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Uncle Sam's EW.

Does US government intervention unfairly hinder - or help -- US firms?

In March, the US State Department and the Boeing Co. (Seattle, WA) reached a consent agreement under which the company will pay $4.2 million in fines for alleged violations of the US Arms Export Control Act (AECA). Although Boeing admits no unlawful activity, State claims that the company committed 110 violations of the AECA - the majority in connection with "marketing activities," according to a Boeing spokesman, that took place during the 1997-98 timeframe, during the competition for Australia's Project Wedgetail. In three instances in particular, State alleges that Boeing illegally exported technical information regarding its airborne early warning and control (AEW&C) system.

This case highlights one of the many problems that industry officials note exist in the current US export-control regime. US EW companies claim they are frequently prohibited from divulging technical information without approval of the US government, whereas some non-US firms often have the active support and encouragement of their governments to find export markets. Moreover, the US government is generally believed to be unwilling to allow the export of cutting-edge EW systems either because its US forces do not have such equipment, or because they simply do not want state-of-the-art technologies in the hands of other countries. The problem, according to US industry, is that many of these state-of-the-art technologies and capabilities are available from companies in other parts of the world, particularly Europe and Israel. They claim that the net effect of US policies is that US EW companies often find themselves at a severe disadvantage in the face of international competition.

A Regulatory Quagmire

With the exception of Sweden (see below), the US has, perhaps, the strictest export-control regulations regarding EW systems in the world. Not only does this mean that many EW systems and technologies cannot be exported, but it also means that, in order to jump through the necessary regulatory hoops, a US company feels that it must spend significant amounts of time and money to gain export approval for acceptable technologies. Few international competitors face such rigid export controls, making it cheaper and easier for a non-US firm to sell its EW products and services in the international marketplace. This is especially true as the international EW market is expanding significantly, as more and more militaries around the world seek modern, state-of-the-art EW capabilities.

Basically, exportability of EW systems from the US, according to one industry source, involves three considerations: transfer of technology and know-how, transfer of military capability, and general political and national-security concerns. Successful export of EW capabilities generally requires not only the cognizance of the regional commander in chief (CINC), but also his advocacy, particularly when sensitive technologies, political concerns, and critical national-security aims are involved. Non-US companies, however, do not have to contend with CINCs.

But getting the support of the regional CINC is lust the beginning. The export-licensing process in the US receives further scrutiny -- or becomes more bogged down, depending on one's perspective -- once the issue reaches Washington. DC, where one finds a lack of clear policy, especially with respect to technical capabilities. As one US industry source put it. "What are the boundaries of the field on which we can play?" Indeed, the source added. "I believe there is no clear, unambiguous guidance relative to the export of EW systems and have been told so by US government officials who see these license applications." These officials are effectively left to their own "good but independent judgement" in terms of what should or should not be permitted for export.

Even licenses approved by the US government are often returned to the applicant with a dozen or more provisos. sources said. Typical among these stipulations, for example, are prohibitions against providing any specific target data (i.e., intelligence) with a system, automated linkage between electronic-attack (EA) and electronic-support (ES) systems, and capabilities to operate against so-called "complex signals," defined as those possessing qualities such as "ECCM [electronic counter-countermeasures]. frequency hopping, spread spectrum, LPI [low probability of intercept], short duration, burst, or pulse modulation." However, any modern military seeking EW capabilities expresses requirements to intercept, locate, and attack these "complex signals," recognizing their prevalence in today's robust electromagnetic environment. Another qualification placed on US EW industry is that "the capability to drive or control a jammer using signals captured on the surveillance equipment must not be discussed, offered, or released." Does this mean that target information derived from a companion ES subsystem can in no way be used to program targets on an EA subsystem? Such a condition, according to one source, is totally unrealistic. Furthermore, requests to identify and pre-approve guidelines for frequency coverage, frequency-hopping target rates. EA modes, effective radiated power, etc., the source said, remain unanswered. This lack of a definitive "field" on which US EW companies can play has led to a regulatory quagmire, essentially drowning the competetiveness of those firms by forcing them to go back through the approval process to query intent and exact meaning of words and phrases. All of this costs the companies time and money.

Caution and Confusion

Another hurdle faced by US industry is the inherent, and to some extent understandable, caution with which the US Department of Defense (DOD) approaches capabilities that exceed those possessed by its own forces. When one considers, however, that EW systems currently fielded by the US military are, for the most part, based on technology that is ten to fifteen years old. US firms feel that they are placed at a disadvantage when competing against international offers of state-of-the-art EW technology. The US government avoids providing capabilities to international customers that could possibly be used in a confrontation against US forces (one company even being told by a US government official that it could not get an export license because the equipment worked as advertised!), but "this policy fails to recognize that equally effective capabilities can be found elsewhere in the international marketplace." said one industry source. The only exception to this policy, however, seems to be the US Air Force, which apparently has no qualms about allowing the release of capabilities it does not have, such as the EW suite for the UAE's F-16 Block 60 fighters on order from Lockheed Martin and the active, electronically scanned array which the US government recently cleared to be part of Boeing's bid for the Republic of (South] Korea's fighter-procurement program.

In addition, "given the lack of attention paid throughout DOD to EW over the past decade" and the electromagnetic explosion to which international customers are reacting, according to one source, "it is almost certain that any current international requirement will exceed US capabilities." This concern, he continued, would have the US EW industry paying "an enormous price for DOD's lag in EW capabilities, while its international competitors are relatively offer capabilities against 'complex signals,' while DOD struggles to identify what 'LPI' really means."

Clearly, there is also -- to a certain degree, at least -- a lack of understanding of EW in general. As an example, one US industry source said, "I've even seen some stuff come back that is so ludicrous as to preclude a jammer even having a receiver." This, of course, begs the question: How is the jamming system supposed to know that there is a signal out there to lam?

The solution is for the DOD to "gather together all of its pertinent players among the EW industry, put all of the concerns on the table, develop a comprehensive and unambiguous policy in terms of technology/capability/national security, and then prepare to update that on a regular basis as technologies move forward."

A Bureaucratic Nightmare

Another problem faced by US EW companies looking to export their wares is the government bureaucracy itself. Even if a solution like the one mentioned above were put in place, it still needs to be implemented efficiently, said John Douglass, president and COO of the Aerospace Industries Association.

Nearly all of the US industry sources contacted for this article complained about the lengthy licensing process, which, they said, can run as long as six months to a year, and as noted above, what is exportable is not codified in any official document. This lack of codification, leads to inconsistencies within the bureaucracy as it attempts to implement its interpretation of US export-control policy, and each bureaucrat's interpretation can be different. As Douglass explained, "Their own personal views get injected into the system." Even codification of export-control policy cannot completely solve this problem, however. People can, as Douglass pointed out, "take a law and twist it around to mean something other than what the original writers of the law intended." Douglass himself has seen this firsthand:

I was a staffer on the Senate Armed Servies Committee and wrote a lot of the industrial legislation that passed -- let's say, between '92 and '95. Then I went over to become assistant secretary of the Navy. And I had on several occasions the eerie opportunity to see Department of Defense or Navy lawyers come in to me and say. "Mr. Douglass, you can't do this, because there's a law against it, and here's the law." And I said, "Hey. I wrote that! That isn't what we intended by this. This isn't what it means at all. That got invented on my word processor, and I explained it to all the senators and congressmen who voted for it, and that isn't what they had in mind."

Sadly, in addition to differing interpretations of export-control legislation, Douglass said that "there've been some personal vendettas develop over the years." He noted instances where individuals at companies have talked to the press about their frustrations in dealing with the US export-control regime. The export-licensing officials figure out in some cases which company it was that complained. Douglass said that company then gets a phone call, saying "Your next export license will be approved in 2065, so don't call us anymore." (This also serves to explain why none of those at US EW companies contacted for this article would speak for attribution.) Douglass did point out that such things occur at a low level, "not at the leadership level by any stretch of the imagination." Rather, his accusatory finger was aimed at "relatively low-ranking bureaucrats who are relatively unsupervised and unaccountable to anybody."

Combine this bureaucratic nightmare with the regulatory quagmire that is US export-control law, and you've got a one-two punch that can knock US EW firms right out of international competition.

The Global Marketplace

US firms, saddled with regulatory and bureaucratic impediments to conducting business, face off in the global marketplace against international companies not constricted in the same manner -- or, in some cases, seemingly not restricted at all. The general rules for most of Europe follow three basic precepts. Exports of military equipment should not be permitted to countries in a state of war or likely to be heading into conflict, likely to re-transfer the technology or capability to a country that would otherwise not be permitted to receive it, or with histories of human-rights violations. The list of countries to which the UK, for instance, cannot export EW system is "quite small," said Bob Andrews, managing director of that country's EWsT. The main "no-no," he said, is the export of any type of EW-database information. This restriction, however, is a common one across the international community, including the US. Carlos Santamaria Benito, EW marketing manager for Spain's Indra, noted similar apprehensions in his country to the release of such data "for identification and the source code" of the system software. Outside this consideration, non-US EW firms have fewer constraints in marketing a nd selling their products and services.

One of the main reasons for this is the need to support indigenous industrial capabilities. Whereas the US consumes the majority of its domestic EW production, Israel, for example, must export to support its own EW capabilities. As Major General (ret.) Yosi Ben Hanan, director of the Israeli defense-export activity SIBAT, said, his country "cannot survive without its own defense base." The Israeli EW industry, he said, is "dependent on finding export markets" so that it can secure the $2 billion in new contracts each year that he sees as vital for its survival.

Furthermore, for European EW companies, EU and NATO countries are becoming de facto "domestic" markets, according to Giuseppe Maresca, marketing and sales director for Italy's Elettronica. With the increased integration of Europe -- economically, politically, and militarily -- export controls, with regard to fellow European allies, are becoming a moot point, especially with the increased cooperation between many European countries on major procurement programs like Eurofighter and the Horizon Common Next-Generation Frigate.

Of course, as with any generalization, there are exceptions. The laws of Sweden, for example, prohibit any defense exports without a special waiver from that country's government. In fact, the Swedish government not only controls exports of military equipment, but also production and, of course, sales to the Swedish military. According to Jan Linder, vice president of business development at Sweden's Ericsson Saab Avionics AB, the willingness to grant export waivers "is largely based on political considerations." These political considerations, though, seem to boil down -- at least on paper -- to the same three basic tenets common to most of Europe noted above, the real difference being the extent to which the Swedish government monitors its defense industry and the weight applied to human-rights considerations.

Uncle Sam's Heavy Hand

Of course, the US government is not adverse to applying pressure on other countries to fall in line with its export policies -- either out of security concers or simply to help US businesses competing internationally. In fact, the US recently tried to get the UK to tighten its export controls in order for the UK to receive a special waiver to US military-export regulations, a status held by Canada for decades. The Pentagon has long argued that the granting of such exemptions would serve to boost the competitiveness of US industry and to encourage other countries to tighten their own export controls. The proposed agreement crafted by the US government was rejected by the British, however, apparently due to US demands that the agreement be legally binding, a demand that one source said would not hold up under British law.

Not all countries, though, manage to shrug off US pressure. It is not uncommon for the US government to attempt to graft its foreign policy onto another nation. For instance, US concerns over the increased military capabilities of the People's Republic of China (PRC) led the US government to pressure Israel to abandon a $250-million contract to supply Israeli firm Elta's Phalcon airborne early-warning (AEW) radars to the PRC.

US security concerns, though, are not the only reasons the US government attempts to influence international EW deals. In some cases, it appears the US government has exerted pressure on foreign governments in order to win business for US EW firms. Turkey, for instance, recently felt Uncle Sam's heavy hand come down on its planned integration of French-built EW equipment for its F-16 fleet. The US government recently established a new policy regarding the installation of non-US EW systems on US-built aircraft, essentially a prohibition of such installations, leading the Turkish government to scuttle its contract with France's Thales for the supply of EW suites for the F-16s (see "Citing US Policy, Turkey Cancels F-16 EW Contract," in this issue of JED). Turkish firms interested in acting as prime on a program are now said to be in disucssions with Thales' original competitor for the program: BAE Systems, formerly Sanders, located in Nashua, NH.

This opens the door for challenges to other countries' plans to install non-US EW equipment on its US-built aircraft. Next up could be Greece's planned installation of Israeli EW systems on its F-16s, but the implications of this US policy could have consequences that reach much further. Consider that, according to Lockheed Martin figures, over 1,800 F-16s have been sold to 19 countries outside the US (and at least three more countries -- Chile, Bulgaria, and Poland -- may soon be added to this list). Add to this the Boeing F-15, along with the scores of older fighters such as F-5s still being used by some countries. And this is only the fighters. US-built transport, AEW, maritime-patrol, and other aircraft also fly with air forces around the world. Futhermore, it has yet to be determined if the new policy applies to helicopters as well as fixed-wing aircraft.

This US policy could serve to force a lot of international business into the laps of US EW companies. Will all international customers fall in line with the new US policy? Will it serve to give US EW houses a competitive advantage over their international counterparts, despite the difficulties presented US firms by their government's export-control policies? Much remains to be seen.
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Title Annotation:Boeing, alleged wrongful export of early warning system
Comment:Uncle Sam's EW.(Boeing, alleged wrongful export of early warning system)
Author:Rivers, Brendan P.
Publication:Journal of Electronic Defense
Geographic Code:1USA
Date:Jul 1, 2001
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