Monday, December 13, 1999

Indictment revives
Chinese spying issue

Bullet The issue: A Chinese-American scientist has been indicted on charges of removing nuclear weapons secrets from the Los Alamos, N.M. laboratory.

Bullet Our view: The indictment revives the issue of Chinese espionage and further strains relations with Beijing.

THE indictment of a Chinese-American scientist on charges of removing nuclear weapons secrets from a secured computer at the Los Alamos, N.M., weapons laboratory is likely to place further strain on already shaky Sino-American relations.

The indictment coincided with the disclosure that a Russian agent planted an eavesdropping device in the State Department. A Russian diplomat implicated in the case has been ordered to leave the country.

The incidents underline the continued friction in relations with Beijing and Moscow despite the collapse of the Soviet Union and China's de facto renunciation of communism.

The scientist, Wen Ho Lee, is accused of downloading secret information on nuclear weapons from a secured computer in the laboratory where he worked for nearly 20 years before being fired last March, and removing it from the lab.

Lee has been the prime target of an FBI investigation involving alleged theft of nuclear secrets by China since 1996.

The probe involved details of a miniaturized nuclear warhead used on Trident submarines, but the Justice Department reportedly was unable to develop evidence that Lee ever provided secrets to China.

It was not until after he was fired that authorities discovered that Lee had improperly transferred thousands of computer codes that provide a history of nuclear weapons development from Los Alamos' secured computer system to his less-secure personal office computer and then removed them from the lab.

Beijing has vehemently denied stealing U.S. nuclear secrets, and can't be pleased to see Lee prosecuted. The obvious implication is that China was the beneficiary of his efforts, whether or not that can be substantiated.

The issue has been reverberating for months, ever since a House select committee completed a report on Chinese espionage activities. The report, which was released in an unclassified version last May but leaked in part earlier, said that for about 20 years China had engaged in successful efforts to obtain secret data from U.S. nuclear weapons laboratories.

Last summer a Senate report and then a report by the president's Foreign Intelligence Advisory Board criticized the FBI and Justice Department for focusing the investigation too narrowly on Los Alamos and on Lee. In September, Attorney General Janet Reno ordered the investigation to broaden its focus to other labs, Energy Department sites and defense contractors.

The decision to seek Lee's indictment may indicate that additional incriminating information against him has since been developed. In any case, the indictment revives the issue of Chinese espionage.

In a separate case, a grand jury in October indicted McDonnell Douglas Corp. and a Chinese state-run company on charges of conspiring to violate export laws. The case has to do with the alleged diversion of aerospace manufacturing equipment from its stated purpose of building civilian aircraft to military use.

Coming just weeks after U.S. and Chinese negotiators reached agreement on a long-sought trade pact, the new development serves as a reminder of the complexity and delicacy of Sino-American relations.

The United States must try to engage China in a constructive relationship through trade. At the same time, the U.S. must view China as a potential rival for strategic domination of East Asia and protect its military secrets accordingly. The indictment seems to signal a greater determination to deal with such security issues.

Hawaii real estate

Bullet The issue: Sales of prime residential real estate in Hawaii are increasing.

Bullet Our view: It's one of the signs that the economy may be improving.

THE escalation of prices for prime Hawaii residential real estate in the late 1980s was breath-taking -- and so was the collapse of prices that followed in the 1990s as the Japanese "bubble economy" burst and Hawaii was caught in the fallout.

Now the prices at the top of the real estate pyramid are rising again. This time it isn't the Japanese who are buying, but Americans enriched by the strong U.S. mainland economy.

Hollywood types are also showing renewed interest. The latest reports have billionaire media production mogul David Geffen and star actor Clint Eastwood purchasing oceanfront lots -- Geffen in Kahala, Eastwood on Maui. Celebrity residents are nothing new in Hawaii, but there haven't been many newcomers in recent years.

Realtors say prices are still well below those of the boom years, but showing upward movement after years of stagnation. This doesn't directly affect the bulk of the housing market, but activity there is picking up, too.

There are other signs as well that the Hawaii economy is reviving. Michael Sklarz, chairman of the state Council on Revenues, says key economic indicators point to a more robust economy in 2000. Lowell Kalapa of the Tax Foundation of Hawaii is skeptical, however.

We agree with Kalapa that it's "too soon to break open the champagne," but it's hard to resist being cautiously hopeful.

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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