US says it won't balk at future spy arrests after Daniloff affair. But critics worry that US will hesitate for fear of another crisis

Reagan administration officials say the recent Daniloff-Zakharov crisis will have no impact on future United States-government decisions regarding the arrest and treatment of suspected Soviet spies. With American journalist Nicholas Daniloff safely back in Washington and United Nations employee Gennady Zakharov expelled to the Soviet Union, US government officials are vowing to continue to crack down on Soviet spying. They contend that the incident has not set a precedent that would encourage the Soviets to arrest Americans in Moscow whenever a Soviet spy is caught in the US.

But conservative critics of the Reagan administration and some intelligence specialists have expressed concern that the White House allowed a damaging precedent to be established through what is being widely viewed -- despite administration denials -- as a swap of a Soviet spy for an innocent American hostage. These observers worry that American officials may be reluctant in future cases to deal firmly with suspected Soviet spies for fear of triggering a diplomatic crisis.

``I think the Soviets figure they have a formula for offsetting the arrest of any KGB or GRU [Soviet military intelligence] officers in this country,'' says Ray Wanall, a retired Federal Bureau of Investigation assistant director who headed the bureau's intelligence division in the 1970s. ``I feel that the exchange that was made and the arrest of [Daniloff] may have a dampening effect on our ability to frustrate the efforts of the Soviets here in the US,'' he adds.

``If a Soviet national is arrested here, an American national will be arrested in Russia -- there is no question about it,'' says William V. Cleveland, also a former assistant FBI director with experience in counterintelligence. ``It is a dirty business, that is the way it works.''

Administration officials reject this view. They counter that in the future it will be the Soviets who will hesitate before trying to set up spy swaps by arresting American reporters. The Daniloff incident exposed the Soviet Union to a public outcry in the US and elsewhere far greater than the Soviet leaders had expected, these officials say.

In addition to losing a public-relations battle with the US, the officials say, the Soviets agreed to release Mr. Daniloff, to release a Soviet dissident to the West, and to adhere to an American demand to reduce the number of officials stationed at the Soviet mission to the United Nations.

Justice and State Department officials have defended their handling of the Zakharov case, noting that no one in the government foresaw that Zakharov's Aug. 23 arrest in New York and imprisonment without bail might trigger a reciprocal action in Moscow. ``On the eve of Zakharov's arrest, no one could have outlined the scenerio that has taken place this past month,'' says Justice Department spokesman John Russell.

However, other observers note that the Zakharov-Daniloff case is not the first time the Soviets have arrested an American in an apparent attempt to arrange a swap for a spy held in the US, pointing to a somewhat comparable incident as recently as 1978.

A major element in the US decision to arrest Zakharov was the administration's growing concern about Soviet spy operations at the United Nations. According to State Department statistics, since 1950 some 30 Soviet officials stationed at the UN have been expelled by the US government for alleged involvement in espionage. Today, more than 500 Soviet citizens work either at the Soviet mission to the world body or, like Zakharov, as civil servants at the UN Secretariat. It has been estimated that as many as one-quarter of these people are engaged in espionage activities.

The hope at the State Department is that the Soviets realize that US officials are serious in their warnings that they will not tolerate Soviet spying, particularly by international civil servants, who are not shielded by diplomatic immunity from US espionage laws.

Officials involved in the arrest of Zakharov say there is nothing they would do differently if confronted in the future with the same case. ``We still plan to investigate cases of espionage and continue to prosecute them,'' says Justice Department spokesman Russell.

``As far as I'm concerned [the arrest of Zakharov] was routine,'' says US Attorney Andrew J. Maloney, who was the prosecuting attorney in the Zakharov case.

As in all cases involving the potential arrest of a suspected Soviet spy, Justice Department officials consulted with the State Department and White House before notifying counterintelligence agents to move in and arrest Zakharov.

Specifically, in this case contacts were made with the State Department's Soviet desk and the National Security Council prior to the arrest. In addition, the US Embassy in Moscow was advised that an arrest was forthcoming.

Though some critics have questioned the timing of the arrest as sending the wrong messages to Moscow in a pre-summit period, Justice Department officials stress that Zakharov's arrest was prompted when he requested that his recruited contacts deliver classified US documents to him on a specific date.

``It was a controlled operation, and the timing of the arrest was based on the Soviets' call, not our call,'' Russell says. When the documents were passed, it provided critical evidence in building a solid case against Zakharov. He was caught red-handed with US secrets, officials say.

It was known that Zakharov was approaching the end of his five-year posting in the US, and some officials have speculated that he was anxious to make a major score in US secrets to present to his KGB superiors. Though most of the press coverage of the Zakharov case has focused on one of Zakharov's recruits, a former Queens College student code-named ``Birg'' by the FBI, US counterintelligence officials were aware of two other persons who were being recruited as Soviet spies by Zakharov.

Unknown to Zakharov, each of the three recruits was secretly cooperating with US counterintelligence agents. But American officials could not be sure that they had identified everyone in the Zakharov spy ring. There was concern that if Zakharov was pressing his contacts for classified documents, some US secrets might get through and be lost to the Soviets, according to one official.

But the major concern, according to prosecutor Maloney and other officials, was the desire to send a strong warning to the Soviets that they had broken an unwritten rule in espionage by expanding their New York spy operations to permit the use of UN Secretariat employees in actually buying classified information.

Traditionally, employees like Zakharov have been used by the Soviet intelligence services primarily as ``spotters'' to identify people who might be susceptible to Soviet recruiting efforts, officials say. Once a person is befriended and agrees to provide classified information to the Soviets, he is usually turned over to a more senior Soviet intelligence official working undercover in the Soviet UN mission or the Soviet Embassy. Such officials have the advantage of diplomatic immunity and can expect simply to be expelled from the US without facing trial if they are caught buying US secrets from a contact or are tripped up in an FBI ``sting'' operation.

As an employee in the UN's Center for Science and Technology, Zakharov did not enjoy diplomatic immunity against US spy charges. US prosecutors were prepared to use him as an example to other Soviet ``spotters'' not to step out of line.

``We are not going to tolerate any more of the Soviets' unfettered use of so-called spotters engaging directly in espionage,'' says a State Department official. ``That has been said loud and clear and I think the Soviets know it.''

Other observers are not so sure. Some say US officials will not really know the full impact of the recent case until the another ``Zakharov'' is arrested.

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