Career Offered Bloch Ideal Cover : Did ‘Perfect Diplomat’ Become ‘Perfect Spy’?

VIENNA —  On the evening of June 29, 1987, a few days before he ended a seven-year tour as a U.S. diplomat in Austria, Felix S. Bloch attended a last performance at the historic Vienna State Opera--”a personal way of saying goodby to Vienna,” one of his friends recalled.

The opera was Beethoven’s “Fidelio,” the romantic tale of a man unjustly jailed by a tyrant--and the faithful wife who disguises herself as a boy to free him. As Bloch, usually the most self-controlled of men, watched the final act from the scarlet seats of the great opera house, his friend, Andreas Unterberger, saw tears well up in the diplomat’s eyes.

“I remember it clearly, because it was so moving,” said Unterberger, foreign editor of Die Presse, Vienna’s leading newspaper.

Hinted at Emotional Side

Bloch, he noted, is a man of discipline and understatement. His sudden tears at the finale of an opera seemed to hint at a hidden emotional side, at passions others could not see.

But a Soviet spy? Unterberger--like others who have known Bloch during his 30-year State Department career--is baffled by the thought.

“If Felix Bloch has really been in Moscow’s service all these years . . . his camouflage was perfect,” the editor wrote in a long essay on the case last week. “But one thing is certain: Only a man who is perfect in his official career can also be a perfect spy.”

Until a few weeks ago, Felix Bloch’s career in the U.S. diplomatic service did, indeed, appear perfect. A member of the elite Senior Foreign Service, a veteran of four years in the plum job of deputy chief of the U.S. Embassy in Vienna, then director of the State Department office dealing with the European Community, Bloch, 54, had won several departmental awards and could consider himself in line for nomination as an ambassador.

“He was in the middle of a reasonably promising career,” said George S. Vest, who, as director general of the Foreign Service, met Bloch. “He was a bit stiff, perhaps, a bit conventional, not at all charismatic or warm . . . (but) the man got high marks.”

Then the French intelligence service, acting on a tip, videotaped two men exchanging a briefcase on a Paris street. The man who took the briefcase was known as an officer of the KGB, the Soviet intelligence agency. The man who gave it to him, officials say, was Bloch.

For several weeks, the FBI followed Bloch discreetly, hoping to catch him in an act that would harden a case of criminal espionage--and reveal whether he was in clandestine contact with other U.S. officials as well.

But the surveillance was unsuccessful. At some point, officials say, Bloch received a telephone warning from his Soviet handler: “A bad virus is going around, and we believe you are infected.”

Confronted With Evidence

On June 22, FBI and State Department officials confronted Bloch with their evidence, apparently hoping to squeeze out a full confession. But Bloch refused to cooperate.

The State Department suspended him from his job, though with pay, and barred him from the building without a security escort. His secretary, who had cleaned out his desk, brought his personal effects down to the lobby in a cardboard box. His nameplate was wrenched from his office door, leaving a gaping hole.

A month later, news of the investigation leaked out, and Bloch was stigmatized publicly as the most highly placed American ever to spy for the Soviet Union--perhaps. U.S. investigators said he may have passed secrets to the Kremlin for as long as 14 years.

There was no immediate arrest, no quick indictment--the evidence, officials admitted, was still insufficient. But Bloch became the focus of a bizarre, unprecedented form of investigation in public, shadowed openly by both FBI and KGB agents and television camera crews as well.

Under the glare of the television lights, Bloch’s career and personality began to appear a little less perfect--as anyone’s might. He had clashed with the two ambassadors for whom he worked in Vienna; in the eyes of some officials, he was sometimes too pro-Austrian, too ready to soften U.S. policies to avoid offending his hosts; to some of his subordinates, he was too rigid, too much a martinet. His friends said he had seemed to have a perfect marriage--but Austrian officials said they had also found another, younger woman.

But none of that explained what might have pushed a man into betraying his country. “It doesn’t make any sense,” one of his State Department colleagues said. “There seems to be a piece missing.”

The key to the mystery, investigators believe, lies somewhere in Bloch’s life. But like any good spy story, this one does not yield its secret easily.

Felix Stephen Bloch was born on July 19, 1935, in Vienna, the son of a prosperous Austrian businessman. The Bloch family was part of the upper crust of Austria’s thriving Jewish community, according to Paul Grosz, president of Vienna’s Jewish Cultural Organization. But when Nazi Germany absorbed Austria in 1938, centuries of Jewish culture and citizenship suddenly counted for nothing. Of an estimated 190,000 Austrian Jews, about 126,000 fled--and all but a few of the remaining 64,000 would die.

Felix Bloch was among the lucky ones. When he was 3, the family--his father, mother and his twin sister--escaped from Austria, making their way first to China, then to New York City. With savings and expertise, his father built a successful paper-goods business in New York. The young Bloch grew up in a comfortable, middle-class American home, speaking only a little German and quickly losing any trace of his parents’ rich Viennese accent. And, according to a published interview with his daughter, he converted to Presbyterianism.

Back in Austria, many of the Blochs’ relatives were among those who died in the Nazi death camps. But later on, when he returned to Vienna, Bloch betrayed nothing of his family history. One of his closest Austrian friends, theater director Franz Schafranek, only learned this month--from the newspapers--that Bloch had been born in Austria. “It was something he never discussed,” Schafranek said.

In 1952, the 17-year-old Bloch took the train to Philadelphia to enter the University of Pennsylvania’s Wharton School of Finance. He was something of an outsider; in those days, social life revolved around fraternities, and anti-Semitism could still be a bar to membership. Bloch threw himself into his studies, briefly joined the Young Democrats and made his mark as a leader of the Boys Club, a service organization formed to help underprivileged children.

Bloch graduated from Penn in 1957 and married Lucille Stephenson, whom he had met as a student. He attended Johns Hopkins University’s international studies center in Bologna, Italy, for a year, and joined the State Department in Washington in 1958. After assignments in Duesseldorf, West Germany, and Caracas, Venezuela, he was tapped for his economics expertise and sent to Berkeley for a year of graduate study at the University of California.

‘Politically, Middle-Road’

“He was very scholarly,” said Prof. John M. Letiche, who taught Bloch and four other foreign service officers during a yearlong seminar. “Politically, he was middle-road--if anything, conservative in the best sense of the word. At no time did he express Marxist views, and certainly never any pro-Soviet views.”

But Letiche also described Bloch--as do others--as somewhat colorless in his dogged competence. “I suppose that demons can get into people,” he said, “but I didn’t see any of that.”

After Berkeley, the Blochs and their two young daughters returned to Washington for four years at the State Department. Then, in 1970, they left for a five-year assignment in West Berlin--the posting that U.S. investigators suspect may have been the secret turning point in Bloch’s life.

In the 1970s, Berlin was still a cockpit of the Cold War--a city where Soviet and Western intelligence officers ran operations against each other at close quarters, where road links to West Germany were periodically blocked as a sign of Moscow’s displeasures, where would-be escapees from the East were cut down with gunfire along the ugly concrete Wall.

American diplomats in Berlin were routinely targeted by Soviet and East German intelligence agents for recruitment as potential spies. Even when the United States opened its first mission in Communist East Berlin in 1974 as a product of the Richard M. Nixon Administration’s East-West detente, the pressure stayed on. If anything, the 10 diplomats in the fledgling mission became almost irresistible targets for the KGB--Bloch among them.

“The Soviets controlled the environment in East Berlin,” recalled John J. Tuohey, who served in the city. “They could come at you from almost any angle, any time they wanted.”

“East Bloc agencies run on anybody they can,” said another old Berlin hand who served with Bloch. “I had some very crude approaches. I remember a cocktail party in West Berlin where a Soviet diplomat walked up, struck up a conversation and began asking me about the state of my finances. Others would ask if I preferred men or women.”

One U.S. diplomat who served in both West and East Berlin, Edward Alexander, was a target of persistent Soviet recruitment attempts over a period of 15 years. “They wouldn’t go away,” recalled Alexander, now retired. “They offered me money, they offered me just about anything you can imagine.”

Instructed to Play Along

Alexander, like Bloch and every other U.S. diplomat assigned to East Berlin, had been given briefings on how to deal with such approaches. Alexander reported every contact to his superiors and, in accordance with their instructions, played along until he was actually asked to spy. But the system, several officials noted, depends on the voluntary compliance of the diplomats involved; embassy officers aren’t tailed or routinely grilled on their Soviet Bloc contacts.

Was Bloch snared by the KGB in East Germany? The Soviets had plenty of opportunities to try. His job as economic and commercial counselor meant he was in daily contact with East German officials, and required him to spend considerable time away from home at Leipzig, site of the annual Leipzig Trade Fair, Alexander noted. Bloch spoke excellent German and was enthusiastic about making contacts among East Berlin’s officialdom, Tuohey added. If the KGB wanted to attempt a recruitment with its traditional lures--sex, money and blackmail--it could easily have done so.

Bloch’s colleagues are unanimous in saying that they know of no evidence that even hints that he was compromised in Berlin. “I never saw anything that would go in that direction at all,” Tuohey said. Still, as a hypothetical possibility, they say they can’t dismiss it.

“It is astonishing,” Alexander said. “For all the John Le Carre stuff, there’s still a grain of truth in it. The Soviets are a very patient bunch of guys. If you think about it, there really must be ‘sleepers’ all over the place.”

In 1980, after two years in Singapore and two years in the State Department inspector general’s office, Bloch, by then 45, arrived back in Vienna--his first long stay in Austria since fleeing as a child. It would be his most successful posting--and, at the same time, his stormiest.

He began as the embassy’s economics counselor; he had held similar posts in Berlin and Singapore. But in 1983, when a new ambassador arrived, Bloch’s career took a big step upward.

The new envoy was Helene von Damm, 45, whose rags-to-riches story--a poor Austrian farm girl who emigrated to America, became Ronald Reagan’s personal secretary and returned home as the U.S. ambassador--captivated Vienna. Von Damm, a diplomatic neophyte, knew that she needed a capable foreign service professional as her deputy. She interviewed six candidates and chose Bloch. It was an unconventional decision--political officers, not economic officers, generally have the inside track--but something about the well-dressed, reserved Bloch impressed Von Damm immediately.

“I chose him because I thought he was very competent and very hard working,” she said in a telephone interview from Salzburg, Austria. “And he does speak beautiful German.”

By all accounts, Bloch was a highly successful deputy in traditional terms. He was extraordinarily well connected (Alois Mock, Austria’s foreign minister, had been one of his classmates at Johns Hopkins in 1958), he developed a visible enthusiasm for all things Austrian and, after 25 years in the Foreign Service, he knew the ropes of diplomacy.

Won ‘High Marks’

“Mrs. Von Damm gave him high marks, and the European bureau (at the State Department) gave him high marks,” the State Department’s Vest recalled.

For the following four years, serving two inexperienced ambassadors, Bloch was the most influential American in Austria. “When Austrians wanted something done,” said one Vienna official, “they ignored the ambassadors and went to Bloch.”

It was a happy time for the Bloch family as well. They lived in the deputy’s official house, a handsome three-story mansion owned by the embassy. They made dozens of Austrian friends. They became devotees of the English Theater, where their younger daughter, Andrea, an aspiring actress, would make her stage debut.

Over time, however, the relationship between the ambassador and her deputy soured. “Felix was a fine foreign service officer, but he could be heavy handed,” Von Damm said. “He was not popular among the staff. . . . The women who worked for him were often in tears. He was cynical, sarcastic, and they would come to me. . . . I often had to smooth things over.”

Another former diplomat at the Vienna embassy confirmed that Bloch could be difficult to work with. “He was professionally quite astute . . . but he was a very rigid man,” he said. “He once wanted to file a negative efficiency report on a junior officer, something that would virtually destroy (the officer’s) career, because he didn’t like the man’s appearance . . . essentially, because the man was fat.”

Von Damm said she also resented Bloch’s tendency to take over as much of the top job in the embassy as he could. “He tried to assume the functions of the ambassador,” she said.

Equally annoying, she charged, Bloch tried to usurp her role in Viennese society as well as Viennese diplomacy. “He wasn’t just ambitious in his own right; he was ambitious socially,” she said.

‘I’m the No. 1 Man’

(Bloch did seem to be missing at least a touch of sensitivity. In an interview filmed in 1984, sitting primly on a chair with his hands clasped on his lap, he told a reporter: “I am the deputy chief of mission . . . normally the No. 2 man--but, since the ambassador is a lady, I’m the No. 1 man.”)

But Von Damm soon came under pressure to resign--pressure emanating mostly from Nancy Reagan, she said. The ambassador, who was married, had fallen in love with the wealthy owner of Vienna’s famed Hotel Sacher, 37-year-old Peter Guertler. Their clandestine courtship, her subsequent divorce, their wedding (in traditional Austrian costumes at the ski resort of Kitzbuehel) became the talk of the town--and that, she said wryly, was “my mortal sin.”

Von Damm’s successor as ambassador was even more flamboyant. He was Ronald S. Lauder, the 42-year-old son of cosmetics magnate Estee Lauder, a Republican fund-raiser and art collector. Lauder waded enthusiastically into Viennese politics, advising Austrians that they ought to opt for conservative governments and stronger defense--and taking a hard line toward Kurt Waldheim, the Austrian president accused of taking part in Nazi war crimes.

Lauder, with Washington’s approval, refused to attend Waldheim’s inauguration; Bloch represented the United States. And Lauder urged the Reagan Administration to bar the Austrian president from entering the United States, officials said.

Bloch, on the other hand, argued for a more conciliatory stance, warning that placing Waldheim on the “watch list” of persons barred from entry would cause unacceptable damage to U.S.-Austrian relations. The Administration put Waldheim on the watch list on April 27, 1987.

Foreign Service Tradition

Officials said Bloch did not seem to be defending Waldheim as much as he was carrying a traditional kind of Foreign Service view--that the embassy’s main job was to keep relations on an even keel.

“Everybody had the impression that Bloch was trying to stop the watch list decision,” said Unterberger, his Austrian friend. “I don’t think that would be in the interest of a Russian spy. The Russians would rather like to see U.S.-Austrian relations deteriorate.

“Lauder went around and told everyone how anti-Semitic this country is,” Unterberger added. “Bloch told us this country is no more anti-Semitic than any other.

“If he was a spy, the only reason I can see was frustration over the incompetent ambassadors he had in front of him,” he added.

To Austrian officials, dealing with Bloch was preferable, by far, to dealing with either Von Damm or Lauder. “From an intellectual point of view, you couldn’t talk to these people,” a senior Foreign Ministry official said. “The ambassadors were not very important, so the No. 2 became very important. . . . (Bloch) had all the access he wanted. That’s why Lauder was a little bit jealous, I think.”

Accounts Differ Widely

In 1987, a year after Lauder arrived, Bloch left Vienna. So heated are the issues surrounding their relationship that accounts of the decision differ wildly.

“I fired him,” said Lauder, who is seeking the Republican nomination to run for mayor of New York. “I wanted to get rid of him because of insubordination. . . . Felix Bloch went outside of channels all the time.”

Others dispute that. “Lauder tried to get him to stay on,” a former diplomat at the embassy claimed.

George Vest, who was in the middle of the brouhaha, says neither version is true. “Bloch had been there a long time, longer than usual, and it was time for him to leave,” he said. “. . . Lauder wanted to get rid of him, that’s true. But the time had come for him to move anyway. The guy did not get fired in disgrace.”

In Vienna, Bloch had frequently briefed American reporters on Austrian politics and U.S. policy. But there was one issue he would not touch: Vienna’s reputation as a spy capital, and U.S. assessments of what the KGB was up to.

“It was a subject,” one reporter recalled him saying, “on which he had no information.”

Bloch’s assignment after his return from Vienna reflected anything but disgrace: He was sent to the Foreign Service Institute’s Senior Seminar, an elite training program for officials destined for top posts.

The program is designed to give overseas officers a breather at a key point in their careers and to reorient them to American life and thought.

James Bullington, a former U.S. ambassador to Burundi, was director of the seminar when Bloch attended. He remembered Bloch’s class of 28 undertaking a broad range of field trips--staying with farm families in Winona, Minn., riding in squad cars with the Detroit police and sailing with a Coast Guard drug interdiction patrol off Miami.

“He was about average in that class,” Bullington said. “But this is a pretty select group to begin with. We call them ‘water walkers.’ He was not at the top of the group but somewhere in the broad middle.”

But Bloch did face one problem: his age. At 52, Bullington said, “Felix was a little bit older than the average of the class, had been in the Foreign Service longer than most.”

Next Job Was Crucial

In career terms, Bloch’s next job was crucial, as a step up or a step down. The assignment he landed was something of a disappointment, friends said. He was named director of the State Department’s Office of Regional Political Economic Affairs for Europe, a senior job--but for a 52-year-old veteran, a sign that his upward momentum had stopped.

In material terms, Bloch should have been comfortable. He was at the top of the salary scale in the Foreign Service, around the $80,000 mark, colleagues said. The financial disclosure forms he filed with the State Department showed investments in mutual funds worth at least $478,000, perhaps as much as $1.3 million. (The forms specify ranges within which assets fall, not their exact amounts). Bloch and his wife lived in a $370,000 condominium in Washington’s fashionable Kalorama neighborhood. His wife was working as executive director of the American-Austrian Foundation; his two daughters were pursuing careers of their own.

But he did not seem happy, friends and colleagues said. His old classmate, Austrian Foreign Minister Mock, said Bloch was disappointed that his prospects for being named an ambassador seemed slim.

“As an overambitious career diplomat,” Mock told a Vienna newspaper, “he always suffered that he had to serve under political appointees and never got to be an ambassador himself.”

“Felix was never going to be an ambassador,” one of his State Department colleagues said sadly. “If he thought he was, he just set himself up for a fall.”

He ‘Plodded Along’

As usual with Bloch, however, no one could remember any of these emotions actually showing. Instead, they said, he “plodded along,” in one colleague’s words, efficiently pulling together papers for senior officials on the European Community’s drive for economic integration by 1992.

And, investigators charged, working for the Soviet Union on the side.

He went to Europe twice in May on State Department business, first to Paris to conduct a seminar on economic issues, then, at the end of the month, to Brussels to help prepare for a meeting between President Bush and European Community officials, and--immediately after that--again to Paris.

It was on one of those trips, apparently, that he allegedly passed the briefcase to the Soviet agent.

“I’ve known him for years,” a senior State Department official said, “and I’m still as baffled as when I first heard about it. What is it that leads to something like that? What demons are driving him?”

McManus reported from Washington and Tempest from Vienna. Times staff writers John Broder and David Lauter in Washington, John Goldman in New York, Ronald J. Ostrow in San Francisco, Michael Ybarra in Philadelphia and Douglas Jehl in Vienna also contributed to this story.