"The CIA failed in its single, overriding defining mission, which was
to chart the course of Soviet affairs." --Daniel Patrick Moynihan,
Quoted by Bill Gertz, Washington Times, May 21, 1992.

"The CIA [has] come under legitimate attack from President Clinton
for failing to predict the collapse of the Soviet Union." --Morton
Kondracke, Washington Times, April 26, 1995.

"The CIA itself did not make much difference in the ultimate outcome
of the cold war. Its analysts misjudged almost every major
development in the post-World War II world, including the most
spectacular misjudgment of all--the flat-out failure to predict the
collapse of the Soviet Union." --David Wise, Nightmover: How Aldrich
Ames Sold the CIA to the KGB for $4.6 Million (1995).

"Has any government department goofed up more than the Central
Intelligence Agency?... Their most egregious and expensive blunder
about the Soviet economy we are still paying for." --Mary McGrory,
Washington Post, March 14, 1995.

"Never has so much money been allocated to study one country; never
have so many academic and government specialists scrutinized every
aspect of a country's life. . . . Yet when the end came, the experts
found themselves utterly unprepared." --Richard Pipes, Foreign
Affairs (January/ February 1995).

"The CIA failed to alert the President and Congress about the
inexorable Soviet collapse. The present DCI, in his starched white
outfit wishing it all away, is in a curious state of institutional
denial." --William Safire, New York Times, April 6, 1995.

Almost everyone, it seems, knows that the Central Intelligence Agency
failed to anticipate the collapse of the Soviet Union. Indeed, the
belief that the CIA somehow missed the single most important event of
the twentieth century pervades virtually all discussions of U.S.
intelligence these days, and may, in fact, be one of the few Cold War
events about which both liberals and conservatives agree.

This unanimity comes at an especially difficult time for the
intelligence community. Under fire today for other shortcomings,
including, notably, its handling of the Aldrich Ames case, the agency
is struggling to explain and justify its mission in the post-Cold War
era.

The perception of failure in the Soviet case has become a key piece
of evidence in current debates over plans to reform the U.S.
intelligence community, part of the rationale behind both the
Commission on Intelligence Roles and Missions and the current
organizational shakeup at the CIA under its new director, John
Deutch. Senator Moynihan regularly uses the CIA's supposed failure to
predict the Soviet collapse as ammunition in his proposal for
abolishing the agency and dispersing its various components among the
Departments of State and Defense.

There is only one small problem: The critics are wrong. The
intelligence community did not fail to predict the Soviet collapse.
Quite the contrary, throughout the 1980s the intelligence community
warned of the weakening Soviet economy, and, later, of the impending
fall of Gorbachev and the breakup of the Soviet Union. Moreover,
within the intelligence community the CIA was the most skeptical
about the ability of Gorbachev to maintain control, and that
skepticism grew greater the deeper one went into the CIA. Within the
agency, the Office of Soviet Analysis (SOVA) was the most concerned
about Gorbachev's future, and said so flatly.

Some intelligence officials and other political figures have tried to
make this point, but so far they have largely been ignored. After the
1991 coup that ultimately finished Gorbachev and the USSR, the
chairmen of the House and Senate oversight committees rejected
charges that the intelligence community had failed to alert U.S.
leaders. Shortly thereafter, Acting DCI Richard Kerr defended the
CIA's record in a letter to the New York Times. Former DCI Robert
Gates has also argued that U.S. intelligence charting the decline and
fall of the Soviet Union was on the mark. Why then has the myth
persisted? One reason is that, until recently, the intelligence
itself has not been publicly available, and, even when the relevant
documents have been released, critics of the intelligence community
have not bothered to read them. Hard data have often been neglected
for the sake of clever argument.

Another reason is that the intelligence community has indeed failed
in other cases, and it is often easiest to paint with a broad brush.
The most famous example is probably the intelligence community's
failure to alert U.S. policymakers of the weakness of the Shah of
Iran, the strength of his opponents, and, in particular, the support
enjoyed by the Islamic fundamentalists. In that case, the evidence
confirms that the failure occurred because the United States, in
trying to maintain friendly relations with the Shah and the Iranian
intelligence service, failed to develop independent sources of
information within Iran. The Soviet case looks like the Iranian
case--Uncle Sam betting on the wrong horse--and so people have
assumed that it is the same.

Finally, critics have been able to claim that there was an
intelligence failure simply because the United States seemed to fail
to achieve its objectives: establishing a long-term partnership with
Gorbachev and preserving the integrity of the Soviet Union. U.S.
policy was thwarted by the sudden coup that eventually led to
Gorbachev's demise; therefore, goes the argument, U.S. intelligence
must have failed. But, as we shall see, the intelligence
community--and the CIA in particular--performed quite well in
anticipating the Soviet collapse. In some respects, its performance
was exemplary.

Predicting the collapse of the Soviet Union involved three separate
problems requiring analysis within progressively more restricted
timeframes and roughly analogous to those encountered in predicting
whether an attack will be launched by a hostile power: a "strategic"
problem, a "tactical" problem, and an "indications and warning"
problem.

The "Strategic" Problem: Detecting Soviet Decline

The failure of the Soviet economy and the unraveling of the Soviet
social system were not as obvious as they may seem in retrospect. For
much of the twentieth century, most experts in the West assumed that
the Soviet system, though often brutal, was at least economically
productive and politically stable.

Indeed, the Soviet economy did seem to work well during the 1950s and
1960s. The Soviet GNP grew at a rapid rate. In part, this growth
reflected the fact that the Soviet Union was recovering from World
War II, and in part that it was still in the initial phase of a newly
industrializing economy, when growth rates are typically large.
Moreover, the Soviet Union was very competitive in many areas of
science and engineering (witness Sputnik), and was also able to
sustain a tremendous military buildup. The Soviets, it seemed, were
well on their way to building the industrial infrastructure that most
Western thinkers believed was necessary for sustained economic growth.

True, the Soviets were behind almost everyone in producing quality
consumer goods, but then so had the Japanese been in the
mid-twentieth century. It is only in retrospect that mainstream
opinion acknowledges that the Soviet heavy industry responsible for
the apparent growth in GNP was inefficient, poorly planned, and, in
many cases, environmentally disastrous. It is also important to
remember that during the 1960s and 1970s many serious people actually
debated the relative effectiveness of market economies and socialism.
Thus, much of the problem of detecting the failure of the Soviet
economy revolved around the difficulty of simply accepting the fact
that such a failure was possible.

Even though there were debates during the 1970s over the size of the
Soviet GNP and the size of the Soviet defense budget, the context was
quite different from the debate that took place in the decade
preceding the Soviet collapse. Intelligence analysts in the Defense
Department argued during this earlier period that the Soviet defense
budget and the Soviet share of GNP devoted to defense were both
larger than that claimed by the CIA. However, the point that the
Defense Intelligence Agency (DIA) was trying to make at that time was
not that the Soviet Union was being stressed, but rather, that the
Soviet Union was able to endure stress. DIA claimed that by
underestimating Soviet military expenditures the CIA was
underestimating Soviet military capabilities and the Soviet
determination to achieve military superiority.

By the late 1970s, however, it was clear that, whatever the
absolute size of the Soviet GNP and defense budget, the Soviet
economy as a whole was faltering. The CIA and defense intelligence
organizations continued to disagree on whether this would affect
Soviet military spending--the DIA insisted that it would not, even up
to the point of Soviet collapse--but there was general consensus
across the intelligence community that a slowdown was occurring.

Indeed, the stultified, stalled-out condition of the Soviet economy
was an accepted truth and was the "given" context in which the new
regime of Gorbachev was analyzed. For example, within eight months of
Gorbachev assuming office as General Secretary, the intelligence
community issued a National Intelligence Estimate (NIE) on the
prospects for Gorbachev and the Soviet economy. It stated:

"The growth of the Soviet economy has been systematically
decelerating since the 1950s as a consequence of dwindling supplies
of new labor, the increasing cost of raw material inputs, and the
constraints on factor productivity improvement imposed by the
rigidities of the planning and management system. The average annual
growth of Soviet GNP dropped from 5.3 percent in the late 1960s to
3.7 percent in the early 1970s, to 2.6 percent in the late 1970s.
Soviet GNP grew by only 1.6 percent per annum in Brezhnev's last
years (1979-82). After reaching a low in 1979, GNP growth averaged
2.3 percent from 1980 to 1984. Growth in 1985 will probably be in the
range of 2.5 to 3.0 percent. These recent improvements have been the
result largely of disciplinary and incentive measures introduced
under Andropov and Gorbachev. It remains to be seen if the upturn in
growth can be sustained. . . ."