Increase in Espionage Feared : U.S.-Soviet Thaw Worries Some Intelligence Officers

At dawn on a recent Sunday morning in San Diego, a team of 10 Soviet military experts arrived at Lindbergh Field on a mission watched closely by U.S. counter-intelligence officials.

As part of the new treaty between the United States and the Soviet Union on intermediate-range nuclear missiles, the Russians had arrived to inspect a General Dynamics plant that once made launch systems for cruise missiles.

Officially, the visit--the first of 10 by the Soviets in the coming year--was described in almost cordial terms by the American hosts who escorted them through Convair Plant No. 19.

“In effect, they’ve got the run of the place,” a U.S. Air Force spokesman said. “This being the first visit, things are a bit on the formal side. I expect it will warm up during later visits.”

Unofficially, there was a different view of the visit by U.S. intelligence experts.

Noting that the Soviets had landed just a few hundred yards from the San Diego restaurant where convicted Navy spies John Walker and Jerry Whitworth concocted the most damaging espionage conspiracy in U.S. history, one top official commented:

“There’s more than a little irony in giving these people the red-carpet treatment in this town. The Russians would steal everything we have here if it wasn’t nailed down or hidden away.

“We think we’ve got them covered, however,” the official added. “Every time they show up here, there will be FBI agents hanging from the rafters, because most of them have never seen a real KGB agent before and these will be 10 of the best, you can bet on that.”

Even in the new age of friendlier relations between the Soviet Union and the United States, visiting Soviet military delegations are still a rarity. But virtually every other form of contact--from cultural to scientific exchange--is on the rise.

The sudden thaw in U.S.-Soviet relations, which follows the most serious wave of espionage cases in U.S. history and tough subsequent restrictions on Soviet spying, has many U.S. intelligence officials worried.

Resurgence Feared

Their concerns are that the new age of glasnost may bring with it a resurgence of Soviet espionage activity in California at a time when the Soviets are only beginning to recover from a series of severe setbacks inflicted by the United States after the spy cases of the mid-1980s.

Two years ago, in the aftermath of Walker-Whitworth and other devastating espionage cases, the United States moved suddenly against the Soviet Consulate in San Francisco, long regarded as the center of Soviet spy activities on the West Coast.

Thirteen Soviet diplomats were expelled, and the size of the consulate was permanently cut from 41 to 26. It was a blow aimed primarily at the two main Soviet intelligence services, the KGB and its military counterpart, the GRU, and by every account it landed squarely.

“The reduction just has to slow them down. They have been pulling in their necks,” said John F. Donnelly, director of counterintelligence for the Defense Department, during a recent interview in Washington. “I’ve heard it described by knowledgeable people as almost a bunker mentality.”

For the moment, the Soviets are in a period of retrenchment. But U.S. officials believe that the KGB and the GRU have already begun to explore new ways of operating in the face of more restrictive U.S. counterespionage policies instituted since 1986.

One obvious way for the Soviet intelligence services to regain momentum in California, the nation’s richest repository of highly classified scientific and technological information, is to gradually replace its San Francisco consular officials with new intelligence agents in the course of normal diplomatic rotation.

That avenue has been made more difficult, however, by a concerted effort involving Congress, the State Department and the FBI aimed at preventing known Soviet intelligence agents from entering the United States--a much tougher screening process than in the past.

“Unquestionably, the reviewing and granting of visas are being looked at very carefully,” a State Department spokesman said. “Congress mandated a tightening of procedures after the spy cases and a more rigorous supervision and oversight of Soviet personnel. We are doing it.”

The FBI expects that the Soviets, who traditionally allocate about 35% of their diplomatic positions to intelligence officers, will be able to slip relatively inexperienced junior spies who have not yet been identified by U.S. intelligence into San Francisco.

But greater reliance, officials believe, will be placed on increased use of East European intelligence services, which have historically played a major role in California, and on the thousands of non-official Soviets and East Europeans who visit California annually.

‘Significant Blow’

“We have clearly dealt the Soviets a significant blow,” said FBI Assistant Director James H. Geer, head of the bureau’s intelligence division in Washington. “One way they have of making that up is to replace ousted personnel with lesser-experienced people. They can also use visiting delegations and their student programs, and they can increase their tasking (spy assignments) of the Bloc countries.”

In California, the FBI has about 1,000 agents, including 375 in San Francisco, 500 in Los Angeles and about 100 in San Diego. The number of agents assigned to counterintelligence is kept secret, but is roughly 25%. Because of the Soviet diplomatic presence in San Francisco, FBI counterintelligence priorities are highest there.

“The intelligence business goes on totally independent of glasnost, “ said Roger P. Watson, who heads the FBI’s counterintelligence forces in San Francisco. “The ouster of the Soviets here was a severe blow, not only here but in all of California. But we didn’t stop the game. We just put one of their players in the penalty box for a while.

“They will make every effort to restaff. We’re convinced of that. But they have other options, too,” Watson continued. “I think that for a long time the Soviets have recognized the difficulty of operating in a legal (diplomatic) situation. The official Soviet presence here has never been the only threat. There are students, travelers, scientists. The Soviet intelligence services will make the necessary adjustments to whatever we do.”

David W. Szady, another San Francisco FBI expert on the Soviets, who was one of the lead agents in the Walker-Whitworth spy case, suggested that any U.S. counterintelligence advantages from the 1986 reduction of Soviet personnel may already have been offset by the changing political climate caused by the new atmosphere of detente between Moscow and Washington.

“There has not been any lessening at all, either with perestroika or glasnost, “ Szady said. “Our effort has been increased. I think we may see an increase in the type of situations we normally face. Now it becomes a little easier for somebody who wants to spy.”

While recovering from setbacks to its traditional human collection efforts in California, according to FBI sources throughout the state, the Soviet intelligence network now relies more heavily than ever on electronic espionage collection.

The Soviet electronic capability includes powerful microwave intercept equipment on the rooftop of the San Francisco Consulate, Soviet spy ships that hover in international waters off the coast and overhead satellites that routinely photograph the grounds of California’s defense plants and military bases.

From the outside of the seven-story brick fortress that houses the Soviet Consulate in San Francisco, there is little indication that anything has changed in recent years.

Streets of S.F.

The Soviets’ high-powered rooftop listening devices still block the view of the San Francisco Bay for some neighbors and continuously monitor phone calls from as far away as the so-called Silicon Valley, the high-tech area near San Jose. On nearby streets, FBI agents, sometimes posing as neighborhood basketball players, keep watch on the people who come and go--as they have done for years.

Most of the windows of the consulate are permanently shuttered. The Soviets have not even bothered to clean off the dried remains of an egg thrown by an angry neighbor five years ago to protest the Soviet downing of Korean Airlines Flight 007.

The differences in Soviet operations, according to the FBI, are more visible elsewhere in the state. In San Diego, for example, the FBI reports that non-official Soviet visitors are traveling in “increasing numbers” to such popular tourist spots as Cabrillo Monument, a vantage point overlooking San Diego Harbor, home of the largest U.S. Navy base in the world.

San Diego is the home port of more than 100 U.S. warships, including more than 20 nuclear-powered attack submarines. At any time, roughly half of the fleet is at sea. From Cabrillo Monument, a trained observer can keep track of which ships are in port and which are on maneuvers, information that can be useful to the Soviets in tracking general U.S. Navy patterns.

“Counting the ships in the harbor is something I’m sure they do,” said San Diego FBI Agent Bob Harmon. “They collect information on how we number our vehicles. We regularly see a Soviet with his family in his car heading for Cabrillo Monument to take some pictures. It’s our job to identify the contacts they make.

Regular Presence

“There’s no permanent Soviet presence here, but we seldom have a time when an unofficial presence isn’t here,” Harmon added. “It is regular and constant.”

Besides counterintelligence concerns involving the U.S. Navy--a job the FBI shares with a strong Naval Investigative Service detachment in San Diego--a recent new worry has been a small but steady stream of Cuban immigrants illegally crossing the U.S. border from Mexico.

U.S. officials have caught about 150 Cubans at the border in San Diego in the last four years. They estimate that at least that many more have entered the country illegally despite U.S. immigration rules that now permit 20,000 Cubans annually to move to the United States.

The FBI, which interrogates every detained Cuban, is convinced that the Soviets are relying more heavily on Cuban intelligence operatives in California than in the past, using them primarily for pro-Nicaragua propaganda work in the state’s large Latino communities.

“We do not routinely see the Soviets using Nicaraguans and Cubans to get technology,” Harmon said. “Typically they are directed within the emigre community. Soviet intelligence is guiding both Cuban and Nicaraguan activities here, and a principal concern is modifying U.S. policies toward Cuba and Nicaragua.”

(The Nicaraguan Embassy in Washington had no comment on the FBI’s charges, but Blase Bonpane, director of the Office of the Americas in Los Angeles, an organization opposed to U.S. involvement in Nicaragua, called the FBI’s allegations “enormously insulting, adding: “I find it takes away respect for the intelligence of anybody who makes that kind of blanket claim.”)

While U.S. Navy operations in San Diego are a major target for the Soviets, the aerospace industry that surrounds Los Angeles and the high-technology microchip world of the Silicon Valley farther north are equal priorities for both the Soviet KGB and GRU.

French Connection

Besides information provided by Soviet defectors to the United States and other sources, much of this country’s detailed knowledge of Soviet technology collection goals was supplied during the early 1980s by a KGB official who was an agent of French intelligence.

The agent, who worked in the KGB directorate in charge of acquiring Western technology, was code-named Farewell. He was detected and executed in 1984, but the information he supplied to the West before his death amounts to a virtual shopping list of the Soviet Union’s most vital technological and military needs.

Some of the information supplied by Farewell to France and subsequently to the United States has been declassified by the Central Intelligence Agency in the form of a 34-page booklet circulated throughout the defense industry titled “Soviet Acquisition of Militarily Significant Western Technology: An Update.”

Among the key disclosures in the document, a primer for all U.S. intelligence personnel, is that the Soviet Union budgets more than $1.5 billion annually for the acquisition of Western technology. Specific targets are assigned by the Soviet Military Industrial Commission (VPK) to the Soviet and East Bloc intelligence services as well as to the Soviet Ministry of Foreign Trade and Soviet Academy of Sciences.

According to the CIA publication, Soviet intelligence services collected between 60% to 70% of all the information and equipment targeted by the VPK during the late 1970s and early 1980s. Roughly 90% of that was unclassified information often supplied by the U.S. government or technological publications specializing in the defense and aerospace fields. The remainder involved stolen documents or illegally exported technology.

California Hit List

Highest on the list of the 100 top Soviet targets in the United States are most of the major aerospace companies of California, including General Dynamics, McDonnell Douglas, Rockwell International, Lockheed, Hughes Aircraft, TRW, Ford Aerospace, Northrop, Martin Marietta and Grumman.

Six major California universities, headed by Caltech, are also on the list of Soviet priorities. According to the report, the Soviets are most interested in Caltech’s knowledge of the techniques and methodologies of strategic concepts of space, aviation and missile systems. Stanford, USC, UC Berkeley, UCLA and UC San Diego are the other major academic targets.

“I wouldn’t get into rankings, but there are few places in the world of more interest to the Soviets than California,” the FBI’s Geer said. “About 25% of the nation’s defense work is in California. California was, is and always will be a point of high interest to the Soviets, the Bloc services, the Chinese and so forth by the very nature of its high-technology base.”

Times staff writer Dan Morain in San Francisco and Times research librarian Tom Lutgen contributed to this story.