?
24. NY Times, Mar. 15, 1999; No Question Leak Helped China, US Says
25. NY Times, Mar. 15, 1999; Theft Report Is a 'Farce,' China Says
26. WS Journal, Mar. 16, 1999; US Corporations on China Bashing and Export Trade
27. NY Times; Mar. 16, 1999; Thomas L Friedman; The Doomsday A-List
28. Wash. Times, Mar 21, 1999; Djurdjevic; " Chinese Dragon Wagging Macedonian Tail"
29. LA Times; April 4, 1999; Testimony Links Top China Official, Funds for Clinton
30. NY Times, April 8, 1999; Second Espionage Scandal from Mid 1990s.

"I am shocked --Shocked!-- to find espionage going on!" Washingtonians buzz. Really, as with most sophisticated observers including Henry Kissinger, I'd be surprised if there weren't. Counter-intelligence forces are always on guard, but as Mr. Berger, Richardson and others betray, at the political-executive level, it seems our leaders are a bit casual about follow through. After all, it happened on Reagan's watch, they tell us. That is not good enough and we should not make espionage easy, but we have other interests involving China as a partner, and as Tom Friedman has observed, Russia's potential "loose nukes" are a lot more scary than China's relative handful ( article #27).

Listening to Beltway punditry's generally shallow analysis on talk shows as the administration seeks to explain away the scandal with de minimis tactical arguments, one can easily get confused about the extent to which we should suspect or fear Beijing. Bob Novak says "Taiwan is not our future, China is." Under inquiry, Bill Richardson openly asserted Beijing is no longer "red." These are fairly true and in considering the dangers of Beijing's ongoing espionage (and we are spying too) there are other imperatives we should consider as well.

China may want, as a secondary manifestation of its power, to expend some money on refurbishing its small nuclear arm (seven liquid-fueled DH-5 ICBM missiles capable of hitting anywhere in the US plus a modest stock of shorter range DH-4s). But China defines its empire by domestic order and economic growth, which it is using to achieve dominance of its region.

While the espionage matters are serious, I fear Republicans, desperate for scandal leverage, are fouling the continuity of what was originally the Republican China policy, dating back to Nixon. I think that overall, that policy has been rather good for both countries.

China, with its 1.2 billion people (of whom, half a billion are illiterate) and 500 nuclear warheads is about as complex an issue as it gets. Suffice it to say that there is always spying going on, and that I can thread through the current scandals in a helpful way. But first we must consider the stresses of sudden post-industrialization of an agrarian peasantry; China's current problem is one Britain, Ireland and America faced in their day. The same land enclosure that swept the peasants off the land in Britain, Ireland and the Continent in the 1700s and 1800s is occurring now in China and it will take them a generation to effect the economic and social changes. Russia and Ukraine, meanwhile, are strangling on their refusal to modernize agriculture and industry. Much of what the West criticize as Human Rights violations are efforts to moderate the population as the government attempts to effect the very tricky job of post-industrial enclosure. The Soviets chose "openness" over basic economic reform; while China chose economic reform over political pluralism. Which oligarchy chose correctly?

We make a mistake when we attempt to judge China, with its 200 million displaced "drifters" and 500 million illiterate peasants, by our standards. Post-industrial enlightenment cannot be achieved, as many propose, by instant "democratization."

Nixon, Bush and Reagan knew how to deal with China and what it is attempting over a 50 and 100-year span. China's nightmare is precisely what happened in the Soviet Union and Yugoslavia, dismemberment into the chaos of warlordism, anarchy, chaos. That is why China and Russia both support Yugoslavia on the issue of Kosovo, and why Turkey (particularly the Army), worried about its Kurdish separatist problem, also tends to support Serbia against the KLA. Will China become an opponent determined to humble the 'hegemonist" US, or remain a polite rival, occasionally opposing our dumber initiatives. This very much depends on how the US attempts to lead as "the sole remaining global superpower."

China remains an absolutist autocracy at the national level, but its ideology is substantially different than when Deng took over from Mao's cadres. It has blended socialism, free enterprise, capitalism and corruption. Change is carefully moderated: democratic elections are being instituted at the local level, slowly, as Tom Friedman reported in his New York Times columns last spring.

I would uncouple any explicit contrast of how we treat a chaotic Russia and how we treat an orderly China. Strobe Talbott compounded the Bush Administration's amateurish handling of Russian reform, which has been too much of politics and not enough of fundamental commercial-economic reform. Now the Mafia rules there and is extending its corruptive control of the rulerships in Romania and Bulgaria. The Haitian Mafia runs things there, the Mafia is on the rise in Mexico --not to mention the Kosovo Heroin Mafia, which some wish to confer sovereign powers upon. This leads me to think of rumors of Clinton and the "Arkansas Mafia:" globally, ethnocentric "cosa nostras" are on the rise everywhere one looks.

The Espionage Damage: As to nuclear and missile espionage, the US detected the new bomb design's characteristics after underground tests in late 1994-early 1995. Thus, the intelligence community has understood this development for four years. It does pose a serious security threat some years before China could have solved the problem on its own. Thankfully, China refused to end its underground tests --by accepting Mr. Clinton's much-touted Test Ban treaty-- until after they provided unmistakable evidence to our intelligence community that they had taken this major step a technological "Great Leap Forward." The New York Times reports that in June 1995 a Chinese official explicitly confirmed the theft of W-88 design directly to the CIA. Beijing now denies all this, of course, .

That message may be read two ways: "we've arrived and now have the power to toast your cities," or, "hey, we're going to take what we can get from these clowns." I read both messages. Meanwhile, Loral, Lockheed-Martin and others were helping improve the reliability of China's satellite launching "Long March" missiles, guaranteeing their newer weapons-carrying missiles would be improved as well.

That comprehensive test ban treaty provides a veil of secrecy for any further developments, so it will be harder to verify further improvements to weapons designs by China, India, Pakistan and other interested developers. We will, though, see improvements to the missiles when they are tested or used in satellite launches. Before drawing closed that veil of secrecy, China itself confirmed to the Congress in a discrete way, via the CIA, that it was exploiting Clinton's amoral leadership. China has also made other confirmations by delivering Johnny Chung back to California and taken other interesting actions. Atop that, they have been able to gain vital assistance from Loral and others to make their missiles more reliable during the Clinton years. The Cox Commission report comes close to connecting these dots, but Clinton managed to sandbag it until after last November's elections. But now, in frustration, the defense-intelligence establishment has leaked to the press in what another analytical shop has labeled a culture-war between the bureaucratic establishment and Clinton's political elite. At the same time, we have one more justification for developing our "Star Wars" defenses.

This makes the Clinton-Gore line that this is really Reagan's fault most interesting. That statement is only true so far as it goes. But how the Clintonistas managed to stretch out the investigation beyond both the 1996 Presidential Election and the 1998 Congressional Elections, while also wrestling down the Chinese campaign funding scandals is where we see the expert hand of Clinton at play, managing to prevent this concatenation of scandals from converging into a "critical mess" that could topple the administration. Current Administrations strike all of us listening carefully as disingenuous, rather than as naivete.

Right now, China is making it easy for Congress to believe in this scandal by its renewed threatening deployment of missiles against Taiwan and companion threats if Taiwan is added to the regional Theater Defense missile system. But Beijing wants Taiwan's capital and China does not have the amphibious navy sufficient to invade the island. It knows full well that Taiwan will get the Aegis anti-missile technology and that ultimately, China will get that too. What most observers do not recognize is that China's plutocratic elite already has reached agreement with Taiwan's capitalists, as it has with Hong Kong's plutocrats and the overseas Chinese of Indonesia, Singapore and elsewhere --including Clinton's friends the Riadys. Those corporatist interrelationships are a more powerful mafia-of-another-name in the long term, as has already been demonstrated in the Oval Office fundraisers.

In the Global arena, powers may be partners, rivals and opponents all at once, given the range of issues. Beijing is at once both an economic partner and regional rival as a great power. Mr. Clinton's record is one of making that rival more powerful, and more often, an opponent, and one of increasing muscle. You worry about Taiwan, I'll watch and worry about Pyongyang. If China decides to "get even," that is where it would happen.

PS: In America, multiculturalism has become a staple in espionage scandals and WASP traitors such as Aldrich Ames are increasingly the exception, rather than the rule. The W-88 design came to Beijing from the furtive hands of Wang Ho Lee, while Chinese American Peter Lee (no relation) is already ending a light sentence for passing secrets of a lesser nature, also in 1985. Larry Wu Tai Chin, a CIA translator, was busted for passing secrets to Beijing in 1986 and committed suicide. We have also seen Jonathan Pollard pass vital secrets to Israel and on beyond, while a Korean American was busted last year passing classified information on to Seoul. In 1985 CIA clerk Sharon Scranage, on station in Ghana, passed secrets to her oyfriend who passed them on to his government.

Benjamin Works

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1. New York Times, March 8, 1999; William Safire: American Defeat

Throughout the 1996 Clinton campaign for President, China's agents of influence had the run of the White House as they raised millions for the Clinton campaign. Chinese military intelligence officials were waved in without clearance. U.S. executives contributed megabucks as they lobbied for easier approval of sales of sensitive technology to Beijing.

In the midst of this -- in April of 1996 -- a Department of Energy official informed President Clinton's deputy national security adviser, Samuel Berger, (1) that China had probably stolen our secrets of making warheads small enough to enable long-range missiles to pack multiple nuclear punches, and (2) that the suspected spy was still at work in the Los Alamos laboratory in New Mexico.

Mr. Berger, who sat in on most of the political meetings with Clinton's Asian fund-raisers, did nothing. The internal security division of the Department of Justice apparently did not ask a court for wiretap authority under the Foreign Intelligence Surveillance Act. At Reno Justice, investigating any Chinese penetration is a no-no.

Over one year later, after news stories and columns about Clinton's "Asian connection" had stimulated law enforcement officials and a Senate committee to bestir themselves, F.B.I. Director Louis Freeh and Director of Central Intelligence George Tenet went to the office of Energy Secretary Federico Pena. "Louis and George read him the riot act," a meeting participant tells me, "about lax security at Los Alamos."

But nothing happened for a year and a half. Senator Fred Thompson's hearings on the Asian connection were politicized and truncated by John Glenn and Tom Daschle. Not until late 1998, when a bipartisan House select committee under co-chairmen Chris Cox and Norman Dicks began asking questions about Chinese espionage, did a new Energy Secretary begin to lock the barn door.

For months, the House select committee has been negotiating with the Clinton Secrecy Brigade to declassify most of its 700-page report. The White House hopes to delay clearance until the select committee goes out of business in April, when criticism of the espionage defeat and its Clinton cover-up could be diffused and buried.

But Berger did not reckon with the journalistic enterprise of The Times's James Risen and Jeff Gerth. Their story on Saturday was headlined "China Stole Nuclear Secrets for Bombs, U.S. Aides Say" and subheaded "Espionage Case at New Mexico Lab Is Said to Be Minimized by the White House."

They show how the theft of our nuclear secrets enabled China to leap a generation ahead with warheads that can be launched from under water. The reporters quote Paul Redmond, the C.I.A.'s former counterintelligence chief who caught the Soviet spy Aldrich Ames, assessing the impact on our defenses of this Chinese espionage: "This was far more damaging to the national security than Aldrich Ames."

Berger has a unique geopolitical Weltanschauung: Whatever elects Bill Clinton and protects him from criticism is good for our national security. Accordingly, his spin control is likely to be: The initial breach happened in the 80's, so blame Reagan, not us.

Besides, goes the White House line, when a Berger flunky asked for a quickie C.I.A. "alternative analysis" of the suspicions of the Energy Department's Notra Trulock, that whistleblower's warning was derogated as merely "a worst-case scenario."

Not yet denied, but likely to be unless witnesses were present, is The Times's account that Trulock "was ordered last year by senior officials not to tell Congress about his findings because critics might use them to attack the Administration's China policies, officials said." For spilling the beans, Trulock was demoted.

Now we're getting to the nub of it. Yanked to a complete turnabout on trade policy with China by the Riady family and other heavy campaign contributors in the satellite and computer businesses, Clinton didn't want Congress -- empowered by law with oversight of intelligence -- to know what the F.B.I., C.I.A. and D.O.E. suspected about China's spy in Los Alamos.

Although aware of the dangerous spying, Clinton still insisted that regulation of the transfer of sensitive technology be controlled by his sell-'em-anything Commerce Department.

He delivered for China. Will Congress now protect the interests of the United States?

Monday, March 8, 1999 Copyright 1999 The New York Times

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BEIJING, March 2 (Reuters) - Secretary of State Madeleine Albright said on Tuesday U.S. Trade Representative Charlene Barshefsky would offer a new proposal to advance China's World Trade Organisation (WTO) entry this week.

22:37 03-01-99

"As Ambassador Barshefsky comes here to discuss a new proposal with the Chinese, there is a good chance that we can move that process forward," Albright told a news conference in Beijing after talks with Chinese leaders.

Albright did not elaborate on the plan Barshefsky would present to China in talks on Wednesday and Thursday in Beijing.

"We are hoping very much for increased flexibility" from China in its 13-year bid to join the WTO, Albright said.

22:44 03-01-99

U.S. officials have expressed hopes China would use Premier Zhu Rongji's scheduled April trip to Washington to make a fresh commitment to join the global trading regime by the end of the year, when a new round of world trade talks is set to begin.

But the officials played down expectations that Barshefsky might clinch a deal in time for Zhu's visit, saying she would use this week's trip to Beijing to sound out Chinese officials.

"We are not looking for any breakthroughs here," a U.S. trade official told reporters in Washington.

Barshefsky told reporters last week that progress was slow and Beijing had made "no discernible change" in its positions.

China is seeking entry into the WTO on more lenient terms granted to developing nations. But the United States, which had a $57 billion trade deficit with China last year, says it is too big to join the WTO on the same terms as the world's poorest countries.

The United States is pressing Beijing for greater access to China's markets in telecommunications and other services and to resolve long-standing trade disputes over wheat, citrus fruit and meat.

China has been reluctant to open its markets wider as it struggles with a politically delicate restructuring of uncompetitive state-owned industries in many key WTO sectors and the impact of the Asian economic crisis.

22:59 03-01-99

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By Christiaan Virant

BEIJING, March 2 (Reuters) - U.S. Secretary of State Madeleine Albright wrapped up a contentious two-day visit to China on Tuesday, saying bilateral ties were on track despite fierce disputes over human rights, trade and Taiwan.

Speaking after a meeting with President Jiang Zemin, Albright reaffirmed Washington's commitment to forging a "constructive strategic partnership" with China.

"Our relationship, while still well short of this goal, has reached the point where it can withstand even sharp disagreements," she said.

But she also issued a harsh warning to Beijing over its deteriorating human rights record, saying Washington would never back away from raising the thorny issue in talks with China.

"All told it's fair to say that in our relations with China these are neither the best of times nor the worst of times."

Human rights took centre stage during a visit to pave the way for an April visit to Washington by Premier Zhu Rongji.

Friday's release of a damning report on China's rights violations by the U.S. State Department sparked the fire.

Beijing fuelled the controversy by detaining dissident Wu Yilong and sentencing democracy advocate Peng Ming to labour camp on the eve of Albright's arrival.

During her talks with China's leaders, Albright hammered home the need for Beijing to relax its grip on free expression and build a multi-party democracy.

China held its ground, arguing each side had a different definition of rights and should focus on consultation, not confrontation.

"The two sides should expand dialogue on this issue to promote bilateral relations," said Foreign Ministry spokesman Zhu Bangzao. "Different views should be handled with mutual respect and under the principle of non-interference in each others' internal affairs."

Last December, three veteran activists were handed long jail terms for attempting to register an opposition political party. Since then, five other dissident voices have been sent to labour camps without trial, four charged with hiring prostitutes.

"Trying to organise a political party is not a threat or crime, it's a right guaranteed by the Universal Declaration of Human Rights," Albright told a news conference.

"The Chinese have expressed unhappiness with our condemnations of recent unjustified arrests and trials and with last week's State Department report documenting widespread human rights violations," she said.

"But the United States will never apologise for speaking or publishing the truth."

Trade friction was also high on Albright's agenda amid mounting congressional concern with a rising U.S. trade deficit and bickering over the terms of Beijing's accession to the World Trade Organisation.

Beijing is seeking WTO entry on more lenient terms granted to developing nations. But the United States, which had a $57 billion trade deficit with China last year, says it is too big to join the WTO on the same terms as the world's poorest.

U.S. Trade Representative Charlene Barshefsky was scheduled to arrive in Beijing on Wednesday for new talks on China's 13-year membership bid.

"As Ambassador Barshefsky comes here to discuss a new proposal with the Chinese, there is a good chance that we can move that process forward," Albright said.

She also addressed Chinese criticism of U.S. proposals to field a Theatre Missile Defence system in Asia.

The plan, aimed at protecting frontline U.S. troops from North Korean missiles, could bring Taiwan under a regional defence umbrella.

Beijing argues the shield would fuel independence sentiment in Taiwan and is a violation of a Sino-U.S. agreement on arms sales to the island.

"We oppose the use of the (North Korea) situation to strengthen military alliances and build up capabilities," Zhu said. "This would not be conductive to peace to stability."

04:10 03-02-99

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BEIJING, March 3 (Reuters) - U.S. Trade Representative Charlene Barshefsky said on Wednesday she had brought no new proposal to talks in Beijing on China's entry into the World Trade Organisation.

"I'm not here to bring proposals. I'm here to listen to what the Chinese have to say," she told reporters on her way to her first meetings with Chinese officials.

22:14 03-02-99

U.S. Secretary of State Madeleine Albright told a Beijing news conference on Tuesday that Barshefsky was bringing a new proposal on China's 13-year bid to get into the WTO and that Washington hoped for Chinese flexibility on the issue.

Barshefsky, who arrived in Beijing on Tuesday night, was scheduled to have two days of meetings before returning to Washington on Friday, a U.S. official said.

She was scheduled to meet with Foreign Trade Minister Shi Guangsheng later on Wednesday.

22:17 03-02-99

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BEIJING, March 5 (Reuters) - Chinese President Jiang Zemin told former U.S. defence secretary William Perry on Friday that differences between the two giants should be ``treated with circumspection,'' the Xinhua news agency said.

Perry, the U.S. coordinator on North Korea, is visiting China for more consultations on North Korea, according to the State Department.

China has criticised U.S. proposals to field a Theatre Missile Defence (TMD) system in Asia. The plan, aimed at protecting frontline U.S. troops from North Korean missiles, could bring China's rival, Taiwan, under a regional defence umbrella.

Jiang told Perry that it was ``not strange'' for China and the United States to have differences due to ``different national conditions and values.''

But it was ``important to treat differences with circumspection,'' Jiang was quoted as saying.

``Differences should be properly handled in the spirit of equality and mutual respect,'' he was quoted as saying.

Jiang said Sino-U.S. ties had improved since an exchange of visits between heads of state in late 1997 and mid-1998.

The two sides should treasure the improvement, which had not come easily, Jiang said.

He said the Taiwan issue has always been the most sensitive and important factor in Sino-U.S. ties.

Bilateral ties could move forward in a stable and healthy manner only if the United States abided by a joint communique in which Washington pledged to reduce arms sales to Taiwan.

Beijing argues the TMD would fuel independence sentiment in Taiwan and is a violation of the communique.

It regards Taiwan as a rebel province that must eventually be reunified with the mainland and has threatened to invade if the island declared independence.

Perry, special adviser to President Bill Clinton and Secretary of State Madeleine Albright, could not be reached for comment.

He is examining U.S. policy toward the Stalinist regime in Pyongyang and is expected to produce a report analysing U.S. policy and possibly proposing changes.

The State Department has said Perry would also make stops in Seoul and Tokyo.

07:57 03-05-99

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6. The New York Times March 6, 1999, Saturday, Late Edition - Final

By JAMES RISEN and JEFF GERTH

WASHINGTON, March 5

Working with nuclear secrets stolen from an American Government laboratory, China has made a leap in the development of nuclear weapons: the miniaturization of its bombs, according to Administration officials.

Until recently, China's nuclear weapons designs were a generation behind those of the United States, largely because Beijing was unable to produce small warheads that could be launched from a single missile at multiple targets and form the backbone of a modern nuclear force.

But by the mid-1990's, China had built and tested such small bombs, a breakthrough that officials say was accelerated by the theft of American nuclear secrets from Los Alamos National Laboratory in New Mexico.

The espionage is believed to have occurred in the mid-1980's, officials said. But it was not detected until 1995, when Americans analyzing Chinese nuclear test results found similarities to America's most advanced miniature warhead, the W-88.

By the next year, Government investigators had identified a suspect, an American scientist at Los Alamos laboratory, where the atomic bomb was developed. The investigators also concluded that Beijing was continuing to steal secrets from the Government's major nuclear weapons laboratories, which had been increasingly opened to foreign visitors since the end of the cold war.

The White House was told of the full extent of China's spying in the summer of 1997, just before the first American-Chinese summit meeting in eight years -- a meeting intended to dramatize the success of President Clinton's efforts to improve relations with Beijing.

White House officials say that they took the allegations seriously; as proof of this, they cite Mr. Clinton's ordering the labs within six months to improve security.

But some American officials assert that the White House sought to minimize the espionage issue for policy reasons.

"This conflicted with their China policy," said an American official, who like many others in this article spoke on condition of anonymity. "It undercut the Administration's efforts to have a strategic partnership with the Chinese."

The White House denies the assertions. "The idea that we tried to cover up or downplay these allegations to limit the damage to U.S.-Chinese relations is absolutely wrong," said Gary Samore, the senior National Security Council official who handled the issue.

Yet a reconstruction by The New York Times reveals that throughout the Government, the response to the nuclear theft was plagued by delays, inaction and skepticism -- even though senior intelligence officials regarded it as one of the most damaging spy cases in recent history.

Initially the Federal Bureau of Investigation did not aggressively pursue the criminal investigation of lab theft, American officials said. Now, nearly three years later, no arrests have been made.

Only in the last several weeks, after prodding from Congress and the Secretary of Energy, have Government officials

administered lie-detector tests to the main suspect, a Los Alamos computer scientist who is Chinese-American. The suspect failed a test in February, according to senior Administration officials.

At the Energy Department, officials waited more than a year to act on the F.B.I.'s 1997 recommendations to improve security at the weapons laboratories and restrict the suspect's access to classified information, officials said.

The department's chief of intelligence, who raised the first alarm about the case in 1995, was ordered last year by senior officials not to tell Congress about his findings because critics might use them to attack the Administration's China policies, officials said.

And at the White House, senior aides to Mr. Clinton fostered a skeptical view of the evidence of Chinese espionage and its significance.

White House officials, for example, said they determined on learning of it that the Chinese spying would have no bearing on the Administration's dealings with China, which included the increased exports of satellites and other militarily useful items. They continued to advocate looser controls over sales of supercomputers and other equipment, even as intelligence analysts documented the scope of China's espionage.

But after learning that Mr. Samore had insisted that this case had no implications for China policy, the President's national security adviser, Samuel R. Berger, acknowledged tonight that the case was clearly relevant.

"We already knew that China was a country that ought not to get sensitive technology," said Mr. Berger. "This reinforced that."

Mr. Samore, the Security Council official, did not accept the Energy Department's conclusion that China's nuclear advances stemmed largely from the theft of American secrets.

In 1997, as Mr. Clinton prepared to meet with President Jiang Zemin of China, Mr. Samore asked the Central Intelligence Agency for a quick alternative analysis of the issue. The agency found that China had stolen secrets from Los Alamos but differed with the Energy Department over the significance of the spying.

An Energy Official As Secret Witness

In personal terms, the handling of this case is very much the story of the Energy Department intelligence official who first raised questions about the Los Alamos case, Notra Trulock.

Mr. Trulock became a secret star witness before a select Congressional committee last fall. In a unanimous report that remains secret, the bipartisan panel embraced his conclusions about Chinese espionage, officials said. Taking issue with the White House's view, the panel saw clear implications in the espionage case for U.S.-China policy, and has now made dozens of policy-related recommendations, officials said.

A debate still rages within the Government over whether Mr. Trulock was right about the significance of the Los Alamos nuclear theft. But even senior Administration officials who do not think so credit Mr. Trulock with forcing them to confront the realities of Chinese atomic espionage.

China's technical advance allows it to make small warheads for use in submarines, mobile missiles and long-range missiles with multiple warheads -- the main elements of a modern nuclear force.

While White House officials question whether China will actually deploy a more advanced nuclear force soon, they acknowledge that Beijing has made plans to do so at some point.

In early 1996 Mr. Trulock traveled to C.I.A. headquarters to provide evidence that his team had gathered on the apparent Chinese theft of American nuclear designs.

As Mr. Trulock gathered his charts and drawings and wrapped up his top-secret briefing, the agency's chief spy hunter, Paul Redmond, sat stunned.

At the dawn of the atomic age, a Soviet spy ring that included Julius Rosenberg had stolen the first nuclear secrets out of Los Alamos. Now, at the end of the cold war, the Chinese seemed to have succeeded in penetrating the same weapons lab.

"This is going to be just as bad as the Rosenbergs," Mr. Redmond recalled saying.

From what they could tell, Beijing was testing a smaller and more lethal nuclear device configured remarkably like the W-88, the most modern, minaturized warhead in the American arsenal. In April 1995 they brought their findings to Mr. Trulock. Los Alamos scientists have access to a wide range of classified intelligence data and seismic and other measurements.

Just as Mr. Trulock, the scientists and others in his team were piecing the evidence together, they were handed an intelligence windfall from Beijing.

In June 1995, they were told, a Chinese official gave Central Intelligence analysts what appeared to be a 1988 Chinese Government document describing the country's nuclear weapons program. The document, a senior official said, specifically mentioned the W-88 and described some of the warhead's key design features.

The Los Alamos laboratory, where the W-88 had been designed, quickly emerged as the most likely source of the leak.

One of the major national weapons labs owned by the Energy Department, Los Alamos, 35 miles outside Sante Fe, N.M., was established in 1943 during the Manhattan Project. Mr. Trulock and his team knew just how vulnerable it was to modern espionage.

The labs had long resisted F.B.I. and Congressional pressure to tighten their security policies. Energy officials acknowledge that there have long been security problems at the labs.

Los Alamos and Sandia National Laboratories, also in New Mexico, had in 1994 been granted waivers from an Energy Department policy that foreign scientists visiting for purposes of scientific exchange be subjected to background checks.

Lab officials resented the intrusions caused by counterintelligence measures, arguing that restrictions on foreign visitors would clash with the labs' new mandate to help Russia and other nations safeguard their nuclear stockpiles.

The Clinton Administration was also using increased access to the laboratories to support its policy of engagement with China, as had been done under previous, Republican Administrations.

In December 1996, for example, China's Defense Minister, Gen. Chi Haotian, visited Sandia on a Pentagon-sponsored trip. Energy Department officials were not told in advance, and they later complained that General Chi and his delegation had not received proper clearances, officials said.

Still, there is no evidence in this case that foreign visitors were involved in the theft of information.

A Scientist 'Stuck Out Like a Sore Thumb'

In late 1995 and early 1996, Mr. Trulock and his team took their findings to the F.B.I. A team of F.B.I. and Energy officials traveled to the three weapons labs and pored over travel and work records of lab scientists who had access to the relevant technology.

By February the team had narrowed its focus to five possible suspects, including a computer scientist working in the nuclear weapons area at Los Alamos, officials said.

This suspect "stuck out like a sore thumb," said one official. In 1985, for example, the suspect's wife was invited to address a Chinese conference on sophisticated computer topics even though she was only a secretary at Los Alamos. Her husband, the real expert, accompanied her, an American official said.

By April 1996, the Energy Department decided to brief the White House. A group of senior officials including Mr. Trulock sat down with Mr. Berger, then President Clinton's deputy national security adviser, to tell him that China appeared to have acquired the W-88 and that a spy for China might still be at Los Alamos.

"I was first made aware of this in 1996," Mr. Berger, now national security adviser, said in an interview.

By June the F.B.I. formally opened a criminal investigation into the theft of the W-88 design. But the inquiry made little progress over the rest of the year. When Energy officials asked at the end of 1996, they came away convinced that the bureau had assigned few resources to the case.

A senior bureau official acknowledged that his agency was aware of Energy's criticism but pointed out that it was difficult to investigate the case without alerting the suspects.

The bureau maintained tight control over the case. The C.I.A. counterintelligence office, for one, was not kept informed of its status, according to Mr. Redmond, who has since retired.

Energy officials were also being stymied in their efforts to address security problems at the laboratories.

After Federico Pena became Energy Secretary in early 1997, a previously approved counterintelligence program was quietly placed on the back burner for more than a year, officials said.

In April 1997, the F.B.I. issued a classified report on the labs that recommended among other things reinstating background checks on visitors to Los Alamos and Sandia, officials said. Energy and the labs ignored the F.B.I. recommendation for 17 months. An Energy spokeswoman was unable to explain the delay.

In early 1997, with the FBI's investigation making scant progress and the Energy Department's counterintelligence program in limbo, Mr. Trulock and other intelligence officials began to see new evidence that the Chinese had other, ongoing spy operations at the weapons labs.

But Mr. Trulock was unable to inform senior American officials quickly of the new evidence. He asked to speak directly with Mr. Pena, the Energy Secretary, but waited four months for an appointment.

In an interview, Mr. Pena said he did not know why Mr. Trulock had been kept waiting until July but recalled that he "brought some very important issues to my attention and that's what we need in the Government."

Mr. Pena immediately sent Mr. Trulock back to the White House -- and to Mr. Berger, who is known as Sandy.

"In July 1997 Sandy was briefed fully by the D.O.E. on China's full access to nuclear weapons designs, a much broader

pattern," one White House official said.

Officials said Mr. Berger was told that there was evidence of several other Chinese espionage operations that were still under way inside the weapons labs.

That news, several officials said, increased the urgency of the issue. The suspected Chinese thefts were no longer just ancient history, problems that had happened on another Administration's watch.

Mr. Berger quickly briefed President Clinton on what he had learned and kept him updated over the next few months, a White House official said.

As Mr. Trulock spread the alarm, his warnings were reinforced by George Tenet, Director of Central Intelligence, and Louis B. Freeh, Director of the F.B.I., who met with Mr. Pena to discuss the lax security at the labs that summer.

"I was very shocked by it and I went to work on shifting the balance in favor of security," Mr. Pena said.

The bureau assigned more agents to the W-88 investigation, gathering new and more troubling evidence about the main suspect.

According to officials, the agents learned that the suspect had traveled to Hong Kong without reporting the trip as required. In Hong Kong, officials said, the bureau found records showing that the scientist had obtained $700 from the American Express office. Investigators suspect that he used it to buy an airline ticket to Shanghai.

Unwelcome News Before Summit Talks

With Mr. Berger now paying close attention, the White House became deeply involved in evaluating the seriousness of the thefts and solving the counterintelligence problems at the laboratories.

Mr. Trulock's new findings came at a crucial moment in American-China relations. Congress was examining the role of foreign money in the 1996 campaign, as charges emerged that Beijing had secretly funneled money into Democratic coffers.

The Administration was also moving to strengthen its strategic and commercial links with China in 1997. President Clinton had already eased the commercial sale of supercomputers and satellite technology, and he wanted to cement a nuclear cooperation accord at the upcoming summit meeting, enabling American companies to sell China commercial nuclear reactors.

In August Mr. Berger flew to Beijing to prepare for the October summit meeting. He assigned Mr. Samore, a senior Security Council aide in charge of proliferation issues, to assess the Los Alamos damage.

After being briefed by Mr. Trulock in August, Mr. Samore asked the C.I.A.'s Directorate of Intelligence to seek a second opinion on how China had developed its smaller warheads. It was, a Security Council aide said, "a quick study done at our request."

The analysts agreed that there had been a serious compromise of sensitive technology through espionage at the weapons labs but were far less conclusive about the extent of the damage. Central Intelligence argued that China's sudden advance in nuclear design might be traced in part to other causes, including the ingenuity of Beijing's scientists.

As an American official described it: "The areas of agreement between D.O.E. and C.I.A. were that China definitely benefited from access to U.S. nuclear weapons information that was obtained from open sources, conversations with D.O.E. scientists in the United States and China, and espionage.

"The disagreement is in the area of specific nuclear weapons designs. Trulock's briefing was based on a worst-case scenario, which C.I.A. believes was not supported by available intelligence. C.I.A. thinks the Chinese have benefited from a variety of sources, including from the Russians and their own indigenous efforts."

Mr. Samore assembled the competing teams of Central Intelligence and Energy analysts in mid-October for a meeting in his White House office that turned into a tense debate.

The C.I.A. report noted that China and Russia were cooperating on nuclear issues, indicating that this was another possible explanation of Beijing's improved warheads.

Mr. Trulock said this was a misreading of the evidence, which included intercepted communications between Russian and Chinese experts.

The Russians were offering advice on how to measure the success of nuclear tests, not design secrets. In fact, Mr. Trulock argued, the Russian measurement techniques were used to help the Chinese analyze the performance of a weapon that Los Alamos experts believed was based on an American design.

"At the meeting," one official said, "Notra Trulock said that he thought the C.I.A. was underplaying the effect that successful Chinese espionage operations in the weapons labs had had on the Chinese nuclear weapons program."

Relying on the Central Intelligence report, Mr. Samore told Mr. Berger that the picture was less conclusive than Mr. Trulock was arguing. Officials said he began to relay that view before hearing Mr. Trulock's rebuttal of the C.I.A. study at the October meeting.

Mr. Samore told Mr. Berger, "There isn't enough information to resolve the debate, there is no definitive answer, but in any event this clearly illustrates weaknesses in D.O.E.'s counterintelligence capability," said one official familiar with Mr. Samore's presentation.

Central Intelligence officials strenously deny that the agency's analysts intended to downplay Mr. Trulock's findings.

Yet when one senior Central Intelligence official familiar with Mr. Trulock's conclusions heard the findings of the C.I.A. report, he said he thought the report was not totally objective.

The Case

Suspect Worked For Over a Year

The F.B.I. inquiry was stalled. At a September 1997 meeting between bureau and Energy officials, Mr. Freeh concluded that his agency did not have enough evidence to arrest the suspect, according to officials.

Investigators did not then have sufficient evidence to obtain a wiretap on the suspect, which made it difficult to build a strong criminal case, according to American officials. Bureau officials say that Chinese spy activities are far more difficult to investigate than the more traditional espionage operations of the former Soviet Union.

But even if the bureau could not build a case, Energy could still take some action against someone holding an American security clearance. Mr. Freeh told Energy officials that there was no longer an investigative reason to allow the suspect to remain in his sensitive position, officials said.

But the suspect was allowed to keep his job and retain his security clearances for more than a year after the meeting with Mr. Freeh, according to American officials.

In late 1997, the Security Council did begin to draft a new counterintelligence plan for the weapons labs, and President Clinton signed the order mandating the measures in February 1998. In April a former F.B.I. agent, Ed Curran, was named to run a more vigorous counterintelligence office at Energy headquarters.

The Administration explained aspects of the case to aides working for the House and Senate intelligence committees beginning in 1996. But few in Congress grasped the magnitude of what had happened.

In July 1998, the House Intelligence Committee requested an update on the case, officials said. Mr. Trulock forwarded the request in a memo to and in conversations with Elizabeth Moler, then Acting Energy Secretary. Ms. Moler ordered him not to brief the House panel for fear that the information would be used to attack the President's China policy, according to an account he later gave Congressional investigators.

Ms. Moler, now a Washington lawyer, says she does not remember the request to allow Mr. Trulock to brief Congress and denies delaying the process.

Key lawmakers began to learn about the extent of the Chinese theft of American nuclear secrets late in 1998, when a select committee investigating the transfers of sensitive American technology to China, headed by Representative Christopher Cox, Republican of California. heard from Mr. Trulock.

Administration officials say that Congress was adequately informed, but leading Democrats and Republicans disagree. Norman Dicks, Democrat of Washington, the ranking minority member on the House intelligence panel and also a member of the Cox committee, said that he and Porter Goss, Republican of Florida, who heads the intelligence panel, had not been clearly informed.

"Porter Goss and I were not properly briefed about the dimensions of the problem," Mr. Dicks said, adding, "It was compartmentalized and disseminated over the years in dribs and drabs so that the full extent of the problem was not known until the Cox committee."

Last fall, midway through the Cox panel's inquiry, Bill Richardson took over as Energy Secretary.

After being briefed by Mr. Trulock, Mr. Richardson quickly reinstated background checks on all foreign visitors, a move recommended 17 months earlier by the F.B.I. He also doubled the counterintelligence budget and placed more former bureau counterintelligence experts at the labs.

But Mr. Richardson also became concerned about what the Cox panel was finding out. So in October he cornered Mr. Berger at a high-level meeting and urged him to put someone in charge of coordinating the Administration's dealing with the Cox committee.

Mr. Berger turned again to Mr. Samore, officials said.

By December Mr. Dicks, in his role as the ranking Democratic member of the Cox panel, was growing impatient with the Administration's slow response to committee requests and inaction on the Los Alamos spy case. Mr. Dicks told Mr.

Richardson, a former House colleague, that he needed to take action, Mr. Richardson recalled.

On one day in December, Mr. Dicks's complaints caused Mr. Richardson to call Mr. Freeh about the inquiry twice, an official said.

Energy gave the suspect a polygraph, or lie-detector test, in December. Unsatisfied, the F.B.I. administered a second test in February, and officials said the suspect was found to be deceptive. It is not known what questions prompted deceptive answers.

As the F.B.I. investigation intensified, the Cox commitee completed a 700-page secret report in which it found that China's theft had harmed American national security, saving the Chinese untold time and money in nuclear weapons research.

After hearing from both Central Intelligence and Energy analysts, the bipartisan panel unanimously agreed with Mr. Trulock's assessment, officials said.

Now, Central Intelligence and other agencies, at the request of the Cox committee, are conducting a new, more thorough damage assessment, even as the debate continues to rage in intelligence circles over whether Mr. Trulock has overstated the damage from Chinese espionage.

Meanwhile, Mr. Trulock has been moved from head of Energy's intelligence office to its acting deputy. While Mr. Richardson and other Energy officials praise hiswork and deny that he has been mistreated, some in Congress suspect that he has been demoted because he helped the Cox committee.

Mr. Redmond, the C.I.A.'s former counterintelligence chief, who made his name by unmasking the Soviet spy Aldrich Ames, says he has no doubts about the significance Mr. Trulock's discoveries.

As he put it, "This was far more damaging to the national security than Aldrich Ames."

------------------------------------- 

GRAPHIC: Photo: Government investigators say a spy who stole secrets from a Los Alamos, N.M., laboratory, above, helped China to greatly speed its development of nuclear weapons. (Los Alamos National Laboratory via Sygma, 1991)(pg. A6)

Chart/Graph: "A CLOSER LOOK: SHRINKING BOMBS AND EXPANDING CAPACITY"

China is suspected of stealing the secrets of miniaturizing nuclear warheads. Until now the size and weight of warheads has limited China's missiles to a single warhead. Miniaturizing a warhead allows several to be placed on a single missile.

China's nuclear stockpile is estimated at 400 to 450 warheads, with about 65 percent thought to be deployed on missiles and bombers and one submarine.

MK 1 (Little Boy) -- 10.5 feet

The first atomic bomb weighed 8,900 pounds, yielded 15 kilotons and was dropped from a plane.

W80 -- 2.6 feet

Miniature nuclear warheads weigh about 300 pounds and yield up to 150 kilotons.

Several fit into the head of a missile.

Graph shows China's INTERCONTINENTAL, MEDIUM-TO-LONG RANGE, and

SUBMARINE-LAUNCHED missiles.

It describes their launch point, range (in miles), and inventory.

(Sources: C.P. Vick, Federation of American Scientists; Natural Resources

Defense Council; Jane's Information Group; "U.S.

Nuclear Weapons," by Chuck Hansen)(pg. A6)

* * * *

c The Associated Press

WASHINGTON (AP) -- The Clinton administration said it is investigating reports of Chinese espionage in the U.S. nuclear weapons program and has increased security at plants to prevent recurrences.

The New York Times reported Saturday that China stole U.S. nuclear secrets from the Los Alamos National Laboratory in New Mexico in the 1980s that helped it develop technology to miniaturize nuclear bombs. That is a key step toward fielding a modern nuclear arsenal.

National Security Council spokesman P.J. Crowley would not comment on the report because it involved intelligence matters.

But he said the administration began an intelligence review after it was briefed about Chinese nuclear espionage in the summer of 1997.

``Given what we know about this espionage, we have begun a detailed assessment of the potential damage and would expect that assessment to be reviewed by an independent panel and then provided to Congress,'' Crowley said. ``That assessment is already underway.''

Edward J. Curran, director of the Energy Department's counterintelligence office, also refused to discuss specifics of the Times report but said in a statement that the department always will be targeted by foreign intelligence services because of the highly advanced research it oversees. The Energy Department is in charge of the U.S. nuclear program, military and civilian.

``We've increased accountability, and we're putting in place additional tripwires to ensure strong protection of the vital national security capabilities at DOE labs now and in the future,'' Curran said.

The Times said the Chinese espionage occurred during the 1980s but was not detected until 1995, when American experts analyzing results of Chinese nuclear tests found similarities to America's most advanced miniature warhead, the W-88.

Within a year, investigators identified the suspect working at Los Alamos, where the 1940s Manhattan Project developed the first atomic bombs. The suspect continued in his job with full security clearance for another year, the newspaper said, and still no arrests have been made.

``The extent to which these disclosures may have helped parts of the Chinese weapons program is unclear,'' Curran said. But he said he could not comment on ``any potential ongoing cases.''

The Times reported that the government responded to the theft with delays, inaction and skepticism, even though some senior intelligence officials believed the theft was among the most damaging cases of espionage in recent history.

Curran said the Energy Department has taken aggressive steps to strengthen its counterintelligence skills, starting with the creation of his office under a February 1998 order by President Clinton.

Counterintelligence agents have been hired for government weapons labs, he said. The agency also has changed its screening process for foreign scientists seeking lab access and implemented more extensive security reviews -- including lie detector tests -- for Energy Department scientists who work in sensitive programs.

AP-NY-03-06-99 1701EST

* * * *

By Matt Pottinger

BEIJING, March 7 (Reuters) - China warned the United States on Sunday against offering Taiwan protection under a missile defence umbrella, saying such a plan would harm the chances of a peaceful reunification with the island.

Foreign Minister Tang Jiaxuan's comments at a news conference were the most explicit public warning to date on the possible consequences of Washington deploying [the Aegis Tier II] theatre missile defence (TMD) over Taiwan.

``If some people intend to include Taiwan under theatre missile defence, that would amount to an encroachment on China's sovereignty and territorial integrity and also be an obstruction to the great cause of peaceful reunification of the motherland,'' Tang said.

The system, which has its roots in the ``Star Wars'' anti-ballistic missile research begun in the 1980s, is being studied jointly by the United States and Japan.

There have been calls in Washington to include Taiwan under an umbrella which the U.S. government says is being considered because of a perceived missile threat from North Korea.

A Pentagon report last month said China had built up its missile force facing Taiwan, which Beijing regards as a rebel province which must be reunited with the mainland.

Beijing has refused to rule out an invasion should Taiwan declare independence. Taiwan agrees on the goal of reunification, but says Beijing must embrace democracy first.

Tang said the umbrella Washington was contemplating was a relic of Cold War thinking and would disturb regional security.

``The development and research of TMD does not go with the trend of the times, nor is it conducive to international disarmament efforts,'' he said. ``It will also exert a negative impact on the global and regional strategic balance and stability into the next century.''

Tang also suggested it would violate Japan's constitutional pledge to maintain only defensive military capabilities, saying it would ``go far beyond the legitimate defensive needs which the relevant country has repeatedly indicated'' -- a clear reference to Tokyo.

U.S. Secretary of States Madeleine Albright said in Beijing last week that China should stop worrying about ``a decision that has not been made to deploy defensive technologies that do not yet exist'' and instead do more for nuclear non-proliferation.

He also responded to the Pentagon report on a Chinese missile buildup by saying it was none of Washington's business.

``Whether we should deploy missiles on our own territory is our own business,'' he said.

05:34 03-07-99

* * * *

Washington, March 8 (Bloomberg) - Intelligence failures that allowed China to steal U.S. military secrets hurt national security more than technology transfers by Hughes Electronics Corp. and Loral Space & Communications Ltd., Representative Norm Dicks says.

Dicks is co-chairman of a special House of Representatives committee that examined whether spying, loopholes in U.S. export controls, and technology transfers helped China improve its military. Hughes Electronics, a unit of General Motors Corp., and Loral, weren't the worst offenders, Dicks said.

``The other areas were much more damaging to national security than this,'' he said in an interview last week. ``There were some failures in U.S. intelligence and counterintelligence. Some very important, sensitive secrets were stolen.''

The report is expected to be released in weeks, and Dicks wouldn't elaborate on the intelligence shortfalls that allowed military secrets to be stolen. One alleged breach - China's theft of U.S. plans for building smaller, more powerful nuclear warheads - was reported over the weekend in the New York Times.

Senate Intelligence Committee Chairman Richard Shelby, an Alabama Republican, said the Clinton administration may have acted too slowly to fix security lapses at its federal research labs and plans an investigation.

The nuclear warhead technology theft allegation should put in context legislators' complaints about actions by Hughes and Loral under U.S. export control laws, an industry official said.

``Learning how to miniaturize nuclear weapons is a hell of a lot more important than improving the quality of 20-year old Chinese Long March rockets,'' said Joel Johnson, Aerospace Industries Association vice president.

The two companies transferred the technology during investigations of failed launches of Long March rockets carrying the companies' commercial satellites.

Those technology transfers don't appear to have increased the capability of China's nuclear missile fleet, said Dicks. Hughes and Loral damaged national security, ``but it's a question to what degree,'' said Dicks.

The congressman, a Democrat from Washington state, doesn't represent Hughes or Loral workers. Yet his district is near the Seattle headquarters of Boeing Co., the world's largest aerospace company, for whom China is a major client.

Shares of General Motors H shares, which track Hughes Electronics, rose 1/16 to 47 1/2; Loral shares fell 1/16 to 17 3/4.

The still-classified report by Dicks's panel outlines 20 years of an ``aggressive acquisition campaign'' by China, including the theft of the nuclear warhead technology in the 1980s, the Times said. The theft at the Los Alamos National Laboratory in New Mexico wasn't discovered until 1995, the newspaper reported.

``If that happened, the security lapses in the U.S. government would be much more serious than lapses in U.S. industry,'' Johnson said.

The Senate Intelligence Committee soon will release an unclassified summary of its own China inquiry.

``We will not tolerate the theft of our secrets,'' Energy Secretary Bill Richardson said on Cable News Network today. He said the U.S. and the Chinese must deal with ``a broad series of issues.''

Dicks said the special House panel's report on China addresses intelligence lapses. ``There were some things that happened that were not very good,'' he said. ``It's that area that we are most concerned about and getting that straightened out.''

The panel's chairman, California Republican Christopher Cox, said ``there's a question of the relative extent of the damage to national security'' from the Hughes and Loral technology transfers.

While Hughes and Loral damaged national security ``our select committee was led to even more serious matters,'' Cox said in an interview, referring to U.S. intelligence failings.

``There is no question about what happened,'' Cox said of the panel's bipartisan consensus about actions by Hughes and Loral. There is a difference of opinion as to the degree of national security damage, he said.

18:38:42 03/08/1999

(C) Copyright 1999 Bloomberg L.P.

* * * *

I have been focused since the beginning when they dumped US Aerospace workers in favor of Chinese and Russian workers...1990...will send you the info...

Ben you might interested to know that Lockheed Martin is much more involved with the China launch deal that is reported in the press...people forget that Lockheed is part owner of Loral...and Loral does nothing without LM OK...

LM is protected at the Executive Branch by Bill, Al, and others...

* * * *

By Bill Tarrant

SEOUL, March 9 (Reuters) - The United States and South Korea will cooperate closely in taking a fresh approach to break a Cold War stalemate on the Korean peninsula, the Presidential Blue House in Seoul said on Tuesday.

U.S. policy Coordinator for North Korea William Perry met South Korean President Kim Dae-jung on the latest leg of his Northeast Asia tour to consult with regional leaders about how to deal with the unpredictable Stalinist regime in the North.

"Both parties agreed a comprehensive approach is needed to settle problems arising from the North's nuclear and missile development programmes. And they also agreed to closely cooperate in the process," a Blue House statement said.

"Such an approach would be based on the South Korean government's gradual engagement policy," it said.

President Kim has been promoting such an approach to dissolve what he calls "the Cold War" structure on the peninsula, where the two Korea's remain technically at war.

Perry told reporters on arrival in Seoul on Monday night that U.S. President Bill Clinton supported South Korea's policy of gradual engagement with communist North Korea.

Perry was responding to mounting concerns in Seoul that Washington might propose a harder line after its own engagement policy with North Korea has come under fire in Congress.

North Korea's launch of a three-stage rocket which hurtled over Japan last August, and the discovery that it was building a vast underground complex suspected to be nuclear related, led to President Bill Clinton's appointment of Perry late last year.

Perry was told to review all policies toward Pyongyang.

The missile launch also prompted the United States to dust off a proposal for a regional Theatre Missile Defence shield that would include Japan, South Korea and possibly Taiwan.

Diplomats say Perry, who has already visited China and Taiwan, and was to fly to Tokyo on Tuesday night, may be considering a two-track approach to North Korea.

The first track would be similar to one Kim has promoted -- offering North Korea a package of economic and political benefits if it curbs its missile and nuclear programmes.

These could include steps towards opening diplomatic ties between Washington and Pyongyang, easing U.S. trade sanctions and providing food and development aid for North Korea.

If that fails, the United States would adopt a harsher containment policy, possibly including a military blockade of the North, according to speculation among some officials and foreign policy analysts in Seoul.

U.S. and North Korean negotiators have been holding talks for more than a week in New York on U.S. demands for access to the suspected nuclear weapons development site in Kumchang-ri, not far from a mothballed Soviet-era, heavy-water reactor.

North Korea, facing severe economic problems and food shortages, denies the site has a nuclear role and demands massive food aid in return for multiple inspections of the site.

The talks have stalemated over that issue.

The United States is alarmed that North Korea, which is believed to have large stocks of chemical and biological weapons, is developing the capability of delivering weapons of mass destruction on long-range missiles.

"North Korea's nuclear ambitions, chemical-biological capability and burgeoning missile capability present a clear and present danger to the security of the United States," the congressmen wrote to Perry in a letter.

U.S.-led United Nations forces fought Chinese-backed North Korea in the 1950-53 Korean war, which ended in a now fraying armistice instead of a peace agreement.

04:59 03-09-99

* * * *

Tue., Mar. 09, 1999 at: Lon 2:22 p.m. Pra 3:22 p.m. NY 9:22 a.m. HK 9:22 p.m.

(Special Section: Taiwan )

TAIPEI, Mar. 09, 1999 -- (Reuters) U.S. envoy William Perry made a whirlwind visit to Taiwan on Monday, a key part of Washington's drive to consolidate U.S. interests in Northeast Asia as China flexes its diplomatic and military muscles.

President Lee Teng-hui gave the former defense secretary a warm welcome and endorsed Washington's call for a better rapport between Nationalist-ruled Taiwan and communist China.

With stops also in Beijing, Seoul and Tokyo, Perry's mission is to throw a security ring around North Korea while also persuading Beijing that U.S. talk of sheltering Taiwan under a regional missile defense does not threaten China.

Perry kept a low public profile after arriving on Sunday, saying he was merely offering a few "constructive and creative" proposals to the governments in Beijing and Taipei, which have been estranged since a civil war split in 1949.

"I can say we have had very positive, very constructive discussions," Perry said after meeting Lee and other officials.

President Lee's office quoted Perry as saying he had urged Beijing to halt what the Pentagon has described as a steady massing along its coast of missiles that seriously threaten Taiwan. Perry on Friday met President Jiang Zemin in Beijing.

As they did in Beijing, Perry and his team of five met key policymakers in the Taiwan strait standoff, including Su Chi, head of the cabinet's Mainland Affairs Council, Koo Chen-fu, Taipei's top China envoy, and Foreign Minister Jason Hu.

Lee told Perry that Taiwan was eager to engage Beijing, saying he was willing to personally guide top Taiwan-affairs negotiator Wang Daohan when Wang visited the island this year.

"We very much welcome Mr Wang's visit," Lee was quoted by the Presidential Office as saying.

"If time permits, I am even willing to show Mr Wang around, allowing Mr Wang to have a better understanding of the Taiwan people's thinking, Taiwan's history and present situation."

Lee nonetheless described China as the most destabilizing factor in Asia, saying he was puzzled by Beijing's angry bluster over Taiwan's possible inclusion in a still-hypothetical Theater Missile Defense system backed by the United States and Japan.

"I don't understand why the Chinese communists have such a fierce response to our participation of the plan even before there is a concrete proposal," Lee told Perry.

Lee said Beijing could defuse tensions by renouncing the use of force to bring Taiwan under mainland sovereignty.

"If the Chinese communists do not target Taiwan as an enemy and are willing to relinquish the massive missile deployment on their seacoasts and give up their hegemonic attitude, there is no need to deploy the Theater Missile Defense," he said.

Taiwan officials said Perry's shuttling between Taipei and Beijing left him keenly aware of a big perception gap spanning the Taiwan strait, one of Asia's most explosive flashpoints.

On Friday, a senior Beijing official warned Washington that any attempt to bring Taiwan under the missile defense umbrella would be seen as direct U.S. military involvement in Taiwan and encourage pro-independence forces on the island.

Washington has said the threat of a North Korean missile attack was behind its proposal, whose development could take a decade and cost billions of dollars.

China regards Taiwan as a renegade province that eventually must be unified with the mainland and has threatened to invade if the island moves toward independence or is helped toward that goal by any outside power.

Analysts said Taiwan needs to study the missile defense proposal further before committing to joining it.

"Unless we have a very clear picture about the political liability or political asset that TMD gives us, we can't make any decision over this issue," defense expert Andrew Yang said.

Taiwan's China Post appealed for a dual strategy of fresh engagement with the mainland and intensified weapons research.

"Joining the Theater Missile Defense system would certainly jeopardize the movement to build a lasting peace between Taiwan and the mainland," the English-language daily said on Monday.

( (c) 1999 Reuters)

* * * *

By JAMES RISEN

WASHINGTON -- A Taiwan-born scientist at Los Alamos National Laboratory was fired Monday for security breaches after the FBI questioned him about China's theft of American nuclear secrets, Energy Secretary Bill Richardson said.

The scientist, Wen Ho Lee, was questioned for three days by the FBI, starting last Friday, but "stonewalled" during the questioning, Richardson said.

Lee, a computer scientist who had been working in the nuclear weapons design area at Los Alamos, has not been charged with any crime, but he has been identified by federal officials as the prime suspect in the spying.

China has denied any such theft took place. But administration officials said China, working with stolen data, has made a leap in developing nuclear weapons with much smaller warheads.

The handling of the espionage matter brought sharp criticism from Capitol Hill. Sen. Fred Thompson, an influential Republican, representing Tennessee, attacked the Clinton administration Monday for failing to notify Congress in late 1997 that China had stolen nuclear secrets when the administration certified that Beijing was no longer helping other nations build nuclear bombs.

That certification lifted a 12-year ban on the sale of American nuclear technology to China, an action long sought by American companies eager to bid on the estimated $60 billion Chinese market for civilian nuclear plants.

The FBI began to question Lee on Friday in an attempt to determine whether he had passed American secrets to the Chinese. The questioning continued through late Sunday, but Lee failed to fully cooperate, said Richardson, who dismissed Lee on Monday, after receiving permission from the FBI.

FBI officials acknowledged last week that they did not have enough to arrest Lee then, but hoped their questioning would lead to a break. While he agreed to talk with investigators and nuclear experts, his failure to fully cooperate has apparently still left the investigators without enough evidence to prosecute.

But Richardson believed he had sufficient evidence to dismiss Lee. He was dismissed for "failure to properly notify Energy Department and laboratory officials about contacts with people from a sensitive country, specific instances of failing to properly safeguard classified material, and apparently attempting to deceive lab officials about security matters," Richardson said.

Reached at their home in Los Alamos, N.M., on Monday afternoon, Lee's wife, Sylvia, a former secretary at the lab, refused to give his whereabouts or comment on the matter. Lee, who officials said is in his late 50s and has been working at Los Alamos for more than a decade, did not hire an attorney to represent him during his interviews with the FBI, U.S. officials said.

Lee has been the prime suspect in a nearly three-year FBI investigation, code-named "Kindred Spirit," into Beijing's theft of U.S. nuclear technology from Los Alamos, senior officials from the bureau and the Energy Department said.

Until recently, China's nuclear weapons designs were a generation behind those of the United States, largely because Beijing had been unable to produce small warheads that could be launched from a single missile at multiple targets.

But by the mid-1990s, China had built and tested such small bombs, a breakthrough officials say was accelerated by the Los Alamos theft.

The espionage is believed to have occurred in the 1980s, officials said, but was not detected until 1995, when American experts from Los Alamos analyzing Chinese nuclear test results found similarities to America's most advanced miniature warhead, the W-88.

By February 1996, investigators from the Energy Department and the FBI, searching travel records and other data at Los Alamos and other U.S. weapons labs, had identified five possible suspects, officials said. Lee quickly emerged as the prime suspect, officials said.

Investigators now believe that Lee gave the Chinese sensitive nuclear detonation information during a 1988 seminar, senior administration officials said Monday.

But after opening a formal criminal investigation in June 1996, the FBI did not at first aggressively pursue the espionage case, according to several senior U.S. officials familiar with the matter.

Only in the last several weeks, after prodding from Congress and the Energy secretary, did government officials administer lie detector tests to Lee. After a first test was administered in December, the FBI, unsatisfied with those results, gave Lee a second test in February, and on that test he was found to be deceptive, officials said.

The FBI decided to interview Lee last Friday after he failed the polygraph, or lie detector test, in February, officials said.

In response to criticism over their handling of the case, FBI officials say that Chinese spy activities are far more difficult to investigate than the more traditional espionage operations of the former Soviet Union. The Chinese often take advantage of scientific exchanges and many other forms of informal contacts, gathering sensitive information from such a wide range of sources that it is often difficult to pinpoint exactly how American secrets leaked out.

U.S. officials say they have concluded that Beijing is continuing to steal secrets from the Government's major nuclear weapons laboratories, which had been increasingly opened to foreign visitors after the Cold War.

In this case, since the theft of the W-88 design information apparently occurred so far in the past, the Justice Department at first lacked the grounds to obtain a secret wiretap on the suspect, making it difficult initially to build a strong criminal case, according to U.S. officials.

Still, the Energy Department failed to move Lee out of his sensitive position, or remove his security clearances, for more than a year after FBI Director Louis J. Freeh told Energy officials in September, 1997 that there was no longer any investigative reason to keep him in place. In espionage cases, the FBI often wants suspects left alone by their employers for fear of tipping them off to their investigations. He was finally moved out of a sensitive area several weeks ago, officials said.

Lee's wife, Sylvia, quit her secretarial job at the lab sometime in the last year or two, Energy Department officials said. FBI and Energy Department officials said that Lee's wife's activities had raised questions while she worked at Los Alamos.

During the 1980s, she was invited to China to give an academic paper on parallel processing -- even though she was only a secretary at Los Alamos. Her husband, who was the true expert, accompanied her, according to a U.S. official. In addition, Energy Department officials said co-workers at Los Alamos questioned the fact that she frequently "inserted herself" into gatherings at the lab with visiting Chinese delegations.

But FBI officials said that she was not a target of their investigation. FBI officials have said it is possible that others were involved in the theft of nuclear secrets from Los Alamos, but they have not yet identified other suspects.

Meanwhile, in response to criticism of the lax security at Los Alamos and other national weapons labs owned by the Department of Energy, Richardson said Monday he is ordering that about 700 Energy Department and laboratory employees be required to take periodic polygraph examinations. The order does not cover all Energy and lab employees with so-called "Q" security clearances giving them access to nuclear secrets, Richardson said, but does cover those who work in the most sensitive areas. Currently, only employees of the CIA are required to submit to polygraph exams on a regular basis.

Tuesday, March 9, 1999 Copyright 1999 The New York Times

* * * *

By JOHN DIAMOND

.c The Associated Press

RIYADH, Saudi Arabia (AP) -- The United States agreed Sunday to sell Saudi Arabia sophisticated [AMRAAM] air-to-air missiles in response to worries about military threats from Iraq and Iran.

Defense Secretary William Cohen also agreed with his Saudi counterpart, Prince Sultan, to increase joint military training to include ground forces from the two countries. The move breaks a long Saudi preference for avoiding overt shows of joint military force with the United States.

The details of the sale of Advanced Medium-Range Air-to-Air Missiles, or AMRAAMs, remain to be worked out, including how many missiles will be transferred and how much they will cost. Congress must approve the sale. But the deal would only add to a U.S.-to-Saudi foreign military sales program that already is the largest in the world, totaling close to $3 billion last year.

Saudi Arabia has requested the weapons for years for use with its fleet of F-16 fighters. Earlier in his eight day swing through the Middle East, Cohen agreed to sell Bahrain 26 AMRAAMs. He also planned to discuss arms sales with other Persian Gulf partners.

The AMRAAM, a 12-foot-long weapon slung under the wing of a fighter plane, can be fired at an enemy plane as the pilot conducts evasive maneuvers. An improved model of the missile, built by Raytheon Co. and Hughes Missiles and Space, is more capable against lower-altitude targets.

Senior U.S. officials described Cohen's private talks with Prince Sultan and later with Crown Prince Abdullah and said they covered a variety of topics, from the threat of chemical and biological weapons to security problems with Iran and Iraq.

``Overall, these were very positive meetings,'' Cohen said.

The crown prince, generally regarded as Saudi Arabia's No. 2 official below King Fahd, received Cohen at a sprawling palace in the Saudi capital. Dozens of palace guards wearing traditional Bedouin garb and carrying long curved swords chatted on couches outside the room where Cohen met alone with Abdullah and a translator.

None of the Saudi officials who met Saturday and Sunday with Cohen issued public statements -- a clear disappointment to Cohen's delegation. They also refrained from criticizing U.S. policy toward Iraq, and a senior military official who spoke on condition of anonymity said a Saudi decision to conduct joint ground-force exercises marked a major shift.

Saudi Arabia is host to 5,000 U.S. troops and dozens of warplanes that carry out deny-flight missions over southern Iraq. Relatively few U.S. ground troops are stationed in Saudi Arabia, and the Saudis, eager to avoid criticism from Islamic countries of being too close to Washington, have avoided conducting large-scale exercises with U.S. ground troops.

Crown Prince Abdullah plans to travel to Iran on April 17 seeking to improve relations. But Cohen said worries about Iran's development of missiles and chemical and biological weapons has the Saudis concerned.

``They are trying to see if they can engage Iran in a positive way while still maintaining a strict deterrent capability,'' Cohen said.

Earlier Sunday, Cohen had a morale-oriented lunch with U.S. Army troops manning D-Battery, a Patriot missile-defense installation at Riyadh Air Base.

``It's my job to try and find incentives not only for you to be in the force, but to stay in the force,'' said Cohen, who described pay and other benefit increases.

Cohen also predicted the United States will not return soon to a military draft. He said senior officers ``would far prefer having someone who wants to be in the military.''

Army Pvt. Yancy Hampton, a D-Battery member and native of Hampton, Fla., was not so sure.

``You've got a lot of people getting out of the Army, and not a lot getting in,'' he said.

AP-NY-03-07-99 1410EST

* * * *

.c The Associated Press

Associated Press Writer

DUBAI, United Arab Emirates (AP) -- The United States is proposing to provide its Persian Gulf allies immediate access to intelligence on Iraqi and Iranian missile launches, Defense Secretary William Cohen said Monday.

The ``shared early warning system'' would link countries such as Saudi Arabia, Bahrain and the United Arab Emirates to sophisticated U.S. intelligence satellites that can spot a missile launch instantly.

``We would do this with all of the Gulf states to have a direct link between what our sensors are able to pick up and to communicate that to the Gulf,'' Cohen said after a 90-minute meeting in Abu Dhabi with Sheik Zayed bin Sultan al-Nahayan, president of this oil-rich nation. Later he flew to the port city of Dubai for a meeting with the UAE's No. 2 defense official.

``We think it's beneficial to all of the states and we're hopeful that each state will see it as being in its interest to have the information,'' Cohen said.

Both Iraq and Iran have missiles that could reach their Gulf neighbors and Iran, in particular, has been improving its arsenal. A senior defense official, who spoke on condition of anonymity, said U.S. intelligence sees no immediate threat of missile attack. But resentment in Iran and Iraq toward the U.S. military presence in the region and tension among Gulf states raise the risk over the longer term.

The move would help nations friendly to the United States conduct drills and exercises against the possibility of a chemical or biological weapons attack, said the defense official. It would also add a degree of security to the thousands of U.S. forces stationed in the region. Because the sensors track missile test flights as well as attacks, they could also provide countries in the region with early warning about improving offensive capabilities in Iran and Iraq.

But acceptance of the deal among the Gulf states is uncertain. They are already wary of drawing criticism for the support they now give to the U.S. military. U.S. Navy ships, for example, make more liberty calls in Dubai than to any foreign port in the world, Pentagon spokesman Kenneth Bacon said.

Making the fourth stop in a six-nation tour of the Persian Gulf region, Cohen said the plan would involve setting up computer terminals in friendly Gulf states to provide real-time intelligence on missile launches. The information would be collected by U.S. spy satellites with infrared sensors that can detect the heat plume of a missile launch.

Cohen is offering the intelligence sharing package to all six Gulf states he is visiting, Bahrain, Saudi Arabia, Oman, the UAE, Qatar and Kuwait.

As has been the case in all of Cohen's stops so far, UAE officials made no public statements to reporters after meeting with the U.S. defense chief. Gulf states are sensitive to criticism from Islamic groups of close ties to the United States.

Cohen's UAE hosts decided Monday that reporters traveling with Cohen would not be allowed to accompany the secretary to Al Dhafra Air Base, where the Air Force operates KC-10 refueling planes. The KC-10s are involved in sustaining U.S. warplanes covering the southern no-flight zone over Iraq.

Among Gulf states friendly to the United States, the UAE is probably least supportive of the U.S. hard line toward Iraq.

The UAE's central security concern is Iran, its neighbor across the Strait of Hormuz. The two Muslim nations are involved in a bitter dispute over control of the Greater and Lesser Tunbs and Abu Musa, islands that lie strategically athwart the western approach to the strait through which much of the world's oil flows.

Sheik Zayed led a move by Gulf states to publicly criticize Iran for a recent massive naval exercise conducted in part to demonstrate control of the islands.

The UAE is also negotiating with the United States for a large military purchase that would include as many as 80 F-16 warplanes and accompanying missiles and radar systems.

If the deal goes through the planes, built by Lockheed Martin Corp. in Fort Worth, Texas, would be delivered beginning in 2004 at the earliest, a senior defense official said.

AP-NY-03-08-99 1323EST

* * * *

WASHINGTON, March 8 (Reuters) - Energy Secretary Bill Richardson on Monday announced the firing of a scientist at the Los Alamos laboratory who allegedly leaked nuclear secrets to China, after the government kept him on the payroll for months to facilitate an FBI investigation.

The Department of Energy (DOE) said the scientist, a contract employee working for the University of California, was notified of his dismissal on Monday after being interviewed by FBI officials.

19:48 03-08-99

The Clinton administration Monday said a leak of nuclear secrets to China in the 1980s did serious damage but denied accusations that it softened its response to avoid damaging relations with Beijing. The New York Times reported Saturday that China used secrets stolen from Los Alamos to produce small warheads that could be launched from a single missile at multiple targets.

DOE said as part of an ongoing FBI investigation, the Chinese-American suspect had already been moved to a non-classified workplace and his security clearance had been suspended. But DOE had kept him on the payroll so that the FBI could continue its investigation of the case. Now that the FBI had interviewed the scientist, there was no reason to keep him on board, DOE said.

Richardson recommended the worker's firing, but the dismissal was carried out by his supervisors at the Los Alamos National Laboratory and the University of California.

In a letter explaining the decision, the worker was cited for failing to inform his superiors about ``contact with people from a sensitive country; specific instances of failing to properly safeguard classified material; and apparently, attempting to deceive the laboratory about security related issues.''

The Clinton administration on Monday said a leak of nuclear secrets to China in the 1980s did serious damage but denied accusations that it softened its response to avoid damaging relations with Beijing. The New York Times reported on Saturday that China used secrets stolen from Los Alamos to produce small warheads that could be launched from a single missile at multiple targets.

DOE said as part of an ongoing FBI investigation, the Chinese-American suspect had already been moved to a non-classified workplace and his security clearance had been suspended. But DOE had kept him on the payroll so that the FBI could continue its investigation of the case. Now that the FBI had interviewed the scientist, there was no reason to keep him on board, DOE said.

Richardson recommended the worker's firing, but the dismissal was carried out by his supervisors at the Los Alamos National Laboratory and the University of California.

In a letter explaining the decision, the worker was cited for failing to inform his superiors about ``contact with people from a sensitive country; specific instances of failing to properly safeguard classified material; and apparently, attempting to deceive the laboratory about security related issues.''

19:58 03-08-99

* * * *

3/9/99

The United States has admitted that its security was seriously damaged by a scientist who was sacked on Monday on suspicion of spying for China.

The scientist - named by US television as Wang Ho Lee - worked in the Los Alamos National Laboratory in New Mexico, which is at the centre of the country's nuclear weapons development.

Gerald Segal of the International Institute for Strategic Studies: US knew of spying for years.

"We don't know the extent of the full damage. It is serious, but the FBI and our law enforcement people at Los Alamos are pursuing this vigorously," Energy Secretary Bill Richardson said.

The US believes that the scientist - an American of Chinese origin - passed on information to China during the 1980s on how to make smaller nuclear warheads.

US intelligence officials believe it could be the most serious spying case in a generation, saving China about 15 years of its own research.

Chinese foreign ministry spokesman Zhu Bangzao said Beijing was following the case closely.

"What I will point out emphatically is that the US media has disseminated many rumours about China stealing US missile technology, and all these are unfounded," Mr Zhu said.

He blamed such rumours on people who wanted to hamper the development of relations between China and the US.

BBC's Paul Reynolds: Timing of the action is interesting

The Taiwan-born scientist recently failed a lie detector test as part of a three-year investigation into the alleged disclosure of sensitive nuclear missile technology to China in the mid-1980s.

Initially the suspect was moved from working on classified material to a less sensitive post. He then had his security clearance suspended, before being fired.

He has not been arrested or charged.

US intelligence believes China received documents which allowed it to develop miniature nuclear devices to be used in multiple warhead missiles.

The information is thought to have saved China 15 years of research effort.

Chinese nuclear technology lagged a generation behind the US until the mid-1990s, according to some reports. Since then, Chinese weapons have shown similarities to the latest US equivalents.

The timing of the action has been questioned as it comes hard on the heels of a story in Sunday's New York Times that China obtained secrets some years ago.

Republican senators have also stepped up the pressure recently, with accusations that the Clinton administration knew about the leak three years ago and was slow to respond for fear of harming relations with Beijing.

The government has denied such accusations.

* * * *

By Randall Mikkelsen

Reuters

WASHINGTON (March 9) - Vice President Al Gore Tuesday blamed China's alleged theft of American nuclear secrets on a ''previous administration'' and said President Clinton had acted to fix an ''inherited'' problem,

Gore was the highest-ranking U.S. official to comment on the allegations since they were disclosed by the New York Times on Saturday. His remarks indicated the Clinton administration is trying to avoid criticism for the affair, which has sparked renewed Republican attacks on U.S. policy toward China.

Gore also told CNN's ''Late Edition'' in an interview to be aired Tuesday evening that the United States would continue to pursue a relationship with China aimed at encouraging further steps toward democracy.

Referring to allegations China had stolen U.S. secrets used to make small nuclear warheads during the 1980s, Gore said: ''This happened in the previous administration, and the law enforcement agencies have pressed it, and pursued it aggressively with our full support.''

''In the course of this what developed was a brand new presidential directive that fixed problems we had inherited and changed and vastly improved the security procedures.''

The espionage from the Los Alamos nuclear research laboratory in New Mexico allegedly occurred during the 1980s, when Republicans Ronald Reagan and George Bush held the presidency. China has dismissed the allegations as ''irresponsible'' and unfounded.

Portions of Gore's remarks on China were aired on CNN ahead of the full interview broadcast and others were contained in a transcript provided by the cable television network.

Asked whether the United States would maintain its engagement with China despite the spying controversy, differences over human rights and other issues, Gore said China's role in the world would continue to grow.

''Obviously having a relationship with them within which we can try to affect their behavior and improve human rights, eliminate unfair trade practices and bring about the kinds of changes that will lead to further democratization in China -- those things are in our interest,'' he said.

Recounting Clinton administration's actions to halt the espionage, a White House official said the theft was discovered in 1995. Following investigations by the FBI and the Department of Energy, White House officials were briefed on the matter in July 1997. In January 1998 Clinton issued a directive to tighten security procedures at Los Alamos and other installations, he said.

On Monday, Energy Secretary Bill Richardson announced that a Chinese-American scientist working at Los Alamos nuclear laboratory in New Mexico, who allegedly handed over nuclear secrets to China, had been fired.

Richardson said on Tuesday in an interview with NBC television that the extent of damage to U.S. national security was unknown, and that Chinese espionage remained a concern.

''We don't know the extent of the damage from these thefts. They were serious. They were unconscionable. We are concerned that the Chinese are conducting espionage. We make no illusions about Chinese behavior,'' he said.

Richardson denied charges by Republican members of Congress that the administration had failed to act decisively after learning that nuclear secrets had been leaked to China.

Security had been tightened at laboratories, counter-intelligence activities doubled and background checks had also been ordered of foreign visitors, he said.

''We think we have plugged the leaks,'' he said.

Senate Majority Leader Trent Lott, a Republican, said the FBI would brief the intelligence committee this week on the alleged theft, and the panel would hold a hearing next week, some of which may be open to the public.

''I'm not going to dwell so much on the past, but what I want to know is what we're going to do about correcting this problem,'' Lott told reporters. ''They've got to tighten up the security.''

''It (the security breach) was allowed to go on for months, even years apparently, that is a concern,'' he said. ''I've been assured by the administration that they are going to cooperate with us and we've got to find ways to protect these lapses in the future.''

REUTERS 14:33 03-09-99

* * * *

19. China Flexes Its Muscles By GEORGE MELLOAN

Date: 99-03-10 10:35:17 EST

Wall Street Journal, Mar. 9, 1999

Global View - With Clinton in Check, China Flexes Its Muscles

By GEORGE MELLOAN

HONG KONG--China seems rather benign when viewed from this city. Bankers and businessmen talk of deals afoot in Shanghai or Wuhan. Recession has only somewhat subdued the bustle of the China trade handled by the denizens of Hong Kong's gleaming skyscrapers. The beautifully engineered expressways, bridges and tunnels that link the central district with the expansive new Chek Lap Kok airport on Lantau Island enhance Hong Kong's reputation as a "pearl of the Orient."

China clearly was sincere in its pre-handover pledge not to tamper with Hong Kong's role as Southeast Asia's premier commercial and financial center. Why would it want to, after all? But don't assume that that pragmatic decision reflected a Beijing wish to preserve the regional status quo. Quite the contrary. The acquisition of Hong Kong 20 months ago, coupled with the economic decline of Japan and other regional powers, has clearly sharpened China's long-standing desire to replace the U.S. as the political kingpin of eastern Asia.

On Sunday, Chinese Foreign Minister Tang Jiaxuan could hardly have been more confrontational when he warned the U.S. not to try to supply America's friends in the region with a theater missile defense system. He referred specifically to Taiwan, but implied opposition as well to a system that would primarily defend Japan, saying that such a deployment would go far beyond that country's "legitimate defensive needs."

Japan would of course beg to differ. It is so uptight about the missile threat from North Korea, which has fired a test missile over Japanese territory, that a defense official reportedly has raised the issue of whether Japan should launch a pre-emptive strike at North Korea. That suggestion rattled teeth in Seoul as well as Pyongyang.

Meanwhile, China, using technology widely believed to have been stolen from U.S. laboratories, is producing weapons of mass destruction and the missiles to deliver them. A Pentagon report last month said China is building up its missile forces targeting Taiwan. China fired "test" missiles over the Strait of Taiwan sea lanes in an attempt to intimidate Taiwan prior to Taiwan's presidential election in 1996. Mr. Tang's warning to the U.S. two days ago says, in effect: "Don't help our neighbors build missile defense systems, because we may want to threaten them with annihilation at some time in the future." That's about as brazen as you can get.

Lurking behind that brazenness, perhaps, is the belief in Beijing that it has been very successful in having its way with Bill Clinton since he assumed the American presidency. On Saturday, the New York Times carried a front-page article by James Risen and Jeff Gerth saying that the Clinton administration did nothing about a suspected spy for China working in the U.S. nuclear weapons laboratories at Los Alamos after suspicious activities were discovered in 1995. The suspect had allegedly stolen crucial data on how to miniaturize nuclear weapons to enable them to be fitted on submarines that could menace the continental U.S.

The story, derived in part from the still-secret results of a congressional investigation chaired by Republican Chris Cox, suggested that Mr. Clinton didn't want the spy story to surface at a time when he was trying to improve relations with China and setting the stage for a state visit to the U.S. by Chinese President Jiang Zemin in the fall of 1997. Two years is a rather prolonged stage-setting, of course. The White House brushed off the Times story with its favorite excuse, that Ronald Reagan was to blame; the miniaturization thefts reportedly occurred in the mid-1980s. But that doesn't explain what happened, or didn't happen, after the 1995 discovery. And since the suspect presumably still is beavering away at Los Alamos, who's to say that secrets are not going out the door even today?

A more plausible motive for the cover-up is the fact that in 1996 Mr. Clinton and the Democratic Party were charged with taking illegal campaign funds from the Chinese. The money was reportedly returned after the story broke, but the sensitivity of the administration to those charges can be judged from the willingness of Attorney General Janet Reno to risk the wrath of Congress with her refusal to appoint a special prosecutor to probe into them. We might have learned what John Huang, a man with important China connections, was up to when he occupied high posts in the Commerce Department and Democratic National Committee but this case, like that of the suspected Los Alamos spy, remains open. You can charge a lot off to the mere incompetence of the Clinton administration, but surely not everything.

Last June, Mr. Clinton finished off his goodwill tour of China by accepting, in seemingly offhand remarks in Shanghai, Chin's three "noes" in reference to Taiwan. In short, he buckled to China's demands that the U.S. do nothing to even suggest that Taiwan might someday be recognized as an independent state, whatever the wishes of its people. His capitulation left Taiwan's leaders in a state of shock and forced them to immediately begin taking steps toward an accommodation with the mainland, which they fear will leave them vulnerable to Chinese demands for reunification.

It is of course not known what role the campaign contributions might have played in inducing Mr. Clinton to take a soft line toward a China that might have been busily stealing secrets that make the U.S. more vulnerable to a nuclear attack. Clearly that's a favor somewhat more generous than offering a night in the Lincoln bedroom. But even if it is too horrible a thought to imagine a president committing what amounts to treason, it should be clear by now that the soft line has not been a howling foreign policy success. A China that dares to tell the U.S. that it will not be allowed to help Japan defend itself against a clear and present threat, can hardly be regarded as a friendly nation.

Indeed, the above sequence of events is a rather scary tale of the mismanagement of an important foreign policy relationship. There is nothing wrong with cutting China some slack and trying to support the positive forces at work there, but not when it threatens the security of the U.S. and its allies. Countering national security threats is an American president's most important job. A failure here dwarfs in importance even the lying about Monica, and perhaps Congress should give it at least equally serious attention.

* * * *

By ERIC SCHMITT

WASHINGTON -- Secretary of State Madeleine Albright sought to defend U.S. policy toward China on Wednesday in the face of concerted Republican attacks on the Clinton administration's handling of suspicions that China stole nuclear technology from the Los Alamos laboratory.

Albright, testifying before a House panel less than a week after visiting China, said that China's theft of nuclear secrets from the lab was a "very serious issue" that the CIA was assessing. But she argued that it should not dominate efforts to remain engaged with Beijing on a variety of issues from human rights to trade policy, which the administration is trying to negotiate separately.

Leading congressional Republicans were unswayed by that argument, as they have been from the start, and instead went on the attack, accusing the administration of not taking the theft seriously enough at first and then of not adequately briefing Congress.

Sens. Richard Lugar of Indiana and Trent Lott of Mississippi, the majority leader, demanded better explanations from Congress. The uproar, inevitably, bled into the political arena, with two presidential hopefuls, Patrick Buchanan and Steve Forbes, each accusing President Clinton's national security adviser, Sandy Berger, of "dereliction of duty," and demanding that he resign for failing to keep Congress adequately informed about the theft.

The administration says it briefed lawmakers beginning in 1996 on suspicions that China had acquired important nuclear bomb-building technology from Los Alamos.

China has denied stealing nuclear secrets from the United States.

Berger, traveling with the President in Guatemala City on Wednesday, defended his actions. "I have no intention of resigning," he said. "The actions that we took as a government when we learned of this alleged espionage which took place in the '80s I believe were appropriate, I believe were in the national interest, and I believe we acted swiftly."

But Lugar, one of the most influential Senate Republicans on foreign policy, urged Clinton "to give the American people a damage assessment" and to review the administration's China policy before the Chinese prime minister visits here next month, when he is expected to push for entry into the World Trade Organization.

Lugar sought to add the espionage case to the growing list of Republican complaints about Clinton's China policy, which include charges that the administration had been too soft on Chinese human rights violations, had allowed American aerospace companies to transfer missile technology to Beijing and had accepted improper campaign contributions from Chinese donors.

"The Clinton administration already had dug a very deep hole for itself on Capitol Hill with respect to China," Lugar wrote in an Op-Ed article on Wednesday in the Washington Post. "That hole just got deeper and wider."

Tim Hutchinson, R-Ark., proposed an amendment to an emergency aid bill for Central American storm victims that would require Congress to take a direct vote on whether the United States should approve China's entry into the World Trade Organization. Currently, that is the prerogative of the administration.

But Congress will indirectly be voting on any effort to get China into the trade organization. Its entry would require an amendment of the law that enables Congress to vote each year on granting China what is commonly known as most-favored-nation trading status.

The World Trade Organization, established in 1995 and with 132 members, governs international trade and mediates disputes.

And Lott endorsed a plan for the Armed Services Committee to hear testimony from the Republican and Democratic authors of a classified bipartisan House report that concluded China obtained some of the most sensitive American military technology. The two lawmakers are Rep. Christopher Cox, R-Calif., and Rep. Norm Dicks, D-Wash.

The lawmakers and the White House cannot agree on how much of the report to make public and in what form.

Against this angry backdrop, Albright and two other Cabinet members, Commerce Secretary William Daley and Energy Secretary Bill Richardson, mounted a coordinated defense Wednesday of the administration's handling of the case.

Under sharp questioning from the House Appropriations subcommittee that controls the State Department's funding, Albright stressed the importance to the United States of engaging China, even in light of the spy charges.

"It is a very important for us to engage with a country of 1.3 billion people that has a huge land mass, and that has an influence within its region, and that is also a permanent member of the Security Council," Albright said.

"We're better off talking with them, dealing with them," Albright continued. "We have made some progress in terms of their cooperation on nuclear proliferation on rogue countries. They're not supplying things to unsafeguarded facilities."

Albright also noted that China was important to the administration as it tries to "sort out what's going on in North Korea."

And she noted that during the Cold War, Washington continued to engage with countries, like the Soviet Union, that spied on the United States.

In a lighter moment that underscored China's importance as a vast consumer of American products, Rep. Tom Latham, R-Iowa, reminded Albright that China was important to Midwestern farmers because "they can also use a lot of Iowa corn and soybeans."

"I, in fact, talked about that when I was there," the secretary said, drawing laughs from the panel.

But most Republicans were not in the bantering mood about China.

Lugar, in his Op-Ed piece and in a separate interview, said that the disclosure that China had made an important leap in miniaturizing its long-range nuclear weapons with the help of stolen American technology, should force the administration and Congress to reassess whether rogue states armed with nuclear weapons posed a greater threat to national security than long-time nuclear powers such as Russia and China.

"I'm just trying to express concern about what I think may be a change in the strategic danger to the United States," Lugar said in an interview.

Smelling political blood, the two Republican presidential candidates who depend on the party's hard-line conservatives for support excoriated the administration. "The allegations surrounding the transfer of atomic secrets to a potential enemy are the most serious since the Rosenbergs went to the electric chair in 1953," Buchanan told a news conference in Sioux City, Iowa. Forbes said in a statement, "No amount of Clinton-Gore spin can cover up the disaster of our relationship with China, a relationship based on drift, dithering and abject appeasement."

Thursday, March 11, 1999 Copyright 1999 The New York Times

* * * *

By JAMES BROOKE

LOS ALAMOS, N.M. -- Within two weeks, Peter H. Lee, a Taiwan-born physicist who once worked at the nuclear weapons laboratory here, will complete a one-year sentence to a halfway house in California, winding up a murky case that speaks of the ambiguities surrounding resurfaced suspicions of Chinese espionage.

As Peter Lee returns to normal life, Wen Ho Lee, another Taiwan-born physicist, is starting life in limbo. On Monday, he was dismissed from the Los Alamos National Laboratory for security violations. He has not been charged with any crime.

No relation to each other, the two are linked only by official investigations seeking to determine how China may have gained access to American nuclear secrets. With lab approval, both made trips to China and addressed groups of scientists.

Peter Lee's involvement with China dates back to 1981, Federal prosecutors say, when he began a correspondence with Chinese scientists that mounted to more than 600 letters and e-mail messages by 1997, the year of his arrest.

After his arrest, he pleaded guilty to passing classified national defense information to Chinese scientists on a visit to Beijing in 1985. He also pleaded guilty to lying to a government agency after he described on a security form a May 1997 visit to China as a pleasure trip. In reality, Dr. Lee, then a researcher for an American military contractor, met extensively with Chinese scientists.

"U.S. intelligence analysis indicates that the data provided by Dr. Lee was of significant material assistance to China in their nuclear weapons development program," the Department of Energy said in a presentencing statement submitted last year to Federal District Judge Terry J. Hatter in Los Angeles.

Facing a possibility of 10 years in prison, Dr. Lee pleaded guilty under an arrangement with the court and was sentenced to one year in the halfway house, ordered to pay a $20,000 fine, and to perform 3,000 hours of community service. He lost his security clearance. At the sentencing, Judge Hatter said, 'You cannot leave to a scientist the discretion of what should be classified."

Lee's lawyer, James Henderson Sr., said in an interview: "My guy was at a conference of scientists and he ended up talking too much. His offense was tied to information that was subsequently declassified."

Indeed, as part of a sweeping opening of weapons laboratories after the end of the cold war, most of the information that Dr. Lee was accused of giving the Chinese in the 1980's had been declassified by the time of his arrest years later.

"Lee was a little ahead of his time," said Christopher Paine, an arms control specialist for the Natural Resources Defense Council, a public policy group. "Today if he discussed those things, there would be no penalty at all. After the cold war the Department of Energy and the laboratories made a unilateral decision to declassify a large amount of information. Time had overtaken his crime."

In the 1980's, Dr. Lee was one of dozens of American scientists who traveled to China on trips authorized by officials of the laboratory here. Dr. Lee is an expert in using lasers to create fusion, a field that can be used for simulating nuclear explosions, but also for generating electricity through nuclear energy.

A naturalized American citizen, he received his doctorate from California Institute of Technology, and worked at the Los Alamos lab from 1981 to 1987. Now 59, he is expected to return to living full time at his family home in Rancho Palos Verdes, near Los Angeles. Today, he did not return a telephone call left at his family home, and his lawyer said he would not talk to a reporter.

Dr. Lee told the judge that he had been carried away by "scientific enthusiasm."

On his 1997 trip to China, Dr. Lee had discussed his work using satellite radar imaging to track submarines, an area of interest to the Chinese. Dr. Lee was conducting this work for TRW Space & Electronics Group, a Redondo Beach, Calif., company, where he was employed from 1991 until his plea, in December 1997.

By 1997, Dr. Lee was the target of an F.B.I. investigation and agents tailed him in China, wiretapped his telephones in California and surreptitiously searched his computers for incriminating information.

"Here is a highly respected physicist, working on secret projects that had weapons applications, giving up the secrets," recalled Jonathan S. Shapiro, who prosecuted the case. Noting that the science was classified when Dr. Lee discussed it in Beijing in 1985, he added, "It is not up to individual scientists, on their own, to waive their oath on behalf of a foreign country."

In California, the reaction was "no harm, no foul, because the stuff had been declassified" recalled Shapiro, who added that he was disappointed last year by the lack of press interest in the case and the light sentence handed down.

"I received phone calls and letters from physicists and scientists who were offended that I prosecuted the case," said the former prosecutor. "The case represented the inherent tensions between the scientists' desire for free and open exchange of information, and the need to keep information classified and secret for the nation's security."

Saturday, March 13, 1999 Copyright 1999 The New York Times

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By TIM WEINER

WASHINGTON -- A spy worms his way into a delicate niche of U.S. military intelligence. He steals its secrets and sells them to another government. His treachery inflicts the gravest damage to U.S. national security.

Another spook sets out to purloin a foreign government's trade secrets. The foreign government smells a rat, sets a trap that snares the spy, her boss, his deputy and two colleagues, and sends them all packing.

In the first case, the spy was Jonathan Pollard, working for Israel. In the second case, the spies were the CIA's, their target France. Both cases caused political thunderstorms. Like most storms, they passed without permanently altering the landscape. The United States and Israel remain close, and Washington and Paris are amiable, after a fashion, a couple reconciled after an infidelity.

Now assume, as one well might, that China -- no ally -- has been caught, red-handed, spying on the United States.

A Chinese-American has been fired from the Los Alamos nuclear laboratory, suspected of swiping bomb blueprints, though he has been charged with nothing. Beijing stands accused of suborning Chinese-Americans for treason, using its embassies as dens of espionage, filching a recipe for miniaturizing nukes.

And the White House is being flayed by Republicans in Congress (or running for president) who say the administration turned a blind eye to Chinese military and intelligence threats, deep-sixed the Los Alamos case and sold out national-security concerns to a mercantile foreign policy driven by campaign-contributing corporations and shady Chinese middlemen.

The imagery goes beyond concerns that holes in the national security fence were closed too slowly for America's own good. The political charges are as powerful as tabloid headlines. Atom spies! Nuclear scandal! Pusillanimous policymakers pussyfoot with Chicoms!

What effect will this have on U.S. politics? Potentially plenty, since a presidential campaign is looming, and exciting foreign-policy issues are scarce.

And what effect will this have on U.S. diplomacy, with a summit coming between the world's most powerful and most populous nations?

"Practically zero," said Donald Gregg, a former CIA station chief and ambassador in South Korea, and deputy national security adviser to President George Bush.

James Lilley, a former CIA station chief and ambassador in Beijing, said: "Espionage is largely separate from the mainstream of foreign policy. You compartment it, you keep demagoguery out of it, you investigate, you nail the spy and you punish him, and you move on."

And former Secretary of State Henry Kissinger made a similar point: "We should be adult enough to understand that major countries are going to be spying on us. I'm assuming that we are spying on China. That should not in itself affect diplomatic relations."

In other words, grow up, America. Stop acting shocked to discover spies in the global Casbah. The world these days is driven by money, not ideology. And national interests, not angels and devils, are what motivate intelligence strategies and international relations in general.

So, these old hands say, the Los Alamos case should not derail U.S. diplomacy; rather, it is likely to gradually decay into the background of the continuous, contentious chatter between the United States and the Middle Kingdom -- if diplomacy's logic prevails. Still, they say, it could become a lightning rod and thus draw a storm sufficient to change the weather in Washington and the Forbidden City.

"On top of human rights, trade, the Chinese aiming missiles against Taiwan, Chinese views of future warfare -- put that into a presidential campaign, and you have a problem," Lilley said.

Kissinger, who knows a thing or two about the interplay of diplomacy and politics, said: "We are drifting into a confrontation because of our inability to connect our diplomatic policy to public support. You cannot open a newspaper without reading an attack on China. It's a nostalgia for confrontation."

For those in search of enemies, China makes a decent target. Its spy services, its army and its state industries all show "exceptional interest" in buying or stealing U.S. technology to modernize its backward military, the Pentagon says. China spies on the United States much as the Soviets did (it was the first to penetrate the CIA with a long-time mole, Larry Wu-tai Chin, who worked there from 1952 to 1981). Its nuclear weapons are capable, at least in theory, of turning Los Angeles and Seattle into smoking, radiating ruins.

But how real is that threat? China's nuclear arsenal is not much more potent than America's was when Mao Tse-tung took charge 50 years ago, and U.S. deterrent power is overwhelming. China has perhaps two dozen weapons capable of striking the American homeland. If the Chinese so much as twitch a trigger finger, the Pentagon can vaporize their nuclear silos and their cities in one fell swoop. And if the Chinese did indeed steal the trick of miniaturizing nuclear weapons from Los Alamos, speeding the day they can place several warheads on a single missile, there is no evidence yet that they have figured out how to deploy that force in a way that alters the strategic balance with the United States.

Still, a smaller, smarter Chinese bomb could undercut U.S. interests if it altered the balance of fear in Asia. Since Hiroshima, nuclear weapons have proved far more useful as instruments of blackmail -- or, more politely, symbols of strength -- than as military tools. When China rattles its shorter-range missiles, Taiwan and Japan listen. A many-headed missile is a talisman that would place China in the nuclear heavyweight class, far beyond regional upstarts like India and Pakistan. And since the Chinese have sold missile technology to Iran, a breakthrough for Beijing may someday be marketed in Tehran.

Now a clamor is rising for far tighter security at the national laboratories like Los Alamos. Chinese espionage presents a unique problem there. It exclusively uses ethnic Chinese operatives, in large numbers, each supposed to gather a tiny piece of a puzzle. "You are looking at an individual collecting one small part one time, and you don't have the quality of case that our country will take to prosecute as far as espionage," said one senior FBI official -- which may explain why there have been no arrests in the Los Alamos case.

That analysis chills the spines of scientists and Sinophiles. "We have a disproportionate dependence on foreign-born scientists at the labs; they love to work here because it's an open society, so they can do cutting-edge work in a congenial atmosphere," said Chas. W. Freeman Jr., a diplomat in Beijing under President Ronald Reagan and co-chairman of the U.S.-China Policy Foundation. "So will there now be a pall of suspicion against Chinese scientists? Are we now going to have a witch hunt? If you ratchet it up and exclude foreign-born scientists, what will that do to our competitive edge?"

The outlook wasn't sunny for the summit before the latest storm. President Clinton still cannot find a new U.S. ambassador willing to carry out his policies, a mix of mercantile zest and missionary zeal. The Chinese have never been thrilled with the United States slamming them for political repression, selling warplanes to their archfoe Taiwan, embracing their old enemy Vietnam, and envisioning a united Korea allied with the United States.

And the prospects for China's most-favored-nation status and its admission to the World Trade Organization won't improve if the Clinton administration cannot find a way to speak bluntly in private to the Chinese and publicly to the American people about nukes and spooks.

"Some people in the United States are busy spreading the 'China threat' fallacy and trying to find a new enemy for the United States," said Chinese Ambassador Li Zhao-xing in a speech in Washington in January. It evoked something that former Assistant Defense Secretary Joseph Nye, now dean of the Kennedy School of Government, said in 1995: "If you treat China as an enemy, China will become an enemy."

Diplomacy, like politics, is the art of the possible. Since the Cold War, Americans have dreamt of engaging Chinese leaders who are more like us than Marx or Mao. Still, it is hard to be a great nation without a great enemy.

Sunday, March 14, 1999 Copyright 1999 The New York Times

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By DAVID E. SANGER and ERIK ECKHOLM

Buried deep in the mountains 150 miles east of Xian, where the Chinese built a terra cotta army to protect the remains of the Emperors, lies a far smaller but lethal force: a half dozen or so intercontinental ballistic missiles that could reach the United States.

The missiles near the town of Luoning are hardly sophisticated by modern standards. The Pentagon believes each is equipped with a single warhead, large but not very accurate, intended for busting cities. They are mounted atop liquid-fuel rockets that take a full hour of preparation to launch.

In total, China is believed to possess roughly 20 missiles that can reach American shores, and perhaps 300 nuclear weapons that, aboard medium-range missiles or bombers, could hit Japan, India or Russia.

It is a bare-bones arsenal compared with the thousands of warheads still maintained by the Unit