MEETING THE ESPIONAGE CHALLENGE: A REVIEW OF UNITED STATES COUNTERINTELLIGENCE AND SECURITY PROGRAMS - REPORT OF THE SELECT COMMITTEE ON INTELLIGENCE UNITED STATES SENATE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00297R000300730001-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 144
• Document Creation Date: December 23, 2016
• Document Release Date: August 1, 2013
• Sequence Number: 1
• Publication Date: October 7, 1986
• Content Type: MISC

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ILL/F"
99th Congress Report
2d Session SENATE 99-4
MEETING THE ESPIONAGE CHALLENGE:
A REVIEW OF UNITED STATES COUNTERINTELLIGENCE
AND SECURITY PROGRAMS
REPORT
OF THE
SELECT COMMITTEE ON INTELLIGENCE
UNITED STATES SENATE
October 7, 1986
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I.
TABLE OF CONTENTS
Introduction and Summary
PAGE
1
A.
Background
1
B.
Organization of the U.S. Government to Meet the
4
Hostile Intelligence Challenge
C.
Counterintelligence: Learning the Lessons of
6
Recent .Cases
0...Security
Countermeasures: Defending on Many Fronts
8
?E..
Budgetary Impact
12
F.
Legislative Proposals
13
G.
Respect. for. Individual Rights
15
II.
The Hostile Intelligence Threat
16
A.
Damage to National Security
16
B.
Sources of the Threat
23
1. Soviet Union
23
2. Warsaw Pact and Cuba
25
3. People's Republic of China
26
4. Other Countries
28
C.
Human Intelligence Techniques
28
1. Official Presence
30
2. Other Aspects of the Hostile Intelligence Presence
32
3. Recruited Agents
35
4. Soviet MIthods of Recruitment
37
5. Technology Transfer
41
6. Active Measures and Disinformation
43
D.
Technical Collection Operations
47
1. Interception of Communications
48
2. Other Forms of Electronic Surveillance
50
3. Penetration of Computer Systems
51
4. Imagery
53
E. .
Summary
54
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III.
A.
B.
C.
D.
Counterintelligence
56
56
59
66
71
Need for a Counterintelligence Strategy
Hostile Presence Limits
Counterintelligence Awareness Programs
Domestic Operations
1. Coverage of Establishments and Officers
72
2. Offensive Operations
74
3. Espionage Investigations and Prosecutions
77
E.
Overseas Operations
83
F.
Personnel Management and Training
84
IV.
Security Countermeasures
86
A.
A National Strategic Security Program
88
B.
Personnel Security
97
C.
Information Security
111
D.
Communications, Computer and Emanations Security
119.
E.
Technical and Physical Security
126
F.
Industrial Security
130
G.
Congressional Security
134
Apoendices
A. U.S. v. Whitworth, Affidavit of RADM William O. Studeman
and Declaration of John L. Martin
B. Defense Security Institute Analysis of the Harper Case
C. Defense Security Institute Analysis of the Bell/Zacharski
Case
D. Defense Security Institute Analysis of the Cavanagh Case
E. U.S. v. Zakharov, Affidavit for an Arrest Warrant and
Search Warrant; and Indictment
F. Forged letter from Herbert Romerstein to Senator David
Durenberger; actual letter from Romerstein to LTG
Robert L. Schweitzer; and forged letter from
LTC Schweitzer to President Augusto Pinochet of Chile.
C. Draft Senate Security Manual
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I. INTRODUCTION AND SUMMARY
As espionage is ancient, so is counterintelligence.
The Chinese military theorist Sun Tzu stated the principle
in the fourth century B.C.: "It is essential to seek out
enemy agents who have come to conduct espionage against
you...."* Today, over two millenia later, the battle is
still being waged.
A. Background
At the beginning of the 99th Congress, the Select
Committee on Intelligence initiated a comprehensive review
of the capabilities of U.S. counterintelligence and security
programs for dealing with the threat to the United States
from Soviet espionage and other hostile intelligence activities.
This decision was an outgrowth of eight years of Committee
interest in these issues. The review is also consonant with
the Committee's mission to "oversee and make continuing
studies of the intelligence activities and programs of the
United States Government, and to submit to the Senate
appropriate proposals for legislation and report to the Senate
concerning such intelligence activities and programs."
Senate Resolution 400, which established the Committee ten
years ago, specifies that intelligence activities include
"activities taken to counter similar activities directed
against the United States."
The Committee's review had barely begun when the
arrests of John Walker and two of his relatives began to
make 1985 the "Year of the Spy." In June, 1985, the Committee
pledged that it would prepare a report to the full Senate at
the earliest possible time. In light of this Committee's
ongoing efforts, the Senate decided not to create a National
Commission on Espionage and Security. On June 20, 1985, the
Chairman of the Committee wrote to the President, saying,
"You and we share an historic opportunity -- both to
dramatically improve U.S. counterintelligence and security
and to demonstrate how Congress and the Executive can work
together to achieve progress in sensitive intelligence
areas."
*Sun Tzu, The Art of War, trans. by Samuel B. Griffith,
Oxford University Press (London: 1963), p. 148.
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The ensuing fifteen months have generated an amazingly
sustained interest in counterintelligence and security on
the part of both policymakers and the public. There have
been over a dozen arrests for espionage, nearly all leading
to guilty pleas or verdicts; Americans and West Germans with
sensitive information have defected to the Soviet Union and
East Germany; and Soviets with sensitive information have
defected to the West, and in one major case then returned to
the Soviet Union. Most recently, the Soviet arrest of an
innocent American journalist in retaliation for the U.S.
arrest of a Soviet U.N. employee has made it clear that
counterintelligence, while seemingly a peripheral element in
superpower relations, can even become the focus of U.S.-Soviet
confrontation.
The "Year of the Spy" was characterized by intensive
Executive branch attention to problems of counterintelligence
and security. Of particular note were the efforts of the
Department of Defense Security Review Commission, chaired by
General Richard G. Stilwell, USA (retired), and the Secretary
of State's Advisory Panel on Overseas Security, chaired by
Admiral Bobby R. Inman, USN (retired) and Executive branch
steps to implement their recommendations. The Stilwell
Commission led to significant progress in Defense Department
personnel and information security policies, and the Inman
Panel led to restructuring of State Department security
functions and a major embassy rebuilding program around the
world.
The Committee's efforts have encouraged, and have
greatly benefitted from, this sustained Executive branch
attention to counterintelligence and security matters.
The Committee received an unprecedented level of cooperation
from the President, the National Security Council staff, the
Intelligence Community Staff, and the many departments and
agencies with counterintelligence or security functions.
Executive branch experts and policymakers testified in
sixteen closed hearings on specific counterintelligence
cases and the current state of U.S. programs to counter
hostile intelligence activities. Scores of staff briefings
and the provision to the Committee of many sensitive
Executive branch studies enabled the Committee to compile
the very best ideas and recommendations of those in govern-
ment, as well as suggestions from security experts in
industry. The Committee, in turn, evaluated those ideas and
submitted a comprehensive set of recommendations for Executive
branch consideration.
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The Intelligence Authorization Act for FY 1986 included
a statutory requirement that the President submit to the
House and Senate Intelligence Committees a report on the
capabilities, programs and policies of the United States
to protect against, detect, monitor, counter and limit
intelligence activities by foreign powers, within and
outside the United States, directed at the United States
Government. The report was to include plans for improvements
that the Executive branch has authority to effectuate on its
own, and recommendations for improvements that would require
legislation. To assist the Senate Intelligence Committee in
its work, the conferees on the Act requested an interim
report developed in consultation with the Intelligence
Committees. This Committee, in turn, prepared its own
interim report, which it shared with the Executive branch
last winter.
The many good ideas and recommendations that the
Committee obtained from Executive branch officials and
studies had not yet been implemented for two basic reasons:
counterintelligence and security had failed to receive
sustained attention; and the ideas frequently challenged
established ways of doing things, cut across bureaucratic
lines of responsibility, or required substantial changes in
resource allocation. External events provided substantial
impetus for interagency attention to these issues. The
Committee's efforts and the Executive branch's cooperation
are producing the interagency decision-making that is
required for progress.
The President began, responding to a request from the
Committee, by designating the Director of Central Intelligence
to represent the Administration at a series of Committee
hearings on counterintelligence and security programs and
selecting a counterintelligence expert on the NSC staff as
liaison to the Committee. An interagency mechanism under
the Senior Interdeparmental Group for Intelligence (SIG-I)
supplied coordinated Executive branch reactions to the
Committee's interim report recommendations. This not only
helped the Committee, but also gave the Executive branch
itself the opportunity to address and decide these important
policy issues. The resulting positions were conveyed to the
Committee in the President's interim report and referred to
an NSC staff committee for implementation.
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The President's President's interim report and subsequent consulta-
tion between Executive branch officials and the Committee
were thus of great value in the preparation of the present
Report. The Committee looks forward to receipt of the
President's final report, which will serve as an important
benchmark of the progress achieved thus far to strengthen
counterintelligence and security capabilities.
The summary that follows is based upon the Committee's
unclassified, public Report. The Committee's full Report to
the Senate contains substantial additional material, including
findings and recommendations that remain classified.
B. Organization of the U.S. Government to Meet the
Hostile Intelligence Challenge
The Committee's findings underscore a fundamental challenge
to the nation. The hostile intelligence threat is more
serious than anyone in the Government has yet acknowledged
publicly. The combination of human espionage and sophisticated
technical collection has done immense damage to the national
security. To respond to the threat, the United States must maintain
effective counterintelligence efforts to detect and neutralize
hostile intelligence operations directly, and defensive
security countermeasures to protect sensitive information
and activities.
The Committee believes that, as a result of significant
improvements in recent years, the nation's counterintelligence
structure is fundamentally sound, although particular
elements need to be strengthened. The Executive branch and
the Committee agree on the importance of developing and
implementing a coherent national counterintelligence strategy
that integrates the work of the FBI, the CIA and the Departments
of State, Defense and Justice. Executive branch agencies
are already drafting such a document. The Committee expects
this strategy to play a major role in its oversight of
Executive branch counterintelligence efforts in the years to
come.
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By contrast, defensive security programs lack the
resources and national policy direction needed to cope with
expanding hostile intelligence operations. Personnel
security policies remain fragmented despite persistent
attempts to develop national standards. Information security
reforms are long overdue. America faces vulnerability to
hostile intelligence activities in the areas of communications
and computer security, where countermeasures must keep pace
with increasing technological change. Consequently, in
December, 1985, the Committee called for the development of
a National Strategic Security Program that would address
these issues. The Committee believes that a new and more
permanent national policy mechanism is needed to create this
program and then to coordinate and foster the protection of
information and activities having the greatest strategic
importance.
In recent months, the Executive branch has come to
understand the sense of urgency with which the Committee
views the need for an integrated strategic security program and an
improved security policy structure. An effort to develop such
a security program is now likely. The Director of Central
Intelligence, in his capacity as chairman of the Senior
Interdepartmental Group for Intelligence, recently revamped
the security committee structure under the SIG-I and
called for greater participation in those committees by
policymakers, so that decisions could be reached on interagency
issues and policy initiatives.
The Committee believes that these changes are insufficient
because they fail to bridge the gaps between the various
security disciplines. Most Executive branch officials,
although opposing further changes at this time, do not
dispute the likely need for them in the future. The Committee
will continue to push for more effective policy review and
formulation, for it believes that the national security
cannot afford much more delay. This is especially true if
the current Administration is to leave as a legacy a workable
security policy system that will not have to be reinvented
by each succeeding administration. The Committee recommends
that the eventual new security policy structure be one that
transcends current politics and policy and is codified in an
Executive Order.
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C. Counterintelligence: Learning the Lessons of
Recent Cases
The Committee has examined in detail each of the
espionage cases that have come to public attention in
recent years, as well as the Yurchenko defection case and
cases that remain classified. Although this Report does
not discuss individual cases in detail, many of the
recommendations in sections III and IV reflect lessons
learned through those cases.
The first lesson of these cases is the need for
greater counterintelligence and security awareness. The
Committee found insufficient tailoring of security awareness
material to the needs of particular audiences -- defense
contractors, workers at government facilities, U.S. personnel
stationed overseas, members of ethnic groups known to be
targeted by foreign intelligence services, congressional
staff and others. The usefulness of such material is
illustrated by the fact that once the U.S. Navy began to
improve its security awareness briefings after the Walker
case, co-workers of Jonathan Pollard noted his unusual
pattern of document requests and alerted authorities..
The second lesson is the need for earlier involvement
of the FBI and the Department of Justice in cases of suspected
espionage. When offices or agencies have held back from
bringing in the FBI, events have often gotten out of control.
When the FBI has been alerted in time, their investigative
resources and interview skills have often led to confessions.
When the Justice Department has been involved at an early
stage, cases destined for prosecution have been built on
more solid ground, resulting in numerous convictions.
The third lesson is the need for more attention and
better access to information on the finances, foreign travel
and foreign contacts of persons with sensitive information.
The Committee found that the FBI sometimes lacked access
to financial and telephone records in its counterintelligence
investigations; that insufficient attention was given to signs
of trouble regarding former employees with sensitive accesses;
and that too few people were alerting office security
personnel or the FBI when they were approached by possible
foreign intelligence officers.
The Chin, Pollard and Scranage cases have taught the
clear lesson that espionage services outside the Soviet bloc
also engage in illegal activities targeted at the United States,
which must not be tolerated. The Bell and Harper cases,
among many, underscored the need for controls on the
activities of certain Eastern European representatives
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and of U.S. companies controlled by the Soviet Union
or its allies. And the Zakharov case, like the Enger
and Chernyayev case eight years ago, reminds us that the
KGB is willing to use the United Nations Secretariat for
intelligence cover.
The Edward Lee Howard case led to investigations
and corrective action in the CIA, just as the Walker case
led to formation of the Stilwell Commission and to additional
steps by the U.S. Navy. The FBI and the Justice Department
are still absorbing the lessons of the Howard case. The
Committee will continue to monitor how well all the agencies
implement improvements in response to those lessons.
The defection and re-defection of Vitaly Yurchenko,
which highlighted both the counterintelligence value of
defectors and apparent shortcomings in their handling and
resettlement, also led to internal reviews and useful
actions by the CIA to improve its handling of defectors.
The Committee believes that more must be done, however, to
change the basic objectives with which the U.S. Government
approaches defectors. We must accept the obligation to help
defectors succeed in, and contribute to, American society.
Executive branch efforts to analyze and learn from the
vurchenko case continue, and the Committee expects to see
more progress in this area.
The CIA has taken significant steps to improve
recruitment and career development programs for counter-
intelligence oersonnel. The Scranage and Howard cases
suggest that there was, and is, substantial need for improve-
ment in CIA counterintelligence, and the Committee will
continue to monitor CIA efforts. The military services and
the FBI are also beginning to improve their recruitment and
career development programs for counterintelligence, but
progress is uneven.
The Committee will continue to press Executive branch
agencies to incorporate into their operations improved
counterintelligence awareness and procedures. While agencies
have moved in the last year to remedy problems that were
exposed in recent espionage cases, they have been much
slower to accept the painful need to confront the implications
of hostile intelligence successes. Attentiveness to possible
hostile knowledge ?of classified U.S. operations must be
increased, and analysis of the impact of known losses of
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classified information must extend to the unhappy possibility
that operations or weapons systems will require modification.
While there is always a need not to let worst-case analyses
paralyze our military and intelligence services, the greater
current danger appears to be a wishing away of the consequences
of hostile intelligence efforts.
D. Security Countermeasures: Defending on Many Fronts
The National Strategic Security Program that the
Committee recommends will have to address a multitude of
issues, cutting across both agency and disciplinary lines.
Thus, different agencies have failed for years to agree upon
the scope and methods to be used in background investigations
for Top Secret and Sensitive Compartmented Information
clearances; the result has been wasteful duplication of
investigations. Military services, in particular, have been
permitted to establish far too many special access programs,
all in the name of security but sometimes with lower security
standards than the regular programs maintain. Technical
experts who run our nation's computer security programs have
poured additional funds into specially-designed hardware and
software to protect sensitive computer systems, while doing
little to combat the major personnel problem of assuring
?the reliability of computer users with access to so
much sensitive data. The various agencies that deal
with technical security issues have only recently begun to
forge effective cooperation on approaches to those issues.
And this country has a long way to go in the development of
operations security practices to protect sensitive programs
against hostile intelligence collection activities.
This Report groups many security issues by discipline,
but the Committee feels strongly that many, and perhaps
most, 'of. those issues will remain unresolved until a more
effective security policy structure is implemented. There is
a need to upgrade security across the board, with improved
recruitment, improved training of personnel ranging from
security clearance adjudicators to polygraphers and technical
security personnel, and upgraded job classifications
that reflect the increased importance and sophistication
of modern security specializations.
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In the field of personnel security, the Committee
found, as did the Stilwell Commission, that insufficient
attention was being paid to the reinvestigation of those who
already have security clearances. Both the Defense Department
? and the intelligence community now understand the importance
of reducing the backlog in those reinvestigations, and the
Committee has worked to ensure that the needed funds
to accomplish this swiftly are provided in legislation. One
reason for recommending interagency agreement on a "single
scope" background investigation is the hope that funds thus
saved could be put to work on the pressing reinvestigation
task, as well as on upgrading Secret clearance investigations
as recommended by the Stilwell Commission. The Defense
Department has reduced the number of cleared personnel by
some 900,000 persons -- over 20% -- thus also easing some of
the clearance investigation costs.
There is a crisis of standards in sensitive governmental
Positions. The Committee found no rigorous standards
regarding the hiring of persons who have committed felonies.
Follow-up measures after persons with admitted problems
like oast drug use are granted clearances are poor or
nonexistent. Even the most sensitive clearances are granted
to virtually anyone whose record does not contain clear
disqualifying factors, rather than being based upon a
selection Process that chooses those persons most able to
cope with the pressures of sensitive access and security.
In light of this, the Committee has supported Defense
Department efforts to develop counterintelligence polygraph
programs with the highest quality controls, pursuant to the
test program approved by the House and Senate Armed Services
Committees.
The Committee has found that the classification system is
unduly complicated and that it breeds cynicism and confusion
in those who create and use classified information. The
Committee believes that a streamlined system, in which
the Confidential classification is eliminated and all
information is either Secret or the equivalent of Sensitive
Compartmented Information, would be much more workable
despite the major changes and initial costs that this would
entail.
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The Committee also found that authorized (but uncontrolled)
disclosures and unauthorized leaks of classified information
are so commonplace as to imperil many sensitive programs and
operations. Recent Executive branch efforts to investigate
instances of unauthorized disclosure of classified information
and to punish those responsible are a welcome development.
The Committee calls on the Executive branch to go further,
however, and to adopt procedures governing authorized
disclosures, so that there will be a record of such dis-
closures -- thus relieving the FBI of the need to investigate
cases that are not real leaks -- and so that those who
originate classified information will have a chance to argue
against its release. There must be both firmness and
order in the information security system before it will gain
the respect of the millions of people who handle classified
information.
The Committee was pleased to learn of the National
Security Agency's many efforts to improve the communications
security of the U.S. Government. It supports NSA's plan for
the development and licensing for distribution of low-cost
secure voice telephone equipment. In addition, the Committee
has proposed Fiscal Year 1987 funding to improve communications
security by beginning the encryption of many domestic
commercial communications satellite links.
The Committee endorses the role of NSA in developing
computer security hardware, systems and standards for both
the government and segments of the private sector, in
cooperation with the National Bureau of Standards. The
Committee'recommends, however, increased attention to
personnel security aspects of protecting computerized
information. It supports State Department efforts to place
U.S. citizens in charge of the computers in U.S. embassies
overseas. The Committee believes that personnel with
access to the most sensitive computer systems should be
included in personnel reliability programs similar to those
now being instituted for persons with sensitive cryptographic
access. And it believes that there must be better analysis
of information system vulnerabilities before permission is
given to put sensitive information on those systems.
The Committee was very concerned over serious deficiencies
in the security of U.S. facilities overseas, primarily those
managed by the Department of State. The bugging of typewriters
in the U.S. embassy in Moscow graphically demonstrated both
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Soviet sophistication and U.S. vulnerabilities. Steps are
being taken to combat technical penetration efforts, ranging
from the embassy rebuidling program proposed by the Inman
Panel to an equipment protection program that was funded in
the Diplomatic Security Act. The Committee supports these
and other efforts, and it has worked to ensure that agencies
will work closely with each other to bring the best expertise
to bear on technical security problems.
The Committee has also found the industrial security
system for classified defense and intelligence contracts to
be seriously deficient, to an extent that warrants consideration
of major changes. The Committee recommends a pilot program
to assign Defense Investigative Service personnel to large
sensitive contractor facilities on a full-time basis. It
proposes changing the Federal Acquisition Regulations to
make security a direct cost in contracts, rather than an
overhead cost that is inevitably subjected to corner-cutting.
It suggests greater incentives in contracts for security
performance, as well as a requirement that security officers
be trained and government-certified. Many of the Committee's
recommendations regarding personnel and information security
will also have a direct impact upon industrial security
practices.
Attention to security requirements is also needed
in Congress itself. The Committee found that there was
no centralized registry of Senate personnel with clearances,
little or no security awareness material for Congress, and
little understanding of how to protect sensitive information
that is provided to Member offices and committees. At the
request of the Majority Leader, the Committee joined with
the Committee on Rules and Administration and the Committee
on Governmental Affairs in recommending that a Senate
security office be established to develop and oversee
implementation of standards and procedures in these areas.
The Committees recommended that the security office be
instructed to survey the extent of clearances among Senate
staff, to recommend how the number of cleared personnel
might be reduced, and to develop a Senate security manual,
the, provisions of which would be binding on all Members,
Officers and employees of the Senate. The Committee continues
to work closely with Senate leadership on these efforts,
with a goal of creating a security office early in the next
session.
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E. Budgetary Impact
The Committee's recommendations will not be cost-free.
Some savings would be achieved through streamlining the
classification system, adopting common standards for background
investigations, and implementating current national policies that
lessen the requirement for TEMPEST protection of U.S.-based
information-processing equipment. But the Committee believes
that the U.S. Government has suffered for years from inadequate
investment in security countermeasures.
In the Intelligence Authorization Act for Fiscal Year
1987, the Committee has proposed substantial increases in
spending for security in the intelligence community and in
related Defense Department programs. Among these initiatives
are an additional S129 million for communications security,
including the first year of a five-year plan to encrypt
sensitive domestic communications satellite channels, and an
additional $22 million to improve personnel security in the
Defense Department. In 1985, Committee members proposed
what became a $35 million supplemental appropriation for
improved technical security at U.S. facilities abroad. In
1986, the Congress passed the Diplomatic Security Act and a
supplemental appropriation providing funds for a massive
program to upgrade security at U.S. missions. This commitment
is designed for protection against not only terrorism,
but also hostile intelligence penetration.
The additional expenditures recommended by the
Committee for FY 1987 would amount to an increase in annual
spending for counterintelligence and security of at least
$500 million above the funding level in FY 1985. This
commitment must continue in the years ahead, when further
increases may well be required because of the growing
technical, communications and computer security vulnerabilities
From a larger perspective, however, the costs of improved
security will be offset by the gains to the United States in
the overall U.S.-Soviet balance of military, intelligence,
economic and political capabilities. Soviet espionage
successes have cost our country or saved our adversaries
billions of dollars. Just as our nation's investment in
intelligence-gathering programs has a significant payoff for
national security, an increased investment in counterintelli-
gence and security programs will help deny comparable
advantages to the Soviets.
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F. Legislative Proposals
The great majority of the Committee's findings and
recommendations relate to administrative actions. Some
needed actions do require, however, legislative authorization.
In these cases, the Committee has either recommended or,
often, already introduced the needed legislation.
Members of the Committee have sponsored several pieces
of legislation in recent years to bring the hostile intelligence
presence in the United States under some control. The
Committee recommends that these be implemented so as to
maintain a limit of 320 on permanently accredited Soviet
embassy and consular personnel. The Committee also found
gaps in current legislation and recommended three further
steps: a legislated policy of equivalence between the U.S.
and Soviet U.N. missions (introduced by Senators Leahy and
Cohen as S. 1773); registration of commercial entities
controlled by Warsaw Pact governments (introduced by Senator
Roth as S. 1900); and extension of the Foreign Missions Act
to include commercial and other entities controlled by
foreign governments (introduced by Senators Durenberger and
Leahy as S. 1947). All three proposals have been attached
to the Intelligence Authorization Act for Fiscal Year
1987.
The FBI could benefit greatly from legislation in
several areas. The Committee has added provisions to
the Intelligence Authorization Act for Fiscal Year 1987
that would require banks and telecommunications companies to
comply with FBI requests for access to customer records
pursuant to duly authorized full counterintelligence investi-
gations. State privacy laws and fears of civil suits have
inhibited some companies from cooperating with the FBI in
recent years. The Committee is also prepared to introduce
legislation to create a court order system, comparable to
that which now exists under the Foreign Intelligence
Surveillance Act, to authorize physical searches for counter-
intelligence purposes. This would avert the need to rely on
assertions of inherent Presidential powers in this area and
would make it easier to use material thus obtained in
eventual prosecutions.
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The FBI has a problem in providing sufficient financial
incentives to its Agents who must work in New York City,
which in turn makes it difficult to retain counterintelligence
specialists in that Field Office for substantial periods
of time. If the FBI determines that legislation in required
to address this problem, the Committee is prepared to
work with the FBI to develop a suitable legislative approach.
The Committee recommends that the FBI and the Justice
Department develop improved means of prosecuting foreign
intelligence officers or agents who enter the United States
illegally or under non-official cover and who engage in
intelligence support functions without actually passing
classified information. This could result in legislative
proposals in the next Congress.
Although the Committee has not recommended legislation
regarding assistance to defectors, it is quite possible that
the Permanent Subcommittee on Investigations of the Committee
on Governmental Affairs will make such recommendations when
it completes its inquiry into that matter. The Intelligence
Committee expects to work closely with the Permanent
Subcommittee on this issue.
The Committee supports recent Defense Department efforts
to develop a counterintelligence polygraph programs with
strict quality controls, modeled on the Air Force's successful
SEVEN SCREENS program, The Committee recommends that the
Armed Services Committee either propose legislation to
establish a permanent authority for this polygraph effort or
extend the current test program under which DoD is operating
and set a date by which the issue of permanent authority
will be decided.
Deficiencies in congressional security have prompted
the Committee, in conjunction with the Committees on Govern-
mental Affairs and Rules and Administration, to propose that
the Senate establish a Senate security office with responsi-
bilities in the areas of personnel and information security.
The office would be established by Senate Resolution.
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The Committee has not recommended any legislation
at this time to deal with the unauthorized disclosure
of classified information. It believes that consideration
of this issue should be postponed until appeals are completed
in the Morison case and the applicability ?of the federal
espionage statutes to leaks and other disclosures has been
decided. In addition, the Committee believes that there are
significant administrative steps that can and ought to be
implemented more quickly, in particular the adoption of
procedures to govern the authorized disclosure of classified
information.
G. Respect for Individual Rights
A free society cannot allow the fear of foreign
adversaries to undermine the constitutionally protected
rights that define the true character of our nation.
This principle has guided the Committee in its review of
counterintelligence and security programs. As President
Reagan stated on June 29, 1985:
fwle can counter this hostile threat and
still remain true to our values. We don't
need to fight repression by becoming
repressive ourselves....But we need to put
our cleverness and determination to work
and we need to deal severely with those who
betray our country. We should begin by
realizing that spying is a fact of life
and that all of us need to be better informed
about the unchanging realities of the Soviet
system There is no quick fix to this problem.
Without hysteria or finger pointing, let
us move calmly and deliberately together to
protect freedom.
The Committee's recommendations seek to strengthen U.S.
counterintelligence and security measures without violating
constitutional rights or upsetting the delicate balance
between security and freedom. A broad range of improvements
can be made without adversely affecting the rights of
individuals, and the additional tools needed for counterin-
telligence and security purposes can be made subject to
reasonable safeguards that minimize intrusion into the
privacy of American citizens.
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II. THE HOSTILE INTELLIGENCE THREAT
The hostile intelligence threat to the United States
is severe, and it confronts the Government and the American
people with increasingly serious challenges. The threat
spans all types of intelligence operations from traditional
human espionage to tbe most sophisticated electronic
devices. Every kind of sensitive information is vulnerable,
including classified government information, emerging
technological breakthroughs and private financial trans-
actions. Foreign intelligence services also sometimes target
the political process, seeking both information and influence.
What has made the threat more vivid to the Congress and
the public are the many espionage cases that surfaced
publicly in the last few years. During 1984-86, twenty-
five people have been convicted or have pleaded guilty
to charges of spying against the United States. Another
person charged with espionage, Edward Lee Howard, has
defected to the Soviet Union; a Soviet employee of the
'inited Nations has pleaded "no contest" to espionage charges;
and several foreign diplomats have been detained and/or
ousted because of their espionage activities. The upsurge
in espionage prosecutions began in the late seventies; and
FBI Director William H. Webster said in 1984 that
the espionage cases that came to public attention were
"merely the tip of the iceberg." The Committee believes
it is vital for the Senate and the public to be aware of
the full dimensions of the threat, technical as well as
human.
A. Damage to National Security
National policymakers must recognize as clearly as
Possible the extent and gravity of the damage to national
security interests caused by hostile intelligence operations.
Based on the public and classified record, the Committee
has found the aggregate damage in recent years to be far
greater than anyone in the U.S. Government has yet acknowledged
Publicly. The Committee has reviewed the actual and probable
injury resulting from recent espionage cases, technical
security compromises and technology transfer. The in-
escapable conclusion is that the damage was immense:
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U.S. military plans and capabilities have been
seriously compromised;
o U.S. intelligence operations were gravely
impaired;
o U.S. technological advantages have been overcome
in some areas;
o U.S. diplomatic secrets were exposed to the
scrutiny of our adversaries; and
o Sensitive aspects of U.S. economic life were
subject to constant Soviet monitoring.
Foreign intelligence services have exploited human and
technical vulnerabilities to penetrate some of the most
vital parts of our defense, intelligence and foreign
policy structure, including many Executive branch agencies
and the Congress. A sober examination of the damage is
essential to make rational decisions on policy initiatives
and resource allocation for counterintelligence and security
programs.
In assessing the military damage, the Committee agrees
with an estimate by a senior FBI official that the espionage
cases over the past several years have involved billions
of dollars of actual and potential damage to U.S. military
Programs. The cases primarily include John Walker and Jerry
Whitworth, James Harper, William Holden Bell, Thomas Cavanagh,
Christopher Cooke and Ernest Forbrich.
Walker-Whitworth
Although the assessment in the Walker and Whitworth
cases is still incomplete, their information may have
enabled the Soviets to read some of the U.S. Navy's
most secret messages to the fleet from the 1960s to
the time of their arrests in 1985 and also possibly
reduced the U.S. lead in anti-submarine warfare.
The cryptographic material passed by John Walker and
Jerry Whitworth was exceptionally harmful, because
the Soviets could use it to decipher encrypted U.S.
Naval communications. Vitaly Yurchenko, the Soviet
KGB defector who later returned to the Soviet Union,
told U.S. authorities that the Soviets read over a
million coded messages as a result.
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(An official assessment of the damage prepared by the
Director of Naval Intelligence and a senior Justice
Department official, is provided in Appendix A.)
Harper
In 1979-81 James Harper passed to Polish intelligence
a huge array of materials pertaining to the survivability
of the Minuteman missile system and to U.S. defenses
against ballistic missile attack. He obtained the
information from a private firm doing contract research
for the U.S. Army Ballistic Missile Defense Advanced
Technology Center in Huntsville, Alabama. Harper
received approximately $250,000 for documents whose
loss Army experts have rated as "beyond calculation."
He also provided computer data-base tapes available
through his contacts in Silicon Valley. Harper's largest
single delivery occurred in 1980, when he took some
100 pounds of classified reports to Warsaw, where a
team of 20 KGB experts flown in from Moscow declared
them to be extremely valuable. KGB Chairman Yuri
Andropov commended the Polish intelligence unit handling
Harper for its efforts. (An account of the Harper
case prepared by the Defense Security Institute is
provided in Appendix B.)
Bell
William Holden Bell was recruited by a Polish intelligence
officer operating under commercial cover. As a project
manager in the Advanced Systems Division, Radar Systems
Group at Hughes International Corporation, Bell was
responsible for development and promotion of the radar
fire control product line of tank vehicles. From 1978
to 1981, Bell supplied Polish (and presumably Soviet)
intelligence extensive classified documents on the
Covert All-Weather Gun System (CAWGS), a proposed
tank gun using Low Probability of Intercept Radar
(LPIR) or "quiet radar." LPIR uses a disguised radar
signal that is difficult for enemy targets to identify
as radar; an enemy is thus prevented from taking
evasive action or using the radar signal for directing
return fire. (An account of the Bell-Zacharski case
prepared by the Defense Security Institute is provided
in Appendix C.)
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Cavanagh
The defense contractor case with the greatest potential
for devastating harm involved Thomas Cavanagh, an engineer
at Northrop Corporation. He was arrested in December, 1984,
for attempting to sell classified documents on Stealth
technology to the Soviets. The FBI intercepted his
attempt, and FBI agents posing as KGB officers made the
arrest after giving him $25,000 for the documents.
While no serious compromise actually occurred, FBI
Director Webster has said that Cavanagh's documents
contained "the core of the Stealth technology,"
which had "cost this country over $1 million an hour to
develop." (An account of the Cavanagh case prepared
by the Defense Security Institute is provided in
Appendix D.)
Cooke
Lt. Christopher Cooke, deputy commander of an Air
Force Titan missile crew, was charged with passing
classified information to the Soviets on U.S. strategic
missile capabilities in 1980-81. While the damage was
serious, the charge was dismissed because Air Force
prosecutors had offered him immunity to find out if he
was part of a larger spy ring (which he apparently
was not).
Forbrich
Ernst Forbrich, a West German auto mechanic, was
arrested in 1984 in Florida after buying a classified
military document from an undercover agent posing as
an Army officer. Forbrich appears to have been a
conduit who passed U.S. military secrets to East
German intelligence, and he admitted selling documents
to the East Germans for 17 years. Forbrich traveled
frequently to the United States, contacting former
U.S. military personnel who had served in West Germany.
Although he was convicted of espionage, none of the
former U.S. military personnel whom Forbrich contacted
was charged.
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The espionage damage to U.S. intelligence over the
past decade has been as great as the harm to military
programs. The cases that surfaced in 1985 -- Howard,
Pelton, Chin and Pollard -- represent a severe blow to U.S.
intelligence, with Howard and Pelton doing the greatest harm
because they compromised collection efforts directed at
high-priority targets in the Soviet Union. Other recent
cases involved FBI Agent Richard Miller, Army counterintelli-
gence specialist Richard Craig Smith, and CIA employees
Sharon Scranage and Karl Koecher.
Howard
Edward Lee Howard, a former case officer dismissed
by the CIA, was accused of selling intelligence secrets
to the Soviets and subsequently defected to Moscow.
Howard probably gave the Soviets information on
sensitive CIA ooerations in Moscow.
Pelton
R3FiaTU Pelton, a former communications specialist with
the National Security Agency from 1965 to 1979, was
convicted in 1986 of selling the Soviets information
about a highly classified U.S. intelligence collection
project targeted at the Soviet Union. Other aspects of
the damage caused by Pelton that did not surface at the
trial have not yet been completely evaluated.
Chin
Larry Wu-tai Chin gave the Chinese an inside view
of U.S. intelligence reporting on China and related
topics for decades, first as a translator for the
U.S. Army and then as a translator and foreign media
analyst for the CIA. Chin was a "plant" who received
intelligence training before his employment by the Army
in 1943. His reporting was highly praised by Chinese
officials.
Pollard
Jonathan Jay Pollard, a civilian intelligence analyst
with the Naval Investigative Service, pleaded guilty
in 1986 to the charge of illegally passing classified
documents to Israel. Pollard obtained a wide array of
intelligence reports on the Middle East for his Israeli
contacts.
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Miller
FBI Agent Richard Miller injured the entire intelligence
community, not just the FBI, when he provided the
Soviets in 1984 (through his Russian emigre lover
Svetlana Ogorodnikova) a document outlining overall
U.S. foreign intelligence collection priorities.
Smith
Richard Craig Smith, a former Army counterintelligence
agent, was charged in 1984 with selling information to
Soviet agents in Tokyo identifying U.S. double agents
being operated against Soviet intelligence. Smith was
acquitted in 1986 after asserting as his defense that
he had been working under the direction of CIA operatives
in Honolulu.
Koecher
Karl Koecher, a naturalized U.S. citizen of Czech origin,
worked as a translator for the CIA in the 1970s. He
and his wife were arrested in 1984 as they prepared to
fly to Switzerland. By then, the FBI had sufficient
information to establish that Koecher was trained and
sent to the United States in the 1960s to work as a
Czech "illegal" and penetrate U.S. intelligence.
Koecher was able to give Czech intelligence everything
he knew about such sensitive CIA information as he was
provided in his job as a translator.
Scranage
Sharon Scranage, a CIA operations support assistant in
Ghana, was convicted in 1985 of turning over classified
information, including the identities of CIA case
officers and clandestine sources, to Ghanaian intelli-
gence officials.
In addition to the damage to classified U.S. military
and intelligence programs, hostile intelligence services
have acquired sensitive technological data in the United
States, Western Europe, Japan and elsewhere. Soviet acquisition
of U.S. technology has significantly reduced the time it
took the Soviets to develop new weapons systems and field
countermeasures to U.S. systems. A recent example is the case
of Manfred Rotsch, a Director of Planning for a prominent
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West German aerospace company, who was arrested as a
Soviet agent. Rotsch was in a position to transfer detailed
manufacturing information on Western weapons systems
to the KGB, and the case points up the vulnerability of
U.S. advanced technology released in coproduction or licensing
programs. The research and development cost savings to
the Soviet Union from illegal Western technology acquisition
are believed to be enormous. The Ministries of Defense
Industry and Aviation Industry alone are estimated to
have saved half a billion rubles (roughly $700 million
at official conversion rates) between 1976 and 1980, although
that figure probably reflects operating cost savings as
well as R&D.
In the diplomatic field, the recent discovery of
bugged typewriters in the U.S. embassy in Moscow exposed
an operation of some duration. For years, the Soviets were
reading some of our most sensitive diplomatic correspondence,
economic and political analyses, and other communications.
More difficult to assess, yet with enormous danger to
the United States, is the Soviet interception of U.S.
communications from collection facilities throughout the
world, including Soviet diplomatic establishments in
the United States and an extensive site at Lourdes, Cuba.
The Soviets could monitor many U.S. domestic telecommuni-
cations channels, including most satellite links and certain
ground-to-ground transmissions. While the risk to military
secrets from poor communications security is widely understood,
the U.S. business community is also highly vulnerable.
Taken together, the damage to national security from
espionage, technology theft and electronic surveillance
amounts to a staggering loss of sensitive information
to hostile intelligence services. As an open society,
the United States already allows its adversaries unfettered
access to vast amounts of information that must be shared
widely so that our political system can function democratically
and the process of free scientific inquiry can be most productive
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Our openness gives hostile intelligence services the
ability to focus their efforts on those few areas of
our government and society where confidentiality is required.
The following discussion of the hostile intelligence
threat to the United States is designed to give the Senate
ani the American people a better appreciation of the challenges
we will continue to face in the future. It is based upon an
assessment prepared by the intelligence community at the
Committee's request. By understanding the nature and scope
of ongoing hostile intelligence efforts, public officials
and private citizens alike can better understand why the
Committee recommends increased emphasis on counterintelligence
and security programs. There is much that the ordinary
citizen can do to strengthen the nation's defenses, especially
if the individual works for the federal government, a
government contractor, ora high-tech industry or research
program. They key requirement is knowledge of the dangers.
B. Sources of the Threat
Among foreign intelligence services, those of the Soviet
Union represent by far the most significant intelligence
threat in terms of size, ability and intent to act against
U.S. interests. In fact, the activities of the Warsaw Pact
country and Cuban intelligence services are primarily
significant to the degree that they support the objectives
of the Soviets. The threat from intelligence activities by
the People's Republic of China (PRC) is significant but of a
different character, as explained below. The intelligence
activities of North Korea, Vietnam and Nicaragua pose a
lesser, but still significant, threat to U.S. foreign policy
interests, although these countries have only a limited
official presence in the United States.
Many other countries -- hostile, allied, friendly and
neutral -- engage in intelligence operations against the
United States. While these activities cannot be ignored,
they do not represent a comparable threat. Nonetheless,
in 1985, arrests for espionage included U.S. Government
employees who had passed classified information to Israel
and to Ghana.
1. Soviet Union
The KGB and the GRU are the two principal
Soviet intelligence organizations. The KGB (or Committee
for State Security) maintains internal security in the USSR
and, as a secret intelligence service, collects intelligence
and conducts covert political influence operations (termed
"active measures") abroad. The GRU (or Chief Directorate for
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Intelligence) is the Soviet military intelligence organization
and engages only in foreign intelligence activities.
In no other country in the modern world have intelligence
and security services played such a crucial, long-term role
in sustaining a government and controlling its citizens.
In recent years, the KGB has become a vital tool for protecting
the Communist Party at home and implementing its policies
worldwide, especially through energetic espionage and
covert action operations both against Western governments
and in the Third World. (Covert action efforts are coordinated
with the International Department of the Communist Party,,
which has lead responsibility for worldwide Soviet "active
measures," including propaganda and political influence
operations.) Soviet military intelligence came into its
own during and just before World War II, and the GRU
aggressively supplements the KGB with espionage and massive
technical surveillance operations. The GRU coordinates and
supports Soviet SIGINT and overhead photography and trains
foreign revolutionary cadres and insurgents. In the opera-
tional Soviet military, "Spetsnaz" (Special Forces) units
have an overseas role as special-purpose commando forces
capable of covert infiltration, sabotage and assassination
operations.
The highest Soviet collection priority is accorded
to policy and actions associated with U.S. strategic nuclear
forces. Other high priority subjects are key foreign policy
matters, congressional intentions, defense information,
advanced dual-use technology, and U.S. intelligence sources
and methods. The Soviets also target NATO intensively,
partly as a means to obtain U.S. foreign policy and military
information; recent arrests in West Germany and Greece
are indicative of the successes of the USSR in targeting
U.S. and NATO classified weapons systems.* The Soviets
heavily influence the collection activity of the Cuban
and Warsaw Pact services, in effect expanding their own
collection resources through exploitation of the ethnic ties
that other services can use in their recruitment efforts, as
well as the normally less stringent U.S. controls on the
activity of non-Soviet visitors and representatives.
*This Report concentrates upon the direct hostile
intelligence threat to the United States and does not
include the counterintelligence and security implications
for the United States of hostile intelligence activities
that target U.S. allies or alliances. The Committee will
examine these matters in its continuing oversight of U.S.
counterintelligence and security programs.
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The Soviets acquire much of the information they need
through non-clandestine means -- diplomatic activities,
trade representatives, visitors, students, and other open
inquiry. They carefully select participants in exchange
programs to maximize access to information of intelligence
interest. The Soviet government also has access to computerized
U.S. and other Western reference systems, to U.S. Government
programs designed to facilitate legitimate dissemination of
information, and to open literature ranging from technical
journals and industry publications to the news media. Soviet
collection efforts are further aided by the absence of
effective U.S. Government controls over foreign visitors and
indirect exports.
The Soviets aggressively screen information on Western
technology to avoid technological surprise and to improve
their economy and weapons systems. The methods used to
acquire technology will depend largely on the cost and the
risk involved. It is likely that increased controls on trade
with the Soviets and on Soviet visitors and official personnel
will cause changes in Soviet collection techniques. Thus,
more use of clandestine methods to acquire technology is
likely when it cannot be obtained in other ways.
2. Warsaw Pact and Cuba
The intelligence services of Poland, East Germany,
Czechoslovakia, Bulgaria, Hungary and Cuba not only serve
their own national interests, but also act as surrogates
for Soviet intelligence. While a member of the Warsaw Pact,
Romania has looser ties to the Soviets in the intelligence
arena. Recent cases demonstrate the aggressiveness of the
Warsaw Pact services. In 1983, an employee of the Bulgarian
trade office in New York was arrested for espionage based
on evidence that he bought a secret document on security
Procedures for American nuclear weapons. The Bell and
Harper cases illustrated the effectiveness of Polish
intelligence in penetrating U.S. defense industry. East
German agents arrested in the United States over the past
three years include a woman courier in a KGB espionage network
and a prominent scientist attempting to recruit American
scientists.
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The recent interagency report on Soviet Acquisition
of Militarily Significant Western Technology documents
fully the relationship between Soviet intelligence and the
Warsaw Pact services. The KGB, more than the GRU, relies
on the collection capabilities of the East German, Polish,
Bulgarian and Czech services. The success of the East
European services can be attributed partly to the Western
misperception that their countries are less of a threat
than the USSR. East European nationals operating in most
Western countries have fewer (or no) travel restrictions
and, in some cases, find it easier to work in a Western
cultural and commercial environment. At the same time,
however, the West does have easier access to Warsaw Pact
countries than to the Soviet Union. Reciprocity considera-
tions limit the West's ability to impose extreme controls
on East Europeans.
The Cuban DCI has long been under the direct influence
of Soviet intelligence. While in recent years- the Cubans
have emphasized operations against anti-Castro emigre groups
and illegal acquisition of embargoed U.S. technology and
equipment, Cuban intelligence also targets U.S. Government
plans and intentions, especially regarding Latin America.
There are indications, dating back many_ years, of Cuban-
support and training for Puerto Rican terrorists and of
propaganda operations to influence segments of American
Public opinion.
3. People's Republic of China
The PRC has several intelligence services whose
personnel are represented among the approximately 1,500
Chinese diplomats and commercial representatives located
at some 70 PRC establishments and offices in the United
States. They also have some access to the approximately
15,090 Chinese students and 10,000 individuals arriving in
2,700 delegations each year. .PRC intelligence also seeks
to exploit the large ethnic Chinese community.
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The implications of PRC intelligence activities are
markedly different from those of the Soviet Union and its
surrogates. The forces of the Warsaw Pact are arrayed
against those of NATO; and the Soviet Union's expansionist
Policy poses a current and continuing global challenge to
the United States and its allies. The PRC is not now in
strategic competition with the United States. Indeed, the
United States has fundamental interests in maintaining
friendly relations with the PRC and promoting its
modernization, to include selective upgrade of its military
defensive capabilities. Intelligence collection priorities of
the two major communist powers reflect their respective
foreign policies. ?The Soviet intelligence services have
urgent requirements with respect to U.S. plans, intentions
and capabilities, as well as technology; the PRC services
concentrate primarily on advanced technology not approved
for release so as to further PRC military and economic
modernization in the 1990s and beyond.
Despite these differences, the PRC intelligence threat
continues to be significant. The evidence of PRC espionage
in the Chin case and from other counterintelligence sources
justifies alerting American citizens to the current risks.
The recent detention of a British national employed by the
New York Times as a reporter in China reflects an increased
emphasis 'byPRC intelligence and security services on
surveillance of foreign visitors. PRC efforts to cultivate
? Chinese-Americans in scientific and technical fields should
? be recognized as including potential intelligence approaches,
? as long as the PRC continues to mount espionage operations
against classified U.S. programs and embargoed technology.
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4. Other Countries
Other countries also conduct human intelligence operations
in the United States, both overt and covert. Their targets
include largely the same range of interests as those of the
Soviets and the PRC, including high technology and political,
military and economic policies and intentions that might
affect the narticular country.
Among the common activities of foreign intelligence
services in this country are attempts to penetrate emigre
communities. A large number of expatriate political and
emigre groups in the United States are viewed as a theat
by authorities in the former homelands. From a national
security viewpoint, these activities are less significant
than those of the USSR and its allies, although they are
clearly in violation of U.S. sovereignty and may have
an effect on the U.S. political system. Foreign intelligence
services also target ethnic groups in the United States,
directly or through front organizations, to influence
U.S. decisions On foreign aid, trade agreements and other
issues where foreign governments have strong interests.
Two recent incidents illustrate the threat from
non-communist governments. In 1984, a vocal opponent
of the current regime in Taiwan was murdered in California,
and the Taiwanese government later admitted that officials
of its intelligence service were implicated. Also in 1984,
the South African military attache was expelled from the
United States for activities incompatible with his diplomatic
status. In 1978, the Committee issued a public report on
Activities of "Friendly" Foreign Intelligence Services
in the United States which examined, as a case study, South
Korean operations in the early-to-mid 1970s. The Pollard
case has raised questions as to whether the Israeli govern-
ment, or significant elements thereof, have engaged in more
extensive espionage operations in the United States. While
the strategic threat in such cases is less than from Soviet
bloc or PRC operations, the harm to specific U.S. foreign
policy interests and legal safeguards is still substantial and
unacceptable.
C. Human Intelligence Techniques
The hostile intelligence threat can be divided roughly
between the human side and the wide array of technical
collection operations. The human dimension begins with
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the trained intelligence officer, dispatched under official
or nonofficial cover to operate abroad. Intelligence
officers recruit and handle agents employed by foreign
governments, industries, or political organizations; and they
"co-opt" other members of their own government and citizenry
for particular assignments. In general, hostile intelligence
HUMINT operations fall into the following categories:
? "Legal" operations are conducted by intelligence
officers under official cover. The term does not
mean "lawful," because case officers recruit and
handle espionage agents. The FBI estimates that
at least 307 of the 1,500 Soviet officials in the
U.S. are KGB or GRU staff officers. Reportedly,
over 3,000 KGB officers and approximately 1,500
GRU officers are posted outside the Soviet Union.
o "Illegals" are trained intelligence officers sent
abroad, often with false identities, who maintain
no overt contact with their government. The number
of Soviet illegals and their activities are very
difficult to estimate.
o "Co-optees" are officials or visitors tasked to
do particular tasks, such as spotting potential
'recruits or servicing drops. Many. Soviet officials
are co-opted, as are many official visitors and
.some emigres. .
"Agents" are American or third-country nationals
recruited for current operational purposes Or,
in some cases, as "sleepers" to be activated .at
later date. Apart from the agents surfaced
publicly in espionage or illegal export cases,
the FBI has numerous other suspected agents under
investigation.
Despite the development of increasingly sophisticated
technical means Of collection, the human agent continues to
be the most important key to satisfying a nation's intelli-
gence needs. An intelligence community study summarized
the human threat in the following terms:
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The Communist countries depend to a large degree
on their human collection networks throughout the
world to satisfy their U.S.-related intelligence
requirements -- requirements ranging from acqui-
sition of advanced technology, location and deter-
mination of the quality of strategic and conventional
military forces, and assessment of U.S. reaction to
international political incidents, to discovery of
techniques used by U.S. counterintelligence.
An analysis of hostile human intelligence operations
against the United States must address the role of the Soviet-
bloc official presence in the United States; the non-official
United Nations and "illegal" hostile presence; the recruitment
of agents; the Soviet Union's systematic technology acquisition
program; and covert political action operations (or "active
measures").
1. Official Presence
The spearhead of the Soviet, other Warsaw Pact and Cuban
intelligence collection effort is their official presence
in the United States. In 1985, there were about 4,250
diplomats, commercial officials and other representatives
from Communist countries in the United States, 2,100 of
whom were from the Soviet Union and the other Warsaw Pact
countries. The Soviet Missions to the United Nations in New
York have approximately 275 accredited diplomats; the Depart-
ment of State has recently mandated a reduction in this
number to 170 by April 1988. The Soviets have 320 accredited
personnel at their Embassy in Washington and Consulate General
in San Francisco, in comparison to the approximately 200
American diplomatic personnel assigned to the Soviet Union.
Additional Soviets come to the United States on temporary
assignment, as do American personnel to the USSR.
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The FBI estimates that at least 30 percent of the Soviet
bloc officials and representatives in the United States are
professional intelligence officers of the Soviet KGB and GRU
or one of the other East Euroepan intelligence services.
Under diplomatic cover, Soviet bloc diplomatic personnel
accredited to the United States and to the U.N. missions in
New York have complete immunity from criminal prosecution for
espionage. (By contrast, Soviet nationals employed by the
U.N. Secretariat, such as Gennadiy Zakharov, do not have
such diplomatic immunity.)
Soviet bloc use of official represenatives for espionage
purposes is well documented. In the Walker and Miller
cases, Soviet officials involved with handling American
agents left the country shortly after their agents were
arrested. In other instances, successful U.S. counterintelli-
gence operations have led to the exposure of Soviet officials
engaged in clandestine communications with agents, such as
by servicing "drops." Soviet bloc intelligence officers
under diplomatic cover also seek to use overt contacts with
Americans as an opportunity to develop long-term relationships
providing an opportunity to assess and exploit vulnerabilities
for espionage recruitment purposes. In one case in the early
1980s, a Soviet official who attempted to recruit a Congressional
staff member was expelled from the country. The staff member
had reported the approach and cooperated with the FBI's
investigation, which led to exposure of the Soviet official's
intelligence recruitment efforts.
The sheer volume of intelligence activity is increased
by the number of officials from other Communist countries in
the United States as well as the large number of establishments
from which they can operate. Soviet bloc and PRC estab-
lishments -- government offices and U.N. missions -- are
located in seventeen different cities. The largest
numbers are in New York (92), Washington (34), Chicago (11),
San Francisco (9), Houston (9), and Newark (9). While most
officials are concentrated in New York and Washington,
all but the Soviets are allowed to travel almost anywhere
they wish in the country, subject to notice requirements
and certain other conditions under the Foreign Missions
Act in the case of most Warsaw Pact countries.
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Within the Soviet services, GRU personnel are targeted
primarily against military and scientific and technical
information, while KGB personnel in its First Chief Direc-
torate (foreign intelligence) are assigned to one of four
operational departments or "lines" -- Scientific and Technical
(Line X), Political (Line PR), Counterintelligence (Line
KR), or Illegals Support (Line N). S&T personnel specifically
target U.S. advanced technology. Often, clandestine collec-
tion of S&T information is preferred over buying or develop-
ing technology because it is cheaper and provides the best
short-term results, although there is a risk factor in
theft. KGB Line PR officers target governmental policy
information and, frequently, seek to advance Soviet objec-
tives via contacts with persons of influence or through
covert activities. Certain Line PR officers focus specifically
on the Congress. Line KR officers have the security respon-
sibility for preventing defections of Soviet personnel and
particular concern for penetration of the U.S. intelligence
community, although all lines are tasked with this important
function as a matter of general concern. "Illegals" support
personnel comprise a small group that helps maintain those
networks.
2. Other Aspects of the Hostile Intelligence Presence
The Soviet Union is effectively using U.N. organizations,
particularly the Secretariat, in the conduct of its foreign
relations and as a cover for the activities of Soviet
intelligence officers and co-optees. The United Nations
employs, worldwide, approximately 800 Soviet nationals as
international civil servants, with about 300 of them in
New York. Approximately one-fourth of the Soviets in
the Secretariat in New York are considered to be intelligence
officers, and many others are co-optees who have been told
to respond to KGB and GRU requests for assistance. The
Soviet intelligence services also use their developed
agents in the United Nations to collect information on U.N.
activities; to spot, assess and recruit American and foreign-
national agents; to support worldwide intelligence operations;
and to collect scientific and technical information on the
United States.
The KGB has succeeded in infiltrating its officers
into the U.N. bureaucracy, with some reaching positions of
authority. The KGB has held the position of Assistant
to the Secretary General since Viktor Lesiovskiy held the
post under U Thant. The current Assistant is a KGB China expert.
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The Soviets take full advantage of U.N. personnel procedures
such as liberal sick leave. This permits KGB U.N. employees
to be absent as often as they desire, enabling them to carry
out intelligence activities further abetted by the comparative
freedom of movement enjoyed by U.N. employees.
While the State Department has recently required
Soviet U.N. employees to give notice of unofficial travel
outside the New York area, they are not subject to the
? geographical off-limits restrictions placed on Soviet
diplomats in response to equivalent restrictions placed
on travel by U.S. diplomats in the Soviet Union. Little
can be done about the number of Soviets employed by the
United Nations in view of the larger number of Americans similarly
employed.*
There have also been reports of the U.N. Secretariat
being used for clandestine activity by Warsaw Pact officials.
Currently, State Department conditions for travel in the
United States by U.N. Secretariat employees from the Soviet
Union still do not apply to U.N. employees from other Warsaw
Pact countries.
The hostile intelligence threat is further expanded by
the number of Soviet bloc commercial entities in the
United States that can be used as cover for clandestine
collection activities. These commercial establishments
include the USSR's AMTORG and INTOURIST, the Polish-American
Machinery Company (Polamco), and similar East German,
Czechoslovak and other East European entities. Through their
legitimate business activities, intelligence officers in these
firms have access to Americans in business, industry and
government.who are potential targets for agent recruitment.
A Czech, Pole Or other East European is frequently able to
contact U.S. companies without arousing the suspicion that
contact by a Soviet official would occasion. The primary
'interests of hostile collectors operating under commercial
cover are economic data and advanced technology. Altogether,
* For a more detailed discussion of the Soviets at the
United Nations, see the Committee's report on Soviet Presence
in the U.N. Secretariat, S.Rpt. 99-52 (May, 1985).
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nearly 70 U.S.-chartered corporations, although owned by
Warsaw Pact countries, function legally as U.S. corporations
and thus are subject to few restrictions on acquiring
technologies. East Europeans employed by these firms are
subject to no travel controls or notice requirements.
In addition to the threat posed by their official
establishments, U.N. employees and front companies, hostile
intelligence services have infiltrated intelligence collectors
into the United States among the thousands of exchange students,
commercial and cultural visitors, tourists and ship crewmen
who enter this country each year. Some 2,000 Soviets come
to the United States each year under the auspices of the
Soviet Academy of Sciencies, the Ministry of Trade, the State
Committee for Foreign Economic Relations, and other Soviet
agencies. They collect not only overt information for non-
defense industries, but also classified and proprietary
data, in response to intelligence tasking on behalf of
military research projects. The number of U.S. universities
and institutes subject to focused Soviet efforts reportedly
increased from 20 to over 60 from the late 1970s to the
early 1980s.
Soviet trade or scientific representatives travel
to California about four times a month in delegations
ranging from two to ten people, supplementing the 41-person
staff of the Soviet San Francisco Consulate. It is reasonable
to assume that, just as 30-40 percent of the personnel
in each Soviet establishment are intelligence officers,
the same percent of the personnel in a Soviet visiting
delegation are intelligence officers and/or co-optees.
Thus, the Soviets are able to target more intensively the
1,500 high-technology companies in the area known as "Silicon
Valley," which constitute the largest collection of electronics
and computer manufacturers in the United States.
In recent years, a number of intelligence agents of
the USSR, Cuba and other countries have been uncovered among
the flood of immigrants into the United States from communist
countries. While not all of these agents are considered
classic "illegals," investigations have determined that
many have been sent with intelligence missions.
The deep-cover "illegals" dispatched to the United States
in the emigre flow and through other means by Soviet bloc
and PRC intelligence services represent a particularly
perplexing problem because of their completely clandestine
manner of operation. They generally enter the United States
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under false identities with forged or stolen documents.
They often acquire U.S. citizenship, and they have attempted
to assume the appearance of ordinary Americans having
no connection with their home country and intelligence
service.
An example of a KGB illegal agent was disclosed
publicly by the FBI in 1981. Col. Rudolf Hermann (a
pseudonym) had earlier been identified and recruited
to work as a U.S.-controlled double agent. Hermann's
25-year career with the KGB had begun in the 1950s while
he was serving in the military of a Soviet-bloc country.
His initial training in espionage techniques such as
secret writing and cipher systems took place in East Germany.
More advanced training was received in the Soviet Union.
Before coming to the United States, Col. Hermann
practiced his intelligence skills in West Germany and
Canada. He and his family entered the United States
illegally An 1968, and he established a home and found work
as a free-lance photographer. He did not directly collect.
classified information, but performed support functions such
as locating drop sites for other agents and spotting potential
recruits. He was also prepared to conduct more active
collection operations in the event of the expulsion ?
of Soviet officials in time of crisis or war. Col. Hermann's
son had enrolled in an American college, under KGB orders,
and was preparing to seek U.S. Government employment,
possibly in .a sensitive position.
3. Recruited Agents
Visitors and emigres are no substitute for recruited
agents inside sensitive U.S. programs. The spy of the 1980s
has been described as a new breed, motivated more by greed
than by ideology. However, the cases uncovered in 1985
suggest more complex motivations; political beliefs,
intrigue, and job dissatisfaction or alienation also appear
to have been reasons for engaging in espionage. Most Americans
arrested for espionage in recent years actually volunteered
their services to the other side.
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Soviet intelligence efforts include active programs
outside the United States against U.S. Government personnel
and businessmen. Even those recruited agents who live
in the United States are frequently met in third countries
to avoid U.S. domestic counterintelligence. Vienna, Austria,
was used as the meeting place for John Walker, Ronald
Pelton and Edward Howard.
KGB residencies abroad target principally American
embassy employees with access to classified information. Other
targets include American journalists, businessmen, and
scientists who can furnish sensitive technological informa-
tion, as well as students with job prospects in sensitive
positions for long-range development.
The widespread use of foreign nationals in U.S. embassies
and consulates compounds the problems faced by U.S. intelli-
gence in most hostile countries. Over 9,800 foreign nationals
are so employed for a number of reasons, including cost
considerations. Despite their value in dealing with local
government organizations because of their language fluency
and understanding of local customs and regulations, their
threat to the security of U.S. operations must be recognized.
The employment of foreign nationals in U.S. establishments
in the Soviet Union and other Eastern European countries,
as well as in numerous other countries where the Soviet
bloc has influence, affords hostile security services
the opportunity to conduct a variety of observations of U.S.
personnel and technical penetrations of U.S. facilities.
The foreign nationals' personal observations are used by the
KGB to assess possible recruitment targets among the American
personnel (e.g., those with financial, family, alcohol, or
drug problems), as well as to identify U.S. intelligence
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personnel. The U.S. Embassy in Moscow faces particular
problems in this regard. Soviet nationals operate the
carpool, including making mechanical repairs and, until
recently, operated the telephones, cleaned the offices, and
performed all the maintenance tasks in the embassy compound.
Approximately 200 Soviets are employed at the embassy,
contrasted to fewer than a dozen Americans in the Soviet
establishments in Washington. The Soviets strictly limit
the use of local hires in their own embassies -- apparently
concerned that if they can succeed, so could U.S. intelligence.
U.S. military installations and personnel abroad
continue to attract major Soviet intelligence interest,
both to gain potential access to military plans and to
acquire sensitive technical data. It is probable that
third-country nationals are used to target U.S. bases, just
as they are at embassies. There are over 120,000 third-
country nationals employed at such installations; and 930 of
these have accesses, of which 371 are at the Secret level,
to see certain classified material.
4. Soviet Methods of Recruitment
A study by the Defense Security Institute outlines
some of the most common Soviet methods of recruiting and
handling agents. The agents who steal most of the U.S.
classified information lost through human espionage are not
foreign nationals, legal or illegal, but Americans already
employed in sensitive positions who are recruited, or who
volunteer, to provide information to hostile intelligence
services.
Social occasions and situations are a favorite hunting
ground for Soviet bloc intelligence officers, such as
diplomats or U.N. employees, on the look-out for potential
recruits. So are restaurants, bars and clubs in the vicinity
of defense contractor facilities. The intelligence officer
looks for a combination of access to desired information and
some motivating factor or factors that might be exploited
for drawing a person into espionage. Ideological affinity
is not frequently encountered, although it is a desired
inducement. Blackmail is a last resort. The most common
motivation is financial gain, often combined with conscious
or unconscious anger at the employer.
In typical fashion, an intelligence officer proceeds
with his cultivation of a prospect by stages, attempting
to establish a pattern of payment for seemingly harmless
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services. The aim is to avoid scaring off the prospect
with premature demands for classified information. After
classified material is Passed, the officer may shift the
mode of communication from personal meetings to more
secure methods such as "dead drops" -- that is, the place-
meet of a package in an inconspicuous agreed location
where it can be picked up by the recipient at a later time.
Recruitment of this sort is a process of salesmanship,
almost of seduction. Soviet intelligence officers vary in
their skill, but some possess the finesse to do an effective
job of cultivation without rushing the potential agent. Most of
our information concerns the least successful recruitment
attempts, such as those reported by persons who become
FBI-controlled double agents. KGB training documents,
however, describe instances of successful recruitment
involving bribery of employees with sensitive access.
In one case cited in KGB training materials, an
intelligence officer spotted a possible recruit while serving
as interpreter for a Soviet scientist visiting the laboratory
of a private U.S. company. The KGB account states that the
scientist was aware of his interpreter's intelligence function
and actively assisted him in that role. The intelligence
officer's attention was drawn during the visit to
a young lab assistant who seemed poorly dressed. When
the Soviet scientist offered to provide copies of a number
of his writings to the head of the laboratory, it was
revealed that this assistant was studying Russian and
could assist in translating the material.
On this basis the Soviet intelligence officer was
able to cement an acquaintance with the young worker during
the deliberately prolonged process of delivering the documents
to the laboratory. As suspected, the lab assistant was
having financial difficulties. He was married and attending
graduate school and his job was a low-paying one. The
KGB officer developed a friendship with him over the course
of three months and then began requests for unclassified
information in return for payment. Ultimately he persuaded
the lab employee to join him in the formation of a consulting
firm for the sale of scientific data, which the lab assistant
would obtain and the KGB officer would market. In furtherance
of this business venture, the lab assistant was persuaded to
provide secret as well as unclassified information.
This recruitment approach reflects both subtlety and
ingenuity. The prospective agent was never confronted with
a stark proposal to spy for the KGB, but was gradually drawn
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into such activity through apparent friendship and an
ostensibly. legitimate business arrangement. Similar
techniques apparently were used by Gennadiy Zakharov, the
Soviet physicist employed at the United Nations who was
arrested on August 23, 1986, for buying classified documents
from an FBI-controlled double agent whom he had attempted
.to recruit. See Appendix E for the indictment and an FBI
affidavit filed in this case. The recruitment of William
Bell, which also Used a consulting ploy, is described in
Appendix C. The finesse with which a good intelligence
officer can draw a person into espionage is a strong argument for
informing the FBI when one is approached by foreign officials,
as this Report recommends later. Advice from counter-
intelligence experts can help to prevent tragedies.
Recruitment is more commonly accomplished on the
basis of 'positive inducement than by coercive approaches..
such as blackmail, which are the last resort for the hostile
intelligence service. Blackmail produces the least satisfactory,
because least willing, sort of agent. But such methods
are nonetheless used with some frequency when preferable
methods fail or are unavailable. This is particularly true
outside the United States, and especially in Communist countries
.where hostile intelligence services control the total
environment. Entrapment through contrived circumstances
can easily be arranged. Sexual entanglements, currency
exchange violations and black market involvement are
favorite recruitment ploys. U.S. diplomatic personnel,
among others, have been targets of hostile intelligence
services using these techniques.
Visitors with intelligence value are routinely approached
by provocateurs with proposals of this kind, and ensuing
arrests or threats of arrest or exposure serve as leverage
for enlistment in espionage. For example, employees of U.S.
firms with defense contracts who visit the Soviet Union or
Eastern Europe will be given special attention and assessment
for possible intelligence exploitation. Visa applications
reveal where an American works, and falsification of such
information is itself an offense that can be used against an
American visitor. Whether active recruitment is attempted
depends upon whether the American provides indications of
susceptibility to inducement or coercion. While travel to
Eastern Europe is not, for the most part, discouraged, those
who go can reduce their vulnerability by not doing or saying
anything that could be recorded or photographed for future
reference in the archives of the KGB.
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In the final analysis, however, the most dangerous
agents of all, who account for the greatest losses of the
most highly classified information, are not those who are
laboriously recruited, but those who walk in the door of a
Soviet embassy somewhere and volunteer information for sale.
For the "walk-in" as for the recruited agent, the motivating
factors are usually greed or indebtedness plus an additional
element of grievance or disgruntlement. The individual
usually is dissatisfied with his or her job or harbors some
grudge against his organization or both.
Some characteristic signs that may betray an agent
at work, if security people and co-workers are sufficiently
alert, include:
o attempts to obtain information when there is
no need to know and excessive curiosity about
what others are doing;
O unauthorized removal of classified material
from work areas or introduction or cameras
or recorders into work areas;
o repeated overtime or unusual work hours not
required by the job; and
unexplained affluence.
Indicators of espionage are, unfortunately, generally much
more noticeable in retrospect than during the course of the
crime. In many cases, it is difficult to distinguish the
soy from an exceptionally hard worker. But suspicious
activities such as those listed, combined with job
dissatisfaction or other disgruntlement, would certainly
provide grounds for heightened attention to an individual's
actions. It was sensitivity to such behavior, after receiving
a security awareness briefing in the wake of the Walker-Whitworth
arrests, that led Jonathan Pollard's co-workers to alert the
FBI, resulting in his arrest and conviction for espionage.
This Report later recommends both improved security awareness
programs and, in some areas, personnel reliability programs
that incorporate peer-group cooperation.
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5. Technology Transfer
The Soviet drive to achieve technological equality
with the United States and other Western countries has
led the USSR to commit enormous resources to the acquisition
of open-source information, unclassified but proprietary
information, and high-technology equipment that the West
has agreed not to export to the Soviet bloc. Soviet
intelligence services actively engage in these efforts
in addition to their pursuit of U.S. secrets. As a result,
the Western lead in many key technological areas has been
reduced, with serious economic and military consequences
for the United States.
Moscow has devised two programs to obtain Western
technology. The first, under the Military Industrial
Commission (VPK) of the Presidium of the Council of Ministers
seeks to obtain military and dual-use hardware, blueprints,
product samples and test equipment to improve the technical
levels and performance of Soviet weapons and defense manu-
facturing equipment. By adapting design concepts from
the acquired hardware and documents, the Soviets reduce
their own research and development costs. In the early
1980s, more than 3,500 requirements were levied by the VPK
each year, with about one-third being satisfied. Some 60
percent of the most significant acquisitions were of U.S.
origin, although not necessarily collected in the United
States. Nearly half of the up to 10,000 pieces of military
hardware and 20 percent of the 100,000 engineering and
research documents the USSR acquires annually worldwide are
used by the Soviets to incorporate Western technology into
their military research projects. Most of the documents,
about 90 percent of which are unclassified, contain patented
or copyrighted proprietary information and are illicitly
obtained.
The GRU is believed to have satisfied considerably
more VPK requirements than the KGB. This success is attributed
partly to the GRU's greater scientific orientation and
its wider variety of technology-related cover positions.
The approximately 1,500 GRU officers serving outside the
USSR have scientific and technological collection as an
intergral part of their responsibilities. The KGB SSIT unit,
Line X, has nearly 300 officers on foreign assignment
operating under cover of Soviet embassies, trade and commercial
organizations, as members of exchange groups, and as employees
of international organizations (the United Nations Secretariat,
for instance, as in the case of Gennadiy Zakharov).
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The second program, managed by the Ministry of Foreign
Trade and the KGB/GRU, seeks, through trade diversions, to
acquire relatively large amounts of dual-use manufacturing
and test equipment for direct use on production lines.
This program attempts to obtain export-controlled microelec-
tronic, computer, telecommunication, machine-tool, robotic,
diagnostic and other sophisticated equipment. This
program also utilizes both legal and illegal means.
Major Soviet collection efforts are targeted at micro-
electronics fabrication equipment and computers; nearly
one-half of detected trade diversions fall into these
categories. The acquisition of much of the information
concerning these high-technology areas is not particularly
difficult. Information is often available to the public
(and, therefore, accessible to the Soviets and their surro-
gates) from U.S. Government agencies.
The Soviets and their allied intelligence services
have for many years been regular attendees of scientific,
technical and industrial conferences in the United States
and abroad. The Soviets considered some of the information
obtained from these conferences to be among the most
significant contributions to their military projects.
The VPK identifies those having the most potential; in
recent years, these have included conferences assembled by
several well-known professional engineering societies.
In addition, the Soviet Ministry of Foreign Trade and
academic-related collectors contribute to Soviet exploita-
tion of open-source Western information. The Ministry of
Foreign Trade has hundreds of trade organizations and
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companies around the world. KGB and GRU officers operating
under cover of these establishments collect large quantities of
data openly, in addition to that derived from their covert
operations. The Ministry, as an independent collector,
helped meet about 15 percent of all fully satisfied VPK
requirements during the late 1970s and early 1980s. It
specializes in acquiring microelectronics, manufacturing
equipment and communications dual-use products.
Equipment is obtained through the use of dummy firms,
false end-user certificates and falsifications of export
licences by the Soviets and professional trade diverters
whom they hire. Many advances in Soviet microelectronics
have been made possible by the illegal acquisition of
equipment from the West. The result, according to U.S.
Government estimates, has been a marked reduction in the
Western technological lead from about 10-12 years a decade
ago to about half that today.
Richard Mueller, a West German citizen, has been
involved in illegal technology acquisitions for the Soviets
for more than a decade. Using dummy and front firms,
he has diverted advanced computers and microelectronics
equipment of significant value to the Soviets. Mueller
was the moving force in the 1983 attempted diversion to
the USSR of several Digital Equipment Corporation VAX super
mini-computers that would have assisted the Soviets in computer-
aided design applications for microelectronics fabrication.
6.. Active Measures and Disinformation
"Active measures" and "disinformation" are terms for
Soviet covert, action operations designed to implement
Soviet policy goals by attacking U.S. policy and by promoting
a positive image of the Soviet Union. They are significant
weapons in the Soviet strategy to discredit and deceive
the United States and its allies. The Soviets' principal
techniques include the use of front groups, agents of
influence, media manipulation and forgeries. The nature and
.scope of Soviet "active measures" was spelled out in detail
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in published hearings before the House Permanent Select
Committee on Intelligence in 1982.* At that time Deputy
Director of Central Intelligence John McMahon testified that
the Soviets have a $3-4 billion program to influence public
opinion in countries throughout the world. It combines all
forms of overt propaganda and covert political action,
including systematic disinformation efforts.
"Disinformation" is a convenient label to describe a
variety of techniques. The classic example is forged
documents used to discredit the United States or to supply
proof of Soviet propaganda claims. Another method is to
recruit and pay agents in foreign news media to slant their
reporting and plant false stories. The Soviets also
secretly fund and control front organizations and individual
agents to promote pro-Soviet or anti-U.S. positions.
The Soviets themselves use the term "active measures" to
describe their covert disinformation and political influence
operations.
It is also fair to say that most overt Soviet propaganda
is also a form of disinformation because of its systematic
distortion of reality to advance Soviet interests. Whenever
a prominent Soviet citizen addresses a foreign audience,
his or her remarks are likely to reflect a calculated effort
to influence the audience. The same is true of Soviet print
and electronic media.
Every country tries to sell its viewpoint. What
distinguishes the Soviet effort are the immense resources
and systematic controls that are employed. Two organizations
develop and implement the Soviet "active measures" strategy:
(1) the International Department of the Communist Party of
the Soviet Union, which coordinates foreign policy and
propaganda objectives and now includes most of the work of
the Party's former International Information Department; and
(2) Service A of the KGB's First Chief Directorate, which
conducts covert political influence and forgery operations.
The CIA has estimated that if the United States were to
undertake a campaign the size of the Soviet "neutron bomb
campaign" of the 1970s, it would cost over $100 million.
Currently, there is evidence of a major Soviet active
measures campaign against U.S. development of the Strategic
Defense Initiative (SDI). The Soviets are making every
effort to convince a world audience that SDI will destabilize
an already precarious superpower armaments balance. In
*Soviet Active Measures, Hearings before the Permanent
Select Committee on Intelligence, House of Representatives,
July 13-14, 1982, U.S. Government Printing Office (Washington:
1982).
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addition, Soviet active measures directed at U.S. allies,
such as in West Germany and Japan, are designed to sow
distrust of American policies and to intensify financial
and commercial rivalries with the United States by holding
out the promise of favorable terms to the business communities
in both countries. Such techniques are more subtle than
blatant forgeries, which may be less effective in furthering
Soviet objectives in sophisticated Western countries.
Soviet active measures efforts are focused primarily on
Third World countries. The Soviets appear to employ massive
active measures currently in South Asia, in an effort to
depict the United States as interfering in the affairs
of India, Pakistan and Bangladesh. The media in all three
countries have consistently carried stories to this effect.
One long-running disinformation ploy concerns alleged
attempts by CIA to aid separatist movements in India, thereby
splitting the country, supposedly to America's economic
advantage. Another frequent theme is accusations of CIA
biological warfare efforts in the region. Discrediting
U.S. intelligence agencies, particularly the CIA, has long
been an important objective of Soviet active measures.
In some cases Soviet active measures directly involve
domestic U.S. matters. During July, 1984, for example,
the Soviets began a widespread disinformation campaign
to discredit the Los Angeles Olympic Games and bolster
worldwide support for their boycott of them. This campaign
featured three forged documents purportedly from racist
groups, threatening Third World atheletes with bodily harm
if they participated in the Olympic Games. Shortly after
their discovery, then-Attorney General William French Smith
announced that the letters were KGB forgeries and part of a
a major Soviet disinformation effort. It has been determined
that these documents fit the pattern of other Soviet forgery
operations and were part of the overall Soviet active
measures campaign to discredit the Reagan administration and
its handling of U.S.-USSR relations.
A very recent forgery sought to implicate the Chairman
of this Committee. In August, 1986, U.S. news media
received copies of a forged letter purportedly from an
official of the United States Information Agency to Senator
David Durenberger, purporting to discuss a proposed plan
to exploit the Chernobyl nuclear power plant disaster for
propaganda purposes. Analysis of the forged letter revealed
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that the letterhead and signature had been taken from a
copy of an entirely different letter from the USIA official
to the President of the Inter-American Defense Board.
Ironically, the USIA official's letter had alerted the
President of the Inter-American Defense Board to an earlier
forged letter, in Spanish, purportedly from the Board
President to Chilean President Pinochet. The circumstances
of the earlier forgery indicated Cuban-Nicaraguan involvement.
(See Appendix F for copies of the forged letters and the
true letter.)
According to the CIA's 1982 assessment, it is sometimes
hard to judge the success of Soviet active measures success
because they "tend to capitalize on and manipulate existing
sentiments that are parallel to or promote Soviet foreign
policy objectives. Whenever a political movement supports
policies that coincide with the goals or objectives of
Soviet foreign policy, the exact contribution of Soviet
active measures to that movement is difficult to determine
objectively." The CIA cites evidence that the Soviets
themselves believe that their efforts are worthwhile. They
appear to consider the "neutron bomb campaign" in Europe to
be one of the most successful. On the other hand, the more
recent campaign against Pershing and cruise missile deployment
in Europe had much less impact. The FBI has described
Soviet operations in the United States, moreover, as "often
transparent and sometimes clumsily implemented." The FBI
also states, "The American media is sophisticated, and
generally recognizes Soviet influence attempts."
As noted later in this Report, the U.S. Government
has stepped up efforts to expose Soviet disinformation
and covert manipulation worldwide. The State Department
now regularly publicizes the facts about Soviet forgeries
and Soviet control of political organizations such as the
World Peace Council, the Christian Peace Conference, and the
12th World Youth Festival.
The most sensitive aspect of the disinformation
threat is Soviet deception of U.S. intelligence as part of
an attempt to confuse or to manipulate the perceptions
of U.S. policymakers. The Soviet military doctrine of
maskirovka and the KGB concept of dezinformatsiya both
emphasize the need for measures to mislead opposition
intelligence services and to create false perceptions that
will influence Western policy and undermine strategic
capabilities.
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The U.S. intelligence community recognizes the danger
of deception and has a community-wide program to assess
systematically the possibilities of successful Soviet
efforts. The deception threat has been a focus of the
Committee's oversight in recent years, and the Committee
continues to support intelligence community efforts to
maintain vigilance in this area.
One major means of countering any Soviet deception
efforts is to leave our adversaries uncertain regarding
the full extent of U.S. intelligence collection capabilities.
Steps to maintain the security of U.S. human and technical
intelligence capabilities make it much more difficult
for the Soviets to engage confidently or successfully in
deception efforts.
D. Technical Collection Operations
Hostile intelligence services use the full range of
intelligence-gathering technologies to collect sensitive
information from the United States and our allies. Public
discussion of technical collection methods is more difficult
than the explanation of human intelligence techniques,
because we do not want to tell the Soviets just how much
we know about their operations. Countermeasures against
technical threats work best when the hostile service does
not recognize U.S. defenses and continues to conduct
operations that can be substantially neutralized. At the
same time, however, wider knowledge of the technical collection
threat is essential to develop better security awareness
and to explain the need for major resource investments.
Technical threats include the interception of communications,
other forms of electronic surveillance, collection of
emanations from equipment, penetration of computer systems,
and photoreconnaissance.
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1. Interception of Communications
The interception of electronic communications and
deciphering of computer-generated codes played a vital role
in Allied intelligence during World War II -- although the
methods of collection were so sensitive that many aspects
of these operations remained secret for thirty years after
the war. An Anglo-American team of top mathematicians and
cryptologists provided Allied commanders with vital real-
time intelligence on German and Japanese intentions and
plans. The interception of electronic communications and the
computer-assisted assault on crytographic systems remains a
central part of present-day signals intelligence.
The Soviet electronic monitoring effort represents a
significant worldwide threat to U.S. military and civil tele-
communications. This threat derives from large collection
facilities that are operated in the Soviet Union, as well
as in other countries around the world, such as Cuba.
The Soviets also maintain a fleet of intelligence collection
vessels that operate worldwide -- including off both coasts
of the United States. The latest of these vessels has been
built from the keel UP specifically for this role, unlike
earlier ships that were reconfigured trawlers or other types
of vessels. The Soviets also use merchant ships and possibly
commercial aircraft to perform collection operations against
targets of opportunity.
A serious threat is posed by the Soviet intelligence
collection facility located at Lourdes near Havana, Cuba.
Established in the mid 1960s, the site has steadily grown
to its present size of about 2,000 technicians and is
the most sophisticated collection facility outside the
Soviet Union.
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Evidence of the seriousness of the threat to electronic
communications was emphasized by the issuance in 1984 of
National Security Decision Directive No. 145, which concluded
that "the compromise of U.S. information, especially to
hostile intelligence services, does serious damage to the
United States and its national security interests."
The technology to exploit U.S. electronic communications
is widespread, and many foreign countries use it extensively.
Currently, more than half of all telephone calls in the
United States made over any distance are vulnerable to
interception. Calls that the caller believes to be on less
vulnerable circuits may be automatically switched to more
vulnerable ones. The Soviet diplomatic facilities at their
Riverdale complex in New York City, at their consulate in
San Francisco and at their new Mt. Alto embassy in Washington
all occupy high ground, thus providing superior opportunities
for communications intercept. The "Silicon Valley" concen-
tration of high technology centers and the government's
sensitive facilities in Washington and New York are at risk
of intercept because of these Soviet sites.
It is especially important for civilian agencies and
the private sector to understand the nature of the risk
from Soviet interception of their communications. The
Defense Department and the CIA have elaborate programs
to inculcate communications security awareness and to
protect classified communications links. The massive
Soviet surveillance efforts from Cuba and elsewhere
demonstrate, however, that the Soviet intelligence payoff
from interception of unsecured communications is immense.
One reason is that too many government officials and contractor
employees discuss classified matters on unsecure lines
because of the difficulty and expense of using currently
available secure communications equipment. Another significant
problem is the Soviet ability to exploit unclassified
pieces of information that are relatively harmless in
isolation, but in the aggregate provide highly damaging
insights into U.S. capabilities. The Committee's classified
Report contains several examples of how both industrial and
national security can be harmed by such intercepts.
Public awareness of the hostile intelligence threat
to domestic communications is essential, because there
are real limits to what the U.S. Government can do to
provide secure communications for the private sector.
Although this Report later discusses some government
initiatives, the protection must depend on the willingness
of private organizations to invest in secure communications,
not only for their immediate self-interest, but for the
larger interests of the nation as a whole.
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2. Other Forms of Electronic Surveillance
The Soviets have a long history of electronic attacks
on the U.S. Embassy in Moscow, dating back to the 1950s
when a replica of the Great Seal of the United States in the
embassy was found to contain an audio device. In the late
1970s, a Soviet antenna was found in the chimney of the
chancery. Additionally, Soviet and other hostile intelligence
services try to gain access to office or communications
equipment in order to "read our mail."
The vulnerability of the U.S. Embassy in Moscow was
dramatized vividly by the recent discovery of the technical
compromise of embassy typewriters. The typewriters were
shipped to the Soviet Union by unaccompanied commercial
means, thus affording the Soviets access to them. The
compromised typewriters were used in the embassy for a
significant period. What made this incident especially
astonishing was that it occurred despite a similar discovery
in 1978, when security officers found that a shipment of IBM
Selectric typewriters destined for the U.S. Embassy had been
shipped from Antwerp to Moscow by a Soviet trucking line.
The potentially compromised equipment identified in 1978
was returned to the United States before being placed in
service. Unfortunately, the Soviets again gained access to
several similar IBM machines that were not recognized for a
substantial time as being compromised.
As noted earlier, foreign nationals with access to
U.S. embassies and other establishments abroad provide a
means for hostile intelligence services to make other
electronic penetrations. Offices, residences and cars are
all vulnerable to the planting of audio or video devices by
foreign nationals with access, legitimate or otherwise,
to the U.S. target.
Although all high technical threat U.S. diplomatic
posts have eliminated the authorized access of foreign
nationals to the vicinity of classified work areas, there
remains a serious problem of common walls with uncontrolled
adjacent areas from which technical attacks and even physical
entries can be mounted. Offices and residences are also
vulnerable to planted devices when access by foreign nationals
is not properly monitored and technical countermeasures are
not routinely employed.
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In 1985, the Secretary of State's Advisory Panel
on Overseas Security, chaired by Admiral Bobby R. Inman,
provided to the Intelligence Committees of the House and
Senate a classified annex to its report, covering electronic
and physical penetration of U.S. diplomatic facilities. The
Inman Panel described the Soviet technical surveillance
effort as "a technologically advanced and sophisticated
program obviously supported by tremendous resources." The
report went on to describe scores of discoveries of Soviet
and Soviet-bloc technical exploitation of U.S. diplomatic
Premises. Noncommunist host nationals have also been
detected mounting technical penetrations of U.S. missions.
The threat to office and communication equipment
from the exploitation of unintended emissions is greater
at U.S. facilities abroad than in the domestic environment,
where the risks and costs of detection are considerably
higher. Consequently, as noted by the Stilwell Commission
on DoD Security Policies and Practices, the previously
rigid requirements for expensive equipment shielding have
been modified to prescribe shielding only when inspection
verifies that a threat exists. There is, however, no
question that such a potential threat does exist at
especially sensitive locations in this country.
3. Penetration of Computer Systems
The hostile intelligence threat to U.S. computer
systems is magnified by the enormous growth in the number
and power of computers and the vast amount of data contained
in them. The General Services Administration has estimated
that the number of U.S. Government computers has increased
from 22,000 in 1983 to over 100,000 in 1985. The increase
in the number of computers in use in industry, business
and other private sectors has been equally staggering.
Computers multiply enormously the information to which a
single individual may obtain access.
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There is a real possibility that the Soviets may
exploit these vulnerabilities. Computers and computer
software are high-priority items of both the VPK's and
the Ministry of Foreign Trade's technology acquisition
programs by legal or illegal means. The Soviet and other
Warsaw Pact intelligence services have also obtained
information concerning the methods used in the West to
provide computer security, and constantly seek more knowledge
Over the past decade, the Soviets have acquired over 300
different types of U.S. and other Western computer hardware
and software, which has enabled them to develop the
technical ability to penetrate at least some U.S.
automated systems. The Soviets are making a concerted
effort to access state-of-the-art computers, including
supercomputers.
The first Annual Report of the National Telecommunica-
tions and Information Systems Security Committee, completed
in September, 1q85, emphasized the challenge of computer
security in both government and the private sector:
Future technologies, particularly the growth of
desktop computers, the increased local storage of
data and the widespread networking, will exacerbate
existing security vulnerabilities as well as create
new ones. As this technology has grown, the resources
and awareness needed to allow security technology
to grow with it have not kept pace. The use of
traditional COMSEC, physical security, personnel
security, and administrative security protection
techniques does not sufficiently protect the
type of information-sharing that is becoming
increasingly common in new automated information
systems, especially distributed processing and
networked systems.
As storage costs decrease, the amount of data
stored at the mainframes increases, creating more
appealing targets. As the uses of networks and remote
access expand, more and more users will have potential
access to a broader range of information. As end-users
of computers continue to increase their technical
competence and computer literacy, the technical and
management automated systems security task of protecting
data and controlling users has fallen even further
behind.
The NTISSC Annual Report admitted that "the full extent
qA6Iiimanreat to andvulnrabilities of automated
i
on systems s unknown."
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Specific cases of unauthorized access to government computer
systems have been detected and reported widely, including
cases of access to and manipulation of Defense Department
data in order to divert military equipment and weapons.
There is no reason to believe that hostile intelligence
?services or their agents will ignore similar opportunities.
4. Imagery
The final category of technical intelligence collection
is photographic or imagery intelligence -- collection by
means of overhead vehicles against adversary installations. ,
The history of this discipline dates to the use of observation
balloons as platforms for photography during the Civil War
.and then use of aircraft for the same purpose during the
two World Wars. The use of U-2 aircraft for imagery collection
was extensively. publicized in the 1960s. Today U.S. and
Soviet imagery intelligence is collected primarily by
satellite. The use of photographic satellites by both
sides has gained wide recognition in the context of.
verification of compliance with arms control limitations.
Intelligence collection against the United States and
U.S. interests worldwide using photographic means, or
imagery, is carried out principally by the Soviet Union
(with some assistance from its Warsaw Pact allies and
Cuba). The Soviet imagery effort is mainly conducted
from spaceborne and airborne platforms. The continued
Proliferation of Soviet satellites has given the USSR
the concomitant capability for increased photoreconnaissance
of its most obvious targets -- U.S. and NATO strategic
and tactical military forces, and crisis situations any
place in the world. In addition to these uses of photo-
reconnaissance, the Soviets employ it to conduct earth
resource surveys for economic and agricultural data.
Soviet spaceborne satellite reconnaissance capabilities
are supported by the capability of military and civilian
aircraft to collect photographic intelligence. The potential
value of airborne reconnaissance conducted by the Soviet
airline Aeroflot, which, in April, 1986, resumed operations
to the United States, and by other Warsaw Pact national airlines
flights remains of concern. These Communist country over-
flights in the United States are under the jurisdiction of
an FAA committee.
The Soviets continue to pursue intelligence-related
manned space programs. In February, 1986, they launched a
new type of modular space station, the MIR, replacing the older
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SALYUT-type modules. The MIR, as did the SALYUT, gives
the Soviets the capability to perform a number of functions
in space, including the use of cosmonauts to augment their
other reconnaissance and surveillance efforts. The apparent
military usefulness of their manned space program has been
indicated in the Soviet announcement that "earth surface
surveys" have been conducted; however, no photographs
were ever published.
The seriousness of the imagery collection threat posed
by Soviet and Bloc overflights in the NATO area can
be illustrated by two examples. In March 1985, Norway
banned or restricted Soviet and Bloc passenger airplanes
from several airports on the basis that they were conducting
electronic surveillance. Bulgarian aircraft were specifically
mentioned as having departed from scheduled routes to overfly
sensitive areas. In West Germany, some 1,500 Soviet Bloc over-
flights occurred in a three-month period in 1985, offering
a tremendous opportunity for both electronic and photographic
reconnaissance.
E. Summary
Until the espionage arrests and disclosures of technical
security compromises in 1985, the American people and most
Government officials did not fully appreciate the
magnitude and intensity of the hostile intelligence
threat, despite previous espionage prosecutions and
knowledge of the vulnerability of U.S. communications
to Soviet intercept operations. The barrage of revelations
in 1985-86 has changed these perceptions, so that today
there is a better recognition in Government and in the private
sector of the continuing efforts by hostile intelligence
services to collect sensitive information by human and
technical means. There is also a greater awareness of
Soviet efforts to influence the political process through
"active measures" directed at countries throughout the
world.
The Committee intends that this description and
analysis of the hostile intelligence threat serve as a
benchmark against which to measure further evolution of
the threat in the years ahead and the effectiveness of
counterintelligence and security programs. It is also
important that the American people -- especially responsible
officials of private organizations in business and industry,
science and technology, and international affairs -- remain
aware of the changing threat from foreign intelligence
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services. Such awareness does not mean exaggerating
the dangers or engendering an atmosphere of suspicion.
Rather, it is part of a mature understanding of the reality
of U.S. relations with other countries in a world of competing
national interests. The political and military rivalry
between the Soviet bloc and the West is a fact of life
that requires constant attention to ongoing and emerging
Soviet bloc intelligence operations.
The hostile intelligence threat is, of course, only
half the equation. On the other side are U.S. activities
to counter this threat: counterintelligence, to uncover
and to neutralize hostile intelligence activities; and
security, to protect against both known and undiscovered
hostile efforts by setting obstacles in the path of anyone
seeking unauthorized access to sensitive information,
activities, equipment or facilities. The rest of this
Report examines the nature and effectiveness of those
critical U.S. programs.
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III. COUNTERINTELLIGENCE
An effective response to the foreign intelligence
threat requires a combination of counterintelligence and
security measures. The Committee believes it is important
to distinguish between counterintelligence efforts and
security programs, while ensuring that both are part of a
national policy framework that takes account of all aspects
of the threat. The best way to explain the difference is
to say that counterintelligence measures deal directly with
foreign intelligence service activities, while security
programs are the indirect defensive actions that minimize
vulnerabilities. The FBI, CIA, and the counterintelligence
components of the Defense Department have primary responsi-
bility for operations and analysis dealing directly with
foreign intelligence services. In addition, the Committee
and the Executive branch have included within the national
counterintelligence policy structure those diplomatic and
regulatory policies that control the numbers and movements
of particular countries' foreign intelligence service
officers and co-opted agents in the United States and at
U.S. facilities abroad.
A. Need for a Counterintelligence Strategy
By statute and executive order, counterintelligence
functions are divided among the FBI, CIA, and components of
the Defense Department. The FBI has the lead within the
United States, while the CIA is in charge abroad. The
Defense Department, which deals with threats to classified
defense information worldwide, divides its counterintelli-
gence functions among the military services, DIA, and NSA.
No single official is responsible for the full range of
counterintelligence activities below the level of the
President and his National Security Advisor. Given these
circumstances, there is a constant risk of fragmentation
and conflict among organizations with different methods and
priorities.
The Committee has found that communication and cooperation
among U.S. counterintelligence agencies have improved
greatly in recent years and are probably better today than
at any time since World War II. Nevertheless, more needs
to be done to ensure that agencies learn from each other's
experiences and that progress achieved in one area can
have benefits for others. The issue is not just communication
and operational coordination to bridge jurisdictional
boundaries. Better long-range planning is also needed to
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make optimal use of limited resources worldwide against
? well-organized and sophisticated adversaries.
Soviet bloc and PRC intelligence operations do not
respect geographic boundaries. Thus, in many recent cases
Americans who committed espionage in the United States
met their foreign intelligence service contacts abroad.
The targets and techniques needed for counterintelligence
success transcend agency jurisdictions. For these and other
reasons, the Chairman and Vice Chairman of the Committee
? stated in October, 1985, that the Executive branch should
develop a national counterintelligence strategy that establishes
national objectives and integrates the planning and resources
of each agency to achieve these objectives. The President's
interim report to the Intelligence Committees indicated
agreement with this proposal, and in fact the Executive branch
is now preparing such a document.
? The organizational structure is already in place,
fortunately, to develop a national counterintelligence
strategy. Under the National Security Council, there is a
Senior Interdepartmental Group for Intelligence (SIG-I)
chaired by the Director of Central Intelligence. Within
that framework, an Interagency Group for Counterintelligence
(IG-CI), chaired by the FBI Director, develops national
policy, recommendations and provides a forum for agreement on
new initiatives. A small secretariat for the IG-CI has
expert personnel drawn from the FBI, CIA, and Defense
Department. This staff evaluates the threat and recommends
policy initiatives for counterintelligence and countermeasures
improvements.
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The IG-CI, assisted by its secretariat, is the proper
place to develop a national counterintelligence strategy.
This structure ensures joint participation by the FBI, CIA
and Defense Department; and other interested departments and
agencies (such as the State and Justice Departments) are
also represented on the IG-CI. Ultimate responsibility for
resolution of policy issues rests with the National Security
Council, which has recently brought onto its staff an
experienced FBI counterintelligence specialist.
The President's interim report to the Intelligence
Committees indicates that the IG-CI has, in fact, been
tasked to frame strategic guidance of the sort proposed
by this Committee. As noted earlier, member agencies
are now engaged in the drafting process.
FINDINGS AND RECOMMENDATIONS:
I. Finding. The IG-CI has been chartered to frame
national counterintelligence objectives and an associated
strategy (or master plan) to further those objectives, and to
submit the objectives and plan for consideration by the
SIG-I and thence the NSC. The Committee is pleased to learn
that Executive branch agencies are actively drafting this
document. This is a positive response to proposals presented
by the Chairman and Vice Chairman in testimony before the
Permanent Subcommittee on Investigations in October, 1985.
2. Recommendation. The National Security Council
should approve a statement of major counterintelligence
objectives and a strategy, i.e., a time-phased master plan,
to attain those objectives. The House and Senate Intelligence
Committees should receive this document. An effective
oversight mechanism should be established to ensure that
major programs and associated budgets, legislative proposals,
and other key actions are validated against the master plan,
constitute judicious and operationally efficient allocation
of resources, and achieve all feasible synergism. There
should also be a process for continuing review and evaluation.
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3. Recommendation. The National Foreign Intelligence
Program should provide for, and Congress should authorize,
augmentation of the staff that assists the IG-CI to ensure
effective performance of its expanded responsibilities
regarding the development and implementation of the national
counterintelligence strategy.
B. Hostile Presence Limits
An effective national counterintelligence strategy
should include diplomatic and regularory policies that
control the numbers and movements of hostile intelligence
service officers and co-opted agents in the United States
and at U.S. facilities abroad. Each year, in the formal
classified justification for funds for its Foreign Counter-
intelligence Program, the FBI advises Congress that, even
with increased resources, the FBI cannot cope with the
hostile intelligence threat unless measures are also taken
to reduce the number of potential intelligence officers in
this country. qbere the numbers cannot be reduced, controls
on their movements can assist the FBI in making better use
of limited resources.
The Foreign Missions Act of 1982, which created a new
Office of Foreign Missions in the State Department, provided
the authority to exercise greater control over the activities
of foreign officials in this country. Although such control
is normally exercised within the framework of diplomatic
reciprocity, the Act also facilitates actions to enhance
U.S. security and counterintelligence interests. Limits
on numbers of foreign representatives allowed into the United
States are usually left to Executive branch discretion,
but the Leahy-Cohen amendment in 1985 established a policy
of equivalence between the number of Soviet embassy and
.consular personnel in the United States and the number of
U.S. embassy and consular personnel in the Soviet Union.
The 1985 Roth amendment provided for regulation of travel
by U.N. Secretariat personnel from countries whose diplomats
are subject to such regulations under the Foreign Missions
Act.
National Security Decision Directive (NSDD) 196, signed
by the President on November 1, 1985, established national
policy objectives for restricting and controlling the hostile
intelligence presence and travel in the United States.
In addition to implementing the Leahy-Cohen and Roth amendments,
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the Administration has imposed Foreign Missions Act travel
regulations on representatives of Warsaw Pact countries
whose intelligence services act as Soviet surrogates,
has begun reducing the number of Soviet representatives in
the United States, and has supported extension of Foreign
Missions Act controls to commercial and other entities
used by hostile intelligence services in this country.
Consistent with these Presidential objectives, Committee
Members introduced legislation to establish a policy of
equivalence for the size of the U.S. and Soviet Missions
to the United Nations (Leahy-Cohen), to broaden the scope of the
Foreign Missions Act to cover commercial and other entities
controlled by foreign governments (Durenberger-Leahy),
to require registration by commercial entities controlled
by Warsaw Pact governments (Roth-Nunn), and to require
imposition of Foreign Missions Act travel regulations
on representatives of Warsaw Pact countries (Roth-Nunn).
The 1985 Roth amendment has been implemented by imposing
travel restrictions on U.N. Secretariat representatives/
employees from the Soviet Union, Afghanistan, Vietnam,
Libya, Iran and Cuba. The State Department's Office of
Foreign Missions Travel Bureau Service has been required
for use by U.N. Secretariat personnel from East Germany,
Czechoslovakia, Bulgaria and Poland. Most recently, it
was publicly announced that effective October 1, 1986,
the Soviet Missions to the United Nations will be required
gradually to decrease their size from 275 to 170,
to be accomplished by April, 1988.
In 1986, the Committee received three reports on
Executive branch efforts to control the hostile intelligence
presence. The first was a report on the respective numbers
and treatment of officials from countries that conduct
intelligence activities in the United States contrary to
U.S. interests and the numbers and treatment of U.S. officials
in those countries. Under the Leahy-Huddleston amendment
of 1984, this requirement covers the Soviet bloc, Cuba,
China, and any other nation designated on the basis of the
threat posed by its intelligence or terrorist activities.
The second was a report from the Secretary of State and the
Attorney General on plans for implementation of the policy
of substantial equivalence between U.S. and Soviet embassy
and consular personnel pursuant to the Leahy-Cohen amendment
of 1985. The third was the annual report of the State
Department's Office of Foreign Missions, which regulates many
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aspects of the treatment of foreign government establishments
and officials in the United States.
These reports reflect uneven progress in limiting
the hostile intelligence presence in the United States.
While the planned reduction in the size of the Soviet
U.N. Mission is an important step forward, the intent of the
Committee in recommending the Leahy-Cohen amendment was also
to reduce the number of Soviet embassy and consular personnel
in the United States. The plan for implementation of
diplomatic equivalence does not achieve that objective.
Instead, there is a potential for actually increasing the
number of Soviet embassy and consular personnel in the
United States if the State Department carries out its plan
for a Soviet consulate in New York and permitting a U.S.
consulate in Kiev. According to the plan received by the
Committee, the number of Soviet diplomatic and consular
officials will increase from 320 to as many as 350, depending
on the number of Americans sent to Kiev. Current plans call
for thirty U.S. officials in Kiev. Apart from the merits of
the need for so large an establishment in Kiev, the Committee
belives that at a minimum the Soviets should be required to
staff their New York consulate within the 320 ceiling on
overall representation in the United States. The State
Department should plan accordingly to staff the U.S. embassy
and consulates in the Soviet Union within a comparable 320 ceiling.
The Committee supports the State Department's plan to
reduce the Soviet work force at the U.S. Embassy in Moscow.
This plan would also allow the staffing of a small consulate
in Kiev within the 320 ceiling and still permit some reduction
in Soviet embassy and consular positions in the United
States. Such reductions could be made, for example, by
refusing to allow the Soviets to replace officials expelled
from the United States for espionage-related activity.
Further reductions should be possible as the Americans who
replace Soviet employees learn to do their jobs more efficiently.
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Apart from issues of numerical equivalence, the State
Department through the Office of Foreign Missions has made
considerable progress in imposing more effective controls.
In addition to regulating the travel of Soviet bloc repre-
sentatives and U.N. Secretariat personnel, the Office of
Foreign Missions (OFM) is requiring Soviet bloc embassies
to secure prior OFM approval of purchases or leases of property
for housing as well as business purposes. A Soviet request to
construct a new apartment building in their existing compound
in Riverdale, New York, has been denied because it is deemed
excessive to Soviet housing needs. On May 28, 1985, the Soviets
were advised that their procurement within the United States
of building equipment, materials, or services for the remaining
construction work at their Mt. Alto site in Washington, D.C.,
must be arranged through OFM. In response to a Soviet request
to expand its recreational facilities at Pioneer Point, Maryland
OFM has told the Soviets they must abide by the same terms and
conditions applied to construction on the site of U.S. Embassy
recrational property in Moscow.
The Committee believes the OFM program is one of the
most important recent counterintelligence initiatives, and
is recommending legislation to broaden OFM's authority to
impose travel controls on certain Soviet bloc-controlled
businesses located in the United States. The Committee also
supports OFM's plans to require Soviet bloc missions to lease
residential units from OFM, to purchase telecommunications
goods and services through OFM, and to use OFM banking services.
OFM's effectiveness will be enhanced by the Administration's
decision to give Ambassador status to its current Director.
(By law, his successor will have such status.) The Committee
supports the decision to make this appointment, so as to strengthen
the Director's ability to deal with foreign representatives.
The need to combat the hostile intelligence presence
must also be taken into account in developing policies and
regulations for exchange programs. There is clear evidence
that some exchange visitors are used for clandestine intelli-
gence purposes. While foreign policy considerations may
dictate greater openness between the United States and certain
countries, they must be balanced against the counterintelli-
gence risks. The President's interim report to the Intelli-
gence Committees states that efforts are made to do this.
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Overseas, the hostile presence problem has three
separate dimensions. The first is employment of Foreign
Service Nationals (FSNs) at U.S. diplomatic missions.
While most attention has been focused on the large number
of Soviet nationals employed at our Embassy in Moscow,
similar concerns arise in othec countries. The Inman Panel
on Overseas Security recommended reducing the number of
FSNs at embassies in other Warsaw Pact countries and
segregating them from sensitive areas and positions in
other missions. The State Department has developed a
plan to reduce the number of FSNs in Moscow Co 95 and
to begin such reductions elsewhere.
The Committee supports both the Moscow effort and
the modest FSN reductions planned in Eastern Europe.
The Administration requested $6.3 million for FY 1986
and 528.3 million for FY 1987 to meet the costs of such
staffing changes; the urgent supplemental appropriations
bill met $12.0 millicn of that need. The Committee urges
the State Department to reprogram the remaining needed
funds, especially if construction funds appropriated in
the urgent supplemental cannot be fully expended in
FY 1987.
A second aspect of the problem is the employment
of over 120,000 foreign nationals at U.S. military
installations. Close to 1,000 of these personnel have
access to some classified information; roughly 370
have access to some Secret material. The Stilwell
Commission recommended stricter personnel security
safeguards in such cases, and consideration should also
be given to reducing the military's reliance on foreign
nationals, who are much more likely to be recruited by
a foreign intelligence service than are U.S. personnel.
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The Committee recognizes that status of forces agreements
limit the hiring of U.S. citizens to perform unclassified
work at overseas bases, but the number of foreign national
employees with authorized or unauthorized access to classi-
fied information can and should be reduced to the minimum
feasible level. The Committee supports the tighter inves-
tigation requirements for foreign employees that have been
recommended by the Stilwell Commission.
The State Department plays a key role in developing
and implementing these policies and in ensuring that they
take into account other U.S. foreign policy objectives.
Components of the State Department vary in their understanding
and appreciation of counterintelligence concerns. It is
important to provide better training and other information
on the foreign intelligence threat to State Department officials.
While the State Department is not a counterintelligence
agency, its officials should be kept fully apprised of the
threat so they can be better prepared to support Foreign
Missions Office and other policies designed to implement a
national counterintelligence strategy.
FINDINGS AND RECOMMENDATIONS:
4. Recommendation. Recent Administration initiatives
and legislation (Leahy-Cohen amendment, Roth amendment)
should be implemented in a manner that places effective
limitations on the numbers and activities of hostile
intelligence service personnel in the United States and
takes into account our foreign policy and intelligence
collection efforts. The limit of 320 on permanently
accredited Soviet embassy and consular personnel should
not be increased, and the State Department should plan to
staff the U.S. embassy and consulates in the Soviet Union
so as to require some reduction in Soviet embassy
and consular personnel in the United States.
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5. Recommendation. Congress should enact legislation
establishing a policy of substantial equivalence between the
size of the Soviet and U.S. missions to the United Nations
in line with the Adminstration's plan to reduce the size of
the Soviet U.N. Mission.
6. Recommendation. Congress should strengthen the
authority of the Office of Foreign Missions to regulate
commercial and other entities controlled by foreign governments
and require registration of commercial entities controlled
by Warsaw Pact governments.
7. Recommendation. The Committee supports efforts
through the Office of Foreign Missions to enhance U.S.
counterintelligence effectiveness, including new initiatives
to require Soviet bloc missions to acquire residential
property, telecommunications services and equipment,
and banking services through OFM. The Committee also supports
the granting of Ambassador status to the current OFM
Director.
8. Recommendation. Policies and regulations for exchange
programs with other countries should take counterintelligence
concerns into account.
9. Recommendation. The State Department should
reprogram whatever Funds are needed to supplement the
$12.0 million appropriated through FY 1987 to implement
plans to replace a substantial number of Foreign Service
Nationals with Americans at U.S. missions in the Soviet
Union and other high-risk countries. The Defense Department
should reduce the use of foreign nationals with access to
classified information at DoD installations abroad, and
Congress should appropriate sufficient funds to replace them
with Americans. Funds for this purpose should be requested
in ?the FY 1988 budget, and DoD should determine what changes
may be required in mandated military ceilings overseas.
10. Finding. In conjunction with the CIA, FBI
and DoD counterintelligence components, the State Department
should have a program of formal training sessions, briefings
and intelligence reporting arrangements to provide more
and better information to State Department officials on
the foreign intelligence threat and U.S. counterintelligence
requirements. The Committee notes with pleasure that progress
is being made in this area.
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C. Counterintelligence Awareness Programs
One key to a successful counterintelligence strategy is
thorough analysis of the hostile intelligence threat and
communication of the results to those who need to take
countermeasures. Current efforts range from the FBI's
Development of Counterintelligence Awareness (DECA) program
for briefing defense contractors to the improved assessment
of Soviet deception, disinformation and active measures.
Informing the public, industry and other government agencies
can have a direct payoff, as in the case where a student at
Columbia University contacted the FBI about a Bulgarian
exchange visitor after seeing a TV documentary on espionage
that described conduct similar to that of the Bulgarian. The
student's report led to an FBI offensive double agent
operation resulting in the arrest of a Bulgarian intelligence
officer. At a classified level, U.S. counterintelligence
agencies must work with a great variety of government
programs and security officials to provide tailored
information and analysis.
On November 1, 1985, the President issued NSDD-197
requiring each U.S. Government agency to establish a security
awareness program for its employees, including periodic
formal briefings on the threat posed by hostile intelligence
services, and to provide for the reporting of employee
contacts with nationals of certain foreign powers. These
programs are to be tailored to the sensitivities of
particular work and designed so as not to intrude into
employees' privacy or freedom of association.
According to the NSC staff, department and
agency heads have responded positively and have given high
priority to this enterprise. The State Department contact
reporting directive, which has been provided to the Committee,
serves as a good model because it specifies reporting
procedures clearly and identifies those countries that
require the greatest attention. Civilian agencies without
extensive national security responsibilities also appear to
be taking this policy initiative seriously.
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The Committee strongly supports this policy and is
.recommending that a similar security awareness program be
established for the U.S. Senate. The Committee has used
the State Department's new program as its model.
The Larry Wu-tai Chin case highlighted the threat posed
by Chinese intelligence operations. As indicated in section
II of this Report, however, the PRC intelligence threat
differs greatly from the Soviet one. These differences
require development of new counterintelligence approaches
geared to the special characteristics of the PRC threat.
In particular, the FBI should develop specialized threat
awareness briefings geared to the unique problems posed by
PRC operations. At the same time, FBI threat awareness
programs do not -- and should not -- leave the implication
that lawful association with or assistance to Chinese
technical and scientific researchers is a sign of disloyalty
to the United States.
Another aspect of counterintelligence awareness is
the knowledge by agency security officials of when to bring
a matter to the attention of a U.S. counterintelligence
agency. In the Edward Lee Howard case,' CIA security officials
failed to alert and involve the FBI in a timely fashion. The CIA
has taken steps recent:I..), to guard against a recurrence of
this problem. The FBI should continue to work closely with
security officials of all U.S. Government agencies to ensure
that they understand its requirements and guidelines. A
good example, is the Pollard case, where the Naval Investigative
Service Command brought in the FBI at an early stage. The
Committee is pleased that the Navy has given a commendation
and a monetary award to the official who was responsible
for bringing the FBI into the Pollard case promptly when
certain questionable behavior was observed.
The lessons of the Howard and Pollard cases should
be extended to all departments and agencies that handle
highly sensitive information. Interagency procedures
for reporting SUSDiCiOUS conduct to the FBI should be
strengthened. Moreover, the Howard and'Pelton cases demon-
strate that former employees with grievances or financial
problems can compromise our most sensitive national security
programs. Individuals who choose to work in positions as
sensitive as those occupied by a Howard or a Felton should
expect to be held to a higher security obligation than
personnel with access to less sensitive information.
Therefore, the FBI should be informed when employees with
access to extremely sensitive information resign or are
dismissed under circumstances indicating potential motivations
for espionage. The decision as to whether the circumstances
justify investigation in varying degrees should be made by
the FBI, in light of its counterintelligence experience, not
by the employing agency. Interagency procedures should be
established to address borderline cases.
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Threat analysis functions are shared among U.S.
counterintelligence, foreign intelligence and security
agencies. Development of an effective national counter-
intelligence strategy, as well as a comprehensive and
balanced set of security measures, requires centralized
assessment of the threat posed by all forms of collection
-- technical as well as human. Since 1981, an interagency
staff has compiled assessments of the hostile intelligence
services threat and U.S. countermeasures, based on inputs
from throughout the Government. The Committee has found
these assessments to be increasingly valuable and is pleased
that they continue to have high priority.
National assessments are no substitute, however, for
high-quality threat assessments tailored to meet more
specific needs. The Committee is pleased to learn that
progress is being made regarding one such need for tailored
material that was highlighted in the most recent interagency
assessment.
DoD counterintelligence agencies have taken the lead
in analyzing the threat to particular military installations
and activities. The Committee supports increased efforts
in this area, esbecially to assess the threat to highly
sensitive research and development projects and to make the
findings available to the officials responsible for security
countermeasures. In recognition of the importance of this
function, the Stilwell Commission has recommended, and the
Secretary of Defense has directed, that the Defense Intelli-
gence Agency establish a Multidisciplinary Counterintelligence
Analysis Center as a service of common concern for DoD to
meet the counterintelligence analytic requirements of the
Defense Counterintelligence Board and the various DoD
components. DIA should have the task of ensuring that other
agencies' threat assessments are responsive to security and
program management needs of DoD components. Efficient
allocation of limited security resources depends on careful
evaluation of the threat.
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Special attention is required for two aspects of
the hostile intelligence threat that directly relate to
U.S. foreign intelligence analysis: deception; and "active
measures," including disinformation, forgeries and other political
influence operations. Hostile intelligence services conduct
these operations in addition to their collection efforts.
An interagency committee and a community-wide intelli-
gence analysis office are both active in the analysis of
deception efforts. Pursuant to the Committee's classified
reports accompanying the Intelligence Authorization Acts for
FY 1985 and FY 1986, a small interagency staff has been
assigned to the analysis office.
In recent years, with the help of the intelligence
community, the State Department has stepped up efforts to
expose Soviet "active measures," such as forgeries and Soviet
control of political organizations and conferences abroad.
The Committee supports recent initiatives to improve intelli-
gence support for U.S. efforts to counter these Soviet
activities.
The State Department and other appropriate agencies
should do more to disseminate the results of such analyses
to opinion leaders and policymakers worldwide. Recent
steps to increase the effectiveness of the Active Measures
Working Group, which is chaired by State/INR, are welcomed
by the Committee. The Working Group has briefed U.S. embassies
on its role, encouraged the formation of embassy committees
to monitor and combat Soviet active measures, and arranged
for both classified and unclassified guidance to be provided
to the field on specific cases. These efforts should
be supported and fully staffed by the relevant agencies,
especially the State Department. The Committee is pleased
that a new office has been established recently in State/INR
for this purpose.
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The FBI prepares reports and testifies before Congress
on efforts in the United States by the Soviets and other
designated countries to influence public opinion and
government policy through "front" organizations and other
covert operations. For example, in 1986 the Committee
received a classified FBI report on "Trends and Developments
in Soviet Active Measures in the United States," which
updated a pervious study prepared in 1982. The FBI report
reviews covert Soviet political influence operations direct-
ed at U.S. public opinion and policymakers. The Committee
regularly requests further counterintelligence information
from the FBI on such operations. The Bureau should continue
to report these assessments in a manner that provides
the necessary facts about hostile intelligence activities
and that fully respects First Amendment rights.
FINDINGS AND RECOMMENDATIONS:
11. Recommendation. All elements of the U.S. Govern-
ment should give high priority to implementation of the
policy requiring security awareness briefings and the
reporting of contacts with nationals of designated countries.
A similar procedure should be adopted for U.S. Senate
personnel.
12. Recommendation. The Howard case demonstrates
the need for strengthening interagency procedures for
bringing possible espionage cases to the FBI's attention
in a timely manner. The FBI should also be informed when
employees with access to extremely sensitive information,
such as Howard and Pelton, resign or are dismissed under
circumstances indicating potential motivations for espionage.
13. Recommendation. The FBI should develop threat
awareness briefings tailored to the special characteristics
of the PRC espionage threat. Such briefings should alert
American citizens to the risks of giving assistance to PRC
nationals who may have espionage assignments, while respecting
the freedom to associate with lawful scientific and technical
research.
14. Finding. Significant efforts are underway to
improve counterintelligence threat analysis, including
publication of regular interagence assessments of the hostile
intelligence services threat and U.S. countermeasures
and the establishment in DIA of a Multidisciplinary CI
Analysis Center to meet DaD threat analysis requirements
in conjunction with other DoD components. The Committee
is also pleased to note that there has been progress in the
effort to provide tailored analyses of the hostile intelligence
threat.
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15. Recommendation. The relevant interagency intelli-
gence analysis office should coordinate and sponsor analytic
efforts on Soviet deception, disinformation and active
measures. The State Department and other agencies should
increase dissemination of information about Soviet active
measures abroad. The FBI should continue to be responsible
for reports on active measures in the United States by
hostile intelligence services and should cooperate with
interagency analytic efforts. Reports on active measures in
the United States that are prepared by agencies other than
the FBI should be prepared in coordination with the FBI
and/or the Attorney General.
D. Domestic Operations
Counterintelligence operations in the United States
differ from such operations abroad, because the environment
is generally more favorable. U.S. counterintelligence has
greater resources, easir access to the target, and public
attitudes favorable to citizen cooperation. While legal
requirements place constraints on surveillance techniques
and investigative methods, those limits are vital for
maintaining our free society and (with exceptions discussed
below) do not inhibit necessary counterintelligence efforts.
Domestic operations can be divided into the following
categories: surveillance coverage of foreign government
establishments and officials; offensive operations to
recruit agents-in-place and defectors or to control double
agents; and espionage investigations and prosecutions.
Many of the strategic requirements for domestic operations
are unique, especially with respect to surveillance of
establishments and officials and the investigation and
prosecution of espionage cases. Other requirements have
more in common with overseas operations, particularly
with regard to penetration of hostile services, handling
of defectors and double agents, and analysis of the
bona fides of sources. Unique features of overseas
operations, as well as personnel management and training
programs that cross geographic divisions, are treated
in later sections of this Report.
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1. Coverage of Establishments and Officers
The foundation for domestic counterintelligence is
systematic collection on a foreign country's official
renresentatives in the United States. Such collection may
be technical or human.
Recent cases have shown the vital importance of
comprehensive coverage of communications to Soviet bloc
embassies and consulates as a means of detecting offers
to sell U.S. secrets. Pelton, Cavanagh, Jeffries and
others made their initial contacts with the Soviets by
contacting an establishment. Skilled counterintelligence
work is required in such cases, and frustrations may be
unavoidable. The Pelton case is an example in which it took
years to achieve a positive identification.
The strategic importance of covering certain foreign
establishments and their employees justifies continuing
resource investments to upgrade the FBI's surveillance
capabilities. The Committee has supported such investments
over the years and continues to do so.
In this connection, the importance of the contact reports
discussed earlier in this Report cannot be overemphasized. While
government regulations can require federal employees
to report contacts with possible foreign intelligence officers,
a free society must rely on the voluntary cooperation of
private citizens to advise the FBI of approaches and other
contacts by such officials. Frequently the FBI requests
citizens to report this information about particular individuals,
based on surveillance of a contact. The FBI's DECA briefings,
which are designed to encourage such contact reports from
defense contractors and their employees, have now reached
over 15,000 contractor employees. FBI and other intelligence
community officials have used speeches and public appearances
to emphasize the importance of public cooperation.
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The American people have a legitimate concern that
their government should not intrude upon their lawful
associations with foreign officials and their First
Amendment right to exchange ideas with visitors from abroad.
For that reason, the FBI operates under guidelines established
by the Attorney General and internal FBI policies overseen
by the Committee that are designed to respect the free
exercise of constitutional rights. As Director Webster
stated in a recent speech:
We certainly don't have enough A4ents to keep track
of every citizen of this country nor do we want to
investigate the activities of lawful organizations
without predication for doing so. Rather, our
focus--indeed our straLegy--must be on the intelli-
gence operatives themselves and the identification
of those who have come here with intelligence commissions
By building a spiderweh throughout the United States
that focuses on them rather than on our own citizens,
we make it much more difficult for those who would
betray our country by surreptitiously supplying national
secrets to foreign intelligence officers. I believe
that in a free society this is the only way we can
function without turning ourselves into a police state.
The existence of those safeguards should give the public
confidence that cooperation with FBI counterintelligence
not only serves the national interest, but is consistent
with respect for constituional rights.
FINDINGS AND RECOMMENDATIONS
16. Recommendation. Congress should continue to
fund increases in FBI surveillance capabilities.
17. Recommendation. American citizens in all walks
of life should be encouraged to assist U.S. counterintelli-
gence efforts by providing information to the FBI, either
upon request or when they are approached by possible foreign
intelligence officers.
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2. Offensive Operations
A major element in counterintelligence is offensive
operations, especially efforts to recruit agents-in-place
within hostile intelligence services and to induce defections
from those services. The strategic payoff of agents and
defectors can be immense, as demonstrated by the exposure of
Edward Lee Howard and the successful prosecution of Ronald
Pelton.
The greatest area of concern is the handling of defectors
as dramatized by the Yurchenko case. According to a CIA
survey, most of the defectors resettled in the United States
with CIA assistance are basically satisfied with their
treatment. Nevertheless, a significant minority have
problems that require special attention on a continuing
basis.
In the aftermath of the Yurchenko re-defection, the CIA
has undertaken a comprehensive review of its practices for
handling defectors. Deputy Director of Central Intelligence
Robert M. Gates summarized the CIA's conclusions and corrective
actions at his confirmation hearing on April 10, 1986:
There were organizational deficiencies. We
have made organizational changes so that a single
individual and a single organization are accountable
and are in charge of the entire process for defectors.
Another element that we have changed...is to ensure that
the same person is basically the principal case officer
for a defector with continuity, so that a defector
isn't facing a whole new set of people all the time
and there is somebody there that he gets to know and
that he can depend upon and that understands him
and understands his concerns, and can identify when
he is going through a particular psychological
crisis....
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Mr. Gates also called it "imperative" to assign individuals
who speak the same language as a defector so that someone
is available to talk in his or her own language; he did not
know, however, whether the CIA has actually been able to
implement this approach.
The actions taken and under consideration by the CIA
reflect a constructive effort to upgrade the defector program
and respond to the lessons of the ?Yurchenko case. They need
continuing high-level support, both in the CIA and in other
agencies. The Committee will continue to assess the CIA
improvements along with other approaches.
The Executive branch continues to examine the broad
question of how defectors might best be welcomed, assisted and
utilized. A private organization formed to assist
defectors, the Jamestown Foundation, has recommended major
changes in the defector handling program. The Committee
intends to follow this issue closely in the coming year and
looks forward with great interest to seeing the results
of Executive branch deliberations.
The Committee cons4.ders it of the utmost importance that
our nation's goals in welcoming and assisting defectors be
more clearly enunciated and boldly implemented. Too.often,
the only operative goals have been the national security benefits
that result from debriefing a defector; the defector's
personal security against attacks by his or her country's
security services; and enabling the defector to survive
without continuing U.S. Government intervention. Other
goals must be added to that list: to encourage achievement
in American society consonant with the defector's talents
and accomplishments; and to assist the defector in making
a continuing contribution to the United States. While the
Executive branch has taken steps to administer its current
defector program more effectively, it must also effect this
important change in attitude and commitment.
The Permanent Subcommittee on Investigations of the
Senate Committee on Governmental Affairs has begun a major
study of the U.S. Government's handling of defectors and
other refugees from the Soviet Bloc. This study will focus
particular attention on the contributions that defectors
can and do make to American society and on the need to
encourage that process. The Intelligence Committee supports
this PSI study and is cooperating with the Subcommittee in
its effort to inform the public regarding the needs of
defectors and of the agencies that assist them.
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Perhaps the greatest risk in a strategy of penetrating
hostile services is that the agent-in-place or defector may
be a double agent, pretending to be recruited by or escaping
to the United States but actually controlled by a hostile
counterintelligence service. Disputes over the bona fides
of sources have plagued the U.S. intelligence community in
the past. Such differences are sometimes unavoidable, but
they should not disrupt interagency cooperation. Counterin-
telligence is not an exact science. The important thing is
not to rely on a single source without careful testing and
corroboration of his information. In this regard, the
Committee has sought and received assurances that intelligence
officials are alert to the risk of over-reliance on the
oolygraph.
The FBI, CIA, and DoD counterintelligence components
have made extensive use of double agents, as evidenced
in the recent Izmaylov and Zakharov cases. Last June,
the Soviet air attache, Col. Vladimir Izmaylov, was expelled
after being apprehended by the FBI. On August 23, Gennadiy
Zakharov, a Soviet physicist working for the United jNations,
was arrested and charged with espionage. Both Soviets
had been maintaining clandestine contact with individuals
who were cooperating with the FBI.
There is a clear need for these operations to be
carefully managed. Counterintelligence managers must also
review operations to ensure that they have not been compromised.
The Committee found Executive branch officials sensitive to
these and other issues raised by double-agent operations.
The most difficult counterintelligence task is countering
the use of "illegals," that is, hostile intelligence
service officers who operate under deep cover rather than
official cover. Some "illegals". may he used primarily for
performing espionage support functions (e.g., clearing drops).
The FBI and the Justice Department should consider improved
ways to prosecute "illegals" for such espionage support activity.
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FINDINGS AND RECOMMENDATIONS
18. Finding. In the aftermath of the Yurchenko
re-defection, the CIA has made improvements in its procedures
for handling defectors. The Committee will continue to
review the implementation of those procedures to ensure
that needed resources and personnel, as well as continuing
high-level support, are provided. The Administration
has commissioned an independent assessment of the CIA
defector resettlement program, and the results will be
provided to the Committee.
19. Recommendation. Objectives for the defector
resettlement program must include encouraging the fullest
possible achievement in American society and assisting
defectors to make a continuing contribution to the United
States. The Committee strongly supports the efforts of
the Permanent Subcommittee on Investigations of the Senate
Governmental Affairs Committee to focus public attention
on the contributions that defectors can make to American
society and on the need to enhance their ability to make
such contributions.
20. Findini. The Executive branch has reassured the
Committee regarding the risk of over-reliance on the polygraph
in testing sources and defectors and has demonstrated
sensitivity to issues concerning the management of U.S.-
controlled double-agent operations.
21. Recommendation. The Justice Department and the
FBI should work together to develop improved ways to prosecute
"illegals" who perform espionage support functions.
If further legislation is needed, the Justice Department
should so inform the Congress.
3. Espionage Investigations and Prosecutions
Espionage investigations that may lead to criminal
prosecution raise delicate issues of interagency cooperation
and balancing of interests. Some senior officials support
imposition of the most severe penalties on an individual
found to have engaged in espionage on behalf of a hostile
foreign power. Law enforcement objectives may conflict,
however, with counterintelligence requirements and other
national security interests.
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Espionage cases involving non-Soviet bloc countries
raise foreign policy issues, because of the desire of
the United States to maintain good relations with particular
governments. In the recent Pollard and Chin cases, however,
the Executive branch has demonstrated its willingness
and ability to investigate and prosecute espionage by
agents acting on behalf of friendly countries--in these
cases, Israel and China. The Committee fully supports
enforcement of the espionage laws, without regard to the
foreign country involved. This policy does not necessarily
conflict with other U.S. objectives requiring good relations
with such countries, so long as it is applied even-handedly.
The United States should make clear to every country, that
it will not tolerate violation of our espionage laws and
that it will investigate the intelligence operations of
countries that control or permit the commission of espionage
in or against the United States on their behalf. The Committee is
pleased with recent assurances of State Department
cooperation with enforcement action whenever evidence of
espionage is presented.
For many years U.S. counterintelligence officials
assumed that information acquired by intelligence techniques
could not be used for law enforcement purposes because
of legal obstacles and the need to protect sources and
methods. The Foreign Intelligence Surveillance Act and the
Classified Information Procedures Act have made espionage
prosecutions somewhat easier, although other difficulties
still remain. These problems include the use of certain
investigative techniques, the need for more expertise
in handling sensitive espionage matters, and requirements
for better cooperation among and within agencies.
One of the principal differences between espionage
investigations and other criminal cases is the overriding
need for secrecy to protect counterintelligence sources
and methods. That is why Presidents have asserted claims
of "inherent constituional power" to authorize the use
of intrusive techniques with Attorney General approval
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rather than a judicial warrant. That is also why Congress
has established a special secure court order procedure under
the Foreign Intelligence Surveillance Act and exempted
counterintelligence from the law enforcement procedures
for access to bank records in the Right to Financial
Privacy Act. U.S. counterintelligence officials have
consistently contended that ordinary judicial procedures
do not provide adequate security in dealing with hostile
intelligence services. In normal criminal cases the
objective -- either immediate or long-term -- is always
prosecution in open court. Counterintelligence operations
have other objectives that may be mo,:e strategically
important, such as learning the methods of the hostile
service.
Federal law does not adequately take account of such
differences in several areas. The FBI has found that the
counterintelligence exemption in the Right to Financial
Privacy Act is insufficient to obtain access to bank records
when financial instituLions refuse to cooperate on a volun-
tary basis. Consequently, the FBI is requesting legislation
to give U.S. intelligence agencies the authority to require
financial institutions to provide access to records. Unlike
the law enforcement procedures under the Right to Financial
Privacy Act, neither a court order nor notice to the subject
of the records would be required. The FBI has a strong case
for replacing the current voluntary system with a law that
provides mandatory access for counterintelligence purposes
within a framework of Attorney General guidelines and
congressional oversight to provide safeguards against
abuses. The Committee, therefore, has included legislation
to address this need in the Intelligence Authorization Act
for Fiscal Year 1987.
There is a similar problem with access to telephone
and other telecommunications records. Paradoxically, it
is easier in some states to wiretap an individual than to
get the phone company to provide access to his or her
billing records. For security reasons, the law enforcement
alternative of a grand jury subpoena is usually impractical;
and the Foreign Intelligence Surveillance Act does not
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cover access to records. As with bank records, the FBI is
asking for legislation that provides mandatory access for
counterintelligence purposes to such telecommunications
records as telephone billing records. The Committee has
incorporated such legislation in the Intelligence Authoriza-
tion Act for Fiscal Year 1987.
A third gap in federal law concerns physical searches.
The Foreign Intelligence Surveillance Act (FISA) authorizes
a special court composed of Federal District Judges to grant
orders for electronic surveillance to meet counterintelligence
requirements, but the Act does not apply to physical search.
The FBI supported broadening the Act to cover searches
as part of the intelligence charter legislation considered
by the Committee in 1980, but the only provisions of the
charter to be enacted were the congressional oversight
authorities. Pursuant to Executive Order 12333, the Attorney
General authorizes warrantless searches for counterintelli-
gence purposes.
The absence of a statutory court order procedure
creates at least two problems. First, as with bank and
telephone records, there is no authority to require cooperation
from private parties. Second, the Federal appeals court in
the Trucrg case ruled that evidence derived from a warrantless
counterintelligence search may not be used in court if the
search occurs after the Government decides to prosecute.
Neither problem exists for wiretaps and other forms of
electronic surveillance under the Foreign Intelligence
Surveillance Act, which provides a court order procedure to
secure the cooperation of private parties and permits the
use of information for law enforcement purposes with appropriate
security.
In light of this situation, the Committee recommended
in 1984 that legislation be developed to establish statutory
procedures comparable to FISA for physical search. The
Committee is prepared to develop and introduce such legislation
in cooperation with the Executive branch.
The President's interim report to the Intelligence
Committees comments, "It is imperative that FISA be
retained as it now exists." The Committee similarly
endorsed FISA in 1984, finding that it has resulted in
"enhancement of U.S. intelligence capabilities" and also
"contributed directly to the protection of the constitutional
rights and privacy interests of U.S. persons." The Committee
believes that physical search legislation can be achieved,
with Executive branch support, without endangering FISA.
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Espionage investigations and prosecutions mould also
be more successful if greater expertise and resources
were brought to bear in certain areas. Since 1985 the Army
has reorganized its counterintelligence efforts and instituted
a specialized training program to develop greater expertise
at the field level in espionage investigations.
The espionage prosecutions in 1985 and 1986 demonstrated
the importance of early consultation with Justice Department
attorneys in developing tactics that reconcile intelligence
and law enforcement interests. In the Pelton case, close
cooperation between NSA, the FBI, and the Justice Department
resulted in a conviction with minimal disclosure of
sensitive information. In the Sharon Scranage case, the
combined efforts of the CIA, Lhe FBI, the Justice Department,
and the State Department produced a strategy that successfully
led both to two convictions and to the exchange of the
Ghanaian official convicted in the case for several prisoners
in Ghana and their families.
The Committee understands that such consultation is now
being instituted in a more timely manner than often occurred
in the past. This welcome coordination requires that the
Justice Deoartment, in turn, have a sufficient number of
attorneys trained and experienced in handling the unique
problems in these cases. The Committee is especially
concerned that those attorneys learn how to maintain controls
on the release of sensitive information. Department attorneys
should also work with U.S. counterintelligence agencies in
potential espionage cases to ensure that their methods are
as consistent as possible with successful prosecution. In
this regard, the Justice Department's Criminal Division has
begun to build a cadre of experienced personnel and to
provide additional training to United States Attorneys.
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The Howard case, which is discussed in some detail in
the Committee's classified Report, revealed serious shortcomings
in CIA performance relating to espionage investigations.
The Committee is pleased to learn that the CIA has taken
steps to correct problems pinpointed in investigations by
its Inspector General and an interagency group. The Committee
will monitor the implementation of those changes.
Issues relating to the handling of the Howard case
by the FBI and the Justice Department have also been pin-
pointed and are the subject of continuing consideration.
The Committee expects remedial actions to be taken, as
appropriate, and will continue to follow this matter.
FINDINGS AND RECOMMENDATIONS:
22. Recommendation. The United States should not
tolerate violation of our espionage laws by any country
and should investigate the intelligence operations of
countries that control or permit the commission of
espionage in or against the United States on their behalf.
The Committee is pleased to learn that the State Department
has pledged to cooperate with enforcement action whenever
evidence of espionage is presented, and the Committee
supports efforts to set up a mechanism for regular interagency
consultation on cases that might warrant action.
23. Finding. The Foreign Intelligence Surveillance
Act continues to be considered by U.S. counterintelligence
agencies to be highly beneficial to their efforts. They
strongly favor retention of FISA as it now exists.
24. Recommendation. Congress should enact legislation
to give the FBI the authority to require financial institutions
and telecommunications carriers to provide access to records,
with notice restrictions comparable to FISA. Any such
authority should be limited to counterintelligence matters,
governed by the current Attorney General's guidelines, and
accompanied by improved provisions for congressional oversight.
25. Recommendation. Congress should enact legislation
comparable to FISA to authorize physical search for intelligence
purposes, so as to reduce legal uncertainties in counter-
intelligence investigations that have prosecution as one
of their objectives.
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26. Recommendation. U.S. counterintelligence agencies
should continue to emphasize, as standard procedure, con-
sultation with the Justice Department at an early stage
in potential espionage cases. The Justice Department
should provide increased training to Criminal Division
attorneys and U.S. Attorneys concerning the prosecution of
espionage cases, including the need to protect sensitive
information relating to such cases.
27. Finding. The CIA has taken some steps that are
likely to improve counterintelligence investigations and
prosecutions, in the wake of investigations of the Howard
case. The Committee will monitor implementation of those
improvements.
Xe,
_18. Recommendation. The FBI and the Justice Depart-
ment should take actions, as appropriate, to remedy short-
comings exposed by the Howard case.
E. Overseas Operations
Strategic counterintelligence objectives abroad differ
from those in the United States not only because of the
different environment, but also because of the added require-
ments for CI support in intelligence collection programs.
The Committee welcomes recent CIA initiatives to improve
both its counterintelligence efforts and its career opportuni-
ties in counterintelligence.
The Committee's classified Report discusses further
issues regarding CIA and Department of Defense counterintelli-
gence activities overseas.
The investigation of espionage by U.S. civilian and
contractor personnel abroad raises jurisdictional questions.
The Committee believes that the FBI should be called in
and should work closely with agency security officials
from the outset.
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FINDINGS AND RECOMMENDATIONS:
29. Finding. The CIA has begun initiatives to
improve its counterintelligence efforts.
30. Recommendation. U.S. agencies abroad should
continue to obtain the timely advice and assistance of the
FBI in cases of possible espionage by civilian and contractor
personnel.
F. Personnel Management and Training
Counterintelligence is not the main function of any
of the organizations responsible for U.S. counterintelligence
programs. The CIA's primary task is collection and analysis
of political, economic and military intelligence; the
FBI is a law enforcement organization; and each of the
service counterintelligence organizations is part of a
larger criminal investigative or intelligence agency. This
is one reason why there have been less specialized training
and fewer incentives for careers in counterintelligence.
Personnel are recruited for law enforcement or intelligence
positions generally and are usually, not assigned to counter-
intelligence until they have experience in other fields.
The advantage of this practice is that personnel can
develop their basic investigative or intelligence skills
in less sensitive areas before taking on more important
counterintelligence duties. The disadvantage is that
specialization and career advancement in counterintelligence
may be discouraged because of the organization's emphasis
on other functions.
Every agency is taking steps to upgrade counterintelli-
gence training, but the results thus far have been uneven.
More should be done to encourage agencies to share their
experience with successful methods. While each agency
operates in a different environment and with different
internal regulations, joint discussion of such topics as the
nature of the threat from particular hostile services and
the techniques for offensive operations and counter-espionage
investigations could be very useful. This would also
make more efficient use of expert personnel who assist in
other agencies' training. In the CIA and the military
services, better training in agency guidelines is also
needed.
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In the aftermath of the Miller case, the Committee has
taken a close look at FBI personnel management policies for
counterintelligence. At the Committee's request, the FBI
prepared a study reviewing the impact of FBI personnel
policies on the Foreign Counterintelligence (FCI) Program
in order to determine how the FBI may more effectively
recruit, select, assign, train, promote, and retain Special
Agents for counterintelligence matters. The FBI study
indicated a need for improvements in several areas.
The FBI confronts unusual personnel management problems
because of the large hostile intelligence presence in New
York City, where the cost of living has discouraged FBI
Agents from seeking assignments or pursuing careers. Unlike
State Department personnel, FBI Agents in New York do not
have a special housing allowance to defray the cost of living
in town. The Committee believes that action is needed to
improve benefits and incentives in New York and is prepared
to develop legislation that may be needed for this purpose.
Another manpower. issue is the limited number of FBI
senior grade positions in the counterintelligence field,
as compared to positions as Special Agent in Charge of
a field office and comparable headquarters positions with
primarily law enforcement duties. The Committee supports
efforts to change this situation, including funds requested
in the FY 1987 budget to increase the number of senior
grade counterintelligence positions at FBI Headquarters.
The Committee also supports the FBI policy requiring that
all new Special Agents in Charge of field offices who have
not previously served in a full-time counterintelligence
position must receive FCI training.
The Committee intends to continue its review of FBI
counterintelligence personnel policies as part of a broader
ongoing study of intelligence community personnel management
issues.
Don counterintelligence components have similar
problems and should develop appropriate revisions in
personnel policy to encourage specialized counterintelligence
career development. In all the DoD counterintelligence
units, as well as the FBI, greater efforts are needed to
recruit and retain the best possible personnel.
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FINDINGS AND RECOMMENDATIONS:
31. Recommendation. More should be done to encourage
agencies to share their experience with successful CI methods
and to make more efficient use of expert training personnel.
32. Recommendation. Additional measures should be
taken to improve benefits and incentives for FBI Agents
in New York City, including any legislation needed to give
the FBI comparable authority to the State Department.
33. Finding. The FBI is planning to increase the
number of senior grade counterintelligence positions at
FBI Headquarters. The Committee supports these efforts.
34. Recommendation. While each counterintelligence
agency must recruit to satisfy its unique needs, greater
attention should be given to determining specialized
qualifications required for personnel to meet each agency's
CI needs as distinct from law enforcement or foreign intelli-
gence needs.
35. Recommendation. DoD counterintelligence components
should continue to develop appropriate revisions in personnel
policy to encourage specialized counterintelligence career
development.
IV. SECURITY COUNTERMEASURES
In 1984-85 the Executive branch conducted seven
in-depth studies of security policies and practices
for protecting classified information and activities
against hostile intelligence collection. The Committee
has reviewed findings and recommendations from all of
these studies, as well as observations and proposals
made by other Congressional committees, by witnesses
at the Committee's closed hearings, and by experts
inside and outside the Government. Taken together,
these reports and recommendations raise grave questions
regarding U.S. security programs to protect sensitive
information from our adversaries.
The Walker case disaster and the bugging of typewriters
in our Moscow embassy were compromises that waited years to
be uncovered and that illuminated significant weaknesses in
the nation's security. There have been wide disparities in
policies and standards for personnel, information, technical
and other security measures. Serious imbalances in resource
allocation have existed, and in some areas inadequate
resources have led to serious gaps in protection. Research
and development to improve security has been haphazard at
best.
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Since the late 1970s, the Committee has worked with
the Executive branch and the Intelligence Community to
strengthen counterintelligence throughout the Government,
so that the FBI, CIA and DoD counterintelligence com-
ponents could deal more effectiv'ely with the hostile
intelligence threat. Until 1985, however, neither this
Committee nor any other congressional body had taken a
similarly comprehensive look at the defensive security
countermeasures that surround the core of classified
information and that are supported by counterintelligence.
The Committee's closed hearings in the fall of 1985 were
the first systematic Congressional review of security
programs since the 1957 report of the Commission on
Government Security established by Congress (with Senator
John Stennis as its Vice Chairman). Although the Com-
mittee is encouraged by many of the steps now being
taken to remedy serious deficiencies, the continuing
fragmentation of security planning and policy requires
a substantial reorganization of the way the Government
handles its many security programs. Congress has a
similar duty to put its on house in order; and the
Committee has specific recommendations for that purpose
as well.
The Committee has addressed security countermeasures
at two levels. First is the national policy level, where
government-wide initiatives and programs are developed,
approved and overseen. Many of the most serious security
weaknesses result from the lack of an effective, national
policy that gives high priority to security programs and
ensures comprehensive and balanced planning. The second
level is the numerous separate security disciplines, which
each have their own problems that must be solved within
a coherent national policy framework. These disciplines
include information security, personnel security, com-
munications security, computer security, emanations
security (TEMPEST), technical surveillance countermeasures,
physical security, industrial security and operations
security. Their variety itself clearly indicates how
difficult it is to pull together the necessary expertise
and reconcile the interests of different agencies and
programs -- intelligence, military, diplomatic, in-
dustrial, research and budgetary. Nevertheless, the
effort must be made if we are to reduce the likelihood
of future compromises that repeat the multi-billion
dollar damage of the Walker, Pelton, Howard, Harper
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and Bell cases or the incalculable harm from inter-
ception of our communications and technical penetration
of U.S. facilities.
We would not wish to mislead; in any foreseeable
environment, U.S. security countermeasures programs can
provide no absolute guarantees against compromises and
losses. Our goal is a significant improvement in security,
a further limiting of the damage that is wreaked by those
compromises and losses. Our belief is that more effective,
but not unduly intrusive measures can accomplish this
objective.
A. A National Strategic Security Program
In December, 1985, the Committee recommended to
the National Security Council that the Executive branch
develop a comprehensive and integrated National Stra-
tegic Security Program to coordinate and foster the
protection of sensitive information and activities from
the efforts of hostile intelligence services. The pur-
pose is three-fold.
First, such a program would give greater visibility,
higher priority and increased attention of senior
officials to security countermeasures. Frequently,
security programs have neither an influential voice in
government departments and agencies nor adequate fund-
ing and career opportunities. Security must be recognized
by the Executive branch and Congress as a crucial under-
pinning to the other basic functions -- military, intelli-
gence and diplomatic -- that safeguard national security.
The second reason for such a program is to provide a
coherent structure to address and overcome security de-
ficiencies. As discussed in the following sections, these
problems include underfunding of essential programs,
significant gaps in research, inadequate training and
career development, insufficient management accountability,
uneven national policy guidance, interagency conflicts
over new initiatives, and failure to ensure necessary
linkages among security disciplines.
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Third, the establishment of such a program and structure
should provide long-term continuity and consistency through
succeeding Administrations. The changing of NSC structures
from one Administration to the next does not fill the
pressing need for continuity and consistency of policy.
When a National Strategic Security Program has taken shape,
therefore, the essential features should be promulgated by
the President in a formal Executive Order.
At the Committee's closed hearings in late 1985,
senior officials were asked to discuss how U.S. counter-
intelligence and security countermeasures policies are
established and coordinated at the national level. The
answer for counterintelligence was clear: responsibility is
focused on a single NSC committee process (the Interagency
Groun for Counterintelligence (IG-CI) and the Senior Inter-
departmental Groun for Intelligence (SIG-I)), with support
from an interagency staff which assists the NSC staff in
coordinating policy initiatives and overseeing their implemen-
tation. Much progess has been made in developing a coherent
nrocess for counterintelligence policy. The same cannot be
said for security countermeasures, where responsibilities
have been widely diffused and the Executive branch has only
begun to develop a coherent policy review structure.
The DCI testified that the SIG-I is "the principal
forum where the national perspective can be brought to
Cr [counterintelligence] and CM [countermeasures] policy,"
with countermeasures handled by an Interagency Group (IG-CM)
chaired by the Deputy Undersecretary of Defense for Policy.
At the same time, however, the DCI acknowledged the existence
of "other Executive branch policy recommending and implementing
entities such as the DCI Security Committee, the National
Telecommunications and Information Systems Security Committee,
the SIG for Technology Transfer, etc." While the DCI said
the SIG-I system has "the capability for and mission for
ensuring proper national-level coordination of all CI and CM
matters," this has not in fact been the case for security
countermeasures.
Recently, the DCI, acting in his capacity as Chairman
of the SIG-I divided the Interagency Group for Countermeasures
into separate groups for Technical matters (IG-CM(T)) and
for Policy and other non-technical issues (IG-CM(P)). The
new IG-CM(T), headed by the Assistant Secretary of Defense
for Command, Control, Communications and Intelligence, is
intended in part to serve as a bridge between the intelligence
world of the SIG-I and the world of the National Telecommuni-
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cations and Information Systems Security Committee (NTISSC).
The NTISSC is chaired by the same Assistant Secretary and
has a presidential mandate under NSDD-145 to develop
communucations, computer and emanations security policy for
the whole government.
The DCI also abolished the DCI's Security Committee (SECOM),
which had been a working-level intelligence community group
outside the IG-CM but covering some of the same issues. The two
new IG-CMs are to have subcommittees that will handle many
of the former SECOM functions, but with more senior members
than was the case with SECOM, so that subcommittee members
can acutally commit their agencies to act upon group recommend-
ations. Staffing is to be achieved through an up-graded
interagency staff.
These structural changes are very welcome signs of
the seriousness with which the Executive branch is approaching the
need to improve the security policy process. The Committee
does not believe, however, that they go far enough in
establishing a forum in which all the many security interests
can be surfaced and reconciled. It is uncertain, moreover,
whether the IG-CM subcommittees will be sufficient improvements
on the SECOM structure to overcome the bottlenecks that too
often have stifled progress on security issues. The
Committee continues to believe, therefore, that a comprehensive
National Strategic Security Program must be developed,
through whatever structures the Executive branch finds best
suited to that task.
In recommending establishment of a comprehensive
National Strategic Security Program, the Committee does
not intend to create a "czar" or to take from individual
agencies their responsibility for implementing national
policies that affect their work. If there is no national
policy, however, there is no standard against which to
hold each department accountable. If national policies
are fragmented, outdated or unbalanced, security becomes
subordinated to other departmental priorities and interagency
disputes. This has occured far too often in recent years.
Later sections of this Report give examples: the inability
to reach agreement on a "single scope" background investigation
for Top Secret and SCI clearances; the proliferation of
special access programs without sufficient controls and
standards; the imbalance in resources between expensive
technical safeguards and the personnel and information
security measures needed for effective computer security;
and, at least until very recently, interagency conflicts
over how to deal with some technical security issues.
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As important as it is to remedy these problems, the
greatest value of a National Strategic Security Program
should be to promote innovative solutions to new and
emerging hostile intelligence threats. This requires
collaboration with counterintelligence agencies to
identify such threats, as well as recruitment and train-
ing of top-quality security specialists with wide-ranging
operational, technical, analytical and managerial skills. At
the core must be a commitment at top management levels
within each department and agency to setting clear security
objectives, providing adequate resources, and devising
effective oversight and inspection procedures for holding
managers and commanders accountable for their performance.
This commitment will be forthcoming only if Congress and
the President make clear they expect it and establish
their own systematic means to assess government-wide progress
in meeting national goals.
A National Strategic Security Program should provide
policy direction and oversee implementation for all security
disciplines:
o Personnel security
o Information security
?o Communications, computer and emanations security
o Technical surveillance countermeasures
o Physical security
o Industrial security
o Operations security
To assist the NSC, a single body should be assigned
responsibility for policy planning and analysis of all
aspects of security countermeasures for protection of
sensitive information against hostile intelligence
efforts. It should ensure effective coordination among
the other interagency forums that address particular
problems. It should have the task of putting together
for the NSC and the Congress a fully balanced and co-
ordinated government-wide program. A senior official
should be designated to testify on the National Strategic
Security Program before the appropriate Congressional
committees.
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During 1985, the CIA and the State Department took
significant steps to achieve the same objectives on a
departmental level. The CIA reorganized and expanded
its Office of Security to integrate all its security func-
tions. Similarly, as recommended by the Inman Panel on
Overseas Security, the State Department established a new
Diplomatic Security Service with higher status and wider
responsibilities, including a high-priority effort to
upgrade technical security. The Stilwell Commission has
recommended a similar action by the Defense Department,
stressing "that all security disciplines have as their
fundamental purpose the protection of classified information
and must be applied in a fully balanced and coordinated
way." The Committee urges that resources be allocated to
enhance security policy and oversight in the Office of the
Secretary of Defense (OSD), so as to make the policy-level
integration of the various security programs in DoD a viable
option.
A significant aspect of the National Strategic
Security Program should be to assist the NSC on resource
priorities. The current budgetary arrangements are
fragmented and inadequate. To consider ways to improve the
resource allocation process, the Committee held a closed
hearing on June 4, 19%, on principal security programs
outside the NFIP, as well as those in the CIA Office of
Security. The ultimate goal of the Committee is to have
each department and agency identify its security resources
by function and program and include these resources in their
congressional budget justification submissions. The
National Strategic Security Program should give the NSC and
Office of Management and Budget a similar opportunity to
evaluate the resource priorities of these and other security
countermeasures programs.
Another high priority for the National Strategic
Security Program should be an assessment of requirements
for research and analysis, especially on personnel
security and the interfaces between personnel,
communications and computer security. The greatest
imbalance in security resources is between costly projects
on technical safeguards and the meager efforts to
look into personnel security issues. Not until January,
1986, was DoD able to get the necessary concurrences
for a modest personnel security research program in DoD
to be administered by the Navy. Current arrangements for
interagency assessment of security research needs have
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been insufficient to identify and promote aggressive and
balanced government-wide efforts, even though particular
agencies have taken valuable initiatives in areas of
concern to themselves.
Special emphasis should also be placed on commander
and manager responsibility for security within their re-
spective organizations. The recent action of the Deputy
Secretary. of Defense ordering the incorporation of security
management as a criterion in military and civilian perfor-
mance and fitness reports is a step in the right direction.
Such a requirement should be extended government-wide and
apply to all contractors as a condition for inclusion on
a bidders list. Other realistic sanctions are needed, as
well as greater consistency in the government and among
contractors on the severity and application of such
sanctions as fines, relief for cause, debarment and sus-
pension, for knowing or negligent security violations both
by managers and by subordinates. The National Strategic
Security Program should supply the necessary policy direction
Security normally r:Inks well below other careers in
most agencies; the National Strategic Security Program
must change the status of the security profession. Security
specialists should match other professionals in terms of
their qualifications, training, compensation and career
opportunities. There should be an independent evaluation
of the recruitment, training, pay, status, professional
development and retention of federal security officers
in all departments and agencies.. As recommended by the
Information Security Oversight Office and the Stilwell
Commission, the OPM job classification standards for
security should be revised immediately to ensure com-
prehensive and accurately graded descriptions of modern
security disciplines.
One of the common themes in all recent studies of
security countermeasures -- the Information Security Oversight
Office (IS00) task force, the Stilwell Commission, and the
Inman Panel -- is the need for better training not only for
security professionals, but also for managers and other
officials having security responsibilities. In the near-term,
the quality of training for new security personnel must have
special attention. Through the government, security initiatives
are providing funds for new personnel. Agencies should be
held accountable for ensuring that the most qualified personnel
are recruited and that their training meets high standards.
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The National Strategic Security Program should
establish government-wide security training objectives
for managers, security professionals, personnel security
clearance adjudicators, and industrial security officers.
Minimum levels of training and certification should be
established for industrial security personnel, clearance
adjudicators, and other positions requiring consistent
standards. Because the Defense Investigative Service
and the Defense Security Institute (DSI) have crucial roles
in the development and implementation of security training
programs and industrial security generally, an expanded
government-wide training role for DSI should be considered.
The Information Security Oversight Office has made a
similar recommendation. DSI could serve as a national
security training and education center serving all federal
departments and agencies. Consideration should also be
given to forming under DSI an interagency group, with
counterintelligence agency participation, to develop and
review effective security awareness educational material
and techniques. Given the concentration of sensitive
facilities on the West Coast, establishment of a per-
manent West Coast security training facility for government
and contractor personnel should be considered.
One of the most challenging and difficult tasks
that a National Strategic Security Program must address
is the development of coherent and effective policy for
operations security (OPSEC). OPSEC has many definitions
among the various departments and agencies. It can include
the implementation and assessment of U.S. efforts to
frustrate hostile intelligence collection. Another element
is the careful design of particular unclassified activities
or information to keep hostile intelligence services from
putting together bits and pieces of information to detect
classified missions or the presence of sensitive installations
Equally important is the assessment of government
practices outside the national security field that could
help or hinder hostile intelligence collection efforts.
The recently established National Operations Security
Advisory Committee of the IG-CM(P) has taken several valuable
initiatives in restricting public availability of sensitive
data.
?
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A 1985 interagency assessment identified serious
OPSEC weaknesses. The National Strategic Security Program
should develop government-wide OPSEC objectives and ensure
that relevant agencies have the necessary resources and
programs to achieve these goals. Just as sensitive military
units take care to ensure that changes in routine activity
will not provide our enemies indications and warning of their
operations, so must agencies and contractors involved with
sensitive agencies or programs incorporate OPSEC in their
overall security philosophy and programs.
These are some of the government-wide security issues
that should be addressed by a National Strategic Security
Program. Others are detailed in the sections below.on
personnel security; information security; communications,
computer and emanations security; technical and physical
security; and industrial security.
FINDINGS AND RECOMMENDATIONS:
36. Recommendation. The Executive branch should
develop and implement a comprehensive National Strategic
Security Program which would provide:
a. NSC-approved objectives and policy direction;
b. A broad master plan faithful to the objectives
and policies, and'both based upon and prioritized
in light of the threat;
c. Close coordination of implementing programs;
d. Assessment and allocation of resource require-
ments for all areas of common concern -- such as,
but not limited to: R&D; computer security;
TEMPEST and personnel security; and core
training for technical security countermeasures;
e. Oversight of implementation of national policy; and
f. A review of total resources planning.
This program, although within the NSC, should be structured
so as to provide long-term continuity and consistency
through succeeding Administrations. Accordingly, the
program and the essential structure for its maintenance
should be promulgated by the President in an Executive Order.
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37. Findim. Recent IC-CM changes promulgated by the
DCI, although not sufficient, in the Committee's view, to
solve the problem, are a welcome sign of the seriousness
with which officials are addressing the need to improve the
security process.
38. Recommendation. The Defense Department should
enhance its security policy and oversight capabilities in
the Office of the Secretary of Defense so as to ensure integration
of policies for the various DoD security programs.
39. Recommendation. The National Strategic Security
Program should evaluate security countermeasures resource
priorities for the NSC and OMB on an annual basis. Security
resources should be identified by function and program in
departmental and agency budget justifications. The Administra-
tion and the Congress should consider additional ways to
implement a more coherent budget process for security
programs.
40. Recommendation. The National Strategic Security
Program should assess requirements for research and 'analysis
on security countermeasures to promote aggressive and
balanced efforts government-wide, especially on personnel security.
41. Recommendation. The National Strategic Security
Program should emphasize- commander and manager responsibility
for security, including government-wide application of the
recent DoD action to incorporate security into performance
evaluations and development of more realistic and consistent
policies for disciplinary sanctions.
42. Recommendation. The National Strategic Security
Program should commission an independent evaluation of the
recruitment, training, pay, status, professional development
and retention of federal security personnel. Relevant
OPM job classifications should be revised and modernized.
43. Recommendation. The National Strategic Security
Program should establish government-wide security training
objectives and should require minimum levels of training and
certification for industrial security officers, clearance
adjudicators, and other positions requiring consistent
standards.
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44. Recommendation. The National Strategic Security
Program should consider phased assignment of national
responsibilities for security training to the Defense
Security Institute (DSI), with an interagency group including
representation from U.S. counterintelligence agencies to
develop security awareness materials. DSI should also establish
a West Coast annex.
45. Recommendation. The National Strategic Security
Progam should develop government-wide operations security
(OPSEC) objectives and ensure that relevant agencies have
the necessary resources and programs to achieve those goals.
9. Personnel Security
The most important barrier to the hostile intelligence
threat and the growing willingness of Americans to divulge
classified information for financial gain is a sound per-
sonnel security program. Unfortunately, recent Executive
branch and congressional studies have identified significant
weaknesses in U.S. Government personnel security practices.
Many of the issues raised by the Report of the Commission
on Government Security in 1957 remain unresolved today,
particularly the need for national policy guidance and
oversight. The Stilwell Commission, the DoD Industrial
Security Review Committee (formed after the Harper espionage
case), the Permanent Subcommittee on Investigations of the
Senate Governmental Affairs Committee, other interagency
assessments, and investigations of agency performance
prompted by recent espionage cases have all addressed
deficiencies, inconsistencies and ineffectiveness in the
administration of personnel security policies and programs.
Development of a more coherent and effetive personnel
security policy should have the highest priority in a
National Strategic Security Program.
The Stilwell Commission, while finding the DoD security
program "reasonably effective," made the following critique:
Clearly there is room for improvement. Many people
are cleared who do not need access to classified
information. Background investigations yield
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relatively little derogatory information on those
being cleared, and under the existing adjudication
process, far fewer still are actually denied a
clearance. Once cleared, very little reevaluation
or reinvestigation actually occurs, and relatively
few indications of security problems are surfaced.
The principle that a cleared individual is authorized
access only to that information he "needs to know"
is generally not enforced.
The Commission attributed these problems to insufficient
resources and the desire not to let security interfere with
mission accomplishment.
The Committee endorses vigorous implementation of
most of the Stilwell Commission's recommendations on
gaining and maintaining access to classified information
and on detecting and investigating security violations.
They should be reviewed at the NSC level and adopted for
government-wide application. In summary, the Commission
Proposes:
o For Secret clearances, better background checks,
an eventual reinvestigation system, and better
workplace controls (document logs and briefcase
searches).
o For Top Secret information, many more reinvesti-
gations, more polygraphs primarily for reinves-
tigations, better workplace controls ( a personal
reliability program and a ban on one-man access),
and a special crypto-access compartment.
? More inspections and management responsibility.
o Not issuing clearances for information to
personnel who require only access to the workplace
o Measures to reduce the number of clearances and
streamline security requirements for contractors,
including a billet system to cut the number of
Top Secret clearances, justification for each
contractor clearance (with periodic rejustification
for overseas positions), and a single scope for
Top Secret and SCI background investigations.
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o To free resources to cover other costs, the easing
of reinstatement procedures for contractors whose
clearances lapse for a short time and the routine
granting of interim Secret clearances while initial
investigations are conducted.
These recommendations reflect the most comprehensive and
detailed analysis of DoD personnel security requirements
that has been conducted in decades. Nevertheless, in
some respects they fall short of meeting current needs.
The first requirement is resources. Personnel security
is seriously underfunded, especially in comparison to the
technical programs for communications and computer hardware
and software. Redressing this imbalance should be one of
the highest priorities for a National Strategic Security
Program. Congress added 525 million for the Defense
Department in FY 1986 to reduce the backlog of investi-
gations and, especially, of reinvestigations of persons
with Top Secret clearances. The Committee has recommended,
and the Senate has passed, an additional $22 million authorization
and 358 positions for FY 1987 to accelerate implementation
of Stilwell Commission recommendations, primarily regarding
more detailed investigations for Secret clearances. Intelli-
gence elements have also regularly fallen short of meeting
periodic reinvestigation goals because of inadequate funding.
This is true as well for the FY 1987 budget. The basic
problem is that personnel security has had relatively low
priority in the Executive branch budget process. The
Committee welcomes recent testimony by the DDCI that the CIA
will give much higher priority to reinvesti-
aations.
t-
Nowhere is the adage "penny wise, pound foolish"
more apt, yet even the Stilwell Commission had to confront
serious resource constraints. Its goal is to reduce
the DoD backlog of reinvestigations for persons holding
Top Secret clearances to manageable levels within four
years and to conduct periodic reinvestigations of all
persons holding Secret clearances and above by 1995.
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Efforts to reduce the number of positions requiring
background investigations can alleviate some of the pressure,
but the technological sophistication of modern military
systems and the need for widespread access to intelligence
products requires that large numbers of DoD personnel have
at least Secret-level clearances. On the civilian side, the
work of Departments such as State, Energy, Justice and
Treasury will continue to require that many employees
have background investigations and reinvestigations.
Over the years, resource constraints have pre-
vented any serious consideration of field investigations
for Secret clearances, which have been based on name
checks of law enforcement and counterintelligence
files. Some of the most sensitive information in the
U.S. Government is classified at the Secret level, and
sustained passage of Secret information to hostile countries
would do grave damage to national security in many areas.
The Harper case is a good example where compromise of a
substantial amount of Secret information from a defense
contractor's office did great harm. The current requirements
for Secret clearance investigations are too low, and the
proposals for wider checks are too modest.
At a minimum, the investigative requirements for
a Secret clearance should include, in addition to name
checks: a credit check; inquiries to present and past
employers; more documentation of identity; other field
inquiries on recent life history; and a subject inter-
view. The key is the interview, to surface issues that
may merit further investigation. This recommendation
requires a substantial increase in manpower and funds,
but the cost is reasonable in light of the Soviet bloc
intelligence enphasis on acquisition of Secret-level
technological data.
Overall, the Stilwell Commission goal of eliminating
the reinvestigation backlog within four years should be
extended government-wide and to contractor employees.
In addition, a government-wide plan for Secret clearances
should be developed and submitted to the Committee, with
a target of implementation in less than the ten years
proposed by the Stilwell Commission. A government-wide
funding plan to achieve all these objectives should be
submitted to Congress as soon as possible.
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Another resource problem results from the resistance
of some authorities to modification of Top Secret and SCI
background investigation requirements that Defense Depart-
ment officials have concluded are not cost-effective.
Because the Defense Investigative Service, CIA and OPM
have different policies on the scope of those investigations,
it is not unusual for individuals, particularly in industry,
to have two or more background investigations in the same
year for Top Secret and SCI access. Moreover, some agencies
appear unwilling to simplify their background investigation
procedures in the light of cost-effectiveness studies. While
the Committee has not attempted to evaluate alternative
procedures in detail, it strongly recommends that a uniform
policy be established to achieve less costly and more timely
background investigations and clearances and to eliminate
redundant investigations.
Another factor that should guide development of
a "single scope" investigation is the high priority
for reinvestigations. Recent espionage investigations
indicate that none of the current approaches to initial
clearance is infallible. Espionage-related issues
rarely surface during initial background checks.
Streamlining the procedures for initial investigations
would release manpower for use in meeting the five-year
reinvestigation requirement that all agencies agree
should apply to Top Secret and SCI clearances.
The Committee also believes that a "single scope"
background investigation for Top Secret and SCI clearance
should include an in-depth interview of each subject
by a trained and experienced security officer. The
record indicates that such interviews are often effec-
tive in surfacing issues not uncovered by a field
investigation that bear on the ability of an individual to
handle sensitive information.
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Several Stilwell Commission proposals deserve
special emphasis. A reliability clearance for persons
needing access to a site, but not to classified infor-
mation, would underscore the importance of "need to
know." There are no figures on the number of people
with clearances where the intent is solely to determine
their reliability. Included in this category are guards
char force, maintenance personnel, etc. Implementation
of this measure would set the stage for carrying out
such other measures as a "billet control system"
describing which positions require access to classi-
fied information. This action will help revive the
need-to-know rule by drawing a clear distinction
between clearance for one purpose and clearance for
other purposes.
The Committee shares a concern, expressed initially
by the Permanent Subcommittee on Investigations, about
the potentially serious risks in issuing security clearances
to foreign-born individuals whose background cannot be
verified adequately. The Stilwell Commission's proposal for use
of the polygraph in such cases is comparable to the FBI's
policy of polygraphing foreign nationals employed for
?specialized purposes. Agencies must guard against overreliance
on the polygraph, of course, especially when independent
corroboration is so difficult to obtain. Other approaches
tailored to particular agency needs should also be considered.
A government-wide minimum standard is needed, however, in
order to ensure cross-agency acceptance of clearances.
One Stilwell Commission recommendation that should
be reconsidered is the proposal for one-time, short
duration (read on, read off) access by cleared personnel
to the next higher level of classified information when
necessary to meet operational or contractual exigencies.
(liven the vast differences between investigative stan-
dards for Secret and Top Secret, there is too great a
risk in giving an individual with only a Secret clearance
access to Top Secret information. If the requirements
for Secret clearances are substantially upgraded, this
proposal could be reconsidered as a means to conserve
security resources. As the Stilwell Commission re-
cognized, administrative oversight is essential to ensure
that repeated read on, read off access does not become
a loophole for semi-permanent access.
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Several areas of concern not mentioned by the Stilwell
Commission deserve serious consideration. One is the need
for relevant data on persons who leave positions with Top
Secret or sensitive compartmented accesses. Felton, Howard
and, for the most part, Walker committed espionage after
each had lost his clearances.
Walker's greed and his aberrant conduct as a private
investigator could have alerted a Navy system tasked to
continue oversight of individuals with previous high clearances
No such system effectively exists. Pelton's bankruptcy
should have served as the indicator for further NSA review,
particularly in view of Pelton's access to very sensitive
information. Had Howard's travels and finances been known,
the FBI might have been brought into that case much sooner.
The Executive branch should consider requiring as a
precondition for clearance, that those who receive access to
the most sensitive information agree to permit, for a period
of years after their clearance ends, access to relevant
financial and foreign travel records. In practice, for
example, this would mean that agency security officials
could access credit bureau information on former employees,
as DoD agencies are now doing on background investigations
and reinvestigations pursuant to the Stilwell Commission's
recommendation.
Such a system could be abused if not clearly limited to
persons with access to especially sensitive information and
properly administered under stringent safeguards for privacy
and civil liberties. It would be important to establish
clearly, for example, that the examination of these records
would not imply suspicion regarding a person. Another useful
safeguard might be to limit the information gained from
these records to an employee's security file unless the
Director of Security certified that it warranted the attention
of another office or the FBI. Other minimization procedures,
perhaps based upon those in the Foreign Intelligence
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Surveillance Act, could also be applied. In addition to
providing better means to detect suspicious behavior,
records access procedures could enable security offices
to respond in a timely and helpful fashion to evidence
of financial problems among personnel whose recent sensitive
accesses would make them lucrative intelligence targets.
The Committee recommends that the Executive branch
study the possibility, in consultation with appropriate
congressional committees and civil liberties experts, of a
Program of expanded post-access foreign travel reporting
obligations and/or agency access to relevant financial and
travel records. The Committee believes that such a program,
if combined with proper safeguards and limited to those
persons whose access to the most sensitive information
clearly warrants special measures, might be acceptable
from a civil liberties standpoint. A similar view has been
expressed by a ranking ACLU official at a recent conference
sponsored by the Congressional Research Service of the
Library of Congress.
Another initiative, relevant to the role of a National
Strategic Security Program in fostering and coordinating
research, is examination of the value of psychological
testing in the security clearance process. Some authorities
contend that such testing can help identify persons disposed
to disregard their obligations for the sake of self-gratifi-
cation. Any use of psychological testing, however, should
take full account of the need for test reliability, trained
personnel to interpret results, and protection of individual
rights. Psychological testing can supplement, but not
replace other screening devices.
The Stilwell Commission urged the Secretary of Defense,
although not in a formal recommendation, to press for
revival of the interagency effort chaired by the Justice
Department in 1983-84 to draft a new Executive Order
on personnel security. While drafting such an order may
be a lengthy process and must not be an excuse for in-
action on the specific national policy issues discussed
above, a new Executive Order would make an important
contribution to better personnel security. Such an
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order should provide a formal Presidential mandate for
minimum government-wide standards and procedures that
incorporate the essential elements of national policy
on key topics, with details to be spelled out in an
implementing directive that can be updated periodically
in light of experience and research. Second, it should
establish an office similar to the Information Security
Oversight Office to provide the kind of policy guidance
and oversight of implementation that ISO() has supplied
for information security. The absence of such an office
makes it extremely difficult for the National Security
Council to address personnel security policy issues
government-wide. Third, a new Executive Order should
focus exclusively on policies and procedures for access
to classified information and to facilities where classified
information is maintained. Experienced Justice Department
officials believe that such an order would make it easier to
defend in court decisions to deny or remove security clearances
More extensive and timely background investigations
and reinvestigations, with streamlined government-wide
standards and procedures, must feed into an adjudication
system with rigorous but realistic criteria for grant-
ing or denying clearances. There is currently no uniform
reauirement to deny a clearance to a person who has'been
convicted of a felony or has admitted to conduct which
constitutes a felony under state or local law. There is no
requirement for follow-up inquiries in cases where clearances
are granted to persons admitting problems like drug use.
(The FBI has expressed particular concern about this problem
in contractor facilities, where habitual drug users have
Dosed real threats to sensitive research and development
programs.) There is no government-wide requirement for training
of persons who adjudicate security clearance cases. (Only
one agency currently has a formal adjudicator training
school and individual services tend to have too few adjudicators
to justify their own training programs.) The lack of
training and experience among adjudicators causes delays and
inconsistencies within and among agencies.
Agency and interagency investigations of such recent espionage
cases as Edward Lee Howard and Jonathan Pollard have highlighted
serious flaws in agency hiring, assignment and termination
practices. The CIA and DoD have moved to rectify problems,
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and there will probably be interagency consideration
of adopting similar corrective measures. The CIA and other
agencies have also become more sensitized to the risks
inherent in decisions to give sensitive assignments to
persons with a history of personal problems. While there is
a balancing need not to do away with necessary managerial
flexibility, these corrective steps are basically much
needed and long overdue.
Underlying these specific problems is a general
attitude that the purpose of the clearance process is
simply to weed out those individuals most obviously likely
to pose a threat to security. Wider background checks
will have little impact if the results are not used
effectively. Especially for Top Secret clearances and
for the most sensitive Secret clearances, the policy
should be reversed. Clearances should go to individuals
whose records demonstrate a clear aptitude for security.
That is, their background and personal qualities should
show a high sense of responsibility -- not just the absence
of proved disqualifying factors. At the same time, denial
of such highly sensitive clearances should not affect the
ability to pursue careers in other areas.
A final personnel security issue is the use of poly-
graph examinations as part of the initial clearance process
or in reinvestigations. Since 1983, the Committee has
followed closely the various attempts in the Executive
branch to widen use of polygraphing for personnel security
purposes and congressional efforts to control such practices
by statute. The Committee has consistently supported the
approach taken by the Senate Armed Services Committee in
approving a personnel screening polygraph test program for
the Defense Department. That test program is limited to
counterintelligence-related questions and has very stringent
quality controls and safeguards for individual rights. The
same limitation, controls and safeguards should apply to any
expansion of polygraphing in otner departments and agencies.
The National Strategic Security Program should ensure full
coordination of departmental policies and practices for this
purpose.
The Committee is concerned about the tendency to
place an over-reliance on the polygraph, thereby allowing
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apparent passage of an examination to validate the reliability
of an individual who may be intent on espionage. Other
concerns are the persistent underfunding for implemen-
tation of some high-quality polygraph programs and the
risks that incompetent or improper use of the polygraph may
harm the careers, reputations or well-being of loyal Americans.
Adequate research on personnel screening polygraph practices
is also lacking.
An essential prerequisite for any wider polygraph
program in DoD or other agencies is a significant upgrading of
the national polygraph training school managed by
the Army. This training program should be the focal
point for development of a government-wide approach
to personnel Security polygraph examinations, including
equipment requirements, question format, quality
controls., and use of individuals as training subjects.
A model that 'should be studied is the Air Force SEVEN
SCREENS program, which. is described in a recent report to the
Senate Armed Services Committee. This is a screening program
that uses only counterintelligence-related questions and is
designed to establish and maintain strict quality controls and
respect for individual rights. The establishment of an Oversight
and Review Committee and the conduct of regular inspections
are especially valuable features of SEVEN SCREENS that should be
considered for use in other polygraph programs. The Committee is
pleased that other sensitive DoD programs are adopting the SEVEN
SCREENS approach.
The Stilwell Commission recommended that Congress replace
the current statutory authority for a limited DoD "test program"
with permanent legislation authorizing the use of polygraph
examinations for personnel screening with counterintelligence-related
questions for DoD personnel. Any such legislation should
incorporate standards for quality control and respect for
individual rights and should provide a means whereby those
standards can be enforced. DoD has prepared draft legislation
for this purpose. The legislation deserves serious consideration
in the next Congress, after thorough review of the current
test program. If Congress does not yet have sufficient test
data to decide this issue, then the current test program
should be extended for a specific period, at the end of
which a decision on permanent authority will be made.
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The DoD-proposed polygraph legislation would apply only
to the most sensitive positions and would include both quality
control and oversight requirements. The Secretary of Defense and
the Armed Services Committees would agree in advance to an annual
numerical ceiling on examinations to be given? and no adverse
action could be taken soley on the basis of polygraph results
except with approval at the highest levels in special circumstances.
In reviewing this proposed legislation, Congress should consider
the adequacy of DoD Policy oversight and inspection arrangements
to ensure consistent implementation and quality control for all
DoD components. As recommended elsewhere, this requires augmen-
tation of OSD security policy staff personnel. An oversight and
review committee comparable to SEVEN SCREENS should also be
considered.
The difficulties with expanding the use of polygraph examina-
tions in DoD and other departments suggest a need for caution at
the national policy level. There is widespread misunderstanding
about the use of polygraphs for personnel security screening with
CI-related questions and strict quality controls. While a
uniform national policy for access to certain types of highly
sensitive data is desirable in theory, more needs to be done to
explain the procedures and safeguards to federal employees, the
Congress and the public and to compile data on employee reactions to
such examinations before a government-wide policy is implemented.
FINDINGS AND RECOMMENDATIONS:
46. Finding. Defense Department adoption of Stilwell
Commission recommendations is a major step forward. The
Committee has supported additional funding in FY 1986 and
1987 to accelerate implementation of recommendations regarding
clearance investigations.
. 47. Recommendation. The National Strategic Security Program
should ensure substantially increased funding for per-
sonnel security in all relevant departments and agencies.
A Government-wide plan should be submitted to Congress
to achieve the following goals: (a) elimination of the
reinvestigation backlog for Top Secret (including SCI)
within four years; and (b) implementation within less than
ten years of a program for intensified investigation and
reinvestigation for Secret clearances.
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48. Recommendation. Agreement should be reached as
soon as possible on a "single scope" background investigation
for all Top Secret and SCI clearances, The uniform policy
should. provide for: (a) less costly and more timely background
investigations and clearances; (b) highest priority for
meeting the five-year reinvestigation requirement; and
.(c) a subject interview in all cases.
? 49, Recommendation. Government-wide adoption should
be considered for the Stilwell Commission recommendations to
prohibit the practice of requesting security clearances
solely to provide access to a controlled area, where there
is no need to know or even to be exposed to classified
information. Reliability investigations should still be
conducted in such cases, with standards equal to those
proposed by this report for Secret clearances.
-
.50. Recommendation. More effective means should be
established for invesrigating.and clearing immigrant aliens
and foreign nationals overseas who are granted access to
classified information. ? i
51. Recommendation. Implementation of the proposal
for.one-time*, short duration.access by cleared personnel to
the next higher level of classified information should be
postponed until Secret, clearance requirements and investi-
gations are upgraded and the IG-CM(P) has reviewed the issue.
52. Recommendation. The Executive branch should study .
the possibility, in consultation with appropriate congressional
committees and civil liberties experts, of a program -
for requiring those who receive access. to the most sensitive
information to agree to expanded post-access foreign travel
reporting obligations and/or agency access to relevant
financial and travel records. Such a program would need to
be clearly limited and to incorporate proper safeguards
regarding the use of the information obtained.
53. Recommendation. The National. Strategic Security
Program should increase personnel security research, including
expanded research and evaluation on the wider use of psychological
testing in the clearance process, taking full account
'of individual rights, as well as the implications
of 'recent espionage cases-
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54. Recommendation. The President should issue a new
Executive Order on personnel security. The order should provide
for government-wide minimum standards and procedures
and a policy oversight office similar to the Information
Security Oversight Office. It should focus exclusively
on personnel security programs regarding access to classified
information and to sites where classified information is
maintained. Drafting of this order should not delay action
on other recommendations.
55. Recommendation. The National Strategic Security
Program should improve the adjudication process for granting
or denying security clearances, with more rigorous standards
regarding persons who have committed felony offenses;
follow-up measures where persons with admitted problems like
drug use are cleared; and a government-wide requirement for
training of adjudicators. For the most sensitive positions,
a "select in" policy based on demonstrated aptitude for
security should be adopted in place of the current "select ?
out" policy based on the absence of proved disqualifying factors.
56. Finding. Agency and interagency investigations of
recent espionage cases have highlighted flaws in hiring,
assignment and termination practices. Recent corrective
efforts in CIA and DoD and proposed government-wide consideration
similar measures should be very useful. The Committee will
continue to monitor these efforts to achieve needed corrective
action without destroying necessary managerial flexibility.
57. Recommendation. The National Strategic Security
Program should ensure full coordination of departmental
policies and practices for the use of polygraphing in
Personnel security screening so as to maintain stringent
quality controls and safeguards for individual rights, to
prevent overreliance on this technique, to- provide for
necessary research and funding,-and to improve understanding
of the procedures.
58. Recommendaticn. Congress should consider permanent
legislation authorizing DoD to use polygraph examinations
for personnel-security screening with CI-related questions,
based on the most recent DoD proposal. If a decision
cannot be reached in 1987 because of insufficient test data,
then Congress should extend the current test program for a
fixed period.
59. Recommendation. The other Stilwell Commission
recommendations on personnel security should be implemented
vigorously in pop with augmented OSD policy oversight, and
they should be reviewed at the NSC level for adoption
government-wide.
of
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C. Information Security
In December, 1985, the Committee submitted to the
National Security Council a series of recommendations
on information security, in response to a request for
input on proposals developed by the Information Security
Oversight Office (IS00). In addition to calling for
a National Strategic Security Program, as discussed
above, the Committee urged immediate implementation of
the ISO() proposals with strong, public endorsement of
the President and the principal members of the National
Security Council. The ISOO proposals would establish
new information security policies for curbing over-
classification and over-distribution, improving
classification management, enforcing the need-to-know
principle, and improving security awareness and in-
vestigations of unauthorized disclosures. The Committee
recommended that senior executives and program managers
be held personally responsible for effective implementation
of these policies.
Although the ISO? proposals are an excellent agenda
For near-term actions, the Committee made several other
recommendations for lon-term decisions. First, there
is a fundamental problem with the classification system
because of its complexity. The Committee recommended
consideration of a two-level system, based essentially
on the current Secret standard and the Sensitive Com-
partmented Information model used in the Intelligence
Community. A two-tier system offers a better chance
of enforcing the need-to-know principle and reversing
the natural incentives to over-classification.
The Confidential classification should be dropped,
with such information either kept unclassified or pro-
tected at the Secret level. The initial decision should
be whether the information requires protection in order
to prevent substantial harm to identifiable national
security interests.
The classification threshold should reflect a
policy that classifies information only where truly
necessary to maintain the national security. The report
on Scientific Communication and National Security,
issued in 1982 by a panel of the National Academy of
Sciences, warned that undue controls can "weaken both
military and economic capabilities by restricting the
mutually beneficial interaction of scientific investi-
gators, inhibiting the flow of research results into
military and civilian technology, and lessening the
capacity of universities to train advanced researchers."
The 1985 interagency report on Soviet Acquisition of
Militarily Significant Western Technology reiterated
the warning that restricting access to scientific data
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"may also inhibit the United States' own national
research effort." As stated recently by former DIA
Director Eugene F. Tighe, "[Ilf the U.S. security
system for handling classified material is to be
useful, only data that are critical to the United
States' status as a political, economic and military
power should be classified." The assumption Should
be that information is unclassified, unless there
is a specific reason for maintaining secrecy.
The higher of the two classification standards
should focus on the much smaller universe of data that
require special protective measures above and beyond the
normal safeguards for classified information. As is the
case with intelligence data designated SCI, classification
at the second level should be based on a full analysis of
the risks of compromise. Such analysis should ensure that
special protective measures are imposed only where necessary
and are not diluted by applying them too widely. Careful
analysis should also provide the elements for more effective
security briefings that help senior policy-makers as well
as lower level employees understand the consequences of
a security breach.
Executive branch officials have noted that many ,
bilateral and multilateral national security agreements
are linked to the current system, and that the handling
of Confidential-level foreign material at the Secret
level will require some investment. The Committee re-
cognizes that this change must be gradual. It is con-
fident, however, that the declassification of many U.S.-
generated documents that do not merit serious protective
efforts will result in significant overall savings that
can be devoted to better protection of Secret and Top
Secret information.
Another concern is that a higher classification
threshold would make more documents accessible to people who
request them, either directly or under the Freedom of
Information Act. However, unclassified information of a
sensitive character can be marked "For Official Use Only" to
maintain a policy of not releasing such materials routinely
or in response to non-FOIA requests. Concern about FOIA,
moreover, should not dictate classification management
policy, which should be geared to the most efficient
protection against hostile intelligence access to truly
important secrets. If a case can be made that specific
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types of unclassified, but sensitive, information should be
exempted from the FOIA, Congress should consider appropriate
legislation as has been done for certain kinds of Defense
Department technical data. This would be in keeping with
the report on Scientific Communication and National Security,
which called for development of specific criteria to
determine whether unclassified scientific research should be
protected by means short of classification.
The other information security recommendations sent
to the NSC by the Committee addressed the problem of
disclosure of classified information to the news media.
The Committee is especially concerned about leaks that
compromise sensitive intelligence sources and methods.
The Committee emphasized the ISO? recommendation that
more effective, unclassified educational materials be
developed to explain the damage caused by unauthorized
disclosures. The more important recommendation was for
new procedures for autho-zized disclosure of classified
information to the news media.
The Committee recommended that the NSC confront the
pervasive practice of authorized disclosure of classified
information on background, without permitting attribution
to the source. By executive order, the President should
require each agency to establish procedures to be followed
whenever an official authorizes the disclosure of classified
information to the news media or in any other public forum.
The procedures should apply not only to formal statements
for attribution, but also to disclosures on background.
They should require that a decision be made to declassify
the exposed information or that a record be maintained for
purposes of accountability when authority is exercised or
granted to disclose information that remains classified.
The procedures should require consultation with the agency
that originated the information and written designation of
the officials in each agency who are authorized to communicate
classified information to the media, either in person or
through an authorized representative.
Some Executive branch officials oppose such pro-
cedures as likely to open the floodgates for "authorized
leaks." Others want strict enforcement of a policy
that any classified information disclosed to the media
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be officially declassified. The Committee strongly
encourages adherence to a policy that officials speak
on the record to the maximum extent. Nevertheless,
there may well be valid reasons for retaining a back-
ground briefing's classified character. Any serious
effort to address the problem of leaks must face the
realities of press-government relations. More leak
investigations may accomplish little, moreover, so
long as authorized background disclosures continue to
divert investigators from cases in which administrative
discipline, dismissal or legal action is possible.
Policies that ignore "authorized leaks" simply reinforce
the climate of cynicism that has fostered disrespect
for security.
In addition to the recommendations submitted to the
NSC in December, 1985, the Committee has several other
information security recommendations. Many proposals
of the Stilwell Commission on managing and controlling
classified information should be considered government-
wide. These include recommendations to:
? Require, rather than simply permit, challenges
to classifications believed to be improper.
o Require a higher minimum degree of account-
ability for Secret documents.
o Impose better controls over reproduction equip-
ment used to copy classified information.
o Initiate long-term action to develop technical
or mechanical controls over unauthorized re-
production.
o Reduce unnecessary retention and storage of
classified documents.
o Prohibit employees from working alone in areas
where Top Secret or similarly sensitive materials
are in use or stored.
The Stilwell Commission recommendations on special access
programs and on National Disclosure Policy for transfers
of classified information to foreign governments are
particularly important.
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The proliferation of special access programs is
testimony to the failure of the current security system.
'SOO Director Steven Garfinkel testified that "a number
of these programs are probably unnecessary," and the
Stilwell Commission reported that some actually afford
less security protection than ordinary classification
requirements. This situation reflects the fact that, too
often, there is no real analysis of the hostile intelligence
threat to special access programs or of the reasons why
normal security standards and procedures offer inadequate
protection. As the Stilwell Commissi'3n comments:
[Allthough the sole rationale for the creation of
Special Access Programs under Executive Order 12356 is
to provide enhanced security, there is sometimes too
little scrutiny of this determination at the time such
programs are created. Unless an objective inquiry
of each case is made by the appropriate authorities,
the possibility exists that such programs could be
established for other than security reasons, e.g., to
avoid competitive procurement processes, normal inspec-
tions and oversight, or to expedite procurement. actions.
The Stilwell Commission's proposed policies, standards and
controls for special access programs should be adopted
government-wide. The development of minimum security standards
for all DoD-established special access programs, which was
recommended by the Stilwell Commission and has now begun,
should end the temptation to use SAPs as a way to avoid
normal security requirements. The assignment of Defense
Investigative Service personnel to work full-time at
major contractor facilities may reduce the likelihood
of problems like those recently revealed at Lockheed
regarding protection of information on stealth technology.
Executive Order 12356 on National Security Information
should be modified, moreover, .to place more controls on
the establishment of special access programs and to give
the ISOO Director greater authority to conduct oversight
and ensure accountability of special access programs.
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A revised executive order should designate the Secretary
of Defense as the sole official entitled to create or
continue defense-related, non-intelligence special access
programs. There should also be a comprehensive, one-time
review and revalidation of all existing special access
programs and associated contracts, with each department and
agency reporting the results to the ISO() Director who should
make an independent assessment for the NSC.
The Committee believes ISO? has made a valuable
contribution to better information security, but its
small size (10 professionals) unduly limits its ability
to conduct oversight inspections and other in-depth evaluations.
ISOO's staff should be expanded to include a permanent
element to inspect agency practices at all levels of command
and management. While ISOO cannot replace internal inspections,
it should do more to ensure the effectiveness of agency
inspections by sampling on a periodic basis. ISO() should
also work closely with the Defense Security Institute to implement
the government-wide policy (proposed by IS00) requiring
seminars and trainino, courses for all levels of commanders
and managers, in government and industry, to understand
information security policy and procedures, especially
classification management.
Classification management training should focus, in part,
on the fact that the only valid national security reason for
classifying information is that a hostile element whose goal
is to damage the interests of the United States should not
have use of the information. Throughout the government,
most classification judgments are made by the "proponent,"
i.e., the originator or functional manager responsible for
the substance of the information. Few classification
authorities consider or have a good knowledge of how a
hostile element, government or otherwise, would use a
particular piece of information to damage U.S. national
security interests.
An informal query of government and industrial managers
by Committee staff tends to validate the report that managers
are often deficient in their knowledge of classification
management requirements and procedures. The proliferation of
classified documents and the need for greater security has
spawned an entire dictionary of special classification
markings and control systems. The rise of these special
markings and control systems has tended to generate a false
sense of security and also to confuse those who do not fully
understand their meanings. ISM and the DCI should undertake
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a thorough reassessment of these practices with a view
to simplifying the special marking systems.
Special markings help to enforce need-to-know restrictions
by warning a reader what accesses are required to read a
document. Equally important, however, is a need for clear
assignment of responsibility for determining whether someone
has a requirement for access to information about a particular
program. ISO() should review current directives and regulations
to ensure that such responsibilities are pinpointed and that
compliance is audited regularly.
Finally, the Committee does not believe that legislation
to enhance criminal enforcement remedies for unauthorized
disclosure of classified information would be appropriate
this year. After completion of the appeals in the Morison
case, a reassessment by both Congress and the Executive
branch might be in order. The Committee does, however,
support continued investigation of unauthorized disclosures
within agencies and by the FBI for purposes of administrative
discipline as well as criminal prosecution. When Department
of Justice guidelines for leak investigations are reviewed
pursuant to ISOO's proposal, they should be revised to
'reflect this policy. Polygraph examinations should also
continue to be used in leak investigations on a voluntary
basis in accordance with procedures followed in other types
of criminal investigations.
FINDINGS AND RECOMMENDATIONS:
60. Recommendation. The Executive branch should
immediately implement the Information Security Oversight
Office (IS00) proposals, with strong public endorsement by
the President and the principal members of the National
Security Council.
61. Finding. The complexity of the current information
security system has led to overclassification, employee
confusion and ignorance, inability to protect all the
information earmarked for protection, and, at least at
times, cynical disregard for security.
62. Recommendation. The Executive branch should
consider simplifying the classification system by establishing
two levels, eliminating the current Confidential classification.
This streamlining should be preceded by consultation with
other countries with whom the United States shares security
classification agreements.
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63. Recommendation. An Executive Order should be
promulgated requiring each agency to establish procedures
governing authorized disclosure of classified information
to the news media, including background disclosures of
information that remains classified. Such procedures should
require records for accountability, consultation with
originating agencies, and designation of officials authorized
to disclose classified information to the media.
64. Recommendation. The Executive branch should review
the Stilwell Commission proposals on managing and controlling
classified information for possible government-wide implementation
as part of the National Strategic Security Program.
65. Recommendation. Executive Order 12356 should be
modified to require greater controls on special access
programs and to give the ISOO Director greater authority to
oversee such programs. The Secretary of Defense should have
sole authority to approve defense-related, non-intelligence
special access programs. The whole government should
conduct a comprehensive review and revalidation of all
existing special access programs and associated contracts,
with an independent assessment by the ISO() Director. Such
reviews should be repeated on a periodic basis.
66. Recommendation. ISOO's staff should be expanded
to include a permanent inspection element. ISOO should work
with the Defense investigative Service to implement improved
training courses on information security and classification
management. ISOO and the DCI should also reassess special
markings with a view to simplication. ISO() should ensure
that agencies designate individuals/ positions with responsi-
bility for determining need-to-know access.
67. Recommendation. The Executive branch should
postpone consideration of new criminal penalties for unautho-
rized disclosure until after the appeals in the Morison
case. The Committee supports continued internal agency and
FBI investigations for purposes of administrative discipline
as well as prosecution, including use of voluntary polygraph
examinations under criminal investigative procedures. DOJ
guidelines for leak investigations should be revised to
reflect current policy of using administrative sanctions
when prosecution is not pursued.
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D. Communications, Computer, and Emanations Security
The rapid expansion of electronic systems and
equipment capable of very high-speed transmission and
storage of large volumes of information offers striking
capabilities and opportunities for the United States,
particularly in the areas of national defense and in-
telligence. Equally striking are the security vulner-
abilities of such systems, for which Executive branch
efforts to develop and implement countermeasures are in
their embryonic stage. The Defense Department and NSA have
been given the lead in developing national policy for
security countermeasures against hostile intelligence
efforts to intercept communications, penetrate computer
systems, and monitor the emanations from communications and
information processing equipment.
Traditionally, communications security meant the
encryption of classified communications and the maintenance
of discipline to ensure that classified information was
not discussed on open lines. In the 1970s, two weaknesses
with this approach came to be recognized. First, it was
discovered that the Soviets had a massive capability
to intercept communications that could be exploited for
significant intelligence value, even if the discussions were
unclassified.
The second factor was the inherent human weakness
of government and contractor officials, at all levels, who
inevitably fail to follow strict security rules. The
inaccessability or inconvenience of secure phones, and the
ease of slipping into or "around" sensitive topics, meant
that security briefings and penalties were simply not
adequate to prevent discussion of classified information on
open lines.
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Congressional concern about communications security
has increased with growing public awareness of the threat.
In 1985, Congress enacted Senator Moynihan's proposal
that the FBI submit a report to Congress on the measures
needed to counter the Soviet surveillance threat to domestic
communications. This report was submitted in June, 1986, but
was limited to the FBI's counterintelligence support role
without discussing steps being taken or planned by the
National Security Agency's Information Security Directorate
to deny the Soviets access to domestic communications.
The NSA communications security program is described
in detail in the annual budget justification submitted
to the Intelligence Committee for the first time in 1985.
NSA has recently initiated a major program to upgrade
communications security by developing a low-cost, user-friendly
secure telephone system. NSA's leadership in working with
private industry to develop such a system may lead to a
significant security breakthrough. NSA's plans to work with
the Private sector by licensing use of essential cryptographic
techniques in equipment marketed to the public are unprecedented,
and the Committee is satisfied with the efforts to take all
equities into account. The Committee supports NSA's plans
for secure telecommunications equipment, including the idea
of making the equipment available to the private sector; it
recommends attention at the highest levels to the need
for agencies outside the traditional national security arena
to join in this program as appropriate. The Committee
will continue to exercise budgetary and policy oversight of
NSA's communications security program.
In this regard, the Committee is concerned that current
plans do not fully respond to the threat to long-distance
communications relayed over satellite links and intercepted
from sites like the one in Cuba. While the low-cost secure
equipment developed under NSA's leadership may solve much
of the problem for government agencies and private firms
that can afford the cost, many organizations are much less
likely to be able to pay the price. Efforts to neutralize
the Soviet intercept operations that damage national secuirty
should not depend so heavily on the marketplace. Senator
Moynihan, former Vice Chairman of the Intelligence Committee,
has proposed a $1 billion program to encrypt all domestic
communications satellite links. The Committee has asked for and
received a five-year NSA plan to protect the most
sensitive links that the Soviets could exploit to damage
O.S. security interests. This less expensive proposal is
to encrypt all dedicated channels leased by federal govern-
ment agencies, by private firms with government contracts,
and by private firms that communicate large financial
transactions and economic forecasts. The Soviets could exploit
these unclassified links by piecing together information that,
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taken in aggregate, is highly damaging to the United States.
In the Intelligence Authorization Act for FY 1987, the
Committee recommends an increase of $129 million for the
communications security program above the funds requested
by the Administration. More than half of this increase
is to begin implementation of the domestic satellite
protection plan.
Another threat comes from hostile intelligence efforts
to monitor emanations from equipment and/or electrical lines.
This problem generally bears the label TEMPEST, from the term
used for the costly shielding and equipment design measures
sometimes needed to ensure against compromising emanations.
Improvements are being made in definition of the threat and
the most cost-effective counLermeasures. The initial
security standards developed by the Defense Department
and the Intelligence Community were based primarily on
the theoretical Possibility of compromise. A 1983 inter-
agency assessment of actual and probable threats led to
refinement of the threat assessment, since the current
threat atipears much greater abroad than in the United
States. The bulk of TEMPEST expenditures, however, is still
being made in the United States.
On June 27, 1986, the General Accounting Office completed
a review of domestic DoD and military service adherence to
national TEMPEST policy for the House Committee on Government
Operations. The GAO concluded that more than a year after
the issuance of the new January, 1984, TEMPEST policy, the
services all continued to follow their older internal TEMPEST
guidance.
The GAO is of the view that the imposition of "TEMPEST
countermeasures on industry should be controlled from a
central point within DoD. Also in order to minimize unnecessary
TEMPEST-related expenditures, the report recommends that the
Secretary of Defense require all DoD components to conduct
TEMPEST evaluations before implementing TEMPEST countermeasures"
in the United States to protect non-SCI information. Both
the Stilwell Commission and an interagency body have
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recommended increased efforts to relate more closely the
extent of the TEMPEST protective effort in the U.S. to the
identified hostile collection threat. The expenditure of
funds and effort for unnecessary TEMPEST protection clearly
shows the need for better threat analysis and interagency
collaboration in developing the communications and computer
security aspects of a National Strategic Security Program.
The Committee sees a similar imbalance in resource
allocation in the computer security field. Testimony at
Committee hearings indicates a disparity in resources
between the technological and human sides of the computer
security problem. The overwhelming emphasis today is on
increasing expenditures for development of more secure
equipment and software, rather than on the personnel and
information security measures needed to deal with the human
side of the problem. The DCI testified that personnel
security is "the most important part of any effective
security program," yet the Computer Security Center at NSA
and the interagency computer security committee (under the
National Telecommunications and Information Systems Security
Csmmittee) chaired by the Assistant Secretary of Defense for
C I have focused mainly on hardware and systems design.
The Stilwell Commission, citing the estimate that
redressing the damage from the Walker-Whitworth case
could cost several billion dollars, went on to
warn:
Given the range of density of information housed
in major DoD computer-based systems, the possi-
bility of remotely accessing terminals over great
distance, and the difficulty of detecting ex-
ploitation by a trusted person, it is entirely
conceivable that a computer-wise traitor could
cause catastrophic loss of resources and military
advantage.
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The Security officer for one of the larger military
logistics computer systems sites expressed the same
concern to Committee staff. The Committee is also
concerned about the apparent use of a DoD computer
system in a scheme to divert parts to Iran.
The trusted-person threat to computer security
is not limited to the Defense Department. The State Depart-
ment has a problem due to the fact that many embassy computer
system managers and operators arc foreign nationals. In
light of the sensitivity of even unclassified State Department
systems, Members of the Committee sponsored an amendment to
the Diplomatic Security Act to protect funding for State
Department initiatives to replace those personnel with
U.S. citizens.
Because of the seriousness of the computer security
threat, the Committee urges consideration of the option
suggested in a 1985 interagency assessment: "The
only recourse may he for the United States to exclude
from these data bases the types of science and technology
information that are likely to be used against U.S. interests."
The National Strategic Security Program should ensure that
the computer security and information security communities
jointly ,develop procedures requiring analysis of computer
system vulnerabilities before sensitive material is approved
for storage in those systems.
Given the gravity of the personnel security pro-
blem, the National Strategic Security Program should
address the need for more stringent controls on per-
sonnel with access to sensitive computer data bases.
As a result of the Walker-Whitworth case, special
"crypto-access" controls have been approved for per-
sonnel with extensive access to classified cryptographic
information.. Similar controls should be considered
for access to the most vital data bases and networks.
Furthermore, such positions should have top priority for
institution of personnel reliability program measures, as
recommended by the Stilwell Commission for DoD personnel
involved in especially sensitive programs.
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One reason for the apparent imbalance in attention to
technological and human aspects of the computer
security problem may be the national policy structure
that separates communications and computer security
from other security functions. In 1984 the President
issued NSDD-145, which made NSA the "national manager"
for communications and computer security under a new
National Telecommunications and Information Systems
Security Committee (NTISSC) chaired by the Assistant
Secretary of Defense for C3I. NSDD-145 was an impor-
tant effort to update national policy, because it
recognized the close connections between computer and
communications security. The Committee endorses the
assignment of NSA, working through its National Com-
puter Security Center, to conduct research and develop
computer security hardware, systems and standards not
only for DoD, but also for the federal civilian establish-
ment and segments of the private sector. The National
Bureau of Standards Institute for Computer Science and
Technology is cooperating with NSA in transmitting
research results throughout the government and to
private industry. These efforts should increase.
Computer security is, however, one of the best examples
of why a still broader national policy structure is essential
to ensure full attention to all aspects of security counter-
measures. While NSA has unique technical capabilities,
computer security priorities should be addressed as part of
the National Strategic Security Program to ensure that
research efforts and resource allocation respond to the most
serious actual and probable threats. (Another reason for a
framework spanning current jurisdictional divisions is that
TEMPEST issues relate closely to technical surveillance
countermeasures, as discussed below.)
Recently, fears have been expressed regarding a
"big brother" role in NSA's growing involvement with
the civilian and private sectors. The Committee believes
that NSA is best equipped to develop technical measures
needed to remedy serious vulnerabilities in a timely
manner. The Committee also recognizes that both the
Executive and Legislative branches must continue to
exercise oversight to ensure that the Government does
not impose technical solutions that impinge on individual
privacy, civil liberties or public confidence.
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To improve congressional oversight of resource
allocation, program priorities and privacy concerns,
the Committee instituted a review of the NSA communications
and computer security budget requests beginning with
FY 1987. The House Intelligence Committee began this
practice last year, and the funds were included for the
first time in the Intelligence Authorization Act for
FY 1986. While these NSA programs are not part of the
National Foreign Intelligence Program and thus are
within the concurrent jurisdiction of the Armed Services
Committee, they also fall under the Intelligence Com-
mittee's general mandate in Senate Resolution 400 for
oversight of measures taken to protect against the
hostile intelligence threat.
FINDINGS AND RECOMMENDATIONS:
68. Recommendation. The National Strategic Security
Program should ensure that NSA's plan for low-cost, secure
voice telephone equipment is implemented by all government
agencies, contractors and offices involved with national
security information and other technological, political and
economic information of significant value to adversaries.
69. Finding. A program for encryption of domestic
commercial communications satellite links that would be the
most lucrative targets for hostile interception of private
communications is a worthwhile supplement to the secure phone
program. The Committee has recommended FY 1987 funding to
begin this program.
70. Recommendation. The National Strategic Security
Program should enforce current national TEMPEST policy for
all government agencies, so that decisions to buy TEMPEST-
ed equipment are based on the best counterintelligence
estimates of actual and probable threats.
71. Recommendation. The National Strategic Security
Program should place greater emphasis on personnel, physical
and information security aspects of computer security,
including research efforts, and should establish relative
priorities for all aspects of computer security countermeasures.
, 72. Finding. 3ecause U.S. embassy computers and word
processing systems may contain sensitive information,
Committee Members sponsored an amendment to the Diplomatic
Security Act to protect State Department funds to place U.S.
citizens in charge of embassy computers.
73. Recommendation. The computer security and
information security communities should review and improve
current procedures for analysis of information system
vulnerabilities before sensitive material is approved for
storage in such systems.
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74. Recommendation. Given the gravity of the threat,
high priority should be given to strict personnel security
controls, comparable to the reinstituted crypto-access
program and incorporating personnel reliability programs,
for persons with extensive access or potential access to
sensitive computer systems.
75. Recommendation. The National Strategic Security
Program should provide for national-level review of communica-
tions, computer and emanations security resource requirements,
with NSA continuing to be responsible for development of
technical measures and standards needed to remedy vulnerabilities.
The Committee will continue to oversee the level of effort
and to ensure that technical measures are not imposed in a
manner that impinges on individual privacy, civil liberties
or public confidence.
E. Technical and Physical Security
In June, 1985, the Committee heard detailed testi-
mony on the bugging of typewriters at our Moscow embassy
and other Soviet technical surveillance operations. This
testimony vividly demonstrated the Soviets' strong technical
surveillance capabilities and U.S. vulnerability to sophisticated
electronic penetration and eavesdropping techniques. Shortly
thereafter, the Inman Panel on Overseas Security submitted
to the Committee a compartmented annex to its report to the
Secretary of State, showing that the technical security
threat is a formidable challenge. The Inman Panel stressed
fundamental problems for the State Department and recommended
both a reorganization of State Department security operations
into a new Diplomatic Security Service and a massive rebuilding
program for overseas missions. The Moscow embassy discovery
and the Inman Panel report have reawakened the intelligence
community and the State Department to the threat of hostile
technical surveillance.
The Committee recognized after the June, 1985, hearing
that U.S. technical surveillance countermeasures (TSCM) had
been seriously underfunded in recent years. Consequently,
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the Committee proposed what became a $35 million FY 1985-86
supplemental appropriation to enhance security countermeasures
at U.S. facilities abroad.
The physical security lapses that allowed Soviet
access to State Department equipment and the low funding
for technical surveillance countermeasures are matters of
grave concern to the Committee. As a result, the Committee
accomPanied its proposal for a supplemental appropriation
with a request for a comprehensive long-range plan for
upgrading technical security at U.S. facilities abroad. The
outlines of such a plan are beginning to take shape.
The Committee is pleased to note the cooperation
and progress achieved in this area by Executive branch
agencies in 1986. The best way to marshal their energies is,
however, to establish a National Strategic Security Program
that can take all interests and disciplines into account.
Current interagency mechanisms will benefit from being
incorporated in this broader and more formal framework.
This recommendation is consistent with an interagency
assessment that emphasizs the necessity for total protection
of information and telecommunications equipment and with the
testimony of CIA's Security Director that "the best security
will be achieved through a program that integrates technical
security with other security disciplines."
Many agencies play R&D or operational roles in detecting
and denying technical penetration by hostile intelligence
services. Adequate TSCM planning must do more than just
provide an organizational framework and philosophy. It
should outline explicitly the vulnerabilities, requirements,
objectives, responsibilities, resources and schedule for
short and long-term MD, training, personnel, inspection and
other needs. The Committee looks forward to this level of
effort in the future.
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Implementing the Inman Panel recommendations, the
State Department has established a new. Diplomatic Security
Service so as to give those who manage its security functions
higher status, increased resources and a greater voice in
Department management. State has also developed a $285
million construction plan to build more secure facilities in
Eastern Europe. The State Department is establishing programs,
moreover, to ensure that all information processing equipment
sent abroad is under strict security controls. These efforts
are a sensible response to the vulnerabilities uncovered by
the discovery of the bugged typewriters. The Committee has
encouraged development of this program, and Members sponsored
an amendment to the Diplomatic Security Act that protects
funds for it.
Congress should also support the substantial, multi-year
expenditures that will be required to implement Inman Panel
recommendations for enhanced physical security at U.S.
facilities overseas. Congress funded initial requests to
improve embassy security against terrorism, including
President Reagan's request for a S110.2 million supplemental
appropriation for FY 1985 and the Act to Combat International
Terrorism (P.L. 98-533), which authorized S366.3 million for
embassy security. The urgent supplemental for FY 1987 appropriates
over $700 million to begin the new construction and other
security enhancements.
The Committee understands that there must be a "rule
of reasonableness" in embassy physical security that
takes into account the need for openness and the negative
effect of a "fortress" image. Nevertheless, policy
and design should be flexible enough to respond not
only to the terrorism threat, but also to the hostile
intelligence threat.
Security expertise in other agenies can contribute
significantly to the success of the embassy construction
program and it will be important to factor technical security
requirements into both the planning and the construction of
new facilities. This Committee has worked closely with the
Senate Appropriations Committee to provide funds and positions
in the FY 1987 urgent supplemental for such assistance to
the Foreign Buildings Office of the State Department.
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The State Department advises that budget constraints
have required modification of the plans for certain construc-
tion which originally would have made necessary security
improvements in FY 1988. The revised plan stretches out
construction work through FY 1990. The Committee urges the
Administration to accelerate its decisions in light of
long-range, tailored security plans for each of these
missions.
FINDINGS AND RECOMMENDATIONS:
76. Recommendation. The Executive branch should
continue to place greater emphasis on the development
of means and the implementation of actions to detect and
defeat technical penetrations of sensitive facilities. The
National Strategic Security Program should reconcile the
various technical security interests and integrate them with
other security disciplines.
77. Finding. Executive branch actions in 1986 to
upgrade security functions and to coordinate technical
security efforts have been a notable step forward. They
deserve continuing high-level support and resource commitments
78. Findini. State Department plans to improve
the security of information processing equipment constitute
a reasonable approach to the technical penetration problem.
Committee Members have moved to ensure that the needed funds
to begin these programs are available.
79. Recommendation. Congress and the Executive branch
should support implementation of the Inman Panel recommendations
for major site and/or physical changes to U.S. facilities
abroad to enhance security, minimize acts of terrorism
and prevent hostile intelligence penetration.
80. Recommendation. The State Department should
ensure that security experts in other agencies are given full
opportunity to participate in the planning and oversight of
new embassy construction efforts to achieve a comprehensive
security system. Decisions on long-range, tailored security
plans for overseas missions should be accelerated.
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F. Industrial Security
Espionage cases of the past ten years, involving such
industry personnel as Boyce, Lee, Bell, Shuler, Harper
and Cavanagh and the loss of sensitive technological
information through increasing levels of espionage and
illicit transfer, have highlighted the priority that hostile
intelligence services attach to U.S. technology. The
interagency report in 1985 on Soviet Acquisition of Militarily
Significant Technology described the threat, and its
findings are confirmed both by Soviet documents obtained by
the French and by the testimony of Soviet bloc defectors.
Industry is vulnerable to recruitments by hostile services
and to employees who volunteer their information for pay.
Industrial communications are vulnerable to Soviet interception;
and industrial facilities are susceptible to technical
penetration, especially overseas. Co-production agreements
with foreign firms compound the difficulties.
Hostile intelligence successes in penetrating U.S.
industry, culminating in the Harper case, triggered an
in-depth review of industrial security programs and policies
in 1984 by a DoD Industrial Security Review Committee (also
known as the "Harper Committee"). This review was particularly
important because DoD has been delegated industrial security
responsibility for eighteen federal departments and agencies.
The Harper Committee's 25 recommendations are designed to
enhance industrial security dramatically. While not all have
been adopted by DoD, the majority are being implemented as
proposed or with some revisions. The Committee urges prompt
action on the Harper Committee reforms that have been
approved for implementation. The National Strategic Security
Program should also review those recommendations for government-
wide implementation.
Several Harper Committee proposals deserve special
emphasis. First is better integration between counter-
intelligence and industrial security. In the past, there
has been a reluctance on the part of the counterintelligence
community to communicate with industrial security officers.
While such communication is improving, particularly in
security awareness programs such as the FBI's DECA program,
there is ample room for closer cooperation. There should be
a continuous two-way sharing among counterintelligence
agencies and government and industrial security officers.
Counterintelligence agencies should provide more tailored
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information on the hostile intelligence threat to particular
programs or types of programs, as well as in particular
geographical areas, for use in security awareness efforts
and the design of security measures.
A pilot program should be initiated for assignment of
Defense Investigative Service personnel to large sensitive
contractor facilities on a full-time basis, and the National
Strategic Security Program should review the results as a
basis for considering a similar government-wide practice.
With 95 percent of all classified docurients (an estimated 15
million out of 16 million) residing with only 4 percent of
the cleared industrial contractors, the case for a continu-
ing government security presence at those facilities is
strong. It is further enhanced by the admissions of the
Chairman of the Board of Lockheed regarding the sloppiness of
the company in accounting for classified documents. A GAO
investigation had revealed that Lockheed was unable to
account for nearly 1500 (iocuments due to inadequate controls.
A reordering of priorities to concentrate on major contractors
will not result in the government taking over contractor
security functions, but rather will permit timely audits of
security functions and correction of problems in primary
facilities.
As discussed in the section on personnel security, a
single-scope background investigation for Top Secret and
SCI clearances would especially benefit industrial security.
The five-year goal for clearing up the backlog of periodic
reinvestigations for Top Secret and SCI, if applied government-
wide, would similarly benefit contractors who are on the
leading edge of U.S. intelligence technology. The Committee
has added funds to agency budgets for this purpose on more
than one occasion.
Industrial security managers have had to cope with
tremendous needs for, and resultant delays in, clearance
investigations for industry. With the large defense
buildup in recent years has come a dramatic rise in the
number of contractor personnel holding security clearances
Between FY 1978 and the end of FY 1985, the number of such
clearance investigations per year increased from 28,000 to
75,000. The Defense Department's recent twenty-percent
reduction in clearances should help ease this burdern.
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Federal Acquisition Regulations should be changed
to designate security requirements for classified con-
tracts as a direct cost. When security is designated
as a direct cost instead of an overhead cost, industrial
security officers are relieved of the opposing pressures
of the government-customer who demands more and better
security and the company officials who see security as
a drain on profitability. In addition, the designation of
security as a direct contract cost will force the customer
to more precisely define his security requirements in the
Request for Proposals (RFP) and in security deliverables.
While this approach may appear more costly to the taxpayer,
in the long run it will result in greater cost savings
through effective planning and cost controls.
Consideration should also be given to the greater
use of Cost Plus Award Fee (CPAF) contracts as an
incentive for fulfilling contract security require-
ments and specifications on time, within cost and
without security violations. Making security a major
award fee determinant along with other award fee
elements will give contractors for classified con-
tracts the motivation for ensuring that more and better-
qualified security planning and operations personnel
are assigned and retained on contracts.
Training and government certification of all current
and planned contractor security officers should be required
in each classified contract. As pointed out in the Harper
Committee report, the intense targeting by hostile intelligence
services of the large amount of classified data entrusted to
contractors, as well as the absence of a formal training
program for industrial security officers, justifies the
governnent's establishment of this requirement. The require-
ment for training and certification should also apply to
personnel with security responsibilities for special access
program contracts.
A final and most disturbing concern is the hostile
intelligence threat to foreign subsidiaries of U.S. firms
and to foreign firms that have co-production agreements with
the United States. Although U.S. counterintelligence
efforts abroad, both unilateral and in concert with our
allies, can help deal with this problem, it also requires
national policymaker attention: The Stilwell Commission
warned specifically of the critical problem with co-production
arrangements, "where losses could entail not only the
end-item being produced but also the technical 'know-how'
necessary to manufacture it in large quantities." Other
weaknesses identified by the Commission include insufficient
controls in the sale of classified weapons systems and
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Ineffective security surveys. The Committee fully endorses
the Stilwell Commission's recommendations for improving
the National Disclosure Policy, which governs transfer
of classified military information to foreign recipients.
The following approach would be required in approving
classified transfers:
(1) reauiring a determination that the need of
the recipient cannot be satisfied by un-
classified systems or data;
(2) if classified systems or data are required,
then requiring selection of a model or type
of such system that minimizes the need to
transfer classified information;
(3) requiring phasing in of the most sensitive
classified information over time, if
feasible;
(4) avoiding co-production of military systems
which involve the manufacture of the
most advanced version of classified com-
ponents or end-items.
In addition, security surveys would be conducted by a
permanent professional staff with flexibility to meet
pressing needs for in-country security assessments.
The National Strategic Security Program should ensure
that such improvements are implemented not only for
military information, but for sensitive intelligence
and nuclear matters as well.
FINDINGS AND RECOMMENDATIONS:
81. Recommendation. The National Strategic Security
Program should foster better communication between U.S.
counterintelligence agencies and industrial security officials
and provide more tailored information on the hostile intelli-
gence threats to particular programs or areas.
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82. Recommendation. DIS should initiate a pilot
program for assignment of its personnel to large sensitive
contractor facilities on a full-time basis, and the results
should be reviewed as a basis for a similar government-wide
practice.
83. Finding. Recently adopted goals for ending the
reinvestigation backlog for contractors holding Top Secret
and SCI clearances who are currently involved in sensitive
classified contracts merit high-level commitment and support.
84. Recommendation. Federal Acquisition Regulations
should be changed to designate industrial security for
classified contracts as a direct cost. The primary intent
of this proposal is to identify and monitor security costs
associated with particular contracts.
85; Recommendation. Consideration should be given to
greater use of Cost Plus Award Fee contracts as an incentive
for fulfilling contract security requirements.
86. Recommendation. Trained and government-certified
security officers should be required in each classified
contract, including those for special access programs.
87. Recommendation. The National Strategic Security
Program should ensure implementation of the Stilwell Commission
recommendations on National Disclosure Policy not only
for military information, but for sensitive intelligence
and nuclear matters as well.
88. Recommendation. Other Harper Committee recommenda-
tions approved by DoD should be implemented promptly and
reviewed for government-wide application.
G. Congressional Security
In December, 1985, Randy Jeffries, an employee of a
private firm that transcribed classified hearing transcripts
for congressional committees, was arrested for attempting
to sell classified material to Soviet intelligence. The FBI
detected the employee making contact with the Soviet Military
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Office in Washington. The employee admitted giving the
Soviets excerpts from a classified transcript of a House
Armed Services Subcommittee hearing on Defense Department
command, control, communications and intelligence programs.
The subsequent FBI investigation revealed that the employee
had been observed by a co-worker removing classified documents
from the firm under his coat and that a friend of his
had destroyed a locked briefcase given to him that possibly
contained classified documents. Jeffries pleaded guilty in
January, 1986, to a charge of supplying national security
documents to a person not entitled to receive them. This
offense carries a maximum sentenc2 of ten years in prison.
The case highlights the fact that Congress is not
immune from the espionage problems that have surfaced
throughout the government in recent years. Both Execu-
tive branch and congressional inquiries have emphasized
the need to enhance congressional security in response
to espionage threats. In November, 1985, the Stilwell
Commission expressed the following concerns about the
handling of classified information by Congress:
"[Allthough Executive Order 12356 provides
that departments and agencies may disseminate
classified information to persons outside the
Executive branch provided such information is
given 'equivalent protection' by the recipient,
DoD elements frequently provide classified infor-
mation to the Congress without any understanding
of how such information will be protected.
While all congressional staff members who re-
ceive access to classified DoD information are,
in theory, cleared by DoD, little attention is
given the handling and storage of such information
by congressional staffs, who are not, in fact,
bound by the safeguarding requirements of Executive
Order 12356."
The Stilwell Commission recommended that the Secretary of
Defense take the following actions:
"Urge the President of the Senate and Speaker
of the House of Representatives to adopt, for
each House of Congress, rules to provide uniform
minimum control over classified information
provided by departments and agencies of the
Executive Branch. Volunteer to provide DoD
resources and assistance to Congress to achieve
this goal."
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In January, 1986, the Report on the Federal Govern-
ment's Security Clearance Programs by the Permanent Sub-
committee on Investigations of the Senate Committee on
Governmental Affairs addressed this subject in the follow-
ing observation:
"Congress must also focus on problems deal-
ing with classified information in the legislative
branch. For the most part, there are no established
standards and procedures. Personal offices and
Committee practices vary widely in terms of their
handling of clearances and classified material.
There are few, if any, checks in this system.
We believe an overall review of security procedures
in the legislative branch should be conducted by
the Rules Committee, in consultation with the
Intelligence Committee, with a goal of recommend-
ing improvements where needed."
The Chairman and Ranking Minority Member of the Sub-
committee, Senators loth and Nunn, addressed this issue
through preliminary letters to the Senate leadership.
The Senate Intelligence Committee has received
information from the FBI and other U.S. intelli-
gence agencies regarding the operations of the intelligence
services of Communist countries directed at Members of
Congress and their staffs, including attempts to recruit
or place agents in Congressional offices. Electronic
surveillance of domestic communications by foreign coun-
tries also poses threats to Congress. Only a few con-
gressional offices have secure telephones linked through
the Executive branch system.
The information provided to the Intelligence Com-
mittee about the espionage threat to Congress indicates
a continuing pattern of activity designed to exploit
vulnerabilities in security. In three cases over the
past ten years, the FBI has uncovered and disclosed
publicly Soviet bloc attempts to recruit and place
American citizens as agents inside Congressional
offices. U.S. counterintelligence successfully pre-
vented any damage in the following cases:
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o In 1976 a political scientist employed by
the Atlantic Council, James Frederick Sattler
was revealed to be attempting to secure a
position with a House Foreign Affairs Sub-
committee, after being recruited and trained
as an espionage agent by East German intelli-
gence.
o In 1980 a former CIA case officer, David
Barnett, was prosecuted tor espionage based
on evidence that he had sold CTA information
to Soviet intelligence and had attempted to
gain employment with the Senate and House
Intelligence Committees on the instructions
of Soviet intelligence.
o In 1982 a staff assistant to a House Member
reported to the FBI an effort by Soviet in-
telligence to recruit him as an agent. At
the FBI's request, the staff member became
a "double agent" to learn more about Soviet
intelligence techniques and aid U.S. counter-
intelligence.
In other cases, which have not been disclosed by
the FBI, there is additional evidence of espionage tar-
geting of Congress by Communist intelligence services.
In more general terms, the FBI has described the
techniques used to penetrate the Congress. Communist
countries assign intelligence officers to the United
States as liplomats, journalists, trade representatives,
and in similar capacities. Some of these intelligence
officers are instructed to cultivate associations with
Members of Congress and congressional staff for the
purpose of developing confidential relationships. A
well-trained intelligence officer knows how to approach
individuals so as not to appear in any way hostile or
threatening. Sophisticated and skillful intelligence
officers can establish relationships that seem entirely
innocent. Professional, academic or social contacts
lead to friendships without any suggestion by the in-
telligence officer of anything illegal or improper.
Only when the intelligence officer has learned enough
about an individual's vulnerabilities will an effort
be made to exploit the relationship.
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Lax security practices offer greater opportunities
for an intelligence officer to succeed in compromising
a congressional staff member. Unlike Executive branch
personnel, congressional staff have no requirement or
established procedure for reporting contacts with representa-
tives of Communist countries. In some cases, Members
or their staff do report such contacts to the FBI, but
the record is very uneven.
The purpose of contact reports is to assist the
FBI's investigations of suspected foreign intelligence
officers. The FBI has advised the Intelligence Committee
that its investigations of suspected intelligence officers
disclose many contacts with individuals who, after further
inquiries, are found to be congressional staff. Contact
reports save the FBI much time and effort, as well as
enabling it to advise staffers on how to handle such contacts.
That agency has raised with the Intelligence Committee the
need for a more formalized procedure in the Senate for
briefing staff on the espionage threat and for reporting
contacts with representatives of Communist countries.
Another matter that the FBI has discussed with the
Intelligence Committee is the handling of classified
documents in the personal offices of Members. The
FBI has offered to develop both classified and un-
classified briefings on the espionage threat to Con-
gress from the intelligence services of Communist
countries. The Defense Department, which is responsible
for most of the security clearances for congressional
staff, might be an appropriate source of assistance
in briefing staff on the handling of classified materials.
In an effort to address issues related to Senate
classified information security, the Senate Sergeant
at Arms, in November, 1985, circulated a Senate Select
Committee on Intelligence questionnaire to all Members'
personal offices and Committees of the Senate. The
results of that questionnaire were not encouraging.
Based on responses from 60 Senators' offices, the
following conclusions can be drawn:
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o There is confusion about the levels and sen-
sitivity of the classified information received
in personal offices.
o There is no uniform procedure followed for storage
or control of classified information in personal
offices.
o Staff with clearances in personal offices
rarely receive security indoctrinations or
other security education.
As a result of the security survey and the foreign
intelligence threat to the Congress, the Senate Select
Committee on Intelligence, together with the Committee
on Rules and Aiministration and the Committee on
Governmental Affairs, determined that the key to ad-
dressing the Senate's information security problems
lies in the creation of a central office within the
Senate to develop and oversee much-needed standards and
procedures on important pesonnel security and information
security issues.
The security assistance that a central office
would provide includes:
o Receiving, controlling, transmitting, storing
and destroying classified material.
o Processing clearance requests for personnel
of the Senate.
o Maintaining a centralized record of clearances
? held by personnel of the Senate.
o Presenting security briefings and debriefings
for the benefit of Senate personnel.
o Consulting on security issues with the per-
sonal offices and committees.
o Conducting administrative liaison with other
U.S. Government agencies on behalf of the
Senate.
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A particularly troublesome question relating to
classified information security is the large number of
Senate staff having access to classified material. The
Senate security office should be required by resolution to
conduct a comprehensive survey of all Senate offices to
determine which officers and employees hold security clearances.
The director would report this information within 90 days to
the Majority and Minority Leaders along with comments
and/or recommendations as to the feasibility of reducing the
number of Senate staff with security clearances.
Another early task of the proposed office should
be to devise a Senate Security Manual whose provisions, if
approved by an oversight group and the full Senate, would be
binding on all Members, Officers and employees. The Committee
has provided to the Senate leadership a draft Senate security
manual to serve as a basis for discussion which is reprinted
in Appendix G to this Report. The draft security manual
contains standards and procedures both for the handling of
classified information and for personnel security.
FINDINGS AND RECOMMENDATIONS:
89. Finding. Hostile intelligence services have attempted
to penetrate the staffs of Senate and House Members and
Committees. Hostile services use sophisticated techniques
to develop contacts that can lead to intelligence recruitments.
90. Finding. Lax security practices in the Senate
increase the risk of compromising sensitive information.
There is no requirement or procedure for reporting contacts
with representatives of Communist countries. There are no
established procedures for handling classified information,
especially in Member offices. There is no accountability
for the handling of such information, and there is great
confusion about the sensitivity of the information and what
should be done with it. There is no central point where the
number of Senate employees with security clearances is
tallied or where such services of common concern as security
briefings and day-to-day information security assistance
are provided.
91. Recommendation. The Senate should establish a
central security office to develop and oversee standards and
procedures on important personnel security and information
security issues.
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92. Recommendation. A central security office, once
established, should immediately survey all Senate offices to
determine which offices and employees hold security clearances.
This information should be reported within 90 days to the
Majority and Minority Leaders along with comments and
recommendations on the feasibility of reducing the number of
Senate staff with security clearances.
93. Recommendation. The proposed office should
develop a Senate Security Manudl, the provisions of which
would be binding on all Members, Officers and employees.
94. Recommendation. All Members and employees of
the Senate should be encouraged, and employees with security
clearances required, to report contacts with Communist
country officials or other suspected foreign intelligence
officers. The central security office should establish a
procedure for such reporting, either through it or directly
to the FBI.
95. Recommendation. Further recommended items for
consideration by the Senate security office include:
establishment of a Senate corps of cleared employees for
transcribing and reporting classified hearings; and
improvement in the communications security of telephone
conversations, classified computer data, and face-to-
face discussions of a sensitive nature.
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