What's a little spying among allies

0 Comments | Insight on the News, March 27, 1995 | by Jamie Dettmer

As economic rivalry replaces military cooperation among Western allies, the balance of trade becomes more important than the balance of power.

It goes by the innocuous-sounding description of "friendly spying," but espionage conducted among allies is just as damaging as enemy spying. At the very least, it can create acute embarrassment, as the CIA discovered in February when the French secret service unmasked an American spy ring and publicized its operations.

Allies have always spied on each other, but intelligence agencies of the West limited such clandestine operations during the Cold War and generally cooperated in order to counter the Soviet threat. Breaches of this understanding, when discovered, were brushed under the carpet.

In seeking a post-Cold War role for itself, however, the CIA has stepped up efforts to gather foreign economic intelligence. But it will have to do better than it did in Paris. Struggling for its bureaucratic life and still hurting from the Aldrich Ames affair, Langley stumbled badly. According to the French, five Americans, including a former CIA station chief and his deputy, attempted to bribe senior officials in the French government in a bid to secure commercial information that could aid Washington in trans-Atlantic trade talks. Every official the CIA approached reported the recruitment effort to the French secret service. Instead of warning the Americans off, the French decided to set them up -- in the end ordering the U.S. agents to leave the country.

(The CIA also allegedly targeted France's telecommunications industry and tried to recruit or, lance, "turn" a technician working in France Telecom's international division. It is not clear whether the CIA was prepared to pass any secrets on to corporations such as AT&T or MCI.)

The spectacle of one Western ally expelling the "diplomats" of another recalled the periodic tit-for-tat expulsions of agents by the United States and Soviet Union during the height of the Cold War. But as the economic rivalry among Western nations intensifies and the competition in the global marketplace becomes fiercer, such incidents surely will multiply.

The fracas in Paris unfolded with more than a tinge of irony. Of all the Western intelligence agencies, the CIA has been slowest to adapt to the post-Cold War realities. Beginning in 1990, the agency began to allocate more resources to combat espionage by friendly foreign intelligence services, including those of France, Germany, Israel and Japan -- to name four culprits raiding the American corporate storehouse even before the collapse of Communism. Previously, the CIA feared it would alienate its allies in the more important fight against the KGB.

The CIA was even slower to mount its own economic espionage missions. For years it collected data on the economies of friends and foes alike. But until recently it declined to pass such information to U.S. firms -- with the exception of American arms manufacturers. By contrast, the French and Japanese intelligence agencies regularly provided private companies with sensitive commercial information stolen from the businesses of rival nations.

In another irony, France has been the most unabashed pilferer of US. trade and industrial secrets. In a 1986 memoir titled Dans les Secrets des Princes, Count Henri de Marenches, then-director of the French secret service, pronounced France's industrial espionage against the United States highly profitable. The flamboyant French aristocrat claimed that his agency's annual budget had been "paid for in full" by a single such operation: "Naturally, Intelligence does not receive actual payment, but the country's industry profits," he said.

Two years ago, a 21-page French government document worthwhile targets two dozen U.S. companies -- including Boeing, IBM and Texas Instruments -- was leaked to newspapers. Paris shrugged off American protests. In the 1980s, several French moles had been unearthed and quietly transferred out of the United States. According to U.S. intelligence sources, the French also set up temporary listening posts in Silicon Valley, and the French national telephone company is known to have cooperated in eavesdropping on U.S. businessmen's phone calls.

If the French have been the most flagrant friendly economic spies, the Japanese characteristically have been the most efficient, say CIA sources. As far back as 1987, the CIA estimated that 80 percent of all Tokyo's espionage assets were directed toward Western Europe. Multinational corporations such as Mitsubishi and Hitachi are integrated in the overall Japanese intelligence effort. Tokyo has planted moles in U.S. firms and used Japanese graduate students in the United States to collect advanced scientific research.

Overall, the CIA's role in economic intelligence gathering under the Clinton administration has grown rapidly The National Economic Council has treated the intelligence agency as an extension of its own staff, to the irritation of Langley's more traditionally minded operators. But there are clear indications that the agency is adapting.