American Intelligence and the Gehlen Organization, 1945-49- (S) Kevin C

•

DECLASS IF IED AND RELEASED BY Secret CENTRAL I NTELL BENCE AGENCY Studies in Intelligence (1997) SOURCES METHODS EXEMPT I ON38211 NAZI WAR CR IMES DISCLOSURE ACT DATE 2001 2006 A Controversial Liaison Relationship American Intelligence and the Gehlen Organization, 1945-49- (S) Kevin C. Ruffner

The CIA's sponsorship of the three years later, he served as a staff nascent West German intelligence officer in an infantry division where service in mid-1949 marked an his organizational planning and staff expansion into uncharted opera- work attracted the attention of senior tional waters. 1 This new direction irrevocably linked the CIA with officers. By mid-1942, Gehlen took former members of the General Staff charge of the German Army High of the defeated Wehrrnacht and Nazi Command's Fremde Heer Ost (FHO Germany's intelligence services, or Foreign Armies East), with the 44 some of whom had notorious war- responsibility of preparing intelli- As the Soviets drew closer time reputations. 2 The Agency made gence on the Soviet Union. Gehlen's this decision after a long-running to Berlin, Gehlen dispersed debite with the US Army about the work in this position eventually his staff and transferred wisdom of supporting a resurrected incurred the wrath of Hitler, who German General Staff and a quasi- rejected Gehlen's pessimistic reports the FHOs intelligence files independent national intelligence about the strength and capabilities of to secret locations in organization. (v) the Soviet Army. Hitler summarily Bavaria. There, Gehlen dismissed Gehlen, now Genera/ma- The story behind CIA's involvement jor, in April 1945. (U) and his handpicked with the Gehlen Organization actu- ally started during the ebbing hours officers waited to Gehlen did not leave Berlin empty- of World War II. With the Soviets surrender to American fighting in the streets of Berlin and handed. He knew that the FHO had forces. the British and Americans racing some of the most important files in across the shell of the Third Reich in the Third Reich and that the posses- the spring of 1945, many German sion of these records offered the best officials realized the desperation of means of survival in the post-Hitler • their cause. Reinhard Gehlen, the period. As the Soviets drew closer to former chief of the German Army's Berlin, Gallen dispersed his staff and intelligence branch dealing with the Eastern Front and Soviet forces, transferred the FHO's intelligence files planned to survive Hitler's Gotter- to secret locations in Bavaria. There, dammerung as the 1,000-year Reich Gehlen and his handpicked officers crumbled. Like most Germans, waited to surrender to American Gehlen preferred surrender to the forces. Gehlen believed that the West- Kevin C. Ruffner, a member of the Western Allies as opposed to an ern Allies and the Soviet Union, while History Staff, is on a rotational uncertain fate at Russian hands. (U) wartime partners, would soon become assignment with the Counterintelli- peacetime rivals. With his knowledge gence Center. Born in 1902, Gehlen entered the about the Russians, combined with Reichswehr, the Weimar Republic's All statements of fact, opinion, or analysis the FHO's collective resources, expressed In Studies In Intelligence are those of small army, shortly after the end of the authors. They do not necessarily reflect the World War I. He advanced Gehlen felt he could influence rela- official positions or views of the Central Intelligence Agency or any other US Government through the officer ranks and joined tions between the East and West and entity, past or present. Nothing In the contents the General Staff as a captain in help shape Germany's role in postwar should be construed as asserting or implying US Government endorsement of an articles factual 1936. During the invasion of Poland Europe. 3 (U) statethents and Interpretations.

69 F6R-COOR Di Nag/WITH 1-"S. Secret Secret Gehlen

Gen. Gehlen (on right) with a group of enlisted men in 1943. (FOUO)

The US Army Picks Up Gehlen have an indefinite period of military conducted espionage work against occupation and a frontier contiguous the Soviets using Russian defectors Even before Nazi Germany's capitu- with them." 4 Boker quickly became and provided raw intelligence to lation, Allied forces were on the the 12th Army Group's resident Gehlen's FH0.6 Gehlen insisted that lookout for German officers and expert on the Soviet Army because of he had access to still-existent agent enlisted personnel with intelligence his interrogation of German officers networks in the Soviet Union backgrounds. Indeed, as the Ameri- who had fought on the Eastern through Baun's sources. (s) cans looked for Gehlen, he tried to Front. (S) surrender to an American unit. After Army headquarters in Washington a circuitous route, the US Army Gathering Gehlen's staff and records learned about Gehlen's activities at frii-arptildiiiiiid.Gelilen 'and hiè-men required some subterfuge on Boker's Wiesbaden and, after some debate, to the 12th Army Group Interroga- part. He was aware, from previous Boker received orders to bring the tion Center near Wiesbaden in June experience, that "there existed in German group to the United States. 1945. Interned at the "Generals' many American quarters a terrible Army G-2's primary interest, how- House," Gehlen reassembled his staff opposition to gathering any informa- ever, centered on the retrieval and and files under the overall direction tion concerning our Soviet Allies." analysis of the FHO records, not in of Army Capt. John R. Boker, Jr. (U) He did, however, gain the support of its personnel. Boker, who had Col. Russell Philp, commander of become quite attached to his project, Bolter, who had previously interro- the Interrogation Center, and Brig. resented losing control of Gehlen gaked ocher German officers, Gen. Edwin L. Sibert, G-2 for the and his staff section after their secret expressed his feelings as he started his 12th Army Group, to employ the departure for Washington on 21 interrogation of General Gehlen. "It former FHO staff members to pro- August 1945. Placed as virtual pris- was also clear to me by April 1945 duce reports on the Soviets. 5 Gehlen oners in a classified building at Fort that the military and political situa- also wanted Boker to establish con- Hunt, Virginia, (known simply as tion would not only give the tact with some of his frontline P.O. Box 1142), the Army planned Russians control over all of Eastern organizational elements, such as to use Gehlen in conjunction with a Europe and the Balkans but that, as Oberstleutnant Herman Baun, who larger project being conducted at

A result of that situation, we would commanded Stab Walli I, which Camp Ritchie, Maryland, to compile

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little sole in these activities. In the ...Berlin and their activities with the throes- of disbandment during the fall Americans. The report also stated of 1945, OSS declined the Army's that Gehlen had recommended that invitation CO employ Baun in Ger- Herman Baun be contacted to pro- many. The new Strategic Services vide further information about the Unit (SSU) also expressed some Soviets while the general worked in reluctance about using the German the United States. Baun, in fact, had FHO for American intelligence pur- been arrested by the US Army as a poses.7 SSU, however, did try to "mandatory arrestee" (members of determine the exact nature of the Nazi party organizations and high- relationship between Gehlen and ranking German Army and SS offic- Army intelligence. On 25 October ers were subject to immediate 1945, Crosby Lewis, SSU's new apprehension by the Allies) in late chief of mission in Germany, asked July 1945 and interrogated at the Winston N. Scott in London for 3rd Army Interrogation Center the "Special Sources" information from following month. The announce- counterintelligence files pertaining to ment of his arrest and the Stab Walli and various German per- distribution of a Preliminary Interro- sonalities, including Baun and gation Report raised great concern at Maj. Gen. Edwin L. Siben (u) Gehlen. Writing hastily, Lewis Army G-2 because the Soviets now informed London: demanded the extradition of both Baun and Gehlen. 9 (c) a history of the German Army on the For your information only, Baun Eastern Front. (S) and a group of other members of The Army refused to accede to the Fremde Heere Oct. experts in the Soviet demand and secluded Baun Through Boker's efforts (he accom- G.I.S. on espionage against the and several other FHO personnel at panied Gehlen's group to the United Russians, are being collected by the Military Intelligence Service Cen- States) and those of officials with the two officers of the G-2 section, ter (MISC) at Oberursel on the East European Order of Battle USFET, who are responsible only outskirts of Frankfurt (also known as Branch at the Pentagon, the situa- to Gen. Sibert. It appears likely Camp King and later officially desig- tion for the Germans gradually nated as that Sibert got an OK from the 7700th European improved. The BOLERO Group, as Command Interrogation Center). Washington on this when he was •Ge-hisAls_unit. became known, served The small group, including Gerhard in the US. last month, at which undei 1-e-d-freCtioti .Of Arm-y Wessel, who had succeeded Gehlen time it appeared that OSS might Eric Waldman until its return to Ger- as the head of FHO in 1945, was up. many in June 1946. By this point, fold Von Gehlen and several quartered at the "Blue House," Gehlen's men not only prepared high-ranking staff officers who where Baun planned to develop a reports based on German records but operated for Fremde Heere Oct full-scale intelligence organization. also had access to and commented and for some of the Army Group According to SSU, G-2 wanted to on American intelligence reports. (S) staff on the Eastern Front during use Baun to resurrect his Abwehr net- the war have been flown to the work against the Soviets. This US.—all this without any con- proved difficult and SSU reported SSU Rejects Gehlen tact with the OSS here. 8 (S) that it "advised them [the US Army] to interrogate Baun at length and While the Army exploited Gehlen In early January 1946, SSU in Ger- have nothing to do with his schemes 10 (s) and his officers in Washington, US many reported co Headquarters what for further intelligence activity." intelligence also sought to question it had learned "through discreet German scientists and engineers inquiries" about the Army's activi- In November 1945, in fact, Lewis about Nazi rocket and atomic devel- ties. SSU described the flight of responded to a request by General opments. The OSS, however, played Gehlen and his FHO staff from Sibert that SSU take over Baun's

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44 By October 1946, Gehlen and Baun claimed to have some 600 agents operating operation from the Army: After intelligence on the Russian order of throughout the Soviet zone reviewing Baun's plans, Lewis battle.17 (S) rejected them outright, calling them of Germany. • • "rather grandiose and vague sugges- As the Army's demands grew, Opera- tions for the formation of either a tion RUSTY transformed from a European or worldwide intelligence 99 select cadre of German General Staff service to be set up on the basis of officers to large group that suffered wartime connections of Oberst Baun from poor cohesion and mixed alle- and his colleagues, the ultimate tar- remaining FHO members to Ger- giances. In addition to covering the get of which was to be the Soviet many. At this point, Lt. Col. John R. Soviet zone, Operation RUSTY took Union." Lewis found a number of Deane, Jr., Operations Officer at on new missions in Austria and other shortcomings with the employment MISC, published his plans to merge areas of Europe as well as broadened of Baun, including cost, control, and Gehlen's BOLERO group with wartime contacts with anti-Commu- overall poor security measures. The Baun's already-existent staff, known nist emigre groups in Germany and fact that the Russians wanted to ques- with members of the Russian Vlasov as KEYSTONE, at Oberursel. Gen- tion Baun and Gehlen, as well as Army. The few American officers eral Gehlen would coordinate the other German intelligence figures, assigned to the Blue House barely functips of both elements of the also did not sit well with Lewis. I 1 (s) knew the identities of RUSTY German organization while he had agents, thus making it difficult to direct responsibility for the Intelli- confirm the validity of German Meanwhile, Boleslav A. Holtsman, a gence Group. This element evaluated reporting. Baun's recruiting and SSU/X-2 counterintelligence officer economic, military, and political in Munich, had interrogated another training of his agents proved haphaz- reports obtained by agents of Baun's officer of Heinz ard while their motivation also raised Stab Walli, Oberst Information Group. I4 The Army des- Schmalschlager, about German intel- questions because of their black mar- ignated the entire organization as ligence activities against the ket activities. Throughout the Operation RUSTY, under the overall Russians. In fact, SSU felt that Western Allied zones of Germany, supervision of Col. Russell Philp, Lt. Schmalschlager was a better source of men and women openly claimed to Col. John R. Deane, Jr., and Capt. information on German intelligence be working for American intelli- activities on the Eastern Front than Eric Waldman, who had preceded gence, leading to many security Baun, a Russian-born German. 12 Gehlen's return to Germany from breaches which undermined Despite SSU's advice that the Army Washington. I5 (S) RUSTY's overall effectiveness. I8 (S) Baun and reduce its reliance Lacking internal control and Ameri- ortf1140-7cierivict inteligerice; the- Gehlen's reports, Deane expected, can oversight, Operation RUSTY opposite took place. Baun thrived "will be of great value to the G-2 turned out to be an expensive under US Army auspices and he Division in that they will furnish the project. By mid-1946, the Army established a service to monitor closest thing to finished intelligence found itself running out of funds Soviet radio transmissions in the Rus- that can be obtained from sources sian zone in January 1946. Two and it once again tried to persuade other than U.S." I6 Deane's optimis- months later, Baun received further SSU to take over the operation fol- tic outlook indeed spurred the Army authorization from the Army to con- lowing Gehlen's return to Germany. to submit even greater number of duct both positive and On a tour of SSU installations in requests to Operation RUSTY. Baun counterintelligence activities in Ger- Germany, Col. William W. Quinn, quickly expanded his collection many. 13(S) - SSU's director in Washington, DC, efforts to meet the Army's insatiable conferred with General Sibert and appetite for information on the new Crosby Lewis about the Army's pro- Soviet threat in Europe. By October posal. Once again, Lewis repeated Operation RUSTY 1946, Gehlen and Baun claimed to many of his objections that he had have some 600 agents operating made earlier in the fall of 1945 and In July of that year, the Army throughout the Soviet zone of Ger- he suggested that SSU make a "thor- . returned General Gehlen and the many who provided the bulk of ough study" before any decision by

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Headquarters. I9 In early September, the wealth of intelligence which is Lewis specified in writing to General contained in the minds of the var- Sibert the conditions in which SSU ious participants as regards would be prepared to assume respon- Russia, Russian intelligence tech- sibility for Operation niques, and methods of operation KEYSTONE. 2° Lewis emphasized against the Russians, could be the need for US intelligence to have extracted In conclusion, however, complete access to all German it is most essential that ifa final records and identities of leading per- decision is made to exploit these sonalities and agents for initial individuals either singly or as a vetting. 21 (U) group, SSU understands that their employment in the past and Neither Crosby Lewis, SSU's chief of their exploitation in the fiaure mission in Germany, nor any other constitutes to a greater or less American official expressed any degree the setting up of an incipi- doubt about employing America's ent German intelligence service.23 former enemies as sources of informa- (S), tion. The Americans, for example, had embarked upon a large-scale project using German officers to On the conclusion of General Sib- Lt. Gen. Hoyt S. Vandenberg (u) write about their wartime experi- ert's tour as G-2 in Europe, the ences. The Army's German Military debate about whether a civilian intel- History Program, for example, con- ligence agency should be responsible Regarding Baun's Information tinued until the mid-1950s and for Operation RUSTY shifted from Group, GIG determined that "there influenced US Army doctrinal and Germany to Washington. Maj. Gen. is no evidence whatsoever which indi- historical writing. 22 The debate Withers A. Burress, Sibert's successor cates high-level penetration into any about Gehlen's project, as it became as the Army's chief intelligence political or economic body in the shaped since 1945, revolved around officer in Germany, appealed to Russian-occupied zone." The review more practical matters, such as cost Lt. Gen. Hoyt S. Vandenberg, also blasted Operation RUSTY for and security. Crosby Lewis summa- formerly Army Chief of Staff for its yearly budget of $2.5 million rized his thoughts about RUSTY for Intelligence and now Director of while CIG's German Mission cost Col. Donald H. Galloway, Assistant Central Intelligence, that the newly only $120,000. GIG decidedly Mt-ea-W.F.—Of-Special 9peration-S7'in formed Central Intelligence Group rejected assumption of RUSTY, September 1946: (GIG) assume control of RUSTY. although it did call for a full study in His memorandum, supported by order to identify salvageable aspects extensive documentation, noted that It is my opinion that SSU of the operation. The report made the Army's headquarters in Germany two significant comments that ANIZON should be given com- considered RUSTY to be "one of its plete control of the operation and reflected CIG's overall frame of most prolific and dependable mind: ”24 that all current activities of this sources. (C) group be immediately stopped before further security breaches I. It is considered highly undesir- General Vandenberg, in turn, nullih the fiaure usefianess of any directed that the GIG take a fresh able that any large scale US- of the members of the group. I fiir- look at RUSTY. On 16 October sponsored intelligence unit be per- ther recommend that an 1946, GIG presented its summary of mitted to operate under even exhaustive study be made along the Burress material and dismissed semi-autonomous conditions. CE lines of the entire operation, Gehlen's Intelligence, or Evaluation, Unless responsible US personnel past and present, so that at least, Group as "drawing broad conclu- are filly acquainted not only i/it appears that the group is too - sions from inadequate evidence and a with the details of each operation insecure to continue an operation, strong tendency to editorialize." carried out but also with the

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identities and backgrourid of all two-month study. "The whole pat- individuals concerned, no high tern of operation," Bossard degree of reliability can be placed prodaimed in the first paragraph of from an American point of view his report, "is accordingly positive upon the intelligence produced. and bold; the factors of control and risk have become secondary consider- ations and thus yield to the necessity 2. One of the greatest assets avail- of obtaining information with speed able to US intelligence has and in quantity.”28 Cs) always been the extent to which the United States as a nation is In a stunning reversal of earlier criti- trusted and looked up to by dem- cism of RUSTY, Bossard compared ocratic-minded people the operation to the wartime work of throughout the world. Experi- OSS with various Resistance groups ence has proven that the best where results mattered more than motivation for intelligence work control. He dismissed "the long bill is ideology followed by common of complaints prepared by our own interests and favors. The Ger- counterintelligence agencies against mans, the Russians, their the lack of security in this organiza- satellites, and, to a lesser extent, tion." Bossard declared, "in the end R. Adm. Roscoe H. Hillenkoetter (Li) the British, have employed fear, [this] serves more as a testimony to direct pressure of other types, the alertness of our counter-intelli- and, lastly, money. With most of gence agencies and a criticism of our anti-Communist intelligence these factors lacking to it, Opera- own higher authorities for not effect- organization. If the United States abandoned RUSTY, it would still tion RUSTY would appear to ing a coordination of interests than a have the same intelligence require- depend largely on the last and criticism of the present organization and its operating personnel."29 (S) ments as before, although with fewer least desirable. 25 (C) resources. Likewise, American con- Bossard's report marked the first trol of the German operation could time that either SSU or GIG had the only strengthen the overall project The Bossard Report opportunity to examine on its own and reduce its security risks. Bossard the operation and to question both felt that Operation RUSTY offered the Americans a readymade, knowl- Inligerertcr-detierarVandenberg-tn Gehlen and Baun as well as other edgeable German intelligence service October 1946, Colonel Galloway members of the German operation. that formed -a "strong core of resis- reiterated CIG's concerns about Impressed with the anti-Communist tance to Russian aggression." 31 (S) RUSTY's costs and questions about sympathies of the Germans and the its security. He recommended that breadth of their contacts (especially GIG not take over the operation.26 with various emigre groups), Bossard Bossard's findings unleashed a flurry The Army and GIG, however, agreed found "no evidence to prove that the of activity in Washington during the in the fall of 1946 that the GIG unusual confidence that had been summer and fall of 1947. On 3 June, could conduct its own examination placed by American authorities in Colonel Galloway recommended to of RUSTY. As a result of discussions the German operators had been R. Adm. Roscoe H. Hillenkoetter, held in New York City in December, abused." Bossard made eight recom- who had just taken over as DCI Samuel B. Bossard arrived at Oberur- mendations to the DCI, with the from General Vandenberg, that he sel in March 1947 to evaluate the bottom line being that the GIG approve the Bossard Report. Gallo- German operation and its future should take responsibility for way added that CIG's takeover of potential. Unlike Crosby Lewis, RUSTY. 3° (s) RUSTY should be cleared through Bossard had a different, and favor- the G-2 in Germany and brought to able, impression of Operation Bossard believed that Operation the attention of the National Intelli- RUSTY during the course of his RUSTY had proven to be a useful gence Authority, predecessor to the

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National Security Council. Colonel about the national security risks Galloway remained concerned that posed.by the US support of a resur- support of the German intelligence gent German General Staff and service could conflict with both State intelligence service. General Cham- Department policies in dealing with berlin agreed that this perception a "potential resistance group" as well created problems and promised to as interfere with the signals intelli- have Maj. Gen. Robert L. Walsh, the gence work of the US Army and Army's G-2 in Germany, oversee Navy. 32 (S) tighter control over the operation.34 • (S) A few days later, Admiral Hillenkoet- ter prepared a memorandum for the While the CIG and the Army Secretaries of State, War, Navy, as debated the merits of Operation Well as President Truman's personal RUSTY in Washington, Lt. Col. representative to the National Intelli- Deane at Oberursel oversaw the gence Authority on Operation almost-daily growth of Gehlen's RUSTY. It outlined the organiza- intelligence service. The rapid expan- tion's history and CIG's earlier sion of agents and reports in 1946 examination into the question of presented a challenge in terms of con- assuming responsibility. In his cover trol and quality. General Gehlen, Henry Hedcsher. Photo courtesy of memorandum, Admiral Hillenkoet- upon his return that summer, discov- Araxi Kobrin. (u) ter expressed the "strong" ered that Baun had his own plans for recommendation that "Operation a German intelligence service which RUSTY be liquidated and that CIG did not meet with Gehlen's approval. the German Mission's Security Con- assume no responsibility for its con- Baun's ambitious grasp for control of trol (or counterintelligence) branch tinuation or liquidation."33 the organization, coupled with in 1946-47, provided an update to Hillenkoetter felt that the GIG mounting questions about his agents Richard Helms, chief of Foreign should have no connection with and finances, resulted in his gradual Branch M (which handled CIA's RUSTY without the knowledge and removal by the Americans and operations in Central Europe), in approval of the National Intelligence Gehlen during the course of 1947.35 mid-March 1948 about the German Authority. (S) The Army, in the meantime, did take some steps to improve its con- intelligence organization's activities. Hillenkoetter's recommendation trol over RUSTY, including the Hecksher observed that while &efecin Piny circles; =a-nd he formation of a military cover organi- RUSTY "enjoys the unqualified back- held a high-level conference on zation, the 7821st Composite ing of the Army in Germany," he felt 19 June 1947 to discuss Army-CIG Group.36 Immediately before that the Soviets must have pene- relations and Operation RUSTY. RUSTY's transfer from Oberursel to trated the German group. "The Having been shown the proposed its own compound in Pullach, a political implications alone (leaving NIA memorandum outlining Haien- small village near Munich, in the late aside the espionage angle) would fall of 1947, Lt. Col. Willard K. koetter's rejection of RUSTY, Maj. come in handy if the Russians at any Gen. Stephen J. Chamberlin, the Liebel replaced Deane as Operations time should look for a pretext to pro- Army's Director of Intelligence, Officer. 3I (S) voke a showdown in Western asked that the document be with- drawn in its entirety. He stated that Germany," Hecksher declared. Like- he did not plan to discuss the matter CIA's Misgivings wise, he was concerned about "the even with the Secretary of War. Con- political implications of sponsoring sequently, the Army momentarily There was still little enthusiasm for an organization which in the opinion relented in its efforts to have GIG RUSTY after the establishment of of qualified observers constitutes a re- assume responsibility for RUSTY. the CIA in the fall of 1947. Henry activation of the German Abwehr Hillenkoetter warned Chamberlin Hecksher, who had served' as chief of under American aegis."38 (S)

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40 summary, C presented the viewpoint of many CIA officers:

The general consensus is that RUSTY represents a tightly knit organization offormer German officers, a good number of which formerly belonged to the German general staff Since they have an effective means of control over their people through extensive fiends, facilities, operational supplies, etc., they are in a position to provide safe haven for a good many undesirable elements from the standpoint of a fieture demo- cratic Germany. Most of these officers are unable to find employment, and they are there- fore able to maintain their former standard of living with- Photo courtesy of Araxi Kobrin. (u) out having to put up with the present difficulties of lift in con- quered Germany. They are With great disgust, RUSTY's approach went against all likewise able to maintain their acting chief of CIA's Karlsruhe opera- principles of intelligence work. "In social standing as former officers tions base, related his experiences the recruitment methods no atten- and to continue their own study with RUSTY in an August 1948 tion was paid to the character of the in the military field and con- memorandum to Headquarters. recruits, security, political leanings or tinue training along military 3 first encountered Baun's quality, with the result that many of lines. The control of an extensive operatives in the summer of 1946 the agents were blown almost imme- intelligence net makes it possible _ diately: IL. J Felt that for the leaders to create a cadre gence Corps (CIC) arrested a RUSTY's "recruiting methods indi- of officers for the perpetuation of number of Germans who claimed to cated a highly nationalistic group German general staff activity. work for American intelligence. CIC of Germans who could easily be- The organization of RUSTY informea C.. lbout these come the nucleous [sic] of serious makes it possible for them to con- arrests, and he launched an investiga- subversive activity against any occu- tinue a closely knit organization tion as to the background of the pying power. At the same time, German agents. He found that which can be expanded at will.'" V-- _3 commented, "the distribu- (S) some of the agents employed were tion of operational supplies, money, SS personnel with known Nazi etc. was so loose and elaborate that records and, in most cases, undesir- the influence on the black market formerly able people. Recruiting methods certainly was considerable."40 (S) SSU's X-2 chief in Germany and then employed," he complained, now head of CIA's Munich opera- "were so loose that former German tions base, reported his views of officers and noncoms were blindly .3 expressed his displeasure RUSTY in a July 1948 memoran- being approached to work for Ameri- with RUSTY and protested any dum to Gordon M. Stewart, CIA's can intelligence in espionage activity plans for future association between chief of mission in Germany. Like directed against the USSR.”39 (S) this group and CIA. In a lengthy his colleagues, 1C-. protested

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no question that the Russians know ..mysterious "R. Gunner" about this operation is going on even "some dangerous points." Gunner, though they may have some of the believed to be General Gehlen, asked details wrong." Helms added, "cer- for Bossard's "personal advice con- tainly the fact that so much publicity cerning certain business questions" has been given to this indicates seri- and wanted him to come to ous flaws in the security of the Munich.46 Disagreements between »43 operation. (s) Gehlen and his American military counterpart, Lieutenant Colonel Lie- Little by little, however, the Army bet, now made their way to the managed to get CIA more involved highest levels of CIA. The entire with RUSTY, despite complaints project appeared on the verge of dis- from the field and even Admiral Hill- integration.47 (S) enkoetter's overall opposition to the project. In December 1947, General Walsh again brought up the issue of The Critchfield Report CIA's taking over of RUSTY with' ,D then CIA's chief of Matters soon came to head which basein Berlin. Walsh maintained forced the CIA to act whether it that, while the handling of RUSTY should maintain a German intelli- by the Army in 1947 might have gence organization. While the Army and GordOn been considered a "sin of commis- issued RUSTY with priorities in M. Stewart. Photo courtesy of Araxi Kobrin: sion," for the Americans not to terms of targets and regions, Major (u) continue the operation in 1948 General Walsh, the Army's chief would constitute a "sin of omis- intelligence officer in Germany, sion."44 (S) informed Admiral Hillenkoetter in RUSTY's poor security practices and October 1948 that the Army could its "freewheeling" methods of agent As late as mid-1948, Admiral Hillen- no longer fund RUSTY for any activ- recruitment .= expressed koetter resisted the Army's overtures ities other than order of battle particular distaste at RUSTY's abuse to assume control of RUSTY. In July intelligence." During a visit to Ger- of the denazification laws which 1948, the DCI informed the Army's many, the DCI discussed the matter undermined the operation's overall Director of Intelligence that he did with Walsh and agreed to provide standing. c quoted a "local not want the Army to use a 1946 let- limited funds while CIA conducted cynic" who said that "American intel- ter of agreement between the War yet another investigation of the ligence is a rich blind man using the Department and GIG to obtain ser- Army's German operation. Immedi- Abwehr as a seeing-eye dog. The only vices, supplies, and equipment for ately before Admiral Hillenkoetter's trouble is—the leash is much too the 7821st Composite Group, the agreement with the Army, Colonel »42 - long. (s) Army's cover organization for Galloway and Gordon Stewart con- RUSTY. Hillenkoetter believed that ferred about RUSTY. They In summarizing the sentiments of a new, and separate, agreement concluded that the Agency needed to Agency officials in Germany, Rich- should be drawn up between both begin penetration efforts against ard Helms told Colonel Galloway in organizations to support the Army's RUSTY, "or at least [be] carefully Ivlarch 1948 that "nothing about requirements f-or RUSTY. 45 (5) watched and reported upon, and that RUSTY has been altered which we should pay particular attention to could lead us to change the position At the same time, Hillenkoetter pro- its attempts to become the official taken by us last year. In fact, the vided General Chamberlin with German intelligence service." 49 (5) reports in the Soviet-dominated some news about RUSTY that he press in Germany concerning the use had learned from various sources. In The die was now cast, leading CIA of former German staff and intelli- one case, Samuel Bossard, now in down a long path that has now indel- gence officers are such that there is England, had received a letter from a ibly linked the Agency with General

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Washington on 17 December. 5I His because "from an intelligence view- full report, with annexes, arrived at point, it seems desirable that CIA Headquarters after that point. An enter RUSTY at that point where it extensive study, Critchfield and can control all contacts and opera- several associates examined the tional developments outside of Army's relationship with RUSTY, its German territory."54 Admiral funding, organi-zational structure, Hillenkoetter, however, reluctantly intelligence reporting, overall opera- agreed to this move and made it clear tions and procedures, and Gehlen's that "CIA was not asking to cake own future projections for his group. over Rusty and was expressing a will- Critchfield's report stands as the ingness co do so only because the CIA's (and its predecessors) most Army was requesting it." 55 Cs) thorough review of the growing Ger- man intelligence service.52 (S) Gen. Omar Bradley, the Army's Chief of Staff (and soon-to-be Chair- Critchfield's report also set the tenor man of the Joint Chiefs of Staff) and for future CIA relations with Secretary of Defense James V. Forr- Gehlep. While he made several estal both supported the Agency's important points, Critchfield move, as did individual members of observed that CIA could not ignore the National Security Council. the presence of RUSTY. He wrote: Throughout the first months of Col. James. H. -Crirelfielci. Photo courtesy of 1949, the Agency, the Department trirchfield. (U) In the final analysis, RUSTY is of the Army, and Gen. Lucius D. a re-established GIS which has Clay, US military governor of Ger- been sponsored by the present de many, debated the issue of the CIA's Gehlen and his intelligence service. facto national government of assumption of RUSTY. 56 Likewise, On 27 October 1948, Colonel Gallo- Germany, i.e. by the military Critchfield in Pullach had his hands way told Stewart that he wanted occupational forces. Because the full with an ongoing dispute between James H. Critchfield, the newly 4,000 or more Germans who Gehlen and Colonel Philp, the new arrived chief of Munich operations comprise RUSTY constitute a US Army commander on the scene. 57 With General Clay's depar- base, to examine RUSTY and pre- going concern in the intelligence pare a report similar to that done by ture from Germany in May, the field it appears highly probable liocsarAi-in1947. Critchfield'sman- Agency assumed control on 1 July that RUSTY will emerge as a date- -screcite-d—th;t he Should evaluate 1949.'8 (s) RUSTY's OB facilities and deter- strong influence, if not the domi- mine which elements should either nant one, in the new GIS. be j, by CIA, exploited, left Another important consideration CIA's Trusteeship with the Army, or liquidated. The is that RUSTY has closest ties report, Galloway noted, should be with ex-German General Staff Even before the official transfer in thorough but also completed within officers throughout Germany. If mid-1949, Critchfield specified the a monch. 50 (S) in the _Pure, Germany is to play terms of agreement between the CIA any role in a Western European and the German organization. The Critchfield, a young US Army com- military alliance, this is an basic agreement reached by Gritch- bat veteran, had served in military important factor. 53 (S) field and GeIden in June 1949 intelligence staff positions in both recognized that "the basis for US- Germany and Austria when he As Critchfield pointed out, RUSTY German cooperation in this project joined the new CIA in 1948. He was a fait accompli, regardless of lies in the mutual conviction of the embarked on his new project with whether CIA wanted the German respective parties that increasing vigor and met his deadline when he organization or not. He advocated cooperation between a free and dem- cabled a summary of his findings co the Agency's assumption of RUSTY ocratic Germany and the United

78 Secret Secret Gehlen

States within the framework of the Critchfield bluntly told Gehlen in ...United States and the Federal Repub- Western European Union and the 1950 that "it was high time he recog- lic of Germany remained close allies Atlantic Community is indispensable nized the fact that his organization, throughout the long years of the for the successful execution of a pol- while viewed in a MOSE creditable Cold War. On the other hand, CIA's icy of opposition and containment of light for its tactical collection and relationship with the Gehlen Organi- Communist Russia." 59 (S) especially its military evaluation zation also had longlasting impact in work, was considered definitely sec- terms of counterintelligence and War- Critchfield acknowledged that "the ond class in any intelligence activity saw Pact propaganda efforts. (U) members of the German staff of this of a more difficult or sophisticated project are acting first and foremost nature, and that if he had any aspira- The Gehlen Organization never as German nationals working in the tions beyond that of producing a escaped from its roots as successors interest of the German people in good G-2 concern for the future Ger- to Nazi Germany's military and intel- combating Communism." Yet, the man Army, some drastic changes ligence circles. Gehlen's intelligence Agency's chief of base insisted that were in order."62 (s) service suffered devastating penetra- until Germany regained its sover- tions by the KGB, witnessed by the eignty and the two countries made While the CIA and its predecessors Hans Clemens and Heinz Felfe spy new arrangements, the CIA would had long protested against the use of scandals of the early 1960s. These remain the dominant partner and the German intelligence service, the intelligence failures highlighted the call the shots. Critchfield, for exam- American service soon found itself CIA's concerns about the Gehlen ple, would specify US requests to defending its own ties to the Gehlen Organization which it had expressed Gehlen for intelligence priorities and Organization. As early as 1953, the during the period under the US that "complete details of operational two agencies had become so Army's contro1. 65 The KGB's ability activities will be available to US entwined that even Roger M. Keyes, to use former Nazis as agents in the staff." While US officials would deal Deputy Secretary of Defense, criti- 1940s and 1950s led to further with the Germans in "an advisory cized the Agency's role in Germany. exploitation by the East German and liaison capacity," Critchfield Frank Wisner, the Deputy Director Stasi until the fall of the Berlin Wall planned to closely examine the for Plans, responded that "there is no in 1989. Reunited Germany has not Gehlen Organization. "All opera- adequate answer or correction of the yet come'to terms with the full tions outside of Germany will," assumption that we rely very largely extent of the Communist penetra- Critchfield noted, "be reduced to a upon the.ZIPPER_effort for intelli- tion of West Germany's military and project basis with funds provided for gence on Eastern Europe generally." civilian agencies. In large part, the each project as approved and on the Wisner stated, "this is a common fal- Bundesnachrichtendienst (BND), the 1a.asitmEcontinu_ leview of era- lacy which is always cropping up and West German successor to the tionar creTans and production." tr(s) it should be pointed our that we have Gehlen Orzanization, was a chief tar- our own independent operations in get because-of its links to the Third Reich. Relations between the Agency and addition to the Zipper effort." 63 The 66 (u) German intelligence service (known Agency also found that supporting variously as ODEUM and ZIPPER) the German service to be an expen- While the Agency's support to the during the first half of the 1950s sive proposition with little actual Gehlen Organization remains a con- were often at odds. 6I Gehlen control over its personnel. 64 (S) troversial topic, it took on this resented the American intrusion, responsibility after lengthy debate which was far more sweeping than and with the full knowledge of the the Army's: In 1950, for example, Cutting Both Ways risks. The CIA recognized that its Critchfield reduced the number of ties to Gehlen meant it inherited Gehlen's projects from 150 to 49, CLA's support of the Gehlen Organi- many negative aspects that had also and he soon whittled this latter num- zation proved a double-edged sword. plagued the Army between 1945 and ber to 10. CIA cut the vast bulk of On the one hand, US assistance to 1949. Gehlen's intelligence on the German projects for nonproduction the nascent West German intelli- Soviet Union, however, outweighed of any worthwhile intelligence or gence service strengthened ties these problems during the hottest even possessing any potential value. between the two countries. The years of the Cold War. The history

Secret 79 Secret Gehlen

of postwar Germany needs to take NOTES 4. Boker's account of his role during into account the origins of the CIA's 1945-46 is found in John R. Boker, trusteeship of the Gehlen Organiza- 1. For an "open" history of the Ameri- Jr., "Report of Initial Contacts with General Gehlen's Organization," 1 tion. (u) can rdationship with the German intelligence service after World War May 1952, in DO Records, Job C II, see Mary Ellen Reese, General Box 2, Folder 2, CIA ARC Reinhard Gehlen: The CIA Connection (S). (Fairfax: George Mason University Press, 1990). Other books, of varying 5. A general history of this early period' degrees of reliability, include E.H. is found in Chief, EE to EE/G, Coolcridge (nom de plume for Edward ATTN: "C.- , "History of the Spiro), Gehlen: Spy of the Century Gehlen Intelligence Organization," (London: Hodder and Stoughton, 28 March 1960, enclosing C- 1971); Heinz Hohne and Hermann -1 "History of the Zolling, Network: The Truth about Gehlen Intelligence Organization," General Gehlen and His Spy Ring, September 1953, DO Records, Job trans. by Richard Barry (London: C... .7 Box 1, Folder 5, CIA Secker and Warburg, 1972); and ARC (S) (hereafter cited as "Gehlen lastly, Reinhard Gehlen, The Service: History"). See also C- _a he Memoirs of General Reinhard Gehlen, trans. by David Irving (New 3 Clandestine Ser- York: World Publishing, 1972). A vices Historical Series C. -= DCI draft manuscript by Jarnes H. Critch- History Staff, 1973, 4 volumes, (here- field, entitled Germany: From Enemy after cited as CSHP _3 (S). to Ally 1946-1956, promises to add significantly to the literature on this 6. Further details about Stab Walli are topic. (U) found in Baun's interrogation in Counterintelligence War Room Lon- 2. For a radical view regarding the don, Situation Report No. 154, CIA's link with the West German "Leitstelle - I OST (Walli), 15 Janu- intelligence service, sec Carl Oglesby, ary 1946, (S), in Herman Baun, File "Reinhard Gehlen: The Secret Treaty DO Records. (S) of Fort Hunt," Covert Action Informa- tion Bulletin 35 (fall 1990), pp. 8-14. 7. Col. W.W. Quinn to CoL Donald (U) H. Galloway, "Operation Rusty," 5 December 1946, DO Records, Job 3. For a review of the organization of 3 Box 5, Folder 9, CIA German intelligence during the war, ARC (s). including the Fremde Heer Ost, written by German officers, see 8. Crosby Lewis to Winston M. Scott; "Development of the Secret Informa- 25 October 1945 (S), Baun, tion Service from the End of World See also Scott to Lewis, 30 War I until the End of World War October 1945, (S), Baun, C 3 II," (undated). See also SAINT, Lon- (S) don to SAINT, "The German Intelligence Service and the War," 7 9. Preliminary Interrogation Report, 16 January 1946, XX-10403, enclosing a Aueust 1945, (C), in Baur), C British report, "The German Intelli- (C) gence Service and the War," all documents in Directorate of Opera- tions Records, Job C- , Box 10. SAINT, AMZON to SAINT, "Rus- 2, Folder 1, Central Intelligence sian Experts of German Intelligence Agency Archives and Records Center Service," 8 January 1946 (S), in Baun, (S). Sec also David Kahn, Hitler's G (s) Spies: German Militaty Intelligence in World War II (London: Hodder and 11. "Gehlen History," pp. 14-15 (S). Stoughton, 1978). (S) SSIJ's objections to takeover in 1945

80 Secret

Secret Gehlen

are outlined in Lewis co Colonel CIA ARC (S). This Evaluation .021. Lewis to Sibert, "Operation KEY- Galloway, "KEYSTONE Opera- Report was prepared in response to a STONE," 6 September 1946, DO tion," 22 September 1946, DO May 1946 US Army request to inves- Records, Job C. 3 Box 2, Records, job E. Box 36, tigate and report all measures taken Folder 2, CIA ARC (S). A declassi- _Folder 8, CIA ARC (S). A copy of by the Soviets to form a German fied copy of this same memorandum this same memorandum with an army. This same folder also contains also appears in Record Group 226, attachment is also located in DO numerous Intelligence Reports Records of the Office of Strategic Ser- Records, job C- 2 Box 3, produced by Operation RUSTY in vices, Entry 178, Box 4, Folder 39, Folder 1, CIA ARC (S). 1946. (S) National Archives and Records Administration. (S) 12. SAINT, AMZON to SAINT, "Rus- 17. Lt. Col. J.L. Collins, Chief, Informa- sian Experts of German Intelligence tion Section, to Chief, Intelligence 22. Kevin Soutour, "To Stem the Red Service," 8 January 1946 (S) and unti- Branch, "Operation Rusty," 24 Sep- Tide: The German Report Series and tled note to "Reg Phelps," in Baun, tember 1946, DO Records, Job Its Effect on American Defense Doc- (S) •n Box 6, Folder 15, CIA ARC trine, 1948-I954,"Journal of (S). Military History 57 (October 1993), 13: "Gehlen History," pp. 15-16 (S). pp. 653-688. (U) 18. For a description of many of these 23. 14. For a roster of the Intelligence Group problems, see "Gehlen History," pp. Lewis to Galloway, "KEYSTONE (also known as the Evaluation 24-29, 34.:Examples of SSU and Operation," 22 September 1946, Group) and the Information Group, CIG reporting about RUSTY's secu- DO Records, Job c Box 36, Folder 8, CIA see "Gehlen History," pp. 21-22. (S) rity problems are numerous and can ARC (S). be seen in C._ .7 to 15. Lt. Col. John R. Deane, Jr., Opera- Chief, IB, "Agent Net Operating in 24. Copies of WA Burress to Hoyt S. tions Officer, USFET MISC, to G-2, the Bamberg Vicinity," 17 September Vandenberg, "Operation RUSTY- USFET, "Plan for the Inclusion of 1946; to Use of the Eastern Branch of the the BOLERO Group in Operation -3 "American Intelligence Former German Intelligence Ser- RUSTY," 2 July 1946, DO Records, Network," 18 March 1947, enclosing vice," 1 October 1946, DCI Records Job Box 2, Folder 2, "American Intelligence Network," 25 Job C. Box 13, Folder 13, CIA ARC (TS). The operation is vari- January 1947; and various intelli- (C) and DCI Records, Job C. ously described as gaining its gence reports about Operation Box 11, Folder 481, (S), designation from either a nickname KEYSTONE from CIG's various CIA ARC. A full copy of the Burress given to Lieutenant Colonel Deane's agents in Munich in 1947. All of memorandum and supporting docu- young son or that given to Colonel these documents are located in DO ments can be found in DO Records, Russell Philp, commanding officer at Records, Job Box 5, Job C... Box 2, Folder 2, "Basket," the secure facility at Blue Folder 8, CIA ARC (S). CIA ARC (TS). The "Vandenberg fteinhard Report" is the best summary report Gehlen, p. 207, and chief of station, about Operation RUSTY during the Karlsruhe to Chief, FBM, "Bi- 19. Lewis to Galloway, "KEYSTONE Army's early period of control. (S) Weeldy Letter," 4 December 1948, Operation," 22 September 1946, MGM-A-859, DO Records, Job C DO Records, Job C. ,3 Box 36, Folder 8, CIA ARC (S). See also 25. "R.K." to Deputy A, "Operation , Box 5, Folder 9, CIA ARC RUSTY," 16 October 1946, DO (S) -2 states emphatically that undated, unclassified summary of Lewis's cables to Washington in 1946 Records, Job C. Z., Box 5, Operation RUSTY gained its name Folder 2, CIA ARC (C). The identity from the son of Lieutenant Colonel in DO Records, Job C. Box 5, Folder 9, CIA ARC. (S) of the correspondent is uncertain at Deane, see CSHP L. 3 vol. 1, p. V- this time although it may have been 1. (S) Rolfe Kingsley. In November 1946, 20. The Americans referred to the Ger- General Vandenberg asked that the 16. Deane tc; G-2, USFET, 2 July 1946; man intelligence service through a Army send Gehlen and Baun to the for a copy of one Evaluation Report, variety of project names, including United States for conferences with see Evaluation Report No, 2, Opera- BOLERO, KEYSTONE, and CIG. See DCI, Memorandum for tion RUSTY, "Political and Military RUSTY. The use of the term Major General Stephen J. Chamber- Training of German PWs in USSR "RUSTY" supplanted KEYSTONE lin, Director of Intelligence, for Commitment in Germany," in 1946 until CIA's assumption in "Operation RUSTY-Use of the 27 September 1946, DO Records, 1949. After that point, the opera- Eastern Branch of the Former Ger- Job C. _3 Box 1, Folder 5, tional terms changed once again. (C) man Intelligence Service,"

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20 November 1946, DCI Records, of 29 May 1947, Kossard simply "55. The Army and CIG discussed bring- Job C.- Box 13, Folder 549, recounts RUSTY's background and ing Baun to America for several CIA ARC (C). its advantages and disadvantages. He months in order to prevent him from does not make a recommendation. In "going independent." Samuel 26. Galloway to DCI, "Operation a third and longer report (undated), Bossard, Memorandum for the File, RUSTY," 17 October 1946, DO Bossard recommends that CIG "Removal of Lt. Col. Hermann Baun Records, Job C. Box 5, assume control of RUSTY. I have to the United States," 3 September Folder 9, CIA ARC (S). This docu- selected the fourth report (listed 1947. DOTS-1121, DO Records, ments appears as an annex to the above) as the ultimate Bossard report. Job C. Box 498, Folder 4, Bossard Report. (S) The three other versions are located CIA ARC (S). The situation between in DO Records, Jot. Box Balm and Gehlen created internal 27. The New York meeting on 19 5, Folder 9, CIA ARC (S). division within the German intelli- December 1946, organized by Gen- gence service within days after the eral Vandenberg, brought together a 29. Ibid. general's return to Germany in 1946. number of the top American intelli- Gehlen, however, retained Baun and gence figures to discuss RUSTY. sent him to Iran to conduct strategic Held at the apartment of Allen 30. Ibid planning in the Middle East. He died Dulles, the meeting included Dulles, in Munich in December 1951 at the age of 54. (S) William H. Jackson (both special 31. Ibid. advisors to CIG), Brig. Gen. Edwin K. Wright (DDCI), Brigadier Gen- 36. CIG's recommendations to General eral Sibert, Colonel Galloway, Col. 32. Galloway, Memorandum to DCI, Chamberlin for changes in RUSTY Laurin L. Williams of Army G-2, "Operation RUSTY," 3 June 1947, are found in a 27 June 1947 untitled, Lieutenant Colonel Deane from DOTS 1171, DO Records, Job C unclassified note written by Bossard. RUSTY, Richard Helms, and Samuel Box 498, Folder!, CIA DO Records, Job C- -Z Box 5, Bossard. The group agreed that CIG ARC (S). A draft of the cable from Folder 9, CIA ARC. The implemen- should hold an investigation of CIG to G-2 EUCOM is also tation of some of the changes are RUSTY "on the ground" because included. A copy of the actual cable, announced in Headquarters, First "certain parts had possible long7range Director, CIG to G-2, EUCOM, 5 Military District, General Orders values." t SHP-n n vol. 1, pp. V-7 June 1947, OUT 2890, is found in Number 54, "Organization of 7821st through V-8. See also Richard DO Records, Job C. Box 7, Composite Group," 1 December Helms, Memorandum for the Folder 203, CIA ARC (TS). 1947, DO Records, Job C_ Record, "Operation Rusty," 19 Box 2, Folder 3, CIA ARC. (C) December 1946, DO Records, Job Box 5, Folder 9, CIA 33. DCI to Secretaries of State, War, 37. Reese, General Reinhard Gehlen, pp. ARC (no cl2ssification listed). Navy, and Personal Representative of the Present, "Operation 'RUSTY,'" 93-97. Relations between Lieutenant DCI Records, Job C- Box Colonel Licbel and General Gehlen 28. See chief of station, Karlsruhe to 11, Folder 481, CIA ARC (S). This deteriorated quickly after Liebel's Chief, Munich operations base, document contains marginalia, dated arrival; in part due to the American "RUSTY," 2 November 1948, MGK- 20 June 1947, written by Brig. Gen. officer's insistence on obtaining A-3955, enclosing undated, unsigned Edwin K. Wright, DDCI, about the identities of the German agents. Bossard Report with charts, DO decision not to send this rnemoran- Lieutenant Colonel Liebel also Records, Job Box 3, C. .3 durn. (S) criticized Gehlen (referred by his Folder I, CIA ARC (TS). Further dis- operational name Dr. Schneider) for cussion of the Bossard Report is poor security practices. Captain found in "Gehlen History," pp. 34- 34. Brig. Gen. Edwin K. Wright, Memo- Waldman supported Gehlen's stand 37. It is difficult to discern Bossard's randum for the Record, 20 Tune during this period, which created original report to the DCI because 1947, DCI Records, Job C.- tension within the American chain several versions appear to have sur- Box 13, Folder 549, CIA ARC (C). of command. For this letter, see vived. In a three-page memo to the In addition to Hillenkoetter and [Colonel Liebel], Memorandum to DCI on 29 May 1947, Bossard rec- Chamberlin, Gen. Wright and Col. "Dr. Schneider," 3 March 1948 and ommends that the National Williams also attended the meeting. Gehlen's vehement reply, "Dr. Intelligence Authority make the final For another description of this meet- Schneider," Memorandum to determination whether CIG have any ing, see Cable, Washington to Colonel Liebel, 11 March 1948, in participation in RUSTY. This memo Heidelberg, 27 June 1947. OUT DO Records, Job C. 3 Box 5, is generally lukewarm about the oper- 3718, DO Records, Job C Folder 9, CIA ARC (S). Liebe' ation. In a second, but similar, memo Box 9, Folder 220, CIA ARC (TS). departed Pullach in August 1948 and

82 Secret Secret Gehlen

Col. Russell Philp, an.old "Blue 46. DCI, Memorandum to Chamberlin, RUSTY," 17 December 1948, House" veteran, arrived as his succes- 31 -Aueust 1948, DCI Records, Job MGM-A-878, MGTS-11, DO sor in December 1948. Liebel's own Box 13, Folder 549, Records, Job C.. Box 3, black market activities and the poor CIA ARC (C). Another copy of this Folder 4, CIA ARC (TS) (hereafter discipline of US personnel at Pullach memorandum also appears in DO cited as "The Cricchfield Report") (S) ultimately injured the Army's efforts Records, Job E Box 5, to tighten control over the Germans. Folder 8, CIA ARC (S). See also 53. Ibid., p. 10 of the "Basic Report" in CSHP C ..J Volume I, pp. 7-9. (S) Cable, C. D, to SO, IN 494,92, 4 "The Critchfield Report." (S) August 1948, DO Records, Job C. Box 5, Folder 8, CIA ARC: 38. Henry Hecicsher: to Helms, "Opera- 54. Ibid tion RUSTY," 18 March 1948, DO (S). Records, Job Box 5, Folder 8, CIA ARC (S). 47. Headquarters told its officers in Ger- 55. Richard Helms, Memorandum for many to refrain from forwarding the Files, 1 February 1949, DO information about RUSTY to Army Records, Job C. Box 5, 39. Chief of Station, Karlsruhe to Chief, officials there because the Army Folder 9, CIA ARC (S). Colonel Cal- FBM, "RUSTY," 19 August 1948, apparently regarded the news as "snip- loway made his recommendations MGKA-2722, DO Records, Job ing." See Cable, SO to Heidelberg, concerning RUSTY in Galloway to Box 5, Folder 8, CIA ARC OUT 58734, 13 February 1948, (S): DCI, "Recommendations in Re (S). and Stewartto Helms, "RUSTY," 17 Operation RUSTY," 21 December Pebruaiy 1948, MGH-A-4058, (S), 1948, Job r_. Box 2, Folder 40. Ibid. both in DO Records, Job ; C 20, CIA ARC (S). The DCI con- Box 5, Folder 8, CIA ARC. curred and submitted CIA's proposed (S) takeover in Hillkoetter to Maj. 41. Ibid Gen. William E. Hall, "Operation RUSTY," 22 December 1948, TS- • 48. For the agenda of the meeting 27098A, DO Records, job 42. Chief, Munich operations base, to between the Army, Air Force, and Box 13, Folder 549, CIA acting chief of station, Karlsruhe,, Gehlen and a list of priorities, see ARC (C). "RUSTY," 7 July 1948, MGM-A- "Minutes of Meeting," 1 October 602, DO Records, Job C 1948, DO Records, Job C._ -7 Box 5, Folder 8, CIA ARC (S). Box 2, Folder 3, CIA ARC (S). 56. For a variety of correspondence during this delicate transition period, see S. Leroy Irwin, Director of Intelli- 43. Richard Helms to ADSO, "RUSTY," 49. Chief of station, Karlsruhe to Chief, gence to DCI, "Operation 'Rusty," 19 March 1948, in DO Records, Job FBM, "RUSTY," 15 October 1948. 19 January 1949, SD-13884; Cable, Box 5, Folder 8, CIA MGK-A-3583, DO Records, Job ARC (S). For a copy of one such Box 5, Folder 9, CIA ARC SO to Karlsruhe, 9 February 1949. _Si:mkt article, see.chief of station, (S). OUT 75997; ."-"Plaeltserg -tti Chief, FBK"RUssian Executive Officer to Chief of Opera- Newspaper Attack on American Intel- tions and Chief, FBM, "ODEUM," 50. Cable, SO to Karlsruhe, 27 October ligence Activities," 6 February 1948, 1 April 1949; Cable, SO to 1948, OUT 70606, in DO Records, Karlsruhe, 16 May 1949, OUT MGB-A-1248, DO Records, Job C. Job C. -2 Box 5, Folder 9, Box 5, Folder 8, CIA ARC 81439; all of these documents (with CIA ARC (S). Richard Helms also (C). the exception of the C 7memo) provided some guidance for this are located in DO Records, Job investigation in Chief, FBM to chief M Box 5, Folder 9, CIA ARC. 44. "Highlights of Conversation with of station, Karlsruhe, "RUSTY," 2 (S). -3 memo is found in W," undated, in DO Records, Job November 1948, MGK-W-914, DO DO Records, Job Box 2, C. -.I, Box 5, Folder 8, CIA Records, Job C.- Box 5, Folder 6, CIA ARC (C). ARC (S). Folder 8, CIA ARC (S). 57. Chief, FBM to chief of station, 45. DCI, Memorandum to the Director 51. Cable, Karlsruhe to SO, 17 Decem- Karlsruhe, "Operational, 10 February of Intelligence, "Letter-AGAO-S-D- ber 1948, IN 19522, (S), in DO 1949, MGK-W-1361, enclosing Alan M 40 TS (23 Oct 46), Subject: Sup- Records, Job c_ Box 5, R. McCracken, Acting ADSO to plies and Equipment for the CIG," Folder 9, CIA ARC (S). Maj. Gen. S. Leroy Irwin, Director 30 July 1948, DCI Records, Job C. of Intelligence, "Operation Rusty," Box 13, Folder 549, CIA, 52. Chief of station, Karlsruhe to Chief, 9 February 1949, in DO Records, ARC (C). OSO, "Report of Investigation- Job C... Box 5, Folder 9,

Secret 83 Secret Gehlen

CIA ARC (S). For further informa- 60. Aid annual expense for over $5 million to Irt". tion on the hostile environment at support the German intelligence ser- Pullach, see chief of station, 61. CIA dropped the use of the term vice. Between 1950 and 1968, CIA Karlsruhe to Chief, FBM, "Letter to RUSTY in 1949, and used a new spent $29 million on Gehlen's organi- General Hall," 10 February 1949, operational code, ODEUM, through zation and US liaison operations. MGM-A-961, and chief of station, 1950 when it changed to ZIPPER. CIA received some funding support Karlsruhe to Chief, FBM, Following the establishment of the from the Army while RUSTY, in the . "ODEUM: Current Situation," 18 BND in 1956, the Agency referred to early days, increased its revenue April 1949, MGM-A-1094; both in Gehlen's group as UPHILL and through black market activities. The DO Records, Job C.. —= Box 5, UPSWING. Between 1957 and Agency never had full access to the Folder 9, CIA ARC (S). 1968, the Agency referred to the Ger- identities of Gehlen agents, forcing man service as HBLAURITE. CIA's the Agency to employ clandestine Pullach base stopped using the means to identify German intelli- 58. Shortly after CIA cook over RUSTY Army's cover as the 7821st Compos- gence personnel. See CSHP from the Army, the Office of the US ite Group and became known as Vol. II, pp. XI-12 through XI-21 and High Commission for Germany Special Detachment, EUCOM, or XVII-1 through XVII-10. (S) (HICOM) assumed control from the the 7878th Signal Detachment. This Office of the Military Government later changed to Special Detachment, 65. For further details, see CSHP- C _7 for Germany United States US Army Europe, and then to the Vol. II!, pp. )0C-1 through )X-80. (OMGUS) and the Occupation Stat- US Army Technical Coordinating See also "KGB Exploitation of Heinz ute went into effect. In September Aqivity. See CSHP C Vol. II, Felfe: Successful KGB Penetration of 1949, the Federal Government of XVII-10 and Vol. III, pp. X-20. (C) a Western Intelligence Service," Germany formed following the ratifi- March 1969 (S) in Heinz Felfe, File cation of the Basic Law, the new DO Records. (S) 62. See CSHP C. ..1 Vol. II, pp. XI-2 republic's constitution in May. In the through XI-7. For more complete spring of 1952, Germany and the details of the conflict between CIA 66. Targeting of West Germany by the Western Allies replaced the Occupa- and Gehlen, see "Gehlen History." East German intelligence service for tion Statute with Contractual (S) its Nazi links is found in Markus Agreements. Three years later, West Wolf with Anne McElvoy, Man Germany became a sovereign nation Without a Face: The Autobiography of and joined the North Atlantic Treaty 63. Wisner, Memorandum to DCI, Communism's Greatest Spymaster Organization (NATO). Several "Communications from Under Secre- (New York: Times Books 1997). (U) months later, West Germany tary of Defense dated 4 December reformed its military forces and the and Relating to (a) Military Cover Gehlen Organization became Ger- for CIA Operations; and (b) Deficien- many's official intelligence service in cies in Intelligence Collection and Dissemination," 12 December 1953, February 1956. (U) • . TS 92318, DO Records, Job C. n Box 13, Folder 16, CIA 59. Chief of station, Karlsruhe to Chief, ARC (C). FBM, "Basic Agreement with ODELTM," 13 June 1949, MGL-A- 64. CIA initially provided Gehlen with 8, DO Records, Job C. Box $125,000 per month in 1949 to run 5. Folder 9, CIA ARC (S). his operations. By 1955, CIA had an

84 Secret