Duping the Soviets

The Farewell Dossier

Gus W. Weiss

We communists have to string substantive topics. The Soviets along with the capitalists for a viewed détente as fpeaceful coexist while. We need their credits, encef and as an avenue to improve their agriculture, and their tech their inefficient, if not beleaguered nology. But we are going to economy using improved political relations obtain continue massive milita~y pro to grain, foreign credits, and 1 In sci grams and by the middle 1980s technology. pure the Soviets deserved their we will be in a position to return ence, and their to a much more aggressive for impressive reputation, demonstrated eign policy designed to gain the space program original ity and accomplishment in rocket upper hand in our relationshsp lacked with the West. engineeringŠbut they pro The Soviets viewed détente duction know-how necessary for long-term competition with the as fpeaceful coexistencef Leonid Brezhnev. Remarks in United States. Soviet managers had 1971 to the Politburo at the and as an avenue to difficulty in translating laboratory beginning of détente. improve their inefficient, if results to products, quality control was poor, and plants were badly During the Cold War, and especially not beleaguered economy organized. Cost accounting, even in in the 1970s, Soviet intelligence car the defense sector, was hopelessly using improved political ried out a substantial and successful inadequate. In computers and micro clandestine effort to obtain technical relations to obtain grain, electronics, the Soviets trailed and scientific knowledge from the and Western standards by more than a foreign credits, West. This effort was a suspected by decade. technology. few US Government officials but not documented until 1981, when French intelligence obtained the ser Soviet S&T 9, vices of Col. Vladimir I. Vetrov, Espionage fFarewell,f who photographed and supplied 4,000 KGB documents on The leadership recognized these the program. In the summer of shortcomings. Toaddress the lag in 1981, President Mitterrand told Pres technology, Soviet authorities in ident Reagan of the source, and, 1970 reconstituted and invigorated when the material was supplied, it the USSR™s intelligence collection for led to a potent counterintelligence science and technology. The Council response by CIA and the NATO of Ministers and the Central Com

intelligence services. mittee established a new unit, Directorate T of the KGB™s First President Nixon and Secretary of Chief Directorate, to plumb the State Kissinger conceived of détente R&D programs of Western econo mies. as the search for ways of easing The State Committee on chronic strains in USŠSoviet rela Science and Technology and the Gus W. Weiss has served as a Spe tions. They sought to engage the Military-Industrial Commission Directorate T and cial Assistant to the Secretary of USSR in arrangements that would were to provide its Defense and as Director of Interna move the superpowers from confron operating arm, called Line X, with tional Economics for the National tation to negotiation. Arms control, collection requirements. Military Security Council. trade, and investment were the main Intelligence (GRU), the Soviet

121 Farewell Dossier

Academy of Sciences, and the State States to visit firms and laboratories higher grain prices for consumers, and Committee for External Relations associated with their commissions. taxpayers provided for a 25-percent-a completed the list of participants. Line X, ever alert, populated these bushel export subsidy. Those of us The bulk of collection was to be delegations with its own people: in observing these arabesques began to done by the KGB and the GRU, an agricultural delegation of 100 question the USSR™s total commit with extensive support from the East about one-third were known or sus ment to the spirit of détente. European intelligence services. A for pected intelligence officers. On a midable apparatus was set up for visit to Boeing, a Soviet guest scientific of adhesive his shoes espionage; the scale this applied to to US Computer Export Policy structure testified to its importance. obtain metal samples. In another epi The coming of détente provided sode, the ranking scientists and In late 1973, President Nixon asked access for Line X and opened new managers of the Soviet computer and his Council on International Eco avenues for exploitation. Soviet intel electronics industry obtained a visa nomic Policy to determine which ligence took full advantage. for the specific purpose of visiting and associated the Uranus Liquid Crystal Watch computers production technology might be prudently sold In the early 1970s, the Nixon admin Company of Mineola, Long Island to Communist countries. This study (a firm not the Fortune 500). istration had no comprehensive among was necessary because détente for economic relations with Three days before the delegation™s policy implied the expansion of commercial the USSR. The sale of arrival, they requested an expansion strategic opportunities with Eastern Europe of the itinerary to include nearly all goods to Communist countries was and the USSR; a new and more lib governed by the Coordinating Com US computer and semiconductor eral set of COCOM rules was mittee of NATO which firms. This maneuver was done to (COCOM), fit these how observe (that is, collect) the latest required to prospects, administered an Alliance-agreed list ever illusory they may have been. of products and data embargoed for technology, and it was executed at Data processing was the most impor sale. Nixon™s policy worked within the last minute so that the Defense tant review. I was would not have time to product requiring this system, and, for the export of Department put in charge of the project, and I products exceeding the approved list, object. It was legalŠLine X had stud was also made for the ied our regulations and turned them responsible special exceptions were necessary. broader of trans to its problem technology And, in a new set of commercial and advantage. fer. The study was the first scientific the United computer arrangements, review of within To the latest aircraft technol technology policy States and the USSR set up joint acquire détente; it to assess the eco the Soviets in 1973 sought technical commissions to assess pros ogy, proposed nomic to the United States Lockheed if gain pects for cooperation. Topics purchasing 50 transports from computer sales set against the included agriculture, nuclear the firm, then in financial difficulty, energy, national risk from those sales. would build and modern fair security computers, and the environment. equip a As Kissinger noted: craft cityf in the USSR. A similar Not the concluded proposition was put to Boeing (it surprisingly, study the that the USSR was short of Over time, trade and investment besieges imagination to ponder comput Brezhnev from the cabin of ers and the means to for leaven the autarkic tenden appearing pay may substantial Our an Aeroflot 747). Line X practiced the computer imports. cies ofthe Soviet system, invite venerable capitalist technique of play analysis presumed that the Soviets gradual association of the Soviet ing off competitors, and, from this intended to use their foreign exchange economy with the world econ bidding, the Soviets sought to gain to best advantage by purchasing the omy, andfoster a degree of technical data for use at home. On most powerful computers, those that interdependence that adds an ele a less lofty technical plane, in 1972 also held the most national security ment to the ofstability political the Soviets risk were used for 2 surreptitiously bought (large computers relationship. 25 percent of the US grain harvest, nuclear weapons calculations and using phone intercepts of the grain cryptography). The report concluded Beginning in 1972, delegations of dealers™ network to listen to both sides that the export potential for American Soviet specialists came to the United of the market. The purchase led to data processing to the USSR was

122 Farewell Dossier

In the early 1970s, there were no US intelligence collection requirements for small and the risk great if the more technology transfer and no evidence does not mean it is not powerful computers were allowed for true. The system defied movement. sale. The study recommended raising scientific espionage, and the of machines moderately power A few alert were few, if any, reporting colleagues dispersed allowed for COCOM release, while at among the executive departments. In the time the sale of sources. same restricting one episode, the Department of of the com technology. Export largest Commerce discovered a Line X to be In puters was prohibited.. ‚9 effort to obtain an embargoed com National Decision Memoran Security puter through a dummy corporation dum (NSDM) 247, 14 March 1974, set up for this one transaction; dotal hand. In their U S. Policy on the Export ofComputers clues were at officials intercepted the shipping to Communist Countries, President intelligence history, the Soviets could container and substituted sandbags. Nixon these recommenda to the success of the atom approved point (A note was enclosed, but it would tions, and became the new bomb and also had to they spies, they not be politically correct to quote it.) export guidelines. As a result, the Sovi their credit collection against indus In 1975, the Apollo-Soyuz spacecraft ets were excluded from trial in importing technology Germany during docking was used to gain intelligence Western com the 1920s. After World War the significantly powerful II, access to the US space program. This détente Soviets the American B-29 puters, notwithstanding. copied project was conceived by the Nixon and the Nene Rolls-Royce administration as part of détente, the If the Soviets were to reach compara jet engine (the copy powered and President Ford had no choice MiG- Two former members of bility with the United States in 15). but to continue the effort. To the the network had computers, their engineers would on Rosenberg set up consternation of NASA, a few weeks the modern Soviet microelectronics their own now have to create designs before the launch counterintelligence and produce equipment. Line X industry. Soviet intelligence was pro suspected that one of the Cosmo would have to use its espionage fessional at ferreting out science and nauts was a KGB officer who had resources to supplement what could technology and had the results to been collecting away over the course be developed at home. NSDM 247 prove it. The Soviets were adept at of the project. eliminated the West as an open copying foreign designs. In the style source available to the Soviets, but of Sherlock Holmes, the clues could Western intelligence was unaware of almost speak for themselves: the Presidential Interest the collection apparatus the Soviets USSR was behind in important tech had deployed to obtain the nologies, their intelligence was President Carter was the first chief technology. accomplished at collection, and executive to take an interest in tech détente had opened a path. nology loss. During his administration, CIA had begun to and Those of Great Game in Strong Suspicions Skepticism suspicious a report the diversion of computers technology espionage found that the from the West into the Soviet defense US Government 221 B In the early 1970s, there were no US was not complex, and he wanted details. In Baker StreetŠwe could make little intelligence collection requirements response, the Agency assigned staff to in officials in for technology transfer and scientific headway persuading this endeavor and produced a more of espionage, and few, if any, reporting charge intelligence requirements complete picture of technology loss that the United States sources. But, by observing the behav was facing a than had been available since the start ior of Soviet delegations visiting US significant threat. We received dis of Directorate T. Carter also ordered plants and by keeping in mind the couraging responses to our pleas for the first comprehensive study of tech clever 1972 grain purchase, a few help: fNo evidencef of a grand nology transfer, Presidential Review government officials began to sus design; fnot usual Soviet practice;f Memorandum 31, a document that pect that a master plan was in place fno requirements and no interest;f only distantly addressed the threat

to obtain our know-how. Direct fno sources.f It seemed to have from clandestine collection. It was

evidence was nonexistentŠonly anec escaped these authorities that having largely a missed opportunity, but

123 Farewell Dossier

Carter responded to the Soviet inva ideological reasons. He supplied a nology, and with the list American sion of Afghanistan by instituting list of Soviet organizations in scien intelligence might be able to control sanctions, canceling several computer tific collection and summary reports for its purposes at least part of Line sales, and stopping equipment des from Directorate T on the goals, X™s collection, that is, turn the tables tined for the Kama River truck plant. achievements, and unfilled objectives on the KGB and conduct economic of the program. Farewell revealed the warfare of™ out own. of than 200 Line X President Reagan came to office names more officers stationed in 10 KGB rezi intent on reversing what he saw as I met with Director of Central dents in the with the fwindow of vulnerabilityf favor West, along Intelligence William Casey on an than 100 leads Line X ing the Soviets in strategic weapons. more to afternoon in January 1982. I pro recruitments. ~ He also believed that the USSR™s posed using the Farewell material to economy did not work and that the feed or play back the products Soviet system was on the way to col Upon receipt of the documents (the sought by Line X, but these would lapse. His intuition led him to Farewell Dossier, as labeled by come from our own sources and believe the Cold War could be won. French Intelligence) CIA arranged would have been fimproved,f that in the Joining Reagan™s NSC staff were for my access. Reading the material is, designed so that on arrival those of us who thought similarly caused my worst nightmares to come Soviet Union they would appear and entertained the idea that eco true. Since 1970, Line X had genuine but would later fail. US nomic pressure would have some obtained thousands of documents intelligence would match Line X The effect. NSC staff sought to fash and sample products, in such quan requirements supplied through ion policies to take advantage of the tity that it appeared that the Soviet Vetrov with our version of those USSR™s low its in that would meet productivity, lag military and civil sectors were in items, ones hardly defense bur the of that Soviet technology, oppressive large measure running their research expectations vast and inefficient economic collect them. den, on that of the West, particularly the apparatus deployed to the first structure. Reagan was presi United States. Our science was sup dent for whom this line of their national defense. Losses thought porting If some double agent told the KGB would have been even remotely were in radar, computers, machine the Americans were alert to Line X Line X acceptable. tools, and semiconductors. and were interf™eting with their collec had fulfilled two-thirds to three- tion by subverting, if not sabotaging, fourths of its collection require the effort, I believed the United A Defector in Place mentsŠan impressive performance. States still could not lose. The Sovi ets, being a suspicious lot, would be and Into the receptive climate of the likely to question reject every in Line X collected. If so, this Reagan administration came Presi Interest Technology Transfer thing would be a rarity in the world of espi dent Mitterrand, bearing news of that would FarewellŠthat is, Colonel Vetrov. In Overnight, technology transfer onage, an operation associated with the succeed even if compromised. Casey a private meeting became a top priority, rising from liked the July 198 lOttawa economic summit, the basement of Intelligence Com proposal. he told of the and Reagan source munity interest. CIA set up a offered the intelligence to the United Technology Transfer Intelligence States. It was passed through Vice Center, and the Pentagon created A Deception Operation President Bush and then to CIA. groups to assess damage and find The door had into Line X. opened ways to tighten technology controls. As was later reported in Aviation But careful study of Farewell™s mate Week and Space Technology, CIA and Vetrov was a 53-year-old engineer rial suggested that more than just a the Defense Department, in assigned to evaluate the intelligence few committees could come out of partnership with the FBI, set up a collected by Directorate T, an ideal this wealth of intelligence. With the program to do just what we had position for a defector in place. He Farewell reporting, CIA had the Line discussed: modified products were had volunteered his services for X shopping list for still-needed tech- devised and fmade availablef to Line

124 Farewell Dossier

X collection channels. The CIA National Security Directive exchange. And the discovery of Alas project leader and his associates stud kan North Shore oil contributed to

ied the Farewell material, examined the 1986 fall in cut On 17 January 1983, to define his petroleum prices, license and other the revenues not of OPEC export applications policy for political, military, and eco ting only intelligence, and contrived to intro nomic relations with the USSR, but also of the USSR. Coincident duce altered products into KGB Reagan approved National Security events and deliberate government collection. American had the effects industry helped Decision Directive (NSDD) 75, policy twin of adding in the of items to be to the burden on the Soviet preparation U S. Relations with the USSR, a doc system fmarketedf to Line X. Contrived and of shifting the com ument spelling out purposes, themes, superpower computer chips found their way into petition to advanced technology, and strategy for competing in the Soviet flawed where the United States held clear military equipment, Cold War. It specified three policy a

turbines installed - were on a gas pipe elements: containment and reversal advantage. line, and defective plans disrupted of Soviet expansionism, promotion the output of chemical plants and a of change in the internal system to tractor factory. The Pentagon intro reduce the of the ruling elite, Good-by to Farewell duced misleading information power and engagement in negotiations and pertinent to stealth aircraft, s?ace that would enhance US About the time I met with Casey, defense, and tactical aircraft. The agreements interests. In economic policy, Vetrov fell into a tragic episode with Soviet Space Shuttle was a rejected NSDD 75 highlighted the need to a woman and a fellow KGB officer NASA design.5 When Casey told control technology; Farewell™s in a Moscow park. In circumstances President Reagan of the undertaking, reports had moved those writing the that are not clear, he stabbed and the latter was enthusiastic. In time, Directive to put emphasis on prevent killed the officer and then stabbed the project proved to be a model of ing technology loss, and the but did not kill the woman. He was interagency cooperation, with the President had (so a KGB arrested, and, in the investi FBI domestic agreed ensuing handling requirements his activities defector working for a foreign intelli gation, espionage were and CIA for overseas responsible he executed in gence service put his stamp on a part discovered; was 1983. operations. The program had great of presidential policy). Later in CIA had enough intelligence to insti success, and it was never detected. 1983, Reagan proposed the SDI, tute protective countermeasures. which Gorbachev and the Soviet in a further use of the Farewell prod military took far more seriously In 1985, the case took a bizarre turn uct, Casey sent the Deputy Director than American commentators. SDI when information on the Farewell of Central Intelligence to Europe to would, if deployed, place unaccept Dossier surfaced in France. Mitter tell NATO governments and intelli able economic and technical rand came to suspect that Vetrov had gence services of the Line X threat. demands on the Soviet system. all along been a CIA plant set up to These meetings led to the expulsion Even Reagan™s 1983 fevil empiref test him to see if the material would or compromise of about 200 Soviet had its economic for be handed over to the Americans or intelligence officers and their speech effect, immediately thereafter the Soviet mil kept by the French. Acting on this sources, causing the collapse of Line asked for this mistaken belief, Mitterrand fired the X operations in Europe. Although itary a budget increase, chief of the French Yves on top of already-bloated defense service, some military intelligence officers 6 Bonnet. avoided compromise, the heart of expenditures. Soviet technology collection crum bled and would not recover. This Two events beyond presidential con An Contribution mortal blow came just at the begin- trol dovetailed with NSDD 75. The Important fling of Reagan™s defense buildup, his Federal Reserve™s restrictive mone Strategic Defense Initiative (SDI), tary policy of the early 1980s led to a In 1994, Gorbachev™s science and the introduction of stealth air fall in gold and primary product adviser, Roald Sagdeev, wrote that in craft into US forces. prices, sources of Soviet foreign computers and microelectronicsŠ

125 I

Farewell Dossier

As for Farewell, his

contribution led to the

collapse of a crucial the keys to modern civil and military collection at technologyŠthe Soviets trailed West- program just em standards by 15 years and that the time the Soviet military the most striking indication of their needed it, and it resulted in backwardness was the absence of a a forceful and effective domestically made supercomputer. The Soviets considered a supercom NATO effort to protect its a attribute,f the lack puter fstrategic technology. of which was inexcusable for a super power.7 Line X did not acquire designs for such a machine, nor ~9 could Soviet computer scientists build one on their ownŠand 4. Schweizer, Peter. Victory: The NSDM 247 had stopped Western Reagan Administration ‚s Secret Strat that Hastened the the help. As for Farewell, his contribu egy Collapse of Soviet Union. New York: The tion led the of crucial to collapse a Atlantic Monthly Press, 1995, collection the time program at just pp. 187-90. the Soviet military needed it, and it resulted in a forceful and effective 5. Conversation with James Fletcher, Administrator, NASA. NATO effort to protect its technol ogy. Along with the US defense 6. Porch, Douglas. The French Secret buildup and an already floundering Services. New York: Farrar, Straus Soviet economy, the USSR could no and Giroux, 1995, p. 448. longer compete, a conclusion reached by the Politburo in 1987. 7. Sagdeev, Roald Z. The Making of a Soviet Scientist. New York: Jolui Wiley & Sons, 1994, pp. 298-301. When historians sort out the reasons for the end of the Cold War, perhaps

Farewell will receive a footnote. It would be deserved.

NOTES

1. Kissinger, Henry A. White House Years. Boston: Little, Brown and Company, 1979, pp. 1, 142.

2. Kissinger on detente. Thomas G. Paterson and Dennis Merrill (Ed.), Major Problems in American For eign Relations, Volume II, 1995, p. 600.

3. For a primary source from a former KGB officer, see Oleg Gordievsky and Christopher Andrew, KGB: The Inside Story. New York, Harper Collins, 1991.

126