'All is not well in intelligence collection'

Tuesday, Jul 06, 2004

In the second instalment of a two-part series, Stephen Fidler discusses how the Iraq war has demonstrated the continued importance of MI6 to the CIA, despite the UK's reliance on America's investment in technology.

In the dispute over the faulty intelligence used to justify the war in Iraq, no part of the US intelligence establishment has come under fiercer attack than the Central Intelligence Agency's operations directorate, which runs America's spies.

Questions have been raised about the assessment of information derived from signals intelligence - which consumes the bulk of the $40bn-plus a year intelligence budget - such as the recordings played by Colin Powell, secretary of state, before the United Nations on February 5, 2003. But much of the controversy has centred on supposed failures of human intelligence, known as humint.

"Satellite photos and communications intercepts can only get you so far. It is the human source that often delivers the final piece of the puzzle," James Pavitt, the CIA's director of operations, told the Foreign Policy Association last month.

But he has already conceded that the CIA lacked agents in Iraq before the war, blaming Saddam Hussein's "republic of fear". Mr Pavitt, a CIA veteran who retires next month, admitted that the CIA had "less than a handful" of sources in the country before it started placing agents in northern Iraq in 2002.

Into this near vacuum stepped Britain's Secret Intelligence Service, also known as MI6, which provided significant material to its US partner. Before the war, George Tenet, the CIA chief who steps down this month, complained of a lack of US intelligence reporting from inside Iraq, according to Bob Woodward's book, Plan of Attack. "How come all the good reporting I get is from SIS?" he asked his colleagues.

Some US lawmakers are openly sceptical about the CIA's performance. The House of Representatives intelligence committee reported last month: "All is not well in the world of clandestine human intelligence collection." Mr Pavitt's operations directorate "needs fixing" and the CIA "continues down a road leading over a proverbial cliff".

The CIA hit back, with Mr Tenet calling the committee's criticisms "ill-informed". One reason for its weakness, the agency says, has been the deep budget cutbacks of the 1990s, which brought recruitment of CIA operations officers and analysts to a halt. According to Mr Pavitt, the CIA trained only about two dozen new operations officers in 1995.

Since September 2001, however, US intelligence services have enjoyed a huge injection of funding, so much so that Mr Pavitt's successors will find it difficult to blame a lack of resources for any future failings. Even so, Mr Tenet said in April that it would take another five years of work before the US would have the clandestine intelligence service it needed - and that the same could be said of other parts of the US intelligence system, including the National Security Agency.

Yet some MI6 reporting appears to have been unreliable, or at least disputed. The Los Angeles Times reported last month that two Iraqis recruited by MI6 in late 2002, whose reports on Iraq's weapons of mass destruction were rushed to the White House before the US invasion, were now viewed as questionable.

The newspaper also pointed out that MI6 had in fact recruited good low-level intelligence informants in Iraq's police, military, intelligence and security services in the early 1990s. These informants were taken over by the CIA station chief in London in 1995 and lost in an ill-fated coup in Baghdad that ended in mass arrests and executions.

The overall effect on the US-UK intelligence relationship of MI6's "good reporting" on Iraq has yet to be assessed. Jeffrey Richelson, senior fellow at George Washington University's National Security Archive, says he thinks the differences are unlikely to affect relations. "Whatever lessons [the US intelligence agencies] learn will be on how they treat information they receive, not how they treat the parties that provided that information."

Much of the criticism on both sides of the Atlantic - as well as in Australia - has centred on intelligence assessments as much as on intelligence gathering. The services shared intelligence assessments as well as raw intelligence. An Australian parliamentary report in December made clear that Australia received "both raw intelligence and intelligence assessments" from the US and UK. The UK has traditionally vaunted the independence of its assessments both from political interference and from the US. But British intelligence has also faced searching questions about whether assessments were influenced by politicians or whether bad information was amplified by sharing among the services.

The Iraq case has nonetheless demonstrated the continued importance of British intelligence to the US, even after the end of the cold war. This is, in part, a deliberate UK strategy: if the UK is a big beneficiary of American technological prowess in signals, imaging and other electronic intelligence, Britain aims to redress the balance by delivering important human intelligence to the US.

"Humint is an area where you don't need the type of massive investment that you need for developing satellite systems, for example, or operating a worldwide network of sigint [signals intelligence] ground stations," says Mr Richelson.

The sharing of humint between the US and UK is more selective than the sharing of sigint. Relations between the CIA and MI6, for example, are far less intimate and more marked by rivalries than relations between their sigint counterparts.

With its budget severely constrained - ignoring capital expenditures, MI6 is assumed to spend just under one-quarter of the annual GBP1.1bn UK intelligence budget - the service must choose foreign intelligence targets with care. That selectivity has been increased as a sharply higher proportion of the intelligence budget has been directed to counter-terrorism.

The UK targets countries where it has important political and economic relationships; ones that are considered potential trouble spots; areas such as Hong Kong where it has historical ties; and countries to which it sells military hardware. It also has a special expertise on the Middle East. "A lot of what we know on the Middle East in the co-operative relationship we have comes from [MI6]," said a senior Bush administration official last week.

But it also picks targets where it knows intelligence will be of use to its US ally, and through which it hopes to encourage the US to open up intelligence files to the UK that would otherwise remain hidden. "Sometimes there's a Pandora's box; and sometimes there's nothing," says a retired British official.

Thus London may make efforts to track what happens in North Korea, not only because it is a potential global flashpoint where it is important to have reporting and analysis independent of Washington but also because of the potential to deliver something valuable to the US.

Not often, but consistently, MI6 has brought important information to the US, which has been a source of pride to British intelligence. Some of the most successful agents working at the heart of the Soviet system at the height of the cold war were cultivated by the British.

Two in particular, Oleg Penkovsky and Oleg Gordievsky, are credited with changing the cold war's trajectory. Mr Penkovsky, who was introduced by the British to the CIA in 1961 and was executed in 1963, provided information that is said to have "saved the world" during the Cuban missile crisis.

There are more recent examples. Whitehall officials say that intelligence gathered by MI6, obtained they say at great risk to those involved, was critical in bringing an end to Libya's non-conventional weapons programmes.

A secret operation by MI6 was instrumental in gathering information to unravel a nuclear supply network run by Abdul-Qadeer Khan, a Pakistani scientist, which supplied Libya, North Korea and Iran and offered technology to other countries.

According to Mr Woodward's book, MI6 agents posed as Islamist extremists and were able to draw out information from a Pakistani scientist about nuclear weapons designs and information on how to build a "dirty bomb". The UK passed on this information to Washington in November 2001.

In the light of the repeated British successes in identifying and recruiting informants, some intelligence analysts suggest that MI6 is superior to the CIA. Even before the CIA admitted its paucity of sources inside Iraq, September 11 had exposed a lack of agents inside Afghanistan where Osama bin Laden was hiding.

Mr Richelson of the National Security Archive says there has been a pattern: "If you look at the history of the cold war . . . pretty much all the people or maybe everyone of them who the US operated in the Soviet bloc or the Soviets operated on the US side were walk-ins. These were people who volunteered themselves; they weren't the result of some clever process of spotting and recruiting."

But he says he does not have enough information to make an informed judgment about whether MI6 is more effective at clandestine operations than the CIA. "Maybe one service is better at the process of spotting and recruiting than the other, but if so, I don't know."

One repeated criticism has been that the CIA has relied too heavily on officers working out of US embassies. US intelligence officials have also said that the CIA has been more constrained than its counterparts by official restrictions on the types of people it is able to recruit as sources.

Yet the CIA's critics suggest that the problems will not be rectified just by enlarging the agency's budget.

In the words of the House intelligence committee: "The damage to the humint mission through its misallocation and redirection of resources, poor prioritisation of objectives, micromanagement of field operations, and a continued political aversion to operational risk is, in the committee's judgment, significant and could likely be long-lasting."

SECRETS WORTH SHARING

Gathering frustration at British and US intelligence, increased by the political dispute last year over the Iraq war, is driving European agencies into each others' arms, intelligence analysts say.

Cees Wiebes, professor of comparative politics at the University of Amsterdam, says European governments complain bitterly about both countries' disinclination to s hare information. "If you call sharing a one-way street, then there is sharing," he says.

He says European agencies have attempted to increase co-operation "as a counterbalance to Ukusa", the US-UK signals intelligence alliance which also includes ties with Canada, Australia and New Zealand. Since the end of the 1990s, he says, co-operation between the monitoring services of France, Germany and the Netherlands has grown and the countries exchange "sigint" daily. Together with Denmark and Belgium, a "Group of Five" is slowly taking shape, he says.

Other European-centred intelligence partnerships are noteworthy. They include the Bern group, established in about 1971, which deals with terrorism and organised crime and whose significance Prof Wiebes says is enhanced by the membership of the US, Israel and the UK. The Kilowatt group, established in 1974, deals with Middle Eastern and Islamic terrorism, while Megawatt or Megaton, established the same year, handles non-Islamic terrorism.

In 1995, the European Union created its own counter-terrorism organisation: the Egmont Group. Today the group deals with money laundering and terrorist financ e and has expanded to include 84 countries. But sharing information through multilateral "clubs" increases the risks to sources. Most intelligence sharing among Europeans is therefore bilateral.

There remains much work to do. It took four days after the March 11 Madrid bombings for Spain to tell other European intelligence agencies that, contrary to its initial statements, Islamic terrorists rather than Eta, the Basque separatist group, were responsible for the attack.

Indeed, the reputations of the European agencies are so variable, in terms of both their operational effectiveness and their ability to keep secrets, that widespread sharing of sensitive information is unlikely.

For instance, Germany's intelligence services are still seen as burdened with the way in which the former West Germany's were infiltrated during the cold war. They run few operations, according to one account, and concentrate more on analysis. Italy is regarded as good on issues relating to non-proliferation; and Spain's anti-terrorism police, despite the bombings on March 11, are seen as effective.

According to intelligence specialists, the reputations of agencies vary even within countries. For example, one says France's domestic intelligence agencies, the Directio n de la Surveillance du Territoire (DST) and the Renseignements Generaux (RG), are regarded by peers as having been highly effective in curbing Islamist terrorism in France since 1995. The foreign service, the DGSE, is regarded less highly, although it has a few good operators.

For yesterday's article go to www.ft.com/intelligence

Stephen Fidler

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