INTELLIGENCE: WITH SPIES LIKE THESE...

Three blocks from the White House, tucked away in an odd little brick building, is a small (50-member) men's club known as the Alibi. It was once a haven for spy masters. Allen Dulles, the longest-serving CIA director (known as the "Great White Case Officer"), drank martinis there with Kennedy and Eisenhower administration officials. It was at the Alibi that Richard Bissell, the CIA's swashbuckling chief of operations, announced in January 1961, at the depths of the cold war, "I'm your basic man-eating shark."

Today, the Alibi's membership still includes a few old spooks, including the president's father, George H. W. Bush (who served as CIA director in 1976 and 1977). But some old hands complain that the club has been taken over by lawyers and lobbyists. George Tenet, the second longest-serving CIA director, who announced last week that he will step down, is not a member of the Alibi. The CIA has grown grayer, blander. Most of the modern "intelcrats" (intelligence bureaucrats) who work at the CIA's Langley, Va., headquarters couldn't find the Alibi on a map.

It is a mistake to mythologize a golden age of spying, those boozy nights at the Alibi when the agency's so-called Department of Dirty Tricks toasted its brotherhood of the dark arts. Less than three months after he proclaimed himself to be a "man-eating shark," spy master Bissell led the CIA into the Bay of Pigs, the most notorious of the CIA's covert-action fiascos. The CIA, and the nation, are still paying for the old boys' hubris. The scandals and congressional investigations that followed made the agency overly bureaucratic and cautious. By the end of the cold war, Langley's corridors were filled with place holders who shuffled from desk to desk and wrote memos telling their bosses what they wanted to hear.

In his seven years on the job, Tenet tried to restore some daring and panache to the "DO," the Directorate of Operations. Unlike those old Alibi members, Tenet is not the preppy type. A self-described "poor boy from Queens," Tenet dribbled a basketball in his office and was often heard crooning Motown tunes in the hallway. He bonded with President Bush as a bluff regular guy. But he wanted to bring back the dash and esprit, if not the elitism and recklessness, of the old CIA.

To a degree, he succeeded. CIA paramilitaries performed bravely in chasing the Taliban out of Afghanistan, and the agency has played at least a hand in the capture of two thirds of the Qaeda leadership. But spying in real life, if not always a mission impossible, is a far cry from James Bond. Intelligence analysis is rarely, to borrow Tenet's unfortunate description of the CIA's report on WMD in Iraq, a "slam dunk." Old spies like to say, "You only hear about our defeats, never our victories." Maybe so. That's not because the CIA's wins are kept secret (real success has a way of leaking out), but because those victories are so rare.

George Tenet's stormy tenure serves as a case study in the vicissitudes of intelligence. Tenet was seen as one of the great Washington survivors, a kind of "Crazy Legs" Hirsh of the bureaucracy, able to nimbly dance past the vicious infighting between his own organization and its rivals at State, Defense, Justice and the White House. But Tenet's buoyant charm concealed a much more serious and desperate struggle: to create an espionage service that could protect the United States from terrorists.

It is not true, as widely rumored, that he was subtly shoved out by the White House. To be sure, the White House needed a fall guy for the intelligence disasters pinned on the CIA by various investigations, including a scathing Senate Intelligence Committee report that may be released shortly. And, true, President Bush does not appear to have tried very hard to talk Tenet into staying. NEWSWEEK has learned that Bush warned Tenet that no one in Washington would ever believe him when he said he was leaving "for family reasons." But Tenet's tears, as he spoke to reporters about quitting the CIA so he could become a better father to his teenage son, were palpably real. Tenet was clearly burned out and sick of trooping up to Capitol Hill to be scolded by senators.

Tenet's departure and the avalanche of critical reports about the CIA's performance before 9/11 and in Iraq are likely to heighten the cry for reform. Some lawmakers will call for a strong intelligence czar to ride herd on the splintered and often feuding intelligence community. Others will seek the creation of a new domestic spying outfit patterned after Britain's M.I. 5.

The White House may even try to get ahead of the wave by trotting out an intelligence-reform package of its own. Some of these steps seem to make sense. But they could just provide the illusion of progress and even backfire. Former CIA inspector general Frederick Hitz says: "Moving the boxes around on the flowchart just means more turf battles. What we need is better people and more patience."

Spying is shrouded in myth and exaggeration, fed by fiction and bad movies. At a minimum, Americans need to lower their expectations about intelligence. Covert action has always been a last resort for presidents when military and diplomatic options fail. More often than not, CIA-backed coups or plots have fizzled or leaked out and caused embarrassing flaps. The CIA failed to recruit any significant Soviet spies during the cold war; the agency's few good moles were all volunteers, or "walk-ins."

The CIA's analysts haven't done much better. The 9/11 surprise and the wrong guess on WMD in Iraq were just the latest in a long line of intelligence failures. In its early days, the CIA also failed to predict that the Russians would get the bomb, that North Korea would invade South Korea and that the Soviet Union would collapse.

The truth is that spying, especially for a democracy that values openness and decency, is very difficult. Few Americans realize that the CIA gets much of its intelligence in the Middle East by buying it from Arab internal-security services, which are not burdened by American scruples. It is not always possible to know what to believe of intelligence gleaned from a Mukhabarat torture chamber.

Recently, Tenet drew some grumbles by testifying that the CIA's Directorate of Operations would need another five years to really be up to snuff in the war on terror. Actually, say espionage experts, 10 years may be a conservative estimate. CIA spy runners have traditionally operated under the shallow cover of posing as diplomats. To get inside terror networks--or even meld into alien societies--requires deep cover. "We need to get out of the embassies and into the back alleys," says Jeffrey Smith, former CIA general counsel. Just as Al Qaeda tries to embed "sleeper" agents and cells in America, the CIA needs to infiltrate the madrassas and mosques of extreme Islam.

That is a long, difficult, expensive process. The model case officer, the old hands like to say, was Robert Ames. A star basketball player from LaSalle, Ames mastered Arabic and Arab customs and blended so deeply into the Arab underworld that one of his agents was a high PLO official. Ames died in the 1983 Beirut embassy bombing.

When Tenet took over the CIA in 1997, there wasn't a Bob Ames in sight. Morale was rock bottom; at "the Farm," the CIA's training base in rural Virginia, there were a grand total of 12 trainees. Today, after vast infusions of cash and urgency, "the Farm is graduating the biggest classes since Vietnam," says a senior CIA official. But it will take decades for them to ripen into wise spy runners.

There is a risk that the zeal for accountability and reform will go too far. In 1975 a special select committee under Sen. Frank Church of Idaho exposed some outrageous plots cooked up by the old boys over martinis at the Alibi. The revelations launched a thousand novel plots and resulted in massive intelligence "reform." Some was necessary, like better congressional oversight and an executive order banning political assassinations. But scores of CIA case officers were summarily fired. Some were cowboys; some were real pros (and some were both). Morale plummeted. The agency became less effective. With Al Qaeda scheming to stage a "spectacular" against America, now would not be the best time to repeat that experience.

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