The New York Times Friday, March 11, 1994, p. A1 U.S. TO ALLOW SALE OF THE TECHNOLOGY FOR SPY SATELLITES ------------------------- Profit vs. Security Issue ------------------------- Marketing to Private Customers Assailed by Some Who Fear Use by Hostile Nations ------------------------- by Edmund L. Andrews Washington, March 10 -- The Clinton Administration announced today that it would allow companies to market sophisticated spy satellite technology to commercial customers around the world. The decision marks a big change from the comparatively strict limits now imposed on satellite-imaging systems, and it caps more than a year of intense debate among the Commerce Department, the Pentagon and Government intelligence agencies. The move, which could attract new business worth hundreds of millions of dollars to American industry, also marks one of the clearest examples so far of the Administration's intention to emphasize commercial and economic priorities over more traditional cold war-era concerns about national security. Change Raises Concern Some security experts questioned the decision to allow wider access to a technology that has been described as one of the most powerful tools in America's espionage arsenal. But others said the technology was already becoming available in other countries and that American companies should be allowed to profit from the trend. Under the new policy, American companies will be allowed to build and operate for-profit satellite systems that are powerful enough to take photographs from 22,300 miles above the earth and depict objects on the ground as small as one square yard, smaller than a subcompact car or a hot-dog stand. Several American companies, among them the Lockheed Corporation, are hoping to set up satellite imaging services for customers around the world. As envisioned by Lockheed, customers would be able to transmit instructions directly to the satellite, which would turn its cameras to the desired location and then beam the images back to the ground. Such customers might include oil and mining companies and environmental researchers. 'A New Era' Administration officials said that companies would also have greater freedom to export entire satellite systems to foreign countries, though such sales will still require approval from the State Department. "This is 1994," David J. Barram, Deputy Secretary of Commerce, said in an interview today. "This is a new era. We believe national security and economic security are intertwined. In order to have national security, you have to have vibrant and competitive industries that are allowed to do what they do best." But some experts warned that the decision could severely compromise national security by letting hostile countries use America's own spy technology to obtain detailed images of sensitive military installations in the United States or to plan military activities elsewhere in the world. "The main customers for these systems will be the intelligence agencies of other countries," predicted John Pike, director of space policy at the Federation of American Scientists, a nonprofit group devoted to science and public policy. "They have fairly strong safeguards here. But in practice it is going to be difficult to prevent North Korea or Iraq from using a front company to gain spy satellite photos in the same way they acquired nuclear and chemical missile technology." Numerous companies already market commercial satellite images, which can be used for mapping, geologic surveys and even agricultural purposes, like remote monitoring of cattle herds. But currently, the most sophisticated of these services is offered by Spot Image, a French company, and it cannot produce photographs showing land areas smaller than about 10 yards in diameter. And while the Spot system is being upgraded, it will still be unable to view areas smaller than five yards. Lockheed and other American companies have been arguing for permission to operate systems that could depict objects about a square yard in size, a request that had been resisted by the Central Intelligence Agency and National Security Agency. Growing Market Despite the agencies' concerns, Administration officials said today that they fully intended to approve requests like those of Lockheed, and went on to argue that the higher-resolution images are essential if any significant commercial market is to be formed. The Commerce Department says that remote-sensing services, as they are known, currently make up a $400 million market worldwide; the market is expected to grow to about $2 billion by the year 2000. Besides Lockheed, two other American companies have sought permission to operate high-resolution satellite-imaging services. One is the Orbital Sciences Corporation, a small rocket and satellite company based in Dulles, VA. The other is World View Inc., a start-up company in Livermore, Calif. Administration officials said that while the companies intended to adopt the precise technology that has long been used on Government spy satellites, the new policy included a number of safeguards to prevent the technology from falling into the wrong hands. As happens now, the Commerce Department must still approve each application to operate a commercial satellite surveillance system or to sell such a system within the United States -- or to market the services around the world. Sales of such equipment outside the country, however, will be subject to the export-control procedures already in place for products that have military applications, which means that each sale must be approved by the State Department and that sales to hostile countries will likely be blocked. But under the new policy, the Government would be much more likely to approve spy satellite exports. Right to Decode To prevent the misuse of satellite data sold by the new commercial services, the Government said that the companies would have to maintain a record of every job the satellite had been instructed to carry out. Moreover, the satellites cannot scramble their transmissions with coding technology that the Government cannot decipher. An oil company could protect its business secrets -- for example, by transmitting its exploration photos in scrambled form -- but the Government would have the right to decode them. In addition, the new policy leaves room for the Government to shut down a satellite system during what an Administration statement described as "periods when national security or international obligations and/or foreign policies may be compromised." But industry officials who supported the new policy said they had been assured by Commerce Department officials that the country would need to be in a "Persian Gulf situation" before it began shutting down systems. Executives at companies that have pressed for more liberal rules said the new policy gave them virtually everything they wanted. "We are very pleased that the Administration put together such a forward-thinking policy that allows the application of defense technology for commercial purposes," said Brian Dailey, vice president at the Washington office of Lockheed Corporation. Gilbert Rye, corporate vice president at Orbital Sciences, echoed that view. "It's an outstanding development," he said. Security Agencies Sign On Today's decision was supported, at least in public, by the Defense Department and other agencies concerned with national security issues -- despite earlier resistance. Two Central Intelligence Agency officials were present at a news briefing for reporters today, though they did not make any comments. Some longtime national security experts said the new policy made sense, given the proliferation of satellite imaging technology around the world.