ACRONYMS AND ABBREVIATIONS

GLOSSARY

The terms are defined according to how they were applied in the period covered by this volume.

CHRONOLOGY

INTRODUCTION

This is the third in a three-volume series covering the history of the Australian Security Intelligence Organisation (ASIO) from its inception in 1949 until the end of 1989, when the fall of the Berlin Wall effectively marked the end of the Cold War. This third volume covers the history of ASIO for the last years in that period, from 1975 to 1989, taking up where Volume II concluded. It begins with the aftermath of the dismissal of the Whitlam Government and the election of Malcolm Fraser as Prime Minister of Australia at the end of 1975.

Much of what transpired during the Cold War has been widely written about and discussed. Indeed, the first two volumes of this history cover plenty of familiar territory. But the last fifteen years of the Cold War, from 1975 onwards, witnessed a surprising intensification of tensions between the superpowers. Few are aware of the number and range of challenges arising from clandestine and secretive operations conducted by intelligence operatives from communist countries, nor of the worrying actions of various other extremist groups in Australia. With a mandate to act effectively as the ‘fourth arm of defence’, concerned with domestic security, ASIO was caught up in much of it. This book sheds fresh light on many of the little-known secrets of Australia’s part in the Cold War, particularly in the final years of the Soviet Union before the end of the Cold War.

For much of the early decades of the Cold War, many, including those within ASIO, saw the world divided into camps: the First World, known generally as the West, which was prosperous and, by and large (although with noticeable exceptions), liberal and democratic; the Second World, essentially the communist countries, seen by many in the West as oppressed; and the Third World, a contested space where the great powers fought over resources and occasionally co-opted local disputes to fight proxy wars. By the end of 1975, however, that period seemed to be coming to a close. The Vietnam War was over, and for three decades no nuclear bomb had been detonated in war. This augured well. In addition, the global period of protest that had affected so many Western countries at the height of the Vietnam War had ebbed. Officials had a tendency to view such protests as exploited by the Soviet-dominated World Peace Council and associated groups for their own strategic ends, but there seemed little point dwelling on that after the fact.

A new period emerged, with US President Richard Nixon opening relations with Communist China shortly after Australia’s then Opposition Leader, Gough Whitlam, visited China and subsequently, as Prime Minister, opened diplomatic relations. Both sides of the Cold War divide, it seemed, were now intent on pursuing peaceful coexistence, or détente.

In reality, though, in 1975 the Cold War still had a decade and a half yet to run and, hidden from plain sight, in some respects was intensifying even further. Indeed, this period witnessed some particularly intense events that are little known or understood to this day. This was a time when thousands of nuclear weapons remained in the hands of both sides, with many of them poised against each other on short-notice readiness to be launched. So despite the peaceful public rhetoric, the lack of trust in the motives of the other side remained palpable. To many in ASIO this danger was self-evident. To them it was clear that ASIO’s Cold War responsibilities had not magically disappeared. If anything, while the level of secrecy remained as great as ever, the intensity reached new heights.

Indeed, the simmering Cold War tensions would bubble up again and almost pass the tipping point into open war. Following the Soviet invasion of Afghanistan in 1979, Australia’s Prime Minister, Malcolm Fraser, boosted defence funding and called for an expansion of the Australian Defence Force to be better placed should the conflict escalate.

While the moment of crisis passed in 1979, it would return to an even greater level in November 1983, when the Soviet Union misinterpreted the motives of a NATO exercise (Operation Able Archer) and commenced activation of its nuclear strike plans. While these exercises did not involve Australian forces or the Australian Government directly, the consequences for Australia, along with everybody else, would have been dire had it escalated into a major nuclear conflagration. In fact, that activation saw the world come closer to a nuclear exchange than at any time since the Second World War. The crisis was averted when, with the guidance of Western intelligence provided through a high-level asset, the Soviets realised that their assessment was incorrect and stood down their strategic nuclear forces.¹ That close shave with disaster led to a realisation by both sides that a rethink of their approaches to deterrence was called for.

For many Australians, while they were perhaps peripherally aware of such concerns, the danger seemed remote. Australia had passed the long period of economic and population growth of the 1950s and 1960s, but even with inflation and unemployment at relatively high levels in 1975, few could dispute that Australia remained in essence a lucky country, attracting millions of migrants to its prosperous shores in search of a better life. Caught between seeing the world in Manichean terms and living in a country with few signs of the Cold War confrontation evident in places like divided Germany, ASIO faced a real challenge in reconciling conflicting views. Those views manifested themselves, to a certain extent, in the contrasting political platforms of the major parties in Federal Parliament.

The protest years of the 1960s and early 1970s generated considerable momentum for reform, not just in politics and society but also in the sequestered world of intelligence and security affairs. The political drama of those years had culminated in the election of the Whitlam Government in December 1972. A key reform measure initiated by Whitlam and his Attorney-General, Lionel Murphy, was the appointment in 1974 of Justice Robert Marsden Hope to conduct a Royal Commission on Intelligence and Security. But through an extraordinary set of circumstances discussed in Volume II of this history, the Whitlam Government came to a surprising end in November 1975. Some feared that would also mean the demise of reforms to ASIO that Whitlam and Murphy had mapped out and Hope was in the process of articulating.

The year 1975 witnessed a polarisation in Australian domestic politics that seemed to echo the international polarisation of the Cold War. Not only did the dismissal of the Whitlam Government and rumours of CIA interference generate shrill reactions from both ends of the political spectrum, but the fall of South Vietnam to the communist North Vietnamese in April 1975 seemed to heighten the political tension.

Those who had long been critical of ASIO saw the coming to power of Malcolm Fraser and his Liberal–National Country Party Coalition Government as the death knell to reform. But the royal commission Whitlam had mandated was still underway, and it was not at all certain that Fraser would seek to curtail the momentum for reform that Hope’s work was generating. In fact, while the reform process had been initiated under Whitlam, it would be carried through with surprising vigour by his successors, Malcolm Fraser and Bob Hawke. This volume looks at ASIO during those reforming years.

Earlier events in ASIO’s history, discussed in the previous volumes of this history, had made big impressions nationally, notably the defection in 1954 of KGB spy Vladimir Petrov and his wife Evdokia; the expulsion of another Soviet spy, Ivan Skripov in 1963; and the raid on Headquarters ASIO by the then Attorney-General, Lionel Murphy, in 1973. To be sure, there was also lingering controversy over the role of intelligence in the dismissal of the Whitlam Government. But little is known about exactly what was happening in the world of espionage and counterespionage in the years from 1975 to 1989. This secret history of the last years of the Cold War is a major part of the story recounted here.

The volume is divided into two parts, corresponding to the political eras of successive Federal governments. Part 1 covers the period when Liberal Party leader Malcolm Fraser was Prime Minister of Australia, from December 1975 to March 1983. Fraser, initially appointed interim Prime Minister by Governor-General Sir John Kerr under extraordinary circumstances on 11 November 1975, went on to a convincing win in a Federal election in December that year and led the country as Prime Minister for the next seven and a half years.

Seen at the time as an arch conservative and a political hawk, Fraser surprised many of his critics and supporters when he actively welcomed tens of thousands of refugees from Vietnam, engaged strongly with the British Commonwealth as an institution to support independence movements in Africa and elsewhere, and took a hardline position against Soviet aggression in Afghanistan following the insertion of Soviet troops there in 1979. Each of these decisions by Fraser would have consequences for ASIO. The wave of migrants from Vietnam and elsewhere, including the Middle East, for instance, would generate considerable additional work for ASIO in monitoring the potential for politically motivated violence. One of the most dramatic incidents in this category occurred outside the Hilton Hotel in Sydney in February 1978 at the Commonwealth Heads of Government Regional Meeting—a gathering held in pursuit of Fraser’s pro-Commonwealth and pro-independence ideals for the remnants of Britain’s former empire. Similarly, Fraser’s strong reaction to the Soviet Union’s entry into Afghanistan in 1979 had consequences for how ASIO pursued its counterespionage responsibilities, principally against Soviet and Soviet bloc targets.

Part 1 of this volume examines ASIO as it grapples not only with Fraser’s approach and policy priorities but importantly also with the fallout and implementation of reforms arising from the Royal Commission on Intelligence and Security. ASIO was under considerable strain during the royal commission, which investigated the national intelligence and security apparatus, and scrutinised the organisation and practices of the intelligence agencies and ASIO in particular. Yet over the following years, the Royal Commission on Intelligence and Security would have a cathartic effect on ASIO, initiating significant reforms that would generate considerable renewal within ASIO. In combination with constructive, respectful and inclusive leadership by successive directors-general, the implementation of the royal commission recommendations would result in an organisation significantly repositioned as an organ of state, its responsibilities recognised and endorsed on a bipartisan basis and underpinned by more thorough legislation that fostered greater accountability.

As reform initiatives gained momentum, domestic security challenges prompted further adjustments. What ASIO had seen as possible subversion, for instance, it came to better understand as politically motivated violence and terrorism. Countering these challenges required different approaches than those that had been used in the past, and ASIO sought to adjust accordingly.

The Royal Commission on Intelligence and Security also triggered the implementation of reforms to foster increased cooperation between government agencies. ASIO’s adjustment to these reforms was pushed along by a series of events, ranging from the Hilton Hotel bombing in February 1978 to international sporting events such as the Brisbane Commonwealth Games in 1982.

Part 2 of this volume corresponds to the period when Australian Labor Party (ALP) leader Bob Hawke was Prime Minister, from March 1983 to late 1989, when the Berlin Wall came down—an inflection point widely seen as marking the end of the Cold War. Eager to avoid the crisis atmosphere of the last days of the Whitlam Government, Hawke approached his responsibilities in a markedly different manner from Whitlam that was in many ways consistent with the approach taken by Fraser. For ASIO, therefore, there would be greater continuity under Hawke than Whitlam.

The story of ASIO told in Part 2 illustrates the fact that despite the breadth and depth of reforms initiated and implemented during the Fraser years, further reform was still necessary. During the period that followed, while Hawke was Prime Minister, ASIO struggled to redeem its public image and to many remained mired in controversy.

Very early in Hawke’s prime ministership, ASIO was in the public eye as a result of the Combe–Ivanov affair explored in detail in Chapter 11. The events surrounding the Combe–Ivanov affair, particularly those aspects concerning ASIO, David Combe and Soviet diplomat-cum-KGB-spy Valeriy Ivanov, traumatised the Organisation. They also helped trigger a Royal Commission on Australia’s Security and Intelligence Agencies, once again headed by Justice Hope. While painful for ASIO, the incident helped burnish Hawke’s credentials domestically and internationally as a trusted hand in the management of his security and intelligence responsibilities. The net effect for ASIO was that international ties were maintained and strengthened.

Hope’s recommendations arising from both the Royal Commission on Intelligence and Security (1974–77) and the Royal Commission on Australia’s Security and Intelligence Agencies (1983–84), as well as the Protective Security Review he undertook in 1978–79, laid the groundwork for the emergence of the Australian Intelligence Community, as it came to be known, by the end of the Cold War. The more robust oversight mechanisms associated with these reforms set the context for the improvements within ASIO itself. These oversight mechanisms included the establishment of the Parliamentary Joint Committee on ASIO, the Australian Secret Intelligence Service (ASIS) and the Defence Signals Directorate (DSD) (later renamed the Parliamentary Joint Committee on Intelligence and Security); the establishment of the Security Appeals Tribunal as part of the Administrative Appeals Tribunal; the establishment of the Office of National Assessments, with the responsibility of overseeing the Australian Intelligence Community; and the establishment of the office of the Inspector-General of Intelligence and Security (IGIS), with enduring powers of a royal commissioner. These reforms, as they affected ASIO, are discussed in some detail in Chapter 14. Together, they dramatically changed ASIO’s accountability and expected responsiveness to an unprecedented degree. Many of the reforms undertaken during this period by successive directors-general—Frank Mahony (1975–76), Edward Woodward (1976–81), Harvey Barnett (1981–85), Alan Wrigley (1985–88) and John Moten (1988–92)—were informed by the work of Justice Hope.² In undertaking their duties, these men were responsible to a succession of attorneys-general: two under Prime Minister Fraser—Robert Ellicott (1975–77) and Peter Durack (1977–83); and two under Prime Minister Hawke—Gareth Evans (1983–84) and Lionel Bowen (1984–90).

In pursuing its responsibilities, ASIO faced a proliferation of domestic security challenges associated with the expanded presence of Soviet and Soviet bloc diplomatic and trade missions heavily staffed by intelligence operatives. The age-old art of espionage had not faded away, despite the world entering the apparently softer, gentler phase of the Cold War associated with the détente between the superpowers. Indeed, there is evidence to suggest that this détente was instrumental in facilitating more effective and expansive Soviet bloc espionage endeavours. According to this view, détente allowed a lowered state of alertness in countries such as Australia that was helpful for more intrusive and extensive Soviet bloc espionage operations. ASIO was as hard-pressed as ever during this period to stay abreast of its counterespionage responsibilities. In fact, ASIO faced an unrelenting challenge in countering espionage linked with the ever-increasing size and number of diplomatic and trade posts established in Australia by communist countries.

The expanding range of security challenges faced by ASIO was also linked to the increasing number of migrant groups settling in Australia. While the Organisation recognised that the overwhelming majority of these recent migrants were settling peacefully, a sufficient number of groups of concern kept it more than fully occupied in keeping abreast of the growing threat of politically motivated violence. Violent extremism associated with groups from the Middle East, Croatians (and their Yugoslav intelligence antagonists), Armenians, and followers of the Indian sect the Ananda Marga, among others, presented ASIO with a range of challenges discussed in this volume. ASIO’s response to these challenges involved extensive consultation and cooperation not only with partner agencies in Australia, notably Federal and state police, but also international partners with experience in handling similar extremist elements.

While the range of groups ASIO was tasked with monitoring kept expanding, some of the traditional target groups changed status. The Security Appeals Tribunal ruled in April 1983 that membership of the Communist Party of Australia (CPA) was no longer sufficient grounds upon which to withhold provision of a security clearance. This was a significant inflection point for ASIO, when the CPA, which had been so significant a factor in the founding of ASIO in 1949 and a focus for much of ASIO’s counter-subversion work for decades, was deemed to be no longer of concern. This led to a significant reorientation and re-prioritisation for ASIO in handling what had been termed counter-subversion but was increasingly viewed, in relation to new and emerging groups of concern, as politically motivated violence.

The period also saw Headquarters ASIO finally relocate from Melbourne to Canberra and the Organisation become a more standard arm of the Australian Public Service. Protective security, politically motivated violence, counterterrorism and counterespionage challenges continued. But few, even in 1983, when Hawke became Prime Minister, could imagine the fall of the Berlin Wall in 1989 or the changes that would eventuate thereafter.

Throughout the history of ASIO, concerns about Soviet bloc espionage and penetration within the ranks of ASIO and the government bureaucracy were ongoing. Indeed, while numerous reports emerged of compromise in ASIO’s partner security agencies in the United Kingdom and the United States, it seemed reasonable to assume that at least some of the suspected Soviet bloc attempts at penetration of ASIO had been successful. There were fleeting indications of penetration and betrayal but, frustratingly, ASIO always found it very difficult to confirm and gather evidence to enable successful prosecution of such cases.