The CIA had already created its own counterpart in the form of stay-behind networks, agent groups recruited and prepared ahead of time who were to be activated if the Russians overran Western Europe. Known today by the name “Gladio,” after a title of an Italian component of this CIA network (among the first to be acknowledged, in the 1990s), there were perhaps five thousand members of these networks in all, including some in most Western European lands, to include the neutral countries Finland, Sweden, and Austria. Beginning in 1950 the groups provided yet another focus for OPC-OSO tension since OPC wanted action units for resistance while OSO wanted stay-behind networks of agents. Both CIA elements tried to recruit the same Europeans, who themselves frequently joined both sides of the CIA operation. Equipment for them was stockpiled in their countries. Many had orders to report to their bases only a month after their countries had fallen to the enemy.

  In later years the Gladio networks became a positive embarrassment to the CIA because they constituted hotbeds of right-wing political action, engaging in actions from terrorist bombings to attempted coups d’état in Italy, Belgium, and elsewhere. (There would be specific fallout for the CIA in 1956, at the time of the Hungarian revolution, as we shall see.) The groups remained in being for decades—DO officer David Whipple, who later managed CIA operations in Western Europe, recalled that agent meetings and network exercises continued at the time he moved on to another assignment in 1979. Richard Helms, on the other hand, insists that the Gladio networks were dismantled before he came to the head of the CIA. “I had to sign off on all these projects,” he told author Jonathan Kwitney. “What would have been the sense of keeping these operations so long?” Several nations ultimately held official inquiries into these clandestine activities. At the time the Gladio nets did nothing in the open. Daniele Ganser, the principal analyst of Gladio, presents evidence across many nations that Gladio networks amounted to anti-democratic elements in their own societies. If so, that is a telling judgment against a CIA in the service of a United States committed to making the world safe for democracy.

  Meanwhile the presidential transition from Truman to Eisenhower brought change for the covert warriors. The Korean War was winding down, to end in a stalemate with the armistice signed on July 27, 1953, at Panmunjom. By then paramilitary operations in China were proceeding fitfully. Those in Korea ground to a halt slowly with mixed results. The Korean era still witnessed a substantial buildup of the means to carry out psychological warfare and covert operations, plus mechanisms to plan and manage them. Before the end of the conflict, veritable covert legions were ready to act on command. Operators like Frank Wisner and managers like Gordon Gray were equipped to make the most of available resources.

  Through his unflagging enthusiasm for psychological warfare, President Harry Truman played a major role in this buildup. It occurred in secret while, in public, the political perception developed that the Truman foreign policy of “containment” stood helpless in the face of the global challenges of the Cold War. The way was open for someone offering a new direction, and Dwight Eisenhower, the Republican Party’s candidate in the 1952 presidential election, did just that.

  Eisenhower spoke often of the ideological struggle against communism; a recurrent theme of the 1952 electoral campaign was that the Truman administration had failed to wage this struggle. The Republican Party platform offered to “roll back” the Iron Curtain while Eisenhower promised to intensify the Cold War through such measures as removing the restrictions on Taiwan’s Chiang Jieshi, unleashing him against the mainland, and strengthening propaganda efforts in Europe.

  Eisenhower won the election. His victory rang in a new atmosphere at the CIA, where at least one intelligence officer felt the Republican platform read like the proposals he used to write at the OPC. The morning after the election, one of the senior paramilitary officers, home from Bangkok, pranced through the Directorate for Plans rooms shouting, “Now we’ll finish off the goddamned Commie bastards!”

  * Despite the PSB’s lack of impact on America’s secret wars, or perhaps to shield its very success at avoiding subordination to the NSC-10/5 system, the CIA has very jealously guarded the records of the Psychological Strategy Board. In December 1988, after this author wrote about the PSB in a systematic way for the first time, the CIA sent a plane with a team of armed guards to Kansas City. The team went to the Truman Presidential Library in Independence, Missouri, seized the PSB records, and returned them to Washington. It became the first time in the history of the National Archives that a set of records processed under existing regulations and open to research had been withdrawn from public view. The CIA held on to the records for months, extracted several hundred documents from the set, and only then returned them to the Truman Library. It cannot have been the quality of the PSB’s planning for psychological warfare that accounted for this degree of concern at Langley.

  6

  Bitter Fruits

  MOST OFTEN the jangling telephone in the office of the president’s appointments secretary brought new problems, the minor crises that made up a routine day. No doubt this was what was anticipated that early spring day in 1955 when John Earman, a special assistant to the director of central intelligence, came on the line. But Earman had a question, not a problem. It concerned an appointment with the president set for 9:50 A.M. on March 24. The meeting had been arranged to award the National Security Medal, the highest decoration given by the United States for intelligence work. A few months earlier, on December 15, 1954, President Eisenhower had signed a memorandum awarding the medal to CIA officer Kermit Roosevelt for the latter’s role in a prime covert operation, the toppling of a legally constituted government in Iran.

  Everything about the ceremony would be held very closely. The National Security Medal, itself a secret, could be awarded by the president at his discretion, unlike the military Medal of Honor, approved by Congress. Award citations and the medals are secret, kept in CIA vaults for the duration of an intelligence officer’s career. The National Security Medal was not only secret, it was special. Kermit Roosevelt was only the fourth person to receive it.

  It would not be the first time Roosevelt came to the White House, nor indeed his first brush with exotic adventures. The grandson of Rough Rider Theodore Roosevelt, some of Teddy’s venturesomeness clearly had rubbed off on his progeny. In 1938, with rising danger of war, “Kim,” as he was known, accompanied President Franklin Roosevelt’s crony Vincent Astor on a Pacific island cruise-cum-spy mission in which they used a yachting expedition to survey Japanese docks, fuel depots, and airfields in the Marshall Islands. Astor had reported to FDR personally, and Kim went along for the evening with his cousin the president. Living in London a year later, Roosevelt felt so outraged at the Soviet Union’s invasion of tiny Finland in the 1939–1940 “Winter War” that he recruited a Spanish Civil War–style international brigade—too late to help the Finns but a fine adventure all the same.

  Months before Pearl Harbor, Kim joined the war information office that Wild Bill Donovan would turn into the OSS. Roosevelt’s Ph.D. dissertation, on propaganda techniques in England’s Glorious Revolution, had been just the thing to pique Donovan, who snapped Kim up from his job as a newly minted history instructor. One day Wild Bill asked Roosevelt what he thought about Iran, effectively giving Kim a portfolio he kept up through his career. He went to the Eastern Mediterranean with OSS boss Stephen Penrose, serving as a top intelligence evaluator. Roosevelt, then twenty-nine, first visited Palestine in 1944 and then went on to Iran. His cousin and fellow OSS/CIA stalwart, Archie Roosevelt, followed Kermit to northern Iran at the end of the war, affording a secondhand but still close look at the immediate postwar crisis in Iran, where the imperial government of Reza Shah Pahlavi survived as a constitutional monarchy.

  Kermit Roosevelt served as a lead writer on the official history of the OSS, and he retreated to writing and academe afterward, returning to Iran repeatedly beginning in 1947, when he went back to research a book on Arabs and oil. Three years later Frank Wisner recruited Kim away from Harvard University. Roosevelt thought Wisner a scattershot, lacking depth and judgment, but he got on better with Tracy Barnes, a fellow Groton alumnus, or Miles Copeland, former Dixieland musician and CIC veteran from the war. Through Barnes, Kim quickly opened his own channel to Allen Dulles, the agency’s new deputy director for operations.

  It became clear to everyone that the Middle East would be Roosevelt’s private preserve after a startling performance in Egypt. Kim knew Farouk, the king of semi-independent Egypt, from dealings during the war. The CIA sent him back. There Roosevelt reminded himself of his low opinion of Farouk, soon denigrated among agency insiders as the “Fat Fucker,” and broadened his contacts to include the Free Officers’ Movement, a revolutionary group whose reformist goals encompassed Farouk’s overthrow. Chief among the officers was one Gamal Abdel Nasser. Project FF became the action against Farouk. In March 1952, Miles Copeland, acting for Kim, told several of the Free Officers that the United States was worried about increasing discontent in Egypt. The seed thus planted blossomed into a coup that summer. Nasser became a member of the resulting junta from which he emerged as Egyptian leader. Kim Roosevelt became Nasser’s grey eminence, extending quiet CIA help and giving advice. Estimates are that the agency funneled $3 million into the Egyptian venture. Kim attempted to harness Arab nationalism to the American wagon of democracy but prudently faded into the background in the months after the coup to hide CIA’s tracks. Agency operators understood the reasons for the anti-American rhetoric Nasser used with his public, but the State Department and White House did not, and the relationship soured. At least Roosevelt had tried. He would try again in Iran with results that, at least in the short run, turned out differently.

  The award ceremony at the White House came off without a hitch. Roosevelt, his wife, and two children, entered the West Wing through a side entrance, avoiding press speculation. The appointment itself, just ten minutes before a session of the NSC, made it convenient for DCI Allen Dulles, Secretary of State John Foster Dulles, and Ambassador to Iran Loy Henderson to be present when President Eisenhower strung the ribbon around Roosevelt’s neck. The presentation indicated the esteem in which Ike held the intelligence community.

  Iran had been a covert action writ large, solving a problem Eisenhower inherited from the Truman administration. The Iran problem arose from oil, though it had a Cold War overlay, specifically from British interest in Iranian oil. The CIA covert action represented the end result of an Anglo-Iranian oil crisis that had endured for two bitter years, drawing in the British government, the Royal Navy, the SIS, and then the United States. Great Britain had total control over the pumping, refining, and shipping of oil in southern Iran through the Anglo-Iranian Oil Company (AIOC). Under an agreement to expire in 1993, AIOC paid Iran rents and taxes plus salaries for Iranian employees. The money accounted for half of Iran’s budget, but in fact AIOC paid more taxes to the British government than to the nation whose oil it pumped, and AIOC itself earned ten times what it paid Iran. Sure of their position, the British offered only cosmetic changes in a supplement to the agreement when it came up for renegotiation. Tensions heightened when the United States signed its own agreement with neighboring Saudi Arabia that recognized Saudi ownership of the oil and the corporation.

  British suspicions of American interests in Iran persisted as a subtext in this affair, but were presumably swallowed by London and AIOC as the price for U.S. diplomatic support and for the covert operation that would follow. Nevertheless, as early as 1948 a group of American oil speculators formed Overseas Consultants in an effort to get control of oil production in northern Iran, where the AIOC had not sewn up its concession. Their legal counsel, interestingly enough, was Allen Dulles of Sullivan & Cromwell in his pre-CIA days. Kermit Roosevelt, who began traveling the Middle East for the CIA in 1950, was perfectly aware of American penetrations, British sensitivities, and Iranian politics.

  Meanwhile the British contrived to have an Iranian parliamentary commission report nationalization of AIOC as completely infeasible. The prime minister presenting this conclusion to the Majlis read a statement that had clearly been inadequately translated from English into the Iranian language Farsi, and this linked him to British interests. He was shouted down and several weeks later, on March 7, 1951, shot dead as he knelt to pray in a mosque. Thus came to power a popular nationalist leader, Dr. Mohammad Mossadegh, who immediately presented a bill for government absorption of Anglo-Iranian. The bill became law, and on May 2 AIOC was taken over.

  Because of its global interests, AIOC had a working relationship with SIS and soon demanded political action to change the government in Teheran to one willing to settle on favorable terms. Monty Woodhouse, the SIS station chief, arrived on the Teheran scene in August 1951, only a few weeks after Mossadegh’s security service shut down AIOC’s private intelligence net. Both Woodhouse and the Secret Service’s controller for the Middle East, George K. Young, were amenable to action. They initiated schemes to discredit Mossadegh’s leadership through psychological warfare, though without accomplishing much more than to make the Iranian prime minister aware of the British play. In mid-1952, when the Royal Navy actually seized a tanker carrying Iranian oil in violation of the British embargo, tensions reached fever pitch. Some weeks later Iran’s monarch, the shah, responded by attempting to dismiss Mossadegh, appointing instead an elder politician in touch with British figures, including former SIS secret warrior Julian Amery. This maneuver failed. The Majlis reelected Mossadegh as prime minister, tying the shah’s hands. The prime minister’s National Front seemed to have overwhelming support.

  London now shifted its stance on covert action. Young ginned up a plan to overthrow Mossadegh by means of a coup d’état. The SIS station began working actively with Iranian agents and arming tribes in the north like the Kurds. Suddenly in October the Mossadegh government cut diplomatic relations with Great Britain, closing down the SIS. Mossadegh’s police also pursued key British agents and pro-shah figures in the armed forces. The SIS retreated to Cyprus and set up a rump Teheran station to observe as best they could. Norman Darbyshire took charge of the Cyprus/Iraq SIS detachment. Monty Woodhouse returned to London where he prepared a new plan, Operation Boot, that would finally be implemented. In November 1952 an SIS delegation showed the proposal to the CIA in Washington. Kim Roosevelt, traveling the Middle East as he often did, learned of Boot while stopping in London on his way home. “What they had in mind,” Roosevelt would later write, “was nothing less than the overthrow of Mossadegh. . . . They wanted to start immediately. I had to explain that the project would require considerable clearance from my government.”

  While the Truman administration remained in office, official U.S. policy favored an amicable resolution of the AIOC matter. Thus nothing happened with the British proposal. But Truman had already become a lame duck and Eisenhower, working on his transition to the presidency, favored much more energetic covert operations. CIA director Walter Bedell Smith knew of British interest. Smith had been Eisenhower’s chief of staff during the war. Not averse to exploring this British notion, Smith discussed it at a meeting in Washington that December even though Iran had not been on the agenda. The session brought together key CIA officers and SIS proponents. Agency participants included Kim Roosevelt, John H. Leavitt, chief of his Iran branch, Leavitt’s deputy John W. Pendleton, and James A. Darling, chief of the Near East Division’s paramilitary staff. Monty Woodhouse headed the British group.

  Meanwhile Bedell Smith’s days at the CIA came to an end. Eisenhower selected General Smith to serve as undersecretary of state, most likely to be the president’s eyes and ears at the department. Ike replaced him at the agency, choosing Allen Dulles to be the new director of central intelligence. John Foster Dulles became secretary of state. The Iran covert action project began to move ahead.

  Although Gordon Gray may have been disappointed he wasn’t asked to head the agency, the truth was that Allen Dulles had had the inside track all along. As brother of the secretary of state, Dulles could avoid the squabbles endemic to Washington bureaucrats establishing a pecking order. As the deputy director he remained current on all matters related to the CIA. Dulles also had impeccable credentials in both diplomacy and intelligence, having served with the State Department from 1916 to 1926 and with OSS during World War II. With his ever-present pipe and professorial air, Dulles projected the perfect image for America’s chief spy.

  Allen Dulles’s era began when he took an oath of office on February 23, 1953. Another SIS delegation, this one headed by British intelligence chief Sir John Sinclair, was in Washington at the time, its mission to plan a joint Iran operation. Allen Dulles had headed the Near East Division during his time at the State Department, and Sullivan & Cromwell represented AIOC’s parent firm in the United States. Although he maintained a casual and noncommittal posture to the British, Dulles favored the idea of a joint operation.

  Mossadegh appealed to the incoming administration for aid, not to settle with the “former oil company” but to develop resources. In 1952 the United States had provided $23.4 million in economic aid. But President Eisenhower’s response on June 29, 1953, was that “it would be unfair to the American taxpayers for the United States government to extend any considerable amount of economic aid to Iran so long as Iran could have access to funds derived from the sale of its oil and oil products if a reasonable settlement were reached.” Only military funds were offered.