The Billion Dollar Spy

1. The CIA's Early Cold War Struggles in Moscow

In the early years of the Cold War, the CIA did not set up a station in Moscow and had no case officers on the streets in the capital of the world’s largest and most secretive party-state.

Pearl Harbor's lessons. The CIA's creation in 1947 stemmed from the intelligence failures leading to Pearl Harbor, aiming to centralize analysis and prevent future surprise attacks. However, the burgeoning Soviet threat quickly shifted the CIA's focus from analysis to espionage and covert action, engaging in a global ideological battle against communism.

Moscow's unique challenges. The Soviet Union under Stalin presented an almost impenetrable environment for espionage. The KGB's pervasive surveillance, coupled with severe punishments for unauthorized foreign contact, made recruiting and running agents in Moscow exceedingly dangerous, hindering the CIA's ability to gather crucial intelligence from within.

Limited intelligence. The CIA relied heavily on external sources like refugees and defectors, but lacked reliable "inside" intelligence on Kremlin thinking and Soviet military intentions. This deficiency left the United States vulnerable to surprise attacks and unable to effectively assess Soviet capabilities.

2. Breakthroughs: Popov and Penkovsky

They were volunteers, not recruited, who came forward separately, spilling secrets to the CIA largely outside Moscow, each demonstrating the immense advantages of a clandestine agent.

Volunteers from within. Despite the challenges, the CIA achieved significant breakthroughs with Pyotr Popov and Oleg Penkovsky, Soviet military intelligence officers who volunteered to spy for the United States. Their motivations varied, from avenging Stalin's injustices to personal career setbacks and disillusionment with the Soviet system.

Popov's revelations. Popov, the first, provided invaluable insights into the Soviet army and security services, including details on Warsaw Pact units and Soviet atomic weapons usage. His spying was driven by a desire to avenge the injustice inflicted on his parents and his small village near the Volga River.

Penkovsky's impact. Penkovsky, the second, delivered thousands of pages of secret documents, revealing Soviet missile capabilities and military strategies. His intelligence proved critical during the Cuban Missile Crisis, debunking the "missile gap" myth and informing President Kennedy's decisions.

3. Angleton's Paranoia and the CIA's Paralysis

He often spoke of a “wilderness of mirrors,” a phrase he borrowed from T. S. Eliot’s 1920 poem “Gerontion,” to describe the layers of duplicity and distrust that he believed were being used by the KGB to mislead the West.

Counterintelligence chief. James Angleton, the CIA's counterintelligence chief, exerted a powerful influence, fostering a culture of intense paranoia and suspicion within the agency. His belief in a vast KGB "master plan" of deception led to operational paralysis and distrust of potential agents.

Golitsyn's influence. Angleton's suspicions were fueled by Anatoly Golitsyn, a KGB defector who reinforced his belief in a complex Soviet deception strategy. This led to a mole hunt within the CIA, ruining careers and hindering espionage operations inside the Soviet Union.

Operational stagnation. Angleton's influence permeated the CIA's Soviet operations division, making it nearly impossible to recruit and run agents in Moscow. The Moscow station became exceedingly cautious, with case officers spending years without ever meeting a real agent.

4. A New Generation of CIA Case Officers Innovates

They were restless and impatient and began to innovate and experiment with new methods.

Challenging the status quo. A younger generation of CIA case officers, including Burton Gerber and Haviland Smith, sought to overcome Angleton's paralyzing influence and revitalize espionage operations. They were not intimidated by the Iron Curtain.

New tradecraft. These officers pioneered new methods for conducting espionage in "denied areas," such as brush passes and exploiting momentary visual blackouts to evade KGB surveillance. They found that the KGB could be lazy, orthodox, and conventional.

Smith's contributions. Haviland Smith developed the concept of "the gap," creating regular, observable patterns of behavior to lull surveillance teams into complacency. He also perfected the brush pass, enabling agents to exchange information quickly and discreetly.

5. CKSPHERE: A Volunteer Emerges

He wanted “to do what Belenko did,” he wrote.

A persistent engineer. In January 1977, a Soviet engineer began making repeated attempts to contact the CIA in Moscow, approaching station chief Robert Fulton with notes expressing his desire to share information. The man was an engineer at a top secret military research laboratory.

Headquarters' reluctance. Despite the engineer's persistence, CIA headquarters remained skeptical, fearing a KGB "dangle" or provocation. Fulton was instructed to do nothing, missing several opportunities to engage with the potential source.

"Look-down, shoot-down" radar. The engineer's notes contained valuable intelligence about Soviet radar technology, including the development of a "look-down, shoot-down" radar system, which could pose a significant threat to U.S. aircraft and cruise missiles.

6. The Ogorodnik Debacle and its Aftermath

Sad, exhausted, and uncertain about how Ogorodnik had been discovered, Peterson had little sleep before she flew out of Moscow the next day, Saturday, July 16.

Marti Peterson's role. Marti Peterson, the first female case officer in the Moscow station, played a key role in the Ogorodnik operation, managing dead drops and communications with the agent. She was the first to show the Angleton years had finally been left behind.

Ogorodnik's compromise. In 1976, signs of difficulty emerged in the Ogorodnik case, with missed signals and suspicious activity. Peterson was ambushed by the KGB while filling a dead drop, leading to Ogorodnik's exposure and suicide.

Turner's response. The loss of Ogorodnik and a subsequent fire at the U.S. embassy prompted CIA Director Stansfield Turner to order a freeze on operations in Moscow, a decision that frustrated many case officers and hindered intelligence gathering efforts.

7. Hathaway's Pursuit of CKSPHERE Amidst Skepticism

What the hell is wrong with headquarters?” he asked. “They have lost their mind! What are we going to do, sit on our ass?”

Hathaway's determination. Despite the operational stand-down, new Moscow station chief Gus Hathaway was determined to pursue the engineer who had been trying to contact the CIA, code-named CKSPHERE. He felt the information from CKSPHERE was far too valuable for a KGB dangle.

Headquarters' doubts. CIA headquarters remained skeptical, unconvinced of the engineer's value and wary of a potential KGB trap. They questioned the likelihood of a Soviet citizen singling out the CIA station chief to deliver a note.

Turner's decision. Despite Hathaway's pleas, Turner ultimately decided against contacting the engineer, prioritizing the resumption of contact with existing, "proven" sources in Moscow.

8. Tolkachev's Identity Revealed: A Turning Point

Finally I have reached you.

Persistence pays off. The engineer, Adolf Tolkachev, persisted in his efforts to contact the CIA, eventually revealing his identity and providing valuable intelligence about Soviet radar systems.

Hathaway's persistence. Hathaway again pushed headquarters for permission to respond. The stand-down was still in effect, but Hathaway wanted approval to carry out a simple operational act—to make a contact.

A phone call. On March 5, 1978, John Guilsher made a phone call to Tolkachev, introducing himself as Nikolai. He needed to reassure Tolkachev that the proper people had received all the materials that Tolkachev had provided and that the United States was interested in learning more.

9. Guilsher and Tolkachev: Building Trust and Espionage

He was chosen to be Tolkachev’s first CIA case officer.

Guilsher's background. John Guilsher, a case officer with deep roots in Russia, was chosen to be Tolkachev's first CIA handler. His language skills and understanding of Russian culture proved invaluable in building a relationship with the agent.

First meeting. Guilsher and Tolkachev met for the first time on January 1, 1979, a meeting that would set the stage for a long and productive espionage operation. They met for forty minutes, and Guilsher sensed it was time to part. They shook hands, and Tolkachev disappeared into the night.

Establishing communication. The CIA and Tolkachev established a system for secure communication, using dead drops, signals, and personal meetings to exchange information and maintain contact.

10. The Billion Dollar Spy: Tolkachev's Impact and Demands

He wanted much more as a sign of the “significance and the importance of my work and my labor.”

Valuable intelligence. Tolkachev provided the United States with a wealth of information about Soviet military technology, including details on airborne radars, weapons systems, and research and development plans.

Financial demands. Tolkachev demanded a six-figure salary, comparable to what the defector Belenko had received, as a sign of the value and importance of his work.

Headquarters' reservations. CIA headquarters was hesitant to meet Tolkachev's financial demands, fearing it would jeopardize his security and raise suspicions.

11. The L-Pill Dilemma and Escalating Risks

He had just one request: a suicide pill, in case he was caught.

Tolkachev's request. Tolkachev requested a lethal cyanide pill, to commit suicide in case he was discovered by the KGB.

CIA's reluctance. The CIA was reluctant to provide the suicide pill, fearing it would encourage reckless behavior or be discovered by the KGB.

Guilsher's plea. Guilsher, the case officer, argued that providing the suicide pill would reassure Tolkachev and strengthen their relationship, but headquarters remained unconvinced.

12. Betrayal and Loss: The End of CKVANQUISH

Everything we do is dangerous.

Howard's betrayal. Edward Lee Howard, a disgruntled former CIA trainee, betrayed Tolkachev to the KGB, providing them with information that led to his arrest.

Tolkachev's execution. Tolkachev was convicted of espionage and executed by the Soviet authorities in 1986.

Legacy. Despite the tragic end, Tolkachev's espionage provided the United States with invaluable intelligence that shaped its military and intelligence strategies for years to come.

Last updated: May 16, 2025