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The Spies Who Lost It

By Stephen Fidler and Demetri Sevastopulo, Financial Times

May 12, 2006

The sudden ousting of Porter Goss as Central Intelligence Agency director has reopened a sore wound in Washington about US espionage. Mr Goss was supposed to overhaul the CIA but, by most accounts, his management caused morale to plummet and prompted an exodus of experienced spies.

As a result of last week's abrupt move by President George W. Bush, politicians are re-examining whether intelligence reforms introduced last year are helping fix the flaws that contributed to the most dramatic intelligence failures in modern US history - the unforeseen terror attacks of September 11 2001 and the inaccuracy of information on weapons of mass destruction in Iraq.

Intelligence has become all the more important to the US since the Bush administration adopted the doctrine of pre-emption as the core element of its national security strategy. The debate about intelligence is gaining tension as the US edges closer towards possible confrontation with Iran over its nuclear programme. So how did American espionage lose its acuity and will a new CIA chief be able to restore it?

In the wake of the 9/11 attacks and the embarrassing discovery that Saddam Hussein did not possess WMD, congressional and independent investigations called for a radical revamp of the intelligence community. Congress responded by passing the Intelligence Reform and Terrorism Prevention Act, which created the new position of director of national intelligence to manage the 16 US intelligence agencies.

In assuming this position, John Negroponte, the former US ambassador to Iraq, dislodged Mr Goss as the most senior US intelligence officer. Mr Negroponte's efforts to transfer CIA counter-terrorism analysts to the newly created National Counter-Terrorism Centre also frustrated Mr Goss, who himself had hoped to get the DNI job.

Even before the ignominious firing of Mr Goss reignited the debate, lawmakers and national security experts were starting to question whether the legislation was helping streamline the intelligence process or whether the DNI office was just creating more bureaucracy.

"The way (the DNI organisation) is being implemented, it is bloating to about twice the level we recommended," says Tim Roemer, a former congressman and member of the 9/11 commission that investigated the attacks on the US and called for reforms. "Therefore, it might not be the nimble, agile decision-making organisation that can match up with al-Qaeda's dynamic and quick decision-making."

Richard Posner, an appeals court judge and author of Uncertain Shield: The US Intelligence System in the Throes of Reform, argues that the legislation was misguided and has indeed produced another layer of bureaucracy rather than a co-ordinating function. "The reorganisation was a mistake, was misconceived, (was) not responsive to the problems in the intelligence system," said Judge Posner.

Paul Pillar, CIA national intelligence officer for the Middle East from 2000 to 2005, also says that there are "major flaws" in the legislation. "It is unfortunate that ambassador Negroponte has been criticised for doing his best at making a bad piece of machinery work," says Mr Pillar.

Former CIA officials agree that the legislation has not helped. One former senior official argues that the US is "less secure today than before 9/11" because of the reforms, which he says have sent the intelligence community into "disarray". This, the official says, is partly because pre-9/11 lines of authority are no longer clear and also because of bureaucratic turf battles, particularly between Mr Negroponte and the Pentagon, which still controls 80 per cent of the Dollars 44bn intelligence budget.

Defending his tenure in speeches, Mr Negroponte argues that in a short period he has improved information-sharing and created an ombudsman to hear complaints from analysts who believe their views are not being given due weight. Peter Brookes, a former CIA case officer now at the Heritage Foundation, dismisses some of the criticisms, saying it is "too early" to judge the reforms.

While debate persists over the effectiveness of the legislation, there is little disagreement that the CIA has been damaged by Mr Goss's weak leadership. A report from the president's Foreign Intelligence Advisory Board overseen by Stephen Friedman, a former investment banker, hastened Mr Goss's dismissal by concluding that his poor management was having a detrimental impact on the agency and had weakened morale.

The CIA was awash with problems before Mr Goss, who served as a case officer in the 1960s before entering politics, returned to the agency in 2004. Morale was low because of the failure to detect the 9/11 plot and or predict the absence of WMD in Iraq.

Among some critics, George Tenet, Mr Goss's predecessor, had earned the sobriquet "Slam Dunk Tenet" in a reference to his iron-clad guarantee to President George W. Bush that Iraq possessed WMD. Mr Tenet is also viewed as having compromised the integrity of the CIA by getting too close to Mr Bush.

But in recent months, a number of former CIA employees have taken the unusual move of publicly defending the agency's performance, arguing the intelligence was not wrong but was politicised by an administration bent on invading Iraq.

In a recent article in Foreign Affairs, Mr Pillar wrote: "What is most remarkable about pre-war US intelligence on Iraq is not that it got things wrong and thereby misled policymakers; it is that it played so small a role in one of the most important policy decisions in recent decades." He says the administration was especially culpable in arguing that Mr Hussein was linked to 9/11 in spite of the absence of any such evidence.

More recently, Tyler Drumheller, the former head of the CIA's European clandestine operations, described how the White House showed little interest in Naji Sabri, the Iraqi foreign minister, whom the agency had recruited in a major coup. Mr Sabri told the CIA that Iraq had no WMD.

"It just sticks in my craw every time I hear them say it's an intelligence failure . . . This was a policy failure," Mr Drumheller told CBS television. "They were looking for intelligence to fit into the policy."

The former senior CIA official who warned that the agency was in disarray says CIA leadership also resisted information that contradicted material they were getting from a source codenamed Curveball, who falsely claimed that Iraq had biological weapons. Senior leaders dismissed warnings from Mr Drumheller, who told them that German intelligence, which was running Curveball, believed his information was highly suspect.

Judge Posner argues that the CIA has tended to become the "scapegoat" because its operatives' "successes are less vivid than their failures". But he disagrees that the intelligence was politicised. He says the real problem was that some CIA employees believed the policy­makers were not as scrupulous in evaluating the caveats attached to the intelligence. "Whether these scruples were ignored at the top policymaking levels, or . . . somehow got lost as they moved up through the CIA . . . is tremendously obscure," he says.

CIA defenders point out that most leading European intelligence agencies agreed with the US assessment. Cobra II, a recent book on the Iraq war by Michael Gordon, a New York Times military correspondent, and retired general Bernard Trainor, reveals that even Mr Hussein's generals believed he possessed WMD. It was only in December 2002, the book claims, that he stunned his senior military officers with the news that Iraq had no suchweapons.

In addition to trying to improve the overall intelligence process, Mr Negroponte has been forced more recently to turn his attention to the CIA, which was reeling from Mr Goss's management. Former officials say Mr Goss and aides he brought with him from Capitol Hill - nicknamed the "goslings" - alienated employees with their abrasive style. They say morale plummeted after Stephen Kappes, the deputy director of operations who was highly regarded in the organisation, resigned after a confrontation with an aide to Mr Goss.

Relations between the CIA and its counterpart agencies around the world also suffered. The former officials say that on the day of the London bombings last year, Mr Goss, who was away from the CIA headquarters, needed repeated telephone calls from his subordinates before he was convinced of the need to return to Langley, Virginia. Mr Negroponte, in contrast, telephoned his British counterparts within hours of the bombings.

Jennifer Millerwise Dyke, CIA spokeswoman, says Mr Goss had made important strides at the agency, including expanding the national clandestine service in terms of personnel and field operations. She adds that the attrition rate at the CIA is about six per cent, lower than the US government average of seven per cent. She denies that Mr Goss had hesitated to return to headquarters, saying he flew back the same morning as soon as a CIA plane was made available.

In an attempt to restore control and morale at the CIA, the White House has nominated General Michael Hayden, who currently serves as deputy to Mr Negroponte, to replace Mr Goss and has tapped Mr Kappes as the "leading contender" for the number two slot.

Some Republicans have expressed opposition to placing a military officer at the helm of the civilian agency, particularly out of concern that Donald Rumsfeld, defence secretary, already exerts too much influence over the intelligence apparatus. But many experts say the combination of Gen Hayden and Mr Kappes will prove a formidable team.

Wayne White, the State department intelligence official responsible for Iraq until his retirement last year, says he was impressed during a high-level intelligence meeting in January 2005 when Gen Hayden, then head of the National Security Agency, concurred with his "very pessimistic read-out" of the situation in Iraq at a time when the administration was presenting a more rosy picture to the public.

However, Mr White has some reservations about Mr Negroponte's objectivity. In 2004, he says he was asked to prepare confidential policy reports on Iraq for Colin Powell, then secretary of state, whose chief of staff suspected he was receiving overly optimistic reports from Mr Negroponte, then US ambassador to Iraq.

While Mr Negroponte focuses on reforming the intelligence community, the most important immediate question is whether the US has better intelligence on Iran than it had on Iraq - and whether the fiasco over WMD has damaged its credibility.

"Iraq clearly has damaged the international perception of the reliability of US intelligence," says Mr White.

Mr Pillar says intelligence gathering on Iran is a little easier because it is less of a "police state" than Iraq. But he cautions that intelligence on Iran is limited, which he says was underscored by the fact that the US learnt of the Iranian nuclear programme only after it was flagged by the Mujahideen-e Khalq, an exiled Iranian opposition group that the US classifies as a terrorist organisation.

"One of the favourable benefits from the unfortunate experience about Iraq and the WMD issue is a healthier scepticism among everybody," says Mr Pillar.

But Mr White points out that while the intelligence community was wrong about WMD in Iraq this time, its estimates of Iraq's proximity to gaining nuclear weapons erred on the other side before the first Gulf war.

Even Mr Rumsfeld concedes intelligence on Iran will receive more scrutiny in the debate in the weeks ahead. "The information (on Iraq) was not correct. Does that give one pause? You bet!" he said this week. "You're dealing with a closed society there (in Iran) so clearly one has to be very careful."

And if Mr Rumsfeld is concerned, then other countries will certainly think twice before accepting US intelligence as a justification for sanctions or military action against another rogue regime.

Additional reporting by Stephen Fidler