After posing for photos, Chinese diplomats led guests through their new, $13 million embassy in Canberra, Australia, a dramatic pagoda-style building with a swimming pool, tennis courts, greenhouse and sweeping lake views.

But the grand opening in August 1990 would have been ruined had the diplomats known everything about their elegant chancery.


Thirty U.S. agents had worked for months to lace the concrete and drywall of every office with fiber-optic listening devices, their fine, glass threads undetectable in security sweeps.

As the Chinese diplomats set about their work, their conversations and computer keystrokes were flashed by satellite to the other side of the globe: candid talk about relations with Taiwan, secret cables with details of Beijing's trade deals, reports on the latest Chinese military hardware.


All of it flowed to a field of satellite dishes surrounded by spruce trees a few hundred yards from the Baltimore-Washington Parkway. At the headquarters of America's largest, most costly and most secret intelligence agency, another rich harvest had begun.

From its sprawling campus at Fort Meade, the National Security Agency eavesdrops on the globe.

The stream of intercepts from Canberra joined a virtual river of communications from all over the world: phone calls of Cali drug cartel operatives, electronic fingerprints of Serbian missiles and tanks, computer messages outlining North Korea's nuclear program, and faxes of a European company fighting U.S. firms for a Saudi Arabian aircraft contract.

Virtually invisible to the American public, NSA runs the nation's most ambitious spying operation, eclipsing the Central Intelligence Agency in budget and personnel. Its operations cost nearly $1 million an hour, $8 billion a year. Its Maryland work force of 20,000 makes NSA the state's largest employer, and it oversees tens of thousands of eavesdroppers in listening posts from Alaska to Thailand.

Now, four years after the fall of the Soviet Union, NSA's dominant prey for four decades, the agency is struggling with new priorities and new pressures. Russian generals have been bumped from the top of a shifting NSA target list that now includes everyone from Balkan warlords to Japanese trade officials. Even as the agency is squeezed by tighter budgets, its eavesdropping capability is threatened by new technology - hard-to-tap fiber-optic cable and uncrackable codes available to anyone with a personal computer.

These challenges are being studied by a commission headed by former Defense Secretary Harold Brown, whose report next spring is expected to chart a course for NSA and the rest of the intelligence community.

With the agency at a crossroads, The Sun has undertaken a yearlong examination of NSA, interviewing scores of employees and retirees, users of NSA intelligence, members of Congress and private-sector experts.

What they describe is an American behemoth that wraps the globe in its electronic embrace. NSA's eavesdropping reports shape the nation's foreign policies on everything from the deployment of U.S. soldiers overseas to the duties Americans pay on imported cars. The agency that built some of the nation's first computers in the 1950s and financed the supercomputers of the 1970s still pours millions into telecommunications research.


Yet it is a shadowy institution virtually unknown to most Americans. References to NSA are routinely excised from White House memoirs and congressional reports. The only eavesdropping operations declassified date back to the 1940s.

"They're famous even within the [intelligence] community for saying nothing," says David Whipple, a retired CIA official.

While the CIA is charged with recruiting foreign agents for human intelligence -- HUMINT, in spy jargon -- NSA simply listens.

Inside the mirrored towers of its operations complex, it decodes, translates and analyzes the electronic stew known as signals intelligence. SIGINT supplies the U.S. government with an hour-by-hour flow of the private messages of foreign leaders, trade negotiators, terrorists and narco-traffickers.

"There is not a single event that the U.S. worries about in a foreign policy or foreign military context that NSA does not make a very direct contribution to," NSA Director John M. "Mike" McConnell said in rare public remarks this year.

It is a claim readily backed by NSA's "customers" in the U.S. government. Human spies often lie. Satellite photographs reveal only what is in plain view. Bugging can deliver the inside story.


"It's authentic by definition," says a White House foreign policy aide who looks at NSA's intelligence daily. "It's useful to know what people are saying privately."

NSA's secret dispatches to Washington policy-makers make it an unseen player in daily events.

From an upper room in the U.S. Embassy in Caracas, Venezuela, for example, NSA agents overheard Cali operatives plotting to smuggle 12,250 kilos of cocaine to Florida inside concrete posts. The tip led in 1991 to the second-largest seizure of cocaine in U.S. history - and started the cartel's unraveling. Last spring, as Colombia began arresting drug leaders, NSA again was the hidden factor, penetrating the cartel's sophisticated communications network.

From Bosnia, radar and other signals are picked up by unmanned aircraft jammed with high-tech gear and beamed back to NSA headquarters. Computers there identify threats and zap the results back to U.S. pilots patrolling Bosnian airspace - all in 11 seconds.

From a commercial communications satellite, NSA lifted all the faxes and phone calls between the European consortium Airbus, the Saudi national airline and the Saudi government. The agency found that Airbus agents were offering bribes to a Saudi official. It passed the information to U.S. officials pressing the bid of Boeing Co. and McDonnell Douglas Corp., which triumphed last year in the $6 billion competition.

And by shifting a satellite from its position over the Russian steppes to a spot 22 miles above the Korean peninsula, NSA fed critical information to U.S. officials during the recent crisis over North Korea's drive for nuclear weapons.


Members of Congress return from tours of NSA dazzled by its capabilities and global reach, recalling CD-quality tapes of profane drug lords and Iraqi missile sites pinpointed on computer screens. They also learn how NSA fulfills its other mission: communications security, designing government phones to make sure foreign eavesdroppers can't do to us what NSA is doing to them.

Yet some lawmakers fear that NSA's secrecy may shield not only the agency's methods but overspending and mismanagement.

"They've been spared the scrutiny we've given most agencies in government, even CIA," said Rep. Bill Richardson, a Democrat on the House Intelligence Committee.

And even some who praise NSA's technical prowess ask whether the eavesdropping justifies its enormous cost.

"Some of this stuff ... has a damn short shelf life," says Noel C. Koch, a top Pentagon official in the Reagan years. While NSA's ultrasecrecy provides "an illusion of competence," Mr. Koch says he often found public sources of information more useful.

Like most of those interviewed, Mr. Koch declined to discuss specific NSA operations. Others refused to talk at all. The less known about the agency, even to the taxpayers who fund it, the better, they said.


"I wish you nothing but bad luck," R. James Woolsey, a former CIA director, said with a laugh, adding only that NSA is "extremely useful."

The reticence of Mr. Woolsey and others reflects the fragility of signals intelligence and the fear that any discussion will alert adversaries to change codes or find other ways to shield their communications. After leaks to the Sydney Morning Herald and other Australian media this year exposed NSA's bugging of the Chinese Embassy, that stream of information dried up, according to a White House foreign policy aide.

Most of those who talked with The Sun requested anonymity. Some could cite by number the federal law, 18 U.S. Code 798, that threatens prison for those revealing secrets about U.S. communications intelligence activities. Others cited the two pieces of NSA lore about the three letters at the heart of America's spy establishment.

To those inside the fence, an admonition: Never Say Anything.

To those outside, a categorical denial: No Such Agency.

'Real time' accounts


In the early 1980s, NSA sent a team to Haiti to survey local telephone and radio traffic. They found little of value to U.S. foreign policy, one official recalls.

What a difference a decade can make.

Last year, as the Clinton administration wrestled with a decision to invade Haiti and restore President Jean-Bertrand Aristide to power, officials turned to NSA.

The eavesdroppers intercepted the phone calls of the military junta, catching Lt. Gen. Raoul Cedras as he decided whether to relinquish power. Closer to home, the agency bugged the telephones of Mr. Aristide during his American exile. Whenever he phoned Haiti's ambassador or consulted his American supporters, verbatim transcripts of the calls were flashed to secure computer terminals in the White House and State Department.

Even when they contained no bombshells, NSA's intercepts did "give you a portrait of the person," says a State Department official. Creole linguists from Fort Meade even came by once to ask how they might improve their bugging reports, he recalls.

That's the kind of service during moments of crisis that top officials never forget.


National Security Adviser Richard C. Allen sat on the deck of his home in Arlington, Va., in August 1981 listening on his secure phone as NSA provided a second-by-second account of Israeli fighters destroying an Iraqi nuclear reactor. The agency was listening to the pilots' communications and the Iraqis' panicked response.

"They kept us virtually in real time," Mr. Allen recalls. "NSA performed, in my view, absolutely invaluable services."

Yet such intercepts are the rare electronic nuggets plucked from masses of ore dug by rank-and-file miners. An NSA career, says a Russian linguist, is "months and months of boredom and drudgery, punctuated by a few minutes of unbelievably intense excitement."

Often NSA adds to an intelligence mosaic whose pieces come from CIA spies, satellite photos, foreign newspapers and academic experts. "For every hot report that ends up in the president's hands," the linguist says, "there's probably 10 years of database development behind it."

When a Pan Am jetliner was downed in Lockerbie, Scotland, by a terrorist bomb just before Christmas 1988, NSA responded quickly. Analysts searched massive computer files for scraps of threatening dialogue and mentions of the Pan Am flight. Eavesdroppers scanned the messages of militant groups around the world for incriminating reactions to the bombing.

"Everybody in the world was flagged to look for anything on that," an Arabic linguist recalls. "We happened to be working on an area of Lebanon where they thought people might be involved."


Ultimately, the agency helped identify two Libyan agents, since indicted in the blast. Nonetheless, says this linguist, Lockerbie was a failure for NSA and the rest of U.S. intelligence because the tragedy wasn't prevented. Every year, he says, NSA's tips to the CIA and FBI head off terrorist attacks - and the public never hears a word.

"There's no question that the information obtained from NSA has been an integral part in preventing terrorist acts in the United States," says Oliver B. Revell, the FBI's counterterrorism chief until 1991.

It is through its widespread monitoring that NSA is able to spot potential terrorists or predict a change in government, listening for trouble like a doctor with a stethoscope pressed to the world.

There are few prime ministers or presidents whose voices have never echoed in the headphones of an NSA linguist, whether they were caught on the phone in their office or in a hotel room during a U.S. visit. Before American leaders meet a top foreign official, NSA helps them prepare by providing the target's latest conversations and written directives.

One former CIA analyst recalls hearing an NSA tape of the late Romanian dictator Nicolae Ceausescu chewing out a subordinate for failing to meet an agricultural production target. A former White House Middle East expert remembers hearing Syrian President Hafez el Assad engaging in "spectacular gossip," culminating in a foul-mouthed tirade against the Iranians, laced with potent Arabic slurs.

During negotiations, from arms control to trade, American officials turn to NSA for help daily - sometimes hourly. They use the agency as a sort of global lie detector.


"If you find that in private conversation, Minister A is saying the same thing he's saying to you, that's reassuring," says Elliott Abrams, assistant secretary of state during the Reagan years.

U.S negotiators often know the cards held by the other side. NSA has provided copies of the orders the foreigners have just received from their bosses. "There were moments when you'd go into a negotiation and you'd have the instructions the other side had received," Mr. Abrams says. "That was not trivial."

NSA provided just such assistance to U.S. negotiators during tense talks with Japan this year over luxury car imports. One American trade envoy who works closely with NSA says he sometimes struggles at the negotiating table not to betray what he knows.

"You have to make sure," he says, "there's no extra spring in your step."

An $8 billion effort

Keeping the world wired isn't easy. And it isn't cheap.


NSA listens from a fleet of billion-dollar satellites and through an ordinary electrical socket on the wall of a foreign mission. The eavesdroppers are in the van along Embassy Row in Washington and in the bunker at Misawa Air Base on the northern tip of Japan. They're aboard that U.S. Navy cruiser steaming through the Mediterranean and in the cockpit of the U-2 spy plane above the Bosnian landscape.

The price tag for the entire bugging network is secret, but it only begins with NSA's annual budget of about $3.5 billion. Those eavesdropping satellites may cost another $3 billion, from the budget of the National Reconnaissance Office. The Army, Navy and Air Force provide NSA with 30,000 or so servicemen and women who staff listening posts, adding about $2 billion.

The total: at least $8 billion a year for U.S. signals intelligence, by the calculations of John Pike, an intelligence watcher at the Federation of American Scientists and ardent student of the Pentagon's "black" budget that conceals NSA's spending.

NSA's rivals at the CIA gripe that what they pay to recruit informants is pocket change compared with what NSA spends on technology. When a Titan IV rocket exploded shortly after its launch in California in August 1993, the blast destroyed its secret payload: three eavesdropping satellites worth $275 million apiece, officials said. In seconds, the accident cost as much as the National Park Service's annual budget.

Those satellites that reach the stratosphere unfurl foil dish antennas the size of a football field. Orbiting above target countries, they catch the microwave signals of telephone calls that radiate past relay towers into space.

From ground stations in Sugar Grove, W.Va., and Yakima, Wash., in England, Germany, Japan, Australia and elsewhere, NSA points its dishes skyward toward another kind of satellite: the ordinary communications satellites that carry the bulk of the world's phone, fax, computer and other traffic.


"Every time a communications satellite is launched, NSA puts up a satellite dish to keep track of it," says Mr. Pike. "That dish sits there and says, 'One copy of everything, please.'"

For tapping phones of foreign officials in the United States, NSA goes to designated telephone company employees who have a security clearance. The agency hands over the list of targeted telephone numbers and the appropriate legal papers, and phone company technicians push a few buttons to make the connection.

But not all eavesdropping can be accomplished at such a safe distance. Small teams of technicians operating under unrevealing code names such as Musketeer and Broadside sometimes take their listening tools close to the source.

NSA makes devices that bounce a laser off a window and pick up the conversation inside from the subtle vibration of the glass. Technicians put tiny transmitters into vases, ashtrays and other everyday objects to be smuggled into a targeted building.

"Everything down to the toothpick in your glass, NSA could do it," recalls a retired senator from an agency tour.

One NSA guard never thought much about the fleet of vans parked inside NSA's headquarters complex, far from public view. Then one day he peered inside.


"There are a whole lot of computers and listening equipment, faxes, telephones," the guard says. "Even a pop-up radar dish that comes out of a rooftop unit that looks like an air conditioner."

The vans, painted in the distinctive colors of the local phone company, blend into the traffic outside embassies, residences and restaurants, anywhere diplomats or foreign operatives gather.

In an effort to tap into the walkie-talkies used by terrorists, foreign soldiers and police officers, NSA created Project Yogurt, a portable unit combining radio receiver, direction finder, computer and tape recorder.

The Yogurt equipment proved its worth in 1985, when Islamic terrorists hijacked TWA Flight 847 shortly after takeoff from Athens, Greece. After the plane landed in Beirut, Lebanon, NSA monitored its communications and electronically scoured Beirut neighborhoods when the hostages were taken from the plane and hidden.

NSA got a break in the most unlikely place - a weekly newsmagazine. In a photo of a U.S. hostage seated next to a terrorist, an NSA engineer spotted a walkie-talkie.

"We knew the make and figured out the band," says an NSA technician involved in the effort. Within hours, custom-built equipment was en route to Beirut, where it allowed U.S. eavesdroppers to listen to the terrorists.


While the hijacking led to the killing of Navy diver Robert D. Stethem of Waldorf, who was shot and dumped on the tarmac, the rest of the hostages were released unharmed. They included Ed Whitmoyer of Severn, an Air Force sergeant who worked for NSA in Athens and was traveling home in civilian clothes. The terrorists never realized they had captured a spy, and Sergeant Whitmoyer returned to the cheers of colleagues gathered at NSA's Friedman Auditorium.

Two years later, West German police arrested one of the terrorists, Mohammed Ali Hamadei, as he arrived at the Frankfurt airport. NSA eavesdropping had tipped them off to his travel plans.

'Brute force' decoding

The thousands of dishes NSA deploys on earth and in space ensure a bountiful catch - too bountiful. To pluck the useful intelligence from the ocean of electronic chatter is a science in itself.

"They get everything with perfect quality," says Mr. Pike of the Federation of American Scientists. "But a lot of it is reruns of 'Gilligan's Island.'"

To distinguish Saddam Hussein from Gilligan, NSA uses the world's most powerful computers.


First, the computers scan for particular telephone numbers or exchanges; just as White House telephones begin with area code 202 and exchange 456, phones used by foreign governments have distinctive patterns.

Next, for communications sent in code, NSA's code-breakers, or cryptanalysts, put the computers to work. If the code is unfamiliar, they may have to mount a "brute force attack," trying every possible combination of the numeric "key" that can unlock the text.

The number of possible keys for one common encryption system is about 70,000,000,000,000,000, or 70 quadrillion. A personal computer might be able to check 100,000 keys per second - but would still take 22,652 years to exhaust the possibilities. NSA's supercomputers probably can break the code in seconds, cryptography experts say.

Once decoded, written communications such as diplomatic cables or commercial faxes can be scanned by the computers for keywords, flagging messages for analysts to review. Keyword lists, in dozens of languages, might include the name of a firm suspected of supplying chemical weapons components, the number of a drug cartel's Swiss bank account or simply the word "nuclear."

Voice communications are trickier. Because pronunciation varies so greatly, only in the last few years have computers begun to recognize keywords with reasonable accuracy. But NSA is in the forefront of such work, and is sponsoring research at Johns Hopkins University and elsewhere to create software that can recognize a language, transcribe speech and perhaps even summarize what is said.

Meanwhile, NSA has spent millions to program computers to recognize individual voices, switching on tape recorders when a targeted individual comes on the line. Such equipment was provided by NSA to the Colombians and used during the hunt for drug lord Pablo Escobar, who was shot to death by security forces in December 1993.


Rapid automated sorting of intercepts is becoming steadily more crucial as NSA labors to keep pace with the communications explosion, NSA Director McConnell, a 52-year-old vice admiral, told a seminar on military intelligence last summer.

All the books and periodicals in the Library of Congress, Admiral McConnell said, contain about 1 quadrillion bits of information. The information transmitted over one satellite channel could fill the Library of Congress in about nine months. But a single strand of fiber-optic cable can carry enough information to fill the Library of Congress in just three weeks.

"With the technology that's on the drawing boards now, we will fill up the Library of Congress about every three hours," Admiral McConnell said. "That's the kind of volume we're having to deal with in a global context."

Even as the intercepts flowing into Fort Meade have reached flood tide, NSA has been plucking from the gigabits of data a changing mix of intelligence. Commerce replaces communism: The Soviet air force has been supplanted by the European aircraft consortium Airbus. But the eavesdropping goes on.

Louis W. Tordella, the courtly mathematician who virtually ran NSA for many years as deputy director, says U.S. officials facing challenges abroad inevitably will turn to NSA.

"I think it's fair to say that the demands on the agency approach infinity," he says. "Everybody wants to know everything about everything."


In this series

Today: NSA eavesdrops on allied presidents, military strongmen, drug dealers and trade negotiators.

Tuesday: Maryland's largest employer is one of America's strangest workplaces.

Thursday: NSA has a secret within a secret: eavesdroppers undercover abroad.

Dec. 10: Scores of countries thought their coded messages were secure. Was NSA reading over their shoulders?

Dec. 12: Trolling for foreign secrets, NSA routinely picks up Americans' overseas calls. And it's legal.


Dec. 14: The next war may be fought with computers. NSA is getting ready.


A reprint of the NSA series will be available for $3.95. To order, call SunSource at (410) 332-6800.