Technological Iron Curtain for Russia
Export Control System as a Tool for Ensuring US National Security
Recently, the attention of specialists leading the monitoring of the world arms market has been riveted to the new international export control regime - the International Trade Treaty weapons (ATT). For the treaty to enter into force, ratification by 50 countries is required. Only eight have done so far. But sooner or later, the ATT will become a factor that has a significant impact on the arms market, albeit at first and indirectly. Today, the world arms market is significantly influenced by national licensing systems for the export of military and dual-use products, and above all the US export licensing system.
The US export control system dates back to the 30 of the 20th century, when the Neutrality Act of 1935 was signed. He gave the US Secretary of State - Secretary of State - the right to license the export of military products and established a list of weapons authorized by the US for export. At that time, isolationist sentiment prevailed in US foreign policy, when the main idea of introducing export controls was to avoid accusing the US government of supporting one of the parties when conflicts arose over the supply of American companies. In other words, it was important not to let smart industrialists drag America into any European or Asian war. However, after the end of the Second World War, the priorities of American foreign policy have changed dramatically - the United States has become a superpower and the world has divided into its own and others.
From isolationism to total regulation
The modern national system for regulating the export of military and dual-use products was formed during the Cold War. Most of the key legislation that formed its legal basis was passed in the second half of the 70s. In 1976, the Arms Export Control Act of 1976 (AECA) was signed, in 1977, the International Emergency Economic Powers Act was issued, in 1979, they were supplemented the law “On export regulation” (Export Administration Act). Derivatives of these laws were the International Trafficin Arms Regulations (ITAR), adopted in 1976 and regulating the export of military products from the United States, as well as the 1979 Export Administration Regulations, which regulate the export of dual-use products. Then there were lists of products in respect of which the export control procedures are implemented. Military products, the export of which is restricted by ITAR rules, are included in the United States Military List (United States Munitions List - USML). The list of dual-use products subject to the legal regulation of the Export Control Rules is the Commerce Control List (CCL).
The result of the adoption of all these regulations, rules and lists was the creation of a complex multi-level export control system in the USA in a short time. Its main objectives are to ensure the national security of the United States, to promote the implementation of the country's foreign policy, to protect fundamental human rights and freedoms, to combat terrorism, and to fulfill the United States obligations arising from participation in a number of multilateral international agreements. In fact, the export control system has become an instrument for achieving and maintaining the technological leadership of the United States, not only in the military field, but also in the field of civilian technologies. Of course, its creation was intended to limit access to advanced American technologies for the Soviet Union and its allies. The de facto export control system has spread not only to US military and dual-use goods, but also to products manufactured by US partners. It is very difficult to find in the market, both then and now, high-tech military or dual-use products of western countries that do not contain American-made components, primarily electronic ones. For any attempt to circumvent the rigid system of control created by the Americans punished.
In February 1973, after the crash of a passenger IL-62 in the vicinity of Sheremetyevo Airport, the USSR Council of Ministers adopted a resolution "On measures to improve the safety of civilian flights aviation". It was supposed to create in two stages the Unified Air Traffic Control System (EU air traffic control) of the USSR. At the first stage (1973-1978) it was necessary to organize air traffic control centers in the European part of the Union, at the second (1979-1982) - on the rest of the USSR. However, it quickly became clear that only Soviet specialists could not solve the problem in such a short time. Affected by the lack of relevant experience and the lag in the domestic element base. In addition, the approaching Moscow Olympics-80 threatened the metropolitan air hub with a huge load to receive hundreds of boards from all over the world in a short time. Under these conditions, a decision is made to attract a western supplier to create the busiest Moscow center for automated air traffic control. The choice was made in favor of the Swedish (Sweden was not a NATO member) company STANSAAB - a subsidiary of the SAAB concern for the development of software and electronic equipment. In 1975, a contract was signed for the supply to the USSR of automated air traffic control systems for the Moscow and Kiev air hubs and Mineralnye Vody airport. The most difficult task was the creation of the largest Moscow ATC center, the core of which was the Swedish automated system "Terkas", which was fully commissioned in 1981. Its construction required components manufactured in the USA that could not be legally supplied to the Soviet Union due to a system of export restrictions. The Swedes organized the underground transportation of the necessary electronic components to the USSR using Soviet diplomatic mail. The scam was revealed in 1980. The lawsuits that followed from the Americans ruined STANSAAB, and as a result, SAAB almost left the market for electronic products, and its subsidiary, STANSAAB, was sold for nothing to competitors from Ericsson. By the way, the "Terkas" system created by the Swedes using American components was still plowing, providing Moscow air hub for thirty years now. However, after the reprisal of the Swedish company, those wishing to joke with the American export control system were reduced. Actually, Terkas was the only significant experience in circumventing this system. It is characteristic that since the creation of the American export control system in the late 70s, the technological backwardness of Soviet industry, especially in the field of electronics, became insurmountable and ultimately played a role in the death of the Soviet empire.
No liberalization
Although the US export control system was formed during the Cold War, no significant weakening of it has occurred since then. The Clinton presidency attempted liberalization in that in 1992, the US Congress authorized the transfer of dual-use technologies from the USML to the Export Control List (Commercial Control List, CCL). However, the rest of the system until the last moment remained exactly the same technological iron curtain as during the Cold War.
Exports of facilities included in USML are licensed by the Directorate of Defense Trade Controls (DDTC) of the US Department of State. The export of products under CCL jurisdiction is licensed by the Bureau of Industry and Security (BIS). Exporting certain types of products requires licenses from both bodies. Both export lists are constantly being updated and refined as technical progress is being made - special expert groups are working on this. The process of obtaining licenses is very difficult. So that no one relaxes, it is accompanied by a strict system of supervision and prevention of violations of export regulations, which is provided by five departments or US ministries at once - the Department of Commerce, the Department of Homeland Security, the Department of Justice, the Department of State, and the Ministry of Finance. Every year on the US Department of Justice website, a list of court cases concerning companies and individuals who unsuccessfully tried to circumvent the export control system or simply put something prohibited for export by thoughtlessly is posted (for fear of intimidation). In addition to multi-million dollar penalties, losers are awarded real deadlines, and not “dvuchechkami” some and not even “Five”, but weighty “desyatochkami” and “quarters”.
A complex and rigid export licensing system has always remained a factor that has a certain negative impact on the export of high-tech products from the United States. Amid the crisis in the American economy, the Obama administration in August 2009 made the decision to begin the reform of the export control system. Her main ideas are as follows:
creation of a single list of goods subject to export control (instead of the current two);
organization of a single coordinating body (Export Enforcement Coordination Center), ensuring compliance with export restrictions;
the formation of a single licensing authority;
introduction of a consolidated screening list (Consolidated Screening List);
development of a simplified procedure for licensing the export of certain goods or to individual countries.
While this reform is underway, it is already obvious that there will be no substantial liberalization of export controls, at least with regard to the supply of military products. Rather, the reform can be called the optimization of the licensing system and the elimination of duplicate functions of the ministries and their subordinate agencies. The essence will not change - the export control system will remain a tool to ensure the national security of the United States and their technological leadership in the military sphere and the sphere of dual technologies.
How does the system work in the arms market? It is clear that the ITAR rules apply to all US arms exports and, de facto, to a significant part of the exports of US allies' weapons to NATO, as well as countries that have Majornon-NATO status ally. Among the states that have significant positions in the arms market are Israel, South Korea and Australia. The fact is that often the systems that are in service with NATO members were developed with American participation. The presence of even a few American components subject to the rules of ITAR, significantly narrows the list of countries in which this system can be supplied, limiting them only to allies, close partners of the United States or states with which America simply has good relations. The overwhelming majority of weapons systems of a high technological level developed by Western countries are somehow dependent on American-made components or technologies. You can find ITARfree small arms, artillery systems, armored vehicles, naval equipment, if we are talking about the platform itself, but when it comes to systems of a higher level of technological complexity - air defense systems, combat helicopters and airplanes, rocket and space technology, the percentage of ITAR -free systems in the global market are steadily declining.
However, in addition to the arms market, the American export control system has a significant impact on the export of dual-use and civilian products and technologies. The most important factor here is the continued technological dominance of the United States in the market of electronic components. At the same time, all military electronics are included in the 11 section of the US military list, that is, its export is limited. In addition, export regulations require licensing of exports of all radiation and heat resistant electronic components, microwave components and other types of dual-use electronics. In fact, all exports of Military, Military Space Grade classes of electronics, as well as much of the simpler components of the Automotive and Industrial classes, are subject to licensing.
Echoes of the Cold War
Under the previous Minister of Defense of the Russian Federation Serdyukov, at a certain stage it was believed that the Russian military department could turn to importing military products. However, our unlucky importers quickly found out that the West does not intend to sell any high-tech weapon systems to Russia. Although officially Russia is not included in the list of ITAR-prohibited countries - the list of states to which the export of military products from the United States is prohibited, it is obvious that the restrictions that existed during the Cold War years have been preserved. In addition, many Russian companies, including Rosoboronexport authorized to conduct import purchases in the interests of law enforcement agencies, are on export control lists, which means that these companies cannot count on obtaining export licenses for deliveries. As a result, everything that the Russian army got hold of abroad - IVECO armored vehicles, MAN HX77 tractors, simulator equipment developed by Rheinmetall Defense for the training ground in Mulin, Israeli Drones, a sniper weapon, the Mistral, is ITAR-free, meaning it does not contain US-made components subject to export restrictions.
Moreover, the existing system of export control of the United States and the systems of other Western countries significantly reduce the ability of Russian companies to import dual-use products, primarily electronic components. I will give you an example. Within the framework of the federal target program “Development of electronic component base and radio electronics at 2008 – 2015 years”, the Moscow State Institute of Electronic Technology and Ruselectronics, established in Zelenograd, a center for designing and manufacturing photomasks. Photomasks are the forms on the basis of which microchips are made. When purchasing equipment for the center being created, its management was confronted with the presence of obviously secret, but strictly implemented, international restrictions on the supply of equipment for the production of the latest generation of chips and equipment for the manufacture of appropriate photomasks to Russia. In a number of cases, they were denied the acquisition of the requested equipment in Europe and Japan (everything was clear with the United States), and equipment with lower characteristics was proposed instead. Since the equipment used in the production of photo masks is very complex, it requires supervision and maintenance from the manufacturer, purchasing through fake companies (the Chinese used this route) with subsequent import into Russia is risky and hardly expedient. As a result, the created center is able to produce photo masks for chips with design norms of 180 nanometers (the level reached by the world's leading electronics manufacturers in 1999), to a limited extent - 90 nanometers. Buy higher level equipment did not allow export restrictions. At the same time, the very fact of creating a national center of photo masks is a significant breakthrough in ensuring independence from foreign manufacturers of electronic components. Having our own relatively modern center for the production of photo masks makes it possible to provide the Russian defense and partially civilian industry with microcircuits, guaranteed to be protected from hardware bookmarks even when placing the production of microchips abroad. But it should be understood that all subsequent steps aimed at achieving technological parity with leading manufacturers of electronic components will have to be done by ourselves. Continuously improved export control systems of the United States and other Western countries simply do not leave the Russian industry another way out.
Recently, the attention of specialists leading the monitoring of the world arms market has been riveted to the new international export control regime - the International Trade Treaty weapons (ATT). For the treaty to enter into force, ratification by 50 countries is required. Only eight have done so far. But sooner or later, the ATT will become a factor that has a significant impact on the arms market, albeit at first and indirectly. Today, the world arms market is significantly influenced by national licensing systems for the export of military and dual-use products, and above all the US export licensing system.
The US export control system dates back to the 30 of the 20th century, when the Neutrality Act of 1935 was signed. He gave the US Secretary of State - Secretary of State - the right to license the export of military products and established a list of weapons authorized by the US for export. At that time, isolationist sentiment prevailed in US foreign policy, when the main idea of introducing export controls was to avoid accusing the US government of supporting one of the parties when conflicts arose over the supply of American companies. In other words, it was important not to let smart industrialists drag America into any European or Asian war. However, after the end of the Second World War, the priorities of American foreign policy have changed dramatically - the United States has become a superpower and the world has divided into its own and others.
From isolationism to total regulation
The modern national system for regulating the export of military and dual-use products was formed during the Cold War. Most of the key legislation that formed its legal basis was passed in the second half of the 70s. In 1976, the Arms Export Control Act of 1976 (AECA) was signed, in 1977, the International Emergency Economic Powers Act was issued, in 1979, they were supplemented the law “On export regulation” (Export Administration Act). Derivatives of these laws were the International Trafficin Arms Regulations (ITAR), adopted in 1976 and regulating the export of military products from the United States, as well as the 1979 Export Administration Regulations, which regulate the export of dual-use products. Then there were lists of products in respect of which the export control procedures are implemented. Military products, the export of which is restricted by ITAR rules, are included in the United States Military List (United States Munitions List - USML). The list of dual-use products subject to the legal regulation of the Export Control Rules is the Commerce Control List (CCL).
The result of the adoption of all these regulations, rules and lists was the creation of a complex multi-level export control system in the USA in a short time. Its main objectives are to ensure the national security of the United States, to promote the implementation of the country's foreign policy, to protect fundamental human rights and freedoms, to combat terrorism, and to fulfill the United States obligations arising from participation in a number of multilateral international agreements. In fact, the export control system has become an instrument for achieving and maintaining the technological leadership of the United States, not only in the military field, but also in the field of civilian technologies. Of course, its creation was intended to limit access to advanced American technologies for the Soviet Union and its allies. The de facto export control system has spread not only to US military and dual-use goods, but also to products manufactured by US partners. It is very difficult to find in the market, both then and now, high-tech military or dual-use products of western countries that do not contain American-made components, primarily electronic ones. For any attempt to circumvent the rigid system of control created by the Americans punished.
In February 1973, after the crash of a passenger IL-62 in the vicinity of Sheremetyevo Airport, the USSR Council of Ministers adopted a resolution "On measures to improve the safety of civilian flights aviation". It was supposed to create in two stages the Unified Air Traffic Control System (EU air traffic control) of the USSR. At the first stage (1973-1978) it was necessary to organize air traffic control centers in the European part of the Union, at the second (1979-1982) - on the rest of the USSR. However, it quickly became clear that only Soviet specialists could not solve the problem in such a short time. Affected by the lack of relevant experience and the lag in the domestic element base. In addition, the approaching Moscow Olympics-80 threatened the metropolitan air hub with a huge load to receive hundreds of boards from all over the world in a short time. Under these conditions, a decision is made to attract a western supplier to create the busiest Moscow center for automated air traffic control. The choice was made in favor of the Swedish (Sweden was not a NATO member) company STANSAAB - a subsidiary of the SAAB concern for the development of software and electronic equipment. In 1975, a contract was signed for the supply to the USSR of automated air traffic control systems for the Moscow and Kiev air hubs and Mineralnye Vody airport. The most difficult task was the creation of the largest Moscow ATC center, the core of which was the Swedish automated system "Terkas", which was fully commissioned in 1981. Its construction required components manufactured in the USA that could not be legally supplied to the Soviet Union due to a system of export restrictions. The Swedes organized the underground transportation of the necessary electronic components to the USSR using Soviet diplomatic mail. The scam was revealed in 1980. The lawsuits that followed from the Americans ruined STANSAAB, and as a result, SAAB almost left the market for electronic products, and its subsidiary, STANSAAB, was sold for nothing to competitors from Ericsson. By the way, the "Terkas" system created by the Swedes using American components was still plowing, providing Moscow air hub for thirty years now. However, after the reprisal of the Swedish company, those wishing to joke with the American export control system were reduced. Actually, Terkas was the only significant experience in circumventing this system. It is characteristic that since the creation of the American export control system in the late 70s, the technological backwardness of Soviet industry, especially in the field of electronics, became insurmountable and ultimately played a role in the death of the Soviet empire.
No liberalization
Although the US export control system was formed during the Cold War, no significant weakening of it has occurred since then. The Clinton presidency attempted liberalization in that in 1992, the US Congress authorized the transfer of dual-use technologies from the USML to the Export Control List (Commercial Control List, CCL). However, the rest of the system until the last moment remained exactly the same technological iron curtain as during the Cold War.
Exports of facilities included in USML are licensed by the Directorate of Defense Trade Controls (DDTC) of the US Department of State. The export of products under CCL jurisdiction is licensed by the Bureau of Industry and Security (BIS). Exporting certain types of products requires licenses from both bodies. Both export lists are constantly being updated and refined as technical progress is being made - special expert groups are working on this. The process of obtaining licenses is very difficult. So that no one relaxes, it is accompanied by a strict system of supervision and prevention of violations of export regulations, which is provided by five departments or US ministries at once - the Department of Commerce, the Department of Homeland Security, the Department of Justice, the Department of State, and the Ministry of Finance. Every year on the US Department of Justice website, a list of court cases concerning companies and individuals who unsuccessfully tried to circumvent the export control system or simply put something prohibited for export by thoughtlessly is posted (for fear of intimidation). In addition to multi-million dollar penalties, losers are awarded real deadlines, and not “dvuchechkami” some and not even “Five”, but weighty “desyatochkami” and “quarters”.A complex and rigid export licensing system has always remained a factor that has a certain negative impact on the export of high-tech products from the United States. Amid the crisis in the American economy, the Obama administration in August 2009 made the decision to begin the reform of the export control system. Her main ideas are as follows:
While this reform is underway, it is already obvious that there will be no substantial liberalization of export controls, at least with regard to the supply of military products. Rather, the reform can be called the optimization of the licensing system and the elimination of duplicate functions of the ministries and their subordinate agencies. The essence will not change - the export control system will remain a tool to ensure the national security of the United States and their technological leadership in the military sphere and the sphere of dual technologies.
How does the system work in the arms market? It is clear that the ITAR rules apply to all US arms exports and, de facto, to a significant part of the exports of US allies' weapons to NATO, as well as countries that have Majornon-NATO status ally. Among the states that have significant positions in the arms market are Israel, South Korea and Australia. The fact is that often the systems that are in service with NATO members were developed with American participation. The presence of even a few American components subject to the rules of ITAR, significantly narrows the list of countries in which this system can be supplied, limiting them only to allies, close partners of the United States or states with which America simply has good relations. The overwhelming majority of weapons systems of a high technological level developed by Western countries are somehow dependent on American-made components or technologies. You can find ITARfree small arms, artillery systems, armored vehicles, naval equipment, if we are talking about the platform itself, but when it comes to systems of a higher level of technological complexity - air defense systems, combat helicopters and airplanes, rocket and space technology, the percentage of ITAR -free systems in the global market are steadily declining.
However, in addition to the arms market, the American export control system has a significant impact on the export of dual-use and civilian products and technologies. The most important factor here is the continued technological dominance of the United States in the market of electronic components. At the same time, all military electronics are included in the 11 section of the US military list, that is, its export is limited. In addition, export regulations require licensing of exports of all radiation and heat resistant electronic components, microwave components and other types of dual-use electronics. In fact, all exports of Military, Military Space Grade classes of electronics, as well as much of the simpler components of the Automotive and Industrial classes, are subject to licensing.
Echoes of the Cold War
Under the previous Minister of Defense of the Russian Federation Serdyukov, at a certain stage it was believed that the Russian military department could turn to importing military products. However, our unlucky importers quickly found out that the West does not intend to sell any high-tech weapon systems to Russia. Although officially Russia is not included in the list of ITAR-prohibited countries - the list of states to which the export of military products from the United States is prohibited, it is obvious that the restrictions that existed during the Cold War years have been preserved. In addition, many Russian companies, including Rosoboronexport authorized to conduct import purchases in the interests of law enforcement agencies, are on export control lists, which means that these companies cannot count on obtaining export licenses for deliveries. As a result, everything that the Russian army got hold of abroad - IVECO armored vehicles, MAN HX77 tractors, simulator equipment developed by Rheinmetall Defense for the training ground in Mulin, Israeli Drones, a sniper weapon, the Mistral, is ITAR-free, meaning it does not contain US-made components subject to export restrictions.
Moreover, the existing system of export control of the United States and the systems of other Western countries significantly reduce the ability of Russian companies to import dual-use products, primarily electronic components. I will give you an example. Within the framework of the federal target program “Development of electronic component base and radio electronics at 2008 – 2015 years”, the Moscow State Institute of Electronic Technology and Ruselectronics, established in Zelenograd, a center for designing and manufacturing photomasks. Photomasks are the forms on the basis of which microchips are made. When purchasing equipment for the center being created, its management was confronted with the presence of obviously secret, but strictly implemented, international restrictions on the supply of equipment for the production of the latest generation of chips and equipment for the manufacture of appropriate photomasks to Russia. In a number of cases, they were denied the acquisition of the requested equipment in Europe and Japan (everything was clear with the United States), and equipment with lower characteristics was proposed instead. Since the equipment used in the production of photo masks is very complex, it requires supervision and maintenance from the manufacturer, purchasing through fake companies (the Chinese used this route) with subsequent import into Russia is risky and hardly expedient. As a result, the created center is able to produce photo masks for chips with design norms of 180 nanometers (the level reached by the world's leading electronics manufacturers in 1999), to a limited extent - 90 nanometers. Buy higher level equipment did not allow export restrictions. At the same time, the very fact of creating a national center of photo masks is a significant breakthrough in ensuring independence from foreign manufacturers of electronic components. Having our own relatively modern center for the production of photo masks makes it possible to provide the Russian defense and partially civilian industry with microcircuits, guaranteed to be protected from hardware bookmarks even when placing the production of microchips abroad. But it should be understood that all subsequent steps aimed at achieving technological parity with leading manufacturers of electronic components will have to be done by ourselves. Continuously improved export control systems of the United States and other Western countries simply do not leave the Russian industry another way out.
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