Australia’s Secret Cold War

Dr John Blaxland is the co-author of The Secret Cold War, the third and final volume of the Official History of ASIO which uncovers behind the scenes stories of the Hilton bombing in Sydney, assassinations of diplomats, the Combe-Ivanov affair, and the new threat from China. It reveals that KGB officers were able to recruit and run agents in Australia for many years, and it follows ASIO’s own investigations into persistent allegations of penetration by Soviet moles. On Monday 5 December 2016, John Blaxland addressed The Sydney Institute to explore some of his volume’s secrets.

AUSTRALIA’S SECRET COLD WAR

JOHN BLAXLAND

It’s a great pleasure and privilege for me to be here with you this evening. What I shall talk about tonight hopefully will be revealing and interesting for everybody concerned. This is the third volume of a complex project that was initiated a number of years ago. The ANU won the contract and Professor David Horner was the project lead. I was hired as the second historian and second author to accompany him on that project. The principal research assistant, Doctor Rhys Crawley, then co-authored Volume III.

We were planning initially to write two volumes. But we found we had so much material that we talked ASIO into going past the mid 1970s to the end of the Cold War. That justified a third volume. We were tight for time, having a massive amount of data to go through. So, Rhys Crawley agreed to help me write the third volume.

Professor David Horner wrote Volume I – about the origins of ASIO as the fourth arm of defence. The idea was that Australia had a security service but it was not seen as confident and capable or up to the job that was emerging at the onset of the Cold War. Charles Spry was the second head of the organisation after Justice Reed was appointed in 1949. Reed served a year, after which Sir Robert Menzies appointed Spry.

The highlight of Volume I is the defection of Vladimir and Evdokia Petrov and the Royal Commission into espionage which generated so much controversy in the 1950s. It involved the work ASIO was doing countering espionage, what it saw as subversion and protective security. With this multi-faceted mandate, it had to protect the nation as the fourth arm of defence. Volume I was awarded the Prime Minister’s Literary Award in 2015, and the St Ermin’s Hotel Intelligence Award.

I was very privileged to be asked to write Volume II which covered the protest years from 1963 to 1975 – the Vietnam War protest years and the years of Gough Whitlam’s government. That was a very significant and turbulent time, the “crash through or crash” period that saw ASIO going through a very turbulent period, and challenged enormously.

Lionel Murphy was the Attorney General. Early on in his tenure, he conducted a raid on the ASIO offices – a very controversial raid that saw him lampooned in the media, notably in the political cartoons. Obviously, the relationship between Gough Whitlam and Lionel Murphy wasn’t great and this was exacerbated during that period as well. But we can see that significant issues were below the surface such as Croatian extremist behaviour for one. Lionel Murphy saw ASIO as not to be trusted. But what he found was essentially the opposite. ASIO was doing what it was expected to do and was being fairly upfront with him about it. For Murphy, ASIO had been under the guidance of the Liberals for so long, that the Labor Party felt it could not be trusted, particularly after the Royal Commission into espionage. It was with this in mind that Gough Whitlam, in 1974, commissioned Justice Robert Marsden Hope to conduct a Royal Commission on intelligence and Security. The results of which is part of the story outlined in Volume III.

Volume III, covering from late 1975 to the end of 1989, is the period I am talking about tonight – “The Secret Cold War”. This was supposed to be the period of détente, when the world was supposed to be about greater peace, love and understanding. The Chinese had established diplomatic relations with Australia and had a diplomatic presence in Australia while the Soviet presence grew. This volume covers the Fraser and the Hawke years. A period of significant reform around the politics of ASIO when counter-subversion morphed into counter-terrorism. Protective security remained a key part of the domain that ASIO was concerned with along with countering espionage which is still very much going on.

Justice Hope was commissioned to undertake two Royal Commissions and the Protective Security Review from 1975-89. The first one, from 1974 to 1977, was the Royal Commission on Intelligence and Security covering the workings of the principal intelligence collection agencies. The Protective Security Review followed the Sydney Hilton Hotel bombing in February 1978. This review stretched from 1978 into 1979. The second Royal Commission on Australia’s Security Intelligence Agencies took place from 1983 to 1984.

Prime Minister Malcolm Fraser took over from Whitlam in November 1975. Fraser was very supportive of Hope’s work, surprisingly enough. Also of Whitlam’s selection for director general, Sir Edward Woodward. Whitlam had seen a director-general from the law had worked well in the case of Edward Woodward. For all that, Fraser did not think Woodward’s successor needed to come from the law.

ASIO conducted surveillance on prominent Australians with Soviet or revolutionary connections. It was clear the Communist Party of Australia was Soviet funded, and it was espousing revolution. But after the 1956 Hungarian suppression and the 1968 crushing of the Prague Spring the wind was taken out of the CPA’s sails. There was a splintering of the socialist revolutionary left with the creation of the Socialist Party of Australia (Soviet funded), the Communist Party of Australia (Marxist-Leninist – Chinese funded) and a variety of Trotskyist and other splinter groups.

ASIO planted people inside these groups. One of them was Lisa Walter, who was very young and impressionable. She was turned by the Trotskyists and went public revealing names of ASIO officers. Edward Woodward had thought it was appropriate ASIO officers not hide their real names by using cover names. That policy was subsequently rescinded because of the problems generated here.

The Steven Rix case was another key case. The Security Appeals Tribunal ruled in 1983 that Communist Party of Australia membership was inadequate grounds for denial of APS employment. By this stage, the rhetoric and the official lines coming out of the Communist Party of Australia were no longer Soviet funded, and the CPA was becoming more and more focused on trying to win elections: not at all successfully, as it happens. The Rix case which went to the Security Appeals Tribunal made ASIO rethink its priorities. Around this time, the CPA dropped away as a priority for ASIO.

I would like to move on to discuss the issue of counter-terrorism. Australia had a number of terrorist instances in the late 1970s-1980s. The most significant was the Hilton Hotel bombing of 1978. Two garbage workers were killed, and a police officer killed with another officer wounded along with several bystanders. The Ananda Marga quickly emerged as the principal group believed to be behind the explosion. Justice Hope, who had just completed the Royal Commission on Intelligence and Security, conducted the Protective Security Review. What emerged from this was a boost for interagency counter-terrorism coordination since there was a real concern about inadequate cooperation between the police and ASIO.

The police were seeking evidence to convict the culprit while ASIO sought intelligence which would not necessarily be useful in any court action. There was a culture clash that showed the two organisations did not mix well. An enduring saga emerged following the Hilton Bombing. There were more terrorist incidents to follow

In 1982, we saw the Hakoah Club bombing and the Westfield Towers bombing. Groups associated with the cause of Palestinian liberation were the principal suspects but no one was prosecuted to conviction. This was a murky period as well. In November 1986, an Armenian Revolutionary Federation member, Hagop Levonian, was killed instantly when a bomb he was carrying exploded in the basement of the building housing the Turkish consulate. The damage done to the Turkish Consulate General office in Melbourne in November 1986 was extensive. This occurred at the time when ASIO was relocating to Canberra. This move saw ASIO refining its procedures and its handling of the incident demonstrated it was increasingly able to rise to the occasion.

Australia witnessed counter-subversion in the 1950s and 1960s through to the early 1970s. With this identity-related extremism, emphasis in the terminology shifted from countering subversion to countering terrorism. Interestingly enough, writers have focused on surveillance conducted on Australian citizens around this time. There are many books on Australians under surveillance by ASIO. What we found, in writing the history of ASIO, is that the majority of ASIO’s efforts were actually focussed on countering espionage, which is what ASIO was established for.

The technology of the time was a little Maxwell Smart-like because ASIO was at the cutting-edge of technology at the time. The equipment available for them to use – miniature cameras and so on – in hindsight looks fairly simplistic, but at the time it was cutting-edge and significant. Around the late 1970s, a concealed camera, radio transmitter and receiver needed a lady’s shoulder bag to carry it. Another device was a listening post with several hidden microphones connected to banks of recorders that were then attached to a residence where people, directly targeted under warrant from the Attorney-General, would be monitored closely.

There’ are a couple of stories in the book about operations ASIO conducted where they got access to buildings to photocopy material in the wee hours of the morning. All high drama, if you like, quite nail-biting. It was certainly nail-biting for me working on it and conducting interviews on some of the people involved. Of course, that technology nowadays seems fairly rudimentary but at the time was quite cutting-edge.

ASIO, as I mentioned, was very much focused on countering espionage as its top resource priority. Its operations monitored the construction of new diplomatic premises from the Soviet bloc particularly in the late 1970s and into the 1980s. The expansion of the footprint of Soviet and Soviet bloc embassies was quite significant in this period.

ASIO sought to capitalise on opportunities. The main focus throughout this period was the Soviets. An aerial view of the Soviet Embassy in Canberra on Canberra Avenue shows how the Soviet embassy and staff was ASIO’s top operational and resource priority. The shot is indicative of the fact that quite a lot of resources went into monitoring this place closely. There are a number of stories in the book about ASIO’s attempts to attract and engage and co-opt members of the Soviet Embassy. This was not so successful for a variety of reasons some of which I’ll touch on shortly.

ASIO officers would conduct surveillance on a Vietnamese diplomatic residence in south Canberra, from across the road.

When the Chinese arrived in Canberra, they established themselves in an old motel in Watson, in the northern suburbs of Canberra. The old hotel/motel was ringed by a high fence adjoining open paddocks. It was a very difficult place for ASIO to place under surveillance. One story has agents in a bathroom in a building nearby stretching on their toes trying to make observations. Amusing in hindsight. What became clear was that the Chinese had a very different approach to espionage from the Soviet Union. The Soviet’s approach was very much based on the KGB resident operating out of the embassy, with dead letter drops and so on. The Chinese model was quite different and presented a significant challenge to ASIO.

In contrast, the operations against Yugoslav intelligence service gave ASIO confidence in its judgements about the nature of their work. As it happens this involved a very successful operation. The details of the operation are still sensitive but it gave them great confidence in the judgements they were making about the Yugoslavs. Not so much with the Russians, but on the Yugoslav target ASIO was confident.

The most significant event, publicly on the TV screens around Australia, was the Combe-Ivanov affair. Valery Ivanov was identified as a KGB officer. His house was placed under surveillance, it was under warrant and a number of listening devices were installed in the house. It was very hard not to be monitored inside his house.

Into this mix came David Combe, a former ALP national president and by then a consultant. Combe saw opportunities with the election of Bob Hawke and the Labor government in 1983. He began to engage closely with Valery Ivanov hoping to exploit business opportunities. What Combe did not realise was when Valery Ivanov asked him to be discreet, it generated interest. Bob Hawke became involved. ASIO head Harvey Barnett spoke directly to Hawke as the new prime minister. He avoided the then Attorney-General Gareth Evans, because Gareth had a reputation as a civil libertarian and had been quite critical of ASIO while he was in opposition. Hawke wanted more details. But Hawke also wanted to act immediately and Ivanov was expelled. Hawke’s desire for prompt action caught Harvey Barnett off guard. The saga started to unravel with a media spotlight to follow.

Mick Young, Bob Hawke’s close confidante, was asked to resign after breaching cabinet confidence regarding Ivanov’s expulsion. Hawke claimed, in the interview we conducted for the book, that it was the hardest thing he ever had to do in politics. It was a very difficult time for the Labor Party, and for Hawke. What followed was what had been promised prior to the election. The Labor Party had commissioned the Royal Commission on Intelligence and Security and wanted to check how well the Fraser Government had implemented it. They were considering commissioning a follow-on Royal Commission. After the Ivanov affair, Hawke commissioned Hope again to conduct a Royal Commission on Australia’s Security and Intelligence Agencies or RCASIA.

There was a media frenzy. RCASIA thrust ASIO into the public spotlight with nightly television coverage and frequent cartoons. Cartoonist David Pryor did some particularly good ones in the Canberra Times. While it was very funny to read those cartoons, for ASIO it was quite traumatic. The old Cold War warrior, Harvey Barnett, who was very much a secretive operator, found the public limelight very challenging.

There were some very significant source protection issues. Some of the sources revealing information were people ASIO was obliged to protect, people whose lives could be put on the line if their names or details were exposed. ASIO had a legal obligation, a duty of care as well, to protect people from exposure in the media. But this was then seen as some kind of subterfuge by ASIO, a bit of playing with the audience, maybe even feeding conspiracy theories. From the ASIO perspective, as with Combe, people and their careers could and did suffer from exposure through this kind of open scrutiny in the Royal Commission process.

Lev Koshlyakov was the KGB resident at the time. He was furious with Valery Ivanov for going too far, too soon, with David Combe. Koshlyakov was in Australia for seven years and considered one of the most dangerous KGB officers ever posted to Australia.

I shall now look at the question of relocation and reform. ASIO had been in Melbourne from 1949 when much of the Commonwealth Government administration and bureaucracy was still in Melbourne. Over the subsequent two decades, it had moved largely to Canberra while ASIO had stayed in Melbourne. It became very clear that ASIO needed to relocate, and be more accountable and more responsive to government by being in Canberra. The man to do it was Alan Wrigley. He was a “take no prisoners” director-general. He had a reputation in defence – depending on who you asked, it was either toxic or gallant. But he was the man to ensure ASIO relocated and it did. Wrigley had high aspirations in defence and was reluctant to go, because he thought he was going to be the next Secretary of Defence. At ASIO, however, he approached the task with determination and vigour.

ASIO relocated in late 1986. It brought ASIO closer to, and more responsive to, government priorities and practices. ASIO emerged into what is probably the modern-era of ASIO history as it adjusted. This happened just before the end of the Cold War. The fall of the Berlin Wall on 9 November 1989 really was the point at which we end the volume.

The story festering in the background still is the question of penetration. There is a lack of appreciation in many quarters of how important the emphasis on the Soviet Union in ASIO’s activities was. Australia became, and still is, important as part of the Five Eyes network, the Anglospheric intelligence connections between the United States, United Kingdom, Canada, Australia and New Zealand that emerged from the Second World War. These intelligence arrangements become incredibly intimate and they endured after The Second World War. In the Cold War, they were refurbished and expanded. Australia would get many of the reports from the British and the Americans. To Soviet intelligence officers, Australia seemed like an easy back door to the Five Eyes because there was a pretty relaxed approach to security in Australia. As much as ASIO officers might want to be vigilant, and be that fourth arm of defence holding the fort across government, in parliament and in various other circles, they were pretty cavalier about security. They didn’t see it as all that credible.

You would have thought that the Petrov defection would have made this clear. But the politics were so toxic and divisive, there wasn’t consensus over this question of security and the need for vigilance. And, of course, Australia had the weapons research establishment and we were involved in nuclear atomic testing in the 1950s and thereafter involved in some high technology collaboration with the British and subsequently with the Americans. And, from 1969 onwards, Australia was host to the joint defence facilities at Pine Gap – what the late professor Des Ball called the strategic essence of the relationship. There was good reason for the Soviet to want to know what was happening in Australia and use that access to obtain sensitive information useful to the Soviet cause. And the Soviets were quite successful. They had a fairly high level of penetration of ASIO and the intelligence community and many operations.

The Soviet Union’s effort in Australia is one of the interesting things about the espionage story. ASIO was getting better at its job as time progressed, becoming more professional, introducing training regimes, recruiting more highly educated people. It was a growing organisation with more skills, more capability, more refined processes. And, yet repeatedly, operations against the Soviets went to ground. It was only after the end of the Cold War that this becomes very clear with the release of the Soviet archives. ASIO was being compromised.

KGB officers were, in fact, able to recruit and run agents in Australia for years. There had been suspicions of this many years before, and we talked in Volumes I and II, about the hints and suggestions that ASIO was penetrated. After all, the British and the Americans had very, very publicly been penetrated, exposed and humiliated over their experience with moles. Surely, ASIO had been as well. The Chapter called “Looking for Moles” follows ASIO’s own investigations into persistent allegations of penetration by Soviet moles.

The key figure here was Geronty Pavlovich Lazovik, a KGB officer in Canberra from 1971 to 1977. He was awarded a medal for an intelligence recruitment while he was stationed in Australia. This medal was a high award given for a significant recruitment. This is a man whom Harvey Barnett came close to asking the Whitlam Government to have removed. He wavered, thinking that it would be too politically sensitive. In hindsight, it’s arguably a great shame that it didn’t happen.

This has been a quick scan of The History of ASIO Volume III, in the context of a three volume history. It is I believe, a very significant reflection on Australia through the prism of ASIO. It comes from unfettered access to the files. Professor David Horner, Rhys Crawley and I wrote this from the unredacted files. There were no black marks, names or operation details removed. We read the originals, musty smelling files. In fact, our penultimate draft was classified top secret. We then went through the process of what I like to call “pixelating out” some of the sensitive details.  We had a lot of debate about what could be included, what could not be included and how we would go about writing around it. What we ended up with in the end result is about 92 per cent of what we submitted in that penultimate draft, staying in the manuscript. So we’re pretty happy that that happened, although it took quite a lot of debate and thankfully, support from the director-general to see that through.