Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

The Spy Trade's Changing Goals

PARIS -- When French Prime Minister Edouard Balladur traveled to Saudi Arabia in January 1994, he and his cabinet could scarcely conceal their excitement about nailing down a lucrative deal that would open up a market long dominated by Americans.

The $6 billion package was ready to be signed when Balladur sat down with Saudi King Fahd. It included a huge arms transfer of warships and missiles, three big-ticket military maintenance contracts and the plum the French had been pursuing for years: a lion's share for the French-led Airbus consortium in modernizing the Saudia state airline fleet.

But Balladur returned home empty-handed. Fahd had inexplicably balked over the terms of the deal at the last minute, and two months later the French learned why.

A high-pressure campaign waged by the American government persuaded the Saudis to give the entire airline contract to Boeing and McDonnell Douglas. Washington had employed its vast intelligence network -- including CIA agents and, according to one source, the international eavesdropping capabilities of the National Security Agency -- to sniff out French bribes and generous financing terms. The Saudis later pulled out of the arms deal also.

This blow floored the French government. For years French politicians, state-run businesses and intelligence agents had collaborated for the greater national glory of securing huge export contracts. But now they were being beaten at their own game by the Americans, and they did not like it one bit.

Intense competition between industrial nations in the world's emerging markets risks becoming a source of serious tensions among Western allies as espionage activity concentrates on commercial rather than political goals.

Anxiety about the changing goals of the spy trade may help explain a controversial French request that the U.S. repatriate five Americans accused of political and economic espionage, which was made public Wednesday in the newspaper Le Monde -- weeks after the request was first made. The disclosure broke a hallowed tradition that intelligence services should work out their differences with great discretion.

Members of the U.S. Senate Intelligence Committee have been prodding the Clinton administration for 18 months to provide a clear set of guidelines on when and how intelligence agencies should engage in gathering economic and commercial information.

In his last report before resigning in January as CIA director, R. James Woolsey described a key economic mission of the American intelligence community as identifying corrupt foreign practices and bringing them to the attention of the White House and the executive branch.

French officials contend that U.S. intelligence agents have gone beyond Woolsey's mandate of reporting bribes and conveyed the secret financing terms of French companies to their American competitors.

In the latest spy flap, the French claim that American agents exceeded the bounds of propriety by using false identities and offering cash bribes to government officials. Those officials, who included an advisor to the prime minister and other cabinet members, held privileged information about France's negotiating position in the global trade talks as well as commercial strategies for cable, satellite and audiovisual systems.

According to French counterintelligence reports published in Le Monde, the Americans have made economic espionage their chief priority in France, where the United States is said to maintain 80 active spies, or double the estimated number of Russian spooks.

One of the cases cited by French counterintelligence in the latest spying controversy involved a 34-year-old government researcher named Henri Plagnol. He said he was approached at a cocktail party by a woman who introduced herself as a public relations director for a large Dallas foundation.

Plagnol said he had lunch with her "on four or five occasions.'' He was later warned by French counterintelligence that the woman was a CIA agent.

In April 1993, Plagnol was hired as one of Balladur's advisers. He was contacted again by the woman CIA agent, and this time French counterintelligence asked him to leave Balladur's staff and serve as a double agent.

French counterintelligence gave him information to pass along, and also collected photographs, hotel registration signatures and credit card imprints that it claimed proved the Americans were using false identities.

They also took note of the serial numbers of the 500-franc ($100) bills that Plagnol was given by a CIA officer. That evidence was used by the French to justify their claim that the five American agents had trespassed the law and should leave the country.