Company in Question

By Bruce W. Nelan

The timing could hardly have been worse for Director of Central Intelligence R. James Woolsey. With the embarrassing Aldrich Ames spy case spread across the nation's front pages last week, Woolsey had to go up to Capitol Hill for one of his public sessions before the House Select Committee on Intelligence. The small hearing room in the Rayburn Building was jammed, and Woolsey's bald head reflected the glare of television lights as he announced he would have nothing to say in open session about the details of the Ames case. The committee chairman, Democrat Dan Glickman of Kansas, accepted that, but he put Woolsey on notice that the case "raises disturbing questions about the internal controls" at the CIA and the committee would soon launch "an aggressive examination of what went wrong."

Even before the FBI closed in on Ames and his wife, Woolsey faced a full plate of policy and management problems. Now that the cold war is over and the threat of thermonuclear war is dramatically reduced, the three major intelligence organizations -- his own CIA, the code-breaking National Security Agency and the Defense Intelligence Agency -- are under orders from Congress to reduce their staffs at least 17.5% by October 1996. And in the midst of the shrinkage, the agencies are being redirected and remodeled in ways that have been unthinkable since World War II, when the national-security establishment was invented.

Woolsey is in charge of something close to its reinvention. The communist menace has been replaced by more amorphous ones from terrorists and the spread of weapons of mass destruction. The Warsaw Pact has gone, but the U.S. is still the declared enemy of hostile rogue states from northern Asia to the Middle East. Woolsey must try to bring the familiar intelligence tools, from satellites to spies, into this world of new threats. "There are ways," he said in an interview with TIME, "in which the Soviet Union was easier to keep track of than Iraq, Iran, North Korea, Libya, the smuggling of fissionable material, terrorist groups, ethnic cleansing and so on."

Last week Woolsey was on the Hill to defend the budget for the intelligence community he oversees and to complain about spending cuts. He did not mention the current budget figure of $28.5 billion -- which is supposed to be secret -- but argued that it should not be cut again. Though the U.S. has the best intelligence organizations in the world, he said, their real spending had been reduced 14% since 1990. Their capabilities, he warned, are now at a level "where we are skating on thin ice on a warm day."

That sounded like hyperbole, but none of the committee members were surprised. Even the head of the Senate Intelligence Committee, Dennis DeConcini, who says he likes Woolsey better than any of his predecessors, finds him "so damn hardheaded" about the budget. The Arizona Democrat does not believe that Woolsey, a savvy Washington lawyer and defense expert, has overlooked the reduction in the Soviet threat. Rather, he suspects that Woolsey's scrappy toughness on the intelligence budget is a move to rally the agency's spies, who tend to resent outsiders, behind his leadership and the changes he has to make.

What makes the CIA different from all other analytical agencies in Washington is that it steals secrets from other countries. It snatches them up with photographic and eavesdropping satellites and pays foreign agents to pilfer them from their own governments. That is a service the State Department or Treasury cannot provide and would not even like to try. So the CIA must bring some of the tools it honed on the Soviet Union to bear on new problems and places.

Satellite images, for example, are useful in the war on drugs to pinpoint airstrips, processing plants and storage areas operated by narcotics cartels in Colombia. Once the drug operations are located, intelligence teams intercept radio messages from the installations and send agents in to scout the area on the ground. When the Colombian military acted on one such U.S. tip, it moved in and seized 26 people, six planes and 20 tons of cocaine.

Photos and infrared images from satellites have long been used to keep watch on Soviet -- now Russian -- missiles and conventional weaponry. Increasingly, ^ they are being called on to monitor arms-control agreements and guard against proliferation of nuclear, chemical and biological weapons. Such images allowed the U.S. not only to follow each step of North Korea's nuclear-weapons program but to evaluate its new missile, the Nodong 1, as well. With what they proudly call their mensuration -- measuring -- capabilities based on digital infrared transmissions from satellites, the experts can tell how much of a missile is warhead, how much guidance system, engine and fuel. They then deduce how far it can travel and what it can carry.

Just in the past year CIA information helped: the French government prevent the shipment of missile-related graphite cylinders to Pakistan; the Germans to interdict a shipment of Scud-missile production equipment being transferred to Syria; Italian authorities to block the delivery of excavation equipment en route to Libya for possible use in construction of an underground chemical- weapons plant; and the Swiss to stop the sale of equipment ordered by a nuclear-related Pakistani company.

The agency uses satellite inspections on other installations, such as chemical plants or oil refineries. Specialists pored over images of Libya's Rabka refinery, comparing every pipe, every cylinder, with known refinery procedures, to show that the Libyans were also trying to produce chemical weapons at the site. In Haiti the agency watches two oil refineries to judge how well the embargo is working. The imagery office is made up entirely of senior-grade CIA officers, and one of them calls it "an all-officer army." This analyst has spent most of his career studying refineries and claims that just by looking at pictures of one he can tell what it is producing and how much.

Even experts as single-minded as these emphasize that intelligence collection is a group activity. An agent on the ground might notice something interesting -- some new construction or activity. The CIA's first response is to target the spot for satellite pictures. The National Security Agency can then usually pick up telephone and radio communications. Where it is possible, agents will be sent to the region to snoop. "There is no single approach," Woolsey says. "Spies tip off satellites, and satellites tip off spies."

For all the sophisticated technology, there are some things only spies can do. They can take documents out of drawers, go to conferences, ask questions in the corridor and pass the secrets to their case officers. The nonstop debate on intelligence is over how much emphasis to give to spies on the ground and how much to electronics. It is not an easy equation to solve because while a satellite is neat and safe -- causing no embarrassment as it snaps away from orbit -- it does not explain what foreign governments intend to do. A spy can attend a Cabinet meeting and report what he learns, but he can also be caught, like Ames was, and trigger a political explosion.

Congress traditionally pushes the agency to put more emphasis on real spies, and directors of Central Intelligence traditionally say they are doing so. "That's one of the two principal things this agency does," Woolsey said. "Recruit and manage spies, and do analysis. Spies are, and I think always will be, essential, particularly in trying to get at the intentions and plans of really closed regimes and organizations." Soviet specialists, who made up more than half the agency's staff, are being switched to current hot spots like the war in the former Yugoslavia. The CIA language center at agency headquarters in Arlington, Virginia, is rushing its students through what they call Turbo-Serbo, a crash course in Serbo-Croatian.

And yet, spies are a problem. They have to be recruited, a process in which a CIA officer overseas can blow his cover. Then there is the question of payoff. Low-level officials are usually of marginal value to the agency, and senior officials are difficult to recruit. When officials who are reeled in while young rise to important positions in their countries, they often try to break off their ties to the CIA.

Woolsey says he is working hard to deliver intelligence untainted by political preferences and get it to the officials who need it in fast and readable form. In a written directive, he instructed analysts to "bend over backwards" to be sure their reports were not politicized. "We are trying," he told TIME, "to behave the way a good consulting company would: get together with the customers, find out exactly what they need and tailor, not the substance, but the form and speed and format to what the customer needs."

Attitudes toward the CIA are changing too. The congressional intelligence committees are demanding more openness and responsiveness from it. Woolsey says he has made 180 appearances on Capitol Hill since he took office. The committees are no longer willing to go along respectfully with whatever the agency chooses to tell them. "During the cold war we didn't ask," says Glickman. "Now we do." His next questions for Woolsey will be about how the Ames case happened and why it took so long to solve.

With reporting by Elaine Shannon and Bruce van Voorst/Washington