Espionage case shows failings of US anti-spy efforts. But will improvements staunch flow of secrets?

The unfolding Conrad spy case points up chronic shortcomings in the United States' ability to counter espionage. Over the weekend the US Army revealed that Clyde Lee Conrad, a former Army sergeant accused of passing secrets to Hungary, was not given a required followup background check in 1983. An Army spokesman said the Defense Department had been behind in its reviews of personnel with security clearance, which are required every five years.

There is no longer a backlog, the spokesman said. But budget constraints have made for a continuing shortage of personnel to conduct checks, and the review process remains inadequate, say former and current intelligence officials and other intelligence specialists.

Since the Walker spy case of 1985, the Defense Department agency in charge of security checks, the Defense Investigative Service, boosted its staff from 1,500 to 2,000 investigators. But in the past year, that number has been cut to 1,740. Next year, the agency faces an $18 million budget cut, or 10 percent of its funds, says spokesman Dale Hartig. Such cuts hurt morale for a team that must conduct some 200,000 investigations a year.

The Conrad case may prove to illustrate another longstanding problem in counterintelligence: coordination among the CIA, FBI, and the Defense Department.

``There were hints early on that there was a problem, and they [the agencies] didn't coordinate,'' says a congressional source familiar with the case who would not be more specific. Though Sergeant Conrad's alleged spying took place on West German soil, the FBI and the US Army are assisting in the probe.

Intelligence officials say the coordination problem has come a long way from the days when FBI director J. Edgar Hoover and CIA director Richard Helms were not even on speaking terms, but they acknowledge that coordination remains a problem. Because of the secretive nature of intelligence work, when information is shared, it tends to happen sparingly.

The officials and experts interviewed were able to cite some positive developments in counterintelligence: More work is going into development of better techniques for screening people. And it is now less possible to get security clearance without a personal interview.

Another positive trend has been that, since the 1985 Walker case, awareness of the possibility of enemy infiltration has been heightened. Subsequent cases - such as that of Jonathan Pollard, convicted of spying for Israel - have been cracked because colleagues reported suspicious behavior.

Counterintelligence is now the FBI's No. 1 mission, a top FBI official told Washington academics last fall.

But overall, the officials and specialists interviewed were not optimistic that the latest case would bring substantial improvements.

``Everybody gets energized when it's on the front burner, but as soon as attention goes away, it returns to the back burner,'' said a congressional aide, reciting a litany of reports, studies, and recommendations put forward in the past few years on how to improve counterintelligence.

Budget constraints, low bureaucratic resolve, and diplomatic concerns all hinder improvement. But the American tradition of respect for civil liberties is perhaps the single most important restraining factor. When President Reagan first took office, an idea to appoint a ``counterintelligence czar'' was squelched because of Orwellian fears for Americans' rights.

Now, counterintelligence ``has never been more important,'' CIA chief William Webster recently told the American Bar Association. ``Over the past three years, we have discovered more penetrations of the US defense and intelligence communities than at any time in our history,'' at a cost to the US ``estimated in the billions of dollars,'' he said.

At the Defense Department, the Walker spy case, in which a US Navy communicator sold data to the Soviets for 16 years, led to cuts in the number of security clearances granted from roughly 4 million to 3 million. But most of those who lost clearance didn't have access to secrets anyway.

Former CIA director Stansfield Turner says that as intelligence work relies increasingly on technology, the number of people who need clearance is necessarily large. In addition, people may be less reluctant to betray a satellite, than another human being.

Analysts say much more attention needs to be paid to lower-level employees who have access to classified information, just the type of people Soviet-bloc recruiters target.

In the latest case, Conrad's job was to guard the safe where secret papers were kept for the 8th Infantry Division at Bad Kreuznach, West Germany. Another as-yet-unnamed American soldier also said to be implicated got involved with Conrad's alleged espionage after he lost his job, according to a congressional source familiar with the case. This second soldier was based in Austria, the source says. Austria has previously been mentioned as the base for the spy Conrad allegedly reported to.

The spy cases exposed in recent years reveal some of the counterintelligence failings of the '70s and early '80s, when counterintelligence capabilties were especially low. American and European officials say Conrad is alleged to have spied for Hungary at least since 1980 and possibly as far back as 1974.

[US investigators now believe Conrad's predecessor also worked for the Hungarian secret service, and that the spy ring may have received NATO information long before Conrad became active, the German newspaper Welt am Sonntag reported Sunday.]