The Moscow Rules

CHAPTER 1

On the morning of November 2, 1962, the wife of Hugh Montgomery, the CIA’s deputy chief in Moscow, answered a telephone call. On the other end, the caller remained silent for ten seconds and hung up. When Montgomery’s wife told him what happened, he immediately realized the implications and began to make arrangements. The silent call was part of a prearranged signal from a Soviet spy named Oleg Penkovsky. Penkovsky had been missing for several months, and the CIA feared the worst. Now, out of the blue, the spy had resurfaced to signal that the Soviets were about to start World War III.¹

Code-named HERO, Penkovsky was a colonel in the GRU, Soviet military intelligence. He also held a senior position at the State Committee for Coordination of Scientific Research Work, a government body that oversaw technology exchanges with the West. Both positions provided him with invaluable access to Russian military and technological capabilities.

Penkovsky first tried to contact the CIA in the winter of 1960 by handing a letter to a couple of American tourists in Red Square. After similar attempts the letter made its way into the hands of the CIA, which grew instantly suspicious. The letter was too vague. In it, Penkovsky wrote that he had important information on numerous subjects that would surely be of interest to the American government. However, he had refused to identify himself, and the chief of Moscow Station feared the whole thing might be a KGB trap. Penkovsky finally handed another letter to a British businessman, who then shared it with British Secret Intelligence Service (MI6). In this letter, Penkovsky included enough details to allow his identity to be confirmed, and the Brits and Americans decided to work together. This was at a time when an indifferent American public’s knowledge of espionage was primarily derived from watching James Bond movies or reading the recent John le Carré best seller The Spy Who Came in from the Cold. Reality, it would seem, was trumping fiction.

Penkovsky was a dedicated and motivated spy. He hated the KGB and was disillusioned with the Soviet regime, which had repeatedly overlooked him for promotion.

Over the next seventeen months, he would become one of the most productive Soviet assets the CIA had ever run in Moscow. Their first face-to-face meeting with the Russian spy took place in a hotel room in London, where Penkovsky handed over an envelope stuffed with secret documents that included diagrams of Soviet missiles and launchers. On two subsequent visits to London and another to Paris, he delivered more than a hundred rolls of exposed film, along with nearly twelve hundred pages of handwritten notes and diagrams. In all, he provided the CIA with so much classified information that thirty translators and analysts were hired to work on the material full time.

Washington made Penkovsky’s intelligence a top priority. It was hand delivered to the president and assigned two code names, IRONBARK and CHICKADEE, to make it appear as if the material came from more than one source. The information touched on a variety of sensitive topics, including Soviet intentions during the Berlin blockade as well as the technical capabilities of nuclear missiles that the Russians sent to Cuba in the fall of 1962. In fact, it can be argued that Penkovsky’s intelligence played a key role in helping President Kennedy stand up to the Soviet premier, Nikita Khrushchev, during the Cuban missile crisis. The American president knew not only the exact type of missile the Russians had placed in Cuba but also that Khrushchev was overstating the capability of the Soviet nuclear arsenal. Kennedy knew it was unlikely that the Soviets would go to war with the United States, and when he called Khrushchev’s bluff, the Soviet leader backed down.²

For his role in helping the United States navigate the Cuban missile crisis, Penkovsky would be dubbed the Spy Who Saved the World and acknowledged as one of the CIA’s most important assets of the early Cold War era.³

In the beginning, there were no rules. The Penkovsky operation went relatively smoothly while the spy was allowed to travel abroad, where it was much easier for him to slip away and meet up with his CIA handlers. Things changed, however, in the fall of 1961, when his foreign travel was curtailed. The CIA in the 1960s was woefully unprepared to run such a sensitive operation out of the US embassy in Moscow, and so arrangements had been made with MI6 to handle the case jointly. The British assigned Janet Chisholm, the wife of the MI6 station chief, to serve as a go-between for the Russian agent, and over a three-month period, she met with Penkovsky almost a dozen times.

In the summer of 1962, the CIA finally sent a trained case officer, Rodney Carlson, to link up with Penkovsky in Moscow, but Carlson and Penkovsky would never meet. By September, the Russian spy had disappeared. Had something gone wrong? Penkovsky had always been one to take risks, sometimes daring to snap photographs of sensitive materials when Soviet officials had only just stepped away from their desks. Perhaps he’d been in an accident or become ill. Due to the sensitive nature of the operation, Montgomery decided to wait rather than risk attempting contact. Then, on the morning of November 2, Montgomery’s wife lifted the telephone receiver and heard ten seconds of silence: Penkovsky had resurfaced.

Because of the heavy surveillance in Moscow, the established way of communicating with Penkovsky was a dead drop. The location for the drop was a radiator tucked under the stairs inside the entrance to an apartment building on Pushkinskaya Street. However, in the event that the spy had critical time-sensitive information—namely, that Russia was about to attack the United States—Penkovsky was to dial a series of telephone numbers, remain silent for a specified amount of time, and then hang up.⁴

After the silent call to the Montgomery residence, consensus at the US embassy was that the warning was a false alarm. It’s true that in November 1962, Soviet nuclear missiles were still in Cuba. But tensions had abated, and the crisis had passed. It seemed unlikely the Soviets would suddenly launch a preemptive strike after backing down. So then why had Penkovsky placed the call? With so much at stake, a case officer named Richard Jacob was sent to see if Penkovsky had loaded the dead drop site with a new message. But when Jacob entered the dingy hallway and approached the radiator, a team of KGB officers sprang from the shadows and grabbed him. It then became clear that the KGB had placed the call and set a trap. How the Russians had known the location of the dead drop and the procedure for the silent phone call was also clear: Penkovsky must have told them.

Confirmation of Penkovsky’s arrest arrived in the December 12 issue of the Russian newspaper Pravda. The article reported that the spy had been apprehended in late October, a full week before the silent call. Throughout his time in Moscow, Penkovsky had met with Janet Chisholm multiple times and passed small packages of chocolates to her, ostensibly for her three children but with exposed photographic film inside. It was unclear when and how he had been compromised, but the KGB likely had witnessed one of these exchanges and become suspicious. Or possibly George Blake, a British spy recently exposed as a double agent, had tipped them off.

Whatever the source of their suspicions, the KGB had drilled a hole in the ceiling of Penkovsky’s study and installed a camera. They had also hidden a camera on his windowsill and stationed an officer in a building across the river. Finally, a search of Penkovsky’s apartment unearthed a cache of espionage-related equipment, including a Panasonic radio used as a one-way voice link (OWVL) to send coded messages, a one-time pad (OTP) used to compose ciphers, and other encryption devices.

After grabbing him at the dead drop, the KGB held Jacob for a few hours, photographed him, and sent him back to the US embassy. Because he was an officer with diplomatic immunity, the Russians could do nothing to him. However, now that he had been identified, Jacob was declared persona non grata (PNG’d), and his days in Moscow were effectively over. He was put on a flight the following morning. Meanwhile, Oleg Penkovsky wasn’t so lucky. After a brief trial, the Soviets executed him on May 17, 1963.

The capture and killing of Oleg Penkovsky was a decisive moment in the history of the CIA as well as in the history of relations between the United States and Russia. In some ways, we still live in the wake of those events today.

On his own, Penkovsky had cracked the security system of the world’s most paranoid government and left it virtually in pieces. At that point, he was the highest-ranking Soviet officer to spy for the United States, and in the aftermath of his arrest, some three hundred Soviet intelligence officers were immediately recalled to Moscow from overseas.

Penkovsky’s avowed goal had been to prevent a nuclear war between the United States and the Soviet Union, and in that, he succeeded. The technical information he provided about the Soviet missiles deployed to Cuba in 1962 allowed the United States not only to track the missiles but also to gauge their operational readiness. As a result, at the time of his meeting with Khrushchev, Kennedy knew that the Soviets needed several days to make the missiles operational, time that allowed him to achieve a diplomatic solution.⁵

In the wake of Penkovsky’s death, the CIA was forced to take stock and examine what had gone wrong. Although the Agency had had numerous successes recruiting agents and spies throughout the world, the Soviet capital was a different story. In describing the difficulties of working in Moscow, former CIA director Richard Helms said that it would probably have been easier to run an agent on the planet Mars.⁶

Moscow has always been an ominous destination for an intelligence officer. From the days of Catherine the Great through the rule of Vladimir Putin, no other espionage environment has rivaled it. As a metropolis in the same category as New York and Paris, Moscow has a distinct urban character, a mystique that hangs over the place like a fog. A visitor never mistakes the fact that they are in the Russian capital, and if that visitor happens to be a CIA officer, well, Moscow is a very special place indeed.

During the Cold War, American officials were routinely restricted in their ability to travel outside the city, but similar rules applied to Soviets in America. In fact, in Washington, DC, for many years, it was part of a CIA officer’s duties to report the presence of a car with Soviet diplomatic plates anywhere in the metropolitan area—at a shopping mall, at a Redskins game, or, most importantly, outside the city. This did not exactly replicate the attention our officers received in Moscow, but it served the same purpose. All CIA reports of Soviet sightings were funneled to the FBI, the agency responsible for keeping track of Russians in the United States, whether in Washington, DC, or at their consulates in San Francisco or New York. The Russian footprint was and is wide and extends from Washington, DC, to New York to San Francisco to Seattle and Houston.

In Moscow, on the other hand, American diplomatic cars typically came under close vehicular surveillance the instant they passed through the embassy gates. In fact, there was a militiaman at that gate whose duty it was to call out the American cars as they drove past. Surveillance teams waiting outside the compound then swung into action, tailing the American vehicle until it returned to the embassy.

These surveillance teams, both on foot and in cars, were deployed by the dreaded Second Chief Directorate (SCD), an enemy that seemed superhuman, and the Seventh Directorate–Surveillance, which supported the SCD. Together they formed a veritable army, vastly outnumbering US agents on the streets of Moscow. According to former KGB general Oleg Kalugin, during the 1970s, there were more than fifty thousand KGB officers in Moscow alone.⁷

Today the SCD has morphed into the shadowy FSB, the breeding ground of Putinism. The majority of Russians now in important positions of power are alumni of the FSB and its predecessor organizations.

Because the Soviets had no way of knowing which Americans belonged to the CIA, they kept a close watch on everyone. The KGB had immense resources at their disposal, and thanks to the paranoid nature of the Soviet regime, they had essentially carte blanche when it came to operational rules. Files were kept on most foreigners, phones were tapped, and patterns studied. If a subject deviated from a daily schedule or in any way acted suspiciously, the KGB closed in immediately. Any conspicuous maneuver (driving the wrong way down a one-way street, for instance) resulted in being bumper-locked, by a KGB Volga, unable to move. These heavy-handed methods applied to the US embassy as well.

Shortly after the United States recognized the Soviet Union and established diplomatic relations in 1933, plans for a US embassy got underway. Stalin himself offered American ambassador William C. Bullitt a site in the Lenin Hills overlooking the Moscow River. America, however, was having none of it. We didn’t want to be outside the city, on its periphery; we wanted to be in the middle of the middle, in the center of things. The American delegation moved temporarily into an area near Red Square, and in 1953, they were offered a property on Ulitsa Chaikovskogo, a site known as the Existing Office Building (EOB).

No matter what it was called, the EOB was quickly revealed to be inadequate in every way and insecure to boot. The site had been constructed in such a way that the Soviets could conduct surveillance from every angle: from adjoining buildings that provided views of windows, the courtyard, and gates; from the militiamen who guarded those gates; from surveillance teams housed in warming rooms ringing the embassy, waiting for targets to emerge; and finally from inside the EOB itself, where information could be gathered by a multitude of electronic bugs, taps, and intercepts.