SSCI HEARINGS ON COUNTERINTELLIGENCE AND SECURITY ISSUES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90M00005R000100070022-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 27, 2016
• Document Release Date: January 11, 2013
• Sequence Number: 22
• Publication Date: July 11, 1988
• Content Type: MEMO

. . _TerLSZeRS11-- MI' A "P.,
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OCA 88-2299
11 July 1988 upifl
MEMORANDUM FOR: Associate Deputy Director for Operations for
Counterintelligence
Director, Security Evaluation Office
Director, Office of Security
Director, Community Counterintelligence and
Security Countermeasures Office, ICS.
FROM:
ZSC.E.
Office of Congressional Affairs 25X1
SUBJECT: SSCI Hearings on Counterintelligence
and Security Issues
1. Latest information from the staff of the Senate Select
Committee on Intelligence, suggests that the Committee will
hold hearings on counterintelligence and security issues
sometime during late September or early October 1988.
2. Attached for your information and use in preparing
statements for these Hearings are:
--SSCI Report entitled, Meeting the Espionage
Challenge: A Review of United States
Counterintelligence Security Programs (October 7,
1986).
--SSCI Report entitled, Security at the United States
Missions in Moscow and other Areas of High Risk
(September 9, 1987).
--Biannual Reports fo the President on the President's
Report to the Congress on the Nation's
Counterintelligence and Security Countermeasures,
Plans, Programs and Capabilities.
3. Once I have received an advance copy of the precise
agenda, I will arrange a meeting to address how we will provide
the needed statements.
Office OT Congressional Affairs
),011 CRET
25X1
25X1
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21 June 1988
MEMORANDUM FOR: The Honorable William S. Sessions
Chairman
Interagency Group/Counterintelligence \
FROM: Acting Director of Central Intelligence\
SUBJECT: Improving Our Counterintelligence and
Countermeasures Posture
1. The Chairman of the SIG(I), Director Webster, has
approved and signed to the National Security Advisor the third
biannual report for the President on the President's Report to
the Congress on the Nation's Counterintelligence and Security
Countermeasures Plans, Programs, and Capabilities. He was
pleased with the report, especially the continuing progress it
reflects toward implementation of measures to improve our
counterintelligence and countermeasures posture. 25X1:
25X1
2. While the report is an accurate one, Judge Webster and
I believe that its very positive tone may obscure some real
problems in addressing the unfinished agenda for strengthening
CI and CM. In fact, there is very little indication in the
submitted reports of problems and obstacles to further
progress.
,3. Accordingly, the Chairman of the SIG(I) would value a
personal report from you on outstanding problems in the area of
responsibility of your interagency group._
4. In short, the DCI would appreciate having from you, a
personal, uncoordinated memorandum outlining problem areas
within the purview of your interagency group. While there is
no question that significant progress has been made over the
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past year or so, we are concerned that important problems are
either being set aside or haggled to death in the bureaucracy.
If there were no such problems, this undertaking would be
unique in the history of government. To be able to address
these problems in a sensible and effective way we need more
specific information and solicit your help in that regard. We
hope you will be candid; your replies will be held tightly. We
would appreciate your report by 15 July 1988.
-61.1 ck-L-6
R bert M. Mates
cc: Director, Community Counterintelligence and
Security Countermeasures Office,
Intelligence Community Staff
25X1
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SECRET
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REPORT ON SECURITY AT THE UNITED STATES
MISSIONS IN MOSCOW AND OTHER
AREAS OF HIGH RISK
SELECT COMMI ITEE ON INTELLIGENCE
UNITED STATES SENATE
? U.S." GOVERNMENT PRINTING OFFICE
WASHINGTON: 1987
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100TH CONGRESS
1st Session
SENATE
I REPORT
1 100-154
REPORT ON SECURITY AT THE UNITED STATES MISSIONS
IN MOSCOW AND OTHER AREAS OF HIGH RISK
SEPTEMBER 9, 1987.?Ordered to be printed
Mr. BOREN, from the Select Committee on Intelligence,
submitted the following
REPORT
I. INTRODUCTION
Since its inception, the Select Committee on Intelligence has ac-
corded a high priority to security programs designed to combat the
foreign espionage threat against the United States. The Committee
has recommended a number of initiatives over the years, primarily
in four areas: (1) improving the effectiveness of counterintelligence
and security programs through budget authorization and oversight
hearings; (2) reducing the hostile foreign intelligence presence in
the United States; (3) providing a comprehensive, analytical over-
view of the entire national counterintelligence and security effort;
and (4) improving what the Committee identified three years ago as
a seriously deficient security situation at the U.S. Embassy in
Moscow.
BUDGET AUTHORIZATION AND OVERSIGHT
The Committee has believed for some time that those charged
with carrying out security programs for the national security and
intelligence communities have received neither the resources ade-
quate to fulfill their responsibilities nor the necessary recognition
for their missions. Resource constraints and inadequate staffing
limited the effectiveness of many counterintelligence and security
programs. In an attempt to address this problem, this Committee
has provided increased funding and manpower. In response to the
Committee's urging and with authorizations for counterintelligence
programs, the Federal Bureau of Investigation, the Department of
Defense, and the CIA have improved counterintelligence programs
and career opportunities. Between FY 1980 and FY 1985, over 2,200
new counterintelligence positions were created. The Committee
also authorized, and Congress approved, additional funds to
(1)
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strengthen the FBI's technical surveillance and data processing ca-
pabilities.
The Committee has urged counterintelligence analysts to recog-
nize that the threat goes beyond the traditional use of human
agents and includes collection denial and possible deception aimed
at U.S. technical systems.
Beginning in the early 1980's, the Committee supported the insti-
tution of a comprehensive, interagency counterintelligence policy
to better coordinate countermeasures against hostile intelligence
initiatives. In 1982, the Directors of the CIA and FBI instituted
measures to tighten cooperation in counterintelligence.
In 1985-86, the Director of Central Intelligence created new posi-
tions for a National Intelligence Officer and a small inter-agency
analytic staff to assess hostile deception efforts. The CIA's Director-
ate for Intelligence also established a unit to analyze the activities
of foreign intelligence services engaged in hostile actions against
the United States. These two initiatives have contributed to an ex-
pansion of Executive branch multidisciplinary counterintelligence
analysis and a heightened sensitivity to the implications of major
security breaches for intelligence analysis of the Soviet Union.
THE HOSTILE FOREIGN INTELLIGENCE PRESENCE
The Committee has been increasingly concerned about the grow-
ing number of Soviets posted in the United States for purposes of
espionage. The Committee has consistently recommended reciproci-
ty of treatment and equivalence in the size of the Soviet-bloc offi-
cial presence here and the U.S. official presence in the Soviet
Union and Eastern Europe.
In response to restrictions placed on U.S. diplomatic personnel
posted in Soviet-bloc countries, and in an attempt to keep closer
track of bloc personnel serving in this country, the Congress in
1982 passed the Foreign Missions Act. The Act created the Office of
Foreign Missions in the State Department, which was empowered
to impose restrictions and conditions upon certain foreign Embas-
sies here comparable to those imposed on counterpart U.S. Embas-
sies. This legislation also provided for certain restrictions to be
placed on travel in the United States by Soviet and other diplo-
mats, and required that diplomats' cars carry distinct license
plates, thereby enabling the FBI's counterintelligence units to mon-
itor more easily any suspect activities.
The 1985 Committee report, "Soviet Presence in the U.N. Secre-
tariat," outlined several serious aspects of Soviet espionage activi-
ties in the United States A review of bilateral equivalence resulted
in the requirement, contained in the FY 1986 Intelligence Authori-
zation Act, that the President provide the House and Senate Intel-
ligence Committees, the Senate Foreign Relations Committee, and
the House Foreign Affairs Committee with annual reports of any
disparities between the size of U.S. overseas missions and the size
and treatment accorded corresponding missions from other coun-
tries in the United States.
Committee Members introduced legislation to mandate equiva-
lency in the size of the Soviet and U.S. diplomatic missions to the
United Nations and in the size of the Soviet Embassy and consular
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and data processing ca-
rence analysts to recog-
ditional use of human
ossible deception aimed
ttee supported the insti-
anterintelligence policy
nst hostile intelligence
IA and FBI instituted
ntelligence.
gence created new posi-
id a small inter-agency
orts. The CIA's Director-
to analyze the activities
hostile actions against
ve contributed to an ex-
ary counterintelligence
e implications of major
r the Soviet Union.
CE PRESENCE
teemed about the grow-
1 States for purposes of
recommended reciproci-
of the Soviet-bloc offi-
presence in the Soviet
S. diplomatic personnel
attempt to keep closer
untry, the Congress in
ct created the Office of
which was empowered
certain foreign Embas-
ounterpart U.S. Embas-
lain restrictions to be
Soviet and other diplo-
carry distinct license
telligence units to mon-
ence in the U.N. Secre-
Soviet espionage activi-
-al equivalence resulted
36 Intelligence Authori-
louse and Senate Intel-
lations Committee, and
annual reports of any
s missions and the size
sions from other coun-
on to mandate equiva-
lomatic missions to the
Embassy and consular
3
staffs here and those of the United States in the Soviet Union. As a
consequence of the Leahy-Cohen amendments of 1985 and 1986, the
United States moved toward essential equivalence with the Soviet
Union in its diplomatic and consular presence, and the Soviet
Union was compelled to reduce sharply the size of its U.N. mission
and its diplomatic and consular presence in the United States. By
relying on the FBI to designate the specific individuals that had to
leave, the U.S. Government was able to impair the large KGB pres-
ence in both New York and Washington, D.C.
COUNTERINTELLIGENCE REPORT
In 1986, the Committee published a detailed report, "Meeting the
Espionage Challenge: A Review of United States Counterintelli-
gence and Security Programs," in an effort to stimulate improve-
ment in the protection of sensitive information from the threat of
foreign acquisition. The study was written in close cooperation with
the National Security Council Staff and the Intelligence Communi-
ty Staff, which were reviewing the same subject for the White
House. The final document contained over a hundred specific find-
ings and recommendations. The White House set forth dozens of
new security initiatives in its O'AT1 classified report on counterintel-
ligence and many proposals that had languished in the bureaucra-
cy were elevated to the policy level for consideration and adoption.
MOSCOW EMBASSY
Among other things, "Meeting the Espionage Challenge" de-
scribed the Committee's long-standing concern for the security of
the U.S. Embassy in Moscow against the hostile intelligence as-
sault of the KGB.
In June 1985, a FBI counterintelligence expert detailed in testi-
mony before the Committee the espionage opportunities enjoyed by
the Soviets because of United States employment of over 200 Soviet
nationals in support positions at the Moscow Embassy, and the cor-
responding disadvantage suffered by U.S. counterintelligence due
to the Soviet practice of employing only their own citizens in com-
parable support positions at their diplomatic missions in the
United States. At this hearing, witnesses also testified regarding
the 1984 discovery that typewriters at the Moscow Embassy had
been bugged with sophisticated electronic transmitting devices
which gave the Soviets access to some Embassy communications.
In 1985, the Committee received its first testimony indicating
that there was strong evidence that the Soviets had succeeded in
incorporating a complex and comprehensive, electronic surveillance
system into the structure of the new U.S. Embassy under construc-
tion in Moscow, even though the Intelligence Community had been
in possession of indications of such penetration since 1982.
In recognition of the need for immediate improvements, the Com-
mittee voted to authorize a $50 million supplemental appropriation
in FY 1985 for security countermeasures at U.S. overseas missions.
The Department of State objected to the provision which directed
the administration of these funds by the CIA. As finally enacted by
the Congress, the appropriation was trimmed to $35 million and
the Department of State was named as one of the agencies to
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which the money was to be allocated. The State Department, work-
ing with intelligence experts, used some of this appropriation to es-
tablish more secure procurement, storage, transport, installation,
and repair of typewriters and other equipment used in the Moscow
Embassy and other diplomatic missions abroad.
In December 1985 and October 1986 staff delegations went to
Moscow to see the situation first-hand. After inspecting both the
old and new Embassy buildings and conducting extensive inter-
views with Embassy personnel, the staff produced two reports that
detailed a still grim picture of small improvements and large re-
maining vulnerabilities.
Parallel initiatives in the Senate have contributed to an increas-
ing awareness of counterintelligence and security problems. In 1985
and 1986, Senator Chiles highlighted construction problems with
the new embassy in Moscow. As a result, Congress mandated a
structural evaluation of the new chancery by the National Bureau
of Standards. The Senate Appropriations and Foreign Relations
Committees have sent delegations to Moscow to inspect the old and
new facilities. In 1986, at the request of the Foreign Relations Com-
mittee, the General Accounting Office prepared a report on securi-
ty at U.S. Embassies overseas. Congress also passed the Omnibus
Diplomatic Security and Antiterrorism Act to fund over five years
a $2.4 billion program to strengthen security at U.S. overseas diplo-
matic posts, as well as an appropriation for the first two years of
the program.
H. SECURITY PROBLEMS AT THE U.S. EMBASSY BUILDINGS
THE CURRENT EMBASSY COMPLEX
Committee staff members who visited the Embassy complex in
December 1985 and October 1986 noted a number of significant se-
curity weaknesses, despite upgrades that had been introduced over
the last two years.
In 1985, the Committee staff found that "secure" areas were
equipped with an obsolescent alarm system similar to those used in
apartment buildings in the United States. An improved alarm
system, which had not yet been installed, had been stored in nonse-
cure space. Both the old and new alarms were dependent upon the
attentiveness and reliability of a single Marine Guard manning the
main guard post in the secure area. Committee staff also noted
that the Marine Guard Detachment did not have especially high
morale at this post.
Security awareness was seriously deficient in 1985. During work-
ing hours secure areas were susceptible to access by unauthorized
persons, alarm systems were frequently shut off, and sometimes
the doors to secure areas were left open. After working hours, fre-
quent incidents of apparent false alarms bred a lack of urgency in
responding to those alarms. By contrast, by late 1986, new locks
and alarms had been installed, and the State Department's Region-
al Security Officer had begun to make real progress toward im-
proving security awareness.
Soviet sophistication in technical penetration operations and the
uncertain physical security at the Embassy prompted concern in
1985 regarding the designated sensitive areas of the Embassy and
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Le Department, work-
s appropriation to es-
ansport, installation,
t used in the Moscow
delegations went to
inspecting both the
ting extensive inter-
iced two reports that
?.ments and large re-
ibuted to an increas-
ity problems. In 1985
ction problems with
ongress mandated a
the National Bureau
d Foreign Relations
D inspect the old and
reign Relations Corn-
d a report on securi-
passed Omnibus
fund over five years
! U.S. overseas diplo-
le first two years of
SSY BUILDINGS
;mbassy complex in
rer of significant se-
een introduced over
secure" areas were
_tar to those used in
si improved alarm
en stored in nonse-
lependent upon the
3uard manning the
ee staff also noted
ive especially high
1985. During work-
ss by unauthorized
)ff, and sometimes
working hours, fre-
lack of urgency in
1986, new locks
!)artm en t's Region-
ogress toward irn-
Terations and the
mpted concern in
the Embassy and
5
communications. By 1986, some of these issues had been addressed.
The Embassy improved adherence to proper security practices re-
garding equipment coming into the Embassy in the wake of the
1984 discovery of Soviet bugging of Embassy typewriters. Still, the
Embassy continued to conduct some of its activities in nonsecure
areas. For example, security at a warehouse where equipment was
stored was, at best, a continuing challenge.
The impression of improving, if still imperfect, security was shat-
tered in December 1986 when a Marine Guard, Sergeant Clayton
Lonetree, revealed that he had helped the KGB obtain access to
classified Embassy materials. The subsequent, well-publicized in-
vestigation has implicated other Marines and has included allega-
tions that Soviet operatives were permitted extended physical
access to the Embassy. This investigation continues and includes
the interrogation of Marine Guards and Embassy personnel, as
well as further inspection of Embassy facilities and equipment.
A worst-case assessment of the Moscow Embassy situation is
based upon the assumption that Soviet operatives were given re-
peated access, for hours at a time, to the most sensitive areas of
the Embassy. Given such access, one must assume that the Soviets
had sufficient time to penetrate the locks and alarms on those
access points. Thus, Embassy communications equipment and all
Embassy documents must be presumed to have been compromised.
The Marine Guard affair has highlighted several security short-
comings at the U.S. Embassy. Questions have been raised regarding
the selection criteria, training, and day-to-day supervision of those
guards by both Marine and State Department personnel. The long
tours, under rules preventing social contact with locals, have
proved a serious flaw. The lack of polygraphs at the end of tours
and of counterintelligence investigations when personnel were re-
lieved for infractions of the rules has meant that there has been no
effective system to detect security compromises.
The lack of an effective alarm system meant that a single human
failure point was possible for the whole security system of the Em-
bassy. By compromising very few individuals, the Soviets could po-
tentially expose the entire U.S. Embassy for penetration and ex-
ploitation. The final section of this report includes several recom-
mendations that follow from this litany of shortcomings.
THE NEW EMBASSY COMPLEX
In 1979, after two decades of negotiations, the United States
broke ground on the site of its new Moscow Embassy complex. By
1986 the residential and recreational buildings on the compound
had been completed and occupied. The chancery was partially com-
plete with the walls, floors, and roof in place but most of the me-
chanical, electrical and interior work still to come. About $23 mil-
lion of the $65 million budgeted for the chancery had been expend-
ed. Meanwhile, the Soviet Union had completed construction of its
complex in Washington and Embassy personnel had moved into
the residential quarters on Mt. Alto. It was clear from the start
that the technical countermeasures challenge would be a difficult
one. The Soviets had a well-known record of technical penetrations
of U.S. and other Western diplomatic facilities. Therefore, a pro-
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gram of technical countermeasures intended to detect any Soviet
listening devices that might be implanted in or directed against the
new Embassy was initiated. At the time, US. intelligence agencies
believed they could neutralize any bugs they might find.
Unlike the Soviets, however, the United States did not employ a
systematic, stringent security program to detect and prevent Soviet
technical penetration efforts. Some points of contrast between the
Soviet and American practices at their respective construction sites
included the following:
The Soviets changed their blueprints without warning
during the architectural bidding process and ,generally identi-
fied nothing more specific than "office area' in their design
plans. US. blueprints identified virtually all office spaces by
name, thus making clear to the Soviets which were sensitive
areas.
The Soviets used only concrete poured on site. The United
States used precast components, all of which were fabricated
by the Soviets off-site, with no U.S. supervision.
The Soviets inspected all materials on site before allowing
their use in construction, frequently calling off construction if
there were questions. The United States had a less exacting in-
spection system and was not willing to put security ahead of
maintaining the pace of construction.
The Soviets used about 30 personnel to supervise an average
daily work force of 100 Americans. The United States used 20-
30 Navy Seabees to watch 600-800 Soviet laborers.
The Soviets required detailed adherence to a preset daily
work schedule and strictly enforced a badge identification
system for American workers. The United States had no effec-
tive system for this.
The Soviets maintained tight perimeter security and used
multiple video surveillance cameras both inside and outside
the buildings under construction. The United States installed
perimeter sensors and closed circuit TV to monitor construc-
tion, but these systems were quickly disabled due to various
?mishaps,,,
The U.S. contractor employed, as a design engineer, a Soviet
emigre who returned to the Soviet Union shortly after the
project was completed. Subsequent investigations to determine
whether he may have been working for the KGB have proved
inconclusive.
By and large, U.S. countermeasures against Soviet technical pen-
etration had to be directed against a huge prefabricated structure
already in place. Despite indications as early as 1982 of extensive
Soviet bugging of the structure, Soviet workers were not removed
from the site, nor was work halted until the summer of 1985.
At this point the US. inspection effort began in earnest. Techni-
cal counterintelligence teams, assuming some bugs were active,
worked around the clock in silence, often in the dark because of
power failures, and in the cold because the building was =finished
and often unheated.
With impressive technical ingenuity and dedication, those who
managed and implemented this countermeasures program were
able to detect a truly massive Soviet program to embed electronic
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xl to detect any Soviet
or directed against the
S. intelligence agencies
, might find.
States did not employ a
tect and prevent Soviet
)f contrast between the
active construction sites
ints without warning
and generally identi-
! area" in their design
ily all office spaces by
s which were sensitive
ed on site. The United
which were fabricated
Tvision.
an site before allowing
fling off construction if
s had a less exacting in-
put security ahead of
to supervise an average
United States used 20-
t laborers.
ence to a preset daily
a badge identification
Aed States had no effec-
?ter security and used
ath inside and outside
United States installed
V to monitor construe-
isabled due to various
sign engineer, a Soviet
aion shortly after the
itigations to determine
the KGB have proved
A Soviet technical pen-
arefabricated structure
y as 1982 of extensive
'..ers were not removed
summer of 1985.
.Tan in earnest. Techni-
me bugs were active,
a the dark because of
uilding was unfinished
dedication, those who
asures program were
la to embed electronic
'7
surveillance devices throughout the Embassy building structure. In
short, the building is extensively and cleverly penetrated. While
the details of this system remain classified, it is clearly sophisticat-
ed and will be extremely difficult, if not impossible, to counter
fully.
From the outset, the KGB viewed the construction of the new
U.S. Embassy as an extraordinary espionage opportunity. There is
a well-documented, even spectacular, record of prior Soviet techni-
cal penetrations of U.S. facilities in the Soviet Union, as well as of
those of other Western powers. In the case of the new U.S. Embas-
sy, the Soviets planned and mounted the most massive, sophisticat-
ed, and skillfully executed bugging operation in history.
The Soviets apparently manipulated the protracted bilateral ne-
gotiations preceding the agreement to start construction in order to
secure optimal conditions for a thorough technical attack?and to
ensure the security of its own new Embassy site in Washington.
The KGB apparently created an elaborate bureaucratic infrastruc-
ture to conceive, develop and implement a penetration program
that would take full advantage of the opportunity. The program
planners probably drew from a large reservoir of technical exper-
tise both inside Soviet Intelligence and in other sectors of the
Soviet bureaucracy to bring to bear their best technology available
at the time.
The Soviets have demonstrated the lengths to which they will go
in diplomatic positioning, operational planning and resource alloca-
tion to compromise a U.S. diplomatic facility built in their own
backyard. The new Embassy stands as a warning and object lesson
to be heeded in planning remedial measures in Moscow and new
Embassy construction elsewhere in the Soviet bloc.
Meanwhile, the National Bureau of Standards has completed a
Congressionally-mandated assessment of the structural integrity
and quality of the new Embassy building. After reviewing the
design specifications and inspecting the site, NBS concluded that
the "structural materials and components used in the Office Build-
ing are generally of good quality. However, important deficiencies
exist in the structure that must be corrected for adequate safety
before the building is occupied." NBS concludes that if the Embas-
sy were located in Washington, DC, it would take $1,464,000 to
effect the necessary repairs, which could be completed in less than
a year. NBS does not attempt to estimate costs and time required
in Moscow. None of these estimates concerns the security-related
problems noted above.
CURRENT PERSPECTIVES ON THE SITUATION
On April 22-23, 1987, the Intelligence Committee held three
closed hearings to consider the problem of security at the U.S. Em-
bassy in Moscow and worldwide. Witnesses included the Undersec-
retary of State for Management, the Assistant Secretary of State
for Diplomatic Security, the Deputy Assistant Secretary of State
for Foreign Buildings, the recently-retired U.S. Ambassador to the
Soviet Union, the chairman of the Secretary of State's Advisory
Panel on Overseas Security (1984-1985), and appropriate officials of
the U.S. Intelligence Community.
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The Committee heard testimony that the Marine Guard compro-
mises, taken with previously existing security and structural prob-
lems in the current Embassy building, will require many millions
of dollars to repair. The Department of State has already asked for
some of those funds, and more are likely to be needed over the next
2-3 years.
Testimony presented to the Committee also indicated that it will
be difficult even to state how Soviet technical penetration of the
new chancery building might be successfully combated, let alone to
actually effect such a program of neutralization. Although several
Executive branch agencies and special boards are considering possi-
ble steps of this sort, witnesses indicated a clear lack of confidence
that any measure could guarantee a secure chancery building in
which sensitive conversations and communications would be truly
protected.
The Committee heard further testimony regarding the basic
flaws in State Department security organization and practices. One
expert witness made a strong plea for the budgetary protection of
State Department technical security programs from competition
from other State Department programs. A State Department offi-
cial conceded that the Department had Attempted, earlier in this
fiscal year, to reprogram funds out of technical security. Congres-
sional opposition had prevented that debilitating action from being
effected. It was also noted that the Bureau of Diplomatic Security
has a difficult time recruiting and retaining expert technical per-
sonnel, due to the rigidity of a Foreign Service personnel system
that is designed for categories of employees other than the sort
that are needed for technical security functions.
At the end of the series of hearings, the question of whether the
organization of the State Department for handling questions of-se-
curity should be revised was discussed. A State Department official
acknowledged that security functions in the Department are divid-
ed among three offices at varying levels within the Department, all
of which must report through the Undersecretary in order to reach
the Secretary. It was agreed that the security -functions in the
three offices be combined. A proposal based upon this idea is incor-
porated in the recommendations of this report.
III. DIPLOMATIC SECURITY AUTHORIZATION
FY '88 is the third year of the State Department's five year pro-
gram to implement the recommendations of the Secretary's Adviso-
ry Panel (Inman Report) on embassy security. Expenditures in the
first two years focused on physical security measures intended to
harden U.S. diplomatic facilities against terrorist or mob attacks.
The FY '88 authorization request, however, focuses on technical se-
curity against the hostile intelligence threat. Recent events in
Moscow certainly suggest this emphasis is appropriate, if not over-
due.
The FY '88 request include $104 million in new monies for tech-
nical security. The major categories of expenditure are as follows:
Millions
Support for positions and programs already in place plus increased costs due
to currency fluctuations and inflation $30
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Nsiboras
program increases for:
Construction security including guards and other measures to protect
construction sites 25
Technical security in new diplomatic facilities including protection
against technical penetration attempts, the replacement of foreign na-
tionals by US. citizens as computer operators, and the procurement of
specialized equipment 16
Protection of office equipment, intended for use at the Moscow Embassy
and other overseas missions, through its life cycle from procurement
to installation and repair 15
Security protection (guards, vehicles, equipment) for American officials,
including the Secretary of State, traveling overseas and foreign digni-
taries visiting the United States 8
Interagency counterterrorism research and development 9
Training of security personnel and provision of secure storage for equip-
ment prior to shipment 1
In the judgment of the Intelligence Committee, these expendi-
tures are all justified and appropriate.
The budget authorization request was developed before the
recent revelations involving the Marine guards in Moscow. The
State Department, in conjunction with the CIA and the National
Security Agency, is preparing a supplemental budget authorization
request. It will take several weeks to develop the request, which
will cover the costs of removing, replacing, and painstakingly ana-
lyzing equipment that may have been compromised as well as ren-
ovating and examining facilities that may have been penetrated.
IV. RECOMMENDATIONS
_The Committee has concluded that fundamental long-term
changes are necessary in the way the United States conducts its
mission in Moscow, other high-threat areas, and elsewhere. If secu-
rity is to become a reality in our Embassies, the short-term fixes
and patchwork approach of the past must be scrapped. Instead, the
Congress and Executive must commit themselves to a program of
institutional reforms that meet the challenge directly.
RECOMMENDATION 1: DEMOLISH THE NEW MOSCOW CHANCERY
BUILDING
Overwhelming evidence indicates that a highly organized and so-
phisticated effort by the Soviet Union has compromised the techni-
cal security of the new Chancery. A significant level of doubt will
always exist concerning our ability to conduct secure activities in
the building. There is no assurance that these problems can be
solved adequately, short of total demolition. Accordingly, the Com-
mittee recommends that the Chancery be destroyed and that plan-
ning be started to construct a secure facility.
The Committee recognizes that demolishing an office building in
which $23 million and the considerable energies of specislists in
the field have been invested is a difficult and potentially controver-
sial recommendation. However, failure to take action, even at this
late date, would obligate further sizable expenditures in the future
to no foreseeable gain. The fact that drastic remedial measures
have not, until recently, been given due consideration should not
affect the imperative to act now.
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Such an effort must be thoroughly coordinated, however, within
the diplomatic and intelligence communities of the United States
Government. We must concede less in our negotiations with the
Soviet Union in order to prevent a repeat of previous mistakes and
mismanagement. The Soviets should be put on notice that the
State Department will negotiate a new set of construction agree-
ments that meet our security requirements. Past mistakes, such as
allowing the Soviets the ability to prefabricate major sections of
the Chancery offsite and making use of Soviet construction work-
ers, cannot be repeated. Furthermore, the United States must not
allow the Soviets to occupy their new Chancery on Mt. Alto until
we can occupy a new Chancery with a reasonable assurance that it
has not been compromised. The State Department must plan for
the continued long-term occupation of the existing U.S. Embassy in
Moscow and make the structural and security modifications neces-
sary to conduct secure operations and communications.
The Committee recognizes that demanding reciprocity in regard
to the U.S. and Soviet Chancery buildings may not adequately ad-
dress security dilemmas presented by the occupation of the resi-
dences on Mt. Alto by the Soviets. The Committee suggests that
this matter merits further intensive consideration by the intelli-
gence and diplomatic communities and recommends that consider-
ation be given to removing the occupants of the residences in the
United States and the Soviet Union until such time as the security
concerns of the Committee are resolved.
RECOMMENDATION 2: CONSOLIDATE THE SECURITY, EMBASSY CONSTRUC-
TION, AND FOREIGN MISSION PROGRAMS OF THE STATE DEPARTMENT
The record demonstrates that the security and building functions
of the State Department are fragmented and are scattered in at
least three different major organizational units. This is a signifi-
cant reason for the security breakdowns in the Moscow Embassy
program. While creation of the new Bureau of Diplomatic Security
is a positive improvement of the Omnibus Diplomatic Security and
Antiterrorism Act of 1986, more _needs to be done before Congress
can be assured that security concerns are considered at the highest
policy levels and that resources are efficiently and effectively spent
in the future.
Accordingly, the Committee recommends that the Bureau of Dip-
lomatic Security, the new construction element of the Foreign
Buildings Office, and the Office of Foreign Missions be consolidated
into a single new organizational unit. Furthermore, it recommends
that this unit be directly responsible and accountable to the Secre-
tary' of State.
Furthermore, the Committee requests the Director of Central In-
telligence to certify to the Committee the security conditions of all
existing Embassy facilities, and of all new facilities prior to their
occupation.
RECOMMENDATION 3: FENCE DIPLOMATIC SECURITY FUNDING
Consolidating the management of the diplomatic security and
building function is only a first step in assuring a vigorous and suc-
cessful long-term counterintelligence effort. In addition, protection
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joust be given to the resource base of these programs in order to
foster continuity, stability, and efficiency.
Accordingly, the Committee recommends that funds appropriated
in that area should then be protected to prevent reprogrammings
or diversions to other areas of the State Department.
COMMENDATION 4: ESTABLISH A SENATE TASK FORCE FOR THE LONG
TERM OVERSIGHT OF EMBASSY SECURITY
The programs of diplomatic security and Embassy construction
cut across the jurisdictions of the Select Coniiiiittee on Intelligence,
the Foreign Relations Committee, and the Appropriations Commit-
tee. No single committee, however, is structured to conduct consist-
ent and thorough reviews of the entire range of relevant issues on
a long-term basis. Such a vacuum results in a piecemeal approach
to Embassy construction and security problems.
Accordingly, the Committee recommends that the Chairman and
Ranking Minority Members of these Committees establish a task
force to review regularly the State Department's overseas security
and buildings programs. Such a working group would periodically
review the quality and effectiveness of these programs and report
to the authorizing and appropriating Committees of Congress on
their findings and recommendations.
RECOMMENDATION 5: ESTABLISH AN OUTSIDE ADVISORY PANEL TO PRO-
VIDE AN OBJECTIVE ANALYSIS OF FUTURE EMBASSY CONSTRUCTION
PLANNING
The history of the new Moscow Embassy program is a text book
example of bureaucratic inertia, turf warfare, and inadequate
7 interagency coordination. Diplomatic objectives and time pressures
precluded full consideration of security and counterintelligence
concerns during the negotiating process. Later, the desire to com-
plete the project resulted in failure to address obvious security con-
cerns, allowing construction to continue at the Chancery until 1985
despite clear warnings as early as 1979 that the building was being
technically penetrated. A failure to defend U.S. interests against
the Soviet intelligence attack has resulted in building a complex
that is a decade overdue, $100 million over budget, and uninhabita-
ble.
Furthermore, there is no doubt that similar efforts will be made
to attack the six new Embassies now planned for construction in
FAstern Europe. This suggests the real possibility that the U.S. will
be placed in the same position with respect to these Embassies as it
is in Moscow.
Accordingly, the Committee recommends that the Secretary' of
State and the Director of Central Intelligence convene immediately
a panel of outside experts to review and analyze the plans, con-
tracts, and protocols of these proposals and make recommendations
necessary to protect the integrity of all new Embassy projects.
RECOMMENDATION 6: REVISE PROCEDURES GOVERNING THE MARINE
SECURITY GUARD PROGRAM
From the tragic revelations concerning the Marine Security
Guard detachments in Moscow and Leningrad, it is clear that both
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the State Department and the Marine Corps inadequately appreci-
ated the intelligence and security dangers inherent in long-term
duty in these locations and did not take sufficient steps with re-
spect to Marine duties and oversight.
Accordingly, the Committee recommends that the Marine Corps
make fundamental changes in the assignment and operational pro-
cedures governing Marine Security Detachments in the Soviet
Union and other hostile intelligence areas. Specifically, tours of
duty should be shortened such that no sustained tour would exceed
6 to 9 months. Assignments in these areas should be made only to
personnel with untarnished records and with previous security de-
tachment experience. To the extent feasible, married Marines
should be utilized. A program of exit polygraphing of Marine
guards for counterintelligence purposes upon completion of their
tours should be implemented.
In addition, the Committee recommends that the State Depart-
ment, in concert with Administration counterintelligence officials,
review security guard procedures in hostile intelligence areas. Con-
sideration should be given to the use of security personnel with
counterintelligence backgrounds in areas where the security threat
derives more from intelligence compromise than physical danger.
RECOMMENDATION 7: REPLACE FOREIGN SERVICE NATIONALS WORKING
AT U.S. MISSIONS IN HIGH-RISK COUNTRIES
While there are no longer any Soviet citizens working in the U.S.
Embassy in Moscow, there are still significant numbers of foreign
nationals working in our missions in Eastern Europe and other
hostile intelligence areas. Such a situation poses a well documented
security threat that cannot be tolerated.
Accordingly, the Committee recommends, as it has on previous
occasions, that the State Department take the steps necessary to
replace these foreign nationals with American workers. In addi-
tion, the Committee recommends that the State Department con-
sider alternatives to contracting out to private U.S. firms for neces-
sary replacement services. Specifically, the Department should
seek to establish its own in-house capability to operate and main-
tain its missions and should develop a creative structure to make
use of junior level personnel from many areas of government to
perform service functions overseas.
RECOMMENDATION 8: REFORM PERSONNEL POLICIES TO ENHANCE
SECURITY
An effective program of diplomatic security depends on adequate
resources, efficient management, and dedicated and competent per-
sonnel. Accordingly, the Committee recommends that the Depart-
ment of State take the necessary steps to expedite the recruitment
and retention of qualified security engineers, technicians, manag-
ers, and counterintelligence specialists. Adequate promotion oppor-
tunities must be assured. In addition, the wisdom of current De-
partmental assignment procedures should be reviewed with an eye
toward expediting the rotation of qualified personnel to diplomatic
security. Increasing the exchange of personnel with other relevant
government agencies also should be encouraged, and adequate
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training opportunities should be provided. The Committee hopes
this will contribute to a fuller understanding of the goals and per-
spectives, of all government agencies involved.
The Committee recognizes that security awareness is sometimes
not considered part of the "culture" of the foreign service. Events
show, however, that the day of "gentlemen not reading other gen-
tlemen's mail" passed long ago. Accordingly, the Committee recom-
mends that the Secretary of State strengthen Department efforts to
provide more effective security awareness and training before over-
seas assignments, increase the authority of Regional Security Offi-
cers at overseas missions, and reemphasize the ultimate account-
ability of Ambassadors for Embassy security. In cases of negligence
and malfeasance of duty, the Department of State must act quickly
to assess accountability and implement necessary disciplinary ac-
tions.
This Committee recognizes that personnel from government
agencies other than the State Department comprise a significant
part of an Embassy staff. In many cases career Foreign Service Of-
ficers are in a minority. This results in fragmentation and uneven
levels of counterintelligence training at overseas posts. Therefore,
the Committee recommends that an office be established to serve
as the focal point for security awareness and cotmterintellingence
training for all U.S. Government personnel from outside the na-
tional security arena (e.g. the Departments of Commerce and Agri-
culture), as well as from agencies under the Department of State
(e.g., AID and USIA), who are assigned to overseas missions. In ad-
dition, this office should be the final authority for judging the suit-
ability on counterintelligence grounds of personnel who are as-
signed from any agency to U.S. Embassies.
The State Department also needs to provide for greater emphasis
on the counterintelligence implications of certain conduct by Em-
bassy personnel, including Marine Guards. Cases of misconduct in
Communist bloc countries, such as fraternization or "black
market" involvement, ought to be routinely investigated, using
polygraph examinations, as appropriate, for possible indications of
espionage.
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