INTELLIGENCE No. 269, 24 July 1995 (Vol. 16, No. 15) Publishing since 1980 Copyright ADI 1995. Reproduction in any form forbidden without explicit authorization from the ADI. A one-year subscription (23 issues) is US $280. FRANCE ANOTHER ANTI-U.S. SPY FLAP BACK-FIRES Someone at French DST counterespionage is going to be called on the carpet for the recent frontpage scare story by Jean-Francois Jacquier and Marc Nexon in "L'Expansion" on a supposedly coordinated American economic intelligence attack against France and French businesses. The last Franco-American spy flap involving the DST resulted in French Interior Minister Charles Pasqua dragging down Prime Minister Edouard Balladur from his leading position to a third place loss in the recent presidential elections (IN, N. 259/51). This time, by trying to scare small French businesses into waking up to the dangers of economic intelligence -- which are real -- by brandishing an American cabal involving President Bill Clinton, CIA director John Deutch, and Kroll Associates founder Jules Kroll, and "open source intelligence guru" Robert D. Steele (see "U.S.A." in this issue), a high official at the DST forgot one of the basic precepts of business intelligence: "Any media coverage could and should be turned to the company's advantage." Indeed, French interest in Steele's November 1995 Open Source Symposium in Washington (see "Agenda" in this issue) has suddenly skyrocketed. One would also assume that Kroll will be getting a lot of business in France from French companies who want intelligence on their French competitors. That certain DST officials unleashed a media operation such as this is quite understandable, given the current political context. Following the May presidential elections, major organizational changes in intelligence are expected and budgets are going to be cut. Already Prime Minister Alain Juppe has appointed his new security and intelligence advisor, Michel Roulet, and the SGDN, the "Prime Minister's intelligence service," has a new "budget hatchet-man," Jean Picq (see "People" in this issue). Unless the Algerian or Balkan conflict "spills over" in France, more changes are expected at a time when there is no money for the DST for chasing Russian spies, and Middle Eastern terrorists are being eliminated in the Middle East by the Israeli-PLO peace process. The DST needs a new and formidable adversary and, under a Gaullist president, secret American interference is a crowd pleaser (IN, N. 267/42). This should not distract from the problem that there is real economic competition, and therefore economic espionage, taking place between the U.S., France, Germany, Japan, and many other countries. However, the tone and style of the "L'Expansion" article show that it is addressed to credulous clients who don't bother to check the facts. These are usually not directors of companies working on the cutting edge of technological developments. Contrary to "L'Expansion"'s statement that Steele has been discouraged from coming to France by unnamed "French authorities," Mr. Steele told "Intelligence" that: "I was invited to France by Mr. Francois Leotard, Defense Minister, with the explicit approval of Prime Minister Balladur, in order to join Admiral Pierre Lacoste, General Jean Heinrich, and General Jeannou Lacaze [all current or former directors of French intelligence services] in speaking to a very select group of 300 French leaders from government, industry, and academia on 23 October 1993. We spoke about the need to reinvent intelligence and significantly increase reliance on open sources. The presentations that these distinguished flag officers and I made have been published in a book [edited by Pierre Pascallon MP] called "Defence et Renseignement" (IN, N. 262/42) available (in French) from Editions L'Harmattan (5-7, rue de l'Ecole- Polytechnique, 75005 Paris)." Larger French companies, especially those in the defense sector, do not take this threat seriously because they can "hold their own" or are even superior to U.S. companies at the business of industrial espionage. Ariane, Airbus, the TGV train and many other French industrial achievements prove this. Also, secret, "pre-competitive" Franco-American cooperation in military technology is probably at an all-time high and involving such top secret programs as trans-sonic wind tunnels, self-regulating rocket ramjets, and nuclear simulation that have all been mentioned previously by "Intelligence." Of the U.S. Army Research Laboratory's 21 international Data Exchange Agreements (DEAs), France leads with nine, followed by Germany with five and Great Britain which is reviewing three. France and the U.S. don't have closer military technology partners. As for "L'Expansion"'s claim that Steele "actually tried to propose his services to Intelco," run by General Jean Pichot-Duclos, Steele says: "I have met with General Pichot- Duclos to inform him of my non-profit activities in the open source arena, but I have never offered him my services." Steele also says the authors of the article did not contact him to verify their information. Steele's explanation for what happened is that, like the DST, Intelco is hurting for small business clients in economic intelligence. It is true that Intelco recently published a 150-page economic intelligence "primer" for small businesses and there have been press stories concerning Intelco's lack of clients (IN, N. 242/7). Under such circumstances, it's easy to "give in" and jump on the anti-American bandwagon. Strangely enough, the article came out just after the Institut des Hautes Etudes de la Defense Nationale announced on 4 July its forthcoming courses on economic espionage and, in an unprecedented public appearance at the same meeting, DST director Philippe Parant warned against the dangers of economic espionage. Also, France's economic intelligence center, the Comite pour la Competitivite et la Securite Economique (CCSE; Committee for Competitivity and Economic Security) (IN, N. 263/48), held its first meeting on 12 July. At the same time, Great Britain decided to buy American Apache helicopters instead of the Franco-German Tiger, and France and the U.S. are locked in battle for the sale of 80 fighter aircraft to the United Arab Emirates. No wonder there's a coordinated anti- American campaign that has, of course, been met with an American response: on 23 July the "Los Angeles Times" said President Clinton had ordered the CIA to make economic espionage against trade rivals a top priority. * For more info on Intelligence, or to subscribe, write: Olivier Schmidt intelligence-adi@wanadoo.fr tel/fax 33 1 40.51.85.19 ADI, 16 rue des Ecoles, 75005 Paris, France