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Secretary of State George Marshall counted on George Kennan to make sure that obvious blunders like the Romanian affair did not occur again. By the summer of 1948 Truman and Marshall had delegated personal responsibility for political oversight of all peacetime clandestine operations to George Kennan, according to a later Senate investigation of U.S. foreign intelligence activities. (Control of espionage and counterintelligence, however, remained outside the diplomat's purview.) Key members of Kennan's Policy Planning Staff—officially a somewhat egg-headed institution dedicated to planning U.S. strategy for ten or twenty years in the future—were detailed to help him with this task.

Two forces, then, converged to thrust the covert operations weapon into Kennan's hands. First, there was President Truman's desire—strongly backed up by Secretary of Defense Forrestal—to make use of this powerful tool in what appeared to be a deteriorating situation in Europe. Secondly, there was the determination, especially by Secretary of State Marshall as well as by Kennan himself, to make sure that no one else in the U.S. government seized political control of this prize before the State Department did.

A new stage in the American effort to use ex-Nazis began. The early “tactical” or short-term utilization of former Fascists and collaborators—techniques somewhat akin to the exploitation of prisoners of war by intelligence agents—gradually came to an end. American agencies and policymakers replaced the tactical approach with a deeper “strategic” appreciation of the usefulness that émigré groups might have in large-scale clandestine operations against the USSR. The U.S. government increasingly accepted the exiles' organizations as legitimate and began to pour substantial amounts of money into them—at least $5 million in 1948 alone, and probably considerably more.

The spring and summer of 1948 were a period of extraordinary
activity in U.S. national security circles. The East-West conflict over administration of occupied Germany finally pushed past the breaking point. The collapse of the Czech government in February, the spring war scare, spy scandals at home, and setbacks for Chiang Kai-shek's Chinese nationalists at the hands of Mao Zedong's People's Liberation Army accelerated the deterioration of U.S.-Soviet relations. By June a relatively minor dispute over German currency reform had prompted the Soviets to shut off Western access to Berlin, and this in turn precipitated the Berlin airlift. There was a real possibility that any further escalation—especially a major military mobilization by either side—could lead to all-out war.

The strategic thinking behind the United States tactics during this period is best summarized in a top secret National Security Council directive and a group of supporting policy papers which are known collectively as NSC 20. These documents, which were drawn up primarily by Kennan and his Policy Planning Staff (PPS), were formally adopted by Truman's NSC in August 1948.
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They deserve quotation at some length because they provided the basic policy framework for U.S. clandestine operations against the Soviets, including the use of former Nazi collaborators, for the remainder of Truman's term.

Kennan sought, as the preamble of his policy statement states, “to define our present peacetime objectives and our hypothetical wartime objectives with relation to Russia, and to reduce as far as possible the gap between them.” The objectives, he writes, were really only two:

a. To reduce the power and influence of Moscow.… b. To bring about a basic change in the theory and practice of international relations observed by the government in power in Russia.

Adoption of these concepts in Moscow [however] would be equivalent to saying that it was our objective to overthrow Soviet power. Proceeding from that point, it could be argued that this is in turn an objective unrealizable by means short of war, and that we are therefore admitting that our objective with respect to the Soviet Union is eventual war and the violent overthrow of Soviet power.

But actual warfare is
not
what he had in mind. The idea, rather, was to encourage every split and crisis inside the USSR and the Soviet camp that could lead to the collapse of the USSR from within, while at the same time maintaining an official stance of nonintervention
in Soviet internal affairs. “It is not our peacetime aim to overthrow the Soviet Government,” NSC 20 continued. “Admittedly, we are aiming at the creation of circumstances and situations which would be difficult for the present Soviet leaders to stomach, and which they would not like. It is possible that they might not be able, in the face of these circumstances and situations, to retain their power in Russia. But it must be reiterated: that is their business, not ours.…”

Anti-Communist exile organizations are cited as one of the primary vehicles for the creation of the desired domestic crisis. “At the present time,” Kennan continues, “there are a number of interesting and powerful Russian political groupings among the Russian exiles … any of which would probably be preferable to the Soviet Government, from our standpoint, as rulers of Russia.” At the same time it is decided that both the Soviet internal problems and the official “hands-off” posture that the United States desires could be more effectively achieved by promoting
all
the exile organizations more or less equally rather than by sponsoring only one favored group. “We must make a determined effort to avoid taking responsibility for deciding who would rule Russia in the wake of a disintegration of the Soviet regime. Our best course would be to permit all of the exiled elements to return to Russia as rapidly as possible and to see to it, in so far as this depends on us, that they are all given roughly equal opportunity to establish their bids for power.…”
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The policy framework for clandestine operations involving exiles from the USSR, in short, was to encourage each of them to attempt to seize power in his or her homeland but to attempt to decline responsibility for having done so. Most interesting in the present context, no distinctions were to be made in the extension of aid to the various exile groups. The practical implication of this decision in the world of 1948 is clear: The United States would indeed support the veterans of the Vlasov Army, the eastern SS collaborators, and other groups that had permitted themselves to become pawns of Berlin during the war.

The State Department began the first known major clandestine effort recruiting Soviet émigrés at the same time its drafts of NSC 20 were working their way through the policy process. This project was known as Operation Bloodstone, and it became one of the department's most important covert projects from 1948 until approximately 1950, when it was superseded by similar programs under direct CIA sponsorship.

Bloodstone proved to be an open door through which scores of leaders of Nazi collaborationist organizations thought to be useful for political warfare in Eastern Europe entered the United States. The project's usual cover, even in top secret correspondence, was an innocuous effort to utilize “socialist, labor union, intellectual, moderate right-wing groups and others” for distribution of anti-Communist “handbills, publications, magazines or use of … radio” that was secretly financed by the U.S. government.
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This all was true enough.

But there was much more to Bloodstone than its cover story. In reality, many of Bloodstone's recruits had once been Nazi collaborators who were now being brought to the United States for use as intelligence and covert operations experts. Some of them eventually became U.S. agent spotters for sabotage and assassination missions. The men and women enlisted under Bloodstone were not low-level thugs, concentration camp guards, or brutal hoodlums, at least not in the usual sense of those words. Quite the contrary, they were the cream of the Nazis and collaborators, the leaders, the intelligence specialists, and the scholars who had put their skills to work for the Nazi cause.

Bloodstone's primary sponsors were a circle of political warfare specialists in the PPS and the Office of the Assistant Secretary of State for Occupied Areas, joined in this effort by Undersecretary of State (later Secretary of Defense) Robert Lovett. Frank Wisner spearheaded the lobbying effort in favor of Bloodstone inside the top-level U.S. interagency security committee known as SANACC
*
and the National Security Council.
⁵

According to Wisner's 1948 records of the affair, a portion of which has now been declassified, the official object of the program was to “increase defection among the elite of the Soviet World and to utilize refugees from the Soviet World in the National interests of the U.S.” Anti-Communist experts including social scientists and propagandists were recruited to “fill the gaps in our current official intelligence, in public information and in politico-psychological operations,” the last of which is a euphemism for covert destabilization and propaganda operations. Wisner proposed that some 250
such experts be brought into the United States during the first phase of the operation; 100 of them were to work for the Department of State, primarily at Thayer's Voice of America, and 50 at each of the armed forces.
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In June of that year Wisner expanded on his theme. “There are native anti-Communist elements in non-Western hemisphere countries outside the Soviet orbit which have shown extreme fortitude in the face of the Communist menace, and which have demonstrated the “know-how” to counter Communist propaganda and in techniques to obtain control of mass movements,” a Bloodstone briefing paper notes. However, “because of lack of funds, of material, and until recently, of a coordinated international movement, these natural antidotes to Communism have practically been immobilized.” The paper continues:

Unvouchered funds in the amount of $5,000,000 should be made available by Congress for the fiscal year 1949 to a component of the National Military Establishment. Upon receipt, the component should immediately transfer [the] funds to the Department of State … [which] should be responsible for the secret disbursement of these funds in view of the fact that the problem is essentially one of a political nature.… Disbursements should be handled in such a manner as to conceal the fact that their source is the U.S. government.

The Bloodstone proposal was approved by SANACC, the special interagency intelligence coordinating committee, on June 10, 1948.
⁷

A month later the JCS approved a second, interlocking plan for the recruitment and training of guerrilla leaders from among Soviet émigré groups. This initiative was a slightly modified version of the revived Vlasov Army plan, which had originally been promoted by Kennan, Thayer and Franklin Lindsay,
*
who later worked with many of these same guerrillas on behalf of the CIA. In their report on this second proposal the Joint Chiefs reveal that Bloodstone was part of a covert warfare, sabotage, and assassination operation—not simply an innocuous leaflet distribution plan. According to the Pentagon records, the recruitment of foreign mercenaries for political
murder missions was a specific part of Operation Bloodstone from the beginning.

The real purpose of Bloodstone, the top secret JCS documents say, was the “extraction of favorably disposed foreigners for the purposes of special operations and other uses.… Special operations,” the JCS writes, “comprise those activities against the enemy which are conducted by allied or friendly forces behind enemy lines.… [They] include psychological warfare (black), clandestine warfare, subversion, sabotage and miscellaneous operations such as assassination, target capture and rescue of downed airmen.”
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In September 1948 a new Joint Chiefs order amplified the plan. “A psychological offensive to subvert the Red Army is considered a primary objective,” it states. “This type of offensive, as attempted by the German Army in World War II, was known as the ‘Vlasov Movement.' It resulted in a resistance movement of approximately one million people.” This new order went on to make a country-by-country survey of the prospects for special operations and appears to link the Gehlen Organization to the plan implicitly. The survey ranks Poland and Lithuania as “excellent prospects” with dissident groups already well established. Hungary and Romania were rated “unpromising … [but] with German help and leadership, limited results for underground operations might be expected.”
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The National Security Council had delivered President Truman's official go-ahead for the special operations segment of Bloodstone and other U.S. covert warfare plans in a June 1948 decision known in national security parlance as NSC 10/2 (“NSC ten-slash-two”). The decision marked a crucial turning point in the history of U.S. intelligence, in the cold war, and, indeed, in the entire U.S.-Soviet relationship. It dealt with the types of clandestine operations the U.S. government was willing to undertake and how they were to be administered.

Through NSC 10/2, the National Security Council authorized a program of clandestine “propaganda, economic warfare, preventative direct action including sabotage, anti-sabotage, demolition and evacuation measures,” according to the top secret text. It went on to call for “subversion against hostile states, including assistance to underground resistance movements, guerrillas and refugee liberation groups, and support of indigenous anti-Communist elements in threatened countries of the free world.” All this was to be carried out in such a way that “any U.S. government responsibility for them is not evident to unauthorized persons and that if [they are] uncovered
the U.S. government can plausibly disclaim any responsibility for them.” No longer would the CIA and other spy agencies be limited primarily to gathering and processing information about foreign rivals. The administrative hobbles that had limited U.S. covert activities since the end of World War II were about to come off.
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A new Office of Special Projects (soon to be renamed Office for Policy Coordination, or OPC) was created within the Central Intelligence Agency to “plan and conduct” these operations. Secretary of State Marshall gave Kennan the job of selecting OPC's chief, and the man Kennan chose was Frank Wisner, the intense, dynamic OSS veteran who had helped engineer the Bloodstone project.
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