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Clinton Reportedly Orders CIA to Focus on Trade Espionage : Intelligence: Shift in priorities reflects Administration's concern about economic rivals. Sources point to agency's secret role in aiding talks that opened Japan's auto market.

July 23, 1995|JAMES RISEN | TIMES STAFF WRITER

WASHINGTON — President Clinton has ordered the Central Intelligence Agency to make economic espionage of America's trade rivals a top priority, and the agency has been scoring secret successes in trade talks with Japan and other nations, according to sources in the intelligence community.

Among the successes, sources say, is strong intelligence information the CIA provided on the Japanese during this spring's heated auto trade negotiations between the Clinton Administration and Japan. "We've done really well with the Japanese," one source said.

The trade talks ended in compromise, but only after critics charged that negotiators and officials in each country had misjudged the political undercurrents influencing their rivals. Even so, sources say U.S. Trade Representative Mickey Kantor has been pleased with the agency's ability to provide accurate reports on the bargaining positions of America's rivals in the Japan trade talks and other negotiations.

The CIA refused to comment, and it is unknown how the United States targeted the Japanese side of the negotiations, and whether it did so with electronic eavesdropping methods or with covert agents.

The new focus on economic intelligence reflects the high priority that the Clinton Administration has placed on international economic issues in foreign policy. Sources say the President has issued a classified set of intelligence priorities for the post-Cold War era that calls for the CIA to take economic espionage off the back burner, where it languished for decades as the agency focused on traditional issues such as the Soviet Union's nuclear capabilities.

The shift to the economic arena actually began well before Clinton's new directive. Once it became clear that economic rivalry with industrial superpowers such as Japan and Germany was being viewed by the White House and Congress as a critical national security issue following the collapse of the Soviet Union, the agency began to divert resources from Russia and other traditional targets to meet the new demand.

"The economic issues have come to the fore in this Administration, and so the intelligence community is moving to support the policy-makers," said one former intelligence community expert on economic espionage.

The shift has not been an unqualified success, however. The CIA has recently experienced humiliating failure as well as victory, with perhaps the greatest defeat coming in a bungled operation in France that is now the subject of a confidential investigation--at the urging of the Senate Intelligence Committee--by CIA Inspector General Frederick P. Hitz.

As a result of the French debacle, new CIA Director John M. Deutch has vetoed plans for Joseph DeTrani, the 53-year-old chief of the CIA's European division, to become the CIA's Paris station chief, sources say. As European division chief, DeTrani--who once served as the CIA's public spokesman--had responsibility for overseeing the agency's covert operation to penetrate the French government and unearth the secrets of French and European Community economic and trade policies--much as the French have spied on American corporations.

But DeTrani watched helplessly in late February as the French intelligence service rounded up at least five of his agents, and then, on the eve of French national elections, trumpeted its victory over the CIA in the French press.

Deutch canceled plans to make DeTrani the Paris station chief, sources say, out of apparent concern that one of his first major overseas appointments would draw fire. Other sources also suggested that he was particularly concerned about the reaction of U.S. Ambassador to France Pamela Harriman. Deutch apparently fears that Harriman, who was called in by the French government in protest following its exposure of the CIA operation, might see DeTrani's appointment to run the Paris station as too provocative, sources say.

Meanwhile, sources say that Dick Holme, a legendary figure within the CIA who survived a fiery plane crash in Africa early in his career and was apparently serving as Paris station chief during the botched operation, is leaving the post.

Yet, while observers concede that the French debacle represents an embarrassing defeat, analysts stress that it is just one of the opening salvos in the struggle over economic intelligence.

In fact, Deutch said in a recent interview that he now views economic policy-makers at the Treasury Department, the U.S. Trade Representative's Office and the National Economic Council as among the most important "customers" of the agency's intelligence-gathering.

Sources add that the CIA is providing its clandestine case officers with new training to be more adept at working on technical economic matters.

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