Industrial Espionage: the CIA’s New Frontier : Intelligence: With the agency downsizing, a new line of spying might well provide employment to all those forced out into the cold.

When R. James Woolsey, the new director of Central Intelligence, told a congressional hearing in March, “Yes, we have slain the dragon. But we live in a jungle filled with a bewildering variety of poisonous snakes,” I wanted to telephone the last living ex-CIA spook I knew to ask who the new snakes are and why Woolsey finds them so bewildering.

But I didn’t call, and now I wish I had, because a few weeks later I received a letter from the brother of my friend the spook, Harry Barbouze, which is not his name, saying Harry had died alone in a Lafayette, La., motel room, presumably of the drink.

The letter was not so much to inform me of Harry’s death as to inquire, rather diffidently, if the $600 I had dispatched by Federal Express several years ago to Harry at that same motel was a loan or a gift? If it had been a loan, the brother would make sure Harry’s estate ( estate? ) repaid it.

I assured him it had been a gift and marveled to myself that there are still brothers who go around cleaning up the messes left by their feckless siblings. But then the Barbouzes were originally Nebraska lads and perhaps that’s the way things are still done in the heartland.

Harry had been one of the Central Intelligence Agency’s contract hires, which meant he had no Civil Service protection or pension. He was dumped after 20 or so years of flitting about the world as an agency labor specialist, fomenting strikes, I suspect, or if need be, breaking them. Harry was a guy who could go either way.

If he were still with the agency today, I know Harry would be keen to try his hand at what some claim will be the CIA’s most promising new venture in years: industrial espionage. I’m almost sure that Harry, a true professional, would as soon have risked his life for IBM as he would have for flag and country--providing the pay was the same.

If the CIA does plunge into the industrial espionage business, the first question will be: How will it divvy up the product? If the agency manages to steal an automotive breakthrough from Honda, will it go to Chrysler, General Motors or Ford? Or will it be secretly auctioned off--thus defraying some of the cost of the U.S. intelligence effort that’s guessed to be about $30 billion a year?

The new CIA director has claimed that economic espionage is “the hottest current topic in intelligence.” It also may be the most bewildering of those poisonous snakes he’s been fretting about.

For example, there’s the problem of what the CIA would do if one of its economic-industrial spies were caught. Would it go the “Mission Impossible” route and deny all knowledge? Or would it already have jailed a variety of foreign industrial spies--say, three Japanese, four Frenchmen, a Korean or two and maybe the lone Swede--to trade back and forth as it did during the Cold War?

The United States, so far, has been one of the few industrialized countries that has refrained--officially anyway--from engaging in the theft of industrial secrets. The Japanese, on the other hand, admit they vacuum up any technological information available, presumably tons of it, which they then translate and analyze for possible use. That’s their overt side. The covert side is exemplified by the Hitachi and Mitsubishi employees who pleaded guilty in 1982 to stealing IBM secrets.

The French apparently are the most blatant of the industrial-economic ferrets. Their former intelligence chief, Pierre Marion, justified his country’s penchant for industrial spying when he said recently: “In the economic competition, in the technological competition, we are competitors. We are not allied.”

Robert M. Gates, the former CIA chief, once listed 20 nations that regularly spy out the U.S. industrial land. France and Japan were near the top of the list, followed by South Korea, China, Israel, Russia, Sweden, Switzerland and Britain. Some say the British were near the bottom because they seldom get caught.

The prevention of industrial-economic espionage lies within the purview of the FBI, not the CIA. The bureau is said to be reorganizing its counterintelligence division so it can cover virtually all foreign spy agencies that might try to pilfer critical industrial information--even when it’s not classified. In April, according to one report, the FBI’s industrial espionage caseload leaped from 10 to 500 in only nine months.

But many industrial firms aren’t waiting around for the FBI to protect their secrets. Instead, they are installing their own counterintelligence measures. Caterpiller Inc., for example, has put all its electronically transmitted material into code. TRW Inc., is producing a gadget that even encodes fax messages.

In addition to such basic measures as encoding electronic messages, there are any number of private firms, old and new, that provide and supervise counterintelligence measures for companies wary of having their secrets stolen.

Although the FBI has dozens and dozens of private competitors in the counterespionage business, the CIA has precious few, if any, commercial rivals who will steal foreign industrial secrets on demand for private enterprise.

So perhaps this is where a new U.S. industry will be born. With the government intelligence bureaucracy under post-Cold War pressure to reduce its redundant personnel by attrition and dismissal, there should be a large pool of out-of-work spies, many of them more than dab hands at pilfering foreign industrial secrets.

The start-up costs of such firms are also encouraging because they need not be vast enterprises. Instead, they could be industrial espionage boutiques that do custom work for grateful clients. There could even be a chain of them--something like the stand-alone, off-the-shelf spy shop once envisaged by Lt. Col. Oliver L. North and his mentor, William J. Casey, the late CIA director.

These espionage boutiques, which by law or tacit agreement would ply their trade only in foreign countries, could relieve pressure on the CIA, deflate its bloated budget and provide employment for its out-of-work spooks.

But before launching such a boutique, one should make sure there is a market for the product. Unfortunately, some experts claim that American industry makes little or no use of the intelligence gathered overseas by its own sales force.

If industry is slow to realize the potential use of espionage boutiques, films and television might snap it up. Instead of down-at-the-heel private eyes and sociopathic homicide detectives of both sexes going about the Lord’s work, one could follow the adventures of either sleek lone wolves or equally sleek teams of men and women in their 20s and 30s, entrepreneurs all, as they go about their high-tech, high-risk adventures in foreign climes, conversing all the while in complete sentences and offering suspense without blood, terror without violence. The basic plot would always be the same: Free-enterprise derring-do comes to the rescue of the free-enterprise system.