by Larry Loftis
The following evening, November 20, Dusko met Johnny for drinks. Sea Lion was being delayed, Johnny said, due to disagreements between the different armed service branches. Unknown to Johnny or Dusko at the time, British Intelligence was intercepting Goering’s messages to Luftwaffe commanders, enciphered in the ENIGMA machine, and Bletchley Park was breaking the code and passing to MI6 far more than Jebsen knew. By the end of July, ULTRA—the British code name for secret intelligence produced by the intercepted and decrypted messages—revealed that the German Army and Navy disagreed over how the troop and supply demands for Sea Lion could be met by seaborne transport.
Johnny went through what he knew of the plans of General Franz Halder, Hitler’s chief of the General Staff, and moved on to Dusko’s assigned station—Lisbon. The Portuguese capital was the Abwehr’s most important outpost, he said, and Dusko’s spymaster would be Major Ludovico von Karsthoff, chief of the Lisbon desk. An Austrian from Trieste, von Karsthoff’s real name was Kremer von Auenrode. Highly secretive, he was listed on the German Embassy staff as “Albert von Karsthof,” wanted to be called Ludovico, and sometimes signed documents as Anzuweto.
Johnny warned that the major was quite charming and that Dusko would like him, itself a bit of a danger. If they became friends, Jebsen feared, Dusko would be more prone to making mistakes. They did become friends and Popov later lamented the situation. “He was a terribly likeable person,” Dusko told an interviewer after the war. “I was very fond of him and I felt guilty all that time because he was the main instrument by which I deceived the Nazi government.” Such the travails of double-cross.
Before leaving, Dusko recalled, Johnny gave him specific rendezvous instructions: Upon his arrival in Lisbon he was to call von Karsthoff from a pay phone and ask for Karl Schmidt, saying that his cousin from Stuttgart told him to call. Schmidt would come to the line and indicate a specified time and place to meet. Dusko was to arrive an hour before the scheduled time and linger. A woman would walk by, wink, and lead him to a waiting car, where he’d be driven to the meeting.
No words were to be spoken.
»
Systems of elaborate codes and clandestine meetings, even in neutral countries, were more than necessary. Hotels, cafés, and bars in Madrid, Estoril, and Lisbon were the principal battlefields of World War II espionage, and where one went, and with whom one spoke, often could be seen by the enemy. Surprisingly, each side possessed a startling amount of information on the other’s secret agents, headquarters, and procedures.
In November 1939 the Germans had kidnapped two of Britain’s most senior MI6 agents, Captain S. Payne Best and Major Richard Stevens, and acquired operative names and other classified information. Posing as members of the Nazi resistance movement, Walter Schellenberg and his assistants had lured Best and Stevens to a restaurant in Venlo, on the Dutch–German border, and quickly subdued them. One man was killed in the encounter and the MI6 agents were hustled to Berlin, where they were interrogated and held until 1945.
For the duration of the war, each side made concerted efforts to learn the other’s operations. Walter Schellenberg wrote in his memoirs that he had “full lists” of American and British personnel operating in Spain. On the British side, by the spring of 1940 the Radio Security Service was intercepting so many German radio signals that it was said the Bletchley Park code breakers knew of Hitler’s orders before his generals. Further, all German spies dropped into England in 1940 and 1941 had been arrested, some executed, and four turned into double agents. From 1941 on, all German agents operating in England were controlled and run by the British.
None were more cautious about the value of their information than the chieftains of secrecy themselves. In his offices on the fourth floor of 54 Broadway, “C” had a secret passageway which led to his official residence at 21 Queen Anne’s Gate. By slipping through concealed doors at both ends, he could move unobserved from his workplace to the drawing room of his apartment.
On the German side, Walter Schellenberg—who had numerous enemies inside the Third Reich—was less subtle. His office contained hidden microphones inside a lamp, his desk, and even the walls. Windows were covered with wire mesh and photoelectrically charged so that if anyone approached, an alarm sounded. The desk itself, he wrote, was like “a small fortress”:
Two automatic guns were built into it which could spray the whole room with bullets. These guns pointed at the visitor and followed his or her progress towards my desk. All I had to do in an emergency was to press a button and both guns would fire simultaneously. At the same time I could press another button and a siren would summon the guards to surround the building and block every exit.
When he traveled, Schellenberg guarded against revealing information if captured by carrying two cyanide capsules—one inserted inside an artificial tooth, another hidden under the stone of his ring.
And it wasn’t just the Germans and British taking precautions. Dusko would say after the war that in every hotel, regardless of locale, his belongings would be searched again and again by everyone—German, British, American, Russian, Italian, Japanese. To survive, anything of intelligence value had to stay on his person at all times; he would operate, move, and live by codes and covers.
»
The following morning, November 21, Popov called on Dr. Campiagni at Via Torino 7. The doctor’s real name, he said, was Major Conti, and the lawyer—Ardanghi—was the Italian chief of counterespionage. About forty-five, Ardanghi was tall, six feet or so, and spoke German like a native. Conti made the introduction, and together Popov and the chief contacted the Air Ministry.
No flights were available for Lisbon.
Dusko left, not knowing whether the Germans and Italians were testing him, or whether the Roman bureaucracy was worse than the Yugoslavian. He called Jebsen, and over lunch Johnny asked for the spy ink Munzinger had given him. Johnny poured it out and gave instructions on a better formula, pyramidon. Dusko would take one and a half pills of amidopyrin and dissolve them in a large spoon containing 75 percent clear alcohol, such as white gin. He was to wrap a pencil tip in cotton wool, dip it in the solution, and write in block letters between the lines of any correspondence. He’d then wait half an hour for the ink to dry and gently rub a sheet of the same paper across the secret message to smooth out any raised letters.
Johnny also told Dusko that any messages from Lisbon should be sent to Don Augustin Mutiozobal, Colon Larreategni 7, Armado, Bilboa. Any correspondence, he concluded, should state: “Still . . . waggons deliverable,” the number of wagons to indicate the days Dusko intended to stay. When they finished their meal Johnny suggested that Dusko try Ala Littoria one more time.
Magically, a seat was available the next day.
5
THE BEE HIVE
“The most fascinating place in the world,” one writer called it. “The hub of the western universe.” The Duke and Duchess of Windsor, the Duke of Alba, the King of Romania, the Prince of Sweden, the Prince of Poland, and the Princess of Greece and Denmark were here. Affluent Parisians, including the Guggenheims, were here, too. The City of Light had become the City of Refuge, the “last of the gay capitals,” and the “port of good hope.”
The New York Times described the locale as a “veritable bee hive” of activity.
It was home to Europe’s largest casino, a sixth-century castle, a twelfth-century cathedral, and the remnants of a Roman theater built by Emperor Augustus in the first century. Its cobbled streets and medieval villages reminded one of Naples or Sicily, and its Avenida da Liberdade was matched in grandeur only by Paris’s Avenue des Champs-Elysées. Cafés were open all night and the languages heard in them included not only English, French, and German, but Romanian, Japanese, and Russian.
And no rationing here. Stores glistened with new typewriters and cameras, McVitie’s petits beurres and clotted creams, fresh fish and sardines. Newsstands overflowed with the Ne
w York Times, Der Spiegel, the London Daily Mail, and Madrid’s Arriba. Time magazine, Harper’s, the Saturday Evening Post—all available.
British and German aircraft rested side by side on the Sintra tarmac, and propaganda shops of the two countries often occupied adjoining spaces. Allied and Axis spies shared hotels and sat next to each other in swanky bars. Wealthy Jews lounged leisurely on Tamariz Beach while tepid Gestapo agents looked on.
Lisbon.
City of peace on a continent at war. Harbor of last hope for refugees fleeing fascism. And, where Dusko was concerned, a shore ripe for Machiavellian machinations.
In 1940 only six European countries were neutral—Switzerland, Sweden, Ireland, Turkey, Spain, and Portugal. Switzerland, historically unaligned, landlocked, and small, was insignificant. Sweden, Ireland, and Turkey, not being contiguous with mainland Europe, played lesser roles in the war. Only Spain and Portugal, with their proximity to France and strategic islands and ports, were of critical importance.
Spain was only nominally neutral, however. Germany had supported Franco’s fascist regime in the Spanish Civil War, augmenting his rise to power, and Madrid leaned heavily to Axis affiliation.
Portugal was a different matter. The country shared the oldest existing alliance treaty—signed in 1373—with England. British soldiers had helped Portugal gain independence in the twelfth century, and the country had maintained its empire largely due to the British Navy. Portugal fought with the Allies in the First World War.
Given historical precedent, the Allies expected Portugal to throw its lot in with Britain and France. The country’s president, however, Dr. António de Oliveira Salazar, was a crafty and slippery leader. Weighing against Portugal’s treaty and historical bond with Britain was Salazar’s fear that Spain might attack to annex its small neighbor. While Portugal’s relationship with Spain was good, rumors of Franco’s intention to invade west constantly surfaced. In addition, Salazar assumed that Germany would support a Spanish invasion of Portugal, or might invade independently.
Throughout 1940 and 1941, Roosevelt and Hitler conducted a silent war over Portugal. While Lisbon provided a handy port for key shipping lanes, Portugal’s colonial empire, which comprised a landmass twenty-five times larger than the mother country, had far greater military importance. From the African islands of Cape Verde to China’s Macau and India’s Goa, Portuguese territories provided tempting targets. The crown jewel, though, was Portugal’s Azores archipelago. Located halfway between Lisbon and New York, it was the only refueling spot in the mid-Atlantic and allowed the only carrier with service, Pan American Airlines, to shuttle between the two continents. If the Allies or the Axis powers seized the Azores, Salazar feared, the islands would quickly be transformed into a naval and submarine base. It was the queen of the Atlantic military chessboard.
In a speech on May 27, 1940, President Roosevelt announced—largely for Hitler’s ears—that the Azores were of such strategic importance that the United States could not permit them to fall into hostile hands. The comment terrified the Portuguese, who inferred that the U.S. would soon move to occupy the islands. If that occurred, Salazar knew, Hitler would invade Portugal to even the scales. Two days later, Portuguese troops—with helmets strikingly similar to the German model—left for the Azores to fend off American invaders.
It was a high-stakes game, and Portugal had no chance of thwarting Axis aggression on their homeland. The joke among those living in Lisbon was that if Hitler wanted Portugal, he could take it with a phone call. Salazar knew this and his concessions toward Berlin were less than subtle.
In 1936, for example, Salazar had created a “Youth Movement” to promote physical fitness, character, respect for law, and discipline. Modeled on the Hitler Youth, the participants wore paramilitary uniforms and marched in regimented order. Harvey Klemmer, in his August 1941 article for National Geographic, included a photo of the Portuguese Youth Movement boys parading before officials on Avenida da Liberdade—offering a fascist salute.
When war broke out in 1939 and escalated across the continent, Salazar continued his appeasement of the Third Reich. His position that the “question of the Jews” was an internal matter for Germany was well known and presumably well received in Berlin. In addition, he strictly limited the number of Jewish refugees landing in Lisbon. On November 13 he sent a notice to each embassy stating that Jews would require direct approval from the Foreign Ministry for temporary immigration visas.
Aristides de Sousa Mendes, Portugal’s consul in Bordeaux, knew this procedure would cause impossible delays and would result in countless Jews being sent to concentration camps. In the summer of 1940, as the Wehrmacht marched across France, mobs of refugees inundated Mendes’s office. His Christian conscience overriding his consular directives, Mendes disobeyed Salazar and began authorizing visas for thousands of Jewish refugees, saving their lives. Furious, Salazar recalled him to Lisbon and on July 4 began disciplinary proceedings. Within weeks, Mendes was fired. Hitler was surely pleased.
Yet appeasement on the Jewish question was not enough. Portugal and Spain—and especially their territories—provided too many military opportunities. In a meeting with his generals on November 4, 1940, the Führer announced Directive No. 18: Germany would attack and capture the Portuguese Cape Verde Islands, the Spanish Canary Islands, and Gibraltar in a plan codenamed “Felix.” After that, in an operation called “Isabella,” Hitler envisioned three German divisions moving in from the Spanish border to attack Portugal itself.
If Franco and Hitler didn’t provide cause enough for neutrality, Salazar had another reason for remaining on good terms with Germany:
Gold.
The principal metal necessary for armoring Germany’s tanks and machinery—tungsten—was produced from a raw ore called wolfram and was found almost entirely in Portugal and China. Since the Royal Navy had cut off the Chinese shipping lane, the Iberian Peninsula—Portugal holding some 90 percent of the deposits—was the only source. Salazar and Hitler knew the alternatives: Germany could purchase the wolfram or extract it by force.
Salazar opened the trade floodgates. In 1942 alone, Portugal shipped some 2,800 tons of wolfram to Germany. The Portuguese president knew the shipments would draw the ire of the Allies, but he had a ready counter—much of the production came from German-owned mines. Aside from nationalizing the operations, Salazar reasoned, he could scarcely object to trade with Germany, particularly given the benefits to Portugal’s coffers. And because Salazar recognized the fragile and speculative value of German marks, much of which were now being counterfeited, he demanded payment in gold. The Third Reich agreed, and over the course of the war Germany would transfer some 124 tons of gold—much of it looted from occupied countries—to Portugal.
To preserve neutrality, Salazar granted an equal allocation of wolfram to the Allies, again demanding gold. His strategy produced staggering results. In 1939 Portugal’s gold reserves were a mere 63 tons (Germany, by comparison, held 133 tons); by 1945 Salazar had more than doubled the country’s holdings—from Germany alone. With another 169 tons from sales to other countries, Salazar had swelled Portugal’s gold reserves to an astounding 356 tons.
And while wolfram was causing Portugal’s wealth to burgeon, the refugee, diplomat, and spy influx was bursting its economy at the seams. Restaurants and cafés were packed. Casino Estoril pulsed all night, every night. Simply finding a bed in the city was a chore.
In December 1940 a Lisbon correspondent for the London Times stated that American generals slept in attics because they couldn’t find hotel rooms. New Horizons, the Pan Am magazine, reported that between June and December 1940, more than eighty thousand refugees were in Lisbon awaiting transit overseas. By the time Dusko arrived in Lisbon in 1941, some forty thousand refugees were awaiting passage to the United States alone. It was, as one reporter wrote, the “bottleneck of freedom.”
The transients were trapped. For t
hese thousands of ex-politicians, ex-intellectuals, and ex-industrialists, only one ship a week left for New York—American Export Line’s Excaliber, Excambion, or Exeter—and refugees waited months for a ticket. Pan Am’s Clipper departed twice a week, but the few seats it carried were reserved for American legates and military brass.
Added to the influx of expatriates were hordes of government officials. Britain and Germany each sent hundreds of diplomats and spies to Lisbon. The Gestapo sent its agents, too, some alleged to be disguised as refugees and some at work on Operation Willi—the German plot to kidnap the Duke of Windsor. Others, while operating in civilian clothes, might as well have been in their SS uniforms. One American journalist reported that when the Gestapo chief for Portugal entered the casino, croupiers greeted him in German and SS officers left their tables to pump his hand.
Rumors circulated about the less amiable tactics of Gestapo and SD agents operating in the city. In late 1939 the Germans were said to have discovered an MI6 operative who was meeting regularly with an Abwehr agent. That operative, in turn, was leaking information. One night German agents kidnapped the man and demanded to know the source of the Abwehr leak. The British spy remained silent.
To encourage their captive to cooperate, the story went, the Germans placed him inside a refrigerated meat locker. Placing a fragmentation grenade in his hand, they told him to hold down the detonator, and pulled the pin. When he was ready to talk, they’d re-pin the explosive. The Germans left, locking the door behind them. The refrigerated cell expedited the man’s predicament—he not only couldn’t sleep or nap, the chill would quickly cripple his grip. The Germans expected a hasty change of heart. The man allegedly lasted seventy-five hours. When his fingers could squeeze no more, he dropped the grenade and was eviscerated.