Inside the CIA

by Kessler, Ronald

  A lot of people disagreed with Meyer, including me,” Fuller said. “But I heard him out. I think he had some useful things to say. Because of his conservative background, a lot of people dismissed what he said.”

  In much the same way, Casey would question and fulminate. Because he was the director, his views were taken much more seriously than Meyer’s. But Casey soon learned that there was only so far he could go. He could not push the CIA officers into saying something they did not want to say or that they felt they could not support. But Casey tried, and the result was a series of spats—some public, some private—that created the appearance during Casey’s tenure that the agency’s analytical side was losing its integrity.

  It began on March 1, 1981, when the New York Times Magazine ran an excerpt of Claire Sterling’s book The Terror Network: The Secret War of International Terrorism, which suggested that the Soviets were providing the weapons, training, and sanctuary for terrorists as part of the Soviet effort to undermine Western democracy. The CIA had never said anything like this. Casey wanted the agency’s analysts to follow up and discover if Sterling’s facts were right. The CIA director had long suspected that the Soviets were in control of world terrorism, using thugs from all over the world as fronts for their own devious purposes.

  What came out in the form of a draft estimate was ambiguous and not at all what Casey had wanted. According to those involved in preparing the estimate, the evidence available to the CIA at the time did not support Casey’s or Claire Sterling’s views.

  “It was a question of semantics,” said David D. Whipple, later national intelligence officer for terrorism. “He [Casey] would say, ‘They [the Soviets] support them, and therefore they are responsible.’ We would both go before a congressional committee. Casey would say, ‘They are responsible,’ and go back to work at noon and leave me to face the committee in the afternoon. I would try to erase what he said, because I was trying to differentiate between Soviet support for so-called national liberation struggles and actual direction of terrorist activities.123

  “There was pressure internally to say more than we could professionally justify, and most of us resisted that,” Whipple said. “Casey was on the right. An NIO can’t be as far forward leaning as he was. . . . Everything you say has to be supported by intelligence. You can’t sit there and interpret facts. Casey had a way of going beyond that sometimes.” Whipple said that despite more recent revelations of East-bloc support of terrorists, “I don’t think they’ll ever prove that the Soviets instigated actions of terrorism, but they certainly supported people and groups who did engage in terrorism.”

  “The analysts were afraid they would be accused of engaging in some political act,” said Adm. Bobby R. Inman, who was deputy director of Central Intelligence at the time. “The first draft bent over backward to avoid that. In any intelligence report, you identify assumptions. It said there is not conclusive evidence that this or that. I read it and put a note on it saying, ‘This sounds like the prosecutor’s argument on why he decided not to prosecute the case.’”124

  Casey was more blunt. He wrote on the draft, “This is a bunch of shit.” According to Inman, Casey was concerned more with the lack of logic and flow than with the conclusion.

  “I’ve seen other instances where he [Casey] had strongly different personal views, but the paper in those cases was very well written. He would say it was well composed or well done,” Inman said. “He then attached a memo on it to the president saying, ‘I don’t agree with this,’ or, ‘I think they are too bashful and my own view is this.’ He never took off his very conservative lenses about how he made his own valuation. But he was the most cautious DCI I’ve seen about not trying to change somebody else’s words to shape a view.”

  “I think Casey sensitized—that’s an understatement—the intelligence community to that possibility [that the Soviets directed terrorists],” Fuller said. “The community was required to think more carefully about it. In the end, the community did not feel there was a sufficient case. . . . In the end, he didn’t fight the problem.”

  Casey’s intervention, his fervently conservative viewpoint, and his repeated involvement in the politics of the Reagan administration made him suspect in the eyes of CIA professionals—suspicions that sharpened after it turned out Casey had improperly and disastrously embroiled the agency’s Directorate of Operations in the Iran-contra affair.

  Another major flap came on September 28,1984, when the Washington Post reported that John R. Horton, who had been national intelligence officer for Latin America, had resigned when Casey rewrote an estimate on Mexico to fit U.S. policy. According to the article, Horton had taken a moderate view about prospects in Mexico, and Casey wanted a hard-line approach that said the Mexican government would move to the left and become destabilized.

  The newspaper story made good copy, but the facts were quite different. The impetus for the estimate had come from Meyer and Casey when they began hearing anecdotes from friends in Mexico about worsening conditions there. For example, the owner of an executive search firm said everyone he knew was sending his kids to the U.S. Middle managers were said to be leaving the country.

  Brian Latell, a respected CIA analyst, was assigned to write a draft of the estimate. Usually, analysts base their conclusions on material available at headquarters, including traffic from stations. But Latell also traveled to Mexico, where Meyer kept in touch with him. Latell then wrote a draft of an estimate that concluded there was a possibility—later set at one in five—that Mexico would become destabilized in the next three to five years. That view coincided with the concerns of Meyer and Casey, who felt U.S. policymakers should at least be alerted to the possibility that Mexico could become a serious problem.

  Meyer put a copy in his safe. Horton, a former station chief in Mexico City, disagreed with the draft. He exercised his right as the national intelligence officer in charge of the area to write a final version that disagreed with Latell’s conclusions. Instead, he took a somewhat more sanguine view of developments in the country. But Meyer, as a vice chairman of the National Intelligence Council, exercised his right to change the estimate essentially back to Latell’s draft.

  “Horton’s problem was we exercised our right to edit what he said,” Meyer later said. “He never said the draft [he wrote] was the second one. He turned the expert’s draft around. We turned it back. He had a right. I also had a right.”125

  “It was a fresh and provocative approach written by an analyst on Mexico which suggested a sharp recasting of our thoughts about Mexico,” Fuller said. “This analyst, who is immensely respected and knows the field, suggested this was not the only approach, but it deserved real consideration. Casey insisted that this aspect of analysis be given reasonable credence within the body of the overall estimate.”126

  Said Fuller, “If you say things will be the same, you’ll probably be right seventy-five percent of the time. When credible analysts come up with fresh approaches, it behooves managers of intelligence to pay special attention.”

  “Casey ironically thought Horton was trying to suppress what the analyst had said. You had a bitter debate about it. But it was an honest estimate. It began on the first page of the finished estimate with virtually half the community dissenting from the pessimistic view,” Robert Gates, who was then chairman of the National Intelligence Council, said.

  As events unfolded in Mexico, they turned out to fall somewhere in between Horton’s approach and Latell and Meyer’s, but the incident further strengthened the perception that Casey was cooking the books. The truth was Casey did listen to facts and would back down if given a good argument. For the CIA’s top officials, Casey’s conservative bent was never any problem. They had enough standing to take him on.

  “I felt when I went into Casey, there was a first-class intellect at work who would listen and argue and respond, which was extremely gratifying to senior intelligence analysts, as opposed to people who are weak and not particularly seized with
the substance of the thing,” Fuller said.

  Yet no one can say for sure how much effect Casey’s ideology might have had on lower-level analysts, any more than one can demonstrate the effect of a conservative or liberal newspaper publisher on the way his reporters cover the news. While Casey’s constant questioning was stimulating, it all pointed in the same direction. Unlike his successor, William Webster, Casey was an observer with a political agenda. He was therefore at odds with the purposes of the CIA—to present the facts and just the facts, as they are, rather than how policymakers may want them to be.

  While it turned out that Casey and Meyer were right on a number of issues, they also turned out to be wrong a number of times. In 1983, Meyer wrote a series of memos saying the Soviet economy was in a shambles, which proved to be far closer to the truth than what the CIA’s estimates were saying. Casey handed the memos to Reagan. On the other hand, the same series suggested that the shootdown of a Korean Airlines passenger jet on September 1, 1983, was a dire Soviet plot. Meyer’s memo predicted that there would be more such incidents.

  The majority report of the congressional Iran-contra committees later said Casey “misrepresented or selectively used” available intelligence to win support for the Nicaraguan contras in certain limited areas. It said he pressured operations officers—as opposed to analysts in the Directorate of Intelligence—to change some reports on the contras, overstated their supply problems in one high-level meeting, and wrote a letter to President Reagan that distorted the attitudes of Central American leaders toward the American contra policy.

  Certainly Casey’s intervention created an appearance of lack of objectivity. In a business where integrity is critical, such an impression can be just as damaging as an outright effort to cook the books. Yet overall, the CIA continued to produce estimates that conflicted with Casey’s views, demonstrating that ultimately, he had little or no effect on the process.

  In 1983, the CIA said the rate of growth of Soviet defense spending was declining. The estimate conflicted with the agenda of the Reagan White House and Caspar Weinberger’s Defense Department. Nor did Casey have any impact on the CIA’s estimates on the prospects for the Nicaraguan contra rebels—the Reagan administration’s pet project. A June 1985 estimate on Nicaragua said, “The Sandinista military . . . cannot by itself destroy the guerrillas, but neither can the insurgents destroy the Sandinista military.”

  Not that Casey didn’t try to alter that judgment.

  “I argued with him [Casey] and others in this building, because for a number of years, the argument of the intelligence community was that the contras would not win the war in Nicaragua,” said Richard J. Kerr, then the CIA’s deputy director for intelligence and later deputy director of Central Intelligence under Webster. “They did not have the force, they did not have the confidence of the people, they did not have the capability to carry Nicaragua. He [Casey] did not believe that at all. But if you look at our product, it consistently said they would not win by force of arms. They weren’t going to make a strong political movement. All they would do is cause the Sandinistas to modify their behavior. He didn’t really agree with that, and he never came down and said, ‘You change that.’”127

  Robert Gates, who was deputy director for intelligence, chairman of the National Intelligence Council, and deputy director for Central Intelligence under Casey, said Casey never influenced the analysts.

  “The analytical side of the agency was always more pessimistic about the prospects for the contras than the policy side of the government or the clandestine service,” Gates said. “At the same time, we were probably overly pessimistic about the Salvadoran military.128

  “The bottom line,” Gates said, “is that throughout that period, the agency did a lot of analytical work that was very unpopular with the policy side. The notion of analysis being influenced politically is dead wrong.”

  “He never told me to write something different than what I wrote,” Kerr said. “What he did do is say, ‘I don’t believe this. I don’t think this is what was reported. I don’t think it’s well documented. I don’t think you’ve done a good analytic job on it, and I think you’ve missed what I consider to be the major issue.’

  There are other people who say in that process, he did that [bring political pressure to bear], because he was the boss and he could intimidate you. He tended to be more hard-line, but not always. He had views, and they were strong views. They weren’t necessarily always identical with conservative issues. If you were not willing to defend yourself, you could be rolled over by him, no question,” Kerr said.

  But by and large, CIA remained impervious.

  “It’s not because we are better than other people, although we are good, but part of it is we believe there is no alternative to being impartial,” Kerr said. “That’s what we do, and that’s the only reason people read us. It’s because they believe we have some contribution to make that is not tied to departmental policy. We may not understand it, we may be wrong, but it’s not because we are pushing a line that is somebody’s policy. If you vary from that, you lose your access, and you lose people who read you. For us, you are doomed if you do that.

  “Ideally,” Kerr said, “you don’t have a DCI like that, but you do need one who forces you to test things. He can have strong opinions. He needs to have different views to get people to develop their arguments.”129

  Nowhere was that better demonstrated than on the question of the Soviet economy.

  14

  Too Little, Too Late

  SINCE THE END OF WORLD WAR II, THE CIA’S DIRECTORATE of Intelligence has struggled with a close to impossible task: estimating the size of the Soviet economy and the amount of money spent on defense. It is difficult because of the nature of Soviet society. Until the end of the Cold War, the Soviet Union was closed to the outside world, but that was only part of the problem. The larger difficulty was that the economy of the Soviet Union defied all common sense. In theory, it was a planned, centralized economy where production, price, and quantity were dictated by Moscow. But in practice, because of this artificial control, it was larded with under-the-table transactions and fraud that were impossible to measure.

  From massive waste to black-marketing, the Soviet economy operated on many levels. Under the planned economy, Soviets had no incentive to work hard or to produce anything. They got paid the same regardless of whether they did anything or not. Because prices of goods bore no relation to their actual cost or to their value to consumers, they did not serve the normal function of regulating supply and demand. In a free economy, if sneakers or chocolate are in short supply and in demand, their prices rise, spurring entrepreneurs to produce more of them. That was missing in the Soviet economy, where ponderous bureaucracies regulated supply. Even if it were possible to regulate millions of transactions from Moscow, the bureaucrats had no incentive to keep up with changes in demand. No matter how much chocolate or how many sneakers consumers wanted, the price and the supply remained the same.

  The Soviets themselves did not know the true size or shape of the Soviet economy. Much of the economic activity took place off the books—in bartering transactions that ate up a good chunk of each citizen’s day. And the Soviets did not want to know about the huge amount of waste and fraud that consumed so much of the country’s output. If the Soviets did not know, how was the CIA to know?

  The answers were critical. In order to better judge the strength of its adversary, the U.S. needed to know how much the Soviets were spending on defense and how long they could continue to do it. If the Soviet economy was strong, the Soviets could continue to pour massive amounts into defense indefinitely. If it was weak, the Soviets could be expected to cut down on defense spending. The two questions were interrelated: If the Soviet gross national product was higher than generally thought, the proportion it spent on defense was lower. If the GNP was lower, then defense spending was proportionately higher. In either case, the amount spent by the Soviets on defense was consider
ed to be roughly the same amount spent by the U.S.

  For years, the CIA estimated that the Soviet economy was expanding by an average of 2.4 percent a year. Beginning in 1980, the CIA signaled that the Soviet economy was in trouble and “losing momentum.” It revised its estimate of annual growth slightly downward, suggesting it was averaging 2.1 percent a year.130 But the CIA’s figures on the Soviet gross national product did not fully reflect how serious the problems were. According to CIA estimates, the Soviet per capita GNP was roughly half that of the U.S. Yet one did not need a Ph.D. in economics to see that that clearly could not be. Any visitor to the Soviet Union was shocked to find that, with the exception of its military, the USSR was a Third World country.

  Going into a grocery store was like walking into a tomb. On most days, they had literally nothing to sell except potatoes and onions. If they had some meat, it was almost entirely fat and invariably previously frozen. Chickens appeared to be a different species—virtually all skin and bones. Milk was sour when it was purchased. Often, milk sold as fresh was actually powdered. Apples were tiny and shriveled. The oranges were still green. Grapes, if available, were rotten. To meet plan quotas, tea was mixed with tiny branches and leaves of other plants to increase its bulk. Most Third World countries at least had enough to feed their people.

  To get an apple, one would have to try to wedge one’s way into a crowd to get a peek at the prices. Then one would have to stand in line for a half an hour to get to the cashier to pay in advance for it. Finally, one waited in another line for another half hour to present the chit to a second clerk who weighed the apples and gave them to the customer without any bags or wrappings.