MASTER OF THE GAME

By DOUGLAS WALLER/WASHINGTON

In the business world they keep score by counting their money. In Washington it is the accumulation of power that determines the winners. So it was remarkable last week to see denizens of the capital giving away power, and in large dollops.

First Bill Clinton agreed that his CIA director could have near veto authority over the appointments of intelligence chiefs in the Pentagon and other government agencies. It was even more remarkable to watch the Senate Intelligence Committee trying to ladle out still more power for the CIA chief by proposing that he control the entire $28 billion annual intelligence budget, most of which heretofore was under the control of the Department of Defense. It didn't take a master spy to find out the winner in this game: John Deutch, only the second director of Central Intelligence to hold Cabinet rank, and clearly becoming the most powerful spymaster Washington has ever seen.

This power didn't fall accidentally into the former M.I.T. professor's lap; he has lobbied hard for it. While he mouthed technocratic demurrals before the Senate committee, promising not to be too "intrusive" and humbly noting that "my Cabinet colleagues, Secretaries of Defense...of State, the Attorney General, have concerns about how future directors of Central Intelligence would, over the long term, play a role in this concurrence," it was clearly time for the winner to take all.

Deutch has been DCI for only one year, but rebuilding a CIA crippled by scandal and low morale isn't enough to satisfy his ambitions. His goal is to consolidate personal control over Washington's sprawling intelligence community, which consists of no fewer than 28 separate and often feuding organizations. Last week the President and the Senate gave him a giant boost toward that end. Indeed, Deutch is in the midst of one of the most impressive power grabs ever seen in Washington. At one point during last week's hearing, intelligence chairman Arlen Specter said the committee was "trying its best to strengthen the hand" of the director of Central Intelligence. It was a sweet payoff for Deutch's schmoozing with Specter and other power brokers.

By sheer force of personality, Deutch has become the most well-connected spymaster since Allen Dulles ran the CIA for Dwight Eisenhower (Dulles' brother John Foster Dulles was Secretary of State). Deutch is also well on his way to becoming even more powerful than Ronald Reagan's notoriously influential spy chief, Bill Casey, who was the first director to hold Cabinet rank. When Deutch appeared reluctant to quit as Deputy Defense Secretary for the CIA job, Clinton dialed up the pressure by again upgrading it to a Cabinet post. Unlike Casey, Deutch ostensibly refrains from advocating policy with the President, only offering information. "Well, John, I know that you can't have an opinion or any advice on this," Clinton likes to joke at meetings. "But what do you think?" The President relishes Deutch's company, his intensity, yes, even his advice.

Deutch encourages such admiration by spreading himself thick across the corridors of power. His squash partner is Clinton's Oxford classmate and Deputy Secretary of State Strobe Talbott. Deutch likes playing hardball. William Perry, the Secretary of Defense, is not only Deutch's ex-boss at the Pentagon but also his former business partner. Deutch knows how to make stone-faced Secretary of State Warren Christopher laugh. At the Prime Rib, a tony Washington restaurant, he swaps spy stories with Senator Specter. Says Talbott: "The first words that come to mind when you interact with John: energy, enthusiasm, focus." All that helps shore up support for what Deutch truly wants: a concentration of intelligence-gathering power never possessed by the DCI.

Today the intelligence community employs some 100,000 people operating as a loose guild in agencies that waste billions of dollars in redundant services. Five organizations buy or run spy satellites, while eight process and analyze their photos. In addition to the Pentagon's Defense Intelligence Agency, the Army, Navy, Air Force, Marine Corps and Coast Guard have their own intelligence services. The Energy and Treasury departments, FBI and Drug Enforcement Administration have intelligence units as well.

The job of DCI was established in 1946 so that one person would oversee these unruly organizations. In the decades since, however, no director has had the inclination or clout to rein in these agencies. Deutch is doing just that. Instead of becoming bogged down in CIA business, as past chiefs have, Deutch has left the day-to-day operation of the agency to his executive director, Nora Slatkin, so he can spend most of his time overseeing the rest of the community.

Gregarious and invariably rumpled, Deutch, 57, appears capable of literally getting his arms around any problem. A bear of a man, 6 ft. 3 in. tall, he dominates almost any room he walks into, wrapping his thick arm around a shoulder to cajole or bully a colleague into giving him what he wants. Given virtual carte blanche by the White House to reform the agency, he has cultivated the congressional intelligence committees that are also demanding change. But most important have been his ties with the Defense Department.

Upon his appointment, Deutch immediately cleaned out the entire CIA top management and replaced it with a team of ex-Pentagon and congressional staff members. In June 1995, a month after settling into the agency's headquarters in Langley, Virginia, he summoned the Pentagon's top intelligence chiefs to his office for a grilling on their fat budgets. "It reminded me of when I took my orals for my master's degree," says retired Lieut. General James Clapper, former head of the Defense Intelligence Agency. With Perry's help, Deutch next set up a Joint Space Management Board to control how billion-dollar spy satellites are built. He then proposed a new National Imagery and Mapping Agency to consolidate the organizations that process satellite photos. He is also pushing the CIA to tailor more of its intelligence to what the military needs, and to share more of the secrets it collects on drug traffickers and organized crime with law-enforcement agencies.

The stakes are high. With the cold war over, critics have called for doing away with the CIA or radically reorganizing the entire intelligence community. Deutch wants to make adjustments to the system in place. However, for the CIA and other intelligence agencies to remain relevant, he believes the DCI must have the power to redirect all agencies to spy on new threats. The CIA is already upgrading many of its techniques: breaking into computer systems, intercepting faxes, experimenting with dead drops in cyberspace to receive secrets.

Deutch doesn't want to micromanage the day-to-day operations of other agencies. But he does want to coordinate their spending priorities so they don't work at cross-purposes. He sees himself as the conductor and the intelligence community as a collection of "beautiful instruments. When they play together well, you've got a symphony. When they play together badly, you've got noise," he tells TIME.

Before Deutch arrived at Langley last May, senior agency hands were forewarned by contacts at his former haunts in the Pentagon that this director wouldn't suffer fools lightly; they handpicked thick-skinned briefers who weren't easily intimidated to bring him up to speed on agency operations. At the CIA, nervous aides will often crowd around behind Deutch as he draws charts on his personal computer to illustrate reports on spy satellites. Taking charge is the only way Deutch knew how to do business. In February, on the Sunday morning after Cuban MiGs blasted two civilian Cessnas out of the sky, he trooped down to the White House Situation Room to make several phone calls. He ordered usually uncooperative intelligence agencies to make public secret signal intercepts that revealed the Cubans knew they were attacking planes over international waters. With the intercepts declassified, Deutch then turned to a computer keyboard to edit the press release.

In many ways, Deutch has been a one-man revolution, attempting to boost the morale of the lower ranks as he whipped the upper levels into line. He is on the agency's E-mail system so any officer can bypass channels and send him a complaint directly. He takes the employee elevators to his seventh-floor suite instead of using the private lift reserved for the director. He wanders the halls popping into offices to chat, and has told his spies they don't have to stand when he walks in to address them in the "bubble," the agency's main auditorium. When his CIA deputy, George Tenet, recently grew a beard, Deutch began introducing him to visitors as "Carlos," after the terrorist and master of disguises whom the CIA helped capture in 1994.

Still, analysts who don't do their homework quickly find that sessions with the onetime chemistry professor can be brutal. During a secret briefing on world narcotics trafficking, Deutch interrupted to ask what intelligence the agency had on a drug network. The analyst tried to dance around the subject for several minute until Deutch cut him off. "That's a long-winded way of saying we haven't got anything," he said icily. Though Deutch can be curt and opinionated, agency officials say, he will concede points when an analyst has his facts together, leaning back in his chair and gushing, "Fabulous."

Agency officials at first were leery of the Cabinet status Deutch had wrung from Clinton. The CIA prides itself on independent analysis. A director must often walk into the Oval Office with intelligence contradicting a President's foreign policy. In his first 72 hours at Langley, Deutch demanded to see the CIA's evidence that China was shipping missiles and nuclear material to Pakistan. Analysts suspected Deutch had been put up to it by the White House, which had been pressuring the agency to tone down its pessimistic reports because they undercut the Administration's case for awarding China most-favored-nation trade status. But after hearing the reports, Deutch agreed the intelligence was solid and said as much to the White House.

Will Deutch's rise counteract the decline of the CIA? The agency was shaken by the Aldrich Ames scandal in 1994, by revelations last year of cozy ties in the early 1990s with Guatemalan army torturers and by lawsuits exposing rampant sexism within its ranks. Deutch's predecessor, R. James Woolsey, who had been widely criticized for his light punishments in the Ames case, had frosty relations with the White House and an operating style with Congress so combative he once threatened to have the FBI investigate former Senate Intelligence Committee chairman Dennis DeConcini for leaking information. (DeConcini denied it, and the White House squelched the move.)

Even worse, the agency's intelligence was often ignored by the White House. Preoccupied with the economy, Clinton would often cancel his daily CIA briefing.Woolsey complained of having little access. Even National Security Adviser Anthony Lake began skipping his agency briefing. The Administration soon learned the CIA had a role to play. On Oct. 3, 1993, 18 U.S. Army soldiers died in an ambush in Somalia. Six days before the fire fight, the CIA had sent the White House a top-secret memo titled "Looming Disaster," which predicted that warlord Muhammad Farrah Aidid would stage such an ambush to embarrass the U.S. But the White House ignored the warning. Deutch still has problems with Clinton's keeping his briefing appointments, but he has better access to Lake, Christopher and Perry. "The word has got out that Deutch has clout, and the product is getting downtown," says a CIA analyst.

A whole array of other problems remains at the CIA. Sex-discrimination complaints have risen in the past three years despite promises to open senior ranks to more women. Treasury Department officials grouse that the economic intelligence the agency provides is little better than Wall Street gossip. The operations directorate still has too many idle holdovers from cold war days, says Milton Bearden, a former senior Soviet-division officer and Bonn station chief. Meanwhile, CIA officials think there is another Russian mole in Langley. And last year French intelligence exposed the CIA's operation in Paris (as a result, Deutch last week decided to reprimand about half a dozen agency officers there for sloppy tradecraft in attempting to steal economic secrets). A report by an agency task force investigating CIA ties to Honduran military officers accused of killing and torturing citizens in the early 1980s is expected to be more damaging than revelations last year in the Guatemala scandal.

Spies on the ground are only a small part of the problem. The big-ticket spending that is out of control has been satellites. For example, the CIA wants to build $1 billion-apiece "8X" spy satellites to photograph targets, even though it has sitting in warehouses about half a dozen satellites that have the capacity to take pictures for the next decade. The Air Force recently launched two $1 billion "Trumpet" signal intercepting satellites, which spend most of their time parked over the former Soviet Union. Furthermore, satellites may simply not be that useful. A highly classified CIA study recently concluded that satellites provide less than 10% of the valuable signal intelligence collected from such rogue states as Iraq and Iran. Most such data are scooped up by ground stations or via phone taps.

Meanwhile, Deutch still faces opposition. Despite Perry's backing, the Pentagon's military brass is fighting a rear-guard action to limit Deutch's control over their spy operations. Veteran CIA hands and Congressmen, on the other hand, are worried that Deutch is going overboard, satisfying the Pentagon's hunger for battlefield secrets at the expense of collecting political and diplomatic intelligence that his principal customer, the President, might need.

When Deutch fired two senior officers in connection with the Guatemala scandal last year, the ranks grumbled that such punishment for old operations now deemed politically incorrect would chill risk taking in the future. (Indeed, many senior officers buy $1 million insurance policies in case the agency abandons them to lawsuits.) The agency "still needs James Bonds," says a House Intelligence Committee member, Congressman Bill Richardson. "[It needs] spies who do the dirty work that needs to be done." The CIA's deputy director for clandestine operations, David Cohen, insists in an exclusive interview with TIME that his spies are still taking chances. Morale is "extraordinarily high in the field," Cohen says. "People are motivated."

But the spies were enraged even more by a New York Times Magazine article last December in which Deutch said they were "not as competent" as military officers he had left behind at the Pentagon. An agency division chief immediately fired off a cable to stations overseas telling them to ignore the director's slap. Deutch says he regrets the statement and has cut back on interviews.

There is deep anxiety at Langley that Deutch's grab for power is designed to advance his own career. The rumor circulating in Langley is that his secret game plan is to take over the Defense Department if Clinton wins a second term and if Perry resigns to return to private life. Deutch's senior aides insist that for now, his power is the spies' best friend. "At the end of the day, are we better off with John Deutch at the CIA?" asks his deputy Tenet. "The answer is yes." Considering how low the agency has sunk, what is good for John Deutch may be good for the CIA.