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January of 1981 was particularly cold in Washington, DC. There had been freezing snow and rain; the wind was coming off the Potomac River with a startling briskness. Still, there was the eager anticipation in the nation's capital that accompanies any transition in power. Barely two days after his inauguration, Ronald Reagan had summoned William Casey, his CIA director-designate, to the Oval Office. In many respects it was unusual for the director of central intelligence (DCI) to be meeting privately with the president so early in the term of office. There was, after all, a budget to write, and positions left unfilled. The central concern of the new administration was the economy. But Ronald Reagan was not just meeting with his director of central intelligence, he was meeting with a close and trusted adviser.
That trust had manifested itself throughout the long campaign. The Reagan Election Committee was broke and in chaos when Casey took over as campaign chairman in January 1980. "A lot of people forget there wasn't much hope for Ronald Reagan in early 1980," recalls Richard Allen, the Reagan adviser on national security issues. "Bill Casey helped to turn things around." On the campaign trail, Reagan had followed Casey's advice. The president knew he was in the Oval Office in part because of the managerial skill and political acumen Bill Casey had injected into the campaign. "Ronald Reagan felt indebted to Bill Casey the way any successful leader does to those who helped make their election possible," says Martin Anderson, a Reagan adviser andcampaign official. Yet in the weeks after the 1980 election, as the plum cabinet appointments were being handed out, Casey grew increasingly disappointed. He had thought that the level of trust and shared identity between himself and the president would translate into an appointment as secretary of state, the job Casey coveted. But Reagan opted for Alexander Haig, the driven former NATO commander with a sense of drama and a sharp, disciplined mind. Haig was in many ways a Reagan outsider: he had played no role in the campaign and was not a friend or admirer. Yet he had the commodities deemed so important for the job at State: experience and presence.
When the president finally did call Bill Casey, in late November, the job offer was not exactly what the former campaign chairman had in mind. The director of the Central Intelligence Agency typically served more as a servant than as a policy maker. He was rarely part of the team or at the center of power. The DCI usually only offered intelligence estimates and assessments. After Reagan made his pitch, Casey told him, "Let me think about it and get back to you."
The more he thought about it, the more the post of DCI as tradition had defined it was just not enough for Bill Casey. Bursting with schemes and plans, at age sixty-seven, he would in all probability have no other chance to reach the inner circle of national power. So he decided to make the best of it, elbowing his way into the policy-making inner circle.
A few days after the offer, Casey called the president-elect back and said he would accept on three conditions. And, he added, they were not negotiable. First, he wanted full cabinet rank and a seat at the table of any senior foreign policy decision-making body. He didn't want to be out of a single loop.
The second thing Casey demanded was an office in the White House complex. He wanted easy access to White House personnel and the president, not exile in Langley. In politics, as in commercial real estate, location is everything. He could drop by the Oval Office unannounced and informally influence policy. But there was another reason he wanted a place in the White House. Martin Anderson, who served on the President's Foreign Intelligence Advisory Board, watched the whole process and recalls, "Having his own office and secretary up there on the third floor of the Old Executive Office Building [OEOB] meant that Casey could confer easily and secretly with just about anyone on the National Security Council staff. Casey could also use his office for meetings he wished to conceal from his own bureaucracy. The phone calls he made and received at the OEOB were truly private, not tape-recorded and carefully logged as they were at CIA headquarters."
The third and final condition was an "open door": Casey wanted assurances from the president that he would have direct access to the Oval Office whenever he wanted. "He didn't want to have to go through other people to talk to the president," says Herb Meyer, Casey's special assistant at the CIA. "He wanted to be able to phone him or meet him directly, alone.
Reagan agreed immediately to Casey's demands, and born at once was the most powerful director of the CIA in American history. Both formally and informally, Casey was at the epicenter of foreign policy power. The agreement with the president gave him a seat on the cabinet as well as membership in the more exclusive National Security Council. More important still, he would sit on the soon-to-be-created National Security Planning Group (NSPG), the body of real foreign policy power that was limited to the president, vice president, secretaries of state and defense, and the national security adviser. And Bill Casey.
But beyond the formal power he would wield and the sprawling office in the OEOB, Casey had another important commodity that would make him the most powerful DCI in American history: a close relationship with the president. This was the most consequential thing Bill Casey possessed. "They were soul mates," says Herb Meyer. "They were Irish-Americans who lived through the Depression and shared a common worldview. They met twice a week, throughout the Reagan years, often alone. They talked on the phone all the time. National security advisers came and went, but Bill Casey was always there. He was the most powerful CIA director in American history." Casey, Allen, Weinberger, all strongly committed to countering the Soviet challenge, all with access to the president.
* * *
Casey was met at Langley headquarters and whisked into the back of an unmarked Oldsmobile 98 by the CIA security detail for his late January appointment with the president. Dark blue with tinted windows, the car was bullet proof, bomb proof, and full of well-armed security aides. One man rode shotgun next to the driver and carried a magnum. In the backseat, Casey had at his disposal several phonesto CIA headquarters in Langley, the White House, and a secure phone for whomever he wanted to call. Behind the Olds rolled a backup security vehicle, with four security men, who were packing magnums and also carried Uzi submachine guns concealed in oversize briefcases. Two blocks from Sixteenth and Pennsylvania, the driver called White House Security. Baron (Casey's code name) would be arriving shortly.
Running late for his meeting with the president, Casey hurried up the steps to the back entrance of the White House. He walked with a slight stoop, and his hands and arms moved in random directions with each stride. Under one arm he held some manila envelopes, and he clutched an ink pen in his worn hand. Several aides from the lead car scrambled to keep up. Casey entered the White House quickly, with some security personnel getting their first look at Reagan's chief spy. The strands of white hair on his balding head, the metal glasses, the disarming face of a kindly old man in his retirement years; he just didn't fit the role. But friends and enemies were only temporarily blinded by his kindly looks. As soon as he spoke, his cunning and razor-sharp mind revealed the real William Casey. After conferring briefly with Richard Allen and White House counsel Edwin Meese, he went to meet Reagan.
In the Oval Office, Casey greeted the president with a hearty handshake. They exchanged pleasantries and an Irish joke or two, then quickly got down to business. Reagan, partially deaf in one ear, strained to hear even the most crisp and precise interlocutors that he encountered and often told his aides to speak up. But Casey, with his garbled mumble and muddled syntax, made it even tougher for the president to hear. (Reagan often joked that Bill Casey was the first CIA director who didn't need a scrambler phone.) On the campaign trail Casey had learned an important trick that he would make tremendous use of throughout his service in the administration. He would always seek to be at Reagan's side so he could be heard clearly.
Reagan's hearing problems and Casey's mushy verbal style led to speculation later as to how informed the president really was of what Bill Casey was proposing or doing. One former national security adviser notes, "Sometimes we wondered if the president fully understood what Bill was saying, and, by a nod of the head, what he was committing the country to."
Casey's file folders were bursting with maps, charts, and graphs for the new commander in chief. He also brought raw intelligence and reports concerning the Soviet economy. Mr. President, Casey began, thumbing through the folders, I want to take this time to bring you up to date on the Soviet situation. They're bad off, struggling. He handed the president some raw data on Soviet manufacturing bottlenecks and shortages, as well as anecdotal information pulled from intelligence reports. He also included a chart of the rise and fall of Soviet hard currency earnings. The situation is worse than we imagined, he told Reagan. I want you to see for yourself how sick their economy is and, as a consequence, how vulnerable they are. They are overextended. The economy's in shambles. Poland's in revolt. They're bogged down in Afghanistan. Cuba, Angola, Vietnam: their empire's become a burden. Mr. President, we have a historic opportunity. We can do serious damage to them.
There was a moment of silence, a strategic pause. Casey continued. Mr. President, I want to send to you every week raw intelligenceunfilteredabout what is going on. I'm also putting together a series of studies concerning what we can do, how we can use this to our advantage.
Throughout his tenure as the director of central intelligence, Casey would have raw information brought to the president every Friday. This practice had an enormous effect on Reagan and his views toward the Soviet Union. Seeing raw intelligence on a regular basis was unprecedented for a U.S. president. But it was a critical first step in his understanding the relative weakness of the Soviet Union. When William Clark became national security adviser in 1982, the flow of intelligence was increased further. "The president loved seeing the raw intelligence on the Soviet economy," recalls John Poindexter. "The anecdotal intelligence especiallyfactories that were shutting down for a lack of spare parts, hard currency shortages, food linesinterested him greatly and helped determine his belief that the Soviet economy was in monumental trouble." Entries in Reagan's private diaries support this view. The March 26, 1981, entry reads: "Briefing on Soviet economy. They are in very bad shape, and if we can cut off their credit they'll have to yell 'uncle' or starve." The intelligence, personally selected by Casey and the NSC staff, was hand delivered to the Oval Office.
After listening to Casey for twenty minutes, the president said, Bill, why don't you raise this at the NSPG? It was at the January 30 NSPG meeting that the subject of a covert, strategic offensive against the Soviet Union was first raised. In addition to the president, members at the time were Vice President Bush, Caspar Weinberger, Alexander Haig, Bill Casey, and Richard Allen. The Soviets were pouring more resources into Afghanistan: 89,000 troops were now there. Soviet forces were still massing around Poland. The prospect of an invasion was growing, and Western Europe seemed uninterested, sending credits to Moscow to build a massive natural gas pipeline.
The entire NSPG was in agreement on the need to expand the defense budget, a trend that had started in the Carter administration after the Soviets moved into Afghanistan. "Everyone agreed that restoring our strength was central," recalls Weinberger. "The real issue was, What were our goals and objectives?"
The meeting was chaired by Allen, who had long viewed U.S. policy vis-à-vis the Soviet Union as strategically flawed. With the discussion about budgetary issues over, Allen began a broad consideration of U.S. objectives. "The discussion was very animated," recalls Weinberger. "It was there that we decided the need to make a stand on Poland. Not only to prevent an invasion but to seek ways to undermine their power in Poland."
The general thrust of U.S. policy toward the Soviet Union had not yet been determined. Secretary of State Haig was eloquently making the case for a "hardheaded détente," which would force the Soviets to negotiate at terms favorable to the United States. By rebuilding the armed forces and negotiating from a "position of strength," argued Haig, U.S. interests would be protected and stability maintained. It was a reassertion of containment, the orthodoxy that had guided American foreign policy since 1947, except perhaps for the few years of the Ford and Carter administrations, when American fortitude, in the shadow of Vietnam, was lacking. Casey, with strong support from Weinberger and Allen, posited that the threat was much more fundamental, and that therefore a more proactive approach was required. The relative strength of America was not enough, Casey said. What mattered also was the strength and health of the Soviet system: increasing American strength would not alter the threat, it would only deter it. The U.S. goal should be not only to raise American strength in relative terms but also to reduce Soviet power in absolute terms. When a democracy struggles against a totalitarian system, Allen said pointedly, it's at a distinct disadvantage. We need to play to our strengths, not our weaknesses.
The discussion went on for almost twenty minutes and concluded with an animated speech by Casey: Mr. President, for the past thirty years we've been playing this game on our side of the field, refusing to take the game to their half of the field. You don't win games that way. If they are secure at home, it won't matter what we do. Their behavior will only change on the tangent.
The president's own instincts led him to favor a more aggressive U.S. policy. During the campaign, he had made a point of listing the countries that had fallen under Soviet control in the years since Vietnam. Silent for about thirty seconds after Casey's presentation, Reagan finally spoke. "I think Al's ideas are the most likely to get results in the public arenagetting help from our allies and so forth. But Bill's option makes the most sense to me strategically."
The Soviets seemed to understand this division within the administration. As Soviet specialist Seweryn Bialer noted early on, "Soviet analysts do see differences and divisions within the Reagan Administration, although they ascribed little importance to them initially. They distinguish, for example, what may be termed the anti-Soviet position of former Secretary Haig and more generally of the State Department from the anti-Soviet and anti-communist position of the Defense Department and White House. The former are said to espouse policies designed to counteract the expansion of Soviet power by realpolitik. The latter go beyond this position to call for a crusade against the Soviet Union."
The discussion was limited to the conceptual, but it was enough to set the initial course. The president seemed inclined toward a more vigorous policy, one that would not only beat back Soviet probes but actually take the game to them.
At the NSPG meeting, it was also decided that the administration needed to begin a concerted covert effort to play on Soviet psychological vulnerabilities and weaknesses. The Soviets were concerned about Ronald Reagan, whom they characterized as an unpredictable cowboy. Richard Allen had met with Soviet Ambassador Anatoly Dobrynin during the transition. "They thought they had some first-class nut-ball on their hands," recalls Allen. "They were frightened to death."
The new administration saw value in cultivating that image, at least within the Kremlin walls. "It was part of Reagan's strategy to get the Soviets to think he was a little crazy," says Allen. This was a concept proposed by the late strategist Herman Kahn, who had compared the superpower competition to the game of chicken. Neither side wanted a crash, went the theory, but neither wanted to back down when a confrontation arose. Yet ultimately someone would back down, to prevent all-out war. As Kahn so succinctly put it, "No one wants to play chicken with a madman." So the cowboy image had its strategic advantages. Born from the meeting was an informal but very intense psychological operation (PSYOP).
The goal was to shape the Kremlin's thinking by putting it on the psychological defensive and thereby making it less prone to taking risks. This involved a series of military probes on the Soviet periphery "It was very sensitive," recalls former Undersecretary of Defense Fred Ikle. "Nothing was written down about it, so there would be no paper trail."
"Sometimes we would send bombers over the North Pole, and their radars would click on," recalls Gen. Jack Chain, the former Strategic Air Command commander. "Other times fighter-bombers would probe their Asian or European periphery." During peak times, the operation would include several maneuvers in a week. They would come at irregular intervals to make the effect all the more unsettling. Then, as quickly as the unannounced flights began, they would stop, only to begin again a few weeks later.
"It really got to them," recalls Dr. William Schneider, undersecretary of state for military assistance and technology, who saw classified "after-action reports" that indicated U.S. flight activity. "They didn't know what it all meant. A squadron would fly straight at Soviet airspace, and their radars would light up and units would go on alert. Then at the last minute the squadron would peel off and return home." The first PSYOP probes began in mid-February and were designed primarily to sow uncertainty and therefore deter a Soviet move into Poland. But the operations would be used throughout the administration as seen fit to send a psychological message to the Kremlin.
Days after his meeting with the NSPG, Casey called together his senior operations directorate. Covert operations would play a critical role in the strategic offensive the administration was planning. Casey wanted to know the agency's covert operations capabilities and explore ways they could be used more effectively. He had requested some memos from his staff on the condition of the directorate. When the reports came in, he found it calcifying through negligence. Quite simply, in his mind covert operations were an underutilized and unappreciated avenue of foreign policy. But this was a controversial view.
Clearly, there were barriers in his own organization. John McMahon was the agency's operations chief, but unlike Casey he was a very cautious man. "John came out of the congressional investigations of the 1970s a wounded man," says Vincent Cannistraro, a former senior agency operations official. "He was very risk averse. He saw problems that would come back to haunt us in almost anything we would do."
The one major covert operation at the time was support for the mujahedin fighting the Soviet invasion of Afghanistan. Set up by Stansfield Turner at the request of President Carter days after the Christmas 1979 invasion, the program had been marginally successful in sustaining the resistance. The CIA was purchasing Egyptian arms and funneling them through Pakistan with the cooperation of the Pakistani ISI. In 1980-81, the value of arms being provided totaled approximately $50 million. The stated U.S. objective in the intelligence finding authorizing the program was to "harass" Soviet forces. Saudi concerns about Soviet adventurism in the region led to some additional contributions. The Saudis agreed to match dollar for dollar the U.S. total.
Washington wanted any weapons going to the resistance to be of Soviet origin, to give U.S. officials plausible deniability if the Soviets complained. Officials in the CIA had come up with the covert Egyptian route for a couple of reasons. Cairo was sympathetic to the struggles of the Muslim brethren in the mountains of Afghanistan. And Egypt had an abundance of Soviet arms, left over from the close military cooperation it had had with Moscow in the 1960s and early 1970s. In addition, China was producing its own Soviet-designed weapons and was seen as a likely candidate to become more involved in the operation.
But while crates of arms were making their way through the covert pipeline, the quality of those arms left something to be desired. The CIA was paying for semiadvanced weapons that could hurt the SovietsAK-47s, grenade launchers, and mines. However, the mujahedin were being shipped old bolt-action rifles, decomposing ammunition, and rusting equipment. "The Egyptians were charging top dollar and selling us crap," recalls one official. "The weapons were just enough to frighten the Soviets and get a few brave mujahedin killed."
Mujahedin commanders had been complaining for months to CIA field operatives about the poor quality of armaments. But Langley had done nothing, fearing that a confrontation with the Egyptians might lead them to go public with the operation. In his earliest days as DCI, Casey had reviewed some of the cables running between Cairo and Langley. He was furious and disgusted.
At the early meeting, McMahon and his aides sat huddled around the table as the new director listened intently. After a cursory briefing concerning half a dozen covert operations, the subject turned to Afghanistan. McMahon told Casey about the quantity of weapons going to the "muj" (as they were affectionately called at Langley) and said that the Soviets were paying a price for the occupation. After McMahon finished, Casey started without delay: "That stuff we're giving them is pure crap. We need to get them real weapons. You tell your people in Cairo to correct the problem, or when I'm there in April I'll raise it with Sadat. I want the Soviets to pay a price." He then got more animated, leaned forward, and in a burst said, "Supporting the resistancethis is the kind of thing we should be doingonly more! I want this sort of activity other places on this globe, places where we can checkmate them and roll them back. The captive nations are our best allies. We've got to make the communists feel the heat. We need to bleed them. And to do that, we need to change some things around here." McMahon left the meeting concerned. The safe operations officer had met "the Crusader."
Throughout his tenure as director, but particularly in the first year, Bill Casey set out to reorganize, revitalize, and reorient the CIA. Under his predecessor, Adm. Stansfield Turner, the CIA had been decimated. The agency Casey inherited had a staff of 14,000 and a budget hovering around $1 billion, but that did not translate into much activity in the field. Turner was a technocrat, a strong believer in satellites and electronic intelligenceand a strong skeptic about the efficacy and desirability of human sources or covert action. During his four years as DCI, the admiral had eliminated some 820 clandestine positions. Morale among agents in the field was low. Despite its public image as an omnipotent force, the CIA in early 1981 was weak and ineffectual. "We didn't have any assets in the places we most needed them," recalls one official. "We couldn't have run a covert operation against the corner 7-Eleven, much less behind the Iron Curtain."
As Adm. John Poindexter recalls, "Sure, in those early years we had a general picture of their military capabilities, but we had no sense of the Soviet policy-making process, no sense of what was going on inside the Politburo. And we had very little ability to engage in covert operations."
Part of the problem, as Casey saw it, was Congress. He told the Senate bluntly during his confirmation hearings on January 13 that he planned to "minimize the restrictions" placed on the CIA. "There is a point at which rigid accountability, detailed accountability can impair performance," he said. And he left few doubters that he felt the country had crossed that Rubicon already. (By summer, he had dramatically reduced the number of CIA staffers assigned to keep Congress informed of agency business.)
Then there was the problem of morale. The CIA had been under assault for years: the Church Commission hearings; the purges under Turner; flaps over the Phoenix Program in Vietnam and botched assassination attempts against Fidel Castro; domestic spying against anti-Vietnam protesters. Bill Casey wanted to put all that behind the agency. "The difficulties of the past decade are behind us," he wrote to his employees in early 1981. "The time has come for the CIA to return to its more traditional low public profile."
The new DCI was surprised when he learned of the limited intelligence sources that he had inherited. "Bill was flabbergasted," recalls his special assistant, Herb Meyer. "After all, we were the leaders of the Free World, and we didn't have one top-notch source in place in the Soviet Union. Given his experience with the OSS [Office of Strategic Services], he accepted no excuses for what had gone on."
The war years had profoundly influenced Bill Casey's views about the game of nations, protracted struggle, economic warfare, and the efficacy of covert operations. In the fall of 1944, Allied armies were preparing to invade Nazi Germany. But the Allies had very little intelligence on what was happening on the ground in Germany. In Italy, France, North Africa, and even Central Europe they had been able to recruit agents who provided valuable information that saved lives and helped the Allies better deal with the German army. Not so in Germany itself. There were no agents providing sensitive military intelligence and no prospects for an intelligence network. Allied commanders approached "Wild Bill" Donovan, director of the OSS, about the problem. To the surprise of many, Donovan turned over this most sensitive and critical intelligence operation to a thirty-two-year-old former navy lieutenant. His name was William Casey.
The navy lieutenant (junior grade) had started out as a consultant to the Board of Economic Warfare in 1943. According to Casey, his job was "pinpointing Hitler's economic jugular and investigating how it could be squeezed by blockade, preemptive buying and other means of economic warfare." Casey found the work somewhat interesting, but he itched for more action. So in 1943 he went to interview with Col. Charles Vanderblue, an official with the OSS. They hit it off, Casey signed on, and barely a year later he was appointed by Donovan to serve as chief of secret intelligence, European Theatre.
Casey's appointment was flattering but his task unenviable. The navy lieutenant relished the opportunity and threw himself into his work. Through creativity (and the fudging of some legal guidelines), Casey set up an intelligence network behind Nazi lines that was one of the great intelligence coups of the war. As author Joseph Persico puts it in his book Piercing the Reich, Casey was able to "recruit two hundred crack agents to penetrate the heart of the Nazi Fortressforge documents, authentic enough to defy the closest scrutinymanufacture convincing identities to deceive the cunning Gestapodevise a complex yet infallible network of communicationsarrange monitoring, fact gathering, and on the spot analysis."
How he did it proves to what lengths Bill Casey would go to subvert the enemy. Dropping Americans behind Nazi lines wouldn't work, so Casey took volunteers from a group of anti-Nazi POWs. His agents spoke German, they were familiar with Berlin, so the match was natural. The fact that using POWs in such a way was a violation of the Geneva Conventions didn't phase the young spy chief. These were desperate times.
By February 1945, Casey had his first two agents inside Berlin. In March, he had thirty teams. The next month, he had fifty-eight teams in Germany. The methods they used were very creative. Chauffeur, the code name for one Berlin team, used prostitutes as spies.
Casey's war years, immersed in the world of the cloak and dagger, left a lifelong impression on him. The whole experience embedded firmly in his soul lessons about the struggle between foes and the necessity for bold action. And these lessons were as relevant to Soviet communism as they had been to German National Socialism. As he wrote in The Secret War Against Hitler (a posthumously published chronicle of his wartime experiences), "I believe that it is important today to understand how clandestine intelligence, covert action, and organized resistance saved blood and treasure in defeating Hitler. These capabilities may be more important than missiles and satellites in meeting crises yet to come, and point for the potential for dissident action against the control centers and lines of communication of a totalitarian power."
His caution aside, Stansfield Turner did leave his heir with some important intelligence assets. The one agent the agency had at the highest levels of the Soviet bloc was Col. Wladyslaw Kuklinski, a member of the Polish General Staff. Courageously, Kuklinski was providing the CIA with a steady flow of intelligence on the Soviets' intentions in Poland. His sensitive reports also included exposing information on the Warsaw Pact's order of battle and operational plans in Europe. Kuklinski was in such a susceptible position as a deep-penetration spy that Turner made certain only the most senior officials saw his reports. Access had been limited to the BIGOT list. In the Carter White House, this list included only the president. Vice President Mondale, and Zbigniew Brzezinski, the national security adviser.
Bill Casey kept the BIGOT list small, and few knew of Kuklinski's exploits. Still, Casey wanted dozens of Kuklinskis throughout the Soviet bloc. He also wanted the covert operations capability enhanced. So in early March 1981, Casey went on a two-week trip to CIA stations in the Far East. (Throughout his tenure, Casey would spend large amounts of time on the road, more than any previous director.) He wanted to meet with people in the trenches and find out what was going on. This was a spirit the CIA had not seen in quite some time. Under Stansfield Turner, notes his onetime executive assistant William Gates, "The CIA was hunkered down in a defensive crouch."
For Casey, that attitude had to change. As he repeatedly told his aides, "Intelligence work is teeming with risks, and I expect us to live with them. The only thing we should seek to avoid are unnecessary risks."
William Casey arrived in Washington as the most powerful director of central intelligence in American history. By virtue of his relationship with the president and his formal power in the administration, he was a key figure in the emerging U.S. foreign policy. "Bill Casey loved the job; he was perfect for it," according to David Wigg, a longtime Casey business partner and for a while the CIA liaison to the White House. "His effect on policy is hard to underestimate."
So in early 1981, Casey began the redevelopment of the U.S. covert operations capability. It would eventually be put in service under a strategy developed by the NSC that would change the course of the Cold War and hasten the demise of the Soviet Union.