U.S., Russia Still Play Spy Games, but to What End?

After two decades as one of America’s top spy-catchers, John Martin couldn’t believe what he was hearing.

“John, the Cold War is over,” a senior U.S. policy-maker told him at a 1994 strategy session. The Justice Department, he was told, was about to scale back the scope and revamp the structure of its espionage efforts to reflect the changing times.

Martin was incredulous. A burly, blunt-spoken lawyer, he had shepherded prosecutions of a slew of Soviet spies after U.S. espionage hit its stride. Why assume that Moscow was any less eager to get its hands on U.S. secrets? “You are setting back the clock 25 to 30 years,” he warned his supervisors.

Now, as the U.S. intelligence community tries to untangle its worst spy scandal in years, Martin and other espionage experts seem a bit like the Greek prophetess Cassandra, whose dire predictions went unheeded.

To be sure, U.S. authorities say, it seemed reasonable enough to assume the traditional antagonism between two nuclear-armed superpowers would subside with the collapse of the Soviet Union. But recent interviews and internal findings suggest U.S. authorities may have badly underestimated gaps in their $30-billion espionage apparatus, and diverted needed resources from Moscow and other critical areas despite ongoing threats to U.S. security.

The arrest last month of FBI counterintelligence expert and suspected Russian spy Robert Philip Hanssen and this week’s dramatic decision by the United States to expel as many as 50 Russian diplomats underscore the fact that the United States and Russia are still spying on each other as intensely as if the Cold War never ended.

And the unfolding events raise core questions about how skillfully the U.S. is playing this role, and what damage may have been done to U.S. interests, experts say.

“The system is too broken to be fixed,” said Robert D. Steele, a former CIA spy who now runs a private intelligence-gathering shop in suburban Washington. “The emperor is naked, and he’s about to die from pneumonia.”

Russians See U.S. Far Ahead

On the other side of the world, there is a parallel sense of angst among intelligence experts. Russian spies admit to still being in the game, pursuing espionage as a vital way to protect their country’s security and economic interests. But from their perspective, they now have a much harder time at it--trailing the United States in modern technology, strapped for funds needed to buy information and ensure loyalty, and less able, since the end of communism, to win agents based on ideological sympathy.

“The times have changed and not in our favor at all,” Igor Prelin, a retired KGB colonel, complained. “All the advantages are now on the U.S. intelligence side.”

U.S. policy-makers see spying as essential--not only to collect information on Russia’s still-massive nuclear arsenal, but also to determine what Russia knows about the United States. Yet the Americans feel they have lost so much ground to their Russian counterparts, they have recently been offering huge rewards for information on Americans spying for Russia.

Last year, for instance, retired KGB spy Yuri Trotkov traveled to Washington to do research and attend what he thought was a conference on intelligence organized by Steele, the former CIA agent, Prelin recounted. Instead, Trotkov ended up being joined unexpectedly at lunch one day by two people who identified themselves as FBI agents.

The agents had a deal for him: They would give him $1 million in exchange for what they called an “extensive debriefing,” according to Prelin.

What does that mean? Trotkov asked. The reply: Give us the names of any American traitors working in U.S. security agencies.

Trotkov refused. But for Prelin, who worked for the KGB for 30 years in 35 countries, the episode dramatized the intensity with which the spy game is still being played, even as the United States and Russia have moved markedly closer to one another than they were in the days of the Cuban Missile Crisis and Ronald Reagan’s “evil empire.”

So why bother?

“Every state will always have some secrets to hide, even from its own allies. And other countries will always seek to learn those secrets,” Prelin said. “It is a cliche that the Cold War is over. I think the Cold War is not that over.”

Since 1960, when two code-breakers for the National Security Agency defected to the Soviet Union, intelligence experts say Moscow has managed to maintain four decades of virtually uninterrupted access into U.S. intelligence circles.

“The biggest lesson from Hanssen’s arrest,” said James Bamford, a national security and espionage authority, “is that the United States should not have a lot of confidence that what we’re doing is being kept from the Russians. The law of averages says that there are probably spies working for the Russians right now” within the United States, he said.

U.S. intelligence officials reject such grave assessments. But Atty. Gen. John Ashcroft and FBI Director Louis J. Freeh have already ordered two separate reviews to determine why Hanssen’s alleged spying went undetected for 15 years and how intelligence holes can be plugged. Lawmakers in Congress are also demanding answers.

Ironically, these reviews come just months after then-President Clinton ordered a wholesale reorganization of the government’s counterintelligence operation “to better fulfill its mission” of identifying and repelling foreign threats.

That reorganization is barely underway; Freeh just named a veteran Portland FBI agent this month to the newly created post of counterintelligence executive. But already, the Hanssen case is forcing the intelligence community to reexamine its role in the post-Cold War era, particularly as it relates to Russia.

FBI Has Resisted Use of Polygraphs

Questions abound:

* How far is the FBI willing to go in expanding its use of polygraphs, audits and other security measures against its own agents to ferret out double agents?

Freeh and other FBI officials have long resisted the idea of wide-scale polygraph tests for their agents. But under pressure from Congress because of the embarrassment of the Hanssen affair, the bureau has now agreed--tentatively--to beef up its internal security.

* Where should the intelligence community focus its vast resources?

At the height of the Cold War, virtually all roads led to Moscow. But with the demise of the Soviet Union and the flare-up of nuclear and other national security threats from such hot spots as China, Pakistan, North Korea, Iraq and other nations, the focus has become more muddled. President Bush acknowledged as much in a tour this week of the CIA complex in Langley, Va., saying that the many nuclear, biological and terrorist threats around the world today are “hard to define and defend against.”

By some estimates, more than a third of U.S. intelligence resources have been diverted from Russia in recent years, and Hanssen’s arrest has led some experts to believe the intelligence pendulum needs to swing back. Moreover, several Justice Department officials asserted that efforts directed at Russia may have been hampered by departmental restructurings in the mid-1990s that limited contact between FBI agents and prosecutors, a problem identified in a still-secret report on the Wen Ho Lee controversy.

* And, more fundamentally, what is the endgame? In the post-Cold War era, what do the United States and Russia hope to achieve with their espionage?

“The central question about spying today,” University of Georgia political scientist Loch K. Johnson wrote last year in the journal Foreign Policy, “is whether it is still necessary.”

“We spy, they spy. It all becomes quite dizzying after a while because you don’t know who is a mole, a double agent, a triple agent. It’s a wilderness of mirrors,” Johnson, who specializes in intelligence and national security, said in an interview.

The benefits, experts say, are inherently difficult to gauge.

The United States spends billions of dollars developing and building the most sophisticated spy hardware in the world; for example, another major satellite project is underway in Southern California to intercept communications from space.

But if Hanssen did in fact give the Russians critical data about U.S. spying beginning in 1985 as alleged, experts ask, how reliable is the information that U.S. agents have gleaned from satellites, spy tunnels, eavesdropping operations and other trade craft?

Russian sources claim, for instance, that they knew for years that the United States had built a massive spy tunnel underneath the Soviet Embassy in Washington. The disclosure of the tunnel’s existence earlier this month was old news to them, the Russians said.

“We don’t know how much disinformation we’ve been fed by the Russians,” said Bamford. “That’s been a factor here for at least the last 15 years with Hanssen. There’s got to be a major assessment of how much we’ve been given that’s phony.”

Professor Johnson maintains that the “gold-plated satellites” the United States uses to listen in on the world have been rendered increasingly ineffective by advances in communications, such as digital cell phones and underground and underwater fiber optics, which are more difficult to intercept.

“We’ve got a sky full of increasingly useless NSA satellites that can’t do the job they once could, so there’s a lot of money thrown at the problem that may not be well used,” he said.

Moreover, some outside experts assert that the U.S. spy community is spending vast amounts of money and resources--and risking diplomatic relations--to get information that might be readily available through public sources in the age of the Internet.

Steele, the former CIA agent who operates a private intelligence outfit called Open Source Solutions, is a big backer of this idea.

He recalls a telling episode a few years ago, when a government commission was exploring espionage shortcomings exposed by another infamous Russian spy--former CIA agent Aldrich H. Ames. As Steele blasted the intelligence community for ignoring “open sources” of information, a retired general laid down a challenge: Steele would go up against the CIA in finding out all they could about events unfolding in Burundi and report back in a few days.

Steele made six phone calls, drawing on public resources such as Jane’s Information Group to generate information on the history of tribal conflict, maps showing areas of conflict, and detailed figures on weapons and personnel. Commission members were impressed by how well he’d fared against the CIA and, Steele added, “Most of what I needed to know was not secret.”

But one U.S. intelligence official, while refusing to discuss details, said the use of so-called open source information “has always been extremely important to the U.S. government, and it will continue to be.”

In the wake of the Hanssen case, all agree, the stakes are now even higher.

“We’ve underestimated our enemies,” said Martin, the former Justice Department spy prosecutor. “Russia has a vacuum cleaner mentality when it comes to sucking up intelligence from potential adversaries, particularly the United States, and that continues today. . . . And it’s going to take a long time before we rebuild from this.”

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Lichtblau reported from Washington and Daniszewski from Moscow.