Phillip Knightley: When is a terror threat not a terror threat? Let's ask a man called Felix...

All intelligence services rely on convincing the public there is a monster at large waiting to grab them

(Darren Diss)

The British undercover agent in the underpants bomb plot that has emerged so sensationally in recent days, was recruited using a technique pioneered by the founder of the KGB, Felix Dzerzhinsky. And Dzerzhinsky would be looking down from wherever he is now and smiling with satisfaction at the latest twists of an episode in which Western intelligence agencies have apparently foiled a plan to attack a US-bound plane.

Dzerzhinsky took over anti-terrorism duties in the newly-emerged Russia at the end of the First World War when the country was riven with revolt and violence. He realised that he had no chance of identifying all the terrorist threats and those planning to perpetrate them. Instead he developed a questionable technique that has become part of espionage theory throughout the international intelligence community: you lure the terrorist to you.

When the story of the foiled bomb plot first broke it seemed too good to be true. The security authorities had intercepted a man carrying a supposedly undetectable bomb which was being examined at the FBI laboratories in Quantico, Virginia. This suggested an amazing piece of intelligence work. What had led the authorities to the man? Why were they suspicious of him? Had they been tipped off? As details emerged it became apparent that the action was rather more straightforward.

In the tradition of Dzerzhinski, the Saudi intelligence service had apparently "dangled" one of its agents in front of known al-Qa'ida members hoping for a "bite". To make the bait attractive, the agent, it later emerged, was a British passport holder. Al-Qa'ida was fooled and handed him the bomb with instructions to smuggle it on a plane bound for the United States. He handed it over to the Saudis. It seems likely that the Saudis passed on the information the agent had gathered on al-Qa'ida to enable the US to mount a drone attack on an al-Qaida leader in Yemen. The Saudis are thought to have planned more operations for its star undercover agent but were forced to abandon them when the story leaked to the Western media. Thus espionage history repeated itself, and echoes can be heard of the most famous of all counter-espionage operations in the Soviet Union, the Trust.

The Trust appeared to be a huge anti-Bolshevik organisation working from Moscow to overthrow the Communists and reverse the revolution. Instead,Dzerzhinski used it to identify anti-communists. All he needed to do was set up the organisation and wait to see who joined it. He could then choose when to roll it up and arrest its members or whether to let it run in the hope of revealing bigger prey.

In intelligence circles the Trust became a textbook operation and its principles copied worldwide. But to be most effective required a ruthlessness that Western services often felt unable to carry out. For instance, if the authenticity of a front organisation was questioned, the KGB did not hesitate to initiate a terrorist incident to reinforce the organisation's reputation. So the Trust would plant bombs that would kill innocent people just so that possible recruits would think it a genuine organisation.

In the West, a front organisation could also run into legal difficulties when it came to winding it up and arresting those who had been tempted to join. Judges wanted convincing that the authority running the operation had not been tempted to act as agents provocateurs and had provoked people into acts that they would not otherwise have considered. This is why the main user of front organisations was at first the British Customs in drug busts rather than the Security Service, MI5, or the Secret Intelligence Service, MI6, the thinking being that the courts would be more sympathetic if a huge haul of heroin was involved and not a bewildered possible terrorist.

British Customs actually advertised for recruits, placing notices in Pakistani journals asking for young Pakistanis going on holiday to Pakistan to contact the British High Commission if they were approached when on holiday to courier drugs back to Britain. Those who did were then instructed to deliver the drugs to the High Commission which took over their transport back to the UK where the Pakistani who had been recruited would deliver them as instructed. At the handover the Customs would pounce and arrest the ringleaders. The headlines in the British press would trumpet: "Huge drugs bust. Smugglers' plot foiled". But as evidence in court showed, the whole plot had been initiated by British Customs and the drugs brought into Britain by Customs themselves.

The difficulty the British Security Service MI5 has faced in its anti-terrorism operations is that it was created to face a Communist threat, and terrorism was at first beyond its ken. Give it a communist plot and it had files, informers and precedents to work with. But tasked after 9/11 with tacking possible terrorist cells in Britain it did not know where to start. Then someone remembered Felix Dzerzhinsky. Subsequent "successes" in fighting terrorism have sprung from operations modelled on the Trust.

But they are risky. How far can an undercover officer go in suggesting a terrorist operation before he risks a judge eventually ruling that he was acting as an agent provocateur? Are the violent sentiments of a member of the group real or just a fantasy? In most counter-terrorism operations of this nature there always remains the suspicion that the accused would not have acted in the way they did if not encouraged to do so by the undercover officer.

All intelligence services rely on convincing the public that there is a monster out there in the big wild world waiting to grab them. Only an alert intelligence service can protect them and keep them safe. All intelligence services promote this view which is what gives them more in common with each other than the governments that employ them. Genuine risk assessments of the dangers of terrorism tend to be played down because they show that the chances of an ordinary citizen dying in a terrorist attack is about the same as dying from a fall in the bath.

Phillip Knightley's books include 'The Second Oldest Profession', a history of espionage