Marginmike and all,
Political pressures from both sides of the Pacific. Nordic countries are saying "great!" from that side of the Atlantic.
U.S. turns down satellite license with China
(Adds China reaction, grafs 5-7 )
By Sue Pleming
WASHINGTON, Feb 23 (Reuters) - The United States said on Tuesday it had rejected a $450 million Hughes satellite deal with a Chinese-led consortium over fears that sensitive U.S. military technology would get into the hands of China's army.
It was the first time a satellite deal with Beijing had been blocked and could further strain diplomatic ties between the two superpowers. It also puts into doubt future satellite sales and could strip U.S. companies of their dominant position in the billion dollar satellite market.
White House spokesman Joe Lockhart said the license to Hughes Space and Communications Corp. was rejected partly due to the make-up of the consortium involved in the deal and who the technology would be sold to, including the Chinese Army.
''There were significant changes in the consortium which caused concerns for State and Defense and led them to recommend that we not grant this license,'' Lockhart said.
Cui Jianjun, a press counsellor at the Chinese embassy in Washington, said his country had always ''strictly adhered to the relevant agreements regarding satellite launching'' and China had no need or possibility of obtaining U.S. technologies from the launch of satellites.
Charges from U.S. lawmakers that such satellite launches were damaging America's national security were ''utterly groundless,'' the Chinese official told Reuters.
The consortium, Asia-Pacific Mobile Telecommunications Company, is 51 percent owned by Chinese interests led by China Telecommunications Broadcast Satellite Corporation. Sunburst Technologies of Singapore is another large shareholder.
State Department spokesman James Foley said the consortium had become more involved with the Chinese military.
''Our policy is to support the civilian launching of U.S. satellites on Chinese rockets but not for military purposes... We determined that the purchasing body was not of a civilian nature and on that basis we declined to approve the sale.''
Foley stressed there was not a change in U.S. policy regarding the launch of U.S. satellites in China and that each application would be examined on a case-by-case basis.
''Allowing the launch of commercial satellites from China is in the interests of both our countries provided of course that the appropriate safeguards are in place,'' said Foley.
China has in the past dismissed claims it has acquired U.S. high-tech missile technology, calling these allegations a product of a ''Cold War mentality.''
A Commerce Department official said a majority of the five government agencies reviewing the sale had decided against granting the license. The decision can be appealed at Cabinet level or by Hughes.
The Commerce Department had favored approving the license, fearing U.S. companies would in the future be excluded from lucrative satellite contracts and that deals would go to their European competitors.
Industry estimates put the number of satellite launches planned in the next 10 years to more than 1,000 and analysts said the United States could launch 30-40 percent of these.
Don O'Neal, a spokesman for Hughes Space and Communications Corp., a unit of Hughes Electronics Corp. (NYSE:GMH - news), said the company had not yet been officially notified of a decision on the license.
He said the deal was for two telecommunications satellites to provide mobile phone services across Asia that were scheduled to be launched next year on a Chinese Long March rocket. ''These satellites did not provide any enhanced military capability,'' O'Neal said.
Defense analysts said the Clinton Administration was concerned U.S. companies were inadvertently helping the Chinese with technology that could provide launch information for China's missile program.
''The administration is more concerned about the launch technology, having the capability for multiple satellite launches which is the same as multiple warhead launches,'' said defense analyst Paul Nisbet at JSA Research.
Both Hughes and Loral Space & Communications (NYSE:LOR - news) are under investigation by the Justice Department and two Congressional Committees for their role in transferring technology to the Chinese after satellites belonging to the companies were destroyed in Chinese rocket explosions in 1995.
A congressional committee is due soon to make public a report recommending stricter security procedures for the transfer of satellites to China.
Clay Mowry, executive director of the Satellite Industry Association, which represents the U.S. satellite industry, said the rejection of the license could have more to do with politics than a military threat.
''All the to-do about Chinese technology transfers and launches in China has meant this is not good timing. It would appear that there are political issues coming into play here,'' said Mowry.
U.S. companies have launched satellites in China and other countries since the destruction of the space shuttle Challenger in 1986 limited launch capability within the United States.
Brian H. |
