Austrian financier Jan Marsalek disappeared on June 18, the same day the 40-year old was fired from his position as chief operating officer of Wirecard, a German financial services provider. A €1.9 billion hole had been discovered in Wirecard’s accounts by an independent auditor and Marsalek had been fingered as the one responsible for it.
Investigative journalists affiliated with Bellingcat, a digital forensic website, suggested that Marsalek fled from Germany to Belarus via Estonia, and then had been taken to Russia by the GRU, Russia’s military intelligence service. Further reporting by the Financial Times revealed that Marsalek appeared to have close links to the GRU, which has been very busy of late.
Among the classified materials Marsalek possessed before his escape from Austria were a set of papers related to an investigation by the Organization for the Prohibition of Chemical Weapons (OPCW) into the poisoning of Sergei Skripal. Those documents included the formula for Novichok, the deadly nerve agent used by two GRU assassins in their attempted murder of Skripal, a former GRU officer turned MI6 agent, in Salisbury two years ago. The OPCW was able to trace the origin of the papers Marsalek was carrying—it turned out that they had been leaked to him from the Austrian ministries.
If Marsalek’s Russian connections are true, he was simply the latest in a long line of Austrian citizens who, whether by accident or design, became hirelings of Moscow.
In the late 1950s and early 1960s, Hans Adolf Baumgarten (as far as we can tell, a pseudonym) served as an adviser in the foreign affairs department of the office of the Austrian president. Initially, Soviet agents attempted to recruit him “on a material basis,” meaning that they simply offered him money in return for information. They failed; Baumgarten refused to cooperate with the Soviets. They were almost ready to shelve his case, but reconsidered when they realized he’d been misevaluated and approached in the wrong way. Still a potentially important asset to them, they wanted to try a more elaborate scheme.
They discovered that Baumgarten was an anti-Hitler German nationalist who believed that liberal democracy could help West Germany achieve primacy in the world and that Austria should rejoin it to enhance this prospect. That seemed to be a clue for the Soviets, who decided to recruit Baumgarten on behalf of the West German intelligence.
It was here that an otherwise straightforward “false-flag” recruitment effort transformed into a labyrinthine saga of double, and even triple, identities.
‘Adviser’: Survey of the Topic False-Flag Recruitment, is the first in a series of KGB training manuals obtained by Michael, the curator of the Lubyanka Files project, to be told in a compelling autobiographical fashion by the operatives themselves. Published in 1965, and circulated internally for educational use at the Department of Special Discipline I at the Andropov Red Banner Institute, this document offers a rare first-person account of the moods, mindsets and behaviors of Soviet agents in the field as well as their perception of a high-valued Western target they snared. All of this material, still classified in Russia owing to its continued curricular use, is presented publicly here for the first time.
An otherwise straightforward “false-flag” recruitment effort transformed into a labyrinthine saga of double, and even triple, identities.
The value for the historian and the espionage junkie in ‘Adviser’ is less to do with its eponymous victim, the hapless Herr Baumgarten, than it is with his wily and witty recruiter-agent, “Safo,” a man in his mid-fifties who worked for three different spy agencies in an extraordinary lifetime but faithfully served only one.
Safo (a fake codename invented for the manual) was on the verge of retirement in 1960. Born into a family of Volga Germans, he’d been recruited by Soviet military intelligence, in which capacity he worked as a pro-communist journalist during the Soviet-Finnish war in 1939. He was soon transferred to the civilian NKVD (the prior incarnation of the KGB) in 1940, formally trained, and tasked with infiltrating the spy networks of the Third Reich, this time posing as a pro-fascist correspondent.
Safo performed his duties only too well because he was subsequently recruited by the Abwehr, Hitler’s military intelligence service, in which capacity he was dispatched behind enemy lines following Operation Barbarossa, Germany’s ill-fated invasion of the Soviet Union. He was posted undercover in besieged Stalingrad, where, we are told, working ostensibly for the Nazis, he burned their penetration agents on behalf of the Kremlin while sabotaging Soviet military infrastructure.
After the Second World War, Safo became a legalized Austrian with the help of his Soviet handlers. He resumed his journalism cover, this time for a large-circulation, pro-American, anti-Soviet newspaper in Salzburg. He therefore transitioned from a Red to a Brownshirt to Christian Democrat—all within the space of a single decade.
‘Safo,’ a man in his mid-fifties, worked for three different spy agencies in an extraordinary lifetime but faithfully served only one.
Safo again acquitted himself with distinction and it wasn’t long before West Germany’s Federal Intelligence Service (BND) uncovered his earlier role in the Abwehr. Given that the founder of the BND, Gen. Reinhard Gehlen, was himself once a member of the Abwehr, this only counted as a qualification for a recruitment. And so, as with any number of former servants of the Third Reich—and quite a few secret servants of Stalin and Khrushchev—Safo joined the BND, making him very well situated to catch a big fish in the Austrian chancellery.
He started by arranging a seemingly chance encounter with Baumgartner and his wife at a swank ski resort in the Tyrol Alps using two unwitting accomplices as bait: a none-too-bright Austrian journalist named “Krantzl” (or so-called in the manual) and Krantzl’s obsequious girlfriend. Krantzl had previously worked in the Austrian chancellery and knew Baumgarten slightly and so who better to facilitate an introduction?
Safo’s amusing digression about his travel companions more than makes up for the flashes of turgid homo sovieticus-speak in this manual:
“By nature, [Krantzl] was quite direct, a dimwit, and in the presence of his girlfriend capable of not paying attention to anything except her. Thus, he was quite suitable for the role which I assigned him in our plans. Of course, I did not breathe a word to him about the fact that Adviser was vacationing in the Alps. I needed Krantzl to see Adviser first in Arlberg and express a wish to introduce me to him. And I had no doubts that Krantzl would not refrain from such a proposal… She clung to Krantzl, adored him, and it seemed could think of nothing in the world without this guileless fat man. She was—I’m sorry—a hausfrau by nature. I am certain then when they get married, Gisela will become a real housewife, will bear Krantzl a bunch of children and will not be interested in anything accept their offspring, the kitchen and her husband’s paycheck.”
Safo recounts in similar vivid detail the scenery and setting of his high-altitude rendezvous with destiny; also the frustrations of a well-laid plan not proceeding as such, namely his belated realization that he had failed to confirm that this was indeed the same hotel Baumgarten was staying in. A stunning lapse in tradecraft for an otherwise meticulous agent.
What already seemed a complex game of cat-and-mouse grew into an even more complex one when the BND inconveniently instructed Safo to recruit Baumgarten to work on its behalf.
Luckily for Safo, it was. Baumgarten turned up and expressed admiration for the KGB agent’s German reportage, which dealt primarily with economic affairs in Eastern Europe. Safo responded by evidently demonstrating a little too obviously his admiration for Baumgarten’s attractive wife. An acquaintanceship was formed and solidified after recruiter convinced mark that his intentions toward his better half were nothing short of gentlemanly. Acquaintanceship then evolved into friendship and friendship into involuntary collaboration as Safo proceeded to his next phase of target development: compromising Baumgarten by getting him to pass on privileged information.
Safo published this information in the Rheinischer Merkur, a conservative West German newspaper to which he was attached, then offered Baumgarten an “honorarium” for his help as an anonymous but well-informed source. After an initial protest, Baumgarten accepted the modest fee. The first hook of recruitment was therefore in place.
At this point, what already seemed a complex game of cat-and-mouse grew into an even more complex one when the BND inconveniently instructed Safo to recruit Baumgarten to work on its behalf. In order to save the KGB’s brainchild, Safo secretly recorded several meetings with Baumgarten; at one he successfully recruited him as a BND agent. Or so Baumgarten was led to believe. Safo carefully edited the recordings and re-assembled Baumgarten’s answers and statements so as to make the resulting tape seem as if he ardently refused to cooperate with West Germany. Safo then sent this edited recording to Gen. Gehlen as proof that he had, regrettably, failed in his mission.
A further wrinkle with tricking Baumgarten into thinking he spied for West Germany was that the Soviets could only plausibly ask him to deliver material of potential interest to Bonn—specifically, information on Austria’s relations with the Eastern Bloc nations, which Moscow scarcely needed, rather than on Austria’s relations with the West, which Moscow most wanted. So it became necessary to somehow let Baumgarten know which service he was really working for while agreeing to have him continue to do so.
KGB ‘Special Discipline’ manuals, such as this one, are considered highly relevant at the FSB Academy for studying the theory and practice of tradecraft.
Safo and his KGB bosses decided the only way to reveal their true identities without blowing the entire operation was to slowly and subtly change Baumgarten’s opinion of his beloved Fatherland such that he might be persuaded to honestly help the Motherland instead.
Over the course of several months, Safo put on a show: choreographed descents into black moods and pseudo-drunken bouts of self-recrimination for serving the wrong master. He began criticizing Bonn for being little more than a satrapy of American capital and American military imperialism, and for integrating former Nazis (such as himself, although he didn’t dare mention that item on his c.v.) and clearing the way for the revival of “fascism” in West Germany. This, it was determined, would appeal to Baumgarten’s innate loathing for Hiterlism as he’d experienced it from his own involuntary service in the German army.
As a psychological influence operation it didn’t quite have the intended effect of changing Baumgarten’s mind completely. But it whittled away his confidence. He became less and less resistant to Safo’s criticism of their ostensible side of the Iron Curtain.
In the end, the KGB used this phantom threat of recrudescent Nazism, as well as evidence of Baumgarten’s treason in Austria, to force him to open connivance with the Soviet Union. Safo and his commanding officers played the deceptively edited tapes of Baumgarten back to him. The game was over.
He came along, bitterly and reluctantly at first, having no choice given the kompromat on him. Perhaps as sop to his own battered conscience, Baumgarten allowed that he was open to learning more about the Soviet “worldview.” He remained a dutiful servant of the Kremlin as of the time of the manual’s publication. An ambivalent footnote suggests his name, too, might have been altered for the sake of security.
It’s unknown if he was ever caught by Austrian counterintelligence or simply retired from active KGB work sometime after 1965, as so many spies did.
Safo, meanwhile, was smuggled out of Austria and back to Russia via an intricate exfiltration plan via Canada. He got to enjoy his long-awaited retirement and no doubt was awarded the state honors for his remarkable and lengthy career, which ended on a high note.
Given the use of false names throughout, it is not possible to corroborate or debunk any of the claims made in this manual. But it remains unlikely that the “Adviser” operation was a fabrication since it was never meant for public consumption and only ever described to educate future generations of spies. A former officer of the Federal Security Service, or FSB—one of two successor agencies to the KGB—said this manual is genuine and still in curricular use at the academy where he was trained. Jan Neuman defected to the United States with his wife, Victorya, a fellow FSB officer; the two then became informants for the FBI and CIA. Neuman confirmed to one of us that despite their age, KGB “Special Discipline” manuals, such as this one, are considered highly relevant at the FSB Academy for studying the theory and practice of tradecraft. “If you’ve already written the Bible,” Neuman said, “why rewrite it?”
Austria has long been Europe’s spook central. Kim Philby, the primus inter pares of the Cambridge Five, first began his working for Soviet intelligence as a courier for the Comintern in Vienna in the early 1930s. It was there that he met and was recruited by Teodor Maly, the legendary Hungarian priest turned spy for the NKVD—the precursor to the KGB—who sent Philby back to England to infiltrate British government.
Years later, on New Year’s Day, 1953, a short, 30-year-old Russian approached the American vice-consul in Vienna’s International Sector and asked for directions to the American Commission for Austria. He handed the vice-consul a letter offering “certain services” to Washington. And so Lt. Col. Pyotr Popov became the first GRU officer ever to be recruited by the newly created CIA as a defector-in-place.
The Baumgarten operation took place not long afterward. Austria gained independence from Germany, which had annexed it in 1938, at the end of the Second World War but it wasn’t a true independence. The country remained occupied by the American, British, French, and Soviet forces until 1955—around the time of Safo’s joining the BND. That year, foreign occupation forces finally agreed to withdraw from the country and allow it to re-establish a free, democratic and sovereign state. But the Soviets made a provision for their withdrawal: Austria had to remain neutral, which, against the background of West Germany’s accession to NATO earlier that year, essentially implied that the country would not join this military alliance.
Austria’s neutral status was fixed in the country’s constitution and made Austria dependent on the Soviet/Russian relations with NATO in its own dealings with the Alliance. For example, Austria joined NATO’s Partnership for Peace in 1995, but that took place only after the majority of post-Soviet republics, including Russia, joined the same program in 1994. But perhaps more importantly, “permanent neutrality” was internalized by the Austrian society: neutralism became an inherent national trait of Austrians, the majority of whom believe that their country should remain a bridge between the West and East.
Economic links, especially those in the energy and banking sectors, are also an important factor determining Austria’s relations with Russia. In 1968, Austria became the first Western nation that started importing Soviet gas, and this agreement made Austria a key country in the European natural gas network even after the fall of the Soviet Union. In 2018, the Russian gas giant Gazprom signed an agreement with the Austrian integrated oil and gas company OMV to extend the existing contract for Russian gas supplies until 2040. Moreover, Russian economic and business leadership enjoys mutually beneficial and high-profile relations with the Austrian bank Raiffeisen Bank International, the subsidiary of which, namely ZAO Raiffeisenbank, is one of Russia’s major banks. And in recent years, Austria—in league with Germany—has been most actively lobbying for the building of Nord Stream 2, yet another gas pipeline delivering Russian natural gas to Europe and, consequently, deepening Europe’s energy dependence on Russia.
But apart from Austria’s neutrality and its leaders’ unwearied endeavors to maintain and intensify economic relations with Russia, Vienna’s lack of determination in putting a bridle on Moscow’s disruptive actions has a third source: historical infiltration of Austria’s state institutions by Russian agents, spies and informants such as Baumgarten and, more recently, it appears, Marsalek. And they’ve not simply betrayed Austrian national interests for material or ideological reasons or for fear of blackmail; they have contributed to the emergence of a political culture that is highly tolerant to Russian misbehavior on many levels.
Austria was one of the very few Western countries that declined to expel any Russian diplomats as part of the coordinated Western response to the GRU’s poisoning of Skripal in 2018.
Chancellor Sebastian Kurz called upon Vladimir Putin to give an explanation, saying that espionage against Austria was unacceptable, while Austrian Foreign Affairs Minister Karin Kneissl cancelled her planned trip to Moscow. But both Kurz and Kneissl seemed to be the bad cop in that situation—they needed to show Austria’s assertiveness in dealing with Russia after the damage the Austrian leadership had done to its reputation among the Western allies earlier that year. The good cop was Austrian President Alexander Van der Bellen who called not to dramatize the espionage case, adding that it would not “seriously tarnish our relationship with the Russian government in the long run.”
There’s little fear of that happening.
Putin twice visited Austria since the nerve agent attack in the U.K. The second visit was a private one: the Russian president attended Kneissl’s wedding, and even had a chance to dance with the happy bride. Following Putin’s informal visit to Austria, former head of Germany’s Federal Intelligence Service August Hanning said that it was not safe for NATO to share secrets with Vienna. The following year, the Austrian newspaper Der Standardreported that British and Dutch intelligence services had “almost completely cut off contact with Vienna” because of the Russian connections of the ruling Freedom Party that controlled, at that time, the ministries of Defense and Internal Affairs.
One wonders how many more Baumgartens there are lurking in those ministries, even today.
The Justice Department tried to seize the email records of four New York Times reporters and imposed a gag order on the newspaper’s executives to keep the matter from going public, a lawyer for the paper said late Friday. David McCraw said he was finally free to sound the alarm about the “stunning” situation after a federal court lifted a gag order that had been in place since March 3 preventing him and other executives from telling the newspaper’s leadership about the government’s secret battle to identify the reporters’ sources. The hunt for sources is said to have begun in the final days of the Trump administration, but it continued even after President Joe Biden took over, according to the Times.
The Justice Department had demanded that Google, which handles the newspaper’s email system, turn over email logs, but the company refused. “Clearly, Google did the right thing, but it should never have come to this,” executive editor Dean Baquet said. “The Justice Department relentlessly pursued the identity of sources for coverage that was clearly in the public interest in the final 15 days of the Trump administration. And the Biden administration continued to pursue it. As I said before, it profoundly undermines press freedom.” The news follows revelations that Trump’s DOJ obtained months worth of phone records of reporters at The New York Times, as well as communications of reporters at The Washington Post and CNN.
This post is long overdue. Let’s get it over with.
🛑 Hey! If you write a comment about this article online,
disclose your stake in cryptocurrency. I will explain why later in this post.
For my part, I held <$10,000 USD worth of Bitcoin prior to 2016, plus small
amounts of altcoins. I made a modest profit on my holdings. Today my stake in
all cryptocurrency is $0.
Starting on May 1st, users of sourcehut’s CI service will be required to be on a
paid account, a change which will affect about half of all builds.sr.ht
users.1 Over the past several months, everyone in the industry who provides
any kind of free CPU resources has been dealing with a massive outbreak of abuse
for cryptocurrency mining. The industry has been setting up informal working
groups to pool knowledge of mitigations, communicate when our platforms are
being leveraged against one another, and cumulatively wasting thousands of hours
of engineering time implementing measures to deal with this abuse, and
responding as attackers find new ways to circumvent them.
Cryptocurrency has invented an entirely new category of internet abuse. CI
services like mine are not alone in this struggle: JavaScript miners, botnets,
and all kinds of other illicit cycles are being spent solving pointless math
problems to make money for bad actors. Some might argue that abuse is inevitable
for anyone who provides a public service — but prior to cryptocurrency,
what kind of abuse would a CI platform endure? Email spam? Block port 25.
Someone might try to host their website on ephemeral VMs with dynamic DNS or
something, I dunno. Someone found a way of monetizing stolen CPU cycles
directly, so everyone who offered free CPU cycles for legitimate use-cases is
now unable to provide those services. If not for cryptocurrency, these services
would still be available.
Don’t make the mistake of thinking that these are a bunch of script kiddies.
There are large, talented teams of engineers across several organizations
working together to combat this abuse, and they’re losing. A small sample of
tactics I’ve seen or heard of include:
Using CPU limiters to manipulate monitoring tools.
Installing crypto miners into the build systems for free software projects so
that the builds appear legitimate.
Using password dumps to steal login credentials for legitimate users and then
leveraging their accounts for mining.
I would give more examples, but secrecy is a necessary part of defending against
this — which really sucks for an organization that otherwise strives to be
as open and transparent as sourcehut does.
Cryptocurrency problems are more subtle than outright abuse, too. The integrity
and trust of the entire software industry has sharply declined due to
cryptocurrency. It sets up perverse incentives for new projects, where
developers are no longer trying to convince you to use their software because
it’s good, but because they think that if they can convince you it will make
them rich. I’ve had to develop a special radar for reading product pages now: a
mounting feeling of dread as a promising technology is introduced while I
inevitably arrive at the buried lede: it’s more crypto bullshit. Cryptocurrency
is the multi-level marketing of the tech world. “Hi! How’ve you been? Long time
no see! Oh, I’ve been working on this cool distributed database file store
archive thing. We’re doing an ICO next week.” Then I leave. Any technology which
is not an (alleged) currency and which incorporates blockchain anyway would
always work better without it.
There are hundreds, perhaps thousands, of cryptocurrency scams and ponzi schemes
trussed up to look like some kind of legitimate offering. Even if the project
you’re working on is totally cool and solves all of these problems, there
are 100 other projects pretending to be like yours which are ultimately
concerned with transferring money from their users to their founders. Which
one are investors more likely to invest in? Hint: it’s the one that’s more
profitable. Those promises of “we’re different!” are always hollow anyway.
Remember the DAO? They wanted to avoid social arbitration entirely for
financial contracts, but when the chips are down and their money was walking out
the door, they forked the blockchain.
That’s what cryptocurrency is all about: not novel technology, not empowerment,
but making money. It has failed as an actual currency outside of some
isolated examples of failed national economies. No, cryptocurrency is not a
currency at all: it’s an investment vehicle. A tool for making the rich richer.
And that’s putting it nicely; in reality it has a lot more in common with a
Ponzi scheme than a genuine investment. What “value” does solving fake math
problems actually provide to anyone? It’s all bullshit.
And those few failed economies whose people are desperately using cryptocurrency
to keep the wheel of their fates spinning? Those make for a good headline, but
how about the rural communities whose tax dollars subsidized the power plants
which the miners have flocked to? People who are suffering blackouts
as their power is siphoned into computing SHA-256 as fast as possible while
dumping an entire country worth of CO₂ into the atmosphere?2 No,
cryptocurrency does not help failed states. It exploits them.
Even those in the (allegedly) working economies of the first world have been
impacted by cryptocurrency. The price of consumer GPUs have gone sharply up in
the past few months. And, again, what are these GPUs being used for? Running
SHA-256 in a loop, as fast as possible. Rumor has it that hard drives are up
next.
Maybe your cryptocurrency is different. But look: you’re in really poor company.
When you’re the only honest person in the room, maybe you should be in a
different room. It is impossible to trust you. Every comment online about
cryptocurrency is tainted by the fact that the commenter has probably invested
thousands of dollars into a Ponzi scheme and is depending on your agreement to
make their money back.3 Not to mention that any attempts at reform, like
proof-of-stake, are viciously blocked by those in power (i.e. those with the
money) because of any risk it poses to reduce their bottom line. No, your
blockchain is not different.
Cryptocurrency is one of the worst inventions of the 21st century. I am ashamed
to share an industry with this exploitative grift. It has failed to be a useful
currency, invented a new class of internet abuse, further enriched the rich,
wasted staggering amounts of electricity, hastened climate change, ruined
hundreds of otherwise promising projects, provided a climate for hundreds of
scams to flourish, created shortages and price hikes for consumer hardware, and
injected perverse incentives into technology everywhere. Fuck cryptocurrency.
A personal note
This rant has been a long time coming and is probably one of the most
justified expressions of anger I've written for this blog yet. However, it
will probably be the last one.
I realize that my blog has been a source of a lot of negativity in the past,
and I regret how harsh I've been with some of the projects I've criticised. I
will make my arguments by example going forward: if I think we can do better,
I'll do it better, instead of criticising those who are just earnestly trying
their best.
Thanks for reading 🙂 Let's keep making the software world a better place.
If this is the first you’re hearing of this, a graceful migration is planned: details here↩︎
“But crypto is far from the worst contributor to climate change!” Yeah, but at least the worst offenders provide value to society. See also Whataboutism. ↩︎
This is why I asked you to disclose your stake in your comment upfront. ↩︎
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