62. Memorandum From Secretary of State Shultz and Director of Central Intelligence Webster to President Reagan1
We met on July 302 to follow up on the July 28 NSPG meeting3 on Embassy Moscow and general security issues. As a result of our discussion, we have largely agreed on what must be done and how we should now move to get on with the job. Our objective is to achieve a sound and integrated security and operational stance at Embassy Moscow and elsewhere overseas, and put in place a rational structure and procedures here in Washington which will assure that good security is central to our overall diplomatic and intelligence efforts.
We have focused on the following five areas of priority and endeavor as they formed the core of the NSPG discussion.
The Existing Office Building (EOB)
There is full agreement between us that we must thoroughly rehabilitate the existing Embassy office building to make it safe, secure and habitable. This work has already begun. We have shipped in the necessary construction materials to give us a new secure Embassy communications center by mid-October. Additionally, work is under way to replace the building’s heating system (which failed last winter), to install a fire protection system, to upgrade the electrical power capacity, and to install a much needed new elevator. Demolition and renovation of the upper floors of the building’s sensitive areas will be accomplished on an accelerated basis. We have already reprogrammed some funds for this and we will get whatever further funds we require to do this thoroughly and well. Current estimates are this may take as much as $35 million to accomplish.
We are going to have much more central coordination and backstopping of Embassy Moscow in this rehabilitation of the existing building and all of the related support activities. Ambassador Gary Matthews has been given full-time responsibilities as Special Coordinator for Moscow and our missions in Eastern Europe. He will pull together the joint efforts to get things done and get them done well and on time. We have also contracted with an experienced, top-notch architectural/engineering firm in Washington which will advise us in overseeing all of this work on the existing building.
[Page 281]We believe that we should aim to retain the existing office building as part of our overall Embassy presence in Moscow.
The New Office Building (NOB)
There is no difference between us on how to proceed in correcting the Soviet-penetrated structure of our new Embassy office building in Moscow. We agree that we should (a) deconstruct the top five floors; (b) install an anti-drilling barrier at the fifth floor level; and (c) “slice” the existing columns of the structure at ground level. The reconstructed top five floors would be made state-of-the-art secure; at the same time we would also make the lower three floors of the new building—on which only unclassified operations will be conducted—secure for all but the most sensitive activities. Finally, we propose that this approach on dealing with the NOB be carried out in a design layout which is consistent with the separate annex building recommended in the Schlesinger report. This will leave open the option should we later decide there is a need for an annex.
Our agreed recommendation, as outlined above, is predicated on the essential technical ability to carry this out and do so in a timely fashion. This approach will be very expensive, but it is money well spent. We should consult with the congressional leadership on how to fund this effort. One alternative could be to supplement the intelligence community budget. This would offer the advantages of concealing from the Soviets just how much we have done to correct and protect against their penetrations.
Organizational Structure
Physical security and counter-intelligence must have our highest priority at all times. We must be organized in such a way that a security consciousness is an integral part of our daily procedures and actions. For this we need an organizational structure which has real clout and heft.
We believe that the basic security organization has to be part of the Department of State in order to give us the accompanying ability to affect the overall diplomatic culture of what we do and how we do it. This effort began already two years ago, in the wake of the Inman recommendations, and we have identified and put in positions of responsibility excellent people to carry out high-quality work with dedication. Now we should move this even further.
Specifically, we propose the establishment of the position of Director of Diplomatic Security, an official who would be at the Executive Level III directly responsible to the Secretary of State. This person would be part of the Department of State and not constitute a separate agency as envisioned in the PFIAB report. This arrangement would [Page 282] place this individual and the organization structurally closer to other elements of the Department he would influence. The approach also avoids creating yet another Under Secretary position since we do not favor the proliferation of under secretaries.
We believe that the first Director of Diplomatic Security should be an individual recruited from outside the Department of State.
Diplomatic Security would have its own separate line item in the State budget. The Director will have broad responsibilities for all aspects of diplomatic security, including personnel, physical and technical.
Audit/Inspection Functions
We propose the establishment of a unit which would set the standards for protecting Embassies from penetration by foreign intelligence activity and monitor conformity with those standards. The head of this unit would be named by and responsible to the DCI, who will report problems and recommendations to the Secretary of State for his action as the person responsible for the management of embassies and missions abroad. Its staff would be drawn from the various agencies involved in our diplomatic and intelligence functions abroad. This unit could be co-located together with the Director of Diplomatic Security.
The unit would have a working level advisory group consisting of the Director of Diplomatic Security and equivalent level personnel from the other agencies involved. Additionally, there would be a high-level Board, including the Secretary of State and the DCI, which would meet once each quarter or on call. This latter body would have the authority to recommend to the Secretary of State that he rescind the ability of a particular facility to receive, retain or perform classified functions in the event of serious security problems. In the event of disagreement by the Secretary of State, an appeal could be made to the President.
Polygraphing
We have a difference of opinion on the issue of polygraphing. The Secretary of State believes that the polygraph should be used in cases of legitimate investigation and not be used as a general screening device or applied to entire classes of individuals. The DCI believes that all personnel assigned to Moscow should be polygraphed. We will continue our effort to reconcile differences in this area.
Budgetary Realities
Secure, effective operations at Embassy Moscow, and elsewhere, require major funding. We must look at this in the same light as other critical areas in our national security. Regarding Moscow alone, it has been observed that the intelligence and insights we derive from secure [Page 283] Embassy operations are just as important to us as one of our spy satellites—which cost us hundreds of millions each. We cannot afford to do any less for the security of our diplomatic and intelligence facilities abroad.
It follows from the content of this memorandum that the security requirements we now face, including in Moscow, will have a major impact on the State Department budget. The major funding which will be required can best be obtained, protected, and effectively utilized if State is designated a national security agency. Without this, the Department will continue to be buffeted by the budgetary cuts now and yet to come.
Conclusion
We believe that we have achieved a solid and substantial measure of agreement in key areas and we must now proceed. The efforts we already have under way, and that which we propose in this memorandum, will give us a solid and secure basis for this very important area of our national security.
- Source: Reagan Library, 1987 SYS 4 RWR INT 405263–40549. Secret; Sensitive. Reagan initialed the upper right-hand corner of the memorandum.↩
- No minutes have been found.↩
- See Document 61.↩