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Meeting the Espionage Challenge: a Review of United States Counterintelligence and Security Programs

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Meeting the Espionage Challenge: a Review of United States Counterintelligence and Security Programs 99m CONGRESS REPORT 2d Session SEAE99-522 MEETING THE ESPIONAGE CHALLENGE: A REVIEW OF UNITED STATES COUNTERINTELLIGENCE AND SECURITY PROGRAMS REPORT OF THE SELECT COMMITTEE ON INTELLIGENCE UNITED STATES SENATE OcOBER 3 (legislative day, SEPTEMBER 23), 1986.-Ordered to be printed U.S. GOVERNMENT PRINTING OFFICE 64-2680 WASHINGTON' 1986 SENATE SELECT COMMITTEE ON INTELLIGENCE [Established by S. Res. 400, 94th Cong., 2d Sess.] DAVE DURENBERGER, Minnesota, Chairman PATRICK J. LEAHY, Vermont, Vice Chairman WILLIAM V. ROTH, Ja., Delaware LLOYD BENTSEN, Texas WILLIAM S. COHEN, Maine SAM NUNN, Georgia ORRIN HATCH, Utah THOMAS F. EAGLETON, Missouri FRANK MURKOWSKI, Alaska ERNEST F. HOLLINGS, South Carolina ARLEN SPECTER, Pennsylvania DAVID L. BOREN, Oklahoma CHIC HECHT, Nevada BILL BRADLEY, New Jersey MITCH McCONNELL, Kentucky ROBERT DOLE, Kansas, Ex Officio ROBERT C. BYRD, West Virginia, Ex Officio BERNARD F. MCMAHON, Staff Director Enic D. NEWSOM, Minority Staff Director DORTHEA ROBERTSON, Clerk (II) CONTENTS Page I. Introduction and Summary.................................................................................... 1 A. Background.......................................................... 1 B. Organization of tlieU.S. Government to Meet the Hostile Intelli- gence Challenge...................................................................................... 3 C. Counterintelligence: Learning the Lessons of Recent Cases ............ 4 D. Security Countermeasures: Defending on Many Fronts................... 6 E. Budgetary Impact .................................................................................... 9 F. Legislative Proposals................................................................................ 10 G. Respect for Individual Rights................................................................. 11 II. The Hostile Intelligence Threat ........................................................................... 12 A. Damage to National Security ................................................................. 12 B. Sources of the Threat............................................................................... 17 1. Soviet Union............................................................................... 17 2. Warsaw Pact and Cuba............................................................ 18 3. People's Republic of China ..................................................... 19 4. Other Countries ......................................................................... 20 C. Human Intelligence Techniques ............................................................ 20 1. Official Presence ........................................................................ 21 2. Other Aspects of the Hostile Intelligence Presence............ 23 3. Recruited Agents....................................................................... 25 4. Soviet Methods of Recruitment .............................................. 26 5. Technology Transfer ................................................................. 28 6. Active Measures and Disinformation .................. 30 D. Technical Collection Operations ............................................................ 33 1. Interception of Communications ............................................ 33 2. Other Forms of Electronic Surveillance ............................... 34 3. Penetration of Computer Systems.................... 35 4. Im agery ....................................................................................... 36 E . Sum m ary .................................................................................................... 37 M. Counterintelligence.................................................................................................. 38 A. Need for a Counterintelligence Strategy.............................................. 39 B. Hostile Presence Limits........................................................................... 40 C. Counterintelligence Awareness Programs........................................... 45 D. Domestic Operations ................................................................................ 48 1. Coverage of Establishments and Officers ............................. 49 2. Offensive Operations................................................................ 50 3. Espionage Investigations and Prosecutions.......................... 52 E. Overseas Operations................................................................................. 56 F. Personnel Management and Training................................................. 56 IV. Security Countermeasures...................................................................................... 58 A. A National Strategic Security Program............................................... 59 B. Personnel Security.................................................................................... 65 C. Information Security................................................................................ 74 D. Communications, Computer and Emanations Security.................... 80 E. Technical and Physical Security............................................................ 85 F. Industrial Security......................................................... 87 G. Congressional Security............................................................................. 90 V. Appendixes ..........................................................-............... 97 Appendix A. U.S. v. Whitworth, Affidavit of RADM William 0. Stu- deman and Declaration of John L. Martin.............................................. 97 Appendix B. Defense Security Institute Analysis of the Harper Case... 105 Appendix C. Defense Security Institute Analysis of the Bell/Za- ch arak i C ase ................................................................................................... 112 IV Appendix D. Defense Security Institute Analysis of the Cavanagh Page C ase ................................................................................................................. 126 Appendix E. U.S. v. Zakharov, Affidavit for an Arrest Warrant and Search Warrant; and Indictment............................................................... 136 Appendix F. Forged letter from Herbert Romerstein to Senator David Durenberger; actual letter from Romerstein to LTG Robert L. Schweitzer; and forged letter from LTG Schweitzer to President Augusto Pinochet of Chile........................................................................... 142 Appendix G. Draft Senate Security Manual............................................... 146 99m CONGRESS REPORT 2d Session SENATE 99-522 MEETING THE ESPIONAGE CHALLENGE: A REVIEW OF UNITED STATES COUNTERINTELLIGENCE AND SECURITY PROGRAMS OCTOBER 3 (legislative day, SEPTEMBER 23), 1986.-Ordered to be printed Mr. DURENBERGER, from the Select Committee on Intelligence, submitted the following REPORT I. INTRODUCTION AND SUMMARY As espionage is ancient, so is counterintelligence. The Chinese military theorist Sun Tzu stated the principle in the fourth century B.C.: "It is essential to seek out enemy agents who have come to conduct espionage against you. ." I Today, over two millenia later, the battle is still being waged. A. BACKGROUND At the beginning of the 99th Congress, the Select Committee on Intelligence initiated a comprehensive review of the capabilities of U.S. counterintelligence and security programs for dealing with the threat to the United States from Soviet espionage and other hostile intelligence activities. This decision was an outgrowth of eight years of Committee interest in these issues. The review is also con- sonant with the Committee's mission to "oversee and make con- tinuing studies of the intelligence activities and programs of the United States Government, and to submit to the Senate appropri- ate proposals for legislation and report to the Senate concerning such intelligence activities and programs." Senate Resolution 400, which established the Committee ten years ago, specifies that intel- ligence activities include "activities taken to counter similar activi- ties directed against the United States." The Committee's review had barely begun when the arrests of John Walker and two of his relatives began to make 1985 the "Year of the Spy." In June, 1985, the Committee pledged that it 'Sun Tzu, The Art of War, trans. by Samuel B. Griffith, Oxford University Press (London: 1963). p. 148. would prepare a report to the full Senate at the earliest possible time. In light of this Committee's ongoing efforts, the Senate decid- ed not to create a National Commission on Espionage and Security. On June 20, 1985, the Chairman of the Committee wrote to the President, saying, "You and we share an historic opportunity- both to dramatically improve U.S. counterintelligence and security and to demonstrate how Congress and the Executive can work to- gether to achieve progress in sensitive intelligence areas." The ensuing fifteen months have generated an amazingly sus- tained interest in counterintelligence and security on the part of both policymakers and the public. There have been over a dozen arrests for espionage, nearly all leading to guilty pleas or verdicts; Americans and West Germans with sensitive information have de- fected to the Soviet Union and East Germany; and Soviets with sensitive information have defected to the West, and in one major case then returned to the Soviet Union. Most recently, the Soviet arrest of an innocent American journalist in retaliation
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