A Brief History of the Spy

by Simpson, Paul

  As far as the CIA is concerned, the eighties was the era of DCI William Casey and the Iran-Contra affair, a convoluted saga of deals involving arms shipments to Iran in exchange for the release of hostages which actually made a profit – and was then illegally used to support the Contra faction in Nicaragua, in direct violation of the law. In the middle of the explosive revelations about the actions of the National Security Council (NSC) and the CIA, DCI Casey was diagnosed with a brain tumour, which effectively incapacitated him at a time when the Agency needed strong leadership.

  The Congressional Committees investigating the affair pointed out the fundamental problem at the heart of the Iran-Contra situation: ‘The common ingredients of the Iran and Contra policies were secrecy, deception, and disdain for the law . . . the United States simultaneously pursued two contradictory foreign policies – a public one and a secret one.’

  In 1979 the Sandanistas took power in Nicaragua, and despite receiving aid from President Carter, the regime allied itself with the Soviet bloc via Cuba, receiving guns and other material from the Communists. The Nicaraguan Democratic Force (aka the Contras) were created in 1980, and as the Sandanistas started supporting the rebels in El Salvador, the US began to provide support to the Contras, although armed action was prohibited by the president. When President Reagan took office in 1981, he cut all aid to the Sandanistas, and on 1 December, signed an order permitting the CIA to support the Contras with arms, equipment and money. The NSC organized publicity stunts to ensure there was support domestically within the US for the aid to continue.

  However, not everyone in Congress was in favour of the CIA’s involvement, which led to Massachusetts Representative Edward P. Boland’s first Amendment in 1982, which barred ‘the use of funds ‘‘for the purpose of’’ overthrowing the government of Nicaragua or provoking a war between Nicaragua and Honduras’. This left a loophole which was quickly exploited – third-party funds could be solicited, and general aid could still be provided to the Contras. The CIA assisted with covert actions in Nicaragua, destroying fuel tanks and mining the harbour. After their role was revealed by the Wall Street Journal, Representative Boland pushed through a second Amendment in 1984:

  During fiscal year 1985, no funds available to the Central Intelligence Agency, the Department of Defense, or any other agency or entity of the United States involved in intelligence activities may be obligated or expended for the purpose or which would have the effect of supporting, directly or indirectly, military or paramilitary operations in Nicaragua by any nation, group, organization, movement or individual.

  Although this was designed to stem the flow of support, it failed. Third-party donations could still be obtained, and the NSC could oversee other activities, since technically they didn’t fall under the definition of prohibited agencies in the Amendment. Colonel Oliver North, on loan to the NSC from the Marine Corps, was placed in charge.

  Around the same time, clandestine negotiations were going on with Iran. The fundamentalist Islamic regime that seized power in January 1979 had taken American hostages at various times – but also needed support in their war against Iraq, so required some way of dealing with The Great Satan (as they dubbed America). A communications pipeline was opened via the Israelis in July 1985 so that thirteen days after President Reagan vehemently denounced any idea of giving reward to terrorists – like those in Iran – he was informed of a plan to exchange a hundred anti-tank missiles for some of the American hostages being held. (There are multiple contradictory versions of how much he knew about this and exactly when.) The deals began to go through, and profits from the second were channelled to a front company, known as the Enterprise.

  This second deal, in November 1985, was the one that caused the CIA major headaches, as Oliver North involved them to assist with some logistical problems. What the CIA knew about the nature of the flight and the contents of the shipment that they were helping to supply became the focal point of the discussions. Most within the CIA were unaware that it involved the transport of weapons (which at that point was technically illegal).

  In light of the second flight’s problems, it was decided that the arms would be sent directly from the Enterprise to Iran, and President Reagan signed a Presidential Finding authorising such shipments on 17 January 1986. Shortly afterwards, someone came up with the idea of diverting the profits from the arms sales to the Contras – or at least, whatever proportion of the profits that the private businessmen involved would allow to be passed across. Many believe that the scheme was devised by DCI Casey, others that it was Oliver North’s brainwave – a memo North wrote on 4 April 1986, which he failed to shred during his mass destruction of documents when the Iran-Contra affair became public later that year, spells out specifically that monies would be diverted to the Contras. North certainly maintained that he believed that President Reagan was aware of this plan, and approved it.

  When news of the covert shipments leaked in November 1986, the main concern at the CIA was over the November 1985 deal, since it took place before the Presidential Finding that gave the Agency permission to assist with an arms deal. DCI Casey – probably already suffering the effects of the brain tumour that would remove him from power before the end of the year – was uncharacteristically lapse in his preparation for the questions about the Agency’s role in an illegal covert action. This wasn’t helped by Oliver North’s attempts to disassociate the NSC from that shipment, or Casey’s inability to recall whether he specifically knew that there were Hawk missiles in the cases that were dispatched with CIA aid, rather than oil-drilling bits, per the manifest. Many in Washington believed that DCI Casey intended to perjure himself to the Congressional Oversight Committee over this, although this may stem from a draft wording that Casey appended to a document during a meeting the day before the hearing – according to CIA sources, he never approved anything that specifically cleared the NSC or CIA of knowledge.

  The CIA’s concern increased when details of the diversion of funds to the Contras became public knowledge a few days later, since William Casey had made no mention of it in his testimony to Congress. There were many calls for his resignation, but in what appeared to be a combative interview with Time in early December (those present suggest that the DCI was in fact quite ill by this point), Casey made it clear he had told Congress all he knew. He knew nothing about diversion of funds, and the CIA had been simply providing support to the NSC. ‘A lot of people are trying to put responsibilities on us that we didn’t have,’ he concluded. This stance was contradicted by a discussion Casey had two months later with reporter Bob Woodward, in which the reporter said Casey admitted that he was aware of the diversion scheme.

  The Iran-Contra affair rolled on throughout 1987, with emphasis switching from the role of the CIA to what knowledge President Reagan had of the deal. His National Security Advisor at the relevant time, Admiral Poindexter, claimed that he had shredded a document signed by Reagan authorizing the deal. Oliver North wrote: ‘Ronald Reagan knew of and approved a great deal of what went on with both the Iranian initiative and private efforts on behalf of the contras and he received regular, detailed briefings on both . . . I have no doubt that he was told about the use of residuals for the Contras, and that he approved it. Enthusiastically.’

  As had happened a dozen years earlier in the aftermath of the Watergate scandal and the publicity attached to the release of the incriminating ‘family jewels’, throughout the rest of President Reagan’s time of office the CIA underwent a period of retrenchment in an attempt to restore its battered image. Highly respected former FBI director Judge William H. Webster became DCI, and brought Richard F. Stoltz out of retirement to act as head of covert operations, replacing Clair E. George, who had been forced to resign after the Iran-Contra details became public. All the while, Aldrich Ames was passing information to the KGB from the CIA, while Robert Hanssen was doing similar from the FBI.

  The CIA was heavily involved with the resistance to the Soviet occupation of Afg
hanistan, which was justifying the pessimistic description of it as Russia’s Vietnam. The Agency was operating covertly out of Pakistan’s capital city Islamabad, mandated by President Reagan in 1985, to assist the Afghan resistance to push the Soviets back into Uzbekistan, using the new Stinger missiles. By the following year, even some of the Politburo in Moscow were starting to query the Soviet involvement, particularly after the resistance scored a stunning success, destroying an ammunition dump at Kharga, just outside Kabul, on 26 August 1986, using CIA-provided technical equipment, and then followed it up with an attack on three helicopters at Jalalabad the following month. At a meeting in November, Mikhail Gorbachev made it clear that Soviet troops should be out within two years, and leave behind a regime friendly to Moscow – without letting the Americans enter. Negotiations began in Geneva, while the CIA agents on the ground continued to assist the resistance to maintain pressure on the Soviets.

  Following the losses in The Year of the Spy caused (although they didn’t know it at the time) by Ames and Hanssen, the CIA was keen to gain new assets on the other side of the Iron Curtain. In May 1987, KGB officer Aleksandr Zhomov, code-named Prologue by the Agency, approached CIA case officer Jack Downing on the Red Arrow express – the overnight train between Moscow and Leningrad – and appeared to be offering access to a new counter-intelligence campaign by the KGB designed to disrupt the CIA’s operations in Moscow. He also provided a list of CIA agents who had been arrested and executed since 1985, and revealed the names of double agents who were going to falsely offer their services to the Agency.

  Conventional wisdom held that the KGB didn’t use their officers in this way (an operation known as ‘dangling’), but in fact Prologue really was too good to be true. When it finally became time to exfiltrate him from the Soviet Union in July 1990, it became clear that Zhomov’s loyalty had been to Moscow Centre the entire time. After the fall of the Soviet Union, Zhomov became head of the American Division of the FSB, the Russian continuation of the KGB, and according to CIA veteran Milt Bearden, he became obsessed with finding out who betrayed Aldrich Ames and Robert Hanssen to the Americans.

  Hanssen was responsible for foiling plans to capture another double agent in 1989. State Department diplomat Felix Bloch had become a person of interest after he received a telephone call in April from Reino Gikman, a KGB illegal in Vienna, by the CIA. Bloch had already come under suspicion because he had a taste for expensive sadomasochistic sex with prostitutes, which he would not be able to afford on his salary. Because Bloch was working in America, the CIA passed the case to the FBI. When Bloch flew to Paris in May, French counterintelligence placed him under surveillance at the request of the Bureau, and photographed Bloch and Gikman (who Bloch would later claim he knew as Pierre Bart) meeting and passing over a bag. Eight days later, Hanssen informed the KGB that Bart/Gikman and Bloch were under investigation.

  Gikman and Bloch met again in Brussels at the end of May, but then at the start of June, Gikman disappeared from Vienna, and on 22 June, Bloch received a phone call from someone he later identified as Bart/Gikman. He told Bloch that he was calling ‘in behalf of Pierre’ who could not see him in the near future because he was ‘sick’, adding that ‘A contagious disease is suspected.’ He rang off after telling Bloch, ‘I am worried about you. You have to take care of yourself.’ The FBI were bugging Bloch’s phone, and as far as they were concerned, this was a clear warning off. He was interrogated by the FBI, and placed under further surveillance – which was exacerbated when ABC News revealed the investigation in July, and the public took to referring to Bloch as ‘Mr Spy’. However, the surveillance proved fruitless: Bloch ceased any activities for the Soviets, and thus the FBI were deprived of gaining any clue as to who warned the KGB to tip him off. Bloch was dismissed from the State Department and eventually wound up as a bus driver.

  Later that year, Hanssen betrayed another major secret to the Soviets – Project Monopoly, a tunnel that had been dug underneath their new embassy in Washington. Although many still doubt the existence of the tunnel, it does seem to have been constructed to allow the NSA and FBI access to the Soviet secrets. However, according to Hanssen’s biographer David Wise, since the buildings were only used by families during the eighties, little useful knowledge was gained. Because of a dispute over the bugs discovered in the American embassy in Moscow, the building in the capital wasn’t used for business purposes until 1994, which meant that, as at least one senior FBI official maintained, ‘There was no information of any kind’ emanating from the expensive equipment that had been installed.

  By this point, events behind the Iron Curtain were developing their own momentum. The final Soviet troops withdrew from Afghanistan in February 1989. In May, Gorbachev suggested that force was no longer a viable way to keep the Warsaw Pact together; the same month, the Hungarians started to tear down parts of the iron curtain of barbed-wire along the Austro-Hungarian border that had been in place for forty-three years. In June, they acclaimed Imre Nagy, the leader of the 1956 uprising, as a national hero; Solidarity, the Polish non-governmental trade union, led by Lech Walesa, gained a majority in the Polish parliament at the same time. That September, a non-Communist government was approved by the Polish parliament. The Hungarian Communist party reformed as a Socialist Party in October, with legislation created later that month that led to the creation of the Republic of Hungary.

  Across the summer of 1989, thousands of East Germans fled to Hungary to gain access to the West, before travel restrictions were imposed. Barred from Hungary, they then headed to Czechoslovakia where a huge encampment of defectors sprang up in the West German embassy compound in Prague. After the deposing of GDR chancellor Erich Honecker in October, the new leader Egon Krenz found that protests were increasing – and was informed that Moscow wouldn’t provide support to keep his regime in power. New rules regarding travel between East and West were meant to be announced by unofficial GDR spokesman Günter Schabowski, noting that journeys via a third country could be permitted, but in a press conference on 9 November, the Politburo member made an historic error and stated that East Germans could travel directly to West Germany – and that these new rules were coming into force immediately. The Berlin Wall began to crumble metaphorically within minutes, as the checkpoints were opened, and was eventually physically dismantled over the ensuing months.

  The Western intelligence agencies had to learn all about it from television news channel CNN. Markus Wolf’s Stasi had been very effective in locating and removing any potential assets that the Agency might accrue in the GDR, so diplomats in Washington, desperately trying to keep pace with events, were forced to turn to their televisions rather than their intelligence briefings.

  Over the coming months the CIA would try to turn as many former East German operatives as they could – a procedure they would also try, with limited success, in the Soviet Union as that headed towards break-up. It wasn’t always successful: some former Communist officers felt that all they had left was their honour, and asked to be left alone. Others, like Markus Wolf himself, listened politely, but ultimately turned the Agency down. There were so many defectors in the end that the CIA eventually had to tell some to simply apply through normal channels for travel to the West.

  However, the many new agents gained the CIA and other Western agencies access to materials they couldn’t have hoped for before, including the new SA-19 surface-to-air missile (SAM) that the Soviets had been developing. What they were not able to get – at that stage anyway – were the Stasi files, even though the East German security headquarters in East Berlin had been ransacked. Many of them had in fact been transferred to Moscow for safekeeping. Former enemies became allies, as the Czech agency, the StB, began cooperating with both the CIA and MI6.

  There were those within the CIA who believed that the KGB was becoming toothless, as the power of the Communist state dwindled with the rise of independence movements in various Soviet republics during the start of 1991. Former head of operations in
America Oleg Kalugin publicly criticized the KGB for its behaviour, noting that Gorbachev’s reforms would never amount to anything until the KGB’s power was reined in. The KGB tried to curb the independence movement in Lithuania around the time of the first Gulf War, when Saddam Hussein invaded Kuwait and was repelled, but this caused an outcry in Moscow and the CIA began hearing about a potential recall for some Army officers to preserve the Soviet Union. On 18 August 1991, two months after the election of Boris Yeltsin as Russian President, and as Gorbachev prepared to sign a New Union Treaty, which some believed would mean the end of the Soviet Union as they knew it, the KGB, led by Vladimir Kryuchkov, made its final move.

  Mikhail Gorbachev was cut off from the outside world at his vacation home, as tanks began to line the streets of Moscow. Russians hurried to the parliament building, the White House, as Boris Yeltsin declared that a coup had taken place. Some of the military backed Yeltsin and a battle of wills ensued – with Yeltsin undoubtedly the eventual winner. The coup was defeated, and Gorbachev, who had been effectively side-lined during the crisis, resigned as Communist Party secretary, remaining as president until Christmas Day. In perhaps the most symbolic gesture, the statue of Felix Dzerzhinsky, the first leader of the Communist secret police, was torn down from in front of the KGB headquarters at the Lubyanka. The KGB limped on for a few more weeks under General Vadim Bakatin, but as the Soviet Union dissolved, so too did the KGB’s power. Its successors in the new Russia were the Foreign Intelligence Service (SVR), the Federal Security Service of the Russian Federation (FSB), and the Federal Protective Service (FSO).