Counterintelligence Aspects of Economic Intelligence

"The White House has released the first annual report to Congress on economic espionage. Produced by the National Counterintelligence Center, the report states that a number of countries target the U.S. despite their friendly relations with the U.S. The FBI has in the past said that the Russians are still a major economic espionage problem. It identified computer breakins and telephone intercepts as accounting for the largest portion of lost economic information. Other methods were recruiting company insiders, office or hotel- room thefts, use of foreign students studying in the U.S., use of foreign employees of U.S. firms, and use of front organizations and joint ventures." Harvey, "Intelligence Notes," AIJ, 16.1, p. 94.

Bellocchi, Like P. "Assessing the Effectiveness of the Economic Espionage Act of 1996." International Journal of Intelligence and Counterintelligence 14, no. 3 (Fall 2001): 366-387.

"So far, the EEA has greatly improved the ability of the federal government to combat economic espionage by placing criminal sanctions on a sound legal foundation. The government has solidified that ability by using the law to successfully prosecute several defendants, while resolving numerous legal issues in their favor."

Burgess, John, and John Mintz. "CIA, FBI Chiefs Warn Panel Over Economic Espionage: U.S. Advanced Technology Is a Target." Washington Post, 30 Apr. 1992, B11, B13.

Counterintelligence News and Developments. "Economic Espionage Act of 1996." Nov. 1996. []

Provides a summary of the criminal provisions of the Economic Espionage Act of 1996, signed by President Clinton on 11 October 1996.

Counterintelligence News and Developments. "Landmark Economic Espionage Trial Concludes." Jun. 1999. []

"In the first real test of the Economic Espionage Act of 1996, two Taiwanese executives who paid an employee of the Avery Dennison Corporation $160,000 to pilfer corporate secrets from the US adhesive maker were convicted of economic espionage on April 26, 1999."

Fialka, John J. War by Other Means: Economic Espionage in America. New York: Norton, 1997.

Cooper, FA 76.3 (May-Jun. 1997), argues that "this book serves a useful purpose by drawing attention to systematic attempts by others to gather information.... But wholesale adoption of the author's information restrictive perspective would do far more damage to the American economy than has the information that foreigners have gathered."

Gertz, Bill. "Foreign Spies Eye U.S. Economic, Trade Data." Washington Times National Weekly Edition, 24 Aug. 1997, 28.

A report by the National Counterintelligence Center says "[f]oreign spies and corporate agents from 23 nations are trying to acquire U.S. trade and economic secrets, including both traditional U.S. foes and allies.... [O]f those ... countries, 12 are assessed to be most actively targeting U.S. proprietary economic information and critical technologies."

Gertz, Bill. "Friends, Foes Said to Employ Business Spies." Washington Times, 30 Apr. 1992, A3.

Michal, Kristen. "Business Counterintelligence and the Role of the U.S. Intelligence Community." International Journal of Intelligence and Counterintelligence 7, no. 4 (Winter 1994): 413-427.

This article was awarded first prize by the Association of Former Intelligence Officers (AFIO) in its Distinguished Intelligence Essay Contest for the 1993-1994 academic year. The aruthor's conclusions: "Economic espionage needs to become a higher risk, lower profit operation in the United States, through a change in espionage laws, the prosecution of espionage cases to the fullest extent, and the imposition of trade sanctions against repeat offenders." (p. 424)

Office of the National Counterintelligence Executive. Annual Report to Congress on Foreign Economic Collection and Industrial Espionage -- 2002. Feb. 2003. []

This is the eighth of these annual reports, first, from the National Counterintelligence Center and, now, the Office of the National Counterintelligence Executive. "It seeks to assess efforts by foreign entities ... to unlawfully target or acquire critical US technologies, trade secrets, and sensitive financial or proprietary economic information."

O'Malley, Edward. "Economic Espionage Act [of 1996]." American Intelligence Journal 18, no. 1/2 (1998): 51-56. Intelligencer 9, no. 3 (Oct. 1998), 8-11.

The author is a retired FBI assistant director.

Poteat, S. Eugene. "Protecting Against Economic Espionage." Intelligencer 10, no. 1 (Feb. 1999): 20-22

The author argues that despite passage of the Economic Espionage Act of 1996, which makes economic espionage a federal crime, "all is not well" in protecting the United States against economic espionage: "There is no singleness of national purpose or adequate coordination. And there is not a unified counterintelligence or security element with authority to insure a coordinated US wide view and response to hostile intelligence threats."

Schweizer, Peter. Friendly Spies: How America's Allies Are Using Economic Espionage to Steal Our Secrets. New York: Atlantic Monthly Press, 1993.

According to Surveillant 3.2/3, this book has been the "subject of some fairly serious allegations concerning untruthful research and reporting." The criticism began with an article by David Leppard and Nick Rufford in the 11 April Washington Post. Schweizer's response in the 15 May Washington Post was an "unfocused rebuttal" that "fail[ed] to refute or clarify any of the questions raised."

Steele, AIJ 14.2/3, finds that the book "suffers from inaccuracies and occasional naiveté," while Cohen, FA 73.5 (Sep.-Oct. 1994), comments that "one wonders how many of the details mustered by the author would hold up to scholarly inquiry. Furthermore, many of the stories here are old hat." Even so, this is "an engrossing, sobering, and generally plausible book."

Lowenthal also notes that the work is largely a compendium of known cases drawn from press accounts. Interviews in the book have been questioned as to their "accuracy and reliability." On the other hand, NameBase says that the book "turns out to be surprisingly informative and worthwhile. No one even tries to deny that Japan, Germany, France, South Korea, and Israel use their intelligence services to steal secrets from U.S. business, and Schweizer provides numerous examples.... The question is whether U.S. intelligence should be unleashed against the threat."

Schweizer, Peter. "The Growth of Economic Espionage: America Is Target Number One." Foreign Affairs 75, no. 1 (Jan./Feb. 1996): 9-14.

"As economic competition supplants military confrontation in global affairs, spying for high-tech secrets will continue to grow, and military spying will recede into the background....[T]he United States is far less involved in economic espionage than most of its major allies and trading partners." France is "one of the most aggressive collectors of economic intelligence in the world.... Japan lacks a large formal intelligence service ... but remains an active acquirer of business information.... The transition from communism to capitalism means only that Russian intelligence will have a greater business orientation.... The United States needs to treat economic espionage not only as an intelligence issue, but as the competitiveness and economic issue it has become."

Socolar, Milton J. Economic Espionage: The Threat to U.S. Industry. Washington, DC: U.S. General Accounting Office, 1992.

At the time of this testimony before the Subcommittee on Economic and Commercial Law, Committee on the Judiciary, House of Representatives, on 29 April 1992, Socolar was Special Assistant to the Comptroller General, GAO. He stated that the "criminal justice and intelligence agencies have not adequately addressed" the problem of economic espionage.

Tuck, Jay. High-Tech Espionage: How the KGB Smuggles NATO's Strategic Secrets to Moscow. New York: St. Martin's, 1986. London: Sidgwick & Jackson, 1986.

Milivojevic, I&NS 2.2, calls High-Tech Espionage "a useful, though not definitive, survey." It is somewhat strange, however, that Tuck has chosen to focus on the KGB when the GRU's budget for foreign-technology acquisition is "many times larger" than the KGB's. For Macpherson. I&NS 3.1, "Tuck lays the groundwork for a fuller understanding of the crucial role of economic intelligence and counter-intelligence in modern strategic assessments."

Warner, William T. "International Technology Transfer and Economic Espionage." International Journal of Intelligence and Counterintelligence 7, no. 2 (Summer 1994): 143-160.

The focus here is primarily on Russian targeting of U.S. technology, and secondarily on the French effort.

Weiss, Gus W.

1. "The Farewell Dossier: Duping the Soviets." Studies in Intelligence 35, no. 9 (1996): 121-128.

"Farewell" was Col. Vladimir I. Vetrov, who was assigned to evaluate the work of Directorate T of the KGB's First Chief Directorate. Directorate T and Line X, its operating arm, had the responsibility for intelligence collection against the R&D programs of the Western countries. Farewell began working for French intelligence in 1981, and supplied information, which was passed to the United States, on the personnel, "goals, achievements, and unfilled objectives" of the Soviet collection program. The CIA, FBI, and Defense Department, then, devised a program to introduce "modified products" into the Line X collection channels. The author concludes that Farewell's "contribution led to the collapse of a crucial collection program at just the time the Soviet military needed it, and it resulted in a forceful and effective NATO effort to protect its technology."

2. "The Farewell Dossier: Strategic Deception in the Cold War." Intelligencer 11, no. 2 (Winter 2000): 23-28.

A version of the above article.


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