Rethinking National Security Strategy Priorities

International Journal of Intelligence and CounterIntelligence, 23: 399–425, 2010
Copyright # Taylor & Francis Group, LLC

ISSN: 0885-0607 print=1521-0561 online
DOI: 10.1080/08850600903566165
CAROLE A. FORYST
Rethinking National Security

Strategy Priorities
termite (tûŕmı̄t́). Any one of numerous species of pseudoneoropterous

insects belonging to termes and allied genera; called
also white ant. Noted for their destructive habits,
their large nests, their remarkable social instincts, and
their division of labour among the polymorphic
individuals of several kinds.1
Among the dangers that prompt quick action by any homeowner,

discovering termites would be near the top of the list. Bite by bite termites
could eventually hollow out a structure, threatening its collapse. A few
insects hiding from view can inflict damage that belies their size and number.
That analogy is worth internalizing before considering recommendations
to reexamine United States counterintelligence (CI) strategic priorities that
rank economic and industrial espionage second to counterterrorism on the
list of ten Intelligence Community (IC) priorities.2
AS EVENTS UNFOLDED . . .
Two important events occurred on 11 September 2001 (9=11) that changed
the strategic focus of the U.S. government. The loss of lives and damage
to property caused by Islamic terrorists lodge indelibly in the mind of
every American. With the country and Congress backing him, those
Carole A. Foryst formerly served as an official with several United States federal
agencies and public corporations. She is a candidate for an M.A. in Strategic
Intelligence Studies at the Institute of World Politics, Washington, D.C.
399
400 CAROLE A. FORYST
actions brought President George W. Bush to declare war on terrorism.

Unnoticed, in barely twenty-four hours, the strategic focus of the country
turned away from a ten-year bipartisan effort against economic espionage
(EE) and industrial espionage (IE). As distinguished by the Economic
Espionage Act of 1996, EE is espionage conducted to benefit a foreign
government; IE is espionage and theft of trade secrets conducted for the
enrichment of someone or some other entity than their owners, including a
foreign government. Spying for a foreign government carries the prospect
of longer incarceration and higher financial penalties than does theft for
economic motives not instigated by a foreign country. Both EE and IE are
criminalized by the Act.3
Overnight, government officials began to shift people and budgets from
counterespionage to counterterrorism. Given the rapid change, that the
President calmly weighed the national security threat from economic
spying against the national security threat from terrorism seems unlikely.
Foreign countries involved in economic espionage did not salute
President Bush after 9=11 and refocus their efforts on counterterrorism.
To the contrary, those countries involved in stealing U.S. secrets
intensified their spying on businesses, defense contractors, universities’
laboratories, and private sector laboratories. In reality, most nations of
the world now steal information to bolster their home economies and
military capabilities.
Their secret activities receive little notice from a distracted political
establishment and indifferent media. The Federal Bureau of Investigation
(FBI) has opened more China-related economic espionage cases since 9=11.
But prosecutors declined to take all but two to trial, partly due to the
difficulty of determining the value of stolen intellectual assets, the
reluctance of corporations to own up to their losses, and prosecutors’
perceptions that the media does not treat espionage cases as newsworthy
and career-enhancing.4 While preventing and stopping economic espionage
is the goal of counterespionage, the absence of personal consequences for
collectors of intellectual property—often trusted company insiders—hands
them free passes to engage in spying. Likewise, the end recipient—foreign
government-owned or crony-owned entities—bear no repercussions
for freebies.
In fact, economic and industrial spying are unabated. Companies and
organizations are experiencing losses and damage at levels that require the
White House and the IC to examine counterintelligence threats and
reconsider the rankings on their list of strategic priorities. The Intelligence
Community must conduct its reanalysis based on fresh information and
analysis. Only then should the assesment be presented to the National
Security Council, policymakers, the President, and the American people.
Nine years after the dramatic policy switch, enough time has passed, and
INTERNATIONAL JOURNAL OF INTELLIGENCE

RETHINKING NATIONAL SECURITY STRATEGY PRIORITIES 401
fear and passion have abated enough so that policymakers should be able to
objectively reconsider the results and reevaluate the nation’s CI priorities.
POLICY FORMATION
At National Counterintelligence Executive (NCIX)–sponsored seminars
seeking to strengthen the partnership between the government and the
private sector, officials and sector experts have urged heightened attention
to both industrial and economic espionage. Without quantifying the losses
sustained by U.S. business and industry from IE and EE, former officials
such as Principal Deputy Director of National Intelligence Donald M.
Kerr and Deputy National Counterintelligence Executive Marion ‘‘Spike’’
Bowman, and many other CI experts have implied that such espionage and
theft are as damaging, if not more so, than other types of spying during
the Cold War.5
Capturing the tone of the counterintelligence community’s current
appreciation of economic espionage, as expressed in an FBI briefing
document for the private sector and speakers at seminars in 2007 and
confirmed in private conversations at a 29 October 2008 CI seminar, is the
following statement:
Left unchecked, such economic espionage threatens the foundations of
U.S. prosperity, say current and former counterintelligence officials. In
an era of globalization, competitors in low-wage developing countries
can produce most products less expensively. The United States’
economic advantage revolves around the sophisticated technology and
unique know-how residing in corporate laboratories and research
institutes. So that’s where the corporate thieves and foreign spies
concentrate their efforts.6
TERRORISM PRESET THE FOG OF WAR

U.S. counterintelligence leadership is increasingly concerned over the
seemingly widespread and damaging effects of economic and industrial
espionage. Early in 2008, Marion ‘‘Spike’’ Bowman, then Deputy Director
of the National Counterintelligence Executive, in a guest lecture to an
intelligence technology class at the Institute of World Politics emphasized
that he was:
. . . most concerned about economic espionage. All 194 countries want
U.S. technology. Some 3,000 ‘front’ PRC [Peoples Republic of China]
companies [are] in the U.S. . . . The Russians are back. From Putin, the
SVR got a new lease on life stealing technology. They have more
agents here than at the height of the Cold War . . . also in Canada. One
quarter of R&D money spent in the world is [by the] U.S.7
AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

The U.S. constitutes roughly four percent of world population. From the
stated perspective o f t he nation’ s then-second highest-ranking
counterintelligence official, the U.S. has lately been experiencing more
economic espionage than the total spying experienced during the Cold
War. A few facts support Bowman’s concern:
. In Fiscal Year (FY) 2005, a record 108 countries were collecting all sorts of
proprietary business information, actively trying to import dual-use products
and circumvent U.S. export restrictions.8
. That year, the FBI opened 89 economic espionage cases and had 122 cases ongoing.9
. By 2006, the FBI was pursuing 143 economic espionage cases.10
. Immigration and Customs Enforcement (ICE) initiated more than 1,050 export
investigations and investigated 2,400 violations of various arms control and
export laws resulting in 101 arrests, 70 criminal indictments, and 85 criminal
convictions.11
. The Department of Commerce’s Bureau of Industry and Security initiated more
than 1,300 investigations, resulting in 31 criminal convictions.12
Calculating the Costs to the United States

The U.S. sustains annual economic losses of significant magnitude.
Commonly quoted losses from official and industry sources might total
$300 to $500 billion annually. 13 The Attorney General’s office in 2002
cited possible losses of up to one trillion dollars. 14 A quick survey
documents the costs as estimated by government and the private sector.
Following the collapse of the Soviet Union in 1991, most governments
refocused their spying from political to economic and industrial
information and technologies. Five years later, the rising level of EE
activity against the U.S. prompted Congress to pass the Economic
Espionage Act of 1996. The Act’s objective was to deter corporate spying
and theft by criminalizing it and to help the FBI investigate and prosecute
offenders. The White House and corporate America were beginning to
understand the magnitude of economic damage that spying was inflicting
on the private sector, academe, and the defense industry, notwithstanding
imprecise dollar estimates. For example,
. The American Society for Industrial Security (ASIC) estimated that between 1993
and 1995, economic and commercial espionage cost American industry $63
billion.15
. In a 1995 report the White House Office of Science and Technology estimated
damage at $100 billion.16
17
. The ASIC published an estimate of industrial losses in 1997 of $300 billion.
. In 1999, that small ‘‘5 percent stuff’’ cost industry an estimated $100 billion in
losses from industrial espionage activity. According to a survey by the ASIC
and PriceWaterhouseCoopers, that worked out to about $50 million an incident.18

. The Attorney General’s 2002 report said that accurate calculation of monetary
losses directly and indirectly linked to economic espionage on an annual basis
cannot be made and is not readily available. Speculations . . . . range from $53
billion to $1 trillion. Losses may reflect inventory ‘‘snapshots’’ only on the day
the audit was performed.19
THE SITUATION TODAY

In July 2008, the FBI’s then–Assistant Director, Cassandra Chandler, said:
At the end of the ‘‘cold war’’ the old-fashioned ‘‘spy game’’ did not go
away, in fact there are more players in the mix than ever before. The
number of countries engaged in espionage against the United States
has actually risen. Our enemies and allies alike covet our technology,
our manufacturing processes, and our trade secrets. Economic
espionage costs U.S. businesses more than 200 billion dollars a year
just in intellectual property theft.20
The cited reports estimated national security losses at around $300

billion per year and commercial losses of around $200 billion, or a
combined $500 billion. That loss of half a trillion dollars came from a
$13.77 trillion economy in 2007, of which only thirty percent, or $4.2
trillion, came from the production of goods. Seventy percent of the
U.S. economy was then, and continues to be, generated by services.21
According to the U.S. Bureau of the Census, non-good-producing
industries include the retail trade, the wholesale trade, and the service
industries. Thus, some $4.2 trillion of gross national product (GNP)
comes from producing industries, from which as much as $200–500
billion is lost to economic theft, or 5–12 percent every year. This guess
is based on estimated losses by authoritative sources, as published in
the last eleven years.
ECONOMIC ESPIONAGE SINCE THE COLD WAR

An upsurge in economic and industrial espionage began sweeping over the
United States as the Soviet Bloc disintegrated. The economic weakness of
the former Communist states, their emerging economies, and commercial
competition motivated them to repurpose their spying to bolster their
economies. Many nations, including U.S. allies, began spying to benefit
their favored domestic companies. Within a few years, President George
H. W. Bush voiced concern in a speech, saying:
We must . . . thwart anyone who tries to steal our technology or otherwise
refuses to play by fair economic rules.22

Likewise, the Central Intelligence Agency’s (CIA) then-Director Robert

Gates warned in a 1992 speech that:
Some foreign intelligence services have turned from politics to economics
and the United States is their prime target.23
In 1999, the Cox Commission, headed by then-Representative Christopher

Cox (R., California) investigated foreign theft of technology since the end of
the Cold War and brought to public attention that China is behind an EE
and IE espionage system that steals vast quantities of intellectual property.
While the matter of counterterrorism distracts official Washington, China
continues to enrich itself through industrial and economic espionage at U.S.
expense, free of public notoriety or federal sanctions. More than a decade
ago, the Cox Report stated that
China pilfered secret design information from national labs on every

nuclear weapon the U.S. possesses . . . such secrets gave China nuclear
design information on a par with America’s. . . . the Chinese stole
anti-satellite technology and obtained neutron-bomb secrets. Part of
the espionage plan [was] a network of 3,000 U.S.-based front
companies that swept up publicly available technical information.24
The Cox Report said China was doing most of the spying, but was joined on
the list of top spying countries by Russia, Japan, France, Israel, South
Korea, and others.
Congress Meets Economic Espionage With Action

By 2008 the mounting espionage showed that Congress and Presidents Bush I
and Bill Clinton took well-considered actions in the 1990s to stymie losses to
U.S. companies and institutions. The theft of all categories of business
information, products, and methods from U.S. companies had reached a
level that drove bipartisan support in Congress to enact, and President
Clinton to sign, the Economic Espionage Act of 1996. For the first time,
American law criminalized economic and industrial espionage and gave
new anti-espionage law enforcement authority to government agencies. The
Act’s cosponsor, Senator Herbert H. Kohl (D., Wisconsin) succinctly
described the issue in a Senate speech in 1996:
We have a problem in America today: The systematic pilfering of our

country’s economic secrets by our trading partners which undermines
our economic security. It would not be unfair to say that America has
become a full-service shopping mall for foreign governments and
companies who want to jump start their businesses with stolen trade
secrets . . . businesses spend huge amounts of money, time, and thought
developing proprietary economic information—their customer lists,

pricing schedules, business agreements, manufacturing processes. This

information is literally a business’s lifeblood. . . . But these thefts have a
far broader impact than on the American company that is victimized
by an economic spy. The economic strength, competitiveness,
and security of our country rely upon the ability of industry to
compete without unfair interference from foreign governments and
from their own domestic competitors. Without freedom from economic
sabotage, our companies lose their hard-earned advantages and their
competitive edge.25
H is c o s p on so r, S e na tor A rl e n Specter of Pennsylvania (then a

Republican, now a Democrat), summarized the issues to the Senate when
introducing the bill:
While economic espionage by foreign governments presents a clear issue
of national concern, the economic cost of industrial espionage by
domestic and nongovernment-owned foreign corporations may be even
greater.
We have drafted this new provision as an amendment to the National
Security Act of 1947 to emphasize the importance of this issue to the
national security of our Nation. Anyone who doubts that this is a
national security issue need only stop to consider why foreign
governments would d evo te so m uch effort to ob taining this
information from U.S. companies. The reality is that U.S. economic
and technological information may be far more valuable to a foreign
government than most of the information that is classified in the
United States today.
. . . In 1992, then-Director of Central Intelligence Robert M. Gates
told . . . [the Senate Select Committee on Intelligence] the Committee:
We know that some foreign intelligence services have turned from
politics to economics and that the United States is their prime
target. We have cases of moles being planted in U.S. high-tech
companies. We have cases of U.S. businessmen abroad being
subjected to bugging, to room searches, and the like. . . . [W]e are
giving a very high priority to fighting it.
Beginning as early as 1990, the Intelligence and Counterintelligence
Communities have been directed to detect and deter foreign
intelligence targeting of U.S. economic and technological interests,
including efforts to obtain U.S. proprietary information from
companies and research institutions that form our strategic industrial
base.
The FBI tells us that 23 countries are being actively investigated and
that there has been a 100 percent increase in the num ber of
investigative matters relating to economic espionage in the United
States during the past year—from 400 to 800. Thus, this bill is not
aimed at any one country, or even a handful of countries. It is
designed to address a widespread threat from a broad spectrum of

countries, including traditional counterintelligence adversaries and

traditional allies.26
After the Cold War ended, freeing many economies from the constraints of
Communism and socialism, foreign countries saw the U.S. as a ripe target
from which to pluck economic and industrial secrets to accelerate their
industrial and job growth without the expense of time and capital
investment or repercussions from the U.S.
EE AND IE ARE INVISIBLE PROBLEMS

The Cold War may have formed Americans’ concept that EE and EI mean
the theft of state secrets and technology for political and military
advantage by the Soviet Union and its allies. With the collapse of Soviet
Communism, and its satellites’ rush to join the North Atlantic Treaty
Organization (NATO) and establish free market economies, most
Americans easily assumed that the era of spying had ended. At the same
time, the Intelligence Community perceived the transformation of foreign
spy services to EE and IE, and so informed Congress and the President.
Political leaders brought the issue before the public, yet few Americans
appreciated the rise of spying against U.S. businesses, industry, academia,
and research laboratories, along with the danger to national security from
countries intent on bolstering their domestic companies and economies on
the backs of American investment, creativity, and labor. Naivete and
hopes for a peace dividend overshadowed Americans’ concerns that they
worked for companies that were becoming spy targets. Foreign
competitors were making competitive use of any kind of company
proprietary information: trade secrets, computer source code, chemical
formulas, research and development (R&D) data, financial information,
manufacturing processes, lists of suppliers and customers, and even
marketing strategies.
GROWTH TRENDS OF U.S. DEFENSE-RELATED FOREIGN ESPIONAGE

The year-by-year growth in the number of countries purloining U.S. economic
assets is shown in Figure 1. The Counterintelligence Office of the Defense
Security Service (DSS) prepares an annual report, Technology Collection
Trends in the U.S. Defense Industry, that provides insight into foreign
espionage directed at the U.S. defense industry. The DSS has multiple
operations to safeguard the country’s security, among them working in
partnership with industry to establish and maintain threat-appropriate
security countermeasures.27 Every year, cleared defense industry contractors
submit Suspicious Contact Reports (SCR), which serves as the basis of the
trends analysis. In fiscal year 2005 reports showed a year-over-year increase

Figure 1. Countries Involved in Economic and Industrial Espionage.
of 43 percent to 971 SCRs. One hundred and six countries were associated
with suspicious activities, compared with 90 in 2004.
The DSS report, while not addressing suspicious activity in companies
outside the defense sector—i.e., companies, startups, universities, and
laboratories—gives a sense of the increase in efforts by unauthorized
persons to obtain U.S. technical and trade secrets to enrich the spy, and
benefit foreign economies, their domestic companies, and their military
capabilities.
The countries that the DSS found spying in 2005 included U.S. allies and
trading partners like Israel, Germany, and France.28 Learning that the
economic strength of France has reached a condition that the country has
no compunction against engaging in economic warfare against an ally is
jarring. France views it as normal among nations to pursue market
advantages by all available means. France boldly declares as the policy of
the Republic what John Locke enunciated in his Second Treatise: that all
nations are in a state of war with each other. The French Defense Ministry,
through its semi-private Defense Consultancy International, went so far as
to establish the École de Guerre Économique (School of Economic Warfare)
in 1996 with a faculty of experts. Were it not a brazen threat to U.S.
economic strength and criminal behavior, such an action might evoke a
cynical smile. The school’s director, Christian Harbulot, declared:
The U.S. is the top priority. There is true industrial competition and there
are many fields where we have everything to lose. We cannot let ourselves
be pushed around. A huge number of companies have disappeared
because they were bought out or destroyed by the Americans. We have
to protect ourselves.29
Overlooking Economic Espionage in National Security Strategy

and Threats Reports
The Intelligence Community, looking for counterintelligence guidance on
economic espionage from the White House, will not find it in the

National Security Strategy of the United States of America, issued in

March 2006 by the National Economic Council (NEC).30
Notwithstanding its title, the document does not create a strategy. It
neither enunciates principles on which the President and government
departments will deal with domestic economic issues, nor identifies
conditions and situations that could weaken or strengthen the country’s
economic power and vitality. The document contains no hint of
economic and industrial espionage, or any perceived economic threats or
vulnerabilities.
Although the Assistant to the President for National Security sits on the
council with cabinet members,31 the NEC created a ‘‘strategy’’ without
mentioning that economic strength is fundamental to U.S. security. Its
fifty-four page report is devoted predominantly to terrorism, with some
passages about AIDS, free trade, etc. It reads like a public relations
release enumerating administration accomplishments, not a strategic plan
to guide government departments and the IC. The report seems at
counterpoint to its mission as envisioned by President Clinton when he
issued an Executive Order establishing the NEC as a parallel body to the
National Security Council as economic espionage was accelerating during
the 1990s.
According to its Website, the NEC has the responsibility to advise the
President on matters related to global economic policy, ensure that policy
decisions and programs are consistent with the President’s economic
goals, and monitor implementation of the President’s economic policy
agenda.32 Two of the four principal NEC functions are ‘‘to coordinate
policy-making for domestic and international economic issues and to
coordinate economic policy advice for the President.’’ 33 Apparently,
however, the IC leadership’s awareness that EE and IE threaten
economic vitality has not resonated within the national security
communities of either Presidents George W. Bush or Barack H. Obama.
A like omission of EE and IE continues to occur. For example, Director of
National Intelligence Dennis Blair’s statement about the Annual Threat
Assessment prepared for the Senate Select Committee on Intelligence, and
delivered 12 February 2009, seemed thorough, discussing numerous
categories of threats, but failed to deal with EE and IE matters, which
would have integrated well into its economic section.34
The Government Accountability Office (GAO) prepared a report in
March 2008 for the ranking member of a subcommittee on Homeland
Security, entitled ‘‘Intellectual Property,’’ which examined intellectual
property enforcement, piracy, counterfeiting goods, and other crimes,
but it contained no mention of EE and IE, and the agencies, including
the FBI, that supplied the researchers with information may also have
ignored the subjects.35

Cyber attacks are EE and EI threats that garner attention. The advent of
cyber technologies makes easier than ever one of the most difficult jobs for
spies: delivery. Yet government documents seldom connect the threat of
cyber security and threats to the actual products and information at risk,
intellectual property and trade secrets, or the value of thefts. Cyber attacks
are said to constitute twenty percent of EE and EI threats.
Although current losses due to hacker attacks are significantly smaller

than losses due to insider theft and sabotage, the hacker problem is
widespread and serious. Industrial espionage often involves the use of
hacking techniques and can be perpetrated either by companies seeking
to improve their competitive advantage or by governments seeking to
aid their domestic industries. Foreign industrial espionage carried out
by a government is often referred to as economic espionage.36
Congressional oversight and White House attention or direction are

apparently spotty and scant. Curiously, a reluctance to address the EE and
IE issue could be detected in DNI Blair’s written responses to Senator
Tom Coburn’s (R., Oklahoma) questions for the record after an
Intelligence Committee hearing in February 2009, in a transcript obtained
by the Federation of American Scientists through a Freedom of
Information request. Absent public visibility of the problem and direction
from the White House and Congress on EE and IE, counterintelligence in
the FBI and other agencies seems to be on its own. CI leaders speak out
occasionally on the issue and report a worsening situation, but without the
political megaphone their voices do not carry to the public, corporate
officials, and heads of educational institutions being drained of their
intellectual property by spies. Media coverage of EE and IE is spotty and
brief. The CI community’s concern is stifled by the media and neglected by
the political leadership. Meanwhile, companies, their workforces, and the
public are uninformed, and therefore remain unaware that their tips about
suspicious people and their activities could help CI authorities mitigate or
prevent economic damage to their livelihoods.
THE NEED TO REFOCUS

Executive Order 12333 specifies four basic functions of counterintelligence
in a democratic society:
1. Identify foreign intelligence and other threats to both the U.S. and U.S. interests
overseas;
2. Assess them;
3. Neutralize them;
4. Exploit them.

In the current environment, the U.S. appears to bring full focus to

performing all four functions to prevent terrorism but neglects the issue of
economic espionage. Prompted by 9=11, policymakers chose this focus and
pursued it for nine years. EE receives little political attention for any
number of reasons. The President and his foreign policy and national
security advisors have a different view than the IC. To cite a historical
example, both Presidents Franklin D. Roosevelt and Harry S Truman
made policy decisions to quietly support and encourage FBI investigations
of the Communist Party in order to deepen U.S. understanding of the
Party and its ‘‘fellow travelers,’’ meanwhile judging the U.S.’s wartime
relationship with Joseph Stalin to be too important to disturb by raising
public ire at the Soviets’ spying.
Now, nine years into U.S. counterterrorism efforts, with President Obama in
his second year in office, is an opportune time to reevaluate CI and CI threat
rankings, and to reconsider EE and IE threats after devising a methodology
for conquering fuzzy numbers. With fresh numbers in hand, reanalyzing
situations and strategies to inform the current class of policymakers in
Congress and the Executive Branch is possible.
Consider that EE and IE were priority concerns during the decade of the
1990s, and the swiftness with which counterterrorism and the war against
Islamic extremists became the issue defining the Bush presidency. After
nine years pursuing this national security priority, Obama may have
perceived that the U.S. had found its footing and might welcome
penetrating, fresh analysis and insights to inform his national security
strategies. This may be an optimal time to produce a National Intelligence
Estimate on economic espionage.
After nine years of success in preventing a repeat of 9=11 in the U.S., a
recommendation that the IC reexamine the basis of current domestic
national security and economic security strategies and weigh the merits of the
current priority rankings published in the FBI strategy documents is justified.
Such reconsideration, based on understanding of the deeper, sustained
threat from EE and EI, might reposition counterespionage with respect to
counterterrorism. The effect would change or raise budget resources,
increase personnel, coordinate and sharpen training among the federal CI
agencies, enhance outreach to business and industry, and heighten
awareness of management and employees that suspicious coworker
activities on the job may warrant reporting to security personnel.
Intentions—Frankly Speaking
China’s premier Wen Jiabao made a remarkable public declaration of his
grand vision of Chinese and Indian dominance in information technology
during a visit to India in April 2005:

We will be able to lead the world in the sector and a day will come when
we can herald the beginning of the Asian century of information
technology.37
Wen was envisioning that result from a combination of China’s hardware

and India’s software. The RAND Corporation commented about Wen in a
conference report:
The emergence of China and India as technology innovators not only
raises the possibility of bitter conflicts over trade, but also that new
consumer markets within Asia may displace the American economy as
the most important final market for technology products.38
China’s aspirations may be achievable in decades or more. Chinese

inventiveness remains in the developing phase at present. The RAND
publication on the proceedings showed that in 2003 China granted more
domestic patents to foreigners than to Chinese. In comparing world-class
inventions by major technology competitors to the U.S., it found that
China—including China-based foreign-owned companies—was receiving a
modest, but growing number of patents in comparison with world totals.
The gap between China’s strategic goal and its current position provokes
the question: how does China plan to achieve its goal? The RAND
conference proceedings were a reminder that:
China benefits from the growth of informal knowledge networks,
students, and scientists who return to newly established labs in Beijing,
and technological entrepreneurs and venture capitalists moving from
Silicon Valley to Shanghai.
In a footnote, the report started:

There are also espionage networks. The national counterintelligence
strategy declares that the key modality is no longer the spy, but the
businessman, student or academic. . . . The end result is that China can
leverage the international system of innovation and that of the United
States in particular, to offset weaknesses in its own national innovation
system.39
Economic espionage and industrial espionage appear to be important

means for China to achieve its vision of information technology
dominance. Some 45,000 Chinese students, the many other thousands
working in businesses and laboratories, and naturalized or
American-born ethnic Chinese are consistently tapped as information
sources by Chinese authorities, employing time-honored techniques of
stroking egos and coercion. China has a view of history in the
thousands of years, and has the cunning and patience to plan for a
better future at U.S. expense. China is waiting out the U.S. Meanwhile,

other countries poach on U.S. preserves, employing traditional industrial

espionage techniques.
A speaker at the RAND Corporation conference questioned the
permanence of U.S. technical preeminence as globalization spreads:
. . . the globalization of S&T [science and technology] complicates the
na tional s ecurity envir onment . . . t h r e e wa y s . . . te chnolog i ca l
capability is now more widely diffused to potential competitors. . . . the
leading edge of innovation . . . may be difficult to situate as it jumps
around from country to country . . . even as the United States remains
the predominant science and technology power, . . . it will have
to . . . think about how to respond when its technological lead is
measured in months or years, not decades. . . . There is also the reality
that individuals or small groups with access to new technologies can
now do greater damage to U.S. national interests . . .40
Because of the Internet, the biggest obstacle faced by a spy–delivering the

information to a handler—has become as easy as the click of an e-mail
‘‘send’’ button. This makes CI work more difficult and the spy’s task easier.
‘‘Much of Our Strategic Advantage . . . Is Economic.’’–USA Today

Those spying to advance the prospects of foreign companies and
countries concentrate their efforts on the U.S.’s greatest economic
advantage: the technological prowess and unique knowledge developed
in university and corporate laboratories. Joel Brenner, a former
National Counterintelligence Executive in the Bush II administration,
said:
The days when everything that was worth stealing, every secret that was
worth stealing in the United States, was a government secret—those days
are long done . . .
Much of what makes the country tick, much of our strategic
advantage in the world is economic.41
Charlene B. Thornton, special agent in charge of the FBI’s San Francisco

office, announced the conviction of a corporate spy, observing:
The economic—and often national—security of the United States rests

largely upon a foundation of technological superiority, and to maintain
that superiority our trade secrets must be protected with the fervency
with which we guard other vital interests. . . . The successful prosecution
of Mr. [Xiaodong Sheldon] Meng is a blow to those who seek to
circumvent the long and costly process of research and development to
gain a technological advantage through lies, deceit, and theft; it is a
victory in the struggle to ensure the economic security of Silicon Valley
and the United States.42

THE UNSETTLED STATE OF AFFAIRS

The state of affairs regarding economic espionage is still not clear, and
available information lacks the solidity to support fresh analysis for
President Obama. Not only do most reports appear to use numbers that
may be outdated, they present mixed messages when comparing official
public statements, FBI and other prevention programs, and the extent of
private sector effort to prevent EE and IE. For example:
. The National CounterIntelligence Executive (NCIX) expresses deep concern about

EE and IE in unclassified private briefings; at the same time, top IC leaders’ written
and oral testimony before House and Senate committees refrains from specific
mention of the concern, and committee members raise no questions.
. The Website of the U.S. Chamber of Commerce is full of topics on
counterterrorism, yet mentions counterespionage only once.
. Barely a handful of private companies offer counterespionage services to the
private sector, and only a quasi FBI-private organization is devoted to raising
awareness for preventing EE thefts.
. The FBI initiated a number of programs to raise awareness in the corporate and
academic worlds. Its News of the Week releases attempt to inform the public about
incitements, arrests, prosecutions, and sentencing, but the media picks up little of
it. Some, but not all, of its releases mention economic damage estimates, and all
seem casual: no release focuses on long-term effects on America’s economic vitality.
. Judge Richard A. Posner, an FBI expert, said in 2005 that the FBI was then
devoting the largest proportion of its personnel and budget to counterterrorism
while shielding 96 percent of its budget from influence by the NCIX and the
ODNI. If this figure is accurate, the Justice Department and FBI leadership
and bureaucracies appeared to undervalue EE counterintelligence.43
. FBI management continues to engage in the bureaucratic practice of revising the
job descriptions of personnel to preclude them from being under the authority of
the Director of National Intelligence.44
. FBI Director Robert S. Mueller III testified in April 2008 that ‘‘We have doubled
the number of intelligence analysts on board, from 1,023 in September 2001 to
more than 2,100 today. We have increased the number of onboard language
analysts from 784 in September 2001 to more than 1,300 today. We integrated
our intelligence program with other agencies under the Director of National
Intelligence.45
. And the FBI’s 56 field offices have established programs to work with the ten
largest companies it deems most likely to be targeted by spies. Logically, a
wider effort could hinder more spying.
. The FBI currently sponsors seminars for corporations at which it emphasizes that
the greatest threat comes from trusted insiders, especially their foreign-born
employees. An FBI briefing document for the private sector states:
A tiny minority could do devastating damage by stealing secrets for either

a foreign government or more often as part of a purely commercial
scheme.

Significant internal and external counterintelligence weaknesses . . .

make U.S. companies easy prey for foreign intelligence services, foreign
organizations and foreign competitors.46
If annual losses to U.S. economic strength from EE and IE are mounting

to $500 billion, a noteworthy vacuum of attention and mixed messages calls
for attention from the President, his Director of National Intelligence,
Science Advisor, Attorney General, FBI Director, and Congress.
ACADEME’S CONCERN: WEAKENING U.S. NATIONAL SECURITY

AND ECONOMIC COMPETITIVENESS
Concerns about the risk that the U.S. could lose its technical leadership and
see its national security and economic competitive positions weakened are
of deep concern in parts of the academic community. The National
Academy of Sciences raised certain issues in a 2007 report concerning
threats to U.S. security and economy. 47 The report prompted the
Undersecretary of Defense for Personnel and Readiness to fund a RAND
Corporation study and conference in November 2008 to gather experts to
discuss the subject:
Concern has grown that the United States is losing its competitive edge
in science and technology (S&T). The factors driving this concern
include globalization, the rise of science centers in developing
countries such as China and India, the increasing number of
foreign-born Ph.D. students in the United States, and claims of a
shortage of S&T workers in the United States. A loss of prowess in
S&T could hurt the U.S. economic competitiveness, standard of
living, and national security.48
The importance of S&T to U.S. prosperity and security warrants that
policymakers pay careful attention to the various high-level reports
issued over the past five years that warn of pressures on the U.S. lead
in S&T.49
The Department of Defense (DoD)–sponsored conference proceedings point

out this competitiveness indicator:
The United States is today a net importer of high-technology products.

Its trade balance in high technology manufactured goods shifted from
plus $54 billion in 1990 to negative $50 billion in 2001.50
That excerpt is footnoted:
For 2001, the dollar value of high-technology imports was $561 billion;
the value of high-technology exports was $511 billion.51

Foundations of Technological Prowess

Several conditions over the years brought the U.S. to undisputed technical
leadership, among them:
. The Founding Fathers protected invention and new ideas in the Constitution,
followed by passage by Congress and signing by President George Washington
of the first U.S. federal law which concerned patent, trademark, and copyright law;
. The U.S. banking system and capital markets supported invention from the
earliest years;
. U.S. companies and individuals invested about $35 billion per year in R&D
between 1976 and 1998, and about $75 billion per year during the 2000s, for a
total of about $1.1 trillion since 1976.52
. Americans exhibit an innovation gene through which they learn, create, absorb,
and apply new ideas and things almost by instinct. The U.S. has been the
innovation leader for decades during which time technology has become the
superstructure supporting the country.
As a nation, the U.S. has been unique in possessing all the above
characteristics; together, they form the base from which it generates ideas,
products, jobs, and wealth that support the country’s national security.
Every year some 27 billion investment dollars enable the U.S.’s generation
of world-class services and products by the country’s best minds and
workforce. U.S. leadership has come to assume that the country’s
capabilities are a birthright and infinite. But how long can the country
maintain its well-being and withstand an economic drain of $200–$500
billion of wealth annually—or $1 trillion to $2 trillion over four years? A
prudent government would address this subject urgently.
The Wealth of a Nation

At a 2006 conference of leading academics held to discuss the findings and
recommendations of a study by the three National Academies of Science,
Engineering, and Medicine, the source of a nation’s wealth was described
this way:
Wealth, in scientific terms, is the intellectual property that potentially
contributes to innovative products and processes and thereby creates
real economic value. In the late 20th century, [U.S.] economists could
attribute half the gains in gross national product and 85 percent of the
gains in per capita income to the application and exploitation of
science and technology research. The scientific investments of nations
have made that growth possible.53
America’s bountiful technology attracts spying by countries that have

been unable or unwilling to create domestic conditions that foster

innovation. They covet and steal the benefits of U.S. investments and
labor by purloining technologies and business secrets. The U.S. is
laden with technology and proprietary information for easy plucking.
The results of the National Academies’ analyses point the way to
inform policymakers’ national security priorities. Congress passed new
EE and IE laws after probing hearings that made CI a priority
concern during the decade of the 1990s, only to have counterterrorism
replace them overnight with no real debate. Since 9=11, combating
terrorism appears to have been the IC’s predominant focus. The Bush
Administration, and to a lesser extent the Obama Administration, have
kept that threat in the forefront of public awareness. Awareness by the
public, and government urgings to report suspicious activities, help
support national security efforts regarding counterterrorism.
Quite the opposite is the situation regarding EE and IE. Judging by IC-
and CI-published strategic plans, testimony, news releases, and
administration official statements, EE and IE are not accorded much, if
any, policy attention. With nine years of success in preventing a repeat
of 9=11 in the U.S., the time has arrived to reexamine the basis of
current domestic national security and economic security strategies and
to weigh the merits of the current priority rankings as published in
strategy documents. Such reconsideration, based on fresh analysis of the
deeper, sustained threat from EE and EI, might reposition
counterespionage above or equal to counterterrorism on the nation’s
priority list. As a result, the President and Congress might budget and
appropriate greater funding, more CI personnel, and better CI training
for federal, state, and local efforts. In addition, the public attention
would heighten awareness on the part of the people who may be
brushing against corporate spies every day without noticing or reporting
anomalous behavior. At present, those who notice suspicious activities
may have no idea as to whom to report them, and may fear that
managers would be dismissive of such reports. That reluctance is in
stark contrast to the success of the official attention to terrorism that
sensitized the public to report suspicious activities.
Strategic and Tactical Threats

Counterterrorism is a war in which the ‘‘Islamic extremists’’ keep alive
their threats in people’s minds. In contrast, EE and IE constitute an
invisible war by people masquerading as everyday folks. For honor or
money they mean to harm the viability of companies and U.S. national
strength. The public rarely glimpses this war from statements by the
President, other elected officials, law enforcement officers, or the media.
Routinely, a terrorist bombing in Istanbul that kills a few dozen people

and damages property provides the graphic imagery that the media
requires to make events worthy of headlines and the evening news. An
economic spy who is indicted, tried, or sentenced garners one inch of
column space on an inside newspaper page on a slow news day. The
public remains largely unaware of the economic espionage threat. CI
leaders express their concerns in annual reports to Congress, and post
news releases about spy apprehensions and prosecutions, but the public
gains little or no insight from political leaders. Likewise, among leaders
of academic institutions, companies, and nongovernmental organizations,
few pay attention to economic espionage. The lone exception is cyber
threats. Cyber threats now comprise twenty percent of EE, and continue
to grow.
MEETING THE THREAT

A fresh analysis to support reconsideration of the FBI’s CI priorities in its
Strategic Plan will require a deeper understanding of the losses to EE and
IE. Arriving at a reliable number for the losses may be a demanding
requirement, but it is one nine years overdue. As the 2005 Annual Report
to Congress put it:
Calculating a precise dollar figure for these losses would be difficult.
Any such estimate must make fair market value estimates of the
technologies lost by firms and the value of replacement technologies
necessary to remain competitive. The figure must also consider factors
such as lost sales as well as marketing and shipping costs. One of the
challenges that makes calculating the cost of industrial espionage
particularly difficult is that the technology losses often are not
reported.54
How can the costs of undermining the vitality of companies and the U.S.
economy be accurately included?
Cyber Attacks Proliferate

That 2005 report also stated:
A recent FBI survey provided additional weight to the observation that
Internet espionage may be on the rise. According to the study, nearly
nine out of 10 U.S. businesses suffered from a computer virus, spy
ware, or other online attack in 2004 or 2005 despite widespread use of
security software. The study concluded that viruses, spy ware,
computer theft, and other computer-related crimes cost U.S. businesses
$67 billion a year, according to an online press report. Detecting the
origins of such attacks—even determining for certain whether they
originate outside the United States—is difficult.55

An Unaware America
The prominence of political and law enforcement focus on counterterrorism
apparently alerts and motivates the public to notice and report suspicious
people and activities. In the absence of a subsequent terrorist act in the
U.S. since 9=11, and by relying on open sources, the ongoing CT success
could be attributed to authorities’ vigilance and some to public awareness.
But this public–private synergy is absent concerning EE and IE, where it
could be a similarly important resource.
Since 9=11, CT has usurped EE and IE as the FBI’s strategic CI priority.
Without diminishing the national imperative of thwarting terrorists’
intentions to prevent their success, President Obama should prudently
order the IC to reevaluate and rank the nation’s CI priorities. Instead
Mr. Obama, his administration, the IC, Congress, and local law
enforcement continue to build one CI capability but no others. With the
exception of young children, few if any Americans could possibly remain
unaware of the commitment of political leaders and law enforcement
agencies to thwarting another terrorist act in the U.S. Aware citizens and
focused leadership are a potent combination to preserve safety against the
odds. The time is too early to relax, as terrorists are likely preparing more
surprise attacks. Consistent public comments by IC leadership about
terrorist threats and the advisability of moving IC elements off the eastern
power grid are sobering and worrisome. Clearly, the bipartisan political
leadership across the country remains concerned and unified against
terrorism, though noticeably less vocal until the failed Christmas 2009
attempt to bomb an airliner over Detroit.
Notable is the contrast in prominence of the political treatment given the
terrorism threat with that given EE and IE threats. In the absence of political
pronouncements, the IC, FBI, and the security industry are aware of this
issue, but few among the public. Yet, in the decade preceding 9=11, the issue
was gaining prominence because policymakers and elected officials perceived a
threat. EE was considered serious enough to merit criminalization in the EE
Act of 1998. As the FBI’s own publication put it:
It was a landmark piece of legislation at that time, showing the foresight
of Congress in protecting proprietary information and trade secrets in
today’s global market and wired world . . . and, by extension, the very
health, and competitiveness of critical segments of the U.S. economy.56
Irrespective of IC and FBI reports to Congress on EE and IE, espionage in

those areas has continued to increase while the issue’s prominence gave way
to graphic images of terrorist-caused death and destruction that have scarred
Americans. Iconic images of 9=11 and concern about personal safety easily
turn attention away from EE and IE, in which the theft of corporate
technology and trade secrets appears victimless, lacks graphics that

provoke emotions, and involves esoteric technologies whose importance is

understood by few.
Lack of Public Awareness Hinders CI

From the perspective of Marion ‘‘Spike’’ Bowman, the former deputy NCIX:
‘‘The biggest headache is lack of intelligence awareness in U.S. corporations.
[They suffer] mega billion dollar losses.’’57
In the absence of sufficient political prominence, the media comes close to
ignoring EE and IE. The FBI issues news releases of the arrest, indictment,
prosecution, and sentencing of criminals to reporters on the Bureau beat
and post them on its Website, although little of this news reaches print,
mention on TV and radio, or incites bloggers. News coverage of criminals
who steal information worth millions to the victims—the stockholders of
the companies—cannot compete with actress Angelina Jolie’s latest family
drama. Yet, media corporations are as vulnerable as any other commercial
or industrial sector. Note that in 1998 Bloomberg media accused the
American subsidiary of Reuters Holdings, Reuters Analytics, of stealing
proprietary information by stealing source codes from its computers.58
In a visual world, where terrorism evokes graphic images of people fleeing
collapsing towers and twisted trains, EE captivates only individuals who are
excited by spreadsheets and CI pursuits. People can identify with danger and
mayhem, but not with a spy siphoning technology and trade secrets to
strengthen a hostile country’s military service or benefit crony-owned companies.
Findings and Recommendations

The Intelligence Community is long overdue to approach these problems by
taking several measures:
1. Reexamine the basis of current domestic national security and economic
security strategies. Weigh the merits of the current priority rankings published
in strategy documents emphasizing CT over EE and IE. Such reexaminations
require fresh and deep comparisons based on new information and economic
analysis.
2. Officially quantify and publicize the annual losses the U.S. suffers from EE and
IE. The current dollar estimates of economic damage quoted in unclassified
reports, officials public statements, and testimony may not have been updated
in 10 years. It is unclear if numbers in official documents are stale or fresh.
Currently, various sources estimate damage and losses to national security
around $300 billion per year, 59 and the commercial losses around $200
billion.60 Is combining the numbers to aggregate losses around $500 billion
valid? Whether these estimates include cyber crimes is not clear. In fact, EE
and IE estimates are ancient guesses, thus unreliable and unusable for
presidential policy consideration.

3. Update the component numbers for EE and IE and explain the methodology for
their compilation. Only with reliable, updated figures will the IC be able to
prepare a comparative analysis of the threats to economic and national
security from EE and IE, and compare the assessment to the economic and
national security threats from terrorism.
4. Present a fully allocated EE=IE vs. terrorism comparative analysis to the
National Security Council and other policymakers for reconsideration of
strategic national CI priorities and their rankings.
5. Analyze and publicize the techniques and practices used by EE and IE spies for
China and other countries. In essence, how do EE and IE spies work?
6. The former Deputy NCIX, Spike Bowman, used the same estimate in 2008 as did
the Cox report of 1999 in stating that ‘‘over 3,000 Chinese-owned companies’’ are
suspected of having intentions to acquire U.S. technology and business
information illicitly. Did this widely quoted number really remain unchanged
for a decade?
7. Mount a national public awareness campaign to achieve the EE=IE equivalent to
CT awareness. Engage in more outreach to help small and medium-size
businesses create a visibility for CI to enhance staff understanding of, and
respect for, CI programs throughout the economy.
8. Publicize CI programs to generate public attention, support private business
awareness of espionage, and generate the use of espionage reporting systems.
Elements of this effort can be based on the following:
. The private sector lacks the ability to do CI without FBI and DOD support.
. The Defense Security Service’s (DSS) counterintelligence program may offer
information and advice that would benefit private sector companies and
organizations. The DSS provides support to the Insider Threat Program, the
Information and Capabilities Protection Program for the early detection and
referral of cases of potential espionage. It assists the defense industry in the
recognition and reporting of foreign collection attempts, through its Security
Education and Training Awareness Program, and conducts CI=Security
awareness training to industry.
. Awareness efforts should be directed at small and medium-sized companies to
reach small centers of innovation where awareness of EE may be minimal or
absent.61
. The FBI offers programs to raise awareness in nondefense organizations, an offer
accepted mainly by the largest companies with security programs and staff, while
overlooking the individual and small centers of innovation that give birth to most
new technology.
. Few know about an FBI program that encourages the public to report suspicious
activity by offering a reward of up to $500,000.62
. The Awareness of National Security Issues and Response (ANSIR) Program is the
FBI’s national security awareness program. The program is designed to provide
unclassified national security threat and warning information to U.S. corporate

security directors and executives, law enforcement, and other government agencies.
It also focuses on the ‘‘response’’ capability unique to the FBI’s jurisdiction in both
law enforcement and counterintelligence investigations.63
During the decades of the 1990s and the 2000s collectively, EE and IE
became a wave washing over the United States, perpetrated mostly by
foreign nationals and naturalized citizens who seek and steal for reasons of
personal pride or greed, or to gain the respect of ethnic compatriots who
stroke them, the full range of proprietary information companies or
institutions possess.
The Cold War was a contest that could have been lost to espionage
termites were it not for the intrinsic unsustainbility of Communism that
led to the collapse of the Soviet experiment. In April 2008, Eugene Poteat,
for many years a leading scientist at the CIA, told a class on Intelligence
Technology that the Soviets were able to apply their long experience of
domestic and foreign spying to get ‘‘everything’’ from the U.S. during the
Cold War. Early on, the U.S. was a comparative neophyte in the art of
intelligence, a deficit that continued even after five years of mentoring by
Great Britain during World War II.
Now, however, the U.S. better understands foreign espionage threats. If
the threats are as grave as believed by experts, the IC would be negligent
in failing to thoroughly understand the current situation, analyze it
continuously, and communicate its findings to policymakers. This time, the
economic weaknesses of Communism will not be there to save the U.S.
from its lack of commitment to prevention of economic and industrial
espionage.
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The Economic Espionage Act of 1996 (EEA) differentiates between definitions of
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4
David J. Lynch, ‘‘FBI Goes on Offensive Against China’s Tech Spies,’’;
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David J. Lynch, ‘‘FBI Goes on Offensive Against China’s Tech Spies.’’
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Sam Vaknin, ‘‘The Industrious Spies: Industrial Espionage in the Digital Age,’’
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Ibid.
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Ibid.
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‘‘The New China Syndrome, The Cox Report Casts a Pall Over the Political and
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‘‘FY 2008=FY 2009 Budget Estimates,’’ Defense Security Service, U.S.
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28
Ibid.
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Susan W. Brenner and Anthony C. Crescenzi, ‘‘State-sponsored Crime: The
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33
Ibid.
34
Annual Threat Assessment of the Intelligence Community for the Senate Select
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David Kang and Adam Segal, ‘‘The Siren Song of Technonationalism,’’ Far
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38
Ibid.
39
Conference Proceedings, Perspectives on U.S. Competitiveness in Science and
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http://www.rand.org/pubs/conf_proceedings/2007/RAND_CF235.pdf,
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40
Ibid.
41
42
‘‘Former Chinese National Convicted for Committing Economic Espionage to
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Under the Arms Export Control Act; and Second Conviction in the Country
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43
Richard A. Posner, Remaking Domestic Intelligence (Stanford, CA: Hoover Press,
2005), p. 31.
44
Ibid.
45
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46
47
‘‘Perspectives on U.S. Competitiveness in Science and Technology,’’ 8 November
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Preface, p. iii.
48
Ibid.
49
Ibid., p. 1.
50
Norman R. Augustine, Retired Chairman and Chief Executive Officer, Lockheed
Martin Corporation, Chair, Committee on Prospering in the Global Economy of
the 21st Century, Committee on Science, Engineering, and Public Policy, Division
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Storm.asp
51
Ibid. For 2001, the dollar value of high-technology imports was $561 billion; the
value of high-technology exports was $511 billion. See National Science Board,
2004. ‘‘Science and Engineering Indicators 2004’’ (NSB 04-01). Arlington,
Virginia. National Science Foundation. Appendix Table 6-01. Page A6-5
provides the export numbers for 1990 and 2001 and page A6-6 has the import
numbers. http://www7.nationalacademies.org/ocga/testimony/
Innovation_and_Competitiveness_Rising_Above_the_Gathering_Storm.asp
52
Research and Development in the FY 2006 Budget, Selected Trends in Non
Defense R&D, Figure 5, AAAS R&D Budget and Policy Program, American
Association for the Advancement of Science, 2006, accessed 24 July 2008 at
http://www.aaas.org/spp/rd/trnon06c.pdf
53
Jonathan Adams, ‘‘Science, Wealth and the Scientific Investments of Nations,’’
Conference Proceedings, Perspectives on U.S. Competitiveness in Science and
Technology, Meeting on Rising Above the Gathering Storm: Energizing and
Employing America for a Brighter Economic Future, p. 37.
54
Annual Report to Congress on Foreign Economic Collection and Industrial
Espionage, 2005, p. 10.
55
Ibid., p. 10.
56
FBI Headline Archives, ‘‘Protecting Trade Secrets: FBI Cracks Down on
Economic Espionage,’’ accessed 8 July 2008 at http://www.fbi.gov/page2/
oct03/secrets101003.htm
57
M.E. (Spike) Bowman remarks, 19 March 2008.
58
Sam Vaknin, ‘‘The Industrious Spies,’’ Global Politician, 6 June 2006, accessed 16
July 2008 at http://www.globalpolitician.com/21824-military-intelligence
59
American Society for Industrial Security, accessed 1 July 2008 at http://
www.ctcintl.com/facts.shtml
60
Remarks of Cassandra Chandler, Assistant Director, Federal Bureau of
Investigation, 23 April 2004.
61
FY 2008=FY 2009 Budget Estimates, Defense Security Service, Department of
Defense, p. 459.
62
‘‘Spies on the Inside, Foreign Intrigue on American Soil,’’ Headline Archives,
FBI, accessed at 8 July 2008 at http://www.fbi.gov
63
National Foreign Intelligence Program, ANSIR Program, 22 October 2002,
accessed 8 July 2008 at http://indianapolis.fbi.gov/pgnatforintell.htm

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International Journal of Intelligence and CounterIntelligence, 23: 399–425, 2010

Copyright # Taylor & Francis Group, LLC

Rethinking National Security

termite (tûŕmı̄t́). Any one of numerous species of pseudoneoropterous

Among the dangers that prompt quick action by any homeowner,

actions brought President George W. Bush to declare war on terrorism.

INTERNATIONAL JOURNAL OF INTELLIGENCE

TERRORISM PRESET THE FOG OF WAR

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

Calculating the Costs to the United States

INTERNATIONAL JOURNAL OF INTELLIGENCE

THE SITUATION TODAY

The cited reports estimated national security losses at around $300

ECONOMIC ESPIONAGE SINCE THE COLD WAR

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

Likewise, the Central Intelligence Agency’s (CIA) then-Director Robert

In 1999, the Cox Commission, headed by then-Representative Christopher

China pilfered secret design information from national labs on every

Congress Meets Economic Espionage With Action

We have a problem in America today: The systematic pilfering of our

INTERNATIONAL JOURNAL OF INTELLIGENCE

pricing schedules, business agreements, manufacturing processes. This

H is c o s p on so r, S e na tor A rl e n Specter of Pennsylvania (then a

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

countries, including traditional counterintelligence adversaries and

EE AND IE ARE INVISIBLE PROBLEMS

GROWTH TRENDS OF U.S. DEFENSE-RELATED FOREIGN ESPIONAGE

INTERNATIONAL JOURNAL OF INTELLIGENCE

Figure 1. Countries Involved in Economic and Industrial Espionage.

Overlooking Economic Espionage in National Security Strategy

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

National Security Strategy of the United States of America, issued in

INTERNATIONAL JOURNAL OF INTELLIGENCE

Although current losses due to hacker attacks are significantly smaller

Congressional oversight and White House attention or direction are

THE NEED TO REFOCUS

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

In the current environment, the U.S. appears to bring full focus to

INTERNATIONAL JOURNAL OF INTELLIGENCE

Wen was envisioning that result from a combination of China’s hardware

China’s aspirations may be achievable in decades or more. Chinese

In a footnote, the report started:

Economic espionage and industrial espionage appear to be important

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

other countries poach on U.S. preserves, employing traditional industrial

Because of the Internet, the biggest obstacle faced by a spy–delivering the

‘‘Much of Our Strategic Advantage . . . Is Economic.’’–USA Today

Charlene B. Thornton, special agent in charge of the FBI’s San Francisco

The economic—and often national—security of the United States rests

INTERNATIONAL JOURNAL OF INTELLIGENCE

THE UNSETTLED STATE OF AFFAIRS

. The National CounterIntelligence Executive (NCIX) expresses deep concern about

A tiny minority could do devastating damage by stealing secrets for either

AND COUNTERINTELLIGENCE VOLUME 23, NUMBER 3

Significant internal and external counterintelligence weaknesses . . .

If annual losses to U.S. economic strength from EE and IE are mounting

ACADEME’S CONCERN: WEAKENING U.S. NATIONAL SECURITY

The Department of Defense (DoD)–sponsored conference proceedings point

The United States is today a net importer of high-technology products.

That excerpt is footnoted:

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Foundations of Technological Prowess

The Wealth of a Nation