eee 23° prs B08 oe MER RANDUM ete, De eh tates FOR: Colonel William W. Quinn FRO: Janes RN. Murphy STRBS ECT: Recommendations for Situation of X-2 Branch, SSU. I. The X-2 Brunch, Strategic Services Unit, is presently tonlucticg, counter-intelligence activitise in areas outside the Western Henlspbere. These uctivitias ure directed to the ecguisition of counter-intulligence information easential to the netioual security which can be used as 4 basis for action by. ~ esprer;riste esencies here and Gbroed in the formulation ené erecution of national policy, and for the protection of any. Cikicéuatice oporstions conducted on behelf of the Averican gov~ arzunent. Counter-{ntelligence infornution thst is produced or ecoreineted through X-2 activities falls into two general eisssificetions: Inforcution concerning fadividuals who are tavelved in intelligence activities on behslf of foreign powers; as¢ information of a strategic muture concerning the orgunization relncdte End odfectives of fureicn intellicexce services. II. Tha Vresiserntts Orécr of 22 Canuary 1946 establishing tiozmel Intelligence Authority end tho CIC gives (para 10)  w5e ls 7O the MIA anc the virector of Centrel Intelligence the responsi- bility for fully protecting intelligence sources and nethode in She cocauct of thelr ectivitieo. An esseshtial factor In the exercise of tris resrponsibliity is the oorntinusd functioning of 22 4ctlve ind agccr-saive centrol counter-irtelligence service as aa istegrel pert of the netional intelligence program. The qvestica heg been raised us to whether tho American Counter- Iotelitcance Service responsible for external areus is best giver e@ central status invependent of other oporuting intelligence al a2e.clas, or by the transfer of its LrrsAiate control to one of snoea sfecclas, ia particular tho Departnent of State or the Petarai girvanu of Investigation. Ly ili. The piececent of the X-2 Branch, SSU, as a function er enXity is a praitios best to serve the interests of the (Ceerraen® 257416 De considaorad in relation to three factors: ei ne Acproves Deze 1 for ia se pater tse AL ” Va esuty oor i
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: Page > ‘with the USSR. The Communist movenent as 4 political party {fe primarily the concern of a positive-intelligence aervice; the use of’ ite nesbers and eympathizers for intelligence purposes and subversion is the concern of a counter-Intelligence agency. The eame lines of penetration will frequently serve to produce infcrmation invaluable to both. A like altuation exists in the investigation of resurgent Nazi groupe. rtelligence on atcmio bond activities presents a similer dunlity. Thus, the effectiveness of both positive and counter- {stalligence activities 1a dependent upon the closest possible  istegration of direction both at headquarters and in the field. Y. The responsibility of a oestral counter-intelligence service is howevor greater {in scope than the protection of scaitive intelligence sotivities carried out on behalf of the CIG Toese other egencies which concuct intelligence cotivities will aiac de targets of forsien intellicence services. The post effective protection theese egercies can huve will come as @ vesiit cf adwice besef unor a central coordination of material beesfc2z on the personnal, activities and organizations of {nimica Pcertefiom Lotelli.zerce sarvices. The nost effective presentation os? sich advice will come froma central end inpartial authority, vather than es from the bias of a particular service. . The ecquiring of counter-Intelligense information roca Clandestine chennels by X-2 supplercents the oounter- ilipencé coverzge afforded by personnel reperting to the ata lecettuent, the Kilitary Intelligence Service and the cPTice of Naval Intellivence. Undor the directive of the Preeilect, the Neticnal Intelligence Authority is charged with the ccocraizsticn of the intelligence activities of these ageccies sr.cleciag tae assignment of intelligance priorities on 4 strategi sesia is accortance with the densends of national security. The piecisg of the X-2 Brancn, Strategic Services Unit, under the 4irect control of the Central Intelligence Croup provides the BMeclicomel Inteliigense Autnority with e counater-intelligense task forte of which tna activities can be constuntly directed to: ‘a ‘the seyuiring of inform:tion wnsidered essentiaY to Bapplemest coat received from the overt sources of thv State Terartaent, MGS ané ONT, end (bd) concertretion on broad stratecic countaTcintellicgence probleca as required by thé changing intasrteticnal eituastioa. evidest trast no consideration is being given J Of piscine tne inmedtiate control of olun*sstic ate activities ourwalte the “aestera henisphere ~ ty af tra Militury Intelligence Sarvice or the er. Intailieance. The aiterniatives to its conduct art2T we vutncrity of toa SIS ara ite trunaference either to S29 larartcent of Senta or ts tha Petersi Burecu of Tuvestifcation
’ He - rer € yet ‘ Jt, . i - - PR Et « transfersi Federal Burs 100 1 @ ie Ais oe cheracter. Prisarfiy, the FBI fea charge’ with the invest ilecetion of tne United States. [t has hegere> respoasidility for ccunter-fstallt United States, althcugt the Army 4 {ndependent countar-irtellicacce s awar-tire exzargency, it was alss intelligescs functions witt!s tbe been urged by the Sureau 2462 its wotlld be best achieved by an erts- all territcries outside the Waster The questics is ‘ i ee i re Ae | croup 1 re mown a ‘ s hue mtg nye yore ie f »s 18 oy io’ ww iw id er 2?” Z° .enoc! .7 tle fm wy 2? : in wre . s ~e@ te : a 4 = cro. As 77 2. tse trrirtiitttes rec clipe tt mer gs t2 tte Lit tizate
eage § poiitiical wialca of any st. es whisk ase auel-at 4acccrette prinolrles by pias 15g She efecitive auttaurity of arrest is the hande of an intelilgen.cte ecarnty. 2 $6 @ waceral . Gesacratic crinctsla trat an intelilverse acesty ete sit ecvisory rather thes execctive, Lest tte S.turs fearcer se ralaed of euch a police ec326 ae tat efcher of Biesia or Cercany whsre political {ntisitestor nse teas peseaitlie Sarsvent the tnjucicious ite of 6.2 preriagstivee. I2 tle g2t.t2 @iscumaiora relevant to the eetabiiatesst sf 4 cantral intelligence @seccy such @ Saar wea terest and fe ravlestet in the precise restrictioss of the Prealternciel Srter, coovicicg that "No police (62) law sclcrctenest functisne encu.t te @ra>rtiees unser thie dirsctiss. Quite apart from any juestison cf the artiverness of past collaboration betwees the FSI and the se sty eerrices of the Arcy and Lavy -= for which refarernce shsuit be sete to those authorities -- it lp avi¢ert thst a éivorce cf the counter-intellisence furctions of a centrsl ace-cty from tive of ite sn@ other Americac positive-inielilicense services cen only serve to decr.sse the efficienos of thelr positive intelliigesce activities. VII. It is therefore recomzended that the Acericen ¢curter- intelligence Service responsitle for operations oursite the . Western hercisphere should be accc> dec co stetus 4irecstly under the Central Intelligence Group, and ¢ the closest Iintegratios and direction of both olanéest rine positive ictelifsence and oounter-intelligence activities should de exercise4 by the CIG in or¢er that these organizations may form e sraciel intellisesce task force for the National Intelligence Authority. It fe presumed that if this country is enesged in Ecothilities, arectel se force till te Operetions anf su enlergeé eerersl inteliise en & —— -
rd required to maintain the flow of intelligence in war time., be coordination of clandestine positive intelligence, counter-intelligence an4 special operations in war tine Cemands th closest possible integration and central . Qirection in order that they may effeotively service the dezanés and requirements of the armed forces. A central system must be provided which is adaptable to all circumstances,
(Page One) Page 2 a. That the branch be administratively associated with the existing agency whose operations it may best support as a primary function. b. That the Branch be so situated that it may with maximum effectiveness impartially serve and advise other American agencies and maintain the security of their foreign activities and installations. c. That the Branch be associated with an agency whose administrative theory and operations, as well as background, will permit it to continue the operations peculiar to counter- intelligence and the purpose for which such a Service exists. IV. Although it is anticipated that each present intelligence agency will continue its operations, these opera- tions will be directed towards the particular mode of the department concerned. Objectives of overall import or general tactical need, will be approached by the CIG either through an established positive intelligence service or by particular task forces. In either case such activities as are pursued will be of the highest security significance and will require a maximum security protection. In any such activities the CiG will require the constant assistance of a counter-intelligence service of the CIG, and acting under its immediate authority and control. Only in this way can the CIG protect and ensure the attainment of highest echelon objectives. The collection of intelligence must be protected from the efforts of foreign intelligence services to feed false information, or penetrate, or to neutralize. The clandestine procurements of positive and counter- intelligence mutually complement each other and are mutually beneficial. Information derived from counter-intelligence sources in the field is frequently of high positive intelligence value, and these sources can be consciously developed produce such information in addition to their primary counter- intelligence function. Contrariwise, sources developed principally for positive intelligence sources are often ina position to provide specific information vital to counter-intelli- gence operations. It is frequently difficult initially to determine the potentialities of any given source. In addition there are targets of mutual interest to both positive and counter-intelligence services. An outstanding example of such targets is the world-side Communist movement and its involvement
(Page Two) Page 4 (First Three-Quarters of Document Excised] Federal Bureau of Investigation. The problem of transferal of the central counterintelligence service to the Federal Bureau of Investigation is somewhat different in character. Primarily, the FBI is a policing organization charged with the investigation of violations of the laws of the United States. It has however lately been given a responsibility for counter-intelligence operations within the United States, although the Army and Navy are also conditioning independent counter-intelligence services within this area. As a war-time emergency, it was also charged with counter- intelligence functions within the Western Hemisphere. It has been urged by the bureau that its domestic responsibilities would be best achieved by an extension of its franchise to cover all territories outside the Western hemisphere. The question is immediately raised as to the ultimate