From..................... BLOWBACK

By Christopher Simpson

Pub by Weidenfeld & Nicolson,

10 East 53rd St., NYC 10022

1988 ISBN 1-555-84106-6

page 183 .................. Ratlines

Vajda, as it turns out, was himself a fugitive from war crimes and treason charges at the time he entered the United States. He had made a career out of extreme-right-wing politics in Hungary and had been a leading anti-Semitic propagandist for the clerical-Fascist Arrow Cross party. In the last months of the war Vajda had helped strip millions of dollars' worth of Hungarian art treasures and industrial equipment from Budapest. This booty then became one of Intermarium's primary sources of funding during the first years after the war.

Vajda had been arrested on war crimes charges in Italy in April 1947. But according to American counterintelligence records which have never before been made public, he soon escaped from Italian police custody in much the same way as Gowen's earlier informant had and fled to Pope Pius's summer estate at Castel Gandolfo, where he was given refuge. U.S. CIC Agent Gowen then helped Vajda secretly exit the country and even provided him with a reference letter that asserted that Vajda "had been of great assistance to Counterintelligence Corps in Rome [by] giving information on immigrants from Russian satellite states."11 The Hungarian then traveled to Spain, where he succeeded in winning State Department and CIC support for his trip to the States.

Unfortunately for Vajda and Special Agent Gowen, columnist Drew Pearson was in Rome shortly after the Hungarian fled Italy. He was approached by unknown persons "probably Communists or Communist inspired," Gowen said who leaked many of the details of Vajda's history and plans to him. Pearson soon discovered that the fugitive war criminal and Intermarium representative Ferenc Vajda had actually entered the United States at taxpayer expense and with special State Department clearance. The columnist publicized the incident, and Vajda was soon arrested and held at Ellis Island in New York Harbor. Former Hungarian Prime Minister Nagy, who had been the object of Vajda's mission, denounced the Intermarium envoy as a "Nazi."12 There followed a brief congressional investigation, the records of which have remained sealed for more than thirty-five years. Vajda was soon deported and found his way to refuge in Colombia. He eventually ended up as Bogota correspondent for 'Time' magazine [though he was fired when his past became public] and as a teacher at an international university whose board, interestingly enough, included Adolf A. Berle, Jr., who is well known today to have served as a conduit for CIA funds throughout this period.13 The Vajda affair was a disappointment for the alliance between

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U.S. intelligence and Intermarium, but it certainly did not end the relationship. In case after case, a clear continuity of personnel can be established, beginning with the Vatican refugee-smuggling networks in 1945, continuing into Intermarium, and winding up in a variety of CIA-financed political warfare projects during the early 1950s. A number of Intermarium activists, including some who are war criminals by even the strictest definition of the term, followed this pipeline into the United States.

A handful of examples will have to suffice to illustrate this process. The Latvian component of Intermarium was among the most deeply compromised by its service to the Nazi war machine, yet a number of its most prominent members entered the United States. They went on to play leading roles in what are now known to have been CIA-funded emigre projects inside this country.

The Latvian Fascist Perkonkrust Fuhrer Gustav Celmins, for example, had organized a Latvian SS unit in 1941 and served as a Nazi agent inside nationalist circles throughout the war. He went on to become an officer in the powerful Rome Branch of Intermarium. Celmins entered the United States as a displaced person in 1950 and was quickly hired as a teacher in a Russian studies program at Syracuse, New York, with a history of ties to American intelligence agencies. Celmins eventually fled to Mexico following a newspaper series that exposed his efforts to organize anti-Semitic activities among Latvian exiles in the United States.14

Other Latvian emigres in intermarium include Alfreds Berzins and Boleslavs Maikovskis, both of whom were wanted on war crimes charges and both of whom ended up on the payroll of CIA financed organizations during the 1950s. They served as leaders of the Committee for a Free Latvia and the International Peasant Union, respectively, which were bankrolled with agency funds laundered through RFE/RL and the related Assembly of Captive European Nations (ACEN).15

As will be seen in a later chapter, CIA money paid for the ACEN's political congresses, provided substantial personal stipends to emigre leaders like Berzins, and in some cases published transcripts of their speeches in book form. Many Intermarium activists became guests on RFE/RL broadcasts, and the radio stations aggressively promoted the organizations they represented throughout the 1950s. CIA money laundered through Radio Free Europe, it is worth noting, also financed the publication of the book 'The Assembly of Captive European Nations,

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which presented the proceedings of the first ACEN congress in New York and included commentaries by Berzins and the Albanian Bloodstone emigre Hasan Dosti, among others.16 This text was distributed free of charge to virtually every library, newspaper, and radio station in the United States and Europe. The propaganda effort was so thorough that this tract continues to turn up regularly in used bookstores and garage sales to this day.

The United States became ensnarled in Intermarium's large scale underground railroads for Nazis when the CIC hired Croatian Intermarium leader Monsignor Krunoslav Dragonovic to run special ratlines out of Europe for U.S.-sponsored intelligence assets who were too "hot" to have any official connection with the U.S. government. Dragonovic, a high-ranking prelate within the Croatian [Roman] Catholic Church, was running one of the largest and single most important Nazi escape services at the time the United States hired him. According to a later U.S. Justice Department report, Dragonovic himself was a war criminal who had been a "relocation" official involved in the deportation of Serbians and Jews by the Croatian Fascist Ustachi regime that had been set up inside Yugoslavia during the war. In 1944 he had fled to the Vatican, where he used the auspices of the church to create underground escape routes out of his home country for thousands of senior Ustachi leaders. According to Ivo Omrcanin, a former Ustachi government emissary and senior aide to Dragonovic now living in Washington, D.C., his mentor used church resources to arrange safe passage for "many thousands of our people," as Omrcanin puts it. "He helped as much of the government as he could, not excepting the security officials." These "refugees" included men such as Ustachi chieftain Ante Pavelic and his police minister, Andrija Artukovic, who between them had organized the murder of at least 400,000 Serbians and Jews.17

The later U.S. Justice Department investigation into the escape of Gestapo officer Klaus Barbie made public dozens of pages of official records concerning Dragonovic's work for U.S. intelligence that would have otherwise probably never seen the light of day. The Justice Department directly admits that Dragonovic went to work for the Americans in smuggling U.S.-sponsored fugitives, and that whether the United Stales liked it or not this provided a source of financing and shield of protection, in effect, for the priest's independent Nazi smuggling work.18

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The deal with Dragonovic was a product of the perceived intelligence needs of the period. According to CIC Agent Paul Lyon, the senior officer of the 430th CIC in Vienna, Major James Milano, ordered him to "establish a means of disposition of visitors" Lyon means exiles from Eastern Europe in the summer of 1947. These "visitors" were men and women "who had been in the custody of the 430th CIC," Lyon writes, "and whose continued residence in Austria constituted a security threat as well as a source of possible embarrassment to the Commanding General." The CIC man traveled to Rome, where, with the assistance of an exiled Slovakian diplomat, he struck a deal for mutual assistance with Monsignor Dragonovic, who already had "several clandestine evacuation channels to the various South American countries for various types of European refugees" in operation.

Under the agreement the priest obtained false identifications, visas, secret safe houses, and transportation for emigres whose flights were sponsored by the CIC. Lyon and CIC Special Agent Charles Crawford, in exchange, helped special refugees 'selected by Dragonovic' to escape from the U.S.-occupied zone of Germany. These were almost certainly fugitive Ustachi [Croatian Fascist] war criminals, even according to the Justice Department's version of events.19

Officially, of course, the United States was still committed to the capture and punishment of Ustachi criminals. But the CIC-Dragonovic agreement inevitably entailed providing de facto protection not only to the fugitives sponsored by the United States but to the Croatian criminals known to be in the monsignor's care as well. The CIC knew that its arrangement with Dragonovic was facilitating the the escape of Fascist fugitives. CIC Special Agent Robert Mudd, for example, reported at the time of the first CIC-Dragonovic contacts that "many of the more prominent Ustachi war criminals and Quislings are living in Rome illegally ...... Their cells are still maintained, their papers still published, and their intelligence agencies still in operation. Chief among the intelligence operatives ..... appear to be Dragonovic and Monsignor Madjerec," he wrote. "Ustachi Ministers are either living in [Dragonovic's] monastery, or living in the Vatican and attending meetings several times a week at San Geronimo [i.e., the Istituto di St. Jeronimos, of which Dragonovic was in charge.]"20 Agent Mudd went on to name ten major Ustachi leaders then in Dragonovic's keeping, several of whom had appeared on Allied lists of war crimes suspects. Despite Mudd's reports, however, the CIC did not arrest any of the Ustachis in Dragonovic's care, nor did it report where they were hiding to the United Nations War Crimes Commission or the Yugoslav government.

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Considerable evidence suggests that the CIA assumed control of Dragonovic the "known and recorded . . . Fascist, war criminal, etc.," in Agent Lyon's phrase in mid - 1951, then maintained that relationship for the remainder of the decade. The Justice Department strongly disputes this theory, however, in its report on Barbie. It argues that "the CIA stated ..... that it had no records of such an operation" involving Dragonovic and further notes that CIA officers familiar with the ratline told Justice that the agency "never had any connection with it."

But another look at the evidence made available through the department's own investigation led many people to a different conclusion concerning the CIA's role in Dragonovic's ratline. First of all, Agent John M. Hobbins of the 430th CIC noted in early 1951 that the CIC's budget for running escaping agents through the ratlines was scheduled to expire on June31, 1951. Hobbins should have known, for he was the 430th's specialist in "Informant Disposal" during the early 1950s. The CIA ''will assume responsibility for evacuations," according to an order from the head of army intelligence in Austria, Hobbins reported, and the "end of the [CIC] budget and the assumption of control by CIA will roughly coincide."42

CIC Agent George Neagoy, the army's principal officer in charge of the ratline after Agent Lyon's departure, transferred from the CIC to the CIA in 1951, at exactly the time the army's ratline "franchise" was to be transferred to the agency. At a minimum, Neagoy brought the CIA a solid working knowledge of the techniques and contacts of Dragonovic's ratline. It is certain that 'some' U.S. intelligence group continued to use Dragonovic as a contract agent throughout the 1950s, though not necessarily for smuggling fugitives. The Croatian priest's CIC dossier, for example, leaves no doubt that he was of "operational interest to USI," as the declassified record puts it,43 at least as late as October 1960. "USI" in this context signifies "U.S. intelligence." The meaning of this phrase is unmistakable: Dragonovic was at the time a contract agent for an unnamed U.S. intelligence agency, most likely the CIA.

Officially Dragonovic remained active in Vatican refugee relief work for much of the 1950s, then gradually drifted into high-profile

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political activism in the Croatian exile community abroad. He maintained his sympathy for the Ustachis and contributed to publications edited by Ante Bonifacic, an emigre nationalist politician who once served as ''director of cultural relations" during the Ustachi regime. Dragonovic also maintained a profitable sideline business of currency smuggling in Italy and Yugoslavia, at least according to testimony in a 1960 trial in which three Yugoslavian [Roman] Catholic priests confessed to having been used by him for that purpose. They went to prison, but Dragonovic remained free in Rome.

Dragonovic's death was of a piece with his life. The Croatian emigre press proclaimed with alarm in 1967 that the aging priest had been kidnapped by Tito's undercover agents and returned to Yugoslavia. There he was said to have been tortured, tried for war crimes, and executed. This version of events has found its way into a number of otherwise reliable studies of Eastern European affairs. In reality, however, Dragonovic returned to Yugoslavia voluntarily in 1967, then lived out the remainder of his days in Zagreb, the capital of the Croatian state inside that country. There was no trial for war crimes, no execution, and not even any criticism or harassment in the Yugoslavian press. He died peacefully in July 1983,44 all of which raises a reasonable doubt about whether Monsignor Dragonovic war criminal, Ustachi smuggler, and career contract agent for U.S. intelligence might have been working for the Yugoslav secret service for quite some time prior to his return to his homeland.

Dragonovic's tangled life is an indication of the complexities and contradictions that are an inevitable part of the intelligence business. It is obvious that neither the United States nor any other power limits its operational intelligence contacts to only those persons who might be considered "respectable'' at home. But Dragonovic's activities also make it clear that there can be a heavy price to pay for clandestine sponsorship of individuals and groups that have political agendas quite different from those of the United States.

The Ustachi criminals saved by Dragonovic did not simply disappear once had they reached the New World. Instead, they established new Ustachi cells in Croatian communities abroad, in some cases headed by the same men who had once led murder squads inside wartime Croatia. The survival of this extremist sect remains one of the more violent examples of the blowback created by the postwar Nazi utilization programs. Ustachis are active to this day in the United States, Australia, and several other countries, and

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according to reports of FBI investigations, some cells have been responsible for an airplane hijacking, bombings, extortion, numerous murders, and the assassination of several Yugoslavian diplomats over the course of the last two decades.45

No doubt the CIC did not anticipate that its support of Dragonovic's ratline would one day contribute, even indirectly, to the creation of terrorist groups inside the United States or other Western countries. But the secrecy that has up to now surrounded U.S. Nazi operations such as the Dragonovic ratline drastically restricted the American public's and even the intelligence agencies' own ability to learn from this mistake. Rather than draw back from using Nazis as agents in the wake of the Barbie debacle, the practice expanded and became more flagrant.