14. Reinhard Gehlen and the United States
by Timothy Naftali
THERE COULD BE NO MORE AMERICAN an event. It was the sixth and final game of the 1951 World Series. The New York Yankees, who came into this game leading the Giants three games to two, would ultimately win the championship, 4-3. Years later, sports fans would refer to 1951 as "the season of changes." This was the year that Joe DiMaggio, the Yankee Clipper, decided to retire. And it was also the season that introduced a new generation of ballplayers led by future hall-of-famers Mickey Mantle and Willie Mays.
There were 61,000 individual stories in the stands that day. Most of the men were World War II veterans. The women cheering alongside them might well have worked in a factory to keep the bombers flying and the ammunition dumps overseas filled. Some had lost loved ones in the war; indeed, there was probably no one at the game who did not know a family who had experienced a death. All were grateful that the war was over and that they were now sharing some peacetime prosperity.
Not everyone who saw DiMaggio play his last game had fought on the same side in the Second World War. Wearing tinted glasses and feeling somewhat uncomfortable at his first baseball game was a trim, well-dressed, middle-aged man of average height sitting with a group of similarly well-dressed middle-aged men. His visa indicated that he was a German businessman who specialized in international patent issues. What it did not say was that seven years earlier, Adolf Hitler had promoted this man to generalmajor (brigadier general) for his intelligence work on the eastern front. His documents also did not record that he was in the United States as the guest of the CIA, which for over two years had been subsidizing him in the expectation that he would one day become the first chief of a centralized West German intelligence service.
Reinhard Gehlen would never again be as anonymous as he was at Yankee Stadium in October 1951. The next year, his name began appearing in some Western newspaper accounts, which revealed his ties to U.S. intelligence and his ambitions for the future. [1] These first Western reports were merely the prelude to a massive Soviet propaganda campaign that would make Gehlen the poster child of an alleged postwar alliance between the NATO powers and the military leadership of the collapsed Third Reich. Even after his retirement from West German intelligence in 1968, Gehlen continued to inspire some fascination as Europe's greatest mystery man of the postwar period. To this day, his name is linked with neo-Fascist movements, Nazi war criminals, and even the KGB.
Beginning with those newspaper reports in the 1950s, there has been no lack of information about Gehlen in the public domain. In the 1970s, these reports were supplemented by books and a memoir by Gehlen himself. [2] Over a decade ago, researcher Mary Ellen Reese used materials declassified under the Freedom of Information Act and some expert interviewing to paint the first detailed picture of how Gehlen came to be employed by the United States, as well as why and under what circumstances Washington decided to reconstitute German intelligence using veterans of the Nazi era. Reese did a superb job, but there were serious gaps in the information she received. [3] Recently, Gehlen's CIA case officer, James Critchfield, published his memoirs of the eight years he worked with the German spymaster. [4] That book offered a very personal look at the development of the relationship between Reinhard Gehlen and the United States, but important questions remained unanswered.
Materials released by the CIA and the Defense Department under the Nazi War Crimes Disclosure Act of 1998 permit a thorough analysis of the origins, implications, and results of the U.S. government's postwar sponsorship of Reinhard Gehlen and of the organization that became the Bundesnachrichtensdienst (BND), the West German Secret Service, in 1956. Four broad conclusions emerge from the thousands of pages of new documentation, which will be explored in this chapter. First, despite being the principal source of funding for Gehlen's activities for close to eleven years, the U.S. government never achieved the control over Gehlen's operations that it had expected, sought, or should have had. Second, Reinhard Gehlen often acted in bad faith in his dealings with the United States. He deceived a generation of U.S. intelligence officers about the details of his operations and violated the basic agreements that were designed to undergird the system of cooperation. Third, a substantial number of former members of SD Foreign Intelligence, the Gestapo, and the Waffen-SS were recruited into the organization when it was being funded by the U.S. government. Gehlen's recruitment of these individuals was not done at the behest of the U.S. government; however, after Washington learned about Gehlen's use of war criminals, it opted to do nothing about it. Finally, the CIA did not hold Gehlen and his organization in high regard as intelligence assets. The Agency's major goals in the Gehlen affair were to facilitate U.S. penetration of a future West German intelligence community and to ensure that neither Gehlen nor any of his subordinates turned their highly nationalistic and secret organization against the West.
Gehlen's recruitment of SD and Gestapo officers is a particular focus of this chapter. From the U.S. Army's sponsorship of Gehlen in July 1945 through the end of CIA supervision in April 1956 (when Gehlen's organization was brought into the open as the BND), war criminals on Gehlen's payroll were technically employed by the U.S. government. Since the Heinz Felfe scandal of 1963 -- in which a former SD officer turned out to be a KGB mole in the BND -- the Gehlen Organization was known to include at least a handful of former SD and Gestapo officers, and over the years it has been suspected that there were a great many more war criminals associated with this operation. Christopher Simpson, who successfully ferreted out the stories of several Nazi war criminals who received U.S. sponsorship, wrote in 1988 that "at least a half dozen -- and probably more -- of his first staff of fifty officers were former SS or SD men." [5] But it has never been clear whether these were isolated cases. With the Gehlen Organization numbering four thousand people at its height during the period of U.S. sponsorship, it seemed an open question whether these few bad apples constituted a source of malevolent influence, a systemic problem, or were simply the result of a few stupid decisions in the field. Equally unknown with any precision was the extent of U.S. knowledge of these recruits.
Newly released information from the CIA and the Army make it possible to assess the extent of Gehlen's recruitment of former officers of the SD and Gestapo. It turns out that it was widespread. At least one hundred of Gehlen's officers and agents had served with the SD or the Gestapo, and the number may in fact be significantly higher. [6] Although these recruits did not represent a significant percentage of the Gehlen Organization, some of those hired had participated in the worst atrocities committed by the Nazi regime, and a couple of them reached postwar positions of authority. In addition, the evidence strongly suggests that Reinhard Gehlen himself knew the background of many of these recruits. The new materials also paint a complex picture of U.S. neglect and acquiescence, raising questions about the U.S. Army's and then the CIA's handling of the moral and security issues surrounding this experiment in institution-building in occupied Germany.
Gehlen and German Military Intelligence
Reinhard Gehlen was a professional military officer, who, in the 1920s, was commissioned in the small army permitted Germany by the Versailles powers after World War I. He served as a company commander and then joined the German Army's General Staff just before the outbreak of World War II. Excelling at staff work and endowed, it seemed, with inexhaustible energy, Gehlen rose to become chief of the Fremde Heere Ost (FHO), or Foreign Armies-East, a research and analysis unit that studied the Soviet armed forces. Unlike some of the men whom he would hire in the early postwar period, Gehlen was largely a manager and analyst with no operational authority. The FHO wrote reports using intelligence collected by the Abwehr, the intelligence service of the German armed forces. With the dissolution of the Abwehr in mid-1944, however, the FHO for the first time acquired direct responsibility for intelligence gathering on the eastern front. Gehlen was promoted to general major later that year, but his service as a general in the Third Reich did not last long. In April 1945, he was fired for exhibiting a defeatist attitude. [7]
Despite Reinhard Gehlen's meteoric rise in the German General Staff and his reputation for knowledge about the Soviet armed forces, it would take a remarkable series of events to explain how the U.S. government ever came to repose any confidence in him. Arguably, at the end of World War II, senior officials in the Allied intelligence community knew more about the personalities and capabilities of Nazi intelligence than any combatant has ever known about an enemy in the history of warfare. Thanks to the weakness of German communications security and the ingenuity of British code breakers, by 1944 the Allies were reading thousands of German intelligence messages a week, primarily the communications of the Abwehr. This intelligence triumph, commonly known as Ultra, set up the possibility of identifying, capturing, and subsequently turning into double agents most of Germany's spies in areas under Allied control. [8] By the end of the war, the Allies determined that they had controlled all but three of the principal spies reporting to German military intelligence. [9] With most of German intelligence under Allied control, the Nazis fell prey to deliberate military deception on both the eastern and western fronts.
Postwar analyses of captured German records confirm that Gehlen's FHO performed only marginally better than the average German intelligence unit in World War II. Its reports on the strength and composition of Soviet forces -- so-called order of battle information -- were quite good; what Gehlen and the FHO lacked was strategic imagination. FHO analyses of Soviet intentions, for example, showed a tendency to believe in German superiority. In his assessments of the battle of Stalingrad, Gehlen guessed wrong about the line of attack that the Soviets would take, consequently underestimating the precariousness of the position of the German 6th Army. In 1944, he predicted "a calm summer" because he believed the Soviets lacked the tactical ability to attack the two largest German army groups in the center and the north of the front. Yet on June 22, 1944, the Soviets launched their largest offensive of the war. [10]
To understand how the U.S. government found itself in the position of championing the cause of a barely mediocre intelligence chief and his second-rate intelligence service, one must look at the politics of U.S. intelligence as World War II ended. From the moment the last shot was fired, the U.S. military and the Office of Strategic Services (OSS) entered into a competition for authority in occupied Germany that the OSS and its successor organization, the Strategic Services Unit (SSU), lost. [11] Until 1949, the U.S. Army was solely responsible for administering the American occupation zone. Accordingly, the military determined the operating conditions for rival intelligence services, favoring its own G-2 and Counterintelligence Corps (CIC). The SSU, which retained a corps of officers who had participated in the fabulously successful Anglo-American wartime counterespionage campaign, was denied a significant operational role. Decisions about the nature and shape of postwar German intelligence would be made by newly deployed U.S. military intelligence officers who were ignorant of Ultra and had no idea how incompetent German intelligence had been during World War II. As a result, they would accord Nazi spy managers like Gehlen far more respect than their wartime record warranted.
Combined with this misperception of the quality of German intelligence was a real ignorance about Soviet capabilities and intentions. United States intelligence -- the OSS as much as the intelligence components of the U.S. Army and Navy -- had very little information on the Soviet Union. It had been U.S. policy, enforced with conviction from the White House on down, not to spy on the Soviets during World War II because they were an ally. The FBI and the code breakers of the U.S. Army had circumvented this prohibition, but as of 1945 they had little to show for their efforts. [12] The OSS, on the other hand, had tied itself up in knots over whether to conduct operations against the Soviets. Its counterintelligence service, X-2, had to shut down its tiny Soviet intelligence collection project at the insistence of the White House in 1944. [13]
When veterans of the Allied counterespionage war, most of whom had found their way into the CIA after 1947, discovered that the U.S. Army was intentionally trying to revive the woeful German intelligence service under Reinhard Gehlen, these professionals would try futilely to end U.S. sponsorship of this ill-conceived experiment. It was bad enough that Gehlen lacked any understanding of operational security or reports assessment; worse, Gehlen himself was never briefed about the weaknesses of his own service in World War II. Not realizing how bad German intelligence had been, he would bring a cavalier attitude to the problems of operations and operational security in the early Cold War.
Gehlen and Major Boker
At some point in early 1945, Gehlen started planning for a world without Hitler. He directed his staff to prepare eight large collections of intelligence files and send them to various secret depots in southwestern Germany. Later, he claimed that he did so wi th the express purpose of providing this material to the Americans for use in the inevitable war against the Soviet Union. Gehlen's later behavior suggests that he, as a German nationalist, was also hiding it for a future German General Staff. Gehlen was captured by the U.S. Army in May 1945 and sent to the 12th Army Group Interrogation Center in Wiesbaden.
A month later, Captain John R. Boker, Jr., an ambitious junior officer and interrogator in the U.S. Army, was assigned to the Wiesbaden camp. Even before the European war had been won, Boker anticipated a future conflict between the United States and the Soviet Union. Boker cut his teeth interrogating and then protecting a group of German Luftwaffe officers who had reconnaissance photographs of Soviet strategic targets to offer. A self-starter who was not inhibited by matters of rank, he sensed that he had a role to play if the U.S. Army was not to waste the intelligence potential of the many interned Nazis who knew something about the Soviet Union. "Now was the ideal time to gain intelligence of the Soviet Union if we were ever going to get it," he later recalled. [14] Nosing around the camp for Soviet experts, Boker made a point of interviewing Gehlen, who was known in the camp to have been the head of the German military intelligence service that dealt with the Soviets.
Gehlen warmed to the American, who apparently wasted no time in sharing with the German general his own belief that a clash with the Soviet Union was inevitable. [15] Gehlen revealed to Boker that he had placed key FHO files in safekeeping with the goal of eventually transferring them to the conquering Americans. Having already successfully schemed to protect the documents of the German air force intelligence officers, Boker knew exactly what to do. He told Gehlen to say nothing more to anyone else about the documents while he sought support from a higher authority to find Gehlen's former assistants and reconstitute the FHO's files.
The chief of the USFET (U.S. Forces European Theater) intelligence center at Wiesbaden, Colonel W R. Philp, was as important as Boker in the initial creation of a relationship between Gehlen and the U.S. government. Philp had supported Boker's work with the German airmen, and he understood that Gehlen might be an even more productive source. To prevent the Soviets or the British from asking after Gehlen, Philp removed Gehlen's name from the list of POWs in U.S. custody. He also permitted Boker to track down Gehlen's key associates outside the regular channels for locating POWs. Sometime in the summer of 1945, Boker and three American colleagues moved into a separate house in Wiesbaden, where Gehlen was also permitted by Philp's order. [16]
By mid-July, Boker and his team had recovered seven of the eight batches of documents hidden by Gehlen's people. [17] In the same period, they were able to locate and bring to Wiesbaden all of Gehlen's key members and staff. Even at this time, Boker and Gehlen were discussing a much broader operation. Gehlen told Boker that he had been able to establish contact with Oberstleutnant Hermann Baun, who ran the intelligence networks on the eastern front (known as Walli) that had fed reports to FHO during the war. [18]
Boker and Philp sold the idea to the U.S. Army that Gehlen and his former staff could write useful historical studies for the U.S. Army, so in August 1945, Gehlen and his associates were flown to the United States along with many of their documents to work with a Pentagon team that was writing a history of the Soviet-German war. [19] Baun stayed behind in Germany. The U.S. military intelligence chiefs intended to use him to see what could be recovered of the Walli wartime intelligence networks.
This effort by a group of determined U.S. Army officers in Wiesbaden initially escaped the notice of the OSS and the SSU. In October 1945, however, the team working with Baun approached the chief of the SSU's German mission, requesting advice on improving the security of this new operation. [20] Astonished by the U.S. Army's audacious quest to reconstitute the German intelligence service's lines into the East, and miffed at not having been told before, the local SSU viewed the Army's operation warily.
Concern in the field about this operation extended beyond the veterans of the ass. The Army's own counterintelligence service, the CIC, had also not been briefed about Boker and Philp's project. Increasingly, former Nazi intelligence agents carrying U.S. documents were caught by the CIC. In each case, the CIC -- whose job it was to arrest former German intelligence officers -- were told to let these men go free because they were working for the United States. [21]
Rusty
Gehlen returned to U.S.-occupied Germany in July 1946 with authorization to reconstitute the FHO, including the Walli networks that Baun had been pulling together. [22] From the moment Gehlen returned through July 1, 1949, the U.S. Army was his principal sponsor. In this period, the Gehlen project acquired the code name "Rusty" and grew from a few hundred veterans of the FHO and the remnants of the Walli networks to encompass about four thousand officers and agents. [23] Rusty's operations, which Baun continued to supervise for Gehlen, also spilled out from the eastern zone of Germany to the French zone of occupation, to occupied Austria, Italy, and Soviet-controlled Poland and Romania. [24]
Newly released documents from this period indicate that, despite the exponential growth in Rusty's activities and payroll, the number of U.S. Army officers assigned to monitor the organization remained at two. [25] United States supervision, such as it was, in effect meant U.S. control over the logistical and financial transfers to Gehlen. His U.S. minders took care that he had the chocolate, women's cosmetics, gas, and cigarettes needed to barter on the black market for additional operational money and the U.S. dollars that would also be traded at a profit for the still-used Reichsmark. As for operational control, there was none. [26]
What did the United States get in return? The U.S. Army in Germany considered the Gehlen Organization their "most dependable and prolific source of information on Russian military intentions and strength." [27] These Germans were a stopgap measure for a U.S. military intelligence system that was poorly trained and understaffed. Gehlen offered continuous tactical coverage of the Soviet armed forces in what would become East Germany. Lacking any agents in the Kremlin or the Soviet military headquarters, Gehlen relied on mundane but effective techniques to build a picture of the enemy's force. Gehlen agents loitered along key rail lines, watching for the movements of Soviet troops and noting the serial numbers of equipment and weapons. The patches on Soviet uniforms also gave away the formations that were in the area. Descriptions of these, too, were added to the mosaic until a pattern emerged. Having few German speakers or people with deep knowledge of German cities and towns, the U.S. Army could not replicate the tactical team that Gehlen appeared to have at his fingertips. [28]
Besides this basic information on Soviet deployments in eastern Germany, the Gehlen Organization made itself useful by providing coverage of Soviet radio communications, especially transmissions of the Soviet air force. In the difficult fiscal climate of the early postwar period, the U.S. military had limited resources to mount a signal intelligence campaign against the Soviets. The U.S. Army, for example, would nor establish a radio listening station of its own in West Germany until the mid-1950s. Until that time, the U.S. Army relied on the British for high-level cryptographic work and on Rusty for the day-to-day listening on radio frequencies used by Soviet pilots, tankers, and grunts. The latter traffic was lightly encoded if at all, but in the event of a major offensive careful listening might pick up hints of what was to come. [29]
This arrangement suited Gehlen very well. The Army increased its demand for reports from the Germans and left Gehlen alone to expand and recruit as he saw fit. [30] Although Gehlen's principal minders in the U.S. Army asked him whether he had any war criminals at headquarters, they did nor require that he submit biographical data on his field personnel and the agents they recruited. Gehlen refused to volunteer the real names of his employees, and he had them register for U.S. gas coupons and food rations under assumed names. [31]
Under these lax conditions, Gehlen was able to employ a sizeable number of Nazi war criminals without U.S. interference. He hired much of the SD's Balkan network, including the leadership of the Iron Guard, the Romanian Fascists whom the SD had protected in exile. The leader of these Balkan operations (which carried the code name "General Agency 13") in the Gehlen Organization was Otto von Bolschwing, who would later become a notorious employee of the CIA after Gehlen dropped him for incompetence. [32] Bolschwing was himself a war criminal, having served in the SD's anti-Jewish office with Adolf Eichmann in the 1930s and as an SD advisor in Bucharest during the anti-Jewish pogroms of 1941. Among Bolschwing's agents when he worked for Gehlen was Horia Sima, the former chief of the Iron Guard who had inspired the anti-Jewish pogrom, and former SS Romanian experts Kurt Auner, Ernst Schlandt, and Joachim Vacarescu. [33]
Gehlen also turned to SD and Gestapo officers to create a counterintelligence service, headquartered in Karlsruhe. Newly released CIA Materials confirm that there were at least eleven former SD or Gestapo men who worked for this section, known initially as "Dienststelle [substation] 114," then as GV-L. [34] For example, Herbert Boehrsch, whom Gehlen used as a contact to German-speaking expatriates from the Sudetenland, had been with the SD in Prague; Walter Otten had been an SS-Sturmbannfuhrer working in the SD office in Bremen; and Otto Somann, with the exalted rank of SS-Oberfuhrer, had served as Inspekteur of the SD and Sicherheitspolizei (Sipo) office in Wiesbaden before being seconded to the Gestapo. Personal participation in wartime atrocities might have been difficult to prove for some of these men, though they all belonged to criminal organizations. Bur the criminal behavior of Emil Augsburg, who joined GV-L in October 1948 (when it still had the cover name Dienststelle 114), is beyond doubt. Augsburg, who fancied himself an expert on Slavs and the eastern front, was detailed to a Sipo unit for "spezialle Aufgaben" ("special duties") in Poland in 1939-40 and the western USSR in 1941. Spezialle Aufgaben was a euphemism for the execution teams that killed Jews and suspected Communists. [35]
Remarkably, the more criminal elements of Rusty were neither in the Romanian operation nor in GV-L, but belonged to Dienststelle 12 or GV-G, an office that organized penetrations of the Soviet zone through Berlin. CIA material reveals that a number of men who had played roles in the Holocaust worked for Gehlen in Dienststelle 12. The chief of GV-L was Erich Deppner, a deputy to SS-Brigadefuhrer Wilhelm Harster, the SD and Sipo commander in the occupied Netherlands. [36] Deppner at the very least witnessed the deportation of over 100,000 Dutch Jews to extermination camps. He also was personally responsible for executing Soviet prisoners of war interned in wartime Holland. The chief of Dienststelle 12's Berlin station was another SS man, Ernst Makowski, who had been a Gestapo officer in southwestern Germany. [37] Also in the Berlin office was Obersturmbannfuhrer Karl Guse, who had been chief of the Gestapo in Rome before the German invasion in 1943, and Werner Krassowski, an SS-Hauptsturmfuhrer who served in Poland as a concentration camp guard with an SS Totenkopf (Death's Head) regiment in 1939-41 and then served with an SS unit in the Baltics. [38]
The man with the most blood on his hands in the Gehlen Organization was perhaps Konrad Fiebig, who had served with the Einsatzkommando 9 of Einsatzgruppe B in the Belorussian town of Vitebsk and was later charged with the deaths of 11,000 Jews. [39] Before ending his Nazi career, Fiebig was named a judge in the Sondergericht judicial system, which was used by the SS to kill political enemies. Despite his past, Fiebig was hired in 1948 as a Rusty courier in Stuttgart and worked for West German intelligence into the early 1960s. [40] Fiebig was not the only Einsatzkommando veteran in Gehlen's organization. Walter Kurteck had been in Einsatzgruppe D in 1942. [41] He had worked on Operation Zeppelin, a scheme for sabotage and assassinations behind Soviet lines and for the executions of political commissars in Russian POW camp. Equally tainted, though not a veteran of an Einsatzkommando, was Alexander Doloezalek, who had worked in the Race and Settlement Office in Poznan and Lodz. [42] His office was responsible for recycling the clothing and other property taken from Jews deported to death camps. Doloezalek was a case officer for Dienststelle 62 and was important enough to be placed on a Gehlen emergency evacuation list in 1959. Friedrich Frank had been with the Gestapo in Cracow and later with Harster in the Netherlands. [43]
It is impossible to know without access to intelligence materials from the Federal Republic of Germany whether and in which cases Gehlen himself was aware of the backgrounds of the men his subordinates had hired. Hermann Baun had established a decentralized recruitment system at the start of Rusty, which Gehlen did not change. The files of personnel, including their real and assumed names and a biography, were kept at the field station that hired them. They were not sent to Gehlen's headquarters; this material was also not collated at the Dienststelle level. Gehlen later explained that the system would prevent Soviets from rolling up all of his networks in the event they captured his headquarters. [44]
What's more, Gehlen's headquarters may not have known about some of the worst recruitments because a number of these war criminals attempted to conceal their wartime pasts. Fiebig, for example, was retired by the BND in 1962 for having falsified the autobiography that he submitted when he was hired. [45] But there can be little doubt that Gehlen knew the background of the man he chose to be the head of his organization's Combined Reports, Translation and Editing Office. Erich Ulich Kayser-Eichberg was a psychologist who had spent his professional career until 1945 deploying his scientific training on behalf of the SS. [46] While professor of psychology at the University of Danzig, Kayser-Eichberg was seconded as an SS-Sturmbannfuhrer to the Race and Settlement unit in the Waffen-SS Alpenland in 1942-43, and then to the Race and Settlement department of the Higher SS and Police Leader's office in Bohemia in 1944. Besides Kayser-Eichberg, Gehlen certainly knew the truth about Emil Augsburg, whom he promoted to a very high position as an advisor on Soviet intelligence because of his experience on the eastern front. And he must have known the backgrounds of Erich Deppner and Otto von Bolschwing, who ran two of his key operational units in the Soviet Bloc. [47] Years later, once the BND was established, Gehlen would demonstrate the consistency of his lack of concern for hiring war criminals by making a section leader out of the notorious Franz Six, who had overseen Einsatzkommando work on the eastern front before directing an anti-Semitic SS think tank. [48]
Gehlen's comfortable relationship with the U.S. Army lasted two years. By the end of 1947, new constraints emerged that threatened to impose limits not only on Gehlen's ability to recruit whomever he wished, but also on his ability to recruit in general. The first constraint came in the person of Colonel Willard K. Liebl, whom the U.S. Army named in the fall of 1947 to supervise the Rusty operation. Unlike his predecessor, Liebl was determined to force Gehlen to turn over the names of his hires. In his memoirs, written after he retired, Gehlen explained his disagreement with Liebl as a struggle to defend West German sovereignty: "The disputes with Colonel L -- finally culminated in my flatly refusing to obey an order he issued in March 1948, since it would have cost the organization its hard-won independence." [49] Gehlen later recounted that he did not feel bound to accept any orders or suggestions from his U.S. supervisor unless "they would serve the mutual interests of Germany and the United States." [50]
Gehlen easily won this battle. Liebl's message was much stronger than the messenger himself. Liebl's wife and some of his associates were implicated in black market dealings, evidence of which Gehlen used to force Liebl to return to the United States. [51] Gehlen got a new U.S. commander. [52] It was his old friend Colonel Philp.
The other constraint involved was money. Liebl's arrival had coincided with the German currency reform arranged by the three Western powers. The effect of this reform was to sharply reduce the purchasing power of Gehlen's U.S. subsidies. Rusty was funded in U.S. dollars, and Gehlen saw the street value of this money plummet over 40 percent within one year without an increase in the U.S. Army's appropriations.
Despite winning the battle over giving his officers' real names to the U.S. Army, the money issue and lingering suspicions about the competence of U.S. military intelligence provoked Gehlen to seek a new U.S. sponsor. He was aware of changes in the U.S. national security community. Of special interest to him was the development of a new centralized intelligence service in Washington in 1947. The CIA, Gehlen felt, would be a much better patron for his organization. He hoped that the CIA would not only understand the needs of his organization better than the U.S. Army had, but that it would also be willing to pay for it. [53]
CIA: The Reluctant Patron
Given the rising costs of Rusty, as early as 1946 the U.S. Army was looking for a way to push these expenditures onto another organization without losing access to the tactical intelligence Gehlen produced. The Gehlen Organization cost the U.S. Army $42,367 in cash and the equivalent of $5,000 in rations per month, or about half a million dollars a year. [54] The Germans were asking for much more. They believed that short of receiving $2.5 million a year, they could not reach their potential for intelligence collection in Europe. [55] In the fall of 1946, the Army suggested a cost-sharing arrangement to the newly formed Central Intelligence Group (CIG), which had acquired the assets of what was left of the OSS. [56]
The Army's offer of Rusty stirred a debate within the fledgling CIG. Veterans of the counterintelligence campaign were especially wary of Gehlen and his organization. The sense that the U.S. Army might be offering a Trojan horse extended beyond the CI experts. In a review prepared for CIG director General Hoyt S. Vandenberg, the writers outlined various reasons for leaving the German organization alone. First, there was the concern that, due to the Army's lax attitude toward Gehlen's rapid recruitment and expansion, the entire organization might have been penetrated by the Soviet intelligence services. "It is considered highly undesirable," a CIG reviewer wrote to headquarters, "that any large-scale U.S.-sponsored intelligence unit be permitted to operate under even semi-autonomous conditions." [57] There was also the sense that participation in the Gehlen Organization represented an unnecessary moral compromise. "One of the greatest assets available to U.S. intelligence has always been the extent to which the United States as a nation is trusted and looked up to by democratic-minded people throughout the world," warned the SSU's report on Rusty in October 1946. [58] For those who were prepared to risk moral tarnish for the sake of a good intelligence operation, there was even doubt that Rusty would payoff. "There is no evidence whatsoever," it was argued, "which indicates high-level penetration into any political or economic body in the Russian-occupied zone." [59]
The supporters of acquiring Rusty refused to give up, however. They successfully convinced General Vandenberg to send an officer to do a more in-depth field study of the network. [60] In March 1947, Samuel Bossard, an OSS veteran who had worked in the counterintelligence branch X-2 and had used Ultra materials alongside the British in London, was given the mission of determining which, if any, components of Rusty should be acquired by the CIG and which should be left with the Army or disbanded. This survey represented the first time in the two-year U.S. relationship with Gehlen that anyone with sufficient knowledge of Germany's wartime intelligence networks was given the task of evaluating this effort at reconstituting German military intelligence. [61]
Bossard's message was that the CIG had to take the Gehlen Organization very seriously. "The magnitude of responsibility either to continue or liquidate has not been exaggerated," Bossard cabled to Washington in April 1947 in advance of his report. [62] Unlike the U.S. Army, which emphasized Rusty as a producer of information, the CIG had to be concerned with the political implications of what Gehlen had managed to create under U.S. military sponsorship. "Operation Rusty," Bossard concluded, "has become less a clandestine intelligence operation directed by American authorities than a potential resistance group supported and fed by the U.S. Government." [63] Numbering about three thousand people in the spring of 1947, the organization was loosely organized, secretive, and widespread. Its agents extended from Stockholm and Paris to Prague and Rome and could easily be spread to the Middle East, the Far East, and the Western Hemisphere.
Bossard believed that the Germans were preparing to fight against the Soviet occupation of their country. Nevertheless, he advised Washington not to assume that this secret organization would inevitably act in the interests of the United States. He described the leadership as anti-Communist and anti-Soviet. The alliance with the United States was a matter of convenience, undertaken because "they consider [the United States] their most effective champion." [64] However, if the United States should abandon the Gehlen Organization, "this group could constitute a source of political embarrassment to the U.S. Government and a security menace to American overt as well as coven activities in Germany." Bossard discovered that already the Gehlen people had "plans for camouflage which can provide the personnel with an opportunity to continue their operations independently of American support."
Although Bossard identified the risks of losing control of the Gehlen Organization, he was just as emphatic about the potential rewards in trying to take it over. He accepted the U.S. Army's judgment that the Germans were producing "high-grade tactical intelligence." [65] And though a CIG analysis of the counterintelligence information produced by Gehlen was very negative, Bossard wrote with respect of "the full potentialities of this German intelligence machine." [66]
Bossard believed that the insecurity of the organization had been exaggerated. "There is no evidence to show that any section of the operation has suffered penetration, defection or compromise from a hostile agency," he wrote. [67] He did not explain the reasons for his confidence. Rusty had extensive recruits among the refugees from the Soviet Union. In his report, Bossard noted that there were seven hundred Georgian, Ukrainian, Polish, and White Russian agents in one operational group and another eight hundred White Russians in yet another group under Gehlen's command. Bossard was also not worried about the types of Germans whom Gehlen had hired: "I have been unable thus far to discover anything in the records of any of the German operating personnel or in any German section of the operation which for security reasons would eliminate them from consideration for future employment." [68] Bossard noted that, as Gehlen's chief of operations, Baun had recruited heavily among veterans of German military intelligence, the Abwehr. Bossard also noted that there were people whose files he had not been able to see. He believed the organization had probably recruited "outlaws" from among the anti-Communist refugees and even former SS officers, though Bossard did not note any in leadership positions. He recommended that once the CIG took over Rusty, these "outlaws" should be evaluated on a case-by-case basis. He believed that no former member of the Nazi party or the SS should be employed above the level of field agent. "Not only is such a policy a necessary safeguard of the best American interests," Bossard explained, "but it will preserve the unity and idealism of those individuals who have clean political records, high professional qualifications, and the same motives." [69]
The explanation for the fact that Bossard could be both confident of the wisdom of taking Rusty yet aware of its acute dangers lay in his assessment of Reinhard Gehlen. The CIG officer was favorably impressed with Gehlen, whom he found was "in every way the Prussian Staff officer." [70] Gehlen charmed Bossard, and cleverly shifted U.S. suspicions to Baun. Giving him his "word of honor that any responsibility placed in him will not be betrayed," Gehlen confessed a mistrust of Baun to Bossard. He mentioned that, unlike Baun, he intended to make Rusty strictly align with "American interests." As a result, Bossard came to blame Baun for all of the organization's darker characteristics. It was Baun who was behind the plans for a Europe-wide, anti-Communist resistance movement that could operate eventually without U.S. financial support. It was Baun who was the fanatical anti-Soviet with little interest in American values. Although he never said this explicitly, Bossard probably also blamed Baun for the hiring of any outlaws by the organization. In comparison with Baun, Gehlen looked like a reasonable client. "[E]very effort should be made on the part of the American authorities to allow G[ehlen] to dominate the organization at the expense of B[aun]," Bossard concluded. "G is more the statesman, and can become a spokesman for American interests while B, the professional intelligence man, should be reduced to the status of a high-level operator with little, if any, executive power." [71]
In part due to this confidence in Gehlen, Bossard wrote that he believed that the CIG should take the entire organization over and then determine which elements to keep and which to liquidate. Despite the lack of thorough supervision by the U.S. Army, Bossard concluded that Gehlen had run his operation very effectively. "[A]t present the purposes and needs of G-2 [U.S. Army] intelligence are so well comprehended," he wrote, "that the operation can be said to 'conduct itself' to the satisfaction of G-2 Frankfurt with a minimum of direct operational guidance from that headquarters." [72]
Bossard's recommendation that the CIG seriously consider replacing the Army and raking control of Gehlen landed with a thud in Washington. The spring of 1947 had been a busy time for U.S. intelligence. By the provisions of the National Security Act of 1947, the new Central Intelligence Agency replaced CIG. Vandenberg was gone, and the CIA's first director, Rear Admiral Roscoe Hillenkoetter, disliked the idea of taking over Gehlen. [73] Bossard's report had some effect nevertheless. His interpretation of Gehlen's importance planted a seed at CIA headquarters. Bossard's immediate superior, the director of the Central European Desk of the Office of Special Operations, Richard Helms, disagreed with Hillenkoetter's decision to keep Rusty outside the Agency's control. [74]
Reinhard Gehlen's Personnel Record, created when he was interrogated by the U.S. Army as a POW in August 1945 (NA, RG 238, National Archives Collection of World War II War Crimes Records, entry 160, Interrogation Records, microfilm publication M 1270, roll 24, Gehlen, Reinhard, box 26).
Less than a year later, Helms authorized a second assessment of the Gehlen operation, this time by James Critchfield. Critchfield was a celebrated colonel in the U.S. Army who had fought in North Africa and France and was now a new recruit in the Agency. Time was a factor -- the Army was eager to get rid of this responsibility -- so Critchfield was given only a month to visit with Gehlen and survey his operation. As would later become clear, this was not enough time to get a real feel for the nature of Gehlen and his organization. But Critchfield nevertheless produced a long document by mid-December 1948. [75]
In much the same way as Bossard had eighteen months earlier, Critchfield argued that the U.S. government had no choice but to contend with the Gehlen Organization. Critchfield knew how starved the U.S. government was for continuous tactical information from the closed Soviet zone, and he was impressed with Gehlen and with the intelligence potential of his organization. He also saw the political advantages of supporting Gehlen and his organization. Like Bossard, Critchfield was impressed with Gehlen's apparent commitment to American goals. Gehlen, he wrote, was motivated by the "conviction that the time of nationalism is past and [that the] only hope lies in [a] Western European and Atlantic Union." [76] By the fall of 1948, Gehlen had won his bitter struggle with Baun. Baun had been sidelined into strategic planning and was no longer a major factor. Gehlen was master of his own house. [77]
Gehlen allowed the American to visit some of his field stations. Critchfield was then carefully introduced to members of the stations and shown biographical data on them. Critchfield later recalled asking about the recruitment of former SS men and being told that there were none in Rusty. "I was told this in November 1948 by Gehlen, by several of his top associates," Critchfield wrote in 2002, "and by Captain Eric Waldman of the G-2 staff in Pullach." [78]
The newly declassified documents neither confirm nor contradict Critchfield's recollection. Unlike Bossard, who addressed in 1947 the problem of SS men in the Gehlen Organization, Critchfield did not discuss the matter in his long report of December 1948. His investigation, however, had brought him very close to some of Gehlen's SS men. He visited Dienststelle 114, which had four hundred people and eight field stations and was home to quite a few former SS men. [79] The month before Critchfield's visit, Emil Augsburg had been hired by this counterintelligence unir and given the alias Dr. Alberti. In his report on Dienststelle 114, Critchfield said that he was permitted to see the "agent control" or personnel records for the group, but he mentioned nothing about Augsburg or any other former SS men on the payroll. The possibility exists that the Gehlen Organization provided the CIA investigator with a carefully selected group of agent biographies to satisfy his curiosity. [80]
Although Critchfield may not have met with former SS men in Dienststelle 114, he did encounter and would later write about a Gehlen officer with a criminal background. Paul Hodosy-Strobl was chief of the Tschardas (Hungarian group) in Dienststelle 114. Hodosy-Strobl, who had originally been recruited by the CIC from a POW camp in 1947, had been selected by the Nazis as the chief of the Hungarian state police, the Gendarmerie, following the German invasion in March 1944. Although Critchfield noted for Washington that the work of this Hungarian group had come under suspicion within Dienststelle 114, he did not raise a flag about the political or moral problems of the CIA associating with Hodosy-Strobl. Two years later, Critchfield described Hodosy-Strobl, who tried to emigrate to the United States in 1950, as having "a dubious and somewhat odious background." In 1948 he said nothing. [81]
Critchfield did make note of some problem areas. He noticed that Gehlen's operations far exceeded the terms of the operational charter established in October 1948 between the U.S. Army and Rusty. According to that agreement, Gehlen was not to undertake any intelligence operations within the Western zones of Germany. Outside of Germany, Gehlen was to restrict any counterintelligence operations to those specifically designed to protect Gehlen's ongoing spying. Inside or outside the country, Gehlen was also not supposed to mount any penetrations of the Communist Party of Germany (KPD) lest lines get crossed with the U.S. Army's Counterintelligence Corps, which had the KPD as one of its principal targets. Critchfield discovered that in one way or another Dienststelle 114 managed to violate all three of these prohibitions. Gehlen had instructed his men to spy on the activities of the West German Communist Party and to keep an index of all "known Communists" at his headquarters in Pullach. [82] Despite the breach of trust that these violations implied, Critchfield recommended that Washington consider how the CIA might benefit from these operations anyway.
There was more skepticism about Gehlen in Washington, even among advocates of a takeover by the CIA. Richard Helms wrote that Rusty was "at best a controversial intelligence package" about which the CIA did not know a lot. [83] Helms overruled Critchfield's request that assessments of Gehlen's operations be made in the field by a future CIA liaison unit with Rusty. Helms wanted Washington, with its access to better information, to be making the call about which of Gehlen's operations would be kept. [84] Helms and his own boss, Assistant Director for Special Operations Donald N. Galloway, insisted that the CIA would first have to discover "detailed characteristics of the organization for which it is assuming responsibility ... Without being able to run traces on the personnel and examine specific details of the operations with Army assistance and personnel, we might well lay [the] CIA open to wholesale penetration by the Rusty organization." [85] Despite this note of caution, Helms at least remained confident that if handled correctly, the Gehlen group "should be a great intelligence producer." [86]
Helms and Critchfield together planned the CIA takeover. The CIA would have to establish its authority over Rusty early on. The organization would be treated as a subordinate unit within the CIA. It would be stripped of all intelligence operations that might conceivably represent a threat to U.S. interests or which might prove more productive under direct CIA control. Gehlen was to be given a fixed budget for his overhead and his operations in the Soviet zone of Germany and such programs as had already proved productive. Although Helms and Critchfield had confidence in Gehlen's ability to produce intelligence in eastern Germany, they agreed that Gehlen should be encouraged to cut back on the number of operations he was running there "while attempting to raise the level of penetration." [87] As for Rusty's operations outside of eastern Germany, they wanted stringent controls to go into effect immediately. The CIA should fund only Gehlen's activities in the Soviet satellite countries, the so-called strategic operations, on a project-by-project basis. Funding decisions would be made in Washington after scrutiny of agent control and other operational materials for each operation. Given that half of the four thousand or so reports that Rusty produced per month for the Army already came from these operations outside eastern Germany, the CIA was intending to scrutinize a significant portion of Gehlen's work. [88] Hopeful that Gehlen would agree, Critchfield expected that this would "give us a degree of control and an insight into their operations which has been non-existent in the past." [89]
Beyond Helms, however, hostility to the idea of assuming responsibility for Gehlen remained in the CIA. Veterans of the counterintelligence war were loud in their belief that the United States would be hurt by this alliance with the discredited German intelligence service. Besides a sense that these Germans were not going to be much help in the Cold War intelligence struggle, the in-house critics reminded the CIA leadership that there was no guarantee that Gehlen and his colleagues represented the "good" Germans. Before Critchfield was sent to Germany, the anti-Gehlen lobby had summarized its argument in this way:
[T]he general consensus is that Rusty represents a tightly knit organization of former German officers, a good number of which formerly belonged to the German general staff. Since they have an effective means of control over their people through extensive funds, facilities, operational supplies, etc., they are in a position to provide safe haven for a good many undesirable elements from the standpoint of a future democratic Germany. [90]
By early 1949, however, the cri tics had clearly lost the debate over assuming responsibility for Gehlen. Two factors served to tip the balance in Gehlen's favor. First, the international situation was very different from what it had been in 1947 when Hillenkoetter had rejected Bossard's recommendation that the CIA take Gehlen over. In 1948, Josef Stalin imposed a blockade on all overland communication to West Berlin, causing the start of what would be an eleven-month air-supply operation by Western air forces. In the first months of the Berlin airlift, the Allies had feared the real possibility of a Soviet attack on Western Europe. In this atmosphere, sources on the East, however imperfect their makeup, were welcome. The second factor was some subtle extortion by the U.S. Army, which in the midst of the Berlin crisis announced plans to cut almost all funding for the Gehlen operation. If the CIA wanted to prevent the untimely collapse of Rusty, it had to act fast. In addition, high-level support existed outside the Agency for the transfer. Both the Chairman of the Joint Chiefs General Omar Bradley and the Secretary of Defense James Forrestal approved of the idea. [91] Convinced by Helms and Critchfield and reassured by Bradley and Forrestal, Hillenkoetter went along with it.