NEW CLOAK AND DAGGER IN THE VODKA ZONE

Politicians are hailing Nato's enlargement as the beginning beneficiaries will be spies, East and West

Moscow CANNY OLD MI6 has so far chosen not to follow its domestic sister service MI5 into the uncertain territory of a graduate recruitment drive complete with applica- tion forms, telephone hotlines and an advertisement in the Guardian. That does not mean, however, that it is short of vacancies. Western intelligence services like to give the impression that they are oversubscribed. In fact, the need for new officers, agents and moles is greater now than at any time during the Cold War.

This week, while heads of government at the Nato sum- mit in Madrid patched up deals to sweeten the temper of France (which has lost its attempt to bring Romania and Slovenia into the Alliance and thus dilute the American influ- ence in Europe) and saluted the entry of Poland, Hungary and the Czech Republic, the Western intelligence services were planning their next great adventure — a new and frantic bout of intelligence-gathering in the wake of Nato's Eastern implant.

Western secret services have not, on the whole, shared their political masters' enthusiasm for Nato enlargement. They point out that the military establishments of Eastern bloc countries are so stuffed with people either formally or informally recruited by the KGB and GRU (Soviet military intelligence) that Nato's secrets will no longer be safe. The successor secret services in Moscow have preserved the same organisational structures at home and, to a large extent, the same contacts in the defence industries and civil service abroad in Eastern Europe as during the Soviet era. While Russian diplomats have learned to avoid using language which sug- gests that they still consider Eastern Europe a sphere of influence, the prevail- ing belief within the FSB (the renamed KGB) is that a foothold can and should be preserved in the former satellites. A former Washington station chief of Russian intelli- gence agreed to meet me in Moscow, where I was subjected to a vodka-soaked afternoon during which the 'betrayal' (i.e. withdrawal of troops) by Moscow of East- ern Europe was lamented and toasts drunk to a revival of Soviet power.

It was the classically Russian mixture of raw emotion with a theatrical edge, adopt- ed for the benefit of an outsider. Russian spies assume that Western journalists are in the pay of their home intelligence ser- vices. The message that this man intended

to send was that his service was not cowed by the mere disappearance of the Soviet Union. A meeting with a senior Russian diplomat who has lobbied European gov- ernments against enlarging Nato showed similar traits. 'Why are you doing this to us?' cried the diplomat. 'Don't you see that your government's policy is brutal? It will make Russia behave worse. We are weak, weak, weak . . !'

Despite this bizarre outburst from a Kremlin emissary who had spent the first half of his professional life telling the West that his country was strong, strong, strong, the Russian diplomatic response has been finely calibrated. Moscow has used West- ern uncertainty about the new security order to gain discreet leverage over the terms of enlargement. No matter how grave the surrounding economic and politi- cal chaos, Russian diplomacy always assess- es its long-term interests well. The intention is to use the consultation rights granted by Nato to President Yeltsin in order to help him sell the deal to a disgrun- tled political establishment to slow down Nato decision-making during times of crisis.

The Russians have made a grand and loud fuss,' chuckles one American intelli- gence official. 'But a lot of that is done to increase Western jitters and to stir up dissent within the West about enlargement. Read the letters page of any serious British, German or American newspaper and you'll see that they have suc- ceeded. The spread of Nato to the East is good for Rus- sian intelligence interests. They will be able to reacti- vate old channels which will be in possession of entirely new information shared between Nato allies.'

In two of the three new Nato countries — Poland and Hungary — ex-communists are back in power, which means that their networks of business/intelligence/political relations are back too. Last year, the Polish prime minister, Josef Olesky, resigned after it was alleged by the military prosecutor that he had passed secrets over a ten-year period to a Russian spy masquerading as a diplomat. Mr Olesky's defence was that the Russian was 'just a friend' and that he had not suspected that he was a spy.

Mr Olesky's hurt reaction to the charges against him rested on the assumption, com- mon in middle-aged politicians and bureaucrats throughout the Eastern bloc, that it was perfectly normal and indeed expected to discuss affairs of state with the Russians. It was the Russians themselves who informed on Mr Olesky — apparently in an attempt to make the Polish govern- ment appear to the West to be too unreli- able in its loyalties to be allowed to join Nato. In the sort of twist beloved of spy writers seeking a denouement, Moscow used kompromat — compromising material — to denounce Mr Olesky for being too close to Moscow, in the hope that an ensu- ing scandal would advance its own strategic interests.

In the event, Moscow miscalculated. Mr Olesky resigned and the threat by the mili- tary prosecutor in Warsaw to produce more evidence that other former commu- nists had been in cahoots with the Russians was never fulfilled. Nato's coolness in the face of the Olesky allegations was due largely to the fact that the intelligence ser- vices of its key member states were already assuming that senior figures in all three new countries might have opaque loyalties and that intelligence-gathering in the after- math of the Madrid summit is as likely to be directed at new Nato allies as against `traditional' targets like the Russians or Iraqis.

The Americans, British and Germans have been busily inviting young defence and intelligence officials from the new Nato countries to modernise their skills through contact with the host countries. The exercise is also intended to help them form real attachments to the West — 'to make them feel like one of us instead of one of them pretending to be one of us', as one veteran of the business put it. It is qui- etly assumed that people in middle age and beyond in the military and intelligence ser- vices of Eastern Europe might retain links with Moscow.

The exception is Romania, whose isola- tion under Ceausescu meant that there is less of a pro-Moscow security establish- ment. The (still formidable) Romanian secret services conducted a dogged cam- paign to persuade Nato that this, combined with its strategic usefulness on the Alliance's southern flank, would make it a useful member. France will continue to campaign for its entry. But for the moment, the thousands of promotional videos enti- tled Romania and Nato: Destined to be Together are back in the stores.

A certain amount of 'friendly' spying within the Alliance is considered normal. Only when it strays outside the tacitly accepted boundaries, as in the allegation leaked by the French last year that MI6 had been spying on their submarines, do things get sticky.

Nato's enlargement into Eastern Europe will, however, raise the stakes by bringing a fresh covert war back to Cold War battle- fields. A new 'spy curtain' will descend, with the Nato countries and those hoping to become so on one side and those exclud- ed on the other. 'The "vodka zone" [name- ly Poland, Ukraine, Belarus and Russia] will be crawling with spooks,' says an American official who travels Eastern Europe relentlessly in the guise of an advis- er on economic restructuring. 'Intelligence ties between Ukraine, Belarus and Russia are very strong and they will be directed heavily against Poland.'

Moscow will expect to use Ukraine and Belarus as its westerly outposts for spying on Nato. The Kremlin's first diplomatic riposte to Nato enlargement has been a new Treaty of Understanding with Ukraine, smoothing the rough edges which have afflicted the relationship since Ukraine declared independence. Belarus, lodged between Russia and Poland, is dubbed the 'Nostalgia Tour' by critically minded citizens because its government is so reminiscent of the old Soviet Union. Minsk is now seeking ever-closer union with Russia.

A British defence official agrees that Ukraine will be 'the new battleground' because of its nearness to Poland and Hun- gary. Western intelligence services will also work hard to recruit agents there in the vast military-industrial complex as well as the diplomatic and banking world, in order to find out how much Moscow knows about its strategy and intentions. The BND, Ger- many's intelligence service, which is strug- gling hard to rid itself of its pre-unification image as the 'Swiss cheese' of European intelligence services (because it had so many holes in it), is said to be particularly active here. The rise of bankers in espionage is strik- mg. 'Bankers know more secrets than any- one else about what has really gone on in the military-industrial complex and about the vulnerability of governments to corrup- tion scandals,' says one source. 'It is very high-risk for an espionage service to recruit an executive in, say, a Czech chemical plant or a weapons manufacturer, but if it can build up a relationship with their banker, it can deduce a lot about their activities.' In Russia, the new breed of post-Soviet banker, like the Most Bank's Vladimir Gusinsky, controls networks of influence stretching deep into the Kremlin and the defence establishment. So, rather than risk humiliation like that meted out to MI6 by the Russians when they televised footage of the station chief of the Moscow embassy allegedly waiting to meet a contact, the Western intelligence services are keen to switch their recruitment to areas where con- tacts can be made in the course of seemingly innocent business. The corollary of this is that MI6 is more likely to seek recruits in the financial and business world.

The old trading and banking elites in the East built on the base of the state trading monopoly continue to flourish. Even in the Czech Republic, which has a model pro- Western President in Vaclav Havel and a Prime Minister (Vaclav Klaus) who is Lady Thatcher's favourite Eastern European free-marketeer, the chief executive of the sensitive chemical conglomerate Chemapol is Vaclav Jurek who, when stationed in France before 1989, spied for the Czech secret police on French chemical warfare research. The information was duly passed to the Russians.

We know this because of the Czech poli- cy of opening the basic files on individuals in public life. But we have no such access to the files in Hungary, where the Prime Minister, Gyula Horn, took the Soviet side in the 1956 uprising as a young volunteer member of the workers' militia.

Tearing out old Soviet intelligence links is like trying to pull out a dandelion root in the garden of the new democracies — great clumps come away in the hand and are dis- carded; underneath the surface, however, the taproot is untouched and continues to grow. 'Fortunately,' says one Western source, 'people are extraordinarily cheap to buy and especially so in former communist countries. There will be a lot of recruit- ments in the months ahead.'

The Russians know this. They also know that it is cheap to buy them back. In a splen- did coup de theatre, Nikolai Kovalyov, head of the FSB, went on television to announce that his service had already hacked into new MI6 equipment, which obviates the need for an agent and a handler to meet. He then told Russian agents collaborating with for- eign powers that they could increase their earnings by turning themselves in and becoming double agents. 'If not,' Mr Kovaly- ov added cheerfully, 'we'll find you anyway.' The game continues.