Finding Common Ground U.S. Export Controls in a Changed Global Environment, Commissioned Papers (1991) / Chapter Skim
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The Democratic Revolution in the East and Its Implications for CoCom
The Democratic Revolution in the East and Its Implications for CoCom
Pages 25-74
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From page 25... ...
Cocoa and the Unified Germany While still a matter of some speculation, it is probably correct to assume that political unification between the two Germanies is likely to happen in 1991. The East German election of March 18, 1990 represented the first formal step in this process, as the population of East Germany voted for unification via Article 23.51 As unification occurs according to the provisions of Article 23, and when the G.D.R.
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From page 26... ...
The second part examines three aspects of unification which pose a challenge to CoCom: the changes necessary in the Cocom list to address problems of nuclear safety and environmental clan-up; and the fact that even after unification Soviet troops are likely to remain in East Germany for some time.
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From page 27... ...
would severely hamper the process of economic union. First, part of the ~ ega ~ f r amework o f the economic union could not be implemented since the AWG would not be extended to East German 53 This does not exclude the possibility that a whole series of special regulations apply to the Eastern part of the new German economy.
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From page 28... ...
When an integrated communications system is set up between the two Germanies, the flow of software can no longer be controlled. Third, the continued maintenance of export controls would cause a negative private sector reaction.
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From page 29... ...
would be high, and the entire process of unification would come under severe strain. Yet if export controls remain after the second of July, the investment necessary to restructure the East German economy would not be made.57 According to West German and other European executives, 56 According to one high ranking advisor to the East German government "75% of the G.D.R.
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From page 30... ...
Lack of investment in the East German economy could substantially worsen this situation by raising unemployment even more and thus requiring more resources.
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From page 31... ...
to compete in world markets, if you don't give them this technology? ".60 It must also be emphasized that economic union can only succeed if the G.D.R.'s economy can maintain its traditional economic links with the Soviet Union, which is a major importer of East German industrial goods.
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From page 32... ...
Finally, the symbolic character of re-erecting an "economic wall" would be a political impossibility. In fact, West German policy makers are concerned that there would be a very strong ant'-American backlash in the German population if it became known that the source of all the difficulties and costs arising from a continued application of export controls to East Germany lay not in Bonn but in Washington.
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From page 33... ...
to supply '5 digital telephone exchanges , including 34,000 lines, to East Germany was signed by Mr.Gerhard Zeidler, director of Alcatel's West German subsidiary, "Cocom close to high-tech sales agreement," Financial Times, 2.16.1990; Siemens and Alactel are currently awaiting approval from CoCom to manufacture digital exchanges in the Soviet Union, see "Moscow to launch giant telecoms satellites," Financial Times, 4.3.1990; the trend towards a European position was also apparent during the recent international computer trade fair CeBIT in Hannover, see for example, "Sturm auf die Bastion Cocom," Suddeutsche Zeitung, 3.22.1990; "Computerbranche macht gegen die Cocom-Liste Front," Frankfurter Rundschau, 3.21.1990. 66 "Durch Die Hintertur," Der Spiegel, No.17 (1990)
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From page 34... ...
is not neutral but still formally a member of the Warsaw Pact.70 Secondly, the G.D.R. has no experience in export controls, nor does it have the bureaucratic structure to effectively duplicate the Swiss modei.
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From page 35... ...
The common foreign trade law could be either the F.R.G.'s AWG, or a new system negotiated between the German states.72 Given the time frame of the economic union and East Germany's inexperience with export controls, an extension of the AWG would be more feasible. From an operational standpoint, this option would be feasible as early as July 2, since by that date all 11,000 East German custom officers will be fully trained in West-Ge~man custom laws.
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From page 36... ...
The first challenge arises from the urgent need to reduce the level of pollution in East Germany.75 The problem of severe environmental pollution in East Germany led to proposals levels and prices will have moved closer together; in addition in order to implement the transitory arrangements with the EC some control system at the border or the source has to be maintained. Finally, some controls need to be maintained to protect the West German economy and the EC at large from third country imports through the G.D.R.
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From page 37... ...
has provoked popular outrage and has catalyzed numerous parliamentary debates and committee hearings. If not resolved before the Fall, this problem will become a campaign issue in the Federal election of December 2.77 The current government, however, has indicated that it will not permit CoCom to stand in the way of the F.R.G.'s efforts to clean the environment in East Germany.78 In fact, the issue of pollution reduction has not only intensified the pressure for liberalizing the lists; it has also created a more general awareness of the existence of export controls among the general 76 These technologies involve measurement and control in of emission of power plants especially in the case of lignite, see for example Klaus Broichhausen, "Cocom wird den kaltem Krieg uberieben," Frankfurter Aligemeine, 2.13.1990; Josef Vosen, DDR und COCOM, 3.29.1990.
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From page 38... ...
The second challenge to Cocom became evident when the opening of the border between the two Germanies revealed the terrible safety standards of East German nuclear reactors.79 Their condition is so bad that after inspection by research teams from the F.R.G., sections of nuclear plants had to be closed immediately to avoid a potential disaster. The only way to continue to operate these plants is to raise safety standards to Western levels.
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From page 39... ...
SS-20. In response to questioning by the opposition in Parliament, the government stated that all items that can enhance the safety of the nuclear reactors in East Germany -- including those on the nuclear list -- must be liberalized.82 The final challenge involves the fact that the creation of a new collective European security structure is likely to take longer than the process of German unification.
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From page 40... ...
As to the munitions and nuclear lists, various schemes to restrict access by the soviet military could be established. For example, a special licensing system could be set up to restrict the production, storage, and distribution of these items on East German territory until Soviets troops are withdrawn.
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From page 41... ...
"Discriminating in favor of the G.~.R. would be sending the wrong signals to the rest of Eastern Europe", said one official in Bonn, 87 thereby articulating the general consensus in the West German public and private sectors that the developments in the G.D.R.
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From page 42... ...
tt88 Furthermore, treating the other Eastern European countries differently would simply intensify the enormous difficulties that they will face in reforming their economies. East Germany is in the fortunate position of receiving special support from West Germany: and the rest of Eastern Europe has begun to fear that the bulk of foreign investment will flow into the G.D.R., which within a few years will be integrated into the largest and most prosperous economy in the EC.
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From page 43... ...
qual ity standards necessary to compete in world markets.90 In this connection, officials in Bonn pointed out that they do not consider the liberalization of the Cocom as a reward for "good behavior". To the contrary, it is one of the many mechanisms through which the Western alliance can support the Eastern European reform process.91 As one respondent said, "if we don't succeed with the reintegration tof Eastern Europe]
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From page 44... ...
suggested that the Cocom restrictions currently in place for Eastern Europe could be liberalized if those countries established an effective control system to ensure that the goods would not be re-exported to the Soviet Union.96 93 See Section 2.~.~. above on the differences between the U.S.
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From page 45... ...
"The creation of an effective export control system would require the establishment of an huge bureaucratic apparatus which would likely become redundant before it was fully operational. Besides, it would involve considerable costs at a time when scarce financial resources in the Eastern European economies should be allocated to the development of a modern economic infrastructure, and not to the creation of an elaborate governmental apparatus that restricts and therefore delays technological progress.
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From page 46... ...
(and all other Europeans) rejects the U.S.'s proposal that Eastern European countries be granted exceptions to the CoCom list in the form of ''favorable considerations".
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From page 47... ...
''1O4 In sum, both public and private sector actors in the F.R.G. see the need for permanent, not temporary, liberalization of the CoCom lists for the Eastern European countries in order to ensure a stable, institutionalized environment for Eastern economic recovery and 102 Statement by the economic spokesman of the CDU/CSU parliamentary group, Matthias Wissmann, 1.21.1990, 7842h.
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From page 48... ...
Bald ein modernes und liberates Cocom-System, n 8.n~.l5hi~£~, 3 · 23 · 1990 ~ i06 Again an important factor here is the private sector will not _nvest in outdated technology, see aWirtschaftswocbeTechnolocieforum. Ge~nderte Fronten,~ W~rtschaftswoche, 3.30.1990: ~Milliarden-Auf~r~ge durch Cocom behindert, Initiative for die Lockerung der Liste," ~~o&DY~_~e.~i=~, 12.16.1989.
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From page 49... ...
Such a shift must be reflected not only in the rethoric of the western alliance, but also in the procedures of the institutions that deal with export controls. Shifting the burden of proof on the controlling authority would give ~ clear sign that the emphasis has shifted away from confrontation towards cooperation, while at the same time keeping the necessary safeguards in place.
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G . takes the position that those items which are necessary to increase the saf sty standards of atomic reactors must be made available to Eastern Europe as well.l08 However, this could be done on a case by case basis using the favorable consideration principle.
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From page 51... ...
over CoCom liberalization for Eastern Europe has been paralleled in the recent conflict over the extension of similar measures to the Soviet Union. At their February meeting in Paris, CoCom member countries discussed the dramatic changes that had taken place in 109 Cocom-Liste konnte Wahikampfthema warden,.
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From page 52... ...
d~d concede that with the withdrawal of Soviet troops from several Eastern European countries, an imminent threat to Western Europe was no longer present.
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From page 53... ...
statements which acknowledge the positive changes that are taking place in the soviet Union, while refusing to actively support Gorbachev's reform efforts.l20 In fact, the Federal Republic does not see any justification for denying the Soviet Union in principal the same CoCom liberalizations granted to Eastern 137 n Bonn durchforstet die uberhohite Emhargo-Liste, n Handelsblatt, 2.3./4.1990; CDU/CSU, Fraktion im Deutschen Bundestag, Pressedienst, 1.23.1990 and 2.23.1990, p.2. In this context German officials have stressed repeatedly that the Soviet Union must not be excluded from the new Europe that is presently being built, see for example speech by Foreign Minister HansDietrich Genscher at the meeting of the Western European Union, Luxembourg, March 23, 1990.
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From page 54... ...
Europe.121 West Germany feels that while the eventual core list might be somewhat larger and the items treated as general exceptions more numerous, the overall approach should be to differentiate as little as possible between the Eastern Europe and the-Soviet Union.122 From the P.R.G.'s perspective, numerous economic and political reasons exist in favor of treating the Soviet Union as an equal among the Eastern bloc countries when discussing the streamlining process of CoCom,l23 On the economic side, there is little doubt that the most critical -- and yet most challenging-task facing the Soviet leadership is that of domestic economic reform. This requires not only putting the Soviet Union on a path of sustainable long term economic growth; equally important is the generation of immediate and tangible economic benefits in order to arrest an already declining support base for Mikhail 121 Interviews; see also the statement by the economic speaker of the CDU/CSU parliamentary group Matthias Wissman in Bonn, 2.23.1990; statement by Peter Kittlemann, foreign policy speaker of the COU/CSU parliamentary group, CDU/CSU, Fraktion im Deutschen Bundestag,.Pressedienst, 1.23.1990; In particular such a differentiation complicates he reform process in the Soviet Union, Wissmann pointed out.
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From page 55... ...
As one respondent said, "if you want to modernize the civil side of the Soviet economy, you cannot insist on the security aspects of dual use technology".125 Of course, until economic decision making is decentralized, enterprises are freed from rigid production plans, and the scope for private sector business activity is expanded, imported high technology capital goods cannot be utilized to their full advantage.126 Yet while high technology imports undoubtedly 124 ReinhlOd Knapp, [ndustrie, Institut fur Strategische Grundlagenforschung and der Landesverteidigungsakademie, Wien, 1990. 125 Interview; see also "Washington will Cocom-Kontrollen lackern," Frankfurter Aligemeine Zeitung, 1.22.1990.
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From page 56... ...
ttl29 Turning to the political perspective, the F.R.G. believes that the symbolic effect of isolating the Soviet Union and the fading of the momentum." i27Hans-Dieter Jacobsen, "Die Rolle der COCOM-Listen fur din sowjetische Wirtschaft und Gesellschaft," Osteuropa Wirtschaft, Vol.34, No.2 (1989)
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i33 The links among the Eastern European countries are less developed, however.
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137 In fact the G.D.R. is a major technology exporter to all Eastern European countries because of its comparatively high standard of technology.
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currently exports to the Soviet Union (especially computers and machine tools) will automatically fall under Cocom restrictions.
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From page 60... ...
We respect the Soviet expectations that its legitimate interests -- in all their aspects, including security and economic interests -- are protected.''l4l This matter is also being discussed at the EC level since the maintainance of commercial treaties will require several transitional agrements with the EC. The Community in general is favorable to the idea of a continuation of the treaties: "it is important also to recognize that continuation of traditional trade flows has a role to play in maintaining good political and commercial relations with other Eastern European countries; ...it will be in the interest of the unified Germany that production which is geared to export to some East European countries should continue.
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From page 61... ...
Yet as mentioned above, both German states have 143 Realistically, since East Germany has ceased to exist as an independent state the foreign availability clause does not apply anymore. However, since these goods have been delivered for many years to the Soviet Union it is clear that these goods are now widely available in that country too.
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From page 62... ...
East Germany provides a link for the Soviet Union to the entire EC market -- and the Soviet Union certainly does not want to be cut off from this part of the European house. In a recent interview, the Soviet ambassador to East Germany stated that one important element in the new definition of Soviet security is the maintenance of East German trade treaties.~46 In addition, the Soviets made clear that the future economic relationship between (East)
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From page 63... ...
-German companies to maintain two separate production lines characterized by two different standards of technology. Private sector respondents argued that such a scenario is unacceptable.
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In addition to these private sector cost considerations, it is important to remember that the Soviet Union is the G3R's most important export market. It will not be easy to find alternative markets for these exports.
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From page 65... ...
As an alternative to these options, the F.R.G. has suggested extensive liberalization of the Cocom industrial list for the Soviet Union, along with measures to ensure that the technology that is exported is applied to its proscribed use.l52 In other words, rather than establishing a new regime that not only continues to be based on technology denial but also develops complicated mechanisms of differentiation among the various Eastern bloc countries, the F.R.G.
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From page 66... ...
argues that such offers by the Soviet Union must be taken seriously. As one respondent stated, "You can't refuse to talk them and you can't deny the worthiness of an international agreement.
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From page 67... ...
and the Soviet Union have already established close cooperation in the filed of nuclear energy and safety. For example, during his last visit to Moscow in October of 1988, Chancellor Kohl and President Gorbatchev signed an agreement to deliver nuclear safety surveillance equipment and to train specialists that can handle this equipment.
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From page 68... ...
Rather the SPD supports a bilateral approach to export controls. To support their demands the party has long demanded a full review and substantial tightening of the West German foreign trade law.
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From page 69... ...
Wahiperiode, Drucksache ll/6085, 12.13.1989. 167 ''Milliarden-Auf~rage durch Cocom behindert," E~3n8LYEter Aligemeine, 12.16.1989; "SPD veriangt eine vollige Neufassung der Cocom-Liste," Die Welt, 2.2.1990.
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From page 70... ...
As one member of the FDP's parliamentary group stated "I expect from the government that it continues to work with increased vigor towards a substantial reduction in the Cocom regulations; the mere preparation of initiatives in not enough.~169 Turning to the private sector, it has been known for a long time that German industry just like the West German government has always supported the central purpose of CoCom. At the same it time resented both the extent of export controls in the dual use area as well as the cumbersome administrative structure of CoCom.170 In general, however, the business community has avoided to speak up in public against CoCom or the U.S.
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From page 71... ...
173 "Rasche Lockerug der Cocom-Ausfuhrbeschrankungen gefordert," Frankfurter Aligemeine, 3.21.1990; "Warum das Tauwetter einige Cocom Anhanger frostein laBt," Frankfurter Rundschau, 6.10.1989.
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From page 72... ...
attitudes and interpretations of the current Eastern reform efforts is falling rapidly and is approaching the point where the United States has to begin to think about balancing their own strategic concerns with the aim to maintain the very institution [CoCom3 itselfl~l76 3.4. Summary To sum up, this section has outlined the F.R.G.'s perspective on the changes needed to adapt Cocom to the political and economic transformations currently occurring in the Eastern bloc.
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From page 73... ...
To the contrary, liberalization should be part of a broad strategy to further encourage the process of economic and political reform in Eastern Europe and in the Soviet Union, and to strengthen international stability and security; b) the "structural realities" of the impending unification of the two Germanies limit the range of policy responses which could be undertaken without undermining both the unification process and the progress of economic and political renewal in Eastern Europe and the Soviet Union; and c)
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From page 74... ...
policy position to streamline CoCom and has given the authorities little freedom in negotiating with the U
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