Smuggling of US technology is outpacing Cold War levels, experts say

Sailors lowering a jet engine on board the aircraft carrier USS Theodore Roosevelt on Feb 26, 2018. Smugglers are attempting to ship US technology at rates that could outpace the Cold War, say experts.
Sailors lowering a jet engine on board the aircraft carrier USS Theodore Roosevelt on Feb 26, 2018. Smugglers are attempting to ship US technology at rates that could outpace the Cold War, say experts. PHOTO: AFP/US NAVY

WASHINGTON (NYTIMES) - Foreign smugglers are trying to ship US technologies, which can be used for weapons and spy equipment, to China, Russia and other adversaries at rates that outpace shadowy and illegal exports during the Cold War, according to US officials and experts.

In one recent case, a Texas businessman was paid US$1.5 million to buy special radiation-resistant circuits for space programmes in Russia and China. The businessman, Peter Zuccarelli, was working with a smuggling ring run by a Pakistani-born American citizen; court documents show Zuccarelli created fake shipping documents and mislabelled the circuits as parts for touchscreen computers. He was sentenced in January to four years in prison.

In another case, Chinese citizen Sun Fuyi sought to buy M60 carbon fibre, which is used in military drones, from undercover federal agents at Homeland Security Investigations.

Using the word "banana" as code for "carbon fibre", Sun took steps to conceal and export US$25,000 worth of the material he bought shortly before he was arrested. He was sentenced in September to three years in prison.

"He openly claimed in an e-mail that he was closely associated with the military," said Mr Pete Gizas, a special agent with Homeland Security Investigations, a branch of Immigration and Customs Enforcement.

Since 2013, nearly 3,000 people have been swept up by Homeland Security Investigations alone for trying to smuggle weapons and sensitive technologies - including circuits or other products that can be used in ballistic missiles, drones or explosive devices.

In that time, according to documents from the Department of Homeland Security, federal agents also seized more than 7,000 items, including microchips and jet engine parts, set to be smuggled out.

Exporting such items is tightly controlled by the US government to prevent hostile nations or terrorist organisations from turning them into weapons or devices that could harm the United States.

In the past, such technology has turned up in improvised explosive devices in Iraq, Russian fighter jets and Chinese military satellites.

Russia, China, North Korea and Iran are some of the countries most active in trying to illegally acquire US military technology, officials said.

Adversaries have long deployed spies and black market dealers to obtain US technology. But the scale of current efforts is unusual and "worse than anything that occurred during the Cold War", said Mr Robert Litwak, vice-president for scholars and director of international security studies at the Wilson Centre in Washington.

"During the Cold War, there was essentially one threat: the former Soviet Union," said Mr Litwak, who served on the National Security Council during the Clinton administration. "Now there are numerous threats."

The rise is connected to an increase in foreign hackers who are infiltrating the US defence industry and technology companies to steal blueprints for weapons and sensitive technology.

"So they can sit in Iran or North Korea, out of reach of US authorities, and just take what they need without trying to smuggle the item out of the country or getting someone to steal it," said Mr Patrick McElwain, who runs a special export enforcement unit at Homeland Security Investigations. "It makes things difficult for us."

China and Russia have poured billions of dollars into research and development as they challenge the United States for global superpower status. But experts said their military and space programmes remain years behind, unable to engineer advanced circuitry needed to match US satellites and weapons systems.

China recently announced its largest increase in military spending since 2015, to pay for an ambitious modernisation programme that would include developing stealth fighters, aircraft carriers and anti-satellite missiles.

Officials at the Chinese Defence Ministry could not be reached for comment.

The Russian Defence Ministry also declined to comment. But Mr Ruslan Pukhov, director of the Centre for Analysis of Strategies and Technologies, Russia's leading think tank for the defence industry and arms trade, said claims of an increase in Russian attempts to steal US military technologies were overblown.

"It is my firm belief that such cases have not become more widespread," Mr Pukhov said. "The public just pays more attention to them now because of the strained relations between Russia and the United States."

But some US experts, citing arrests and convictions of people who have been caught, said technology stolen from the United States had helped adversaries develop new weapons systems.

It is unclear how successful China, Russia, North Korea and other countries have been in acquiring American-made weaponry or technology. But officials say they believe the problem is a widespread national security concern.

Homeland Security Investigations runs the government's efforts to control exports of sensitive technology and arms through the Export Enforcement Coordination Centre.

The task of separating illegal exports from legitimate shipments of weapons and technology is daunting. Some items, such as stolen microcircuits, tend to be small and can be easily hidden.

And a legally-exported technology purchase can become illegal after it leaves the United States. That happens when sensitive technology is shipped to friendly nations but then immediately and illegally sent to nations where such exports violate US laws, including China and Iran.

US officials comb through law enforcement, intelligence and trade databases to look for suspicious packages that might contain stolen technology. They also rely on tips from companies who receive suspicious queries for items.

But the foreign smuggling rings that seek to illegally export US technology show no signs of abating.

Military contractors and technology companies have reported a tenfold increase in the number of suspicious inquiries they receive from individuals asking about weapons systems and technology, according to a person familiar with the queries who was not authorised to discuss current investigations.

Despite the dismantling of some smuggling rings, the federal authorities remain outgunned, said Mr David Albright, president of the Institute for Science and International Security in Washington.

"The mechanisms to defeat export controls multiply faster than the efforts to stop them," he said.