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July 11, 1988
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. . _TerLSZeRS11-- MI' A "P., Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 ? OCA 88-2299 11 July 1988 upifl MEMORANDUM FOR: Associate Deputy Director for Operations for Counterintelligence Director, Security Evaluation Office Director, Office of Security Director, Community Counterintelligence and Security Countermeasures Office, ICS. FROM: ZSC.E. Office of Congressional Affairs 25X1 SUBJECT: SSCI Hearings on Counterintelligence and Security Issues 1. Latest information from the staff of the Senate Select Committee on Intelligence, suggests that the Committee will hold hearings on counterintelligence and security issues sometime during late September or early October 1988. 2. Attached for your information and use in preparing statements for these Hearings are: --SSCI Report entitled, Meeting the Espionage Challenge: A Review of United States Counterintelligence Security Programs (October 7, 1986). --SSCI Report entitled, Security at the United States Missions in Moscow and other Areas of High Risk (September 9, 1987). --Biannual Reports fo the President on the President's Report to the Congress on the Nation's Counterintelligence and Security Countermeasures, Plans, Programs and Capabilities. 3. Once I have received an advance copy of the precise agenda, I will arrange a meeting to address how we will provide the needed statements. Office OT Congressional Affairs ),011 CRET 25X1 25X1 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Distribution: Orig ADDO/CI (w/att, copy 1) 1 - D/SEO (w/att. copy 2) 1 - D/OS (w/att. copy 3) 1 - D/CCISCMS/ICS 1 - DDA 1 - D/OCA 1 - DD/SA/OCA DD PTS/0SOA Re07777/ Chrono L_ Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11 CIA-RDP90M00005R000100ILLtbIIi 070022-5 _ ? Wishingion.D C 20505 ? \\ 21 June 1988 MEMORANDUM FOR: The Honorable William S. Sessions Chairman Interagency Group/Counterintelligence \ FROM: Acting Director of Central Intelligence\ SUBJECT: Improving Our Counterintelligence and Countermeasures Posture 1. The Chairman of the SIG(I), Director Webster, has approved and signed to the National Security Advisor the third biannual report for the President on the President's Report to the Congress on the Nation's Counterintelligence and Security Countermeasures Plans, Programs, and Capabilities. He was pleased with the report, especially the continuing progress it reflects toward implementation of measures to improve our counterintelligence and countermeasures posture. 25X1: 25X1 2. While the report is an accurate one, Judge Webster and I believe that its very positive tone may obscure some real problems in addressing the unfinished agenda for strengthening CI and CM. In fact, there is very little indication in the submitted reports of problems and obstacles to further progress. ,3. Accordingly, the Chairman of the SIG(I) would value a personal report from you on outstanding problems in the area of responsibility of your interagency group._ 4. In short, the DCI would appreciate having from you, a personal, uncoordinated memorandum outlining problem areas within the purview of your interagency group. While there is no question that significant progress has been made over the 25X1 Onri - Caniti7Aci CODV Aooroved for Release 2013/01/11 CIA-RDP90M00005R000100070022-5 25X1 25X ? Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 past year or so, we are concerned that important problems are either being set aside or haggled to death in the bureaucracy. If there were no such problems, this undertaking would be unique in the history of government. To be able to address these problems in a sensible and effective way we need more specific information and solicit your help in that regard. We hope you will be candid; your replies will be held tightly. We would appreciate your report by 15 July 1988. -61.1 ck-L-6 R bert M. Mates cc: Director, Community Counterintelligence and Security Countermeasures Office, Intelligence Community Staff 25X1 2 SECRET npniassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 25X1 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 R Next 32 Page(s) In Document Denied Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11 : CIA-RDP90M00005R000100070022-5 REPORT ON SECURITY AT THE UNITED STATES MISSIONS IN MOSCOW AND OTHER AREAS OF HIGH RISK SELECT COMMI ITEE ON INTELLIGENCE UNITED STATES SENATE ? U.S." GOVERNMENT PRINTING OFFICE WASHINGTON: 1987 Declassified in Part - Sanitized Co A proved for Release 2013/01/11: C.IA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 ? 100TH CONGRESS 1st Session SENATE I REPORT 1 100-154 REPORT ON SECURITY AT THE UNITED STATES MISSIONS IN MOSCOW AND OTHER AREAS OF HIGH RISK SEPTEMBER 9, 1987.?Ordered to be printed Mr. BOREN, from the Select Committee on Intelligence, submitted the following REPORT I. INTRODUCTION Since its inception, the Select Committee on Intelligence has ac- corded a high priority to security programs designed to combat the foreign espionage threat against the United States. The Committee has recommended a number of initiatives over the years, primarily in four areas: (1) improving the effectiveness of counterintelligence and security programs through budget authorization and oversight hearings; (2) reducing the hostile foreign intelligence presence in the United States; (3) providing a comprehensive, analytical over- view of the entire national counterintelligence and security effort; and (4) improving what the Committee identified three years ago as a seriously deficient security situation at the U.S. Embassy in Moscow. BUDGET AUTHORIZATION AND OVERSIGHT The Committee has believed for some time that those charged with carrying out security programs for the national security and intelligence communities have received neither the resources ade- quate to fulfill their responsibilities nor the necessary recognition for their missions. Resource constraints and inadequate staffing limited the effectiveness of many counterintelligence and security programs. In an attempt to address this problem, this Committee has provided increased funding and manpower. In response to the Committee's urging and with authorizations for counterintelligence programs, the Federal Bureau of Investigation, the Department of Defense, and the CIA have improved counterintelligence programs and career opportunities. Between FY 1980 and FY 1985, over 2,200 new counterintelligence positions were created. The Committee also authorized, and Congress approved, additional funds to (1) Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5_ Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 2 strengthen the FBI's technical surveillance and data processing ca- pabilities. The Committee has urged counterintelligence analysts to recog- nize that the threat goes beyond the traditional use of human agents and includes collection denial and possible deception aimed at U.S. technical systems. Beginning in the early 1980's, the Committee supported the insti- tution of a comprehensive, interagency counterintelligence policy to better coordinate countermeasures against hostile intelligence initiatives. In 1982, the Directors of the CIA and FBI instituted measures to tighten cooperation in counterintelligence. In 1985-86, the Director of Central Intelligence created new posi- tions for a National Intelligence Officer and a small inter-agency analytic staff to assess hostile deception efforts. The CIA's Director- ate for Intelligence also established a unit to analyze the activities of foreign intelligence services engaged in hostile actions against the United States. These two initiatives have contributed to an ex- pansion of Executive branch multidisciplinary counterintelligence analysis and a heightened sensitivity to the implications of major security breaches for intelligence analysis of the Soviet Union. THE HOSTILE FOREIGN INTELLIGENCE PRESENCE The Committee has been increasingly concerned about the grow- ing number of Soviets posted in the United States for purposes of espionage. The Committee has consistently recommended reciproci- ty of treatment and equivalence in the size of the Soviet-bloc offi- cial presence here and the U.S. official presence in the Soviet Union and Eastern Europe. In response to restrictions placed on U.S. diplomatic personnel posted in Soviet-bloc countries, and in an attempt to keep closer track of bloc personnel serving in this country, the Congress in 1982 passed the Foreign Missions Act. The Act created the Office of Foreign Missions in the State Department, which was empowered to impose restrictions and conditions upon certain foreign Embas- sies here comparable to those imposed on counterpart U.S. Embas- sies. This legislation also provided for certain restrictions to be placed on travel in the United States by Soviet and other diplo- mats, and required that diplomats' cars carry distinct license plates, thereby enabling the FBI's counterintelligence units to mon- itor more easily any suspect activities. The 1985 Committee report, "Soviet Presence in the U.N. Secre- tariat," outlined several serious aspects of Soviet espionage activi- ties in the United States A review of bilateral equivalence resulted in the requirement, contained in the FY 1986 Intelligence Authori- zation Act, that the President provide the House and Senate Intel- ligence Committees, the Senate Foreign Relations Committee, and the House Foreign Affairs Committee with annual reports of any disparities between the size of U.S. overseas missions and the size and treatment accorded corresponding missions from other coun- tries in the United States. Committee Members introduced legislation to mandate equiva- lency in the size of the Soviet and U.S. diplomatic missions to the United Nations and in the size of the Soviet Embassy and consular Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 and data processing ca- rence analysts to recog- ditional use of human ossible deception aimed ttee supported the insti- anterintelligence policy nst hostile intelligence IA and FBI instituted ntelligence. gence created new posi- id a small inter-agency orts. The CIA's Director- to analyze the activities hostile actions against ve contributed to an ex- ary counterintelligence e implications of major r the Soviet Union. CE PRESENCE teemed about the grow- 1 States for purposes of recommended reciproci- of the Soviet-bloc offi- presence in the Soviet S. diplomatic personnel attempt to keep closer untry, the Congress in ct created the Office of which was empowered certain foreign Embas- ounterpart U.S. Embas- lain restrictions to be Soviet and other diplo- carry distinct license telligence units to mon- ence in the U.N. Secre- Soviet espionage activi- -al equivalence resulted 36 Intelligence Authori- louse and Senate Intel- lations Committee, and annual reports of any s missions and the size sions from other coun- on to mandate equiva- lomatic missions to the Embassy and consular 3 staffs here and those of the United States in the Soviet Union. As a consequence of the Leahy-Cohen amendments of 1985 and 1986, the United States moved toward essential equivalence with the Soviet Union in its diplomatic and consular presence, and the Soviet Union was compelled to reduce sharply the size of its U.N. mission and its diplomatic and consular presence in the United States. By relying on the FBI to designate the specific individuals that had to leave, the U.S. Government was able to impair the large KGB pres- ence in both New York and Washington, D.C. COUNTERINTELLIGENCE REPORT In 1986, the Committee published a detailed report, "Meeting the Espionage Challenge: A Review of United States Counterintelli- gence and Security Programs," in an effort to stimulate improve- ment in the protection of sensitive information from the threat of foreign acquisition. The study was written in close cooperation with the National Security Council Staff and the Intelligence Communi- ty Staff, which were reviewing the same subject for the White House. The final document contained over a hundred specific find- ings and recommendations. The White House set forth dozens of new security initiatives in its O'AT1 classified report on counterintel- ligence and many proposals that had languished in the bureaucra- cy were elevated to the policy level for consideration and adoption. MOSCOW EMBASSY Among other things, "Meeting the Espionage Challenge" de- scribed the Committee's long-standing concern for the security of the U.S. Embassy in Moscow against the hostile intelligence as- sault of the KGB. In June 1985, a FBI counterintelligence expert detailed in testi- mony before the Committee the espionage opportunities enjoyed by the Soviets because of United States employment of over 200 Soviet nationals in support positions at the Moscow Embassy, and the cor- responding disadvantage suffered by U.S. counterintelligence due to the Soviet practice of employing only their own citizens in com- parable support positions at their diplomatic missions in the United States. At this hearing, witnesses also testified regarding the 1984 discovery that typewriters at the Moscow Embassy had been bugged with sophisticated electronic transmitting devices which gave the Soviets access to some Embassy communications. In 1985, the Committee received its first testimony indicating that there was strong evidence that the Soviets had succeeded in incorporating a complex and comprehensive, electronic surveillance system into the structure of the new U.S. Embassy under construc- tion in Moscow, even though the Intelligence Community had been in possession of indications of such penetration since 1982. In recognition of the need for immediate improvements, the Com- mittee voted to authorize a $50 million supplemental appropriation in FY 1985 for security countermeasures at U.S. overseas missions. The Department of State objected to the provision which directed the administration of these funds by the CIA. As finally enacted by the Congress, the appropriation was trimmed to $35 million and the Department of State was named as one of the agencies to Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 4 which the money was to be allocated. The State Department, work- ing with intelligence experts, used some of this appropriation to es- tablish more secure procurement, storage, transport, installation, and repair of typewriters and other equipment used in the Moscow Embassy and other diplomatic missions abroad. In December 1985 and October 1986 staff delegations went to Moscow to see the situation first-hand. After inspecting both the old and new Embassy buildings and conducting extensive inter- views with Embassy personnel, the staff produced two reports that detailed a still grim picture of small improvements and large re- maining vulnerabilities. Parallel initiatives in the Senate have contributed to an increas- ing awareness of counterintelligence and security problems. In 1985 and 1986, Senator Chiles highlighted construction problems with the new embassy in Moscow. As a result, Congress mandated a structural evaluation of the new chancery by the National Bureau of Standards. The Senate Appropriations and Foreign Relations Committees have sent delegations to Moscow to inspect the old and new facilities. In 1986, at the request of the Foreign Relations Com- mittee, the General Accounting Office prepared a report on securi- ty at U.S. Embassies overseas. Congress also passed the Omnibus Diplomatic Security and Antiterrorism Act to fund over five years a $2.4 billion program to strengthen security at U.S. overseas diplo- matic posts, as well as an appropriation for the first two years of the program. H. SECURITY PROBLEMS AT THE U.S. EMBASSY BUILDINGS THE CURRENT EMBASSY COMPLEX Committee staff members who visited the Embassy complex in December 1985 and October 1986 noted a number of significant se- curity weaknesses, despite upgrades that had been introduced over the last two years. In 1985, the Committee staff found that "secure" areas were equipped with an obsolescent alarm system similar to those used in apartment buildings in the United States. An improved alarm system, which had not yet been installed, had been stored in nonse- cure space. Both the old and new alarms were dependent upon the attentiveness and reliability of a single Marine Guard manning the main guard post in the secure area. Committee staff also noted that the Marine Guard Detachment did not have especially high morale at this post. Security awareness was seriously deficient in 1985. During work- ing hours secure areas were susceptible to access by unauthorized persons, alarm systems were frequently shut off, and sometimes the doors to secure areas were left open. After working hours, fre- quent incidents of apparent false alarms bred a lack of urgency in responding to those alarms. By contrast, by late 1986, new locks and alarms had been installed, and the State Department's Region- al Security Officer had begun to make real progress toward im- proving security awareness. Soviet sophistication in technical penetration operations and the uncertain physical security at the Embassy prompted concern in 1985 regarding the designated sensitive areas of the Embassy and Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100o7nn99_ Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Le Department, work- s appropriation to es- ansport, installation, t used in the Moscow delegations went to inspecting both the ting extensive inter- iced two reports that ?.ments and large re- ibuted to an increas- ity problems. In 1985 ction problems with ongress mandated a the National Bureau d Foreign Relations D inspect the old and reign Relations Corn- d a report on securi- passed Omnibus fund over five years ! U.S. overseas diplo- le first two years of SSY BUILDINGS ;mbassy complex in rer of significant se- een introduced over secure" areas were _tar to those used in si improved alarm en stored in nonse- lependent upon the 3uard manning the ee staff also noted ive especially high 1985. During work- ss by unauthorized )ff, and sometimes working hours, fre- lack of urgency in 1986, new locks !)artm en t's Region- ogress toward irn- Terations and the mpted concern in the Embassy and 5 communications. By 1986, some of these issues had been addressed. The Embassy improved adherence to proper security practices re- garding equipment coming into the Embassy in the wake of the 1984 discovery of Soviet bugging of Embassy typewriters. Still, the Embassy continued to conduct some of its activities in nonsecure areas. For example, security at a warehouse where equipment was stored was, at best, a continuing challenge. The impression of improving, if still imperfect, security was shat- tered in December 1986 when a Marine Guard, Sergeant Clayton Lonetree, revealed that he had helped the KGB obtain access to classified Embassy materials. The subsequent, well-publicized in- vestigation has implicated other Marines and has included allega- tions that Soviet operatives were permitted extended physical access to the Embassy. This investigation continues and includes the interrogation of Marine Guards and Embassy personnel, as well as further inspection of Embassy facilities and equipment. A worst-case assessment of the Moscow Embassy situation is based upon the assumption that Soviet operatives were given re- peated access, for hours at a time, to the most sensitive areas of the Embassy. Given such access, one must assume that the Soviets had sufficient time to penetrate the locks and alarms on those access points. Thus, Embassy communications equipment and all Embassy documents must be presumed to have been compromised. The Marine Guard affair has highlighted several security short- comings at the U.S. Embassy. Questions have been raised regarding the selection criteria, training, and day-to-day supervision of those guards by both Marine and State Department personnel. The long tours, under rules preventing social contact with locals, have proved a serious flaw. The lack of polygraphs at the end of tours and of counterintelligence investigations when personnel were re- lieved for infractions of the rules has meant that there has been no effective system to detect security compromises. The lack of an effective alarm system meant that a single human failure point was possible for the whole security system of the Em- bassy. By compromising very few individuals, the Soviets could po- tentially expose the entire U.S. Embassy for penetration and ex- ploitation. The final section of this report includes several recom- mendations that follow from this litany of shortcomings. THE NEW EMBASSY COMPLEX In 1979, after two decades of negotiations, the United States broke ground on the site of its new Moscow Embassy complex. By 1986 the residential and recreational buildings on the compound had been completed and occupied. The chancery was partially com- plete with the walls, floors, and roof in place but most of the me- chanical, electrical and interior work still to come. About $23 mil- lion of the $65 million budgeted for the chancery had been expend- ed. Meanwhile, the Soviet Union had completed construction of its complex in Washington and Embassy personnel had moved into the residential quarters on Mt. Alto. It was clear from the start that the technical countermeasures challenge would be a difficult one. The Soviets had a well-known record of technical penetrations of U.S. and other Western diplomatic facilities. Therefore, a pro- in Part - Sanitized Copy Approved for Release 2013/01/11 : CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11 CIA-RDP90M00005R000100070022-5 6 gram of technical countermeasures intended to detect any Soviet listening devices that might be implanted in or directed against the new Embassy was initiated. At the time, US. intelligence agencies believed they could neutralize any bugs they might find. Unlike the Soviets, however, the United States did not employ a systematic, stringent security program to detect and prevent Soviet technical penetration efforts. Some points of contrast between the Soviet and American practices at their respective construction sites included the following: The Soviets changed their blueprints without warning during the architectural bidding process and ,generally identi- fied nothing more specific than "office area' in their design plans. US. blueprints identified virtually all office spaces by name, thus making clear to the Soviets which were sensitive areas. The Soviets used only concrete poured on site. The United States used precast components, all of which were fabricated by the Soviets off-site, with no U.S. supervision. The Soviets inspected all materials on site before allowing their use in construction, frequently calling off construction if there were questions. The United States had a less exacting in- spection system and was not willing to put security ahead of maintaining the pace of construction. The Soviets used about 30 personnel to supervise an average daily work force of 100 Americans. The United States used 20- 30 Navy Seabees to watch 600-800 Soviet laborers. The Soviets required detailed adherence to a preset daily work schedule and strictly enforced a badge identification system for American workers. The United States had no effec- tive system for this. The Soviets maintained tight perimeter security and used multiple video surveillance cameras both inside and outside the buildings under construction. The United States installed perimeter sensors and closed circuit TV to monitor construc- tion, but these systems were quickly disabled due to various ?mishaps,,, The U.S. contractor employed, as a design engineer, a Soviet emigre who returned to the Soviet Union shortly after the project was completed. Subsequent investigations to determine whether he may have been working for the KGB have proved inconclusive. By and large, U.S. countermeasures against Soviet technical pen- etration had to be directed against a huge prefabricated structure already in place. Despite indications as early as 1982 of extensive Soviet bugging of the structure, Soviet workers were not removed from the site, nor was work halted until the summer of 1985. At this point the US. inspection effort began in earnest. Techni- cal counterintelligence teams, assuming some bugs were active, worked around the clock in silence, often in the dark because of power failures, and in the cold because the building was =finished and often unheated. With impressive technical ingenuity and dedication, those who managed and implemented this countermeasures program were able to detect a truly massive Soviet program to embed electronic n.rincQifipri in Part - Sanitized Coov Approved for Release 2013/01/11 CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 f:11 xl to detect any Soviet or directed against the S. intelligence agencies , might find. States did not employ a tect and prevent Soviet )f contrast between the active construction sites ints without warning and generally identi- ! area" in their design ily all office spaces by s which were sensitive ed on site. The United which were fabricated Tvision. an site before allowing fling off construction if s had a less exacting in- put security ahead of to supervise an average United States used 20- t laborers. ence to a preset daily a badge identification Aed States had no effec- ?ter security and used ath inside and outside United States installed V to monitor construe- isabled due to various sign engineer, a Soviet aion shortly after the itigations to determine the KGB have proved A Soviet technical pen- arefabricated structure y as 1982 of extensive '..ers were not removed summer of 1985. .Tan in earnest. Techni- me bugs were active, a the dark because of uilding was unfinished dedication, those who asures program were la to embed electronic '7 surveillance devices throughout the Embassy building structure. In short, the building is extensively and cleverly penetrated. While the details of this system remain classified, it is clearly sophisticat- ed and will be extremely difficult, if not impossible, to counter fully. From the outset, the KGB viewed the construction of the new U.S. Embassy as an extraordinary espionage opportunity. There is a well-documented, even spectacular, record of prior Soviet techni- cal penetrations of U.S. facilities in the Soviet Union, as well as of those of other Western powers. In the case of the new U.S. Embas- sy, the Soviets planned and mounted the most massive, sophisticat- ed, and skillfully executed bugging operation in history. The Soviets apparently manipulated the protracted bilateral ne- gotiations preceding the agreement to start construction in order to secure optimal conditions for a thorough technical attack?and to ensure the security of its own new Embassy site in Washington. The KGB apparently created an elaborate bureaucratic infrastruc- ture to conceive, develop and implement a penetration program that would take full advantage of the opportunity. The program planners probably drew from a large reservoir of technical exper- tise both inside Soviet Intelligence and in other sectors of the Soviet bureaucracy to bring to bear their best technology available at the time. The Soviets have demonstrated the lengths to which they will go in diplomatic positioning, operational planning and resource alloca- tion to compromise a U.S. diplomatic facility built in their own backyard. The new Embassy stands as a warning and object lesson to be heeded in planning remedial measures in Moscow and new Embassy construction elsewhere in the Soviet bloc. Meanwhile, the National Bureau of Standards has completed a Congressionally-mandated assessment of the structural integrity and quality of the new Embassy building. After reviewing the design specifications and inspecting the site, NBS concluded that the "structural materials and components used in the Office Build- ing are generally of good quality. However, important deficiencies exist in the structure that must be corrected for adequate safety before the building is occupied." NBS concludes that if the Embas- sy were located in Washington, DC, it would take $1,464,000 to effect the necessary repairs, which could be completed in less than a year. NBS does not attempt to estimate costs and time required in Moscow. None of these estimates concerns the security-related problems noted above. CURRENT PERSPECTIVES ON THE SITUATION On April 22-23, 1987, the Intelligence Committee held three closed hearings to consider the problem of security at the U.S. Em- bassy in Moscow and worldwide. Witnesses included the Undersec- retary of State for Management, the Assistant Secretary of State for Diplomatic Security, the Deputy Assistant Secretary of State for Foreign Buildings, the recently-retired U.S. Ambassador to the Soviet Union, the chairman of the Secretary of State's Advisory Panel on Overseas Security (1984-1985), and appropriate officials of the U.S. Intelligence Community. Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11 CIA-RDP90M00005R000100070022-5 8 The Committee heard testimony that the Marine Guard compro- mises, taken with previously existing security and structural prob- lems in the current Embassy building, will require many millions of dollars to repair. The Department of State has already asked for some of those funds, and more are likely to be needed over the next 2-3 years. Testimony presented to the Committee also indicated that it will be difficult even to state how Soviet technical penetration of the new chancery building might be successfully combated, let alone to actually effect such a program of neutralization. Although several Executive branch agencies and special boards are considering possi- ble steps of this sort, witnesses indicated a clear lack of confidence that any measure could guarantee a secure chancery building in which sensitive conversations and communications would be truly protected. The Committee heard further testimony regarding the basic flaws in State Department security organization and practices. One expert witness made a strong plea for the budgetary protection of State Department technical security programs from competition from other State Department programs. A State Department offi- cial conceded that the Department had Attempted, earlier in this fiscal year, to reprogram funds out of technical security. Congres- sional opposition had prevented that debilitating action from being effected. It was also noted that the Bureau of Diplomatic Security has a difficult time recruiting and retaining expert technical per- sonnel, due to the rigidity of a Foreign Service personnel system that is designed for categories of employees other than the sort that are needed for technical security functions. At the end of the series of hearings, the question of whether the organization of the State Department for handling questions of-se- curity should be revised was discussed. A State Department official acknowledged that security functions in the Department are divid- ed among three offices at varying levels within the Department, all of which must report through the Undersecretary in order to reach the Secretary. It was agreed that the security -functions in the three offices be combined. A proposal based upon this idea is incor- porated in the recommendations of this report. III. DIPLOMATIC SECURITY AUTHORIZATION FY '88 is the third year of the State Department's five year pro- gram to implement the recommendations of the Secretary's Adviso- ry Panel (Inman Report) on embassy security. Expenditures in the first two years focused on physical security measures intended to harden U.S. diplomatic facilities against terrorist or mob attacks. The FY '88 authorization request, however, focuses on technical se- curity against the hostile intelligence threat. Recent events in Moscow certainly suggest this emphasis is appropriate, if not over- due. The FY '88 request include $104 million in new monies for tech- nical security. The major categories of expenditure are as follows: Millions Support for positions and programs already in place plus increased costs due to currency fluctuations and inflation $30 npriaRRified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 9 Nsiboras program increases for: Construction security including guards and other measures to protect construction sites 25 Technical security in new diplomatic facilities including protection against technical penetration attempts, the replacement of foreign na- tionals by US. citizens as computer operators, and the procurement of specialized equipment 16 Protection of office equipment, intended for use at the Moscow Embassy and other overseas missions, through its life cycle from procurement to installation and repair 15 Security protection (guards, vehicles, equipment) for American officials, including the Secretary of State, traveling overseas and foreign digni- taries visiting the United States 8 Interagency counterterrorism research and development 9 Training of security personnel and provision of secure storage for equip- ment prior to shipment 1 In the judgment of the Intelligence Committee, these expendi- tures are all justified and appropriate. The budget authorization request was developed before the recent revelations involving the Marine guards in Moscow. The State Department, in conjunction with the CIA and the National Security Agency, is preparing a supplemental budget authorization request. It will take several weeks to develop the request, which will cover the costs of removing, replacing, and painstakingly ana- lyzing equipment that may have been compromised as well as ren- ovating and examining facilities that may have been penetrated. IV. RECOMMENDATIONS _The Committee has concluded that fundamental long-term changes are necessary in the way the United States conducts its mission in Moscow, other high-threat areas, and elsewhere. If secu- rity is to become a reality in our Embassies, the short-term fixes and patchwork approach of the past must be scrapped. Instead, the Congress and Executive must commit themselves to a program of institutional reforms that meet the challenge directly. RECOMMENDATION 1: DEMOLISH THE NEW MOSCOW CHANCERY BUILDING Overwhelming evidence indicates that a highly organized and so- phisticated effort by the Soviet Union has compromised the techni- cal security of the new Chancery. A significant level of doubt will always exist concerning our ability to conduct secure activities in the building. There is no assurance that these problems can be solved adequately, short of total demolition. Accordingly, the Com- mittee recommends that the Chancery be destroyed and that plan- ning be started to construct a secure facility. The Committee recognizes that demolishing an office building in which $23 million and the considerable energies of specislists in the field have been invested is a difficult and potentially controver- sial recommendation. However, failure to take action, even at this late date, would obligate further sizable expenditures in the future to no foreseeable gain. The fact that drastic remedial measures have not, until recently, been given due consideration should not affect the imperative to act now. Declassified in Part - Sanitized Copy Approved for Release 2013/01/11 ? CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 1.. 10 Such an effort must be thoroughly coordinated, however, within the diplomatic and intelligence communities of the United States Government. We must concede less in our negotiations with the Soviet Union in order to prevent a repeat of previous mistakes and mismanagement. The Soviets should be put on notice that the State Department will negotiate a new set of construction agree- ments that meet our security requirements. Past mistakes, such as allowing the Soviets the ability to prefabricate major sections of the Chancery offsite and making use of Soviet construction work- ers, cannot be repeated. Furthermore, the United States must not allow the Soviets to occupy their new Chancery on Mt. Alto until we can occupy a new Chancery with a reasonable assurance that it has not been compromised. The State Department must plan for the continued long-term occupation of the existing U.S. Embassy in Moscow and make the structural and security modifications neces- sary to conduct secure operations and communications. The Committee recognizes that demanding reciprocity in regard to the U.S. and Soviet Chancery buildings may not adequately ad- dress security dilemmas presented by the occupation of the resi- dences on Mt. Alto by the Soviets. The Committee suggests that this matter merits further intensive consideration by the intelli- gence and diplomatic communities and recommends that consider- ation be given to removing the occupants of the residences in the United States and the Soviet Union until such time as the security concerns of the Committee are resolved. RECOMMENDATION 2: CONSOLIDATE THE SECURITY, EMBASSY CONSTRUC- TION, AND FOREIGN MISSION PROGRAMS OF THE STATE DEPARTMENT The record demonstrates that the security and building functions of the State Department are fragmented and are scattered in at least three different major organizational units. This is a signifi- cant reason for the security breakdowns in the Moscow Embassy program. While creation of the new Bureau of Diplomatic Security is a positive improvement of the Omnibus Diplomatic Security and Antiterrorism Act of 1986, more _needs to be done before Congress can be assured that security concerns are considered at the highest policy levels and that resources are efficiently and effectively spent in the future. Accordingly, the Committee recommends that the Bureau of Dip- lomatic Security, the new construction element of the Foreign Buildings Office, and the Office of Foreign Missions be consolidated into a single new organizational unit. Furthermore, it recommends that this unit be directly responsible and accountable to the Secre- tary' of State. Furthermore, the Committee requests the Director of Central In- telligence to certify to the Committee the security conditions of all existing Embassy facilities, and of all new facilities prior to their occupation. RECOMMENDATION 3: FENCE DIPLOMATIC SECURITY FUNDING Consolidating the management of the diplomatic security and building function is only a first step in assuring a vigorous and suc- cessful long-term counterintelligence effort. In addition, protection Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11 CIA-RDP90M00005R000100070022-5 11 joust be given to the resource base of these programs in order to foster continuity, stability, and efficiency. Accordingly, the Committee recommends that funds appropriated in that area should then be protected to prevent reprogrammings or diversions to other areas of the State Department. COMMENDATION 4: ESTABLISH A SENATE TASK FORCE FOR THE LONG TERM OVERSIGHT OF EMBASSY SECURITY The programs of diplomatic security and Embassy construction cut across the jurisdictions of the Select Coniiiiittee on Intelligence, the Foreign Relations Committee, and the Appropriations Commit- tee. No single committee, however, is structured to conduct consist- ent and thorough reviews of the entire range of relevant issues on a long-term basis. Such a vacuum results in a piecemeal approach to Embassy construction and security problems. Accordingly, the Committee recommends that the Chairman and Ranking Minority Members of these Committees establish a task force to review regularly the State Department's overseas security and buildings programs. Such a working group would periodically review the quality and effectiveness of these programs and report to the authorizing and appropriating Committees of Congress on their findings and recommendations. RECOMMENDATION 5: ESTABLISH AN OUTSIDE ADVISORY PANEL TO PRO- VIDE AN OBJECTIVE ANALYSIS OF FUTURE EMBASSY CONSTRUCTION PLANNING The history of the new Moscow Embassy program is a text book example of bureaucratic inertia, turf warfare, and inadequate 7 interagency coordination. Diplomatic objectives and time pressures precluded full consideration of security and counterintelligence concerns during the negotiating process. Later, the desire to com- plete the project resulted in failure to address obvious security con- cerns, allowing construction to continue at the Chancery until 1985 despite clear warnings as early as 1979 that the building was being technically penetrated. A failure to defend U.S. interests against the Soviet intelligence attack has resulted in building a complex that is a decade overdue, $100 million over budget, and uninhabita- ble. Furthermore, there is no doubt that similar efforts will be made to attack the six new Embassies now planned for construction in FAstern Europe. This suggests the real possibility that the U.S. will be placed in the same position with respect to these Embassies as it is in Moscow. Accordingly, the Committee recommends that the Secretary' of State and the Director of Central Intelligence convene immediately a panel of outside experts to review and analyze the plans, con- tracts, and protocols of these proposals and make recommendations necessary to protect the integrity of all new Embassy projects. RECOMMENDATION 6: REVISE PROCEDURES GOVERNING THE MARINE SECURITY GUARD PROGRAM From the tragic revelations concerning the Marine Security Guard detachments in Moscow and Leningrad, it is clear that both n.rincQifipri in Part - Sanitized Coov Approved for Release 2013/01/11 CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 12 the State Department and the Marine Corps inadequately appreci- ated the intelligence and security dangers inherent in long-term duty in these locations and did not take sufficient steps with re- spect to Marine duties and oversight. Accordingly, the Committee recommends that the Marine Corps make fundamental changes in the assignment and operational pro- cedures governing Marine Security Detachments in the Soviet Union and other hostile intelligence areas. Specifically, tours of duty should be shortened such that no sustained tour would exceed 6 to 9 months. Assignments in these areas should be made only to personnel with untarnished records and with previous security de- tachment experience. To the extent feasible, married Marines should be utilized. A program of exit polygraphing of Marine guards for counterintelligence purposes upon completion of their tours should be implemented. In addition, the Committee recommends that the State Depart- ment, in concert with Administration counterintelligence officials, review security guard procedures in hostile intelligence areas. Con- sideration should be given to the use of security personnel with counterintelligence backgrounds in areas where the security threat derives more from intelligence compromise than physical danger. RECOMMENDATION 7: REPLACE FOREIGN SERVICE NATIONALS WORKING AT U.S. MISSIONS IN HIGH-RISK COUNTRIES While there are no longer any Soviet citizens working in the U.S. Embassy in Moscow, there are still significant numbers of foreign nationals working in our missions in Eastern Europe and other hostile intelligence areas. Such a situation poses a well documented security threat that cannot be tolerated. Accordingly, the Committee recommends, as it has on previous occasions, that the State Department take the steps necessary to replace these foreign nationals with American workers. In addi- tion, the Committee recommends that the State Department con- sider alternatives to contracting out to private U.S. firms for neces- sary replacement services. Specifically, the Department should seek to establish its own in-house capability to operate and main- tain its missions and should develop a creative structure to make use of junior level personnel from many areas of government to perform service functions overseas. RECOMMENDATION 8: REFORM PERSONNEL POLICIES TO ENHANCE SECURITY An effective program of diplomatic security depends on adequate resources, efficient management, and dedicated and competent per- sonnel. Accordingly, the Committee recommends that the Depart- ment of State take the necessary steps to expedite the recruitment and retention of qualified security engineers, technicians, manag- ers, and counterintelligence specialists. Adequate promotion oppor- tunities must be assured. In addition, the wisdom of current De- partmental assignment procedures should be reviewed with an eye toward expediting the rotation of qualified personnel to diplomatic security. Increasing the exchange of personnel with other relevant government agencies also should be encouraged, and adequate Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Co rt- con- with threat ger. RKING the U.S. ' foreign d other umented previous ryto in addi- nt con- " r neces- shoul d main- to make ent to NCE uate I per- Depart- tment manag- oppor- 1. De- an eye tnatic Vant uate Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 13 training opportunities should be provided. The Committee hopes this will contribute to a fuller understanding of the goals and per- spectives, of all government agencies involved. The Committee recognizes that security awareness is sometimes not considered part of the "culture" of the foreign service. Events show, however, that the day of "gentlemen not reading other gen- tlemen's mail" passed long ago. Accordingly, the Committee recom- mends that the Secretary of State strengthen Department efforts to provide more effective security awareness and training before over- seas assignments, increase the authority of Regional Security Offi- cers at overseas missions, and reemphasize the ultimate account- ability of Ambassadors for Embassy security. In cases of negligence and malfeasance of duty, the Department of State must act quickly to assess accountability and implement necessary disciplinary ac- tions. This Committee recognizes that personnel from government agencies other than the State Department comprise a significant part of an Embassy staff. In many cases career Foreign Service Of- ficers are in a minority. This results in fragmentation and uneven levels of counterintelligence training at overseas posts. Therefore, the Committee recommends that an office be established to serve as the focal point for security awareness and cotmterintellingence training for all U.S. Government personnel from outside the na- tional security arena (e.g. the Departments of Commerce and Agri- culture), as well as from agencies under the Department of State (e.g., AID and USIA), who are assigned to overseas missions. In ad- dition, this office should be the final authority for judging the suit- ability on counterintelligence grounds of personnel who are as- signed from any agency to U.S. Embassies. The State Department also needs to provide for greater emphasis on the counterintelligence implications of certain conduct by Em- bassy personnel, including Marine Guards. Cases of misconduct in Communist bloc countries, such as fraternization or "black market" involvement, ought to be routinely investigated, using polygraph examinations, as appropriate, for possible indications of espionage. 0 rnnv Annroved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5 25X1 Declassified in Part - Sanitized Copy Approved for Release 2013/01/11: CIA-RDP90M00005R000100070022-5