Duping the Soviets The Farewell Dossier Gus W. Weiss We communists have to string substantive topics. The Soviets alongwith thecapitalistsfora viewed dØtente as (cid:147)peaceful coexist while. We needtheircredits, ence(cid:148) and as an avenue to improve theiragriculture, andtheir tech their inefficient, ifnot beleaguered nology. But wearegoingto economy using improved political continue massive milita~ypro relations to obtain grain, foreign gramsandby the middle 1980s credits, and technology. 1 In pure sci we willbe in aposition to return ence, the Soviets deserved their to a much moreaggressivefor impressive reputation, and their eignpolicydesignedtogain the space program demonstrated original upperhandin our relationshsp ityand accomplishment in rocket engineering(cid:151)but they lacked with the West. pro The Soviets viewed dØtente duction know-how necessary for long-term competition with the as (cid:147)peaceful coexistence(cid:148) Leonid Brezhnev. Remarks in and as an avenue to 1971 to the Politburo at the UdinfifticeudltSytaitnest.raSnosvliaettinmgalnaabgoerrastohryad beginning ofdØtente. improve their inefficient, if results to products, quality control was poor, and plants were badly beleaguered During the Cold War, and especially not economy organized. Cost accounting, even in using improved political in the 1970s, Soviet intelligence car the defense sector, was hopelessly ried out a substantial and successful inadequate. In computers and micro relations to obtain grain, clandestine effort to obtain technical electronics, the Soviets trailed and scientific knowledge from the foreign credits, and Western standards by more than a West. This effort was suspected by a decade. technology. few US Government officials but not documented until 1981, when 9, French intelligence obtained the ser vices ofCol. Vladimir I. Vetrov, Soviet S&T Espionage (cid:147)Farewell,(cid:148) 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 ofthe source, and, 1970 reconstituted and invigorated when the material was supplied, it the USSR(cid:146)s intelligence collection for led to a potent counterintelligence science and technology. The Council response by CIA and the NATO ofMinisters and the Central Com intelligence services. mittee established a new unit, Directorate T ofthe KGB(cid:146)s First President Nixon and Secretary of ChiefDirectorate, to plumb the State Kissinger conceived ofdØtente R&D programs ofWestern econo as the search for ways ofeasing mies. The State Committee on chronic strains in US(cid:151)Soviet rela Science and Technology and the GusW. Weiss has served as a Spe tions. Theysought to engage the Military-Industrial Commission cial Assistant to the Secretary of USSR in arrangements that would were to provide Directorate T and Defense and as Director ofInterna move the superpowers from confron its operating arm, called LineX, 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 Report Documentation Page Form Approved OMB No. 0704-0188 Public reporting burden for the collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number. 1. REPORT DATE 3. DATES COVERED 1996 2. REPORT TYPE 00-00-1996 to 00-00-1996 4. TITLE AND SUBTITLE 5a. CONTRACT NUMBER The Farewell Dossier 5b. GRANT NUMBER 5c. PROGRAM ELEMENT NUMBER 6. AUTHOR(S) 5d. PROJECT NUMBER 5e. TASK NUMBER 5f. WORK UNIT NUMBER 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING ORGANIZATION Center for the Study of Intelligence,Central Intelligence REPORT NUMBER Agency,Washington,DC,20505 9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSOR/MONITOR’S ACRONYM(S) 11. SPONSOR/MONITOR’S REPORT NUMBER(S) 12. DISTRIBUTION/AVAILABILITY STATEMENT Approved for public release; distribution unlimited 13. SUPPLEMENTARY NOTES Studies in Intelligence, Volume 39, No. 5, 1996 14. ABSTRACT 15. SUBJECT TERMS 16. SECURITY CLASSIFICATION OF: 17. LIMITATION OF 18. NUMBER 19a. NAME OF ABSTRACT OF PAGES RESPONSIBLE PERSON a. REPORT b. ABSTRACT c. THIS PAGE Same as 6 unclassified unclassified unclassified Report (SAR) Standard Form 298 (Rev. 8-98) Prescribed by ANSI Std Z39-18 FarewellDossier Academy ofSciences, and the State States to visit firms and laboratories higher grain prices for consumers, and Committee for External Relations associatedwith their commissions. taxpayers provided for a 25-percent-a completed the list ofparticipants. LineX, ever alert, populated these bushel export subsidy. Those ofus The bulk ofcollection was to be delegationswith its own people: in observing these arabesques began to done by the KGB and the GRU, an agricultural delegation of 100 question the USSR(cid:146)s total commit with extensive support from the East about one-third were known or sus ment to the spirit ofdØtente. European intelligence services. A for pected intelligence officers. On a midable apparatus was set up for visit to Boeing, a Soviet guest scientific espionage; the scale ofthis applied adhesive to his shoes to US Computer Export Policy structure testified to its importance. obtain metal samples. In another epi The coming ofdØtente provided sode, the ranking scientists and In late 1973, President Nixon asked aacvceensusesforfoLrienxeplXoiatantdioonp.eSnoevdienteiwntel emlaencatgroenriscsofintdhuestSroyvioebttcaionmepdutaevrisaand his Council on International Eco ligence took full advantage. for the specific purpose ofvisiting nomic Policy to determine which the Uranus Liquid Crystal Watch computers and associated production technology might be prudently sold In the early 1970s, the Nixon admin Company ofMineola, Long Island pisotlriactyiofnorhaedconnoomciocmprreelahteinosnisvweith T(ahrfeiremdnaoyst abemfoornegtthheedFeolretgautnieon5(cid:146)s00). wtoasConemcmeussnairsytbeccoauuntsreiedsØ.teTnhties study implied the expansion ofcommercial the USSR. The sale ofstrategic arrival, they requested an expansion opportunities with Eastern Europe ggoovoedrsnteodCboymtmhuenCiosotrdcionuanttirniegsCwoasm oUfSthceomiptiunteerarryantdo isnecmliucdoenndeuacrtloyrall and the USSR; a new and more lib mittee ofNATO (COCOM), which firms. This maneuverwas done to eral set ofCOCOM rules was administered Alliance-agreed list observe (that is, collect) the latest required to fit these prospects, how ofproducts anadndata embargoed for technology, and it was executed at ever illusory they may have been. sale. Nixon(cid:146)s policyworked within the last minute so that the Defense Data processingwas the most impor pthriosdsuycsttseme,xcaenedd,infgorthteheaepxpproorvtedoflist, Dobejpeactr.tmItewnatswloeugladl(cid:151)LniontehavXehtaidmesttoud tpaunttipnrcohdaurcgteroefqutihreinprgorjeecvti,ewa.nIdwIas Asspcniedec,nitailifniecxacanerpertawinosgneestmeownfetrcseo,mnmtehecerescUsinaarilyt.eadnd iteoditosuardrveagnutlaagtei.ons and turned them wbfreaerrvos.iaTeadlwhesreoofpcmrtoaoemdbcpelhunetromeelsroopfgosynttsuepidcobyhllinewcoayflsoowrgitytthhheteirfniarnsts SptteeacctthesnsifcaoarnldccootohmpemeirUasStsiiSooRnn.sseTttoopuiapscsjseosisntpros Topguoyr,cahctaqhsueiinrSoegvit5eh0tesLloaitnceks1th9ea7ie3rdcrptarrfoatnptsoepsocerhdtnsolif dnØotmeintce;gaiitnsotougthhtetUoniastseedssStthaeteesco included agriculture, nuclear energy, the firm, then in financial difficulty, fnartoimoncaolmspeuctureirtysarliessksfertoamgatihnosstetshaeles. computers, and the environment. would build and equip a modern (cid:147)air As Kissinger noted: craft city(cid:148) in the USSR. Asimilar proposition was put to Boeing (it Not surprisingly, the studyconcluded Over time, tradeandinvestment besieges the imagination to ponder that the USSRwas short ofcomput leaven theautarkic tenden Brezhnev appearingfrom the cabin of ers and the means to pay for cmiaesyoftheSovietsystem, invite vaennAeerraobflleoctap7i4t7a)l.istLitneechXnipqruaectoifcepdlathye sanuablsytsainstiparlecsoummpeudtethratimtphoertSso.viOetusr gradualassociation oftheSoviet ing offcompetitors, and, from this intended to use their foreign exchange with the world economy econ bidding, the Soviets sought to gain to best advantage bypurchasing the andfoster degree of omy, a technical data for use at home. On most powerful computers, those that interdependence thataddsan ele a less lofty technical plane, in 1972 also held the most national security mentofstability to thepolitical the Soviets surreptitiously bought risk (large computers were used for relationship.2 25 percent ofthe US grain harvest, nuclearweapons calculations and usingphone intercepts ofthe grain cryptography). The report concluded Beginning in 1972, delegations of dealers(cid:146) networkto listen to both sides that the export potential forAmerican Soviet specialists came to the United ofthe market. The purchase led to data processing to the USSRwas 122 FarewellDossier In the early 1970s, there US intelligence were no collection requirements for small and the risk great ifthe 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 moderately the power ofmachines few, ifany, reporting A few alert colleagues were dispersed allowed for COCOM release, while at among the executive departments. In thesame time restricting the sale of sources. one episode, the Department of technology. Export ofthe largest com (cid:145)9 Commerce discovered a Line X puters was to be prohibited..In effort to obtain an embargoed com National SecurityDecision Memoran puter through a dummy corporation dum (NSDM) 247, 14 March 1974, set up for this one transaction; U S. Policy on theExportofComputers dotal clues were at hand. In their officials intercepted the shipping to CommunistCountries, President intelligence history, the Soviets could container and substituted sandbags. Nixon approved these recommenda point to the success ofthe atom (A note was enclosed, but it would tions, and theybecame the new bomb spies, and they also had to not be politically correct to quote it.) export guidelines. As a result, the Sovi their credit collection against indus In 1975, theApollo-Soyuz spacecraft etswere excluded from importing trial technology in Germany during dockingwas used to gain intelligence significantlypowerfulWestern com the 1920s. AfterWorld War II, the access to the US space program. This puters, dØtente notwithstanding. Soviets copied theAmerican B-29 project was conceived by the Nixon and the Rolls-Royce Nene administration as part ofdØtente, Ifthe Soviets were to reach compara jet engine (the copy powered the and President Ford had no choice bilitywith the United States in MiG-15). Two former members of but to continue the effort. To the computers, their engineers would on the Rosenberg network had set up consternation ofNASA, a few weeks their own now have to create designs the modern Soviet microelectronics before the launch counterintelligence and produce equipment. Line X industry. Soviet intelligence was pro suspected that one ofthe Cosmo would have to use its espionage fessional at ferreting out science and nauts was a KGB officer who had resources to supplementwhat 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 ofthe project. eliminated the West as an open copying foreign designs. In the style source available to the Soviets, but ofSherlock Holmes, the clues could Western intelligencewas unaware of almost speak for themselves: the Presidential Interest the collection apparatus the Soviets USSRwas behind in important tech had deployed to obtain the nologies, their intelligence was President Carter the first chief was technology. accomplished at collection, and executive to take an interest in tech dØtente had opened path. a nology loss. During his administration, CIAhad begun to Strong Suspicions and Skepticism Those suspicious ofa Great Game in report the diversion ofcomputers technology espionage found that the from the West into the Soviet defense In the early 1970s, there were no US US Governmentwas not 221 B complex, and he wanted details. In intelligence collection requirements Baker Street(cid:151)we could make little response, theAgency assigned staffto for technology transfer and scientific headway in persuading officials in this endeavor and produced a more espionage, and few, ifany, reporting charge ofintelligence requirements complete picture oftechnology loss sources. But, by observing the behav that the United States was facing a than had been available since the start ior ofSoviet delegations visiting US significant threat. We received dis ofDirectorate T. Carter also ordered plants and by keeping in mind the couraging responses to our pleas for the first comprehensive studyoftech clever 1972 grain purchase, a few help: (cid:147)No evidence(cid:148) ofa grand nology transfer, Presidential Review government officials began to sus design; (cid:147)not usual Soviet practice;(cid:148) Memorandum 31, a document that pect that a master plan was in place (cid:147)no requirements and no interest;(cid:148) onlydistantly addressed the threat to obtain our know-how. Direct (cid:147)no sources.(cid:148) It seemed to have from clandestine collection. Itwas evidence was nonexistent(cid:151)only anec escaped these authorities that having largely a missed opportunity, but 123 FarewellDossier Carter responded to the Soviet inva ideological reasons. He supplied a nology, and with the listAmerican sion ofAfghanistan by instituting list ofSoviet organizations in scien intelligence might be able to control sanctions, canceling several computer tific collection and summary reports for its purposes at least part ofLine sales, and stopping equipment des from Directorate T on the goals, X(cid:146)s collection, that is, turn the tables tined for the Kama River truck plant. achievements, and unfilled objectives on the KGB and conduct economic ofthe program. Farewell revealed the warfare of(cid:146) out own. President Reagan came to office names ofmore than 200 Line X intent on reversingwhat he saw as officers stationed in 10 KGB rezi I met with Director ofCentral the (cid:147)window ofvulnerability(cid:148) favor dents in the West, alongwith Intelligence William Casey on an ing the Soviets in strategicweapons. more than 100 leads to Line X afternoon inJanuary 1982. I pro He also believed that the USSR(cid:146)s recruitments.~ posed using the Farewell material to economy did notwork and that the feed or play back the products Soviet system was on the way to col Upon receipt ofthe 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 (cid:147)improved,(cid:148) that Joining Reagan(cid:146)s NSC staffwere for my access. Reading the material is, designed so that on arrival in the those ofus who thought similarly caused myworst nightmares to come Soviet Union theywould 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 ofdocuments intelligence would match Line X effect. The NSC staffsought to fash and sample products, in such quan requirements supplied through ion policies to take advantage ofthe tity that it appeared that the Soviet Vetrovwith our version ofthose USSR(cid:146)s low productivity, its lag in military and civil sectors were in items, ones that would hardly meet technology, oppressive defense bur large measure running their research the expectations ofthat vast Soviet den, and inefficient economic on that ofthe West, particularly the apparatus deployed to collect them. structure. Reaganwas the first presi United States. Our science was sup dent forwhom this line ofthought porting their national defense. Losses Ifsome double agent told the KGB would have been even remotely were in radar, computers, machine theAmericans were alert to Line X acceptable. tools, and semiconductors. Line X and interf(cid:146)eting with their collec were had fulfilled two-thirds to three- tion by subverting, ifnot sabotaging, fourths ofits collection require the effort, I believed the United A Defector in Place ments(cid:151)an impressive performance. States still could not lose. The Sovi ets, being a suspicious lot, would be Into the receptive climate ofthe likely to question and reject every Reagan administration came Presi Interest in TechnologyTransfer thing LineX collected. Ifso, this dent Mitterrand, bearing of would be a rarity in the world ofespi news Farewell(cid:151)that is, Colonel Vetrov. In Overnight, technology transfer onage, an operation that would a private meeting associated with the became a top priority, rising from succeed even ifcompromised. Casey July 198lOttawa economic summit, the basement ofIntelligence Com liked the proposal. he told Reagan ofthe source and munity interest. CIAset up a offered the intelligence to the United TechnologyTransfer 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 opened into Line X. ways to tighten technology controls. As was later reported inAviation But careful study ofFarewell(cid:146)s mate WeekandSpace Technology, CIA and Vetrovwas 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 ofintelligence. With the program to do just whatwe had position for a defector in place. He Farewell reporting, CIA had the Line discussed: modified products were had volunteered his services for Xshopping list for still-needed tech- devised and (cid:147)made available(cid:148) to Line 124 FarewellDossier X collection channels. The CIA National Security Directive exchange. And the discovery ofAlas project leader and his associates stud kan North Shore oil contributed to ied the Farewell material, examined On 17January 1983, to define his the 1986 fall in petroleum prices, cut export license applications and other policy for political, military, and eco ting the revenues not only ofOPEC intelligence, and contrived to intro nomic relations with the USSR, but also ofthe USSR. Coincident duce altered products into KGB Reagan approved National Security events and deliberate government collection. American industry helped Decision Directive (NSDD) 75, policy had the twin effects ofadding in the preparation ofitems to be U S. Relations with the USSR, doc to the burden on the Soviet system a (cid:147)marketed(cid:148) to Line X. Contrived ument spelling out purposes, themes, and ofshifting the superpower com computer chips found their way into and strategy for competing in the petition to advanced technology, Soviet military equipment, flawed where the United States held clear Cold War. It specified three policy a turbines were installed on a gas pipe elements: containment and reversal advantage. - line, and defective plans disrupted ofSoviet expansionism, promotion the output ofchemical plants and a ofchange in the internal system to tractor factory. The Pentagon intro reduce the power ofthe ruling elite, Good-by to Farewell duced misleading information and engagement in negotiations and pdeefretnisnee,ntantodsttaecatlitchalaiaricrrcarfatf,t.s?aTchee agreements thatwould enhance US About the time I metwith Casey, NSoAviSeAt SdpeascigenS.h5uWtthleenwaCsaaseryejteocltded iNntSerDesDts.75Inhiegcholnioghmtiecdptohleicny,eed to Vaewtoromvafnellanidntoa faetlrlaogwicKeGpBisoodfefiwceirth President Reagan ofthe undertaking, control technology; Farewell(cid:146)s in a Moscowpark. In circumstances tithhneetelpraratogtjeeernccwtyapscrooeovnpteehdruasttioiaosbtnei,ca.wimItonhdtetilhmeeo,f irDeniprgoertctetsicvhhenaotdloompgoyuvtleoesdms,pthahaonssdiestwhroeintipnrgetvheent kbtihulatlteddairdtehnenooottffkciilclelearrt,haehnedwosttmhaeabnnb.esdtHaabenbdewdas President had agreed (so KGB arrested, and, in the ensuing investi FBI handling domestic requirements a and CIA responsible for defectorworking for a foreign intelli gation, his espionage activities were osupcecreastsi,onasn.dTihtewapsrongevrearmodhveeatredscetgaersde.at go1ef9n8pc3re,essiRedereavnigtciaeanlppuprtolohipicosys)s.etdLaatmthpeeroSinDnIa,part dCtuiItsAecophvreaordteedec;tniohveuegwchaosuinnettxeelerlcmiuegtaeesndcuerientso.1i9n8s3t.i which Gorbachev and the Soviet iucnt,aCfuarstehyerseunstetohfetDheepFuatreyweDlilrepcrtoord military took far more seriously In 1985, the case took a bizarre turn ofCentral Intelligence to Europe to thanAmerican commentators. SDI when information on the Farewell tell NATO governments and intelli would, ifdeployed, place unaccept Dossiersurfaced in France. Mitter gence services ofthe Line X threat. able economic and technical rand came to suspect thatVetrov had These meetings led to the expulsion demands on the Soviet system. all along been a CIA plant set up to or compromise ofabout 200 Soviet Even Reagan(cid:146)s 1983 (cid:147)evil empire(cid:148) test him to see ifthe material would intelligence officers and their speech had its economic effect, for be handed over to theAmericans or sources, causing the collapse ofLine immediately thereafter the Soviet mil kept by the French. Acting on this X operations in Europe. Although itaryasked for a budget increase, this mistaken belief, Mitterrand fired the military intelligence officers on top ofalready-bloated defense chiefofthe French service, Yves some 6 expenditures. Bonnet. avoided compromise, the heart of Soviet technology collection crum bled and would not recover. This Two events beyond presidential con mortal blow camejust at the begin- trol dovetailed with NSDD 75. The An Important Contribution fling ofReagan(cid:146)s defense buildup, his Federal Reserve(cid:146)s restrictive mone Strategic Defense Initiative (SDI), tary policy ofthe early 1980s led to a In 1994, Gorbachev(cid:146)s science and the introduction ofstealth air fall in gold and primary product adviser, Roald Sagdeev, wrote that in craft into US forces. prices, sources ofSoviet foreign computers and microelectronics(cid:151) 125 I FarewellDossier As for Farewell, his contribution led the to collapse of crucial a the keys to modern civil and military collection program at just technology(cid:151)the Soviets trailed West- em standards by 15 years and that the time the Soviet military the most striking indication oftheir needed it, and it resulted in backwardness the absence of was a forceful and effective domestically made supercomputer. a The Soviets considered a supercom NATO effort to protect its puter a (cid:147)strategic attribute,(cid:148) the lack technology. ofwhich inexcusable for was a super power.7 LineX did not acquire ~9 designs for such machine, a nor could Soviet computer scientists build one on their own(cid:151)and 4. Schweizer, Peter. Victory: The NSDM 247 had stopped Western ReaganAdministration(cid:145)s SecretStrat help. As for Farewell, his contribu egy thatHastenedthe Collapseofthe Soviet Union. NewYork: The tion led to the collapse ofa crucial Atlantic Monthly Press, 1995, collection program atjust the time pp. 187-90. the Soviet military needed it, and it resulted in a forceful and effective 5. ConversationwithJames Fletcher, NATO effort to protect its technol Administrator, NASA. ogy. Alongwith the US defense 6. Porch, Douglas. TheFrenchSecret buildup and alreadyfloundering an Services. NewYork: 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. TheMakingof aSovietScientist. NewYork:Jolui When historians sort out the reasons Wiley& Sons, 1994, pp. 298-301. for the end ofthe Cold War, perhaps Farewell will receive a footnote. It would be deserved. NOTES 1. Kissinger, HenryA. WhiteHouse Years. Boston: Little, Brown and Company, 1979, pp. 1, 142. 2. Kissingeron detente. Thomas G. Patersonand DennisMerrill (Ed.), MajorProblemsinAmericanFor eignRelations, Volume II, 1995, p. 600. 3. For aprimarysource from a former KGB officer, see Oleg Gordievskyand Christopher Andrew, KGB: TheInsideStory. NewYork, Harper Collins, 1991. 126