A sub scandal should change the rules
By STAFF David Kirkpatrick, Patricia Sellers, Sarah Smith, H. John Steinbreder

(FORTUNE Magazine) – The equipment, designed to make propellers that enable submarines to glide beneath the seas in silence, has sent thunder crashing through the Western alliance. The U.S. is furious with some of its allies for selling high-tech metal milling systems to the Russians. The culprits in this case are Toshiba Machine, a subsidiary of Japan's giant electronics company, and Kongsberg Vaapenfabrikk, a company wholly owned by the Norwegian government. Toshiba supplied the Soviets with the machines; Kongsberg provided software to run them. Total price tag, including five-year servicing agreements: $17 million. But the other culprit is the rickety system used to bottle up strategic goods. Cocom, a Paris-based group of 16 Western allies including Japan, asks its members not to ship hundreds of thousands of high-tech items to the Communist bloc. How they comply is up to them. Predictably, few nations pay much attention to the blacklist until a serious breach of security happens. Instead of banning all Toshiba products from the U.S., as some Congressmen want to do, Washington should press Cocom for reforms. A shorter, more manageable list, along with real power to enforce restrictions, would help.