High-Level U.S. Envoy Suspected as Soviet Spy

A 30-year State Department veteran who recently served as the No. 2 official at the U.S. Embassy in Vienna and now heads a division dealing with European affairs is suspected of spying for the Soviet Union, federal officials confirmed Friday.

The official is Felix S. Bloch, who sources said was videotaped giving a briefcase of materials to a Soviet agent. A State Department spokesman confirmed Friday night that Bloch has been placed on administrative leave and is the subject of an FBI investigation.

‘Illegal Activities’

“The Department of State’s Bureau of Diplomatic Security is cooperating with an FBI inquiry into reports of illegal activities involving (Bloch) and agents of a foreign intelligence service,” said the spokesman, Richard Boucher.

Officials said the case involves a potentially serious breach of highly sensitive information that could damage U.S. national security interests.

The U.S. Embassy in Vienna handled all contacts with the Palestine Liberation Organization until the United States opened direct talks with the PLO in Tunisia, and the contacts were directed by Bloch, a source familiar with U.S. intelligence said Friday night.

Bloch, 54, currently serves in Washington as director of the Office of Regional Political-Economic Affairs in the State Department’s Bureau of European and Canadian Affairs, the bureau that helps set American policy toward Western Europe, Eastern Europe and the Soviet Union.

Bloch’s own unit is in charge of U.S. policy towards the European Community. But one State Department official said Friday night that as an office director, Bloch also would have had access to materials on State Department deliberations on high-technology items that the United States and its European allies would not allow to be sold to the Soviet Union.

While the second-ranking official in Vienna, Bloch had access to secret communications sent to and from the embassy.

Access to Top Secrets

“He had access to top-secret, compartmentalized information and was at a level where it all comes together to be fed into the decision-making process,” one federal official said.

Another official said Bloch was not directly involved in Soviet policy or in arms control negotiations with the Soviet Union.

Bloch has not been arrested, and a source familiar with the investigation said that much of what happens in the investigation depends on any explanation he may give to FBI agents. “He has some tall explaining to do” about the incident in which he was allegedly videotaped giving a briefcase to a Soviet official, the source said.

It was learned that the FBI has been interviewing Bloch’s friends and associates for more than a week. News of the investigation was first made public Friday night by ABC News.

Until about two years ago, Bloch served as deputy chief of mission, the second-ranking official, at the U.S. Embassy in Austria.

Bloch was the senior Foreign Service officer in the U.S. Embassy, serving under two ambassadors who were political appointees of the Reagan Administration and had little previous experience in foreign policy. The first was Helene A. von Damm, who went to Vienna after serving as President Reagan’s secretary and administrative assistant. The second was businessman Ronald Lauder.

“Under a politically appointed ambassador, it’s the DCM (deputy chief of mission) who runs the show and knows what’s happening,” a senior American intelligence analyst observed.

Bloch fell under suspicion two years ago while serving at the U.S. Embassy in Austria because superiors believed that he maintained unusually close ties with the Austrian government, sources said.

He was eventually asked to leave that post by then-Ambassador Lauder, according to sources close to Lauder.

It is not known when Bloch is alleged to have handed over the briefcase to a Soviet agent in Vienna or for how long he is suspected of engaging in spying activities.

Born in Austria

According to a biographical register once published by the State Department, Bloch was born in Austria in 1935, graduated from the University of Pennsylvania and joined the department in October, 1958, as an intelligence research specialist.

In his early career, he served overseas as a commercial officer in Duesseldorf, West Berlin and Caracas.

Boucher, the department spokesman, said Friday night that Bloch’s State Department pass “has been withdrawn pending resolution of this matter”--meaning that he will not be entitled to enter the building. He would not say when this action was taken or when Bloch was placed on administrative leave.

Preston Pitts, a neighbor of Bloch in downtown Washington, said Friday night that agents have been staking out Bloch’s home for about three weeks. “There were six or seven cars with two people in each car. The cars stayed there every day in the same position,” Pitts said.

Pitts said he was sure Bloch knew he was being watched. “I saw him walk his dog two weeks ago, and all the cars followed him,” he said.

In major investigations where the FBI is attempting to obtain information from the suspect himself, it routinely employs obvious surveillance as a means of pressuring the suspect to cooperate, at least to the extent of offering an explanation for his conduct.

A source close to the investigation said the videotape of Bloch in Vienna was not made by the FBI but by another investigative agency, which he would not identify. The source would not say whether the CIA has participated in the probe.

Cases of suspected spying by State Department diplomats are rare, and no high-level officials have been implicated publicly in many years. In the most celebrated espionage case touching the department, Alger Hiss, a 10-year veteran official, was convicted of perjury in 1950 in connection with the passing of department documents to the Soviets in the late 1930s.