User:Hcberkowitz/Sandbox-Economic intelligence

Economic intelligence has the unusual property, among intelligence disciplines, that it has major private sector as well as governmental applications. It is primarily an intelligence analysis discipline, with its inputs coming from a wide range of collection techniques.

It should be noted that while industrial espionage involves collection methods that may be illegal for private companies, business intelligence largely comes from open sources.

Porteous identifies two kinds of economic intelligence that are distinct from S&TI:

1. trade negotiation intelligence
2. macro-economic intelligence

Porteous raises the question: is commercially oriented, economic/scientific/technical espionage efficient? He observes that some claim intelligence obtained through economic espionage would be "tactically useless" for a number of reasons. Typically, the barriers to potential efficiency are related to an intelligence agency's lack of knowledge of the subject area and to problems associated with the dissemination of intelligence once acquired. These arguments tend to come from individuals who at the same time argue for or accept the need for government to defend against economic espionage engaged in by other governments. It is difficult to support these points simultaneously: if economic espionage is "tactically useless", it is similarly useless to foreign governments that practice it, and thus need not be defended against.

He counters the argument that "lack of direct knowledge of a certain business or its technology has been cited as a significant obstacle to intelligence services engaging in economic espionage. Yet during the Cold War, intelligence services spent significant amounts of time and energy, with some success, trying to obtain intelligence on various complex military technologies of which the case officers would not have had a profound knowledge. If intelligence services were trusted to obtain such information, a shift of focus to complex commercial technologies and intelligence would not be unthinkable. The same techniques used to obtain military secrets could be turned to complex commercial technologies or strategies without too much difficulty."

Another efficiency argument deals with the security of dissemination to industry. National characteristics will be different here; industry-government partnerships, for example, are far more routine in Japan than in the United States. US consortia have been open to foreign firms, and many have shut down, such as the Microelectronics and Computer Technology Corporation and the Corporation for Open Systems (in OSI and ISDN) networking. Some, such as the Open Software Foundation merged with other groups and wound up being international.

Porteous observed "the existence of means to reduce dissemination difficulties will not erase them. Problems will inevitably arise. Those countries considering engaging in or expanding their practice of economic espionage would be well-advised to consider the alleged experience of France in this area. It has recently been suggested that the embarrassing release of information indicating French intelligence service targeting of American companies, which triggered an American boycott of the Paris Airshow, was the work of disgruntled French firms. The companies responsible for releasing the material to the press apparently were unhappy with what they saw as the tendency of the French intelligence service, Direction générale de la sécurité extérieure (DGSE), to favour some French firms over others in distributing material obtained through economic espionage. The incident reportedly cooled relations between the DGSE and certain elements of French industry.

It is not uncommon to have nations claiming that each is trying to get economically significant scientific and technical information to file counterclaims of each spying on the other. One conflict comes from the fact that the United States considers certain practices illegal, which are are normal business practice in other countries.

Nations have different views of what constitutes offensive and defensive economic intelligence: "Decisions informed by the provision of economic intelligence range from determining whether to raise interest rates to the proper stance to take in contentious trade negotiations. This type of intelligence support to government decision-makers is generally accepted as a legitimate function of state intelligence services. Related intelligence services that go beyond the mere collection of information and aim to influence events directly, either at a macro-economic or firm level, are understandably more controversial.

Citing a US example, Porteous describes a useful distinction: "... the CIA recently distinguished between

• intelligence used to inform government policy-makers and
• intelligence used to influence events at the firm level,

to differentiate their economic intelligence activities in France from the direct industry-support activities in which French intelligence had engaged in the USA."

He cites the former category, intending to inform government officials, as where the CIA was allegedly supporting the formulation of American trade policy with regard to negotiations concerning audio-visual matters at the GATT. This was reportedly done through the provision of clandestinely obtained intelligence on the French bargaining position. The Americans argued that this support to government decision-makers was well within the bounds of tolerable espionage behaviour...." The Americans contrasted this with :alleged French intelligence activities in support of French commercial actors through directly transmitting clandestinely obtained proprietary information from American companies was not.

In 1994, Porteous suggested that there may be a shift in the countries most eager to engage in this sort of intelligence gathering. "Early on, the French and the Russians were presented in most North American analyses as the primary practioners of economic espionage. Now, in a realignment perhaps more attuned to today's geopolitical realities, this dubious status is being transferred to the Japanese and emerging Asian economies. In a recent article in the Far Eastern Economic Review, FBI officials stated 57 countries are running operations to obtain information out of Silicon Valley. These same officials were quoted as labelling Asian governments and multinationals, particularly Japan, Taiwan and South Korea, as the chief culprits."

There are differences in economic culture between Europe and Asia. Where European industry-government partnerships tend to be very formally defined, the Asian ones are more fluid. "The prospect of huge Asian multinational corporations, with their definite but elusive relationship with government, engaging in industrial or economic espionage, may open new debates on when and how intelligence services should intervene in these cases. For while European states move towards privatization (albeit retaining a "golden share") in many cases there is little sign of a lessening of links between business and government in the high growth communitarian societies of Asia. The imminent emergence of powerful Chinese multinationals out of the so-called "socialist market economy" of China will only increase this trend."

It can reasonably be surmised that there is a degree of economic intelligence gathering among most or all industrialized nations. Merely because a country, in the list below, complains of intelligence gathering against it should not be interpreted as meaning that country's intelligence service does not collect information from other countries.

Canada

Porteous mentions that in Montreal, two members of the Stasi, the former East German secret police, explained how they used phony work records from "sympathetic companies" to gain employment at targeted Canadian companies.

He speculated, in 1993, "In the near future, it is conceivable that the UK would share more economic intelligence with fellow EC members than it would with Canada or the United States. On the other hand, the USA would be more likely to share its economic intelligence with its fellow FTA and NAFTA members."

While there has been no official Canadian statement about targeting scientific, technical and economic intelligence, the Communications Security Establishment (CSE), the Canadian SIGINT agency, advertised for "university graduates for analyst positions noting that "graduation in fields such as economics, international business, commerce ... would be an asset"."

National-level economic intelligence

Economic intelligence intended for policymakers help them understand the economic interplay between their country and other countries, or between countries whose interactions, as a group, influence one's own country. It helps policymakers understand other countries' attitudes toward international agreements and national laws relevant to economic data. It also helps understand how individual countries define sensitive economic data.

There are two broad missions for economic intelligence.

• The first is to provide strategic warning of international economic trends that could have a significant impact on US interests.
• The second is tactical-providing information and analysis on important international economic issues to US policy and enforcement officials in support of their day-to-day decisionmaking and interactions with foreign counterparts.

The Intelligence Community monitors the pace, scope, and direction of economic reform in the former Soviet Union, Eastern Europe, and China, and it tracks economic policies and performance in other key emerging markets of concern to US interests.

Specifically, Intelligence Community economic analyses includes:

• Warning. Anticipating economic crises by providing timely assessments of financial vulnerabilities, national economic performance, and threats to world energy supplies. More integrated international markets increase the risk that an economic crisis in one country will spill over to other trading or financial partners.
• Understanding foreign economic policy making. Identifying and assessing the complex interaction between economic, political, and social factors that drive policymaking and economic performance in emerging economic powers and in countries of strategic interest. This includes the analysis of obstacles to these countries instituting market-based economic reform.
• Rogue states and illicit activities. Monitoring the domestic performance and external economic relations of rogue states--North Korea, Iran, Iraq, and Cuba--monitoring the economic impact of sanctions, and developing approaches that track the complex financial networks that support drug traffickers, terrorists, and proliferators of weapons of mass destruction.
• Helping to ensure that all countries are playing by the same economic rules so we have a "level playing field." The Intelligence Community is not involved in enforcement, but we do report our findings to appropriate officials.

Economic intelligence has been critical to addressing some of the issues US policymakers have faced over the past year:

• Economic analysis helped policymakers better understand the economic conditions in North Korea.
• Analysis of the economic changes taking place Russia have enhanced policymakers' understanding of Russian military reforms as well as political developments.
• Knowledge of Iraqi economic pressures has helped policymakers evaluate the conditions for Iraq's political leadership and the likelihood of adherence to the UN agreements.

economic potential for war — That share of the total economic capacity of a nation that can be used for the purposes of war. economic retention stock — That portion of the quantity of an item excess of the approved force retention level that has been determined will be more economical to retain for future peacetime issue in lieu of replacement of future issues by procurement. To warrant economic retention, items must have a reasonably predictable demand rate. economic warfare — Aggressive use of economic means to achieve national objectives. GAO noted that: (1) one country conducts the most aggressive economic espionage against the United States to help develop its own defense industrial base, and to sell or trade information with other countries for economic or political purposes; (2) another government conducts aggressive and massive economic espionage against the United States because its primary goal is to achieve self-sufficiency in arms manufacturing; (3) another country conducts industrial espionage against the United States for the same reasons, but at a lower intensity; (4) a country that has no foreign intelligence service uses its private-sector companies to obtain economic intelligence from the United States; and (5) a fifth country has not targeted the United States or its defense industry for espionage, but has begun to move toward more overt collection of economic intelligence, which may be diverted to countries to which the United States would not sell defense technologies.

Economic intelligence benefits to private enterprise

For the past few years the U.S. Intelligence Community has been debating a truly controversial subject - Should the CIA and other Intelligence agencies assist American corporations by collecting economic secrets from foreign competitors? At his confirmation hearings, current CIA Director James Woolsey called this "the hottest topic in intelligence policy."

The issue first surfaced during the Bush administration. As the Cold War began to wind down, American Intelligence agencies found themselves facing some entirely new challenges Traditional Cold War opponents have been replaced with aggressive economic competitors. More often than not these same competitors are allies and trading partners of the United States.

• What kind of information does U.S. industry need and who defines the requirements?
• How specifically can U.S. government spying help private industry?
• To whom should the information be given?
• How can covert information be handed out without disclosing sensitive intelligence sources and methods?
• In an age of multinational corporations, what defines an "American" corporation?
• By providing Intelligence to the private sector, the U.S. government could find itself in a position of dictating industrial policy.
• Intelligence cannot protect American industry from its own decisions.
• "What would you do with this information if you had it?"

American business has been quick to reject the suggestion. Some of the objections voiced by the private sector include:

• Government sponsored commercial espionage activities could alienate our allies and trading partners and intimidate customers and suppliers overseas.
• Few American industries would be willing to reveal their status on specific technologies.
• Analysis provided by the CIA has been questionable in the past. How can this possibly assist U.S. business?
• "The best intelligence source is the industry itself."
• "..the idea that the U.S. Government would engage in espionage against foreign companies to improve American competitiveness is grotesque. In an era of free trade and economic interdependence it is unthinkable."

However, each is based on the assumption that clandestine collection methods are necessary to produce effective commercial intelligence. This misses one important point - there is a tremendous difference between Business Intelligence (BI) and Industrial Espionage.

Business Intelligence can be defined as collection of business and competitive information through legal and ethical methods. It has been estimated that as much as 80% to 90% of this information may be obtained through Open Source collection methods. Business Intelligence might be collected through newspaper articles, trade journals, Security & Exchange Commission (SEC) filings, specialized databases and trade show material.

Industrial Espionage (or Economic Espionage) is the clandestine collection of sensitive, restricted or classified information. This information by its very nature is not openly accessible and can only be obtained through covert collection means. Industrial Espionage might include the theft of sensitive or restricted competitor information (such as financial data, restricted manufacturing processes, customer accounts, etc.) covert recruitment of sources within a competitors firm, and other such methods.

The bottom line? Business Intelligence is legal. Industrial Espionage is not. Japanese Business Intelligence 101

• Japanese Intelligence organizations may be divided into Government of Japan (GOJ) and private sector.

• GOJ Intelligence Agencies are normally quite small in scale. Japan does not have a large centralized Intelligence organization such as the CIA.

• Japan's Intelligence needs are essentially economic in nature and most intelligence collection, analysis and processing is handled by the private sector.

• There is a significant interaction between the Government of Japan (GOJ) and the private sector.

• Japanese Business Intelligence efforts concentrate on market, economic and technological intelligence. Unique, innovative or critical technology receives particular attention.

In Japan, there is a much stronger relationship between the government and the private sector. In order to understand the success of Japanese corporations it is essential to also understand their relationships with GOJ agencies such as the Ministry of International Trade & Industry (MITI) and its trade promotion agency, the Japan External Trade Organization (JETRO). JETRO is also one of the best examples of a true Japanese commercial intelligence organization.

The Japan External Trade Organization (JETRO)

After the end of the Second World War, most Japanese corporations were operating without detailed information regarding what they should produce and export to foreign markets. They had no information regarding changes in various tariffs nor a means of effectively marketing their products. In brief - Japanese firms lacked essential Business Intelligence information to allow them to effectively compete in overseas markets.

To cope with this situation, a group from the Osaka Chamber of Commerce and major Japanese businesses in the Kansai area formed the Overseas Trade Promotion Association (Kaigai Boeki Shinkokai). The new group unfortunately was not sufficiently powerful to accomplish the mission.

In 1954 MITI took over the organization and with GOJ support expanded its activities. Under the Japan External Trade Organization law of 1958, the new organization was transformed into a special corporation and became known as the Japan External Trade Organization, more commonly called JETRO. Since that time JETRO has functioned as a true commercial intelligence organization, acting as an extended arm of MITI to promote external trade.

Today JETRO has 84 domestic offices composed of 33 trade information centers and 51 economic internationalization centers in Japan. Internationally, JETRO has 48 overseas offices and operates 28 specialized JETRO Centers.

JETRO has a total staff of approximately 1200 people which equally divided between the Japan domestic (600 Japanese staff members) and overseas offices (300 Japanese and 300 local country staff members).

JETRO activities include research of economic trends, domestic and international information and Business Intelligence. JETRO targets include economic, trade, industry, technology, products, market trends, areas studies, etc. JETRO publishes a wide variety of material in both Japanese and English. Some examples are the Tsusho Koho (Japanese) and the JETRO Daily.

A Scenario for the Future

JETRO through its worldwide network of overseas offices and close interaction with the private sector has given Japanese corporations a powerful competitive edge by providing cost effective access to Business Intelligence information. Despite the recent emphasis on providing assistance to non-Japanese firms seeking to market their goods and services in Japan, the primary role of JETRO has not changed significantly.

The JETRO model has worked quite well for Japan. Is there something to be learned from JETRO and the Japanese Experience? Would a similar model work for the United States? Let me provide my own scenario for what I call......

Intelligence collection for economic intelligence

A surprisingly wide range of means of information collection provide inputs to intelligence collection. For example, agricultural production, or shortfalls in it, can have major economic impacts. Satellites can give a great deal of information on the health and coverage of crops, but the kind of satellite that collects such data is not the high-resolution imagery intelligence IMINT "spy satellite", but rather broad-coverage photographic, supplemented with multispectral observations.

Allegations of intelligence collection at the national level: charges and countercharges

It is not uncommon to have nations claiming that each is trying to get economically significant scientific and technical information to file counterclaims of each spying on the other. One conflict comes from the fact that the United States considers certain practices illegal, which are are normal business practice in other countries.

Nations have different views of what constitutes offensive and defensive economic intelligence: "Decisions informed by the provision of economic intelligence range from determining whether to raise interest rates to the proper stance to take in contentious trade negotiations. This type of intelligence support to government decision-makers is generally accepted as a legitimate function of state intelligence services. Related intelligence services that go beyond the mere collection of information and aim to influence events directly, either at a macro-economic or firm level, are understandably more controversial.

Citing a US example, Porteous describes a useful distinction: "... the CIA recently distinguished between

• intelligence used to inform government policy-makers and
• intelligence used to influence events at the firm level,

to differentiate their economic intelligence activities in France from the direct industry-support activities in which French intelligence had engaged in the USA."

He cites the former category, intending to inform government officials, as where the CIA was allegedly supporting the formulation of American trade policy with regard to negotiations concerning audio-visual matters at the GATT. This was reportedly done through the provision of clandestinely obtained intelligence on the French bargaining position. The Americans argued that this support to government decision-makers was well within the bounds of tolerable espionage behaviour...." The Americans contrasted this with :alleged French intelligence activities in support of French commercial actors through directly transmitting clandestinely obtained proprietary information from American companies was not.

In 1994, Porteous suggested that there may be a shift in the countries most eager to engage in this sort of intelligence gathering. "Early on, the French and the Russians were presented in most North American analyses as the primary practioners of economic espionage. Now, in a realignment perhaps more attuned to today's geopolitical realities, this dubious status is being transferred to the Japanese and emerging Asian economies. In a recent article in the Far Eastern Economic Review, FBI officials stated 57 countries are running operations to obtain information out of Silicon Valley. These same officials were quoted as labelling Asian governments and multinationals, particularly Japan, Taiwan and South Korea, as the chief culprits."

There are differences in economic culture between Europe and Asia. Where European industry-government partnerships tend to be very formally defined, the Asian ones are more fluid. "The prospect of huge Asian multinational corporations, with their definite but elusive relationship with government, engaging in industrial or economic espionage, may open new debates on when and how intelligence services should intervene in these cases. For while European states move towards privatization (albeit retaining a "golden share") in many cases there is little sign of a lessening of links between business and government in the high growth communitarian societies of Asia. The imminent emergence of powerful Chinese multinationals out of the so-called "socialist market economy" of China will only increase this trend."

It can reasonably be surmised that there is a degree of economic intelligence gathering among most or all industrialized nations. Merely because a country, in the list below, complains of intelligence gathering against it should not be interpreted as meaning that country's intelligence service does not collect information from other countries.

Canada

Porteous mentions that in Montreal, two members of the Stasi, the former East German secret police, explained how they used phony work records from "sympathetic companies" to gain employment at targeted Canadian companies.

He speculated, in 1993, "In the near future, it is conceivable that the UK would share more economic intelligence with fellow EC members than it would with Canada or the United States. On the other hand, the USA would be more likely to share its economic intelligence with its fellow FTA and NAFTA members."

While there has been no official Canadian statement about targeting scientific, technical and economic intelligence, the Communications Security Establishment (CSE), the Canadian SIGINT agency, advertised for "university graduates for analyst positions noting that "graduation in fields such as economics, international business, commerce ... would be an asset"."

China

"China has also warned its people about foreigners seeking economic intelligence. (In this instance the Chinese government felt 1000-year-old remedies and ancient healing techniques required protection.)"

France

France and the US have accused one another of economic, scientific and technical espionage at the national level. According to a US senator, William Cohen, French have been hiding listening devices on Air France flights in order to pick up useful economic information from business travelers."In 1993, the CIA warned U.S. aircraft manufacturers to be on the lookout for French spies at the Paris Air Show, and intelligence officials have claimed that France regularly sponsors the theft of information from U.S. companies." .

France declared several US intelligence officers persona non grata for alleged US economic intelligence-gathering, although Knight stated the US denied the charges.

France, according to Russell, also is a target. In an interesting disclosure twist, the French former intelligence official, Alexandre de Marenches describes the Japanese as experts in c. economic espionage. He relates that the Japanese government and industry have close ties with each other. The French intelligence agency, Direction générale de la sécurité extérieure (DGSE), studies Japanese intelligence operations abroad, trying to determine Japan's next technology target. According to de Marenches, Japan examines the global production situation, determines which country can satisfy their high- technology requirement, and then dispatches a collection delegation.

Third-country cooperation can help block economic intelligence gathering. "In late 1978,the British government intercepted telephone conversations of detailed Japanese plans to acquire illegally a French digital telephone switching system. The British government notified France, an act that reveals the extent of intelligence exchanges between some nations. When contacted on the matter, the French telecommunications company expressed astonishment; it thought the Japanese were interested in buying not stealing the technology.

"The DGSE mounted an intelligence collection effort to discern Japan's plan. Through simple techniques, members of the Japanese negotiating team toured the French plant, spoke with design engineers, and took photographs of equipment and manufacturing processes. While listening to conversations in the team's hotel room [via electronic eavesdropping equipment discussed earlier], French intelligence heard the Japanese exchange information, analyze the photographs, and assign collection requirements for the next day. One delegate was to get a French designer to discuss the switching system in detail; another was to take more detailed photographs of plant equipment.

"Alerted by the DGSE, the French company refused to grant the Japanese further access to manufacturing details. Abruptly, Japan canceled the remainder of the visit and broke off contract talks."

Germany

"German articles talk of American or French use of signals intelligence (SIGINT) capacity to eavesdrop on sensitive commercial transactions."

Israel

Several sources describe Israel as having energetic programs in economic and S&TI. According to an Command and General Staff College thesis, Israeli Air Force intelligence tried to steal 14 boxes of corporate data from Recon/Optical, Inc., a company that develops optics and semiconductors used in reconnaissance satelliges. "Data the agents removed successfully, before their arrest, went to the laboratories of the Israeli company Electro-Optics Industries. The Government of Israel continues efforts to field a reconnaissance satellite with the services of a prime contractor--Electro-OpticsIndustries."

Japan

"In the early 1980s, the companies Hitachi and Fujitsu, and the government agency the Ministry for International Trade and Industry (MITI) were caught stealing corporate secrets from IBM, Cray, and Fairchild Semiconductors. A 1987 Central Intelligence Agency (CIA) report "concluded that 80 percent of all Japanese government intelligence assets were directed toward the United States and Western Europe and concentrated on acquiring secrets about... technological developments."

As of 1994, "Japan operates its economic collection bureaucracy in a manner different &om France. The Japanese government itself does not provide large amounts of intelligence to its corporations. Companies maintain their own extensive intelligence gathering assets. Instead, the Japanese government provides direction and money; it also collates the information provided to it by companies. Government agencies, the Ministry for International Trade and Industry (MITI) and the Japanese External Trade Organization (JETRO), coordinate national economic collection priorities, provide access to foreign countries (through trade offices), and channel the intelligence they do collect to the appropriate industry. JETRO operates 77 offices in 59 countries; its agents collect economic and technical information and forward it to MITI. According to Japan: 2000, a report commissioned by the CIA, "Japan's elaborate system for political and economic intelligence is conducted through the various trading companies down to the office leve1.""

Republic of Korea (South Korea)

"South Korea's equivalent of the CIA, the National Security Planning Agency, places operatives in Korean companies like Hyundai, Samsung, and the Lucky Group. The companies then post the agents to foreign countries to forge close contacts with their industrial counterparts to gather technical and financial information."

Former Soviet Union and Russia

"To address the lag in technology, Soviet authorities in 1970 reconstituted and invigorated the USSR's intelligence collection for science and technology. The Council of Ministers and the Central Committee established a new unit, Directorate T of the KGB's First Chief Directorate, to plumb the R&D programs of Western economies. The State Committee on Science and Technology and the Military-Industrial Commission were to provide Directorate T and its operating arm, called Line X, with collection requirements. Military Intelligence (GRU), the Soviet Academy of Sciences, and the State Committee for External Relations completed the list of participants. The bulk of collection was to be done by the KGB and the GRU, with extensive support from the East European intelligence services. A formidable apparatus was set up for scientific espionage; the scale of this structure testified to its importance. The coming of détente provided access for Line X and opened new avenues for exploitation."

"In June of 1994, Russian presidential aide Yuriy Baturin accused Asian countries, particularly China and North Korea, of economic espionage."

United Kingdom

Reuter's stories from Britain make similar claims involving a middle-eastern power and a multi-billlion dollar arms deal the UK was bidding on. "The concept of "economic well-being" used above is also found in the British Intelligence Services Act, 1994. The Act discloses for the first time the functions of the British Secret Intelligence Service (BSIS) and the General Communications Headquarters (GCHQ) with regard to the economic and commercial interests of the state. According to the Act, under the authority of the Secretary of State, the functions of the BSIS include obtaining and providing information as well as performing "other tasks" relating to the actions or intentions of "persons outside the British Isles". These functions of the BSIS, like those of the GCHQ, are to be exercised only in the interests of national security, prevention or detection of serious crime and, most importantly from the point of view of this article, "in the interests of the economic well-being of the UK"."

United States

The United States suffers from a degree of conflict, in that it is sensitive to economic espionage against US companies, but it also objects to those companies using business practices, routine in other countries, that are considered corrupt domestically. "The United States is the only member of the Organization for Economic Cooperation and Development (OECD) to pass legislation-the Foreign Corrupt Practices Act-criminalizing the payment of a bribe to a foreign official. The legislation arose out of the American bribery scandals of the 1970s. These restraints, which are extraterritorial in scope, have proven a constant irritant to Americans doing business abroad. According to Secretary of State Warren Christopher, the legislation costs American companies "hundreds of millions of dollars in contracts every year". Not surprisingly, the USA is particularly upset about the practice engaged in by some countries of not only turning a blind eye to bribery by their own nationals but recognizing these same bribes as tax-deductible business expenses. The Clinton administration has not been encouraged by progress in lobbying fellow OECD members to pass domestic legislation mirroring America's, or to agree to an enforceable international code condemning the practice. In the absence of any international support for these initiatives, American commercial interests have been pressuring their government either to change the international regime or to rescind the legislation. "Unwilling to rescind, the Clinton administration turned to the CIA." Former Director of Central Intelligence James Woolsey distinguished between what is licit for the US government and illicit for companies: "I... reserve the term industrial espionage to mean espionage for the direct benefit of an industry. ... I don't call it industrial espionage if the United States spies on a European corporation to find out if it is bribing its way to contracts in Asia or Latin America that it can't win honestly." "

Statements of current and past US officials about economic intelligence collection

"Former United States Central Intelligence Agency director James Woolsey confirmed in Washington... that the US steals economic secrets "with espionage, with communications [intelligence], with reconnaissance satellites", and that there was now "some increased emphasis" on economic intelligence. He claimed that economic spying was justified because European companies had a "national culture" of bribery and were the "principle offenders from the point of view of paying bribes in major international contracts in the world".

Responding to the European Parliament report on interception capabilities and the Echelon satellite surveillance system, Woolsey said that the "Interception Capabilities 2000" report which had been presented to the parliament's Citizens' Rights Committee on 23 February, was "intellectually honest". In two cases cited in the report, "the fact [is] that the subject of American intelligence collection was bribery."

"That's correct", he told a packed audience of foreign press journalists: "We have spied on that in the past. I hope... that the United States government continues to spy on bribery." Woolsey continued, Former United States Central Intelligence Agency director James Woolsey confirmed in Washington this week that the US steals economic secrets "with espionage, with communications [intelligence], with reconnaissance satellites", and that there was now "some increased emphasis" on economic intelligence.

He claimed that economic spying was justified because European companies had a "national culture" of bribery and were the "principle offenders from the point of view of paying bribes in major international contracts in the world".

Responding to the European Parliament report on interception capabilities and the Echelon satellite surveillance system, Woolsey said that the "Interception Capabilities 2000" report which had been presented to the parliament's Citizens' Rights Committee on 23 February, was "intellectually honest". In two cases cited in the report, "the fact [is] that the subject of American intelligence collection was bribery."

"That's correct", he told a packed audience of foreign press journalists...We have spied on that in the past. I hope... that the United States government continues to spy on bribery." Woolsey continued, "Whether economic or military, most US intelligence data came from open sources, he said. But "five percent is essentially secrets that we steal. We steal secrets with espionage, with communications, with reconnaissance satellites."

Explaining his view that Europe was the main centre of world industrial bribery, he asked "Why... have we in the past from time to time targeted foreign corporations and government assistance to them?... Some of our oldest friends and allies have a national culture and a national practice such that bribery is an important part of the way they try to do business in international commerce.... The part of the world that where this culture of getting contracts through bribery, that actually has a great deal of money, and is active in international contracting is to a first approximation Europe".

"[...] The principal offenders, from the point of view of paying bribes in major international contracts in the world, are Europe. And indeed, they are some of the very same companies -- the companies are in some of the very same countries where the most recent flap has arisen about alleged American industrial espionage."

Woolsey, when newly Director of Central Intelligence in 1993, publicly announced that economic intelligence was now a CIA program. French intelligence had been aggressively going after information from American executives. Woolsey said "No more Mr. Nice Guy."

In a statement in 1995 entitled "A National Security Strategy of Engagement and Enlargement", President Bill Clinton detailed just what his administration expected from American intelligence with regard to protecting or pursuing American economic interests

To adequately forecast dangers to democracy and to U.S. economic well-being, the intelligence community must track political, economic, social and military developments in those parts of the world where U.S. interests are most heavily engaged and where overt collection of information from open sources is inadequate. Economic intelligence will play an increasingly important role in helping policy-makers understand economic trends. Economic intelligence can support U.S. trade negotiators and help level the economic playing field by identifying threats to U.S. companies from foreign intelligence services and unfair trading practices.

Expert inference about economic intelligence collection by the US

According to Porteous, [Clinton's] statement clearly envisages the use of clandestine methods to obtain this intelligence where "overt collection... from open sources is inadequate".

Russell observes "France and Japan provide illustrative examples of foreign governments' actions.

"It is this direct link between government and business that some individuals propose to establish between the U.S.Government and U.S. businesses. Anticipated rewards of such a relationship include: reduced product research and development (R&D) timelines, reduced R&D costs, accelerated time from R&D to product marketing, and the receipt of lucrative contracts by undercutting a competitor using inside knowledge of his bid and terms. In sum, any benefit gained in these areas has the potential to increase profits."