The Paradox of Fiction and the Ironies of Economic Espionage

still: Le Bureau des Légendes

Several countries including close allies, or nations otherwise considered as friends have conducted economic espionage against the United States. According to the FBI, its estimated that “billions of U.S. dollars are lost to foreign competitors every year who deliberately target economic intelligence in advanced technologies and flourishing U.S. industries.” The FBI has consequently declared economic espionage as a priority, second only to terrorism.

Besides France, Great Britain, Japan and South Korea; other friendly countries have regularly conducted economic espionage against the United States. For instance, Israel, “with the cooperation of American Jews,” and despite being a major recipient of US foreign aid, has been conducting economic espionage against the US since 1948. Their Office of Special Tasks, known as LAKAM; created in 1960 by the Israeli Defense Ministry has “led a systematic effort to collect scientific and technical information from the United States.” This, despite the fact that in 1951, the United States and Israel agreed not to spy on each other.

In 1986, security guards at Recon Opticals, a firm producing state of the art aerial surveillance equipment for the US Department of Defense caught three Israeli air force officers stealing thousands of pages of documents relating to the company’s proprietary information. This stolen technology provided the base for OFEK 3, Israel’s first reconnaissance satellite. Although Recon was paid $3 million in damages, the company suffered “grievous damage and barely escaped bankruptcy.”

The Republic of South Korea (ROK), another allied country, has been keenly aware of the role played by science and technology in its economic development. Since the 1990’s, it has aggressively targeted the United States to maintain its superiority by trying to “grab and steal technology that will benefit their industry.” Besides using its current National Intelligence Service (NIS), and its predecessors, the ROK employs a variety of organizations for its collection strategies linked to trade, and the science and technology sectors, to gather political, technical and economic intelligence. The Republic of Korea’s economic intelligence operations are driven by three factors:

1. continued access to advanced technologies to ensure continued economic growth
2. support for Korea’s indigenous arms industry

3. wider political considerations related to its foreign policy objectives

Besides the United States, ROK has also targeted Japan, a friendly nation, where South Korean agents have been the most aggressive in their intelligence collection operations.

Brian Champion (1998) argues that surreptitious collection of manufacturing and other business secrets has been an abundant practice for thousands of years. He gives the example of ancient China which so “closely guarded its silk manufacturing secrets, that anyone disclosing them was punishable by death.” France is supposed to have stolen the secret of making porcelain from the Chinese in the 18th century when a French Jesuit priest sent its manufacturing secrets via letters back to his country. Similarly, a British agent plundered the secrets of porcelain-making from France and returning to Britain, proceeded to develop porcelain-making to such heights that his country “captured a significant share of the world’s porcelain making market.”

The leadership of the United States, (or arguably any country today) is built around its economic and technological prowess, which is largely created by private firms. This makes the theft of intellectual and industrial information a major security implication to a producing country’s economy. In 1996, to deter the drain of its proprietary information, the United States Congress passed the Economic Espionage Act. Despite its passage, “there is so much trade thievery that the US finds itself in the middle of an epidemic of economic espionage.” Some of the reasons given as to why this approach isn’t working are:

• EEA has been difficult to prove
• Sentences are minimal
• Lack of buy-in from the private industry to cooperate with law enforcement

It has been significantly easier for the above mentioned countries to conduct economic espionage against the United States precisely because they didn’t have a developed technical infrastructure after WW 11, which the United States did possess. Further, unlike the United States, countries like India, Japan, Israel, ROK and other European countries which targeted the U.S. for economic espionage purposes, didn’t possess strong enough economies to develop their own proprietary research and development capabilities.

Due to its technical development and enormous investments in research and development, the United States has always been a target of espionage and hasn’t felt the need to target other economies for their technological prowess. Although the U.S. has claimed it doesn’t conduct economic espionage, it doesn’t refrain from stating that it can gather competitive intelligence; from both foes and allies.

“Competitive intelligence (CI) is an important strategy which is designed to assist organizations to gather emerging trends, capabilities or threats posed by competitors.” This form of intelligence gathering is also overt, and arguably somewhat legal. Competitive intelligence uses open data mining and a good exploitation of OSINT as well as commercial imagery. But the question remains whether the United States might have to consider economic espionage in the future…perhaps against China??

Bibliography

FBI, Documents. “Economic Espionage: Protecting America’s Trade Secrets.”

Clarke, Duncan L., “Israeli’s Economic Espionage in the United States”, Journal of Palestine Studies, Vol. 27, 1997/98, pp. 20–36.

Cochran, Edwin, “South Korea’s Intelligence Targets U.S. Technology”, International Journal of Intelligence and Counterintelligence, Vol 16, №2, pp. 179–201.

Champion, Bruce, “A Review of Selected Cases of Industrial Espionage and Economic Spying,” Intelligence and National Security, Vol. 13. №2, (Summer 1998), pp. 123–143.

Reid, Melanie, “A Comparative Approach to Economic Espionage: Is Any Nation Effectively Dealing with this Global Threat?, University of Miami Law Review Vol. 70, 2016 pp. 757–829.

Fitzpatrick, William, “Uncovering Trade Secrets: The Legal and Ethical Conundrum of Creative Competitive Intelligence”, SAM Advanced Management Journal, Vol 68. №3., (2003) pp. 4–12.