Charles R. Smith
Friday, Oct. 10, 2003

According to the former CEO of Hughes Aerospace, the U.S. nuclear industry has to sell atomic reactors to China. In fact, a report by C. Michael Armstrong stated that the U.S. Navy's nuclear program would be threatened without atomic sales to China.

"China is the only major market that can support the U.S. nuclear power industry in the near to mid-term," states a 1997 report prepared by the President's Export Council, chaired by Armstrong.

"If continued to be denied China, U.S. companies will be out of the business, with a corresponding loss of trained personnel to support the 100 U.S. civilian nuclear power plants. There are also implications for continued support to U.S. Navy nuclear programs."

The report was obtained by NewsMax.com from the U.S. Commerce Department using the Freedom of Information Act. The report was part of a package of over 200 pages of documents authored by or from C. Michael Armstrong to the Clinton administration.

Armstrong was contacted at his current position as chairman of the board at Comcast Corporation and given an opportunity to comment on the release of the documents. The former Hughes CEO declined to be interviewed for this report.

'Greed-Induced Glaucoma'

While Armstrong refused to comment on the newly released documents he authored, others were quick to respond, including a top national security adviser for America's closest ally, Canada.

"This guy is a classic example of greed-induced glaucoma," stated a senior Canadian security official.

"These kinds of comments bring to mind Lenin's exhortation to his followers not to worry about resistance to the Communist revolution from unprincipled capitalists: 'They'll sell us the rope we'll use to hang them.' "

"Both our countries' economic investment in China illustrates that these days unwitting treason can wear a two-thousand-dollar suit and speak in the language of return on investment or increased share price," noted the Canadian official.

"C. Michael Armstrong got Hughes into a satellite deal with China that disgraced the company and cost it half a billion dollars," commented a U.S. national security source. "Having trashed Hughes, he then went on to AT&T," noted the source.

"Big boys are supposed to be able to tie their own shoes, and in business they are supposed to have a viable business model. This thought is objectionable, that survival of the U.S. nuclear industry depends on China," stated John Kusumi, executive director of the China Support Network, a U.S.-based coalition working for democracy in China since 1989.

"To transfer technology, and to claim this is vitally necessary, lends the appearance that the basis and business model of the industry is treason. When the depths of corruption are no longer embraced, industry will tie its own shoes in a way that does not compromise national security," said Kusumi.

Chinagate

Armstrong was unsuccessful in his lobbying to approve nuclear technology sales to China despite the strongly worded report to the president. While Clinton did make attempts to export nuclear technology to China, a reluctant Republican-controlled Congress, concerned over national security problems inherent in the move, resisted the efforts.

Armstrong's failure was mainly due to his success in what became known as "Chinagate," the sale of advanced satellite and space technology to the Chinese army (People's Liberation Army, or PLA). The role in Chinagate played by Armstrong is clearly displayed by the newly released documents.

In 1995, Armstrong wrote Clinton National Security Advisor Anthony Lake, seeking to transfer satellite export authority from the State Department to the Commerce Department.

"The USG [U.S. government] does not require Congressional approval to remove commercial satellites from the United States Munitions List (USML), which is under State Department jurisdiction, and placing them on the Commerce Control List (CCL), which is under Commerce Department jurisdiction," wrote Armstrong.

"It is my understanding that State has resisted vigorously Commerce attempts to do just that. For the national good, this situation must change. A commercial communications satellite is not a defense item. State Department control of satellites is not required for national security. Continued State Department control is damaging to the U.S. satellite industry and is not warranted."

Thank You, Bill Clinton

In 1996, President Clinton moved the oversight of satellite exports from the State and Defense Departments to the Commerce Department. In response, Armstrong and his counterparts wrote a thank-you letter to Clinton.

In a May 3, 1996, letter signed by the CEOs of Hughes, Lockheed and Loral, the three executives expressed their thanks directly to Bill Clinton.

"In October of last year we wrote to you asking you to complete the transfer of responsibility for commercial satellite export licensing to the Department of Commerce. Your administration recently announced its intention to do just that.

"We greatly appreciate this action which demonstrates again your strong commitment to reforming the U.S. export control system," states a letter signed by Hughes CEO Armstrong, Lockheed CEO Norman Augustine and Loral CEO Bernard Schwartz.

The Commerce Department was ill-equipped to deal with satellite exports to China. The resulting fiasco at Commerce allowed the Chinese army to obtain a vast array of advanced missile, satellite and space technology. In fact, in 1998 the Defense Department charged that the Commerce Department exceeded its legal authority by authorizing export transfers to a foreign military.

In the end Hughes was charged with 123 counts of violating national security. All of the violations took place during Armstrong's term as head of Hughes. Hughes pleaded no contest to the 123 charges filed by the U.S. State Department and has since paid a record fine.

Military Satellites for China

Armstrong's contention that "a commercial communications satellite is not a defense item" is simply false. In fact, Hughes executives admitted that the satellites sold to China were military items. Ironically, the admission came when the company tried to sell a former Chinese satellite to the U.S. military.

AsiaSat, a company founded in 1988 in part by the Chinese army, made a March 1996 satellite purchase from Hughes to build the AsiaSat-3 with a $220 million loan from a consortium of banks.

Asiasat-3 was placed into an incorrect orbit by a Russian Proton booster rocket launched from Baikonur in 1997. In 1998, space insurance companies paid off the satellite loss and transferred ownership to Hughes.

AsiaSat-3, a "commercial" satellite sold to China, was more than just a $220 million piece of orbiting junk. Hughes recovered the satellite, using a special lunar orbit technique to bring it back into a useable position around the earth.

Hughes then offered the recovered satellite to the U.S. Navy for military purposes. Mark J. Schwene, Hughes Global Services vice president, was quoted in Aviation Week and Space Technology making the offer.

"Possible markets for the satellite (AsiaSat-3) include providing capacity over ocean regions for the Navy as well as providing sufficient communications services in times of crisis to meet military communications surge requirements," stated the Hughes VP.

The very same Hughes "commercial" satellite sold to China was offered to the U.S. Navy to serve in times of crisis to meet American military requirements. Of course, it never occurred to C. Michael Armstrong that the Chinese army might use Hughes satellites for "military communications."

Legacy in Orbit

Armstrong has since left Hughes, and the satellite company has been sold to Boeing. Boeing took the hit for the 123 violations and has had to clean up the Hughes mess. Boeing officials have replaced the Armstrong management and revamped the company with new leadership, emphasizing national security first.

Yet the legacy of Chinagate will continue to fly high. While the American shuttle remains grounded, China is expected to orbit its first manned spacecraft. The U.S. space technology illegally sold to the Chinese army will fly with the new PLA astronaut.

Charles Smith will be on:

The American Freedom Network with NewsMax contributor Dr. James Hirsen on Friday, 10/10/03, at 11 a.m. Eastern time. Show information at http://www.amerifree.com.

The Jerry Hughes show on Friday, 10/10/03, at 3 p.m. Eastern time. Show information at http://www.cilamerica.com.

The Phil Paleologos "American Breakfast" show on Tuesday, 10/14/03, the Langer Broadcast Network, at 8 a.m. Eastern time. Show information at www.dinershow.com.

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