The Associated Press's Pamela Hess reports that the nation's top intelligence officials, Director of National Intelligence Denny Blair and CIA director Leon Panetta are "locked in a turf battle" over whether non-CIA personnel should be the DNI's formal representative in a country, or whether the CIA's station chiefs -- traditionally the senior intelligence officer at any embassy -- should retain their supervisory role. "Turf battle" is one way to describe it, but don't draw from that the notion that Blair and Panetta are at daggers drawn. They've simply asked the White House to resolve a question that Congress dropped in their laps when it created the DNI structure and took away the CIA chief's power to direct the activities of the nation's other 15 intelligence agencies.
In 2004, as part of its major post-9/11 reform bill, the Intelligence Reform and Terrorist Prevention Act, Congress created a new intelligence bureaucracy to oversee the activities of the entire community. The CIA director -- who had also been the director of central intelligence -- would now be, in essence, the chief human intelligence collector and analyzer, and the CIA would no longer be, at least in a symbolic sense, the hub of the community. When the CIA director was also the DCI, CIA station chiefs had dual authority, too. They managed the activities of CIA personnel and assets in a station and they signed off on any intelligence activity by any other agency in that country.
Congress changed the system, but it didn't offer any guidance. The DNI was given less budget authority than he needed and few tools to fight through the bureaucratic tangles. The two DNIs before Admiral Blair tried to consolidate their power. Blair simply inherited his grandmother's furniture.
The reality is that this dispute needs to be resolved. If a National Security Agency signals intelligence officer travels to [REDACTED] to visit a special collection facility, does he or she need the approval of the station chief to visit or liaise with other agencies? If the US intelligence presence in, say, the former Soviet Republic of [REDACTED] is primarily a technical one and not a repository of spies and their human sources, does it make more sense for the NSA chief, who might have a better relationship with the country in question -- and we're primarily talking about countries with whom the US has intelligence relationships -- to serve as the de facto chief of station? Also: who does the chief of station report to? The CIA Director? The DNI? Questions about the line of authority run from the mundane to the serious -- if the DNI orders a station chief to go do something, does the station chief first ask his or her supervisor at the CIA's National Clandestine Service?
The CIA and NSA, through a still-classified entity called the Special Collection Service, jointly run large codebreaking and signals intelligence collection facilities at dozens of embassies across the world. The NSA's presence at smaller embassies is limited to code rooms; NSA officers don't run spies. But as the NSA's external footprint has grown, its liaison arrangements with other countries have blossomed. In certain very friendly countries, NSA operates joint collection facilities with the host government. The result is that there are far more NSA employees in a number of countries than there are CIA employees.