Pearls and Irritations

In a telephone conversation between Kissinger and Nixon following the 1973 military coup d’état in Chile, the President asked if “our hand” showed in the overthrow and death of the democratically elected President Allende. Kissinger explained that “we didn’t do it”, in terms of direct participation in the military actions. “I mean we helped them”, Kissinger continued, “[redacted words] created the conditions as great as possible.”

Source: Peter Kornbluh, The Pinochet File

As outlined in previous articles in this series, following its meeting in June 1974 on the problems caused by the Whitlam government, the US State Department had ruled out any “spooky fiddling” in Australia.

On Kissinger’s return, however, his decision to move the relationship into the US National Security Council (NSC)’s jurisdiction signalled that a more robust strategy had been adopted. The Central Intelligence Agency (CIA) would be involved.

In any operation in Australia, the CIA would have to operate with a very light touch. As suggested in the only ‘Top Secret’ paragraph in a record of meeting with the Defence Secretary in February 1975, Ambassador Marshall Green was clearly aware of the risks involved:

“Secretary Schlesinger expressed the opinion that U.S. installations would be allowed to remain in Australia as long as Whitlam is in charge. Green agreed, with two exceptions: (1) If Minister Cairns ever became head of the Labor Party, the U.S. would find it difficult to stay; (2) if current investigations in the U.S. became linked with Australia, the resulting storm might shorten our stay.”

The “current investigations” were clearly those being undertaken by the Senate’s Church Committee into covert actions undertaken by the CIA in other countries.

An additional constraint was that Australia was a member of Five Eyes, at that time known as the UKUSA agreement. This was a very substantial intelligence sharing agreement between Anglophone countries. The group’s protocols required that any foreign intelligence officer operating in Australia should be ‘declared’ and no covert operation should be mounted against the host government.

Nevertheless, since these protocols were largely devised by the CIA, they may have been honoured by that agency as much in the breach as in the observance.

Labor came to power in 1972 deeply suspicious of ASIO, which under Charles Spry had developed a close relationship with the CIA. They believed, justifiably, that ASIO had been used by conservative governments to spy on left wingers like Cairns and systematically undermine the party. Justice Hope, who headed a Royal Commission into the security services established by Whitlam in 1973, confirmed that ASIO was “politically biased” and “the whole system was substantially directed to the left wing of politics”.

James Angleton, the CIA’s Director of Counter-intelligence, was suspicious about the new Labor government from the very beginning. Intelligence sharing was significantly reduced following Whitlam’s letter to Nixon in December 1972. The view in the CIA was that “the Australians might as well be regarded as North Vietnamese collaborators”.

Attorney General Murphy’s March 1993 ‘raid’ on ASIO’s headquarters added fuel to the flames. Based on information passed to him by a faction of anti-Whitlam Cold War warriors in ASIO, Angleton instructed the CIA station chief in Canberra, John Walker, to ask ASIO head Peter Barbour to state publicly that Whitlam had lied to Parliament about the raid. The objective of this extraordinary intervention was to force the Prime Minister to resign. Barbour simply refused.

The Prime Minister’s attitude to the security agencies hardened as the government moved to the left after the May 1974 election. In July, Whitlam instructed Barbour to cease collaboration between ASIO and the CIA. As Blaxland wrote: “Barbour felt this would be harmful to the nation, causing damage to critical intelligence links”. He persuaded Whitlam to allow him to wind the relationship back to a lower level.

Following the NSC’s assumption of jurisdiction over the relationship with Australia after August 1974, outlined in part 2 of this series, what role would the CIA have played? In his book CIA Diary, Philip Agee, a young CIA officer who served in Ecuador and later went rogue, reveals details of the CIA playbook, some of which are relevant in the Australian context. The objective, if this playbook was followed, would have been to destabilise the government while at the same time eliminating the possibility of Cairns, the Americans’ true bête noire, becoming prime minister.

Is there evidence that this occurred? As suggested below, a CIA covert action cell may have been active in Australia at this time.

Jim Cairns was riding high when he became Treasurer in December 1974, but shortly afterwards his decline began. His relationship with his private secretary, Junie Morosi – a relationship which seemed genuine and mutual – became a magnet for the popular media and was a factor in the government’s declining popularity.

One likely avenue for dirty tricks relates to a letter Cairns supposedly sent to George Harris, a Melbourne dentist, inviting Harris to identify possible sources for a foreign loan, with a finder’s fee of 2.5 per cent. Cairns always vehemently denied signing the letter. His denial was credible. As Treasurer, he agreed with his department’s strictures regarding unconventional loan raising. He had consistently opposed paying any commission for such transactions. As Acting Prime Minister in January, he had revoked Rex Connor’s commission to seek a large overseas loan (on his return, Whitlam reinstated it).

Nevertheless, Cairns was forced to resign for misleading Parliament. The purported letter, a scratchy photocopy, was leaked to the Murdoch press. Was it genuine? What was its source?

Perhaps of most interest in exploring this question is that the CIA, in reporting Cairns’ downfall, stated in its classified National Intelligence Daily that “some of the evidence had been fabricated”.

As discussed in Part 1, Rex Connor, was also dismissed for misleading Parliament. A reporter from the Melbourne Herald tracked down Tirath Khemlani, Connor’s intermediary, and published a front-page story contradicting Connor’s assurances that he had stopped actively seeking foreign borrowings. Connor duly resigned. Fraser then seized on this ‘reprehensible circumstance’ and announced he would block supply.

A week later, his briefcase bulging with papers and his mouth with potato crisps, Khemlani descended on Australia, seemingly intent on involving the Prime Minister in the affair. What was his motive? Dishing the dirt on a major client is not generally a career enhancing move for executives in the financial sector. Did money change hands? The journalist involved said that Khemlani “did not ask for money and nor was he paid anything”. Various unconfirmed allegations, however, include that Khemlani “was rumoured to be in the pay of the CIA”.

There is no proof of CIA intervention.  And yet, Cairns’ fall from grace was complete and revelations about Connor had caused Fraser to block supply. If we pose the question of cui bono – the US NSC would be high on the list.

In September 1975, Whitlam dismissed ASIO head Peter Barbour, who was not popular with the CIA. The Cold War warriors within ASIO had compiled a dossier on Barbour’s practice of travelling in company with his “beautiful Eurasian secretary”. With outstanding chutzpah, the head of ASIO’s Canberra office, Colin Brown, who was conducting an affair with the wife of the CIA’s John Walker, told the Hope commission his boss’s travelling habit was “ill-advised and indiscreet”.

Barbour’s dismissal left a gap at the top of ASIO just when the Prime Minister could have benefited from someone who had his back. Whitlam was about to break cover in what was obviously a mission to find out the truth about CIA activities in Australia.

The Prime Minister’s inquiries to Foreign Affairs and Defence revealed that a senior CIA officer, Richard Stallings, had been operating undeclared in Australia. In 1966-70, Stallings had been in charge of establishing Pine Gap for the CIA. More recently, he had been working at a CIA base at Willunga in the Adelaide Hills, where his former deputy at Pine Gap, Victor Marchetti, told journalists he was employed by the Agency’s covert action division.

Whitlam was furious. Tange had deceived him over the purpose of Pine Gap, which, being a CIA installation, was clearly used primarily for espionage against the Soviet Union. Also, against all the diplomatic protocols for Five Eyes countries, the CIA had been running undeclared officers in Australia.

Having discovered that Stallings had rented a house from the leader of the National Country Party, Doug Anthony, Whitlam, as James Curran states, “threw caution to the wind” in a speech on 2 November. “After all the self-control he had shown in previous years on the US facilities, after all the firm assurances he had given about them to American counterparts … he finally succumbed to temptation.” Whitlam accused his political opponents of “being subsidised by the CIA”.

This statement aroused fire and fury on both sides of the Pacific. The State Department issued a denial that Stallings was employed by the CIA while its Director, Bill Colby, denied involvement in Australian politics. Yet Whitlam had discovered some of the truth about Pine Gap and was due to answer a question on notice from Anthony on its ownership and functions in Parliament on the afternoon of 11 November.

The NSC would have had two overriding concerns. The first was that Whitlam would reveal the identities of CIA officers in Australia and that the Pine Gap facility was an espionage operation run by the CIA. The second was that Whitlam would formally provide the requisite one-year notice that the agreement to host Pine Gap would not be renewed when it expired on 9 December. Marchetti said later that the threat to close the facility “caused apoplexy in the White House. Consequences were inevitable … a kind of Chile was set in motion.”

Although Kissinger stood down as National Security Adviser on 3 November, as Secretary of State he remained a senior member of NSC and would still have been directing this operation. What would he have done? Although Cairns had gone, Whitlam could no longer be relied on to safeguard Pine Gap. The best outcome was for the Labor government to go. But, to return to the opening passage about Chile, it was essential that “our hand” did not show in its demise. Whitlam was now leading in the opinion polls. The Governor-General reported to the Palace that Whitlam was exuberant in early November, convinced Fraser would back down. If he were to be dismissed and there was any hint of a Chile-like coup in Australia, Whitlam could campaign at the next election on an anti-American interference ticket and quite possibly regain office. That would be fatal for the facilities.

Following Whitlam’s speech, the American response took nearly a week to arrive. It was carefully considered. Kissinger turned to Ted Shackley, Chief of the CIA East Asia Division, who had been deeply involved in the Chile operation and whose name may well be the redacted item at the head of this piece. On 8 November, Shackley sent a demarche – a confidential agency to agency signal – to ASIO. He said he could not see how the issues raised by Whitlam could do other than “blow the lid off those installations in Australia where the persons concerned have been working and which are vital to both of our services and countries, particularly the installation at Alice Springs”. Unless the problems could be solved, he “could not see how our mutually beneficial relationships are going to continue. The CIA does not lightly adopt this attitude.”

The cable was devilishly clever. It reeks of Henry Kissinger. If it fell into Whitlam’s hands, which was not intended, it allows for the interpretation that Pine Gap was a joint facility and that only intelligence sharing was being endangered, leaving plenty of room in an election campaign for plausible deniability that ANZUS was under threat. On the other hand, its dog whistling interpretation for the cognoscenti, which amounts to an ultimatum, is far more menacing. Blaxland, in his history of ASIO, states that according to one assessment, “the Shackley cable was probably the most serious note passed to Australian authorities in the history of bilateral relations between Australia and the United States”.

Whitlam was shown the cable and was angry but undeterred. He read out to Tange his proposed reply to the Parliamentary question. The Defence Secretary, who was aghast, had obviously picked up the subliminal message in Shackley’s cable that may well have been intended for him. He told the Prime Minister’s staff that the disclosure that Pine Gap was a CIA facility for gathering top secret intelligence could mean the end of the alliance. For that reason, he believed it constituted “the gravest risk to the nation’s security there has ever been”.

Tange was clearly at the end of his tether. It seems likely from the State Department meeting in June 1974 that the Americans regarded him almost as an agent of influence. In 1977, Andrew Hay, a senior Coalition staffer who was deeply involved in investigating the loans affair, told Toohey “Tange was operating behind the scenes to see the end of the Whitlam government”. If so, he would surely have advised Malcolm Fraser, his former Minister at the time Pine Gap was established, of the signal from Fairfax, Virginia.

It is often suggested that the CIA’s ultimatum to ASIO played no part in the Governor-General’s thinking because there is no evidence that he was briefed on the American concerns. This is incorrect. John Farrands, the Chief Defence Scientist, was the senior Australian official most closely associated with Pine Gap. In 1977, on the basis he would deny the story if it ever emerged, Farrands told Brian Toohey about a call he made to Kerr on 8 November, the day the CIA’s demarche arrived. On the basis of Tange’s instructions, Farrands advised the Governor-General of the security concerns about Whitlam. The Defence Minister, Bill Morrison, who was aware of the briefing, later told a journalist, “I don’t think [the briefing] was decisive, but I think it reinforced [Kerr’s] position”.

The CIA would not have approached Kerr directly. Apart from the risks, they were not best placed to influence him. To return to the CIA playbook, as Agee records about a destabilisation campaign in Jamaica “no major political action of that nature would have been undertaken without the approval, and probably the participation, of the British. After all, special rules apply for CIA operations in Commonwealth countries …”

 

Read the other articles in this series:

“Shame Fraser, shame”: The overthrow of Edward Gough Whitlam. Part 1

Stress testing the US alliance: Whitlam and the secrets of Pine Gap. Part 2

Cold War imperatives: Whitlam and the US National Security Council. Part 3