[PEN-L:9455] A sign of intensifying competitive pressure?

[D Shniad <shniad@xxxxxx>]

The Los Angeles Times 				Sunday, March 16, 1997


CIA FINDS ITSELF OUT IN COLD WITH U.S. ALLIES

	Espionage: Friendly nations have halted operations on their turf.
	Communism's fall has changed game, they say.

	By James Risen, Doyle McManus, Times Staff Writers

WASHINGTON--Around the world, America's friends are sending a quiet
but stern message to the Central Intelligence Agency: The Cold War is
over, the rules of the spy game have changed, and it's time for the United
States to curb its espionage operations on its allies' turf.

At least four friendly nations have halted secret CIA operations on
their territory during the past two years, compromising U.S. spies and,
in some cases, forcing the CIA to freeze its operations and reprimand its
officers, according to people familiar with U.S. intelligence operations.

The latest blowup with a major ally came to light this month in
Germany, where a CIA officer was ordered to leave the country, apparently
for trying to recruit a German official, sources said.

In recent months, other CIA officers have been caught spying in Rome
and New Delhi, U.S. intelligence sources said.

The three blown operations came hard on the heels of a major
intelligence failure in Paris in 1995, when the French uncovered and put
an end to an economic espionage operation run by the CIA.

At least partly responsible for the blown operations may be a massive
exodus of veteran CIA officers since the end of the Cold War. That has
thinned the ranks of experienced officers and led to mistakes in what
spies call "tradecraft."

Buyouts, early retirements and other forms of turnover have left the
CIA "like a major airline trying to maintain its route schedule with
pilots from a shuttle service," said one CIA veteran. Two division chiefs
have left the CIA's Directorate of Operations, the agency's clandestine
espionage service, in recent months.

But, more broadly, U.S. officials believe that with the end of the
Cold War, America's allies are sending a signal that they no longer feel
they have to tolerate extensive CIA operations for the greater good of
the anti-Communist alliance.

In the past three years, Germany, France, Italy and Switzerland have
all pressed for a reduction in the number of CIA officers operating on
their soil, intelligence sources said.

The shift in intelligence relations with allied powers is certain to
be one of the first and most important challenges facing Anthony Lake if
he is confirmed by the Senate to be the next CIA director. In fact, the
German flap erupted on the eve of Lake's contentious confirmation
hearings, which will continue this week.

Nowhere is the change in the intelligence relationship more obvious
than in Germany. For 50 years, West Germany was the CIA's biggest base
for operations against the Soviet bloc and other "denied areas"--hostile
countries such as Iran, Iraq and Libya.

The American intelligence agency fielded hundreds of secret
operatives, many of them "undeclared"--kept secret even from the German
government. The CIA's Tehran station for operations against Iran, for
example, is still in exile in Frankfurt, known by the code name of
"Tefran."

In recent years the German government has chafed at the CIA's
continued use of its reunified territory without permission. After the
Berlin Wall came down, the CIA still kept secret from the German
government the fact that the U.S. spy agency still had covert bases all
over West Germany.

Among other things, German intelligence was apparently not notified of
Tefran's existence in Frankfurt--even though the Iran operation employed
as many as two dozen CIA personnel based in the Nazi-era headquarters of
the I.G. Farben arms firm.

What's more, after East Germany collapsed and West German intelligence
officials began to debrief their former adversaries, the East Germans
told them of secret CIA bases in East Germany that the CIA had kept
secret from West German intelligence as well.

The CIA has since closed one base in Munich and another in Leipzig, in
the former East Germany, the existence of which the U.S. intelligence
agency had concealed from the German government even after the country
was unified. But sources say other German bases remain secretly in place.

U.S.-German tensions have also built over Germany's mercurial
intelligence chief, Bernd Schmidbauer, who, many in the U.S. government
believe, has developed close and unhealthy ties to Iran. Schmidbauer has
repeatedly told U.S. officials there is no reason for the CIA to spy on
German citizens now that East Germany and the Soviet Union have been
confined to the dustbin of history.

Resentment over the extent of CIA operations is not limited to
Germany. Frustration appears to be growing in a number of European
capitals concerning the failure of the United States to reduce its
intelligence operations on the continent as much as its troops.

"The question of the U.S. intelligence presence is on the table more
broadly than just in Germany," said one senior State Department official
who asked not to be identified. "Our presence in these countries began
during the Cold War, and now the nature of our presence and our
collaborative liaison relationships are evolving in a lot of these
places."

In most countries, the official added, the issue is being handled
"both civilly and intelligently."

France is not in this category. In 1995, French intelligence publicly
humiliated the CIA when it exposed a U.S. spy operation designed to steal
secrets from French trade negotiators. That economic intelligence
operation was apparently compromised when a female officer was
identified
by French intelligence.

In the midst of the 1995 national election campaign, the French
government leaked its espionage triumph to the media, sending a message
not only to voters but also to the rest of Europe that the French were
now playing hardball with the CIA. In the past decade, one CIA source
said, the agency has decreased its personnel in France from a high of
almost 60 case officers to about a dozen today.

During the past few months, other countries have followed the French
lead, and the CIA has watched in quiet horror as one operation after
another has been blown or compromised.

In Rome, the CIA station chief and at least two other officers had to
leave last summer after Italian police, cracking down on suspected
terrorists, arrested a CIA case officer. The CIA man had been running a
recruitment operation without notifying the Italians.

Ironically, CIA officials had told the Italians about the suspected
terrorists in the first place, apparently forgetting that the CIA was
running an operation there at the same time. One CIA veteran blamed
"egregious tradecraft errors" for the blowup, which led to the compromise
of at least one sensitive CIA informant and the identification of several
CIA officers operating under cover.

At the end of 1996, the CIA's deputy station chief in India was caught
while apparently trying to recruit the chief of India's
counterintelligence service. CIA sources said the deputy station chief's
"tradecraft" mistake was to try to reach too high into the Indian
government to make an espionage recruitment--and to try to do so too
rapidly.

The CIA officer "rushed it" and "didn't vet the guy," one source said,
in part because the deputy station chief was trying to complete the
recruitment before transferring out of the country for another
assignment.

The CIA's problems at the hands of America's friends and allies pale
in comparison with the catastrophe that hit the agency's tenuous
operations against Iraq last September, when a major CIA covert action
was overrun by an Iraqi military incursion against Kurdish dissidents in
northern Iraq.

Iraqi leader Saddam Hussein's army captured the city of Irbil;
destroyed the headquarters of the Iraqi National Congress, a dissident
group that had been set up under U.S. sponsorship as an alternative to
Hussein's regime; seized high-tech communications equipment supplied by
the CIA and executed as many as 100 members of the CIA-backed group.
CIA case officers had to flee to avoid being scooped up by Saddam's
soldiers.

Problems with hard targets such as Iraq are to be expected. Espionage
blowups are not supposed to happen so frequently among friends, however.

And the new rift with Bonn is potentially the most serious of them
all.

For decades, the CIA had the run of the German countryside and enjoyed
excellent relations with the West German government, where suspicions
were widespread that Bonn's own intelligence service was badly penetrated
by the Stasi, East Germany's spy service. Former Chancellor Willy Brandt
developed close relations with the CIA in part because he believed the
agency offered a reliable back channel to Washington.

"That good feeling is all gone now," said Gregory Treverton, an expert
on Germany at the Rand Corp. think tank and the former chairman of the
National Intelligence Council, which oversees U.S. intelligence analysis
and estimates.

"Germany is reacquiring, slowly but surely, all of the attributes of
real sovereignty," Treverton said.