REPORT TO THE EDAC EXECUTIVE COMMITTEE ON OPERATIONS OF THE DIVERSION CONTROL NETWORK FROM JANUARY 1, 1954 TO APRIL 30, 1954

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00328A000200160019-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 12, 2016
• Document Release Date: March 30, 2000
• Sequence Number: 19
• Publication Date: May 18, 1954
• Content Type: REPORT

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SECRET
May 18, 1954.
REPORT TO THE EDAC EXECUTIVE COMMITTEE
ON OPERATIONS OF THE DI SIGN CONTROL NETWORK
From January 1, 1954 to April 30, 1934
T. Background
During the summer of 1953, the EDAC agencies reappraised the adequacy of
intelligence support and action on diversion cases They concluded that exist-
ing arrangements were too diffuse and uncertain to insure systematic intelligence
follow-ups and timely, coordinated actions Steps were clearly necessary to estab-
lish additional machinery in Washington. The EDAC Executive Committee, after ex-
ploring the question at some length, established the Diversion Control Network on
October 20, 1953 (ED/EC D-37/3), On January 1, 1951, the Network commenced opera-
tions,
II. Terms of Reference
Under the terms of reference of the Diversion Control Network the general
responsibilities of the cognizant agencies remain unchanged, but designated
Diversion Control officers in MDAC/FOA, EDS/State and ORR/CIA constitute points
of contact for the performance of the following functionsa .
1. Provide a continuous and systematic check on the intelligence
build-up and action disposition of all potential preventive action cases.
2, Serve as the central contact point between the Diversion Control
Network and the EDAC structure (including all economic defense agencies other
than State and CIA),
3, Serve as a reference point, a service facility, and a medium of
communication and coordination between intelligence and action elements,
B. EDS/State
1. Prepare and coordinate follow-up requests for the collection,
by Foreign Service posts, of information required to fill critical gaps in in-
telligence on diversions and possible illegal movements of primary strategic
commodities to the Soviet bloc,
2. Assume, or coordinate within the State Department, responsibility
for preventive action on diversion cases which are suitable for State Department
action, whether or not the information has been received from Foreign Service
posts.
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C. oRR/c IA,
1. Collate, focus and transmit to appropriate action authorities
all available intelligence, regardless of origin., on potential preventive
action cases.
2. Prepare and coordinate follow-up requests for the collection.,
other than by Foreign Service posts, of information required to fill critical
gaps in such intelligence.
At the beginning of the period under review., it was thought that the par-
ticipation of Commerce, Treasury and Defense would be relatively limited. It
was., of course., envisaged that the intelligence and action components of all
cognizant EDAC agencies would be continuously informed and consulted as appro-
priate and asked to participate on matters involving their responsibilities or
special competence. But initially, the extent of the participation of these
three agencies was underestimated. Experience revealed., however, that it was
desirable to have all three agencies participate regularly. By the end of the
period the routine operations of the Network encompassed all six agencies.
III, operations of the Diversion Control Network
Cases are established by mutual agreement among the Network members, a
"case" being any effort to circumvent East-West trade controls which appears
to call for some sort of action by one or more of the member agencies. Action
may involve a file check by CIA, a despatch or telegram to one or more foreign
service posts, etc.
The volume of communications on diversions is so large that it is impracti-
cal to pursue all possible cases. It has been agreed that in general the Diversion
Control Network will confine its attention to transactions involving significant
amounts of International Ii..st I commodities which satisfy one or more of the fol-
lowing criteriao
1. There is a substantial chance of preventing an impending diversion.
2. Development of the facts in the case, even if the diversion cannot
be prevented., may yield enough information to assist in persuading or enabling a
COCOM country to plug a loophole in its enforcement machinery so that future di-
versions of this sort may be prevented.
The information and reports out of which DCN cases develop are provided by the
collection activities of the Foreign Service and of CIA. The principal role of
ORR/CIA in furnishing support to the DCN is to integrate the intelligence mater-
ials collected from these two sources. This involves assembling, collating and
appraising the significance of the individual reports, searching out amplifying
information in the various component parts of CIA and disseminating to the DCN
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members concerned both answers to specific spot inquiries and also summations of
the pertinent intelligence data that has been developed on a case basis. A
standardized procedure has been worked out for requesting the release of certain
CIA-collected information important to the development of particular DCN cases
and useful for wider dissemination to selected State Department posts overseas
as an aid in their case investigation or enforcement efforts.
The action agency members of the DCN also contribute to the assembling and
evaluating of transactions intelligence materials and assume the responsibility
for selecting and docketing DCN cases. Based on the intelligence materials the
action agencies take the lead in determining what specific action is to be
undertaken both in Washington and overseas. Instructions to the field serve
both to direct appropriate enforcement activities and to indicate lines of en-
deavor for additional intelligence collection efforts.
IV. Statistical Summary
Cases carried on initial inventory (January 1. 1954) m 102
Cases carried on final inventory (April 309 1954) - 172
Status of the cases carried on final inventory was as followsa
Transactions interrupted .e......... oGe 41
Diversions accomplished .e.eeee..eeoe.e 20
Outcome unknown ... .......ee.ee..eeocee 20
Surveillance continuing se.eeee.oeeeea. 74
Legitimate transactions 000600*00000000 6
Part interrupted and part diverted .e.. 6
Part diverted and part legitimate ..... 1
Part interrupted and part unknown 2
Total 172
V. Relations with USRO/ST
The current arrangements for division of responsibility between the
Diversion Control Network in Washington and the Office of Security Trade
Controls (USRO/ST) in Paris are as follows.,
a. Paris has responsibility for monitoring diversion cases which it
initiates unless relieved of this responsibility by Washington.
be Paris has responsibility for regional (Western European) diversion
cases on which preventive action must be taken promptly (i.e., within two or
three weeks).
It has become increasingly clear that these arrangements are too vague to
be satisfactory and that further clarification is necessary. A definite decision
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has been deferred, however., until such time as the Chairman of the Diversion
Control Network can visit USRO/ST and discuss the problems fully.
VI. Sped aI Problems
In addition to coordinating action on diversion cases, the Diversion Control
Network has dealt with a number of special problems. Both procedural and sub-
stantive aspects of the following questions have been considered., analysis of
Radio Free Europe reports on East-West
trade transactions. routinizing surveillance of copper movements from Chile
through Hamburg; lateral dissemination of intelligence in the field;
problems affecting the relations among Foreign Service posts;
and CIA/tashington; preparation of diversion case summaries
for specific purposes; encouraging naval, military and air attaches to provide
support to EDOs.
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