SECTION I - CURRENT INTELLIGENCE

VICE PRESIDENT DEFENDS ROLE OF CIA AND MILITARY INTELLIGENCE INSIDE THE U.S. Vice President Dick Cheney recently confirmed a story reported first in the New York Times that the CIA and military intelligence organizations have been obtaining access to Americans' financial records. Cheney defended the program as a necessary tool in the war on terror and to secure U.S. military bases and operations inside the United States. The Vice President said that military intelligence supports counterespionage and counterterrorism efforts directed against Department of Defense interests in the U.S. The financial records were obtained by issuing "national security letters," which act as a subpoena, to banks, credit card companies and other financial institutions. Companies that oppose the disclosure can challenge the letters in court. Cheney asserted that the activities of the CIA and military intelligence organizations were legitimate practices the authority for which dates back 30-40 years. Calling the story "dramatic," Cheney appeared on Fox News Sunday to ensure the American people understood that "... this is a legitimate security effort that's been underway for a long time and it does not represent a new departure from the standpoint of our efforts to protect ourselves against terrorist attack." The Times article characterized the program as a dramatic expansion of the roles of the CIA and the Defense Department into areas of intelligence collection that traditionally fell under the auspices of the FBI. Major Patrick Ryder, a Pentagon spokesman said, "the letters provide tremendous leads to follow and often with which to corroborate other evidence in the context of counterespionage and counterterrorism." The New York Times reporters were unable to uncover specific cases where the military or CIA used the letters to obtain private financial information about an American, but their sources in the Pentagon said the program was used to check out a government contractor who had unexplained wealth (often an indicator of espionage activity) and a military chaplain that was suspected of giving aid to detainees at Guantanamo Bay. The charges against the chaplain turned out to be a mistake. [PJK/Brietbart 14Jan07]

SCIENTIFIC EVIDENCE LACKING TO BACK USE OF CONTROVERSIAL TECHNIQUES A study sponsored by the Defense Intelligence Agency (DIA) and the Counterintelligence Field Activity (CIFA) found that almost no scientific evidence exists to support harsh and coercive interrogation techniques as viable methods for obtaining useful intelligence. The Intelligence Science Board, which conducted the study, found that there has been no objective examination for over 40 years of the controversial techniques that were in use by the CIA and the military to support the war on terror and the war in Iraq. Further, the study found that cases of abuse such as those reported at Abu Ghraib prison in Iraq and the U.S. detention facility at Guantanamo Bay may have directly stemmed from the lack of research and interrogators creating techniques "on the fly." The report entitled "Educing Information- Interrogation: Science and Art, Foundations for the Future" (374 pages) says that in order to meet the pressures to produce intelligence new techniques were created on the battlefield that were based on "popular culture and ad hoc experimentation" without any indication that the techniques actually worked. The military has since banned all coercive interrogation techniques. Col. Steven M. Kleinman, who has served as the Pentagon's senior intelligence officer for special survival training doubts the integrity of information obtained through harsh interrogation methods and wrote that intelligence gathered with coercion is sometimes inaccurate or false, noting that isolation, a tactic U.S. officials have used regularly, causes "profound emotional, psychological, and physical discomfort" and can "significantly and negatively impact the ability of the source to recall information accurately." However, the CIA maintained permission from congress to use harsh methods when necessary. [CL/WashPost 16Jan07/White]

IRANIAN PARLIAMENT MEMBER CLAIMS IRAN SHOT DOWN A U.S. UNMANNED AERIAL VEHICLE IN IRANIAN AIRSPACE Seyed Nezam Mola Hoveizeh, a member of the Iranian parliament, reported to the local news agency Fars that Iranian troops shot down an unmanned U.S. drone as it crossed the border from Iraq. The action occurred "in the last few days" as tensions between Iran and the U.S. are ratcheting up over Tehran's nuclear ambitions and meddling in the civil strife inside Iraq. No other details, such as the date and time of the incident, were provided, but Hoveizeh said, "the United States sent such spy drones to the region every now and then."  President Bush announced earlier this month that an additional aircraft carrier, the U.S.S. John C. Stennis, would deploy to the Gulf region within the next month. The addition of the Stennis will bring the number of aircraft carrier groups in the Persian Gulf to two for the first time since the invasion of Iraq. In addition to the aircraft carrier, the U.S. is deploying anti-missile Patriot batteries to the region to thwart any attempt by Iran to threaten its neighbors. Meanwhile, the Kuwait-based Arab Times is reporting that the U.S. may launch a sea-based attack on Iran by April. According to an unnamed source, the Bush Administration believes that an attack on Iran would create a new balance of power in the region and calm down violence inside Iraq which the U.S. believes is fueled in part by Iran and Syria. In what may be an attempt to dissuade any U.S. air attack, Iran obtained a new Russian anti-aircraft missile system. Russian Defense Minister Sergei Ivanov confirmed that his country had delivered the Tor-M1 missile system to Iran based on a $1 billion 2005 deal, and would consider supplying Tehran with additional defensive weapons systems. The Tor-M1 can track up to 48 airborne targets, including aircraft and low flying missiles, simultaneously, and has a range between 20 and 6,000 meters. [PJK/Xinhua 17Jan07/Youchang]

POLICE MAY HAVE IDENTIFIED LITVINENKO'S KILLER IN VIDEO FROM AIRPORT CAMERA Scotland Yard investigators believe they have matched the image from an airport surveillance camera to Litvinenko's deathbed description of his killer. According to Oleg Gordievsky, a former KGB agent and friend of Litvinenko, who has been working closely with the police, the suspect is in his early 30's with a muscular build, short-cropped dark hair and distinctive Central Asian features. Police are not releasing the image of the suspect. Gordievsky believes the man is a professional assassin sent by the Kremlin to kill Litvinenko. Until now, police did not reveal that Litvinenko went to a room in the Millennium Hotel on 1 November, the day he became ill, to discuss a business deal. Present at the meeting were Litvinenko, Dimitri Kovtun, a Russian businessman who is being investigated for trafficking the radioactive material used in the poison plot, and another former KGB officer, Andrei Lugovoy. During the meeting the three men were joined by the suspect, who was introduced only as "Vladislav." According to Gordievsky, Vladislav had flown into Heathrow that same day on a Lithuanian or Slovak passport, did not check into any accommodations in London, and then flew out using a different passport. During the meeting, investigators believe Vladislav prepared a cup of tea for Litvinenko and put the pulonium-210 poison in the cup. Vladislav was posing as a man who could get Litvinenko a lucrative contract with a Moscow-based security company. Most of the details of the meeting were obtained from Litvinenko himself before his death. The room where the meeting was held is still sealed. The room had the highest levels of polonium contamination of any of the sites in London that were tested. [CL/Times 20Jan07/McGrory and Halpin]

INTERPRETER FOR COMMANDER OF NATO FORCES IN AFGHANISTAN HELD WITHOUT BAIL IN SPYING CASE Mr Justice Calvert-Smith turned down a bail request from Corporal Daniel James, a British Army interpreter charged with passing information to the enemy, saying that James was a flight risk, and that there was a chance that he might commit other offenses. James, who was born in Iran and speaks Farsi and Dari. became a naturalized British citizen in 1986. He served in Afghanistan as the interpreter for General David Richards, British Commander of NATO forces in Afghanistan. James is charged under the Official Secrets Act and allegedly "communicated to another person information calculated to be, or that might be, or intended to be directly or indirectly useful to the enemy." The charge claims that James passed information to Iran. At the bail hearing, James's defense attorney, Paul Raudnitz called James a patriot saying that his decision to join the British Territorial Army was "a deliberate act of patriotic duty toward the country that had taken him in". Furthermore, Raudnitz said, "[James] has in no remote sense any competing interest or commitment to any other country or party." Bail hearings in Britain are normally held in private, but members of the press were invited to this event at the request of the defendant. [CL/Telegraph 13Jan07/Henry]

SECTION II - CONTEXT AND PRECEDENCE

BORIS GUDZ AND THE ACE OF SPIES Sidney Riley, the self-described "Ace of Spies," was lured to his death in 1925 by a team of Soviet security officers led by Artur Artusov who were part of the OGPU, a forerunner to the KGB. The last surviving member of the group, Boris Gudz, died recently on 27 December at the age of 104. At the time of the Riley affair, Gudz was a junior member of the group. It was less than a decade since the overthrow of the czar, and the Bolshevik Revolution was still young. There was support in the West, not least of all in Britain, for anti-Bolshevik groups who sought to derail the revolution. Gudz was hired by Artusov to help infiltrate these anti-Bolshevik groups and locate Western spies. To that end, the Trust was created. The Trust was a White Russian movement consisting of real anti-Bolshevik activists who formed what they called an "alternate government" within the Soviet Union. However, the group, unbeknownst to its members, was controlled by Artuzov's and Gudz's team. British intelligence suspected the link between the Trust and the OGPU, and asked Sidney Riley to assess the anti-Bolshevik group (the British later denied that Riley was working for them). At the request of Ernest Boyce, SIS head of station in Helsinki, Riley agreed to meet with members of the Trust in August, 1925. They met in Vyborg, Finland. Riley promised Boyce's deputy, Harry Carr, that he would not cross into the Soviet Union. However, Riley, an itinerant womanizer and repeat bigamist, was tempted by a Soviet seductress, Maria Radkevich, and Gudz's team fed Riley's ego with compliments that he was an inspiration to the group. Riley agreed to come to Moscow to address the leaders of the Trust and meet with the full "alternate government." Riley was 51, and although a successful spy in his prime, was no longer working for British intelligence in a fulltime capacity. He had become obsessed with overthrowing the Bolsheviks, and the meeting in Moscow was his opportunity to live out his fantasy. Riley went first to Leningrad where he was treated in first-class fashion, and then on to Moscow where he met with the membership and leaders of the Trust. Shortly thereafter, Riley, who was wanted in the Soviet Union for his part in a 1917 effort to thwart the revolution, was arrested by the OGPU. He was taken to Lubyanka prison and endlessly interrogated. His captors would often take him to Sokolniki park for walks. It was on one of these walks that Stalin's order to execute Riley was carried out. At least two of Riley's wives sued the British government for compensation. The Brits, however, said that after 1921 Riley no longer worked for them and his activities were his personal affair. The government also could not unravel Riley's "somewhat complicated matrimonial tangles."
    Gudz continued serving and in 1934 was sent to run the Soviet intelligence collection station in Tokyo. There Gudz met Richard Sorge, a German Communist who was working undercover as a Nazi journalist. Sorge was another womanizer, and his mistresses included the wife of the German ambassador and secretaries within the Japanese government. Sorge became one of the most successful sources of Soviet intelligence on pre-World War II German and Japanese intentions. Gudz returned to Moscow in 1936, but continued to handle Sorge. In 1941, Sorge reported that Germany was preparing to invade the Soviet Union. Stalin, who trusted Hitler, did not respond favorable to this report, calling Sorge "a shit who has set himself up with some small factories and brothels in Japan". Gudz told Sorge that the Soviet government doubted the veracity of his claims.
    During Stalin's purges, Gudz's sister was arrested and Gudz thrown out of the Communist Party. He found work as a bus driver for a while and later rejoined the Party. Later in life he served as a consultant to Soviet television which put together a piece on the success of the KGB against Western spy agencies. [CL/Telegraph 18Jan07]

SECTION III - CYBER INTELLIGENCE

DEPARTMENT OF DEFENSE RESCINDS WARNINGS OF RIGGED CANADIAN COINS Last week, WINs reported that the Defense Security Service (DSS) was warning government contractors that Canadian coins had been discovered containing tiny transmitters that could track one's movements [WINs #01-07] . DSS said that many of the details of the report were classified, but assured the public that the story was true. It turns out the story was not true. DSS officials have been unable to substantiate their own agency's claims, and have launched an investigation to determine how the faulty intelligence was included in a 29-page report on security concerns. The initial report garnered immediate skepticism from technology and intelligence experts. The experts said that transmitters tiny enough to fit inside a coin would have an extremely limited range, and that the metal in the coin would interfere with the signal, making them highly suspect to be used as tools for espionage. Furthermore, as was theorized in WINs last week, a target could easily and inadvertently slip surveillance simply by spending the coin. [LATimes 19Jan07/AP]

NSA'S DOMESTIC WIRETAPPING PROGRAM WILL BE SUBJECT TO NEW FISA COURT PROCEDURES The Bush Administration has reversed its opposition to restricting the NSA's domestic wiretapping program by agreeing to new FISA Court procedures that provide the necessary "speed and agility" to issue warrants in anti-terrorism cases. The program had been under intense scrutiny and criticism since it was discovered that NSA was screening phone records of Americans to find suspicious calls made between domestic locations and phones overseas. The President had said that the court's previous rules did not provide sufficient flexibility to react to international terrorism, and that as Commander-in-Chief he was authorized to permit the records screening and wiretaps to protect the country. Attorney General Roberto Gonzales appeared before a Senate Judiciary Committee hearing last week and faced harsh questioning about the program. Government attorneys will also be arguing before an appellate court judge in Cincinnati to present evidence in an attempt to overturn an earlier court decision that the NSA program was illegal and unconstitutional. [CL/NYT 18Jan07/Lichtblau and Johnston]

SUCCESSFUL CHINESE TEST OF ANTI-SATELLITE WEAPON ALARMS U.S. White House spokesman Tony Snow decried the 11 January test by China of an anti-satellite weapon and the U.S. is organizing allies to denounce it. The test has set off virtual alarm bells within the administration and Snow said, "We are concerned about it, and we've made it known." National Security Council member Gordon Johndroe was less diplomatic in his remarks saying, "The U.S. believes China's development and testing of such weapons is inconsistent with the spirit of cooperation that both countries aspire to in the civil space area." Australia and Canada both quickly released statements that agreed with the U.S. position, and the U.K., South Korea and Japan are expected to do the same. Intelligence agencies believe the test involved a "kinetic kill vehicle" launched on a ballistic missile that successfully destroyed an aging Chinese weather satellite at about 500 miles altitude over the Sichuan province. All members of the U.S. Intelligence Community including the CIA, NSA, DIA and even NASA are pulling out the stops to obtain data on the test and the anti-satellite weapon. The test, if its occurrence is proven, will mark a dramatic advance in Chinese military capability and could act as a countermeasure in wartime to the imagery satellites of the United States, Japan, Russia, Israel and Europe.  [LawrenceS/AviationWeek 19Jan07]

SECTION IV - BOOKS, SOURCES AND ISSUES