CIA Finds Itself Out in Cold With U.S. Allies

Around the world, America’s friends are sending a quiet but stern message to the Central Intelligence Agency: The Cold War is over, the rules of the spy game have changed, and it’s time for the United States to curb its espionage operations on its allies’ turf.

At least four friendly nations have halted secret CIA operations on their territory during the past two years, compromising U.S. spies and, in some cases, forcing the CIA to freeze its operations and reprimand its officers, according to people familiar with U.S. intelligence operations.

The latest blowup with a major ally came to light this month in Germany, where a CIA officer was ordered to leave the country, apparently for trying to recruit a German official, sources said.

In recent months, other CIA officers have been caught spying in Rome and New Delhi, U.S. intelligence sources said.

The three blown operations came hard on the heels of a major intelligence failure in Paris in 1995, when the French uncovered and put an end to an economic espionage operation run by the CIA.

At least partly responsible for the blown operations may be a massive exodus of veteran CIA officers since the end of the Cold War. That has thinned the ranks of experienced officers and led to mistakes in what spies call “tradecraft.”

Buyouts, early retirements and other forms of turnover have left the CIA “like a major airline trying to maintain its route schedule with pilots from a shuttle service,” said one CIA veteran. Two division chiefs have left the CIA’s Directorate of Operations, the agency’s clandestine espionage service, in recent months.

But, more broadly, U.S. officials believe that with the end of the Cold War, America’s allies are sending a signal that they no longer feel they have to tolerate extensive CIA operations for the greater good of the anti-Communist alliance.

In the past three years, Germany, France, Italy and Switzerland have all pressed for a reduction in the number of CIA officers operating on their soil, intelligence sources said.

The shift in intelligence relations with allied powers is certain to be one of the first and most important challenges facing Anthony Lake if he is confirmed by the Senate to be the next CIA director. In fact, the German flap erupted on the eve of Lake’s contentious confirmation hearings, which will continue this week.

Nowhere is the change in the intelligence relationship more obvious than in Germany. For 50 years, West Germany was the CIA’s biggest base for operations against the Soviet bloc and other “denied areas”--hostile countries such as Iran, Iraq and Libya.

The American intelligence agency fielded hundreds of secret operatives, many of them “undeclared”--kept secret even from the German government. The CIA’s Tehran station for operations against Iran, for example, is still in exile in Frankfurt, known by the code name of “Tefran.”

In recent years the German government has chafed at the CIA’s continued use of its reunified territory without permission. After the Berlin Wall came down, the CIA still kept secret from the German government the fact that the U.S. spy agency still had covert bases all over West Germany.

Among other things, German intelligence was apparently not notified of Tefran’s existence in Frankfurt--even though the Iran operation employed as many as two dozen CIA personnel based in the Nazi-era headquarters of the I.G. Farben arms firm.

What’s more, after East Germany collapsed and West German intelligence officials began to debrief their former adversaries, the East Germans told them of secret CIA bases in East Germany that the CIA had kept secret from West German intelligence as well.

The CIA has since closed one base in Munich and another in Leipzig, in the former East Germany, the existence of which the U.S. intelligence agency had concealed from the German government even after the country was unified. But sources say other German bases remain secretly in place.

U.S.-German tensions have also built over Germany’s mercurial intelligence chief, Bernd Schmidbauer, who, many in the U.S. government believe, has developed close and unhealthy ties to Iran. Schmidbauer has repeatedly told U.S. officials there is no reason for the CIA to spy on German citizens now that East Germany and the Soviet Union have been confined to the dustbin of history.

Resentment over the extent of CIA operations is not limited to Germany. Frustration appears to be growing in a number of European capitals concerning the failure of the United States to reduce its intelligence operations on the continent as much as its troops.

“The question of the U.S. intelligence presence is on the table more broadly than just in Germany,” said one senior State Department official who asked not to be identified. “Our presence in these countries began during the Cold War, and now the nature of our presence and our collaborative liaison relationships are evolving in a lot of these places.”

In most countries, the official added, the issue is being handled “both civilly and intelligently.”

France is not in this category. In 1995, French intelligence publicly humiliated the CIA when it exposed a U.S. spy operation designed to steal secrets from French trade negotiators. That economic intelligence operation was apparently compromised when a female officer was identified by French intelligence.

In the midst of the 1995 national election campaign, the French government leaked its espionage triumph to the media, sending a message not only to voters but also to the rest of Europe that the French were now playing hardball with the CIA. In the past decade, one CIA source said, the agency has decreased its personnel in France from a high of almost 60 case officers to about a dozen today.

During the past few months, other countries have followed the French lead, and the CIA has watched in quiet horror as one operation after another has been blown or compromised.

In Rome, the CIA station chief and at least two other officers had to leave last summer after Italian police, cracking down on suspected terrorists, arrested a CIA case officer. The CIA man had been running a recruitment operation without notifying the Italians.

Ironically, CIA officials had told the Italians about the suspected terrorists in the first place, apparently forgetting that the CIA was running an operation there at the same time. One CIA veteran blamed “egregious tradecraft errors” for the blowup, which led to the compromise of at least one sensitive CIA informant and the identification of several CIA officers operating under cover.

At the end of 1996, the CIA’s deputy station chief in India was caught while apparently trying to recruit the chief of India’s counterintelligence service. CIA sources said the deputy station chief’s “tradecraft” mistake was to try to reach too high into the Indian government to make an espionage recruitment--and to try to do so too rapidly.

The CIA officer “rushed it” and “didn’t vet the guy,” one source said, in part because the deputy station chief was trying to complete the recruitment before transferring out of the country for another assignment.

The CIA’s problems at the hands of America’s friends and allies pale in comparison with the catastrophe that hit the agency’s tenuous operations against Iraq last September, when a major CIA covert action was overrun by an Iraqi military incursion against Kurdish dissidents in northern Iraq.

Iraqi leader Saddam Hussein’s army captured the city of Irbil; destroyed the headquarters of the Iraqi National Congress, a dissident group that had been set up under U.S. sponsorship as an alternative to Hussein’s regime; seized high-tech communications equipment supplied by the CIA and executed as many as 100 members of the CIA-backed group. CIA case officers had to flee to avoid being scooped up by Saddam’s soldiers.

Problems with hard targets such as Iraq are to be expected. Espionage blowups are not supposed to happen so frequently among friends, however.

And the new rift with Bonn is potentially the most serious of them all.

For decades, the CIA had the run of the German countryside and enjoyed excellent relations with the West German government, where suspicions were widespread that Bonn’s own intelligence service was badly penetrated by the Stasi, East Germany’s spy service. Former Chancellor Willy Brandt developed close relations with the CIA in part because he believed the agency offered a reliable back channel to Washington.

“That good feeling is all gone now,” said Gregory Treverton, an expert on Germany at the Rand Corp. think tank and the former chairman of the National Intelligence Council, which oversees U.S. intelligence analysis and estimates.

“Germany is reacquiring, slowly but surely, all of the attributes of real sovereignty,” Treverton said.