WOULD YOU BELIEVE...IRANIAN MODERATES?

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP99-01448R000301290097-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 23, 2016
• Document Release Date: May 21, 2013
• Sequence Number: 97
• Publication Date: March 1, 1987
• Content Type: OPEN SOURCE

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I
WASHINGTON MONTHLY
March 1987
When will the CIA get smart?
blAT
WOULD YOU BELIEVE..
IRANIAN MODERATES?
.T first. John Hor-
immansuntrir--
off as just another
cocktail party
anecdote. In the
summer of 1983,
over drinks at a
fellow spook's din-
ner party in
Washington, a
visiting Republican
fundraiser from California buttonholed him with
horror stories about doing business in Mexico.
The bagman knew Horton was a respected CIA
veteran, a former Mexican station chief who had
been called back from an eight-year retirement
to take over the controversial post of National
Intelligence Officer (NIO) for Latin America on
the elite inter-agency panel that turned out the
intelligence community's top-secret surveys
known as Estimates. He also knew that Horton
was working on an analysis of Mexico and the
bagman wanted to make one thing dear: Ma-
k* was on the brink of collapse lb illustrate his
point, he somberly recounted the example of his
Mexico City business partner who was so wor-
ried about the situation that he kept his private
plane constantly warmed up at the airport in case
he had to get out in a burnt
The notion of a Lear jet purring on the tar-
mac. racking up boggling fuel bills. tickled Nor-
ton's instinct for the &baud, but be didn't give
the story a second thought. Less than ayes: late;
however, he recalled it as neither humorous nor
harmless. For him, it had become ominously
symptomatic of what he saw happening at the
CIA. Furious and disillusioned, he had quit after
CIA DirectorY/1tiam Casevnrred a Mort on
Mexico rewritten to depict that country as on the
Meld MeDetteid 6 the ItIshiegtoe boom chi( fee
Madam Cemedet seeterevekbi
,7 byMMpppid . ?
?f'f
? ?
verge of toppling, a condu:sicit Horton believed
there was no intelligence evidence to support.
There were only allegationsfitsAimsy as the
Republican bagman's. Ono; when Horton pro-
tested there was no data to backup the dooms-
day scenario, a senior intelligence:official cited
a story he had heard from his Mod= maid. As
Horton recently wrote in lilt/rite/national Jour-
nal of IntelligencE and Cointterintelligence: "In
the case of Matico a half-be losd theory had taken
on the authority of gospel" -
Within the CIA it was no secret that a hidden
agenda lay at the heart of the bitter debate over
the Mexican Estimate. According to other in-
telligence officials. Casey was trying to win the
official imprimatur of the intelligence community
on plans to put the screws to a country that had
become a meddlesome foreign policy opponent.
At the time, the government of President Miguel
de la Madrid was the most vociferous critic
among the United States' Latin allies of the ad-
ministration's Central American policy. It
vehemently disapproved of aid to the contras and
was a prime mover behind the Contadora pro-
cess, the proposal for a negotiated peace with
Nicaragua that was once again showing signs of
life. With official proof that Mexico was a
menace?another Iran on America's doorstep
threatening even U.& . lecurity . with its in-
stability?Casey mortar *cod to win ap-
proval for economic and OVert actions to
destabilize its recalcitrant scriviument. 'There
was a great deal of resentmenVaf Mexico for
standing in our way on Central American policy."
says Horton. 'Mere was almost a desire to see
Mexico punished!'
Horton has been one of the feii.CIA officials
Id quit In protest over the corruption of the in-
telligence process by w* hotirms, the ad-
minstratfon's "zealotry!' YltivW?aliendyeirned
retirement, it was a luxurtite cOaktifford;* l?
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the two years since his exit, other top officials
have left the agency in discreet disgruntlement
over the direction Casey has moved the CIA. Still
more continue to chafe angrily inside, bound by
the prospect of pensions, or clinging to the belief
that they can have more effect trying to change
the system from within. But the disaffection
among analysts is widespread.
"Central America is just one example." says
Scott Armstrong of the National Security Ar-
chive. "The problem is pervasive?systematic and
across the board:.
Horton's experience was not simply a case of
sloppy professionalism or facts running afoul of
the preconceived notions of the Reagan ad-
ministration and its businessmen friends. It is the
most public example of what agency critics
charge is an increasing and dangerous politiciza-
tion of intelligence under Ronald Reagan.
Politicization of intelligence makes for far less
riveting headlines than exposes on CIA guerrilla
training manuals that advocate assassination or
the agency's mining of Third World harbors. But
the consequences ate fundamental and far-
reaching, and threaten to pervert the very mis-
sion of the CIA.
As the agency finds itself increasingly im-
plicated in the Iranian arms scandal, the
spotlight's glare is focusing on Casey's pell-mell
plunge into clandestine operations?frequently
against the advice of intelligence reports and his
own deputies. But, as many observers of the tight-
knit espionage club point out, one of the by-
products of his billion-dollar investment in covert
actions has been pressure on the intelligence com-
munity to come up with the evidence to justify
the expense. In cases like the agency's secret war
against Nicaragua, critics charge that intelligence
has been tailored to fit the Reagan administra-
tion's obsessions. During an interview with The
New York Times last year. Senator David
Durenberger, then chairman of the Senate In-
telligence Committee, took calculated aim at the
CIA's Central American assessments. Said
Durenberger: "Some of that stuff is cooked."
Some see in the anent charges a sinister replay
of the Vietnam era. when CIA analysts found
Great Society policymakers openly hostile to facts
about Vietcong strength that 'might have called
U.S. military involvement into question?and,
not incidentally, saved thousands of American
lives. By refusing to see the world in terms that
don't dovetail with its poildea. the Reagan ad-
ministration risks finding itself embroiled in
another tragic foreign misadventure with poten-
tially disastrous tesidts. Says Jeffrey Richelson,
an intelligence scholar at Washington's American
University and author of The Sword and the
Shield: "It can be very serious if you wind up in-
vading Nicaragua because you're convinced
they're going to invade 12 other countries."
Golden years
In the bowels of the CINs fortress-style head-
quarters, planted on 219 barbed-wire-shrouded
acres in suburban LingletAi' Vita' ia,' a special
passkey-activated elevatot,whhks the director of
Central Intelligence dirge* from the parking
garage to his seventh-floor penthouse suite. Using
it, he molds the agency's 3ntpressii.-v marble en-
trance lobby, where a verse fnini the Gospel ac-
cording to St. John is chiseled Into anew all: "And
ye shall know the truth aid the truth shall make
you free That lofty resolve was the CIRs cor-
nerstone when it was built an ashes of World
War IL It was founded as in intelligence, not an
operations agency, in reaction to .the worst in-
telligence failure in American history?the
Japanese attack on Pearl Harbor. Without a cen-
tralized intelligence organization. the Fortress
America over which Franklin Delano Roosevelt
presided had not put together the hints that scat-
tered U.S. military agents had been picking up
about Japan's intentions. As soon as the war was
over. Harry Ituman moved quickly to fill that
vacuum.
The CINs mission was sketched out in only a
few paragraphs of the 1947 National Security Act.
It was so vague that certain factions of the in-
telligence community periodically have de-
manded a detailed charter, either to protect the
agency or rein it in. But its fortunes have been
left to fluctuate with the whims of succeeding ad-
ministrations and the Directors of Central In-
telligence (DCII) charged with running it.
When William Casey took over in January
1981 as the most overtly political DCI in his-
tory?fresh from orchestrating Ronald Reagan's
Landslide presidential victory?the agency's for-
tunes %vac at an all-time lost During most of the
previous decade, the image of the CIA as an om-
niscient, intrepid force of clandestine Hardy Boys
had been exploded in a succession of humiliating
headlines and public congressional hearings. The
list of its failures and misdeeds had exposed the
agency's invincibility as a myth. Even one of the
CIA's most affectionate critics, Roy Godson, a
professor of intelligence studies at Georgetown
University, points oitir"There never was a great
CIA golden age when everything was brilliant
and then it all fell apart!' As William Cotb% the
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DCI who found himself at the helm when the
agency braved its most ferocious public storms,
now admits, "We made mistakes in the fifties too.
You just didn't hear anything about it:'
But when the world finally did hear. during
Senator Frank Church's 1975 committee hearings,
the most shocking revelations demonstrated that
the agency had swiftly expanded its original in-
telligence function to embrace a paramilitary zeal
and had taken to toppling unfriendly govern-
ments around the globe. Yet in virtually every case
where a covert action had ended in defeat or
disarray, it seemed the CIA had chosen to ignore
or skew its own intelligence.
From the beginning, the glamorous cloak-and-
dagger veterans who thrived under General "Wild
Bill" Donovan's wartime Office of Strategic Ser-
vices (OSS) made no secret of their scorn for the
caution of their dakbound counterparts. The
CIA was barely a year old when it launched
Operation 'Valuable: an attempt to overthrow
Enver Hoxha's regime in Albania by parachuting
Albanian refugees behind that country's moun-
tainous Iron Curtain to stir up a local revolt.
Frank Wisner, the agencies clandestine services
whiz. spurned CIA analysts' reports that "a pure-
ly Albanian uprising at this time is not indicated,
and, if undertaken, would have little chance of
success:' He leapt at the Albanian plot as a
"clinical experiment to set whether larger
rollback operations would be feasible elsewhere."
That clinical experiment ended in defeat?and
death for at least a dozen of the air-dropped
Albanians?in part because the operation was
compromised by the double-agentry of British
defector Kim Philby. But in larger part, it was
done in by the very conditions of which the CIA:s
own intelligence had warned.
Still, Wisner was not deterred. Within months,
the CIA was plotting Operation Ajax, the over-
throw of the legally constituted government of
Iranian Premier Mohammed Mossadegh, who
had just nationalized the Anglo-Iranian Oil Com-
pany. That brisk 1953 covert operation, which
reinstalled the rung. uncertain Reza Shah
Pahlavi on the Peacock Throne, marked the CINs
first paramilitary victory. So emboldened was
Director Allen Dulles by the triumph that before
it was complete he had optimistically christened
his next plot Operation Success: the ouster of
Guatemala's democratically-elected president,
Jacobo Arbon, who had expropriated 400,000
acres of hugely fallow banana plantations belong-
ing to the United Fruit Company.
Those twin victories energized the operations
branch for decades. But their success masked the
fact that such operations exacted a price. To many
inside Iran and Guatemala, the United States?
and specifically the CIA?became synonymous
with the vicious repression and torture practiced
by the right-wing regimes it had installed.
The bloom did not begin to wear off the CIA's
secret wars until the failure of Operation Pluto,
better known as the Bay of Pigs invasion. Above
all, that 1961 debacle underlined the risk of run-
ning covert operations out of the same executive
suite as intelligence gathering. When President
John F. Kennedy hesitated over whether to give
the green light to the invasion, Allen Dulles
showed Kennedy a reassuring cable from a U.S.
Marine colonel with the Cuban exile brigade
training at Puerto Cabezas, Nicaragua, who
claimed that as soon as the rebels landed, their
compatriots would rise up to join than and "melt
away" from Castro. There is reason to doubt the
authenticity of that cable, and the CIP:s Office
of National Estimates had reported no such
possibilities of Cuban support. In his embittered
memoirs, Dulles later admitted that the CIA had
purposely kept Kennedy in the dark about the
possibility that Operation Pluto might fail. As
in many later cases, the agency hadn't wanted to
risk undermining a covert action in which it had
invested so heavily.
The CIA:s top brass was not alone in taking
a cavalier attitude towards information that failed
to suit policy. As intelligence analyst Greg 'Bever-
ton of Harvard's Kennedy School of Government
has shown, when the administration made up its
mind that Salvador Allende constituted a socialist
menace in Chile, the Nixon White House ap-
peared determined not to let facts cloud that
perception. After a study of the intelligence at
the time, Ileverton concluded that, "It's pretty
clear the estimates didn't conjure up a picture of
Allende as the kind of threat that was used as
a justification for the covert action!'
Caught napping
In the tumultuous social landscape of the
seventies, the public at home and abroad came
to distrust the CIA as a sinister force. After
revelations about its role in the 'Vietnam war?
including its illicit domestic marl opening and dir-
ty tricks against the war's opponents?spilled on-
to the front pages, nadonal anger built to such
a pitch that Congress responded with the Church
and Pike committees to scrutinize the rogue
elephant of Langley. But tIke public wanted more
strict limits on the agency's covert action
capability.
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4144
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.William Colby chose to appease that demand
with secrets. In a trade-off some agency veterans
have never forgiven him for, he cooperated with
the committees, serving up documentation of the
CIA's sins, including its plots to hasten the demise
of Fidel Castro with Mafia hitmcn and exploding
cigars. "I took a conscious decision that ill tried
to stonewall, the agency wouldbe shattered," he
says. "Congress was going to pass a law saying,
"Thou Shalt Never Do Any Covert Action
Again.' "In the end, after what Colby calls "50
pages of sanctimony." the committee concluded
that?if used only when "absolutely essential to
national security" and when the operations "in
no case" contradicted official U.S. policy?
meddling in the internal affairs of other nations
should not be outlawed. Colby. an old covert
operations hand, draws himself up to full stature
in his chair as he recalls it "I consider that a full
victory," he says.
The CIA that Admiral Stansfield 'Ramer in-
herited after Jimmy Carter's election in 1976 was
an organization that had been sorely discredited.
But the furor over covert actions had in some
ways provided a distraction from the more fun-
damental intelligence failure that the months of
damaging testimony had laid bare.
In a 1975 Harper's article, former CIA analyst
Sam Adams detailed how the Pentagon and the
Johnson administration had purposely
underestimated Vietcong strength during the war.
They had both ignored and suppressed Adams's
figures that, if revealed, would have forced Lyn-
don Johnson into a politically suicidal choice?
either vastly increase the draft or pull out of Viet-
nam altogether. When Adams tried to correct the
misguided figures, he met hostility, first within
the CIA, where he received threats of dismissal,
then later from the White House itself.
On top of Adams's revelations came leaks of
secret testimony from the 1975 House Select
Committee hearings on intelligence. They
chronicled six other glaring intelligence flops?
key moments when the CIA and its sister agen-
cies was caught napping. With its vast resources
the U.S. hadn't foreseen Ho Chi Minh's bloody
Th Offensive, a turning point in the war; the 1968
Russian Invasion of Czechoslovalcia; the 1973
Middle East war; the 1974 military coup in Por-
tugal; the overthrow of Archbishop Malcarios in
Cyprus; or India's 1974 nuclear test, the first
proof that a Third World country had an atomic
bomb. In the case of the Indian atomic blast, a
Defense Intelligence analysis had reported only
months earlier that the prospect of that nation
pursuing a nucleg weapons program soon was
"not likely." As for the surprise of the Yom Kip-
pur invasion of Israel, the report concluded: "The
Mid-East war gave the intelligence community a
real test of how it can perform when all its best
technology and human skills are focused on a
known world 'hot spot.' It failed:*
When Rimer took over in the wake of that in-
dictment, he concentrated on getting the CIA out -
of the covert operations business, firing several
hunched agency employees in a purge known as
the Halloween Massa= The axe fell squarely on
the secret warriors who had earned the agency
its WISIWOry reputation. Within the corridors at
Langley, the CIA's stripped-down budget and
mission were blamed on Thrner's noticeable lack
of clout with Carter. But they were also a reflec-
tion of the times. when America was looking for
reassurance that it was a moral nation, and when
the CIA was a reminder of skeletons in the na-
tional closet. Jimmy Carta appeared uninterested
in intelligence?that is, until fist-waving Iranian
militants brought his presidency to its knees with
their hostage-taking at the U.S. embassy in
Teheran. Suddenly the U.S. was faced with the
worst intelligence failure of its postwar history.
In part, the failure was the price of a long-ago
covert action. After 25 years of propping up the
increasingly imperious and overly sensitive Shah,
the CIA had so much at stake in Iran that after
the first energy crisis in 1974 it decided the agency
couldn't risk offending him. As a result, the CIA
avoided all contact with the Shah's opponents,
the Shi'ite dissidents seething in the bazaar, for
the two crucial twilight years of his regime from
1975 to 1977. The agency never saw what any
casual tourist in Teheran could have predicted?
the looming shadow of an ayatollah on the
horizon.
That lapse was not just a case of failing to
know what was happening beneath the gilded
surface of Iran; it was also a case of not wanting
to know. For under Carter, in a different way than
would occur under Casey. intelligence had been
politicized. According to the 1979 House In-
telligence Committee report, there was "conscious
suppression of unfavorable news, but indirect-
ly.... From an analysts' perspective, until recent-
ly you couldn't give away intelligence on Iran.
Policymakers were not asldng whether the Shah's
autocracy would survive indefinitely; policy was
premised on that assumption."
That humiliating blind spot produced one swift
result. With its national pride held ransom in
lehaan, the American public wanted action.
With that swing St the pendulum. Carter
launched a volley of operations?all covert, in.
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cluding the botched Delta mission to rescue the
embassy hostages that ended in technical
breakdown and death in the desert. In the bitter
Central American debate, few critics are aware
that the intial covert action against Nicaragua's
Sandinista regime was launched in the fading
days of the Carter administration.
No sissies
It was into this abruptly changed climate that
William Casey loped in 1981. With a mandate
from the 1980 Republican platform as well as
from Reagan himself, Casey set out to inject new
muscle and life into the ailing CIA. For years the
millionaire tax lawyer had been considered an
"intelligence groupie," avidly frequenting the
fringes of the espionage world, and, under Gerald
Ford, sitting on the President's Foreign In-
. ? -
- ? -
[THE PERSONNEL PROBLEM
dward Lee Howard was hired by the CIA
in 1981, and in 1982 was selected by the
directorate of operations for assignment to
l`the most sensitive post of all, Moscow. During
his training he was told the identities of CIA
? personnel in Moscow and of at least one
F important Soviet official who was spying for the
United States. But in 1983, after being confronted
? with disturbing results from a polygraph test.
Howard admitted having used drugs and
committing some petty thefts, such as stealing
money from vending machines and from a
woman's purse on an airplane.
?He was fired. He became a heavy drinker (he
; may have been one previously), committed an
assault with a deadly weapon, and told two CIA
employees he was thinking of defecting. The
employees reported this threat to higher-ups at
the agency. Yet Howard went tutwatched until a
bear late?hen he was identified through
rinformation supplied by the Russian defector.
Vitaly Yurchenko. Even so, Howard was allowed
t to escape to Moscow, the Soviet official who had
t been our spy was executed, and several CIA
1.agents were expelled from Russia.
Edwin P. Wilson was hired by the CIA in 1955.
'He worked for the agency for the nett 16 years
and then was hired by the Navy for one of its
tsectet spy operations. He then became involved
In the weapons business, in which he was
: associ-
pow!, with two old friends who rose to high
lions ha the CIA: Thomas Clines- and
Theodore Shackley. Shackley became the
1
number-two man in the directorate of operations,
and also was rumored to be in line to be director
telligence Advisory Board. But he drew his main
inspiration for the job from the undercover
derring-do he had savored as one of "Wild Bill"
Donovan's trusted OSS lieutenants in wartime
London. dropping agents behind enemy lines and
basking in Donovan's credo: "In an age of bullies,
we can't afford to be sissies."
Casey personally supervised the revamping of
both the CIA's intelligence and operations direc-
torates, leaving other tasks to his deputy, Admiral
Bobby Ray Inman, a respected intelligence pro-
fessional who parted ways with him within a year
and a half. Presiding over the biggest build-up
of the intelligence community since the agency's
inception, Casey more than doubled the total in-
telligence budget, pushing it toward an estimated
S24 billion in 1986. With annual increases of up
to 20 percent a year, the growth of the CIA's
spending power outstripped the Pentagon's.
7^:::::??'!":???? - ?
by Charles Peters
? . -
of the entire agency.":? -*- ? " ?
Yet Wilson was a terrible man. He became
wealthy, and bought a large estate in the fanciest
part of the Virginia hunt country even though his
government employment paid him a maximum
of S32,000 a year. He sold guns and bombs to
Kadaffi that were used in terrorist operations. He
twice tried to arrange the murder of the U.S.
attorney who was investigating him.
Yet, not only was he close to senior CIA offi-
cials during much of this time, even after he left
the Navy job and was running his own arms busi-
ness, another CIA employee, William Weisen-
berger, supplied him ten miniature detonators of
the most advanced design. Another CIA agent.
Patry E. Loomis, moonlighted as a part-time
Wilson employee. Wilson also worked with Frank
Tema, the former CIA agent who sold 1Cadaffi
the guns that killed the young policewoman in
front of the Libyan embassy in London.
How did people like Howard. Wilson, and
lirrpil get hired? How were Howard and Wilson
selected for important assignments? Why was ?
Howard so quickly given access to life-and-death
information about our Russian connections?
What kind of men vmre Shackley and Clines and
--Weisenberger and Loomis?an CIA employees,
remember?if they were friends and associates
with a man like Wilson? What are we to think
of the fact that Clines, in a major way. and
Shackley, to a lesser extent, turned up as
? participants in the abortive 198546 arms for
hostages deal with Iran't.Fhat dOes all this say
about the CIA and the Mud of people who work
? for it?
tcs-A
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Casey went on a hiring spree, boosting manpower
by one-third, returning it to the highs of the Viet-
nam era. Many of those lured back were the
familiar facts from the agency's paramilitary past
excised by Thrner; in fact, some of them are now
resurfacing in the Iranian arms scandal.
Tb observers, the most obvious mark of Casey's
tenure was the dizzying expansion of the Direc-
torate of Operations?the DO or, as It is
euphemistically known in Langley, the "interna-
tional affairs division!' Under him, covert ac-
tions, which the Reagan administration preferred
to dub "special activities." again boomed; six
years later, an estimated 50 are now in full swing.
By rebuilding the agency's status and morale,
Casey won a loyalty that has made even those
who are horrified at some of his later directives
reluctant to criticize him. "When Casey came in,
he returned everybody to the good old days." says
a former CIA employee "He generated a lot of
nostalgia and everybody loved it. The trouble is
that nostalgia was probably not the best thing for
the agency, because, of course, the times had
changed!'
In a speech to New York's Metropolitan Club
in May 1985, William Casey aired his global
perspective. Privy to the most sophisticated data
and analysis in the Western world, he nonetheless
blamed "Marxist-Leninist policies and tactics"
and the Soviet Union's "subversive war" for
"famine in Africa, pestilence through chemical
and biological agents in Afghanistan and Indo-
China, war on three continents, and death
everywhere." In a blanket indictment he charged
that "in the occupied countries?Afghanistan,
Cambodia. Ethiopia, Angola, Nicaragua?in
which Marxist regimes have been either imposed
or maintained by external force... has occurred
a holocaust comparable to that which Nazi Ger-
many inflicted in Europe some 40 years ago."
That world view, unsullied by fact or nuance
and firmly rooted in World War II?merely
substituting the Soviets for the Nazis as the
villians?had won Ronald Reagan's eat Casey
saw his task as not simply supplying the presi-
dent the information and analyses necessary to
forge foreign policy; as a trusted conservative
strategist and the rust DCI ever awarded a seat
in the Cabinet, he became a player in formulating
policy. Some observers saw in that distinction an
inherent conflict of interest. Was Casey represent-
ing the CIA's case to the president, or was be im-
posing the president's policy on the agency?
Stansfield lltrner had believed that "the ethic of
Intelligence is independence from policy." but
Casey and his White House allies spurned that
"traditionalist" view as out of date. They made
no secret of their determination to make in-
telligence better serve decision makers. That
radical shift occurred as Casey led the CIA into
a key role at the cutting edge of secret diplomacy
Covert actions were becoming not just hand-
maidens to foreign policy. but in some cases like
Central America, the foreign policy itself. As one
'congressional source with close ties to the agen-
cy notes, "The operations side has been driven
by and large by Mr. Casey's view of the world."
That same world view also guided an overhaul
of the analysis side of the CIA. From the age of
23, information had been Casey's game. In his
first job writing for a Washington newsletter that
alerted businessmen to upcoming legislation, he
learned how to couch the most complex legalese
in simple terms. Later, he made his fortune by
founding the Institute for Business Planning,
publishing under his own signature dozens of
handbooks on real estate strategies and the merits
of mutual funds for corporate readers. Al the
time he took over the CIA, the handbooks were
still netting him $300,000 a year in royalties.
His canny appreciation of how to package
knowledge to meet the needs of an audience was
particularly useful when he became director of
Central? Intelligence. The intelligence
community?through the inter-agency National
Intelligence Council that reported directly to
Casey?turas out top secret National Intelligence
Estimates (NIEs) aimed at a select clientele: a
handful of top officials, Cabinet members, the
Joint Chiefs of Staff and?the most important
customer of all?the president.
But when Casey arrived in Langley in 1981, the
estimate process was in disrepute. It was widely
regarded as a cautious unwieldy bureaucracy
filled with Ivory ibwer idealists and bogged down
by its own lengthy review systems. Its reports were
frequently plodding and book-length, riddled
with countless footnotes that recorded dissenting
views of the various intelligence agencies. As
secretary of state, Henry ICissinger had dismissed
them as "talmudic documents" and made no
secret of the fact that he filed them in the
wastebasket.
Even Casey's most bitter critics credit him with
whipping the estimate process into better shape
He reorganized analysts into regional groups for
easier consultation. and 'Mended their mandate
to study a vast range of subjects the CIA had
never bothered with, including terrorism and
drugs. the Reagan iktinistration's pet peeves.
Haunted by the spectre of the CIRs intelligence
failure in Iran, he elevated dissenting opinions
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from the footnotcs to the main body of the urns.
Most important, the NEEs became more frequent,
increasing from a mere dozen under Stansficld
Thaler to a hundred a year. For a president who
had no patience for complexity or ponderous
briefing books, Casey served up intelligence in
palatable mini-memo form with a summary of
the estimate's conclusions at the top. Reagan, the
consummate fan of a well-told yarn, also found
his daily CIA briefings lively and anecdotal;
Casey loved to cite Donovan's dispatches to
Roosevelt, which were peppered with hyperbole
and hype.
The director made no seem of the fact that
he had a hand in revamping the estimates. When
he took exception to one, it wasn't unusual for
him to cancel his entire day's agenda and bark
out a volley of stinging, even insulting, com-
mands to his aides demanding fixes and rewrites.
"We used to be in his office fighting things out,"
says Herbert Meyer, a onetime Fortune editor
Casey brought in to manage the estimates.
"Fighting over a particular paragraph!'
One of Casey's most bitter battles occurred
soon after his arrival. Then-Secretary of State
Alexander Haig had just publicly denounced the
Soviet Union as the fountainhead of global ter-
rorism, an opinion Casey shared. Inspired by
Haig's rhetoric, the DCI's office commissioned
the agency's rust terrorism estimate. The result
failed to back up Haig's or Casey's thesis. Casey,
who had the final veto on the National In-
telligence Council, promptly ordered a series of
redefinitions and rewrites. He took the estimate
out of the hands of his national intelligence of-
ficer for terrorism and gave it to an influential
ne..vcomer, Lincoln Gordon. the very conservative
former ambassador to BraziL In case anyone
missed his point, Casey issued a memo advising
the analysts to read journalist Claire Sterling's
just-published book, The 7b7or Network, which
he thought had gotten the Soviet connection
right.
Gordon's revised terrorism estimate still failed
to prove the DCTs case. Casey didn't hide his
fury. Admits Meyer: "We were dissatisfied with
the final product." Still. Casey finally signed off
on the estimate?some speculate because It was
leaked to The New York limes?and analysts
congratulated themselves that the integrity of the
intelligence system had withstood political
pressure. But four years later. Casey remained un-
convinced by his own =pests' assessment. "A
Soviet connection may seem very shadowy to
some," he declared. "but it seems wry close to
me."
cascy's penchant for seeing the sinister hand
of the Kremlin behind most global events
troubled his analysts. Jealous of their profes-
sional independence, many veterans have come
to worry about the insidious effect of that mind-
set. "You hear a lot of people inside complain-
ing that there's an anti-Soviet twist being put on
everything," says Jay Peterzell of the American
Civil Liberties Union. "What they fear is that it's
becoming an institutionalized bias. People see
that if they put that twist on things, it's a way
of getting ahead."
Indeed, there have been visible rewards for
those Casey found like-minded. After hiring
Meyer?whose hard-line views had been on
display as Fortune's Soviet editor?he promoted
him over much older and more seasoned in-
telligence professionals to manage the prestigious
National Intelligence Council. Casey also
brought in Fritz Ermath, a controversial hawk
who had won a reputation on the Carter National
Security Council for his implacable suspicions of
Moscow as the council's national intelligence.of-
ricer for the Soviet Union.
Some observers charge that Casey also
imposed the administration's policy biases by
subtler means. Analysts complain that they have
been asked to count all Soviet trucks as military
vehicles. Others have been ordered to pursue ar-
cane statistics that would later appear in one of
the president's red-scare speeches. "They're be-
ing manipulated by internal tasking," says Scott
Armstrong. "If I'm told every week I have to do
an update on weapons shipments to El Salvador,
I don't have time to write about the strength of
the contras. It puts me out of action for other
things; it neutralizes me."
When Casey took over the CIA, conservatives
scorned the agency as a dangerously liberal force
in the volatile East-West strategic debate. Among
Republican right-wingers, its long record of cau-
tionary readings on Soviet military strength and
intentions?consistently lower than the Pen-
tagon's?had earned it a reputation as a tool of
the arms control crowd.
Under Casey, the CINs Soviet estimates have
become more hawkish, although still not hawkish
enough for some conservatives like Senator Jesse
Helms. But they have been instrumental in justi-
fying the biggest peacetime military build-up in
American history. In the summer of 1985, with
the Pentagon's budget under assault in Congress,
the White House found it convenient to order the
declassification of the final summary of the top-
secret estimate on Sovietittategic forces, which
It promptly published. "
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But experts agree that intelligence is being cut
most disturbingly to fit the administration's pas-
sions about Nicaragua. Soon after Casey's arrival
at the CIA. he dispatched his first chief of the
National Intelligence Council's Latin American
division to teach at Georgetown University, pro-
nouncing him, according to one of his former
staff members, not "activist enough." In his
stead, the director appointed Constantine
Menges, known for his rabid anti-Soviet articles.
Menges proved so activist that one Senate In-
telligence Committee staff member recalls him
as "more of a propagandist than anything else."
Agency professionals, who try to easefully in-
sulate themselves from partisan policy interests,
vcre horrified at being dragged up to Capitol Hill
to back up Menges's artravagant claims of Soviet
subversion. "They'd come back dose to tears,"
remembers one of their colleagues. "There was
a near mutiny in the Latin American division."
M early as two months after his inauguration.
Reagan had signed a presidential "finding "?the
declaration that since 1980 has required that Con-
gress be notified of each covert action?
authorizing a clandestine operation against the
Sandinistas. By November of that same year,
another "finding" expanded on the first to orate
the contras, a force of 1.500 Nicaraguan refugees,
recruited and trained by the CIA with help from
the Argentine military?for an initial price tag
of $19 million. Those "findings" justified the
contras' existence as a force to halt the massive
flow of arms from Nicaragua to the leftist guer-
rillas in El Salvador.
But three years later, former CIA analyst David
MacMichael attacked that claim, charging that
at the moment the contras were mated in-
telligence showed there was no massive arms flow
to the Salvadoran rebels from Nicaragua. A one-
time counter-insurgency- specialist in Thailand
who was brought into the National Intelligence
Council in 1981. MacMichael protested to his
superiors that he had called up all the files on
arms traffic between the two countries and found
it had virtually halted. He was assured that the
agency had technical evidence?too highly
classified for him to see. Besides, as one official
told him, "Everybody knows there are arms com-
ing into El Salvador from Nicaragua!' "Bob,"
MacMichael says he replied, "what everybody
knows isn't intelligence work."
Although the administration has failed to pro-
duce evidence to back up its claim, and despite
the fad that it has since changed its official ra-
tionale for the contras' existence, some in-
telligence experts still question MacMichael's
assertions. His vociferous opposition to U.S.
policy in Central America has made him a con-
taversial figure. His clams have also been under-
cut because he didn't speak out until 1984, a year
after he had left the agency when his contract
wasn't renewed because, he says he was told, his
standards were "possibly too high."
But a full two years before MacMichael burst
into the headlines, loud alarms over the CIA's
Central American assessments had prompted
Rep. Edward Boland's intelligence subcommittee
to commission a study. Its report, while couched
in cautious and balanced bureaucratese, was
highly critical. Among other flaws, it found "col-
orful but imprecise language was substituted for
necessary analysis" and decried "a few products
whose primary purpose appears less to inform
policy choices than to help mobilize support for
policy." The Boland committee asserted that its
purpose had been merely to "sound an early note
of concern" over such politicization of in-
telligence. But from all reports, that early warn-
ing failed to deter Casey, who regarded congres-
sional oversight as an uppity annoyance.
Mexican standoff
When John Horton was called back to the
agency in the spring of 1983 to take over the post
of Constantine Menges, who had been promoted
to the NSC, he was a known supporter of the ad-
ministration's policies in Central America. But
early on he began to fed pressure. Summoned to
an emergency meeting of the intelligence com-
munity to survey data on the Sunday after 7,000
U.S. troops invaded Grenada, he and his col-
leagues concluded that the administration's pre-
invasion estimates on the number of Cuban
soldiers stationed there had been widely exag-
gerated. But when they submitted their final
scaled-down figure, one that has since been of-
ficially accepted, Herbert Meyer told Horton, "I
think it stinks." Casey himself called the statistic
"unimaginative!' As Horton put it, "I can only
suppose that the assessment was itmimaginative
because of what it did not say"?that Cuban
construction workers on the island didn't count
as combat troops. An additional sin may have
been that the figure happened to agree with one
Fidel Castro had quoted. As an official pointed
out to HOI100, it couldn't be right: "Castro lies,
you know."
Still, that incident hadn't prepared Horton for
his experience on the Mexican enimate. At first
the pressure was low-key:11e found that Meyer
had circumvented him by consulting directly with
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a junior analyst sifting Mexican intelligence.
Meyer's office also repeatedly asked Horton's for
rewrites. "They don't come right out and tell you
what they want." says another former analyst.
"Otherwise there'd be a rebellion. They say,
'Don't you think you should reocamine this part,
put a little more emphasis on that?'" Casey
reportedly felt the agency's view was "too nar-
row:' Each request of Horton cited a story from
the business and political cronies Casey regular-
ly consulted. "That was the troubling part?these
allegations and anecdotes that there wasn't suf-
ficient evidence to support," says Horton. Each
anecdote also meant another request to new of-
ficers to check it out, a costly process. When they
didn't find the necessary evidence, Casey's office
pronounced them out of touch. At one point
Meyer commissioned an independent task force
to study the question. The task force also failed
to satisfy the director's expectations. Finally,
Meyer took the offending estimate out of Hor-
ton's control and rewrote its conclusions himself.
Horton protested. "Over my dead body," and
gave his notice.
Meyer argues that he merely restored an
original draft of the estimate?the one from an
underling on Horton's staff whom he had per-
sonally supervised. He claims he wasn't
politicizing intelligence; he was "de-politicizing"
it, a charge Horton and the other onlookers scoff
at. As chairman of a team. Horton forged an
estimate from many sources, ultimately taking
responsibility for its conclusions. As he later
pointed out. Meyer's rewritten conclusions con-
tradicted much of the estimate's main text. Of his
final product, Meyer concedes; "We pushed it till
we got it where we wanted it."
Meyer charges that Horton was a sore loser;
he notes Casey had a right to change the estimates
published under his signature. William Colby has
also come to Casey's defense, admitting that as
DCI he too had rewritten estimates that
displeased him. But scholars point out that Col-
by was a veteran intelligence professional with a
commitment to the agency's independence, not
a former presidential campaign manager helping
draft the government's foreign policy agenda.
At issue in the Horton case is not the right of
the DCI to interfere with his staff, but the danger
of that interference when he has become a par-
tisan figure. That threat prompted Horton to
make his concerns public. Like many agency
veterans, he fears that turning the CIA into what
Senator Durenberger has tamed the White
House's "political action committee" will event-
ually rebound on the agency itself, leading it in-
to another round of congressional inquisitions
and demands for legal restraint. "If any cans get
hung around anyone's neck for Central
America," he says, "it won't be Reagan's or
Casey's, it's going to be the CIA's."
As Meyer points out. an NIE comes down to
a question of judgment. Still, the judgments
published in an NIE are no ordinary ivory tower
theories; they form the guidelines for foreign
policy and an administration's attitudes.
In the two years since Casey's pessimistic con-
clusions about Mexico, that country, needless to
say, has not collapsed. But in addition to its long-
standing problems with corruption, its troubled
oil economy and staggering foreign debt, it has
found itself facing a new problem: vituperative
rhetoric from senior officials in the Reagan ad-
ministration. Last year. during a congressional
subcommittee hearing on Mexico under Senator
Jesse Helms, Assistant Secretary of State Elliot
Abrams, the administration's Central American
point man, led an attack on Mexico that sug-
gested things in the country could get out of
hand. As the CIA's supposedly top secret assess-
ment of Mexico's perils found its way into the
press and the economic pressures on the country
increased, a beleaguered President Miguel de la
Madrid appeared to heed the warning, quietly but
pointedly bowing out of his role as a leading
Central American power broker. In fact, his
retreat lasted until last December, when the Ira-
nian arms scandal had so weakened the Reagan
administration that he took advantage of the op-
portunity to revive the Contadora process.
Wagging the dog
"How can any man say what he should do
himself." Jomini. a French strategist once asked,
"if he is ignorant what his adversary is about?"
For any government, good intelligence is fun-
damental. But intelligence boils down to what
questions are asked of it. "If you change the
nature of the business so the answers become a
way to get the Pentagon its budget or funding for
the contras." says Scott Armstrong, "then you've
distorted the whole process of intelligence. The
desire to condemn your enemy for public rela-
tions purposes becomes so much greater than
understanding what's really going on."
When a country starts to see all terrorists as
Soviet agents, it risks missing the festering hate
of nationalists or religious fanatics. When all
revolutions are dismiad as Kremlin plots, there
is little hope of comprehending indigenous
discontent well enough to capitalize on it. And
Calked
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when an administration has acquired such a stake
in a covert operation like the contras that it faces
what Allen Dulles once termed a "disposal prob-
lem"?what to do with 15,000 armed Nicaraguan
exiles let loose on the Central American
isthmus?it may no longer be able to afford find-
ing out what Daniel Ortega is really thinking: is
he building his massive army to export a revolu-
tion or because he is bracing for an American
invasion?
Covert actions create their own momentum. "I
was an operations officer in my past," says Hor-
ton. "If you're involved in a covert action, you
get bound up in it and you want to see it suc-
ceed. You can lose your objectivity" Agrees Mac-
Michael: "Once you get into operations, the
operations tail begins to wag the intelligence dog.
People want the operation to continue and they
begin to look at anybody that might stand in the
way as somebody to be kept misinformed."
Casey's preoccupation with the Reagan ad-
ministration's policy themes may also have left
the country blind in other key regions. Despite
the massive build-up of intelligence resources, the
CIA had not succeeded in penetrating Hezbollah,
the Shi'ite Party of God in Lebanon; and, despite
indications of a threat to the U.S. embassy in
Beirut, it failed to predict the tragic October 1983
truck-bombing that killed 230 marines.
Robert McFarlane recently admitted to the
Senate Foreign Relations Committee that U.S. in-
telligence on what was happening inside post-
revolutionary Iran was so "woefully poor" the
CIA had to rely solely on Israeli reports that
claimed there were moderates in that country lob-
bying for renewed ties to the United States.
Two wildly conflicting CIA assessments on
Iran within a year indicate another danger of us-
ing intelligence as "a tool to justify a foreign
policy. In May 1985, apparently anticipating the
administration's secret arms sales, Casey commis-
sioned a formal intelligence estimate from MO
Graham Fuller. It provided a rationale for over-
tures to ibhaan by warning of increasing Soviet
efforts to gain a foothold in the country. A year
later, when the arms sales had failed to win the
release of most U.S. hostages, a revised Special
National Intelligence Estimate proclaimed the
Soviet threat minimal. For a policymaker, such
results produce confusion at best. Playing fast
and loose with selected intelligence also tends to
backfire on its architects. The Senate Intelligence
Committee, instead of becoming convinced by
the CIA's assessments on Central America, has
learned to be wary of all intelligence on the area.
The media in turn has learned to be increasingly
suspicious of intelligence leaks that mii;ht end up
transforming it into a pawn in the CIA's global
disinformation campaigns.
As Robert Gates. Casey's deputy since early
last year, takes aver as director, he falls heir to
a charged legacy. On its 40th anniversary, the CIA
once more stands at a anssroads?discredited for
the very covert actions that Casey chose to make
the agency's chief focus, most of them, ironical-
ly, not very covert at all. Many at Langley are
elated that Reagan chose to return the embattled
agency to the hands of a career insider. But Gates
owes his recent meteoric rise to the fact that he
had become Casey's man and, in announcing the
appointment, the White House made no secret
of its assumption that he would keep the CIA on
Casey's course. The question now is whether he
has the strength and courage?when intelligence
fails to bolster the president's well-known
prejudices?to bring his boss bad news.
Still, there is hope in Gates's appointment that
he will move the CIA out of the controversial
covert actions business and back to its original
purpose?gathering and analyzing intelligence.
As a veteran of the analysis side of the CIA, who
from 1982 to 1986 served as deputy director for
intelligence, Gates has a natural commitment to
that mission?and, according to most CIA of-
ficials, a built-up scepticism about clandestine
operations. But he may have difficulty reversing
the course of the CIA's runaway covert plots,
most of which have become publicly acknow-
ledged administration policy. If the government's
capacity for covert actions does survive, the best
way of assuring that officials aren't tempted to
manipulate intelligence to justify them or cover
up their failure would be to transfer the respon-
sibility for paramilitary operations to another
agency. preferably the Pentagon, which is already
accountable to Congress.
In the CIA:s stormy history, it has too frequent-
ly found itself the victim of knee-jerk
emotions?automatically lauded by the right,
automatically berated by the left. If a legitimate
and broad-based political constituency is to be
built with the aim of assuring a strong indepen-
dent intelligence agency, free of the failures and
mishaps that have plagued the CIA over the past
40 years, the rust responsibility lies with the agen-
cy itself in restoring its own shattered credibility.
No nation, after all, can affbrd to chart its policy
course on fiction knowingly served up as fact; by
telling decision-makers only what they want to
hear. the CIA risks ISZying a price in which truth
may only be the rust?and the least serious?
casualty.
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10.