Bloch Suspended Over Spying Suspicions : Espionage: The State Department moves to fire the career diplomat. Prosecution remains unlikely, although the investigation continues.

The State Department suspended career diplomat Felix S. Bloch without pay Wednesday and took initial steps to fire him 33 weeks after he was publicly identified as a suspected Soviet spy.

Although sources familiar with the FBI investigation of Bloch reiterated that prosecution on espionage charges appears unlikely, spokesmen at the State Department, Justice Department and the FBI insisted that the highly visible inquiry is continuing.

Citing “considerations of due process and the rights of the individual under the Privacy Act,” State Department spokesman Richard Boucher refused to spell out the administrative charges against Bloch, 54, although he said they had been presented to him in writing.

The former second-ranking officer at the U.S. Embassy in Vienna, Bloch allegedly was filmed handing over a travel bag to a known Soviet agent during a rendezvous last June at a Paris restaurant.

Bloch declined through his attorney to discuss the State Department action. He has spoken cryptically about the investigation in the past, once telling an Austrian magazine: “There are suspicions, but there is no proof. They have to prove my guilt.”

Despite the allegations, Bloch has continued to receive his full annual salary of $78,600. He has drawn about $50,000 in pay since he was placed on administrative leave and his name was stripped from the door of his State Department office June 22.

His lawyer, John M. Bray, said he had not yet seen the State Department’s letter to his client and could not say whether Bloch would seek a hearing before a panel of department officers on the proposed firing. He declined to comment on the action.

But a source familiar with the letter said it contained no information beyond previously published allegations that Bloch is suspected of accepting payments from the Soviets in exchange for government secrets.

Under federal law, Bloch has 30 days to answer the charges and present information on why he should be restored to duty. Although he could seek an open hearing, the government could take steps to protect classified information, including the identity of sources.

The suspension and firing have no direct impact on Bloch’s pension. Boucher declined to say whether the department plans to take steps to prevent Bloch, a 30-year veteran of the Foreign Service, from collecting retirement benefits.

Despite a federal grand jury investigation and a painstaking reconstruction of Bloch’s finances, the government has failed to produce sufficient evidence to support in court the FBI’s suspicions about his alleged spying, an official familiar with the probe said.

The failure to bring charges has magnified an already embarrassing episode for the government and appears to leave undetermined the extent of the damage that Bloch may have caused to national security.

Another source familiar with the investigation said one “option” for investigators would be to summon Bloch before a grand jury and immunize him from prosecution to elicit a statement on any information he may have turned over to the Soviets.

But such a move would be a last resort to assess potential damage to U.S. security, the source said.

In December, the FBI reduced the scope of its unusually open surveillance efforts against Bloch. For months, FBI agents accompanied him on walks and followed him on trips to New York and other destinations, often trailed by an entourage of reporters and cameramen.

Bloch served in Vienna, a sensitive crossroads post, until he returned in 1987 to the State Department to head the office handling regional affairs for the European Community.

He had wide access to economic data in his latest assignment and had enjoyed even broader access to sensitive material while at the Vienna embassy.

Sources close to the case said U.S. intelligence officials last May intercepted an overseas phone call to Bloch from a KGB “illegal,” or undercover intelligence agent, who used the pseudonym Pierre. Based on that call, the FBI asked French agents to monitor the meeting in a Paris restaurant between the two men.

At the meeting, Bloch allegedly passed a travel bag to the agent, identified by U.S. officials as Reino Gikman, a Soviet spy who traveled under cover as a Finnish computer salesman. The meeting was understood to have been photographed by the French agents.

In June, a U.S. intelligence operation intercepted another international call between the two men, during which the Soviet agent, using cryptic terms, seemed to try to warn Bloch that both men could be under surveillance, the sources said.

The FBI then converted its surveillance of Bloch from a covert to an overt operation, and the State Department placed him on administrative leave with pay.

ABC News disclosed the investigation a month later, and, in an unusual move, the inquiry was immediately confirmed by the State Department.

In an interview with FBI agents, a source familiar with the case said, Bloch maintained that he knew Gikman only as a fellow stamp collector.

Bloch allegedly made an incriminating admission in an intercepted conversation with his wife, Lucille, a government source said. But there were doubts over whether that material could be used to prosecute Bloch.

BACKGROUND

Veteran Foreign Service officer Felix S. Bloch was placed on administrative leave by the State Department in June after French intelligence officers allegedly filmed him handing a travel bag to a known Soviet agent during a meeting at a Paris restaurant. For months, the FBI has conducted an unusually public investigation of the former Vienna embassy official, but sources say the government has been unable to obtain enough evidence to bring criminal charges against Bloch.