A Brief History of the Spy (7 page)

As part of the Potsdam Treaty which divided Germany into four sectors – run by Britain, France, the US and the USSR – Berlin itself was similarly divided. This was a constant thorn in Stalin’s side: it provided a staging-post for American and British intelligence deep in the heart of Soviet East Germany; disaffected and reluctant citizens could find a haven from Communism by claiming asylum there and it was a reminder that Stalin had failed to achieve everything he wanted from the end of the war. The Western sectors were heavily reliant on cooperation from the Soviets, and when Stalin took exception to the way in which Britain, France and America were advancing with democracy and a new currency within occupied Germany, he decided that he wanted the allies out of Berlin. Pressure on what he regarded as the weak point of the coalition might also lead to a permanent split between the various states.

A policy of harassment began: trains travelling between the non-Soviet parts of Germany and Berlin were stopped and searched; a Soviet Yak-9 fighter came too close to a British airliner, killing all aboard. On 19 June 1948, the Russians stopped all rail traffic into the city; four days later, road and barge traffic was also halted. Then they cut the electricity supplies to West Berlin. It could have been a prelude for war, but all analysis indicated that if the Western powers held firm, Stalin would eventually back down. An incredible feat of logistics ensured that the blockade of Berlin, while still materially affecting everyone within the city, never brought the Western powers near to capitulation. For ten months, a
constant stream of aircraft brought supplies along the internationally agreed air corridors over East Germany, keeping the Berliners alive.

Three months before the blockade began, at a time when the Soviets were carrying out military manoeuvres and beginning their harassment, DCI Hillenkoetter briefed President Truman:

The USSR . . . cannot expect the US and the other Western Powers to evacuate [Berlin] voluntarily. The USSR, therefore, will probably use every means short of armed force to compel these powers to leave the city.

These devices may include additional obstruction to transport and travel to and within the city, ‘failure’ of services such as electric supply, reduction of that part of the food supply which comes from the Soviet Zone . . . [T]he day-to-day developments in the immediate future will test the firmness, patience, and discipline of all US personnel in Berlin.

As a prediction of the nearly year-long crisis, it couldn’t really be bettered. It certainly seemed as if Stalin wasn’t being served with nearly as good intelligence from his people in Berlin, since he fatally underestimated the resolve of the coalition, and had little option but to back down and eventually reopen the borders.

The Cold War wasn’t the only consideration for the CIA in 1948. Events in the Middle East were the focus of attention, as Jewish forces fought tooth and nail to create an independent state of Israel. On numerous occasions during that year, it seemed as if the Arab forces would deal a decisive blow to the nascent state, which had been declared on 14 May 1948, and recognized by the US and the USSR. However, the tenacity of the Jewish people – together with aid from foreign countries, sometimes in direct breach of United Nations declarations – ensured their survival. Hillenkoetter answered
criticisms that the CIA hadn’t predicted the outcome by pointing out that no one could have anticipated the amount of overseas aid that Israel would receive.

What proved to be one of the biggest mistakes the early CIA would make came with regard to the Soviet atomic programme. Neither the CIA nor the FBI was fully aware of the extent of the spy rings that had been set up during the Second World War to elicit the information – although Alan Nunn May had been arrested following the Gouzenko revelations, he was proud in later life that he never betrayed any of his colleagues to the security forces. The Venona transcripts showed that there were others involved, but there wasn’t clear evidence as to whom – and without that information it was impossible to judge what could have been passed across.

Although the Western allies had tried to prevent German atomic scientists from being inducted to the Soviet programme at the end of the war, they knew that some key German personnel, including Dr Nicolaus Riehl of the Auer Company, Professor Gustav Hertz, and Professor Adolf Thiessen, were in Russian hands. Intelligence reports concluded that Germany’s foremost cyclotron constructor, as well as an expert in the biophysics of radiation, were also working for them. Four East German scientists who defected to the West in 1947 helped to fill in some of the gaps, and evidence obtained by covert CIA operatives suggested that plutonium production was taking place at Elektrostal, a small town about sixty miles east of Moscow, using material produced at the IG Farben plant near Berlin.

Unfortunately, the CIA’s own analysts didn’t pay much heed to that information, and instead relied on pre-war geological analyses which stated that the Soviet Union wouldn’t be able to threaten America’s near-monopoly on suitable ore. In October 1946, the CIA’s Office of Reports and Estimates suggested that ‘It is probable that the capability of
the USSR to develop weapons based on atomic energy will be limited to the possible development of an atomic bomb to the stage of production at some time between 1950 and 1953. On this assumption, a quantity of such bombs could be produced and stockpiled by 1956.’ The ORE admitted its projections were ‘educated guesswork’ but based it on ‘the current estimate of existing Soviet scientific and industrial capabilities, taking into account the past performance of Soviet and of Soviet-controlled German scientists and technicians, our own past experience, and estimates of our own capabilities for future development and production.’ Although the information received regarding the Soviets progress brought the projected date forward to a certain extent, the earliest possible date was still being given as ‘mid-1950’ with mid-1953 being the most probable. That report was dated a mere five days before the Soviets exploded their first atomic device, nicknamed Joe-1 at Semipalatinsk, a site in north-eastern Kazakhstan, on 29 August.

Internally at the CIA, the failure to predict the timing of the test firing was described as an ‘almost total failure of conventional intelligence’ by assistant director Willard Machie. Summoned before the Joint Committee on Atomic Energy on 17 October, Hillenkoetter maintained that ‘I don’t think we were taken by surprise’ – an assertion that didn’t go down too well with the members of the committee.

‘Our estimates were not too far off,’ Hillenkoetter said, explaining that the CIA assumed that the Russians didn’t begin work on an atomic programme until after the explosion at Hiroshima in August 1945, but it was now clear that they had started in 1943 – so the ORE’s estimate of five years from start to finish was still accurate. He also noted that now the Russians had exploded a bomb, it meant that they could better correlate the various pieces of information that they had. (One Senator pointed out that even ‘the Russians themselves didn’t know that they had the bomb until it went off’, unconsciously
echoing the concerns of Soviet ministers at the time, who sought reassurance that there had been the distinctive mushroom cloud before reporting to Stalin.)

At least one of the Senators present caught the mood: ‘We have not had an organisation adequate to know what is going on in the past and [the DCI] gives me no assurance that we are going to have one in the future.’

Failing to predict the rise of the Communist party and the declaration of the People’s Republic of China was another charge levelled against Hillenkoetter by the
Herald Tribune
. Once again this wasn’t accurate: the Agency had been repeatedly pointing out that the nationalist forces in China were disintegrating, and the rise of the Communist party under Mao Tse Tung was a corollary of that.

In the words of a later deputy DDI at the CIA, John Gannon:

[There was] a widely held but incorrect perception that the job of intelligence officers is to predict the future. That is not the case. Only God is omniscient, and only the Pope is infallible; intelligence officers are too savvy to compete in that league. Rather, the function of intelligence is to help US decision makers better understand the forces at work in any situation, the other fellow’s perspective, and the opportunities and consequences of any course of action so that US policymakers can make informed decisions.

Hillenkoetter’s job at the CIA was made much harder by the lack of cooperation that he received from other intelligence agencies. As he told President Truman, ‘The [military] services withhold planning and operational information from the CIA and this hampers the CIA in fulfilling its mission.’ The FBI could be obstructive, and the military sections overestimated Soviet capabilities in their own fields to ensure their own departments received the necessary support.

It wasn’t all bad news: the CIA were able to prevent a Communist party victory in the 1948 Italian elections. This wasn’t the spy work of the Second World War, sneaking behind enemy lines. However, for an American government seriously worried about the spread of Communism, it was equally important, and for the agents actively involved in passing money to contacts and other clandestine activities, it wasn’t that different in reality.

Former CIA operative F. Mark Wyatt was one of those involved in this new form of spying. As he told CNN in 1995:

The run-of-the-mill operative in the [CIA] was hopeful that we could get into a [covert] operation . . . My colleagues in the CIA, in 1946–47, when I was involved, were gung-ho. We had been in the war; we didn’t question authority – ‘Should we do it this way, should we not?’ We definitely knew that the Soviet empire was, as Reagan said, the Evil Empire, and that was it. And when we were stationed abroad . . . whether we were in Sri Lanka or we were in Iceland, we knew what our target was: it was the Soviet target. We were interested in what was going on in that country, and the connections of that country with the pervasive expansionist Soviet power.

DCI Hillenkoetter wasn’t convinced that the CIA had the authority to take an active role in the Italian election and was advised by the agency’s general counsel, Lawrence Houston, that he needed a specific mandate. This he received from the National Security Council in NSC directive 4a, which ordered the CIA ‘[to] initiate steps looking toward the conduct of covert psychological operations designed to counteract Soviet and Soviet-inspired activities’. The Special Procedures Group (SPG) was tasked with finding a way to do this.

In reality, this meant working with the Christian Democrats to defeat the Popular Democratic Front, a coalition formed by the Italian Communist and Socialist Parties. In
addition to letter-writing campaigns by Italian-Americans, propaganda broadcasts by the Voice of America warning of the dangers of a rerun of the Czechoslovakian fall into Communism, and food and grain assistance, the SPG undertook more covert operations. As Wyatt recalled:

We had bags of money that we delivered to selected politicians, to defray their political expenses, their campaign expenses, for posters, for pamphlets, what have you . . . And we did many things to assist those selected Christian Democrats, Republicans, and the other parties that were completely reliable – that could keep the secret of where their funds came from. They were talked to by CIA experts: ‘What do you say if all of a sudden you have in Turin the greatest extravaganza of propaganda? Who pays for it? Does the Fiat Corporation pay for it, or what? You’ve got to have some reason for your munificence at this time, and we don’t want an indication that it’s young Americans that are passing the money to you . . . [in] black bags.

It meant training the Italian politicians in tradecraft so that the money could be passed surreptitiously, but, perhaps to the surprise of some of the agents involved, it worked. The Christian Democrats won by a landslide – 48 per cent to 31 per cent for the Popular Democratic Front. How much of this can be ascribed to the CIA’s activities has been questioned over the years, but it was a rare victory for the early agents of the CIA to celebrate.

With the Soviet Union proving that they had the atomic bomb in August 1949, it was evident that the escalation between the two opposing forces could result in a third world war, and the fifties would see many proxy conflicts between West and East. Eastern Europe and China were held by the Communists – even if everyone in power in the countries didn’t necessarily bow down before Josef Stalin, they were of similar mindset, and to the Western intelligence agencies, they were a common foe.

All three of the main agencies involved in that conflict – Britain’s MI6, the American CIA and the Russian KGB – would undergo major reorganization in the early years of the decade. The British had to reassess their entire set-up in the light of Donald Maclean and Guy Burgess’ defection to Russia – and MI5’s strong conviction that Kim Philby was the ‘Third Man’ who had persuaded them to leave. (Philby would continue to be a problem for MI6 until his eventual departure
to Russia in 1963.) The death of Stalin in 1953 directly led to the restructuring of the Soviet State Security Service into the form in which it is best known. And the CIA had to deal with yet another failure of intelligence-gathering.

A lack of confidence in the reports coming from the CIA’s Office of Reports and Estimates had been expressed as early as Spring 1949, and it was criticized heavily for not putting together the pieces regarding the Soviet atomic test. However, it was its failure to predict the invasion of South Korea by the North Koreans of the Democratic People’s Republic of Korea (DPRK) in June 1950, and the involvement of the Chinese People’s Army in October that year that led to the departure of Hillenkoetter.

In January 1950, the CIA reported their analysis of the troop movements in North Korea:

The continuing southward movement of the expanding Korean People’s Army toward the [border at the] thirty-eighth parallel probably constitutes a defensive measure to offset the growing strength of the offensively minded South Korean Army . . . Despite this increase in North Korean military strength, the possibility of an invasion of South Korea is unlikely unless North Korean forces can develop a clear-cut superiority over the increasingly efficient South Korean Army.