While America’s intelligence services comb the globe for terrorists, a debate endures over creating a new bureau to spy on menaces at home.

Critics fear that creating such an agency steps on the very ideal America was founded upon: freedom to live without the king looming over your shoulder. But though it would do something the CIA is forbidden to do — spy inside the United States — advocates say such an agency would remedy a flawed FBI and make the nation both safer and freer.

Their model in support of these Founding Father ideals lies, ironically, within Britain’s MI-5.

“What it is, it’s a domestic CIA,” said Peter Earnest, a retired senior CIA officer and former spokesman for the agency. This new animal, however, would assume responsibilities currently under FBI jurisdiction.

The FBI is now split into two components: law enforcement and counterintelligence. The first branch chases after mobsters and bank robbers. The second tries to flip enemy spies and sniff out terrorists.

This duality is where those favoring an American MI-5 get their ammo. Restraints placed on the counterintelligence section are the same as those placed on police gathering evidence for trial, such as giving Miranda warnings and disclosing sources. Yet the MI-5 camp says that inhibits the FBI’s ability to root out spies and terrorists.

On the other hand, these same advocates warn that the War on Terror might result in the FBI’s criminal branch using new powers in routine cases, thus eroding civil liberties. The answer, they say, is to take counterintelligence away from the FBI and give it to a new agency.

“These domestic cases are the very ones for which our Constitution gives all of us due process protections,” said Duncan DeVille, a former federal prosecutor and current director of Global Options, a security and corporate intelligence firm.

“We’re left with the worst of both worlds at the FBI: a counterintelligence wing that still is restrained by many trial court rules; and a traditional law enforcement wing that might be emboldened to use recently granted extraordinary tools in normal domestic criminal cases.”

Robert Mueller, FBI director, has criticized the proposal as unjust punishment for mistakes made by a few of his people prior to Sept. 11. But Homeland Security Secretary Tom Ridge has already visited Britain to see how MI-5 works. Members of the Senate Intelligence Committee are considering the question: John Edwards, a Democrat from North Carolina, has strongly backed creating a domestic intelligence organization. Mike DeWine, a Republican from Ohio, is undecided but wants to study the idea.

“I think it’s a proper thing for Congress to look at,” DeWine said. “I think I come out on the side of, ‘Let’s see how the FBI does without this change.’”

Though he’d like to see for himself how MI-5 works in Britain, he is unsure whether a U.S. version would be constitutional. Opponents fear the new agency would usher in a Hoover-esque era of fat dossiers on activists and actors or anyone with dissident views.

“A domestic spy agency would mean a return to the years when the FBI, under J. Edgar Hoover, investigated citizens simply for subscribing to leftist publications or for speaking out against the government,” FBI author Ronald Kessler editorialized in The Washington Post. “It was all done in the name of intelligence gathering, an amorphous standard that could be used to justify investigating and compiling files on anyone perceived to be different.”

The American Civil Liberties Union has also issued a statement against the idea.

“The FBI can do the job if its management is reformed and coordination is improved,” Timothy Edgar, an ACLU legislative counsel, said in a release. “We shouldn’t establish — for the first time in our history — a secret agency whose main purpose is to allow those in power to investigate Americans who are not engaged in any criminal activity.”

Earnest, the former CIA spokesman, said this kind of quandary actually dates back to World War II, even the Civil War.

“Tension between the needs of national security and the rights of citizens is not a new thing,” Earnest said. “We’re just confronting it again.”

He called it a healthy conflict. Lean too far toward security, and the bad guys win: America ceases to be America. Allow liberty to completely trump intelligence and the bad guys win again: They succeed at horrific strikes.

“It’s a fine line,” Earnest said. “A balancing act.”

This is the same controversy that once blazed, but now merely smolders, over the incarceration of Jose Padilla, homeboy-cum-accused terrorist. In May, federal authorities arrested Padilla in Chicago’s O’Hare International Airport. Attorney General John Ashcroft alarmed the citizenry with news that an al-Qaida operative had planned to detonate a radiological weapon. It later surfaced that the former gangbanger had no bomb, but was believed to have been involved in an al-Qaida plot.

Though a U.S. citizen, Padilla was stuffed into a Navy brig after being interrogated by the FBI and hasn’t been seen since.

Activists say Padilla cannot be held without charges, while the military says he is an enemy combatant and can remain behind bars indefinitely.

Vice Adm. Lowell Jacoby, director of the Defense Intelligence Agency, told a U.S. district court that isolation was necessary to find out what Padilla knows. If he thinks he can be sprung without talking, the reasoning goes, then he won’t.

“I assess Padilla’s potential intelligence value as very high,” Jacoby wrote the court. “I also firmly believe that providing Padilla access to counsel risks loss of a critical intelligence resource, resulting in a grave threat to national security.”

Whatever happens with Padilla, the MI-5 debate could return to the fore in more urgent form. For now, the president has opted to assemble a Terrorist Threat Integration Center, staffed with analysts from both the FBI and CIA, to better coordinate intelligence.

But DeVille believes a new domestic spy agency is inevitable.

“The chances of an American MI-5 being formed, while not good in the short term, are quite good in the long term,” DeVille said. “And sadly, were the FBI to allow another 9-11 type attack, then I think we’d see a quick move to establish an American MI-5.”

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