The Billion Dollar Spy: A True Story of Cold War Espionage and Betrayal (2 page)

I
n the early years of the Cold War between the United States and the Soviet Union, the Central Intelligence Agency harbored an uncomfortable secret about itself. The CIA had never really gained an espionage foothold on the streets of Moscow. The agency didn’t recruit in Moscow, because it was just too dangerous—“immensely dangerous,” recalled one officer—for any Soviet citizen or official they might enlist. The recruitment process itself, from the first moment a possible spy was identified and approached, was filled with risk of discovery by the KGB, and if caught spying, an agent would face certain death. A few agents who volunteered or were recruited by the CIA outside the Soviet Union continued to report securely once they returned home. But for the most part, the CIA did not lure agents into spying in the heart of darkness.

This is the story of an espionage operation that turned the tide. At the center of it is an engineer in a top secret design laboratory, a specialist in airborne radar who worked deep inside the Soviet military establishment. Driven by anger and vengeance, he passed thousands of pages of secret documents to the United States, even though he had never set foot in America and knew little about it. He met with CIA officers twenty-one times over six years on the streets of Moscow, a city swarming with KGB surveillance, and was never detected. The engineer was one of the CIA’s most productive agents of the Cold War, providing the United States with intelligence no other spy had ever obtained.

The operation was a coming-of-age for the CIA, a moment when it accomplished what was long thought unattainable: personally meeting with a spy right under the nose of the KGB.

Then the operation was destroyed, not by the KGB, but by betrayal from within.

To understand the significance of the operation, one must look back at the CIA’s long, difficult struggle to penetrate the Soviet Union.

The CIA was born out of the disaster at Pearl Harbor. Despite warning signals, Japan achieved complete and overwhelming surprise in the December 7, 1941, attack that took the lives of more than twenty-four hundred Americans, sunk or damaged twenty-one ships in the U.S. Pacific Fleet, and thrust the United States into war. Intelligence was splintered among different agencies, and no one pulled all the pieces together; a congressional investigation concluded the fragmented process “was seriously at fault.” The creation of the CIA in 1947 reflected more than anything else the determination of Congress and President Truman that Pearl Harbor should never happen again. Truman wanted the CIA to provide high-quality, objective analysis.
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It was to be the first centralized, civilian intelligence agency in American history.
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But the early plans for the CIA soon changed, largely because of the growing Soviet threat, including the blockade of Berlin, Stalin’s tightening grip on Eastern Europe, and Soviet acquisition of the atomic bomb. The CIA rapidly expanded far beyond just intelligence analysis into espionage and covert action. Pursuing a policy of containment, first outlined in George Kennan’s long telegram of 1946 from Moscow and later significantly expanded, the United States attempted to counter Soviet efforts to penetrate and subvert governments all over the world. The Cold War began as a rivalry over war-ravaged Europe but spread far and wide, a contest of ideology, politics, culture, economics, geography, and military might. The CIA was on the front lines. The battle against communism never escalated into direct combat between the superpowers; it was fought in the shadows between war and peace. It played out in what Secretary of State Dean Rusk once called the “back alleys of the world.”
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There was one back alley that was too dangerous to tread—the Soviet Union itself. Stalin was convinced the World War II victory over the Nazis demonstrated the unshakability of the Soviet state. After the war, he resolutely and consciously deepened the brutal, closed system he had perfected in the 1930s, creating perpetual tension in society, constant struggle against “enemies of the people,” “spies,” “doubters,” “cosmopolitans,” and “degenerates.” It was prohibited to receive a book from abroad or listen to a foreign radio broadcast. Travel overseas was nearly impossible for most people, and unauthorized contacts with foreigners were severely punished. Phones were tapped, mail opened, and informers encouraged. The secret police were in every factory and office. It was dangerous for anyone to speak frankly, even in intimate circles.
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This was a forbidding environment for spying. In the early years of the Cold War, the CIA did not set up a station in Moscow and had no case officers on the streets in the capital of the world’s largest and most secretive party-state. It could not identify and recruit Soviet agents, as it did elsewhere. The Soviet secret police, which after 1954 was named the KGB, or
Komitet Gosudarstvennoi Bezopasnosti
, was seasoned, proficient, omnipotent, and ruthless. By the 1950s, the KGB had been hardened by three decades of experience in carrying out the Stalin purges, in eliminating threats to Soviet rule during and after the war, and in stealing America’s atom bomb secrets. It was not even possible for a foreigner to strike up a conversation in Moscow without arousing suspicion.

The CIA was still getting its feet wet, a young organization, optimistic, naive, and determined to get things done—a reflection of America’s character.
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In 1954, the pioneering aviator General James Doolittle warned that the United States needed to be more hard-nosed and cold-blooded. “We must develop effective espionage and counter-espionage services and must learn to subvert, sabotage and destroy our enemies by more clever, more sophisticated and more effective methods than those used against us,” he said in a top secret report to President Eisenhower.
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The CIA faced intense and constant pressure for intelligence on the Soviet Union and its satellites. In Washington, policy makers were on edge over possible war in Europe—and anxious for early warning. Much information was available from open sources, but that wasn’t the same as genuine, penetrating intelligence. “The pressure for results ranged from repeated instructions to do ‘something’ to exasperated demands to try ‘anything,’ ” recalled Richard Helms, who was responsible for clandestine operations in the 1950s.
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Outside the Soviet Union, the CIA diligently collected intelligence from refugees, defectors, and émigrés. Soviet diplomats, soldiers, and intelligence officers were approached in third countries. From refugee camps in Europe, the CIA’s covert action unit recruited a secret army. Some five thousand volunteers were trained as a “post-nuclear guerilla force” to invade the Soviet Union after an atomic attack. Separately, the United States dropped lone parachutists into the Soviet bloc to spy or link up with resistance groups. Most of them were caught and killed. The chief of the covert action unit, Frank G. Wisner, dreamed of penetrating the Eastern bloc and breaking it to pieces. Wisner hoped that through psychological warfare and underground aid—arms caches, radios, propaganda—the peoples of Eastern Europe might be persuaded to throw off their communist oppressors. But almost all of these attempts to get behind enemy lines with covert action were a flop. The intelligence produced was scanty, and the Soviet Union was unshaken.
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The CIA’s sources were still on the outside looking in. “The only way to fulfill our mission was to develop inside sources—spies who could sit beside the policymakers, listen to their debates, and read their mail,” Helms recalled. But the possibility of recruiting and running agents in Moscow who could warn of decisions made by the Soviet leadership “was as improbable as placing resident spies on the planet Mars,” Helms said.
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A comprehensive assessment of the CIA’s intelligence on the Soviet bloc, completed in 1953, was grim. “We have no reliable inside intelligence on thinking in the Kremlin,” it acknowledged. About the military, it added, “Reliable intelligence of the enemy’s long-range plans and intentions is practically non-existent.” The assessment cautioned, “In the event of a surprise attack, we could not hope to obtain any detailed information of the Soviet military intentions.”
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In the early years of the agency, the CIA found it “impossibly difficult to penetrate Stalin’s paranoid police state with agents.”
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“In those days,” said Helms, “our information about the Soviet Union was very sparse indeed.”
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For all the difficulties, the CIA scored two breakthroughs in the 1950s and early 1960s. Pyotr Popov and Oleg Penkovsky, both officers of Soviet military intelligence, began to spy for the United States. They were volunteers, not recruited, who came forward separately, spilling secrets to the CIA largely outside Moscow, each demonstrating the immense advantages of a clandestine agent.

On New Year’s Day 1953 in Vienna, a short and stocky Russian handed an envelope to a U.S. diplomat who was getting into his car in the international zone. At the time, Vienna was under occupation of the American, British, French, and Soviet forces, a city tense with suspicion. The envelope carried a letter, dated December 28, 1952, written in Russian, which said, “I am a Soviet officer. I wish to meet with an American officer with the object of offering certain services.” The letter specified a place and time to meet. Such offers were common in Vienna in those years; a horde of tricksters tried to make money from fabricated intelligence reports. The CIA had trouble sifting them all, but this time the letter seemed real. On the following Saturday evening, the Russian was waiting where he promised to be—standing in the shadows of a doorway, alone, in a hat and bulky overcoat. He was Pyotr Popov, a twenty-nine-year-old major in Soviet military intelligence, the
Glavnoye Razvedyvatelnoye Upravleniye
, or GRU, a smaller cousin of the KGB. Popov became the CIA’s first and, at the time, most valuable clandestine military source on the inner workings of the Soviet army and security services. He met sixty-six times with the CIA in Vienna between January 1953 and August 1955. His CIA case officer, George Kisevalter, was a rumpled bear of a man, born in Russia to a prominent family in St. Petersburg, who had immigrated to the United States as a young boy. Over time, Popov revealed to Kisevalter that he was the son of peasants, grew up on a dirt floor of a hut, and had not owned a proper pair of leather shoes until he was thirteen years old. He seethed with hatred at what Stalin had done to destroy the Russian peasantry through forced collectivization and famine. His spying was driven by a desire to avenge the injustice inflicted on his parents and his small village near the Volga River. In the CIA safe house in Vienna, Kisevalter kept some magazines spread out, such as
Life
and
Look
, but Popov was fascinated by only one,
American Farm Journal
.
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The CIA helped Popov forge a key that allowed him to open classified drawers at the GRU
rezidentura
, or station, in Vienna. Popov fingered the identity of all the Soviet intelligence officers in Vienna, delivered information on a broad array of Warsaw Pact units, and handed Kisevalter gems such as a 1954 Soviet military field service manual for the use of atomic weapons.
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When Popov was reassigned to Moscow in 1955, CIA headquarters sent an officer to the city, undercover, to scout for dead drops, or concealed locations, where Popov could leave messages. But the CIA man performed poorly, was snared in a KGB “honeypot” trap, and was later fired.
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The CIA’s first attempt to establish an outpost in Moscow had ended badly.

In 1956, Popov was transferred to East Germany and resumed spying for the CIA, traveling to West Berlin for meetings with Kisevalter at a safe house. He again proved a remarkably productive agent. His intelligence take included the text of a revealing speech in March 1957 by the Soviet defense minister, Marshal Georgy Zhukov, to troops in Germany about the use of nuclear weapons in war. In 1958, Popov was abruptly recalled to Moscow and interrogated, and his treachery was discovered. However, the KGB kept this under wraps and used Popov to occasionally pass misleading information to the CIA. On September 18, 1959, Popov slipped the CIA a message written in pencil on eight strips of paper and rolled into a cylinder about the size of a cigarette. The message told the CIA what had happened, a courageous last act of defiance by a doomed spy. The message was rushed back to headquarters, where Kisevalter read the penciled Cyrillic on the tiny strips of paper and broke down in sobs. Popov was tried in January 1960 and executed in June by firing squad.

The second breakthrough began to unfold just two months later in Moscow, on August 12, at about 11:00 p.m.

Two American student tourists, Eldon Cox and Henry Cobb, strolled across Red Square cobblestones, still wet from a light rain, heading back to their hotel after seeing a performance of the Bolshoi Ballet, when a man came up behind them and pulled at Cobb’s sleeve, holding a cigarette and asking for a light. The man was of medium build, wearing a suit and tie, with reddish hair showing gray at the temples. He asked if they were Americans, and when they said yes, he began to speak rapidly while looking around to make sure they were not being observed. He pressed an envelope into Cox’s hands and pleaded with him to take it immediately to the American embassy. Cox, who spoke Russian, took it to the embassy that night. Inside was a letter. “At the present time,” said the writer, “I have at my disposal very important materials on many subjects of exceptionally great interest and importance to your government.” The writer did not identify himself, but enclosed a hint that he had once been stationed in Ankara, Turkey, for Soviet military intelligence. He gave precise instructions for how to contact him—with messages in a matchbox concealed behind a radiator in the entrance hall of a Moscow building. He included a diagram for the dead drop.
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The writer of the letter was Oleg Penkovsky, a colonel in the GRU, an imaginative, energetic, and self-confident officer who served with distinction in the artillery during World War II. He was now working at the State Committee for Coordination of Scientific Research Work, a government office that oversaw scientific and technical exchanges with the United States, Great Britain, and Canada and provided cover for Soviet industrial espionage and clandestine acquisition of technology in the West.