Operation Valuable Fiend: The CIA's First Paramilitary Strike Against the Iron Curtain

Operation Valuable Fiend: The CIA's First Paramilitary Strike Against the Iron Curtain

by Albert Lulushi

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Overview

In 1949, a newly minted branch of the CIA (the precursor of today’s National Clandestine Service), flush with money and burning with determination to roll back the Iron Curtain, embarked on the first paramilitary operation in the history of the agency. They hatched an elaborate plan, coordinated with the British Secret Intelligence Service, to foment popular rebellion and detach Albania, the weakest of the Soviet satellites in Europe, from Moscow’s orbit. The operation resulted in dismal failure and was shut down by 1954.

In Operation Valuable Fiend, Albert Lulushi gives the first full accounting of this CIA action, based on hundreds of declassified documents, memoirs, and recollections of key participants, including Albanian exiles recruited for missions and their Communist opponents. Up till now, the story of the operation has been obfuscated and even distorted. Some blamed the Soviet mole Kim Philby for sabotaging it; the communists credited the prowess of their secret police; and CIA memoirs were heavily sanitized. Lulushi documents a range of factors that led to the failure, from inexperienced CIA case officers outsmarted in spy-vs-spy games by their ruthless Stalinist opponents; to rivalries between branches of the CIA and between the agency and friendly intelligence services; and conflicts among anti-Communist factions that included Albania’s colorful exiled leader, King Zog.

The book also shows how this operation served as the proving ground for techniques used in later CIA Cold War paramilitary actions—involving some of the same agency operatives—including the coup d’états in Iran and Guatemala and the Bay of Pigs invasion of Cuba.

Skyhorse Publishing, as well as our Arcade imprint, are proud to publish a broad range of books for readers interested in history—books about World War II, the Third Reich, Hitler and his henchmen, the JFK assassination, conspiracies, the American Civil War, the American Revolution, gladiators, Vikings, ancient Rome, medieval times, the old West, and much more. While not every title we publish becomes a New York Times bestseller or a national bestseller, we are committed to books on subjects that are sometimes overlooked and to authors whose work might not otherwise find a home.

Product Details

ISBN-13: 9781628723229
Publisher: Arcade
Publication date: 06/03/2014
Pages: 368
Sales rank: 1,359,143
Product dimensions: 6.30(w) x 9.10(h) x 1.30(d)

About the Author

Albert Lulushi was born in Albania and experienced firsthand the oppression of Europe’s harshest Stalinist regime before fleeing to the West in 1990. He moved to the United States in 1991 and built a successful career as an information technology entrepreneur working with US government agencies and Fortune 500 companies. He has assisted US government officials at the highest levels in establishing and conducting relations between the United States, Albania, and Kosovo since the fall of Communism.

Read an Excerpt

CHAPTER 1

The Office of Policy Coordination

On July 26, 1947, President Harry S. Truman signed the National Security Act, which laid the foundations of the modern national security establishment, based on the experience gained during World War II and the challenges presented by the intensifying Cold War. It created the National Security Council (NSC) to advise and assist the President on national security and foreign policies; established the office of the secretary of Defense, led by a civilian presidential appointee to coordinate the activities of the separate Departments of Army, Navy, and Air Force; and instituted a Joint Chiefs of Staff (JCS) organization responsible for the unified strategic direction, command, and integration of land, naval, and air forces. It also created the Central Intelligence Agency (CIA), the first peacetime coordinated and comprehensive intelligence service in the nation's history. As the Congress wrote the National Security Act initially, the CIA's mandate was very similar to that of its predecessor, the Central Intelligence Group, which President Truman had created in January 1946 by presidential directive. The CIA's mission was to collect intelligence by secret or overt means, perform research and analysis, and produce intelligence summaries and estimates.

The first few months of the CIA's existence coincided with an escalation of Communist activities throughout the world and particularly in Europe. The Soviet Union leveraged both the good will created by its fight against the Nazis during the war and the presence of its armies in a number of European countries after the war to inspire and support local Communist parties by open means or behind the scenes. In Czechoslovakia, the Communists had won only 38 percent of the votes in the 1947 elections and held a minority position in the government and parliament. But they controlled the police, security apparatus, and armed forces, which they used to engineer a coup in February of 1948. A government purged of non-Communists came to power, and the parliament quickly approved a new constitution proclaiming Czechoslovakia a People's Democracy, effectively placing it in the Soviet orbit.

A similar scenario risked being repeated in Italy, which had scheduled parliamentary elections for April 18, 1948. The Italian Communist Party, the strongest Communist party in Europe outside the Soviet Union, had outperformed the Christian Democrats in municipal elections in 1946 and 1947. Supported by millions of dollars funneled "in black bags of money directly out of the Soviet compound in Rome," they were poised to win the parliamentary elections. Almost forty years later, Gianni Agnelli, the Italian industrial mogul and head of the Fiat conglomerate, described the effects of a Communist electoral victory in Italy as follows: "[It] would have been a tragedy for Italy; ... would have been a tragedy for Europe; ... would have been a tragedy for the Mediterranean; and it would have been a setback for America."

The United States took a number of steps to ensure a favorable outcome of the elections. Significant economic and military aid available under the Marshall Plan was directed to Italy; the large Italian-American community in the United States sent millions of letters, postcards, and telegrams urging their friends and family back home to reject the Communists. The Voice of America and commercial radio stations in Italy broadcast hours of programming designed to influence the vote, with the Voice of America featuring prominent personalities like Frank Sinatra and Gary Cooper to pitch their message.

However, there was a need to act more decisively with direct but clandestine support that would help the Christian Democrats and their coalition partners get over the top. The CIA's Office of Special Operations (OSO) was the natural choice for the job. The OSO was the intelligence-gathering arm of the CIA that controlled the overwhelming majority of the agency's personnel and assets at the time. Most of the OSO officers had learned their tradecraft during World War II, serving in military intelligence units or in the Office of Strategic Services (OSS), created by William J. "Wild Bill" Donovan in 1942 to collect intelligence and conduct sabotage operations against Axis targets in Europe and parts of Asia.

James Angleton, the OSO station chief in Rome, took charge of the CIA operation to influence the Italian election. Angleton had been instrumental in rebuilding the Italian intelligence services after the war and had unfettered access to their hierarchies, which he used to channel all available OSO assets toward supporting the Christian Democratic candidates and their allies. F. Mark Wyatt, a young CIA officer assigned to the operation recalled:

We had bags of money that we delivered to selected politicians, to defray their political expenses, their campaign expenses, for posters, for pamphlets, what have you. And we did many things to assist those selected Christian Democrats, Republicans, and the other parties that were completely reliable — that could keep the secret of where their funds came from.

We would like to have done this in a more sophisticated manner. Passing black bags to affect a political election is not really a terribly attractive thing. But we only had a few months to do this, and that was the principal thing that we did.

In the end, Alcide De Gasperi's Christian Democrats and their coalition partners were able to beat Palmiro Togliatti's Communist-Socialist alliance thanks to the strong anti-Communist get-out-the-vote effort supported by the Catholic Church and financed by the CIA.

* * *

The legal cover for the CIA's conduct of the Italian operation had been provided by NSC directive 4-A of December 17, 1947, which directed the director of Central Intelligence (DCI) to "Initiate and conduct, within the limit of available funds, covert psychological operations designed to counteract Soviet and Soviet- inspired activities which constitute a threat to world peace and security or are designed to discredit and defeat the United States in its endeavors to promote world peace and security."

An increasing number of people in the national security establishment came to the realization that countering the Soviet threat in a cold war required a broader spectrum of covert actions, more than just psychological operations like those undertaken to influence the outcome of the Italian elections. NSC directive 10/2 of June 18, 1948, authorized the CIA to conduct broad covert rather than merely psychological operations, defining them as:

All activities ... which are conducted or sponsored by this Government against hostile foreign states or groups or in support of friendly foreign states or groups but which are so planned and executed that any US Government responsibility for them is not evident to unauthorized persons and that if uncovered the US Government can plausibly disclaim any responsibility for them.

Specifically, such operations shall include any covert activities related to: propaganda; economic warfare; preventive direct action, including sabotage, anti — sabotage, demolition and evacuation measures; subversion against hostile states, including assistance to underground resistance movements, guerrillas and refugee liberation groups, and support of indigenous anti-Communist elements in threatened countries of the free world.

The Office of Policy Coordination was created on September 1, 1948, to organize and manage these covert operations. As envisioned by NSC 10/2, the OPC took direction from the State Department in peacetime and from the military in wartime. The OPC was placed organizationally under the CIA "for housekeeping and logistics only [italics in original]." It had a direct line reporting and access to the State Department and military hierarchies, with only a "dotted line" dependency on the director of Central Intelligence, who was Roscoe H. Hillenkoetter, rear admiral, US Navy.

The engine behind the creation of the OPC and the man assigned to lead it was Frank Gardiner Wisner, a forty-year-old lawyer who came over from the State Department with the title of assistant director for policy coordination. The higher echelons of the CIA and the State Department at the time were full with ambitious and bright northeasterners educated at Ivy League schools. While equally ambitious and brilliant, Wisner came from the south and his alma mater was the University of Virginia. He was born and raised in Laurel, Mississippi, into a family that had moved there from Iowa after the Civil War to start a successful lumber business and therefore did not owe its prosperity to the slave-owning plantation economy of the antebellum South. Although he grew up in one of the most segregated states of the union, Wisner was proud of the enlightened role his family and especially his sister, Elizabeth Chisholm, had played in discovering the talents and supporting the musical education and career of Leontyne Price, the world-renowned African American soprano.

After attending public high school in his hometown, Wisner enrolled in the all- boys Woodberry Forest School in Orange, Virginia, and then went on to complete undergraduate studies and law school at the University of Virginia. After graduating, Wisner worked on Wall Street and then enlisted in the US Navy six months before Pearl Harbor. Things got interesting for him when he transferred to the Office of Strategic Services (OSS) in July 1943. His first assignment was in Cairo, Egypt, and then from there to Istanbul, Turkey.

In August 1944 Wisner was transferred to Romania on the heels of the retreating German army in order to coordinate the safe evacuation of hundreds of Allied airmen held there as prisoners of war. In Romania, Wisner witnessed from up close the focused efforts of the Soviet Union to establish a Communist regime. The plight of King Michael and the privileged, fervently anti-Communist Romanian elite convinced Wisner that the Soviet Union was gearing up to exploit its power and undermine US interests in Europe and beyond. Wisner was among the few officials at the time to raise concerns about the dangerous enemy that the Soviet Union was becoming, concerns that George F. Kennan, the US deputy chief of mission in Moscow, had articulated most vocally. In his famous "long telegram" from Moscow in February 1946, Kennan had advocated strongly for a new attitude in US policy toward America's wartime ally.

After the war, Wisner went back briefly to his legal career in New York City before joining the State Department in 1947, where he and Kennan, then the head of the Policy Planning Staff, agitated for new ways to counter the Soviet threat, which eventually lead to the creation of the OPC.

Wisner envisioned the OPC as a focal point within the government able to render services to the entire government through its ability to consider problems and get things done where more overt agencies were unable to act. Wisner understood that achieving this vision would result in an unprecedented power in the hands of his organization, which in turn demanded the highest quality of personnel to wield that power responsibly and intelligently. In the weeks and months immediately following the creation of the OPC, Wisner focused his efforts on building an organizational structure and finding the best and the brightest people that would enable him to accomplish his vision.

In its initial days, the OPC comprised about fifteen people, most of them inherited from a previous organization known as Special Projects Group, whose primary function was the conduct of propaganda activities. The OPC's first organizational structure had two main divisions, Operations and Plans & Projects, with foreign branches under each division. The Operations division included branches covering broad geographical areas under the overall direction of the chief of operations. In the early days, there were so few people working for the OPC that only the branches handling Germany, Austria, and the Balkans were actually operating. The branch covering the Balkans and Southeast Europe, Foreign Branch B Section I, or FB-I, was responsible for Albania, Bulgaria, Greece, Hungary, Malta, Romania, and Yugoslavia. It also covered the Free Territory of Trieste, an area on the northern shores of the Adriatic disputed between Italy and Yugoslavia, which, like Berlin, had been one of the fault lines between the Western Allies and the Soviet Union in the early days of the Cold War. The allies partitioned the territory into two zones in 1947. Zone A included the port city of Trieste and a narrow strip of coastline surrounding it; it remained under the administration of the US and Great Britain until 1954, when it became part of Italy. Zone B included parts of the Istria peninsula under the control of Yugoslavia, which went on to incorporate it into its own borders in 1954.

The first chief of FB-I was James McCargar, a Foreign Service officer with deep knowledge of the Soviet Union and Eastern Europe who had taken a temporary assignment with the CIA in 1948 as a case officer in Genoa, Italy, before moving over to the OPC in February 1949. A graduate of Stanford University, McCargar had worked briefly as a reporter for the San Francisco Call-Bulletin before joining the Foreign Service in 1942. His first assignment was in Vladivostok in the Russian Far East, where he served as vice consul. In 1943, he moved to Moscow as secretary of embassy. In 1944, McCargar received a commission in the Naval Reserve and served in Alaska through the end of the war as a liaison between the Soviet Navy and the US Merchant Marine. After the war, McCargar returned to the Foreign Service and went to Budapest, Hungary, first as secretary of legation, and then as chief of the political section. In 1946, McCargar established and ran an escape network through Soviet-occupied territory that saved over sixty Hungarian and Romanian pro-Western political personalities and their families from the arrests, imprisonments, and executions that ravaged Eastern Europe at the time.

Soon Franklin Lindsay joined the OPC as McCargar's boss overseeing all the OPC East European projects. Lindsay had been second in command in the OSS mission attached to Tito's partisans in Yugoslavia during World War II. He brought to the job firsthand experience in guerrilla actions and understanding of the Balkans and partisan warfare principles.

In those early days, Wisner surrounded himself with like-minded former OSS operatives, most of whom he personally recruited with a direct and passionate pitch that went along these lines: "I'm setting up a new organization inside the CIA called the Office of Policy Coordination, and it'll be something different, maybe something up your alley. OPC won't just gather intelligence. We'll be what America needs in this Cold War, an action arm. You're a man of action, aren't you ... ?"

Once the new recruits were on board, Wisner pushed them to compete and produce actionable projects. He managed the OPC like a law firm: the more clients, the more cases, the more rewards. He judged the performance of individuals by the importance and number of projects they initiated or managed. No idea was too far-fetched as long as it was useful in subverting the Soviet influence anywhere in the world.

For example, a new staff office created in late 1949 to conduct propaganda and psychological warfare activities included an eclectic mix of writers, financiers, Hollywood producers, and movie agents, who in 1950 acquired the movie rights to George Orwell's Animal Farm and financed the production and release of the film in 1954. They chose to create an animated movie that parents and children alike could watch and designed the script carefully to convey a clear anti-Communist message. Attention to all the necessary details, including a full complement of jokes and a happy Disney-like ending that was a departure from Orwell's original book made the film a success at the box office. Similarly, they produced another antitotalitarian movie based on Orwell's 1984, which they released in 1956. No one outside the agency had any idea that the CIA financed the movies.

Wisner's energy and focus caused the Office of Policy Coordination to grow rapidly within the CIA, often at the expense of the older and more established Office of Special Operations, whose espionage and counterintelligence activities were important but not as exciting to the CIA customers in the White House, State Department, and the Pentagon. Whereas the OSO was generally content to collect, analyze, and disseminate intelligence, Wisner was eager to put intelligence to work. During the course of 1949, the OPC gradually built up its budget to $4.7 million and its staff increased to 302 people assigned to seven overseas stations, in London, Frankfurt, Vienna, Rome, Athens, Istanbul, and Cairo, who covered countries in Europe and the Near East.

(Continues…)


Excerpted from "Operation Valuable Fiend"
by .
Copyright © 2014 Albert Lulushi.
Excerpted by permission of Skyhorse Publishing.
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Table of Contents

List of Maps and Documents ix

Acknowledgments x

Introduction xi

List of Acronyms xvi

List of Cryptonyms and Pseudonyms xviii

Note on the Pronunciation of Albanian Names xxi

Prologue 1

1 The Office of Policy Coordination 4

2 Albania between 1912 and 1949 13

3 Genesis of Operation Fiend 40

4 The National Committee for Free Albania 57

5 Philby in Washington 73

6 First Infiltrations of 1949 77

7 Reevaluation of Project Fiend 89

8 Labor Services Company 4000 99

9 Odyssey of the First CIA Paramilitary Team 109

10 Philby's Exit 123

11 Propaganda and Psychological and Economic Warfare 131

12 Adverse Developments in the Infiltration Program 146

13 ABucket of Diamonds and Rubies 163

14 A Rich Harvest of Bitter Fruit 173

15 King Zog Overstays His Time in Egypt 208

16 Planning the Fondest Dream 217

17 The American Backers Are Obliged to Withdraw 230

18 Lessons and Legacy of Project Fiend 243

Epilogue 260

Notes 271

Bibliography 297

Index 318

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