CASEY S CIA: NEW CLOUT, NEW DANGER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00845R000201190003-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 22, 2016
• Document Release Date: June 11, 2010
• Sequence Number: 3
• Publication Date: June 16, 1986
• Content Type: OPEN SOURCE

ART Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
ON PAGE A&9 V_- F WORLD REPOR
16 June 1986
CASEY'S CIA: NEW
CLOUT, NEW DANGER
Under a combative spymaster,
"the company" is back. Covert
operations are in style, and
old hands are back at work.
But controversy rises: Is the
CIA leading the nation down
a perilous new path?
rehired, and the agency is
flooded with new job appli-
cants. A morning briefing
book from Casey, replete
with charts and graphs, pro-
vides Ronald Reagan with a
daily roadmap to the world.
Few dispute that Casey
has improved the quality of intelligence
gathering and analysis, especially on
terrorism. One measure of its new man-
date is that officials outside the CIA
are eagerly assigning more tasks to the
agency. There is no doubt that morale
is shooting up within the ranks of "the
company."
But critics, increasingly vocal, argue
that change is coming at a high price.
They say the greatest danger is that
Casey is pushing the agency into covert
wars-as in Nicaragua, Angola and Af-
ghanistan-that can't be won. They as-
sert that U.S. intelligence has failed in
key countries such as Lebanon and
botched the handling of Soviet defectors.
They fear Casey will re-create a "rogue
elephant" and return the agency to its
low state of the early 1970s.
number of accused turn-
coats, including convictions
of the Walker family and
Ronald Pelton. On June 4.
Jonathan Pollard ended an-
other case, pleading guilty to
spying for Israel.
Many of these cases do
not touch the CIA itself. But
Casey wears two hats: As
director of the CIA, he is
automatically Director of
Central Intelligence. sitting
atop a pyramid that includes
the supersecret National Se-
curity Agency (NSA), the
Defense Intelligence Agen-
cy (DIA) and the National
Reconnaissance Office
^ Casey is "surely one of the heroes of
.4 merica 's fight for freedom in the post-
war era ... The revitalization of an in-
telligence community is one of the
things we celebrate here tonight. "
-President Reagan at an OSS veterans
dinner, May 29, 1986.
"I think Casey has gone off the deep
end. His program of action coupled with
his enormous power make him a very
dangerous man. "-A noted author on
intelligence issues.
To his supporters. William J. Casey is
a savior who is leading the Central Intel-
ligence Agency out of the wilderness into
a new era of prominence and power. To
his critics, he is a blustering autocrat
whose impulsiveness threatens America.
On only one thing do most agree: At
73. Bill Casey has become the most
influential director of the CIA since
Allen Dulles, whose reign ended a quar-
ter century ago. Along the way, he has
not only revived the CIA but made it a
formidable player in American policy
overseas-and the center of a growing
storm at home and abroad.
U.S. intelligence opera-
tions are now one of the
fastest growing portions of
the federal budget, expand-
ing even more rapidly than
the Pentagon's share. The
CIA is erecting a massive
new office building that will
double the size of its head-
quarters in Langley, Va.
Many old CIA hands re-
leased in the 1970s have been
Plugging leaks, nabbing turncoats
More recently, as the nation's spymas-
ter. Casey has been embarrassed by a
hemorrhaging of leaks from within the
intelligence community and revelations
that a series of U.S. officials have been
turning over American secrets to the
Soviet Union and other nations. In past
weeks, leaks have sprung regarding U.S.
eavesdropping on Libya and the Soviets
and the presence of a high-level U.S. spy
in the Polish government. Casey,
charged by law with guarding security
secrets, is lobbying hard for tougher
steps against leakers, including stepped-
up FBI probes and more lie-detector
tests, but the leaks continue. Meanwhile,
U.S. prosecutors have had their hands
full with cases against an unprecedented
(NRO). A problem in any of
these agencies winds upon Casey's desk.
With so many leaks and spy trials. it
was only a matter of time before hard-
liners in the Reagan administration col-
lided head-on with the media. That fight
has just begun, and the CIA director has
been in the thick of it. threatening prose-
cution of several news organizations.
At the eye of the storm, Bill Casey
rests easy. His office on the seventh
floor of Langley is lined with pictures of
several Presidents he has served, and
"the director," as he is known, brushes
aside the fires around him. There have
been so many over the years that Casey
seems immune to them. He speaks with
authority, and he acts as though he-
and his boss-have only a short time left
to remake the world.
It is that connection to the boss,
Ronald Reagan. that is Casey's greatest
source of power. Reagan likes Casey
for many of the same reasons that he is
drawn to White House Chief of Staff
Donald Regan: Both are bluff Irish-
men. self-made millionaires. men of
Reagan's generation who love risks and
never walk away from a fight. Casey is
even one-up: More than Regan. he is an
ideological soul mate of the President.
They have been close ever since Reagan
called in Casey to run his 1980 cam-
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
paign. Reagan rewarded him with the
CIA directorship and made him the
first head of the agency to sit in the
cabinet.
When Casey took over in 1981, the
agency had been in trouble for nearly a
decade. Its image was scarred in the
early 1970s by disclosures of assassina-
tion plots, experiments with mind-al-
tering drugs and spying on U.S. citi-
zens during the Watergate era.
Congress had reacted with budget
cuts and restrictions on the agency.
The ranks of senior agents were deplet-
ed-so much that by the time Ameri-
can hostages were seized in Iran in
1979, Washington had little sense of
what had been happening there. For-
eign sources elsewhere had cut their
ties to the CIA, fearing exposure. Mo-
rale throughout the agency was low.
Adm. Stansfield Turner, Casey's pre-
decessor under President Carter, had
focused on technical intelligence gather-
ing, lacking a mandate to restore the
agency to its prescandal status. Before
that, a series of directors under Presi-
dents Ford and Nixon in the mid-1970s
were preoccupied with limiting the dam-
age from the scandals they inherited.
Bigger budget, higher spirits
While still new on the job, Casey
quickly got Reagan's consent to over-
ride Budget Director David Stockman
and undertake an ambitious long-term
restoration. The result: A $24 billion
spy budget that has increased by some
25 percent annually. The CIA's share
of the budget is about S3 billion a year.
"Casey is a doer and risk taker who's
revived the agency's activist spirit,"
says former Director William Colby.
Under Casey,-the intelligence services
have about 16,000 employes engaged in
activities that range from analyzing sat-
ellite photos of Iranian troop movements
to undermining foreign governments.
Relatively few-albeit an important
few-are involved in the more romantic
cloak-and-dagger spying in dark corners
of Moscow and East Berlin.
There is more to the new CIA than
affluence. From Mideast terrorism to
high-tech smuggling by the East bloc,
complex new challenges are thrusting it
into new areas and altering the way it
collects and packages information. To
adapt, Casey has boosted manpower by
2,500. Two thirds of the agency's em-
ployes have been hired in the past de-
cade, giving Casey wide latitude in shap-
ing a new generation of professionals.
The CIA's higher profile and the
country's changing mood are conferring
a new respectability and sparking a surge
of new applicants-up to 150,000 a year. vices." Most helpful on terrorism are
Only 1 percent are accepted. By con- Israel, Italy, Egypt and Morocco.
trast, as many as 45,000 apply each year Less is known about the effectiveness
to the Foreign Service, and the Peace of CIA efforts to strike at Mideast terror-
Corps had 13,000 applicants in 1985. Isis through surrogates. But at least one
In his rebuilding, Casey has given project went tragically awry. The CIA
priority to restoring so-called human trained a renegade Lebanese counterter-
intelligence (HUMINT)-a CIA term rorism unit responsible for a 1984 car-
for old-fashioned spying. Casey's en- bomb blast that killed 80 civilians and
thusiasm for cloak-and-dagger action injured 200. The strike-not authorized
has been undiminished since his days of by the CIA-was aimed at a leader of the
running more than 100 agents in Eu- Shiite group believed to have engineered
rope during World War II for the Of- the bombing of the Marine barracks.
fice of Strategic Services. In sharp contrast, the U.S. is consid-
Once in command, Casey rehired ered the world's best in the two catego-
most of the 800 agents let go by ries of electronic intelligence: SIGINT.
Turner. Casey, says former CIA official the acronym for signal intelligence and
George Carver, "is attuned to the es- communications, and IMINT, for radar
sentiality of human intelligence with all and photo imagery,. SIGINT comes
its inevitable messiness." On a trip to from intercepted messages and IMINT
Central America, Casey made a point from ground and satellite stations that
of meeting with every agent in the field, provide pictures of everything from mis-
pa aneral stopping to talk with every sile deployments to highway conditions.
Despite his efforts, many respected High tech and dose analysis
analysts believe the U. S. still trails oth- Even critics give Casey high marks for
er nations in the scope and quality of upgrading the quantity and quality of
undercover activity. Natsesal Intelligence Estimates (NIE),
These same analysts say problems the basic assessments of global political,
with human intelligence account partly military aad economic trends. In 1980,
for several alleged failures- there were 12 NIE's a year. Now, there
? Lebanon: While the CIA had reason are more than 60, as well as several
to suspect that Iranian-backed terrorists hundred long-range research projects.
would eventually bomb the U.S. Marine Much of this, sources say, is due to
barracks in Beirut, it lacked informa- Deputy Director Robert Gates, who has
tion needed to prevent the 1983 attack also opened new lines to outside experts.
or to warn of its imminence. Says an In 1980, the CIA hosted two or three
Israeli intelligence source: "The CIA is academic conferences a year. Now, un-
still in the dark in Lebanon." der Gates's direction, there are up to 75.
? Grenada: Closer to home, the U.S. To aid government consumers of in-
had no clue that a faction of the ruling telligence, CIA analysts are also permit-
New Jewel Movement was plotting to ted to highlight dissenting views as well
assassinate Prime Minister Maurice as inform readers which assessments are
Bishop in 1983. The CIA also underesti- based on speculation and which on hard
mated the size of the Cuban force on the fact. Other Casey practices include a
island, complicating the U.S. invasion. weekly watch report pinpointing trou-
? Chernobyl: Despite spy-in-the-sky ble spots around the globe.
satellites orbiting over the Soviet Union, Insiders complain that Casey often
the CIA knew nothing of the recent interprets analyses to suit his views.
nuclear disaster for three days. It found Ralph McGehee, who spent 25 years in
out only when Sweden publicly prodded the agency, says flatly that Casey "has
Moscow to confirm the accident. distorted intelligence to rationalize co-
Casey has installed a sophisticated, vert operations." One senior analyst,
computerized center for keeping track John Horton, quit in protest in 1984
of terrorists, but the CIA so far has had after Casey rejected his Mexico analysis
scant success penetrating their organi- by scribbling, "This is a bunch of crap"
zations. Senator David Durenberger across it. "Casey wanted an alarmist
(R-Minn.), chairman of the Senate In- view of Mexico's stability to rationalize
telligence Committee, says the agency's U.S. goals in Central America," Hor-
greatest successes come from electronic ton says.
spying. One near success was an elec- But Casey has been known to yield
tronic interception that almost prevent- when facts tell a story he dislikes. The
ed the bombing of a Berlin nightclub. White House was unhappy to hear it
"The best stuff," Durenberger ex- when the CIA told Reagan-correctly,
plains, "comes from human sources, but as it turned out-that a boycott of a
that's almost exclusively provided by Soviet gas pipeline to Western Europe
liaison with foreign intelligence ser- would not work. Casey's record also
Continued
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
includes moments of uncanny accuracy By far the most controversial feature
as a forecaster. One example: Months of the new CIA is its aggressive leader-
before Soviet leader Leonid Brezhnev ship in U.S.-sponsored covert opera-
died. Casey sent Reagan a memo breez- tions, now consuming Sb00 million a
ily concluding in race-track form: year. The President has made Casey
"Chernenko peaked too soon. Kiri- stage manager of the so-called Reagan
lenko faded in the stretch.... If I had Doctrine-the policy of aid to rebels
to bet money, I'd say Andropov on the against Soviet-backed eoyernments in
nose and Gorbachev across the board."
Despite improvements in intelligence
gathering, Casey has stirred up a hor-
net's nest of critics, both within the
Reagan administration, where officials
anonymously-though gingerly-wor-
ry about his assertive style, and on Capi-
tol Hill. The director's relations with
Congress, though better today, have of-
ten been rocky. Beginning with charges
of personal financial irregularities, there
have been periodic calls for his resigna-
tion. The rancor peaked when Congress
found he had ordered the mining of
Nicaraguan harbors without telling key
members. "If Bill Casey were Paul Re-
vere, he wouldn't have told us the red-
coats were coming until it was in the
papers," fumed Representative Norman
Mineta (D-Calif.).
Angola, Afghanistan, Nicaragua and
Cambodia, along with lesser operations
in other countries.
Like Reagan, Casey sees covert oper-
ations abroad as a way to stem Mos-
cow's "creeping imperialism." In
speech after speech, he describes the
Mideast oil fields and the isthmus be-
tween North and South America as pri-
mary targets of the Kremlin. Moscow,
he believes, creates problems of unrest
that defy solution by diplomacy or
troops, leaving the U.S. with only one
option: Providing assistance to forces
trying to prevent consolidation by Sovi-
et-backed regimes.
Risks vs. rewards
Many critics-from Congress to for-
mer top intelligence operatives-say
the not-so-secret wars are ineffective,
creating situations the U.S. can't con-
trol and using money better spent else-
where. They also -argue that Casey's
lack of a careful strategy could allow
covert wars to escalate, dragging in
U.S. troops and compromising the na-
tion's strategic position.
It is obviously a risky strategy. Nica-
raguan contras were organized by the
CIA and the Argentine military in
1981, but as their numbers have
swelled they have proved hard to con-
trol. There have been persistent reports
of drug smuggling and human-rights
abuses by the contras. U.S. military
sources com lain that CIA
Casey in ah'earlier role, advising rebels frequently has been shoddy, con-
Reagan during 1980 presidential campaign ducted by retired military personnel
A bigger source of controyersv-and who often speak no Spanish.
the sharpest blow to Casey personally- The Pentagon's Special Forces say
they are best suited to aid paramilitary
was the redefecnon of senior KGB
oper-
ative Vitaly Yurchenko, trumpeted as
the best CIA catch in years. He walked
away from his CIA handlers at a
Georgetown bistro last November,
showing up the next day at the Soviet
Embassy to denounce the agency. Previ-
ously, Yurchenko had been debriefed for
three months. That exercise yielded in-
formation exposing several Americans
who were selling secrets to the Soviets.
L.' S. officials say Yurchenko simply
changed his mind-largely, the CIA
concedes, due to its poor handling of
him. The affair was a personal setback
for Casey, who took great interest in
Yurchenko, insisting on having meals
with him and disregarding agency skep-
tics who questioned the defector's stabil-
ity. In the scandal's aftermath, Casey
ordered a complete overhaul of the sys-
tem for dealing with defectors.
But Defense Secretary. Weinberger has
rejected CIA proposals to turn over the
covert wars to the elite Army units.
On occasion, the CIA has gone be-
yond advising. Indeed, the most disput-
ed single act of the Sandinista-contra
conflict-the 1984 mining of Nicara-
guan ports-was apparently performed
not by contras, but by CIA agents. For-
mer rebel leader Edgar Chamorro tells
of a CIA official coming to his door at
2 a.m., asking him to sign a statement
taking responsibility for the action.
The effort against Nicaragua points
up the uncertainty in all such covert
operations. In none of the publicly
known cases do the CIA-backed orga-
nizations have realistic prospects of un-
seating pro-Soviet regimes.
In Afghanistan, the U.S. investment
far exceeds that of all other covert ac-
tions combined. Since l9'9. beginning
even before the Soviet invasion late that
year, the U.S. has funneled close to s l
billion to rebels. Informed observers
say that 30 percent or more of the aid
has been stolen in the pipeline that goes
through Pakistan.
Despite that. Reagan decided last fall
to increase aid to rebels in both Af-
ghanistan and Angola, even providing
them with Stingers-hand-held, top-of-
the-line antiaircraft weapons. The CIA
director promptly flew to Zaire to set
up the aid flow to Angolan rebels. Ca-
sey spends up to a third of his time in
the field.
Not all of Casey's subordinates share
his enthusiasm for covert operations.
Insiders say John McMahon, a CIA
veteran who was the agency's No.
resigned under pressure in February
largely because of reservations about
covert activity, particularly in Central
America and Afghanistan.
With time, the big exercises abroad
have become increasingly contentious.
That makes the term "covert" decided-
ly a misnomer-and a major source of
friction with Congress.
"We're told not to discuss opera-
tions, but then we hear it come up in
White House briefings." says Senator
Patrick Leahy (D-Vt.). "It's stretching
the oversight process to the breaking
point..'
Despite complaints, Congress places
few blanket restrictions on CIA actions
abroad. The only existing restraints are
a longstanding ban on assassination of
foreign leaders and a legal responsibil-
ity to keep lawmakers "fully and cur-
rently informed of all intelligence acti, -
ities." Congress has exercised the
power of the purse, cutting off funds
for contras, then reinstating them with
the proviso that the CIA not control
the aid. If Congress. as expected. re-
news aid yet agairr, that restriction al-
most certainly will be lifted.
Moscow's response has been any-
thing but encouraging. Instead of re-
straining adyenturism. Gorbachev is
stepping it up. claim U.S. officials.
They complain that he has recently
completed a major buildup in Angola
and launched an offensi%e in Afghani-
stan, and his Sandinista friends are
hanging tough in Nicaragua.
All of this means that with equally
determined leaders such as Reagan and
Casey, the CIA will play an expanding
role in countering Moscow. Conserva-
tives will applaud and the critics will
grow more vocal, warning of dire con-
sequences for both the agency and the
country. Meanwhile, as critic John
Horton puts it. "You have to under-
stand that Bill Casey is a '3-year-old
man haying a tremendous time."' ^
by Robert A Manning -in
Steven Emerson and Charles Fenyves
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
CIA Chief Casey, right, draws his power from the best possible source
New buildings at the CIA's Langley, Va., office complex symbolize
Casey's mandate. They will add I million square feet of office
space, doubling the size of the agency's headquarters
President Kennedy awards a National
' Security Medal to Allen Dulles, retiring
head of CIA, in November, 1961
With President Nixon looking on, Wil-
liam Colby becomes intelligence chief
during the dark days for the agency
Adm. Stansfield Turner takes over for
' President Carter. Turner focused more
on technical advances, less on spies
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
4 Months before Leonid Brezh-
nev died on Nov. 10, 1982, Ca-
sey came close to predicting
the order of Soviet succession
up to today's leader, Mikhail
Gorbachev. He would bet Gor-
bachev "across the board," he
told the President. Here,
troops carry body of interim
leader Konstantin Chernenko
- Ferdinand and Imelda Marcos
before their forced exit. With a
solid spy network and sharp
analysis, the CIA foresaw the
rise of Communist rebels, ero-
sion of Marcos's support, un-
rest in the military and Marcos's
vote fraud. The result: Reagan
dumped Marcos, helping usher
in the Aquino government
I A crude mine sweeper pulls
mines placed by the CIA from
the harbor at Puerto Corinto in
Nicaragua. The mining was
one of the agency's most awk-
ward moments under Casey. It
forced him to apologize to
Congress. which he failed to
notify, and stirred world criti-
cism of the U.S. actions
- Even with its vast resources,
the CIA could not prevent the
car bombings in Beirut of two
U.S. Embassy buildings and a
Marine barracks in which 241
troops died. The most reliable
information on radical Moslem
groups-suspected in the
attacks-is provided by other
governments. including Israel
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 4RTil Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
ON PAG?U.S.\EItiS F WORLD REPORT
16 June 1986
When the critics speak, the CIA chief takes the offensive
For Casey, a long career
of weathering storms
The wonder of William Casey may
be less his buildup of the CIA than how
he kept his power through controver-
sies that might have defeated less deter-
mined men.
Since 1981. Casey has weathered
storms over his finances, the choice of a
political operative to run his clandestine
operations, the CIA's mining of Nicara-
guan harbors and his own role in Ronald
Reagan's 1980 campaign. He has
from you people." It was vintage Ca-
sey-deference rare, defiance toward
all who would rein him in.
A jealous guardian
He is very sensitive to criticism.
While attending a dinner of former Of-
fice of Strategic Services (OSS) col-
leagues, Casey erupted at Mark Wyatt,
an old intelligence hand who had criti-
cized CIA handling of defectors. Wyatt,
he snapped. was a "selfish bastard" and
fused to include $7.5 million worth of
stock in Capital Cities Communica-
tions, which later took over ABC.
The blind-trust issue opened Casey
to charges that he could be using one of
the most sensitive public positions to
line his pockets. Legality aside. say crit-
ics, he had plainly violated the spirit of
post-Watergate reforms aimed at im-
posing ethical standards. "Here's a guy
with more information about what's
going on in the world than anyone,
shifting large sums from wheat to oil,"
said a former White House aide.
"It was outrageous."
The clamor only stiffened Ca-
sey's resolve to stay in the job.
Mcfe than his personal pride was
at stake. Casey was determined
to return the CIA to the glory
days that he knew when serving
in the OSS, the agency's forerun-
ner, and all signs point toward
his staying through the Reagan
Presidency. "Every time he's
been under fire, he has been will-
ing to gut it out," said Stuart
clashed often with Congress, surviving "publicity seeker.
calls for his firing from left and right. Casey was controversial long before
Yet Casey today appears more secure he got the CIA job. As Richard Nixon's
than ever as the U.S.'s top spy. His choice to head the Securities and Ex-
secret-beyond his close ties to Rea- change Commission in 1971, he faced
gan-seems to be a combination of keen stiff congressional opposition because of
intelligence, crustiness and unswerving allegations that he had breached securi-
confidence in his own judgment. ties laws. He prevailed by convincing
Those qualities have been evident Congress that the lawsuits were trivial
most of his life. Left fatherless at an early irritants that plague any big executive.
age, the grandson of an Irish immigrant
worked his way through Fordham Uni- His stormy SEC reign led Senator
versity. While in St. John's law school, Edward Kennedy (D-Mass.) to quip that
Then. head of OSS spies in Europe
Casey was the second most outra-
geous" chairman after Kennedy's fa-
ther, Joseph P. Kennedy. As at the CIA
later, Casey brooked no meddling in his
rule.
Only five months after Casey
took the CIA command, Repub-
lican senators were calling for his
ouster. The reasons: Yet another
lawsuit over Casey's business
dealings, as well as his appoint-
ment of Max Hugel, a politician
and businessman with no intelli-
gence experience, to head clan-
destine operations. Hugel was
forced to resign.
Even more controversial was
his role in "Debate
t
"
h
ga
e,
t
e ap-
he supported himself, his mother and pearance of former President
siblings investigating welfare cases. By Carter's briefing book in the Rea-
his mid-30s, he had made his first million gan campaign before the debate
as a lawyer, tax expert and investor. between the two candid
t
i
a
es
n
At first glance, nothing about Casey 1980. Treasury Secretary James Baker,
suggests toughness. A tall, stoop-shoul- then a Reagan campaign official, said he
dered man in a rumpled suit, he some- got the book from Casey. Casey, the
times mumbles and casts a mild gaze at campaign manager, denied it. The ten-
the world through heavy glasses. With sion in their relationship endures.
his gray hair and lined face, he strikes Casey brought his most serious prob-
the casual eye as a tired executive on lem on himself by refusing to follow
the last commuter train home. standard practice and place his wealth,
But Casey is hardly mild-mannered. estimated at $15 million, in a blind
At a Washington party, he startled trust. It was two years before he relin-
guests by snapping at the head of the quished control, and then only after
Senate Intelligence Committee: "m reports that he held stock in firms that
not going to take any more of this s*** dealt with the CIA. Even then, he re-
Now, head of all U.S. Intelligence
Spencer, a former Reagan politi-
cal lieutenant. "And it worked."
Although a number of Casey's
actions have caused Reagan
problems, the White House has yet to
admonish Casey-at least publicly. "He
is too formidable," says a former presi-
dential adviser. "He wouldn't take any-
body's guff."
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
hRTit,Lt Mir
ON PAGE U.S.~;EWS E WORLD REPORT
U.S. raises the veil to combat spies, leakers, while trying to curb the media
While Willi
am Casey retools the CIA,
an unprecedented series of spy trials
has revealed that the U.S. has lost a
torrent of secrets to foreign powers.
Like tales from the most bizarre spy
thriller, disclosures of greed, betrayal
and deception are pouring from court-
rooms. More than half a dozen accused
spies have been arrested, and a manhunt
is under way for another who escaped.
By Casey's estimate, the losses have
been devastating to U.S. security. "Ev-
ery method we have of obtaining intelli-
gence-our agents, our relations with
other intelligence services, our photo-
graphic, electronic and communica-
tions capabilities-have been severely
damaged," he says. That may be hyper-
bole to mislead Moscow. But by any
measure, the losses are substantial.
Two recent trials have revealed the
disclosure of some of the nation's most
Walker betrayed U.S. codes
sensitive secrets to the Soviet Union.
According to federal prosecutors, the
Walker family spy ring for 16 years
provided Moscow with precise details
of U.S. military communications.
The Walker ring-including former
Navy men John, the ringleader, his son
Michael and brother Arthur-betrayed
wholesale the secret encoding of U.S.
Navy messages. Adm. James Watkins,
chief of naval operations, says the cost
of offsetting the compromise of tech-
nology will be $100 million.
In a second courtroom, the govern-
ment successfully prosecuted Ronald
Pelton, a former midlevel employe of the
National Security Agency, for allegedly
betraying to the Soviet Union that the
U.S. has for years been intercepting cod-
ed secret Soviet military messages.
The CIA has been particularly con-
Going public
to guard
secrets
Vurchenko waved as he redefected
to Moscow-and then disappeared
cerned about Pelton, because one of the
highest objectives in espionage is to
crack an enemy's codes. With that ac-
complished, a country can learn anoth-
er's plans. One of the most famous exam-
ples occurred during World War II
when the U.S. broke the Japanese code.
The breakthrough led to the destruction
of four Japanese aircraft carriers and
victory in the Battle of Midway. Similar-
ly, the breaking of the German code
aided the Allies' invasion of Normandy.
in retaliation for the ax
The CIA itself has not escaped the
rash of betrayals. A manhunt is under
way for Edward Howard, the first CIA
agent publicly known to have sold out
to the Soviets. After being fired by the
agency in 1983, Howard blew the cover
of a Soviet military expert spying for the
U.S. and revealed the methods of the
CIA's Moscow station. Ironically,
Howard used CIA countersurveillance
techniques to elude FBI agents guard-
ing his home in Santa Fe, N.M., last
September and is still at large.
The Soviets are not alone in harvest-
ing U.S. secrets. China and Israel ob-
tained classified documents from U.S.
spies Larry Chin and Jonathan Pollard.
Chin, an intelligence analyst who sold
U.S. assessments to Peking for 30
years, committed suicide in jail. Pol-
lard, who worked in Navv counterintel-
ligence, pleaded guilty in' early June to
spying for Israel.
The CIA's own counterintelligence
failures played at least a partial role in
the drain of information. John Walker,
Pelton and Howard all went to Vienna
to meet with KGB handlers, but, says
agency consultant Roy Godson. "We
didn't catch them there. These penetra-
tions could have been avoided by better
counterintelligence." Soviet defector Vi-
taly Yurchenko, who later redefected to
Moscow, exposed the treachery of How-
ard and Pelton to CIA interrogators.
Some intelligence analysts fear that
disclosures stemming from public trials
such as those of Walker and Pelton
may do more harm than good. Better,
they claim, to turn spies into double
agents or triple agents. Says William
Stevenson, author of A Van Called In-
Pollard spied for Israel, ,with results
roiling American-Israeli relations
trepid: "The worst effect of these trials
will be to discourage foreign nationals
from cooperating with us."
The administration plainly hopes that
by putting accused spies through public
trials, and winning stiff punishments, it
can deter other betrayals. But it also
wants to safeguard information that is
revealed in the trials.
Increasingly, the CIA's efforts to lim-
it information at spy trials-along with
growing administration concerns about
leaks of classified information-have
put the Reagan team, and especially
Casey, on a collision course with the
press. At times. that conflict has over-
shadowed the trials themselves.
Top-level officials at the CIA report
that the agency's chief public-informa-
tion officer, George Lauder, regularly
tries to persuade journalists to with-
hold details considered too sensitive by
the agency. On more than a half-dozen
occasions, Casey personally has inter-
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
vened successfully, persuading news or-
ganizations not to print or broadcast
stories he thought would damage na-
tional security.
Casey points out that he is obliged by
law to protect "sources and methods"
of intelligence gathering, and he has
publicly said that journalists are show-
ing more restraint.
Threats of prosecution
Casey has not always won, and lately
he has become even more forceful in his
campaign. The Washington Post and
other news organizations have been told
that the administration may prosecute if
the leakage continues, and Casey has
recommended prosecution of NBC.
Managing Editor Leonard Downie
of the Washington Post believes Casey's
crusade stems from growing concern in
Congress over the CIA's covert actions.
"I am a bit skeptical about Casey's
Pelton: Convicted of serving Moscow
threats against the press," Downie
says. "He could have made his con-
cerns known in a more cooperative
way. We have withheld information
many times as a result of national-secu-
rity concerns." NBC News President
Larry Grossman says the network had
broadcast last November a report
about Pelton similar to one that later
drew Casey's objections: "Apparently,
Casey didn't see that one. His threats
do not sound carefully thought out."
But even if the administration does
deflect attention from the spy trials and
covert operations, it still must contend
with the underlying causes of both
treachery and leaks: Greed, ego and the
machinations of Washington infighting.
by Robert A Manning with Charles Fenyvesi.
Steven Emerson and Jonathan Rosenbloom
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
" U.S.NEWS ~ WORLD REPORT
16 June 1986
With facts, files
Their sources range from spies and
satellites to newspaper clippings.
What they don't know they fill in
with their best guesswork.
That is how U.S. intelligence an-
alysts build "The Soviet Estimate,"
a document that, more than any
other single factor, shapes U.S.
judgments about Soviet power. It
is a respected work, but frequently
Department
of Energy 2
Department of
the Treasury 3
/ Federal
ureau o
InveBf
sttgatto
nM~aoa
Oita,
oltim
Cenral
610rMn
cow
and guesses
tration-and in some cases its pre-
decessor-has based policy:
? In September, 1985, the Defense
Intelligence Agency downgraded
its estimate on the range of the
Soviet Backfire bomber, in effect
concluding that the plane is not a
strategic weapon. That diluted the
longstanding U.S. argument for
taking the Backfire into account in
any deal to limit long-
range weapons.
? In April, the CIA ac-
knowledged that it had
regularly overestimated
yields of Soviet nuclear-
weapons tests. Charges
that the Soviet Union was
violating agreed limits on
underground explosions
became less credible.
By all accounts, it is dif-
ficult to assess Soviet
strength. Intelligence ana-
lysts often must project the
future of programs even
before the Kremlin makes
the decisions that will
shape them. Specialists
generally give the CIA
higher marks for dispas-
sion than they give the
DIA, which has consis-
tently produced more
hawkish readings. Casey
has tried to insulate CIA
analysts from public con-
troversy. Under his direc-
tion, the CIA has stopped
publishing reports from its
Defense
Intelligence
Agency
National
1sewilly
Army
intelligence
Bureau of Intelligence and Research
2 Office of Deputy Assistant Secretary for Intelligence
3 Office of Intelligence Support
The Director of Central )ntelligence runs
the CIA but also oversees the collection
of intelligence by several other agencies
,SN&WR-Basic data: CIA
the nation's Kremlin watchers
have had to issue new calculations
with embarrassing haste.
One of the most controversial
reversals came in 1983, when the
CIA announced that Soviet mili-
tary spending had grown by 2 per-
cent yearly since 1977, instead of
the 3 to 4 percent it had estimated
a year earlier. For the same period,
the growth rate of Moscow's weap-
ons purchases was found to have
been nearly flat-a far cry from the
"massive buildup" claimed earlier.
The shift infuriated some law-
makers, who claimed they had
been misled into supporting a de-
fense budget based on faulty esti-
mates of the threat.
Other revisions have scaled back
judgments on which the adminis-
regional analysis offices. "Casey
says, 'Let's keep research confiden-
tial so people can't snipe at us,' "
remarks Harvard Sovietologist
Marshall Goldman. "It's unfortu-
nate for the CIA. It's better to have
their work debated in the open."
Casey also has acted to reduce
squabbling between the CIA and
the DIA. In 1984, after competing
analysts bickered over Soviet spend-
ing, Casey approached Weinberger
with a deal: Rather than focusing on
spending, both agencies would
count the numbers of weapons-
ships, missiles, airplanes-the Sovi-
ets were producing. With the most
abstract guesswork reduced, future
disagreement is less likely.
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2
`d IL U.S.NEIvS v I ORLD REPORT
16 June 1986
11 1 11 11 it
Moscow hsadquartsrs of the KGB. At home the agency secures the
primacy of Communist leaders; abroad it collects Information
Giant of the spy industry
Moscow
Soviet KGB chief Viktor Chebn-
kov steers an intelligence appara-
tus that dwarfs William Casey's
CIA in size, scope of duties and
influence on national policies.
Chebnkov's sweeping powers are
mandated by the KGB's Russian
title: Komitet Gosudarstvennoi Be-
zopasnosti. the Committee for State
Security. To fulfill its mission-
safeguarding Communist Party rule
of the U.S.S.R.-the KGB peers
into every corner of Soviet society
while gathering foreign intelligence.
If copied in the U.S., the KGB
would embrace the CIA, the FBI,
Secret Service, Coast Guard, Bor-
der Patrol, National Security Agen-
cy and Immigration and Natural-
ization Service-plus many divi-
sions of elite troops.
From Soviet defectors comes
this profile of the KGB:
The agency's 90,000 career offi-
.ers are supported by 150.000
technical and clerical workers.
Based in Moscow, the agency has
hranches in all 15 Soviet republics.
Its annual budget is between S6
and 512 billion.
Some 10,000 agents are involved
in foreign operations, 2,500 of them
abroad. About 500 are believed to
be in the U.S., most under cover as
diplomats at the Soviet Embassy in
Washington, D.C.: at the Soviet
mission to the United Nations in
New York City, and among Soviet
employes of the U.N. itself.
In the U.S.S.R., virtually all im-
portant organizations are infiltrat-
'1
11 11 If If BE as so its ii
ed by the KGB's First Depart-
ment, which monitors personnel
activities, or by its Second Depart-
ment, charged with internal secun-
ty. Agents sift through personnel
records and watch for suspicious
actions by workers.
Grim welcome
An elite, 250,000-man uniformed
KGB military force patrols bor-
ders. Larger than the U.S. Marine
Corps, the force is equipped with
patrol boats, tanks, helicopters, ar-
mored vehicles and dogs trained to
hunt human quarry. Steely-eyed
KGB troops manning passport-
control booths are the grim greet-
ing for foreigners.
Secret-police power peaked un-
der dictator Joseph Stalin. when
the dreaded late-night knock at the
door signaled arrest and possible
execution by the KGB's predeces-
sor, the NKVD. While held in
closer check by the politicians to-
day, the KGB still plays a power-
ful role in shaping Soviet policies.
Chebrikov is a full member of the
ruling Politburo. Both he and So% i-
et leader Mikhail Gorbachev are
proteges of the late Yuri Andro-
pov. who headed the KGB before
assuming Kremlin leadership.
While KGB tactics are less bru-
tal than under Stalin. fear of the
secret police still pervades Soviet
society. It is a fear Soviet leaders
count on to guarantee order and
security, as much a part of the sys-
tem as the Politburo itself.
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP90-00845R000201190003-2