CNN Moderator: David E. Murphy is co-author of "Battleground Berlin: CIA vs. KGB in the Cold War" -- which he wrote with journalist George Bailey and Sergei Kondrashev, former head of the KGB's German Department. Murphy began work at the CIA's Berlin Base in 1954, and was chief of the Berlin Base from 1959 to 1961. He briefed President Kennedy on the crisis in Berlin shortly after the Wall was erected there.

Chat Participant: How tense was the situation from your point of view during the Checkpoint Charlie standoff?

David Murphy: At that time, I was in Washington as the deputy chief of the East European division of CIA which was responsible for Berlin and Germany. Since we were hearing all the reports from Berlin by cable it was a very tense situation. We were not sure what was going to happen. We knew that the station in Berlin, CIA station, was being asked to verify whether the troops manning the tanks on the Soviet side were actually Soviets and not East Germans. We were able to determine that and make it available to General Clay, but I don't think we were as excited as the people in Berlin itself.

Chat Participant: Why did the U.S. take a soft position when the Wall was erected in Berlin?

David Murphy: You must remember that the State Department mission in Berlin, as well as our own CIA base there, had made it quite clear to Washington on several occasions -- as early as May 1960 -- that the East German leadership could not tolerate a continuation of the refugee flow, and that they were certainly going to be forced to transform the open sector borders into an Iron Curtain-type international frontier. Had they not done so, it was almost a certainty that the regime would have collapsed. As far as the Kennedy administration was concerned they knew quite well that we were not prepared to risk war to prevent them from taking measures on their side of the sector border, to regulate or put an end to this flow of refugees.

Chat Participant: You were asked to help brief President Kennedy on the situation soon after the Wall was erected. Could you comment on that experience, please?

David Murphy: Yes, the administration was perfectly prepared to stand by and allow the East Germans to take whatever measures they thought necessary, to regulate the outflow of refugees. What did come as a surprise to them was the reaction of the West Berliners. The cable, which was sent to President Kennedy by [West Berlin Mayor] Willy Brandt, emphasized that the West Berlin population was indeed shocked at the fact that the West took no action to counter the closure of the sector borders. They interpreted this as perhaps the first step of the West's abandonment of West Berlin. When the border was closed I was actually on home leave in San Francisco and came back to Washington to find all hands perplexed by this reaction. On the 17th of August, the director of CIA, Allen Dulles, took me with him to a meeting at the White House. When we arrived, President Kennedy -- thinking that I had been brought in by Mr. Dulles to raise again the fact that there should be U.S. action to remove the barbed wire -- made it perfectly clear that "our writ does not run in East Berlin." I responded by saying that was not my intention. It should also be understood that the West Berliners looked upon Berlin as a single city. People on both sides of the sector borders would celebrate their birthdays together and visit both parts of the city as a matter of course. It would be as though Boston had been cut off along the Charles River. Kennedy understood this immediately, and it was this that prompted him to take action to increase the troop strength and send Vice President Johnson and General Clay to Berlin as his representatives.

Chat Participant: What did your intelligence tell you was being told to the Russian people about the situation?

David Murphy: If the question is what the Russian people were being told, they were being told what was in the Russian press. The need to erect an "anti-fascist barrier" and comments of that sort. What's more interesting is some of the reporting by the KGB on the situation. For example, in November 1960, the KGB received a report that Willy Brandt, the mayor, had addressed a meeting in West Berlin -- in which he said that he fully expected that there would be a division of Berlin imposed by the East Germans, and he further predicted that the allies would do nothing. This certainly helped the Soviets to realize that the risks in closing the border were not all that great.

Chat Participant: Sir, in that time the Stasi [East German security service] were doing all the background work in East Germany for the KGB, or they had a different objective of their own?

David Murphy: The relations between the KGB and the Stasi did indeed reflect the interests of each side. And they did not always coincide. The Soviets, on their part, relied heavily on Stasi to ensure the security of the East German state -- to run, if you will, a very efficient, modern-day Gestapo. At the same time, the KGB looked forward to receiving the excellent intelligence reports on West Germany provided by Markus Wolf and his Stasi intelligence service. At the same time, however, the KGB insisted on running its own independent operations from East Berlin and East Germany into the West.

Chat Participant: Do you know what happened to your own agents in the East after the Wall went up?

David Murphy: You must realize that when the Wall went up, all of the previous methods of operations for us ground to a halt. Although we had tried during 1960 and early 1961 to establish impersonal, two-way communications with our sources in East Berlin and East Germany, the idea of personal visits back and forth across the sector border was finished. Nonetheless, in the first year of operations after the Wall, we were able to stay in contact with over 30 of our sources and produced some 250 reports on conditions in East Germany. However, we fully recognized that without personal contact it was a matter of time before these sources would give up and cease contact of their own accord, or would be subjected to arrest and control by Stasi.

Chat Participant: Bottom line, who penetrated whose operations better? [the United States] or the Soviets?

David Murphy: It is perfectly clear that, in terms of mass coverage of potential sources and actual sources of ours and the East, that the Stasi had the upper hand. They ran a sort of police state that, in terms of the numbers of people involved, was far in excess of the German Gestapo of the Hitler period. However in key areas -- for example, Soviet military intelligence -- we did very well.

Chat Participant: How seriously was NATO compromised in the '60s and '70s by Stasi agents?

David Murphy: The work of the East German intelligence service under Markus Wolf was fantastic. The level of their penetrations was fantastically successful. They were able, by virtue of West German participation in NATO, to obtain solid documentary material on NATO plans and activities.

Chat Participant: Did you ever get people of interest out of the GDR [East Germany]?

David Murphy: The answer is yes. In terms of individuals, there was the deputy chief of East German military intelligence -- who came out to us in 1958 or '59, just at a time when we were getting ready to respond to the propaganda campaign mounted by the Soviets, in which they attempted to portray West Berlin as an intelligence cesspool. We used material from our own archives, our own files, plus this man's arrival in West Berlin to launch a counterattack --which made clear that the number of Soviet satellite and East German intelligence services in East Berlin far outnumbered those of the West in West Berlin.

Chat Participant: Were there any good cooperation between CIA and another Western intelligence agencies (like MI5 or MI6) in Berlin that time?

David Murphy: Perhaps the best example of cooperation between Western services was that of the work done jointly by MI6, the British Foreign Intelligence Service, and CIA to construct the Berlin tunnel -- which tapped key Soviet communications channels between Moscow and East Germany.

Chat Participant: Were you personally ever targeted by counterintelligence or espionage?

David Murphy: Not that I know of.

Chat Participant: What procedures did you have to take in Berlin at that time to make sure you were not being surveillanced by the other side?

David Murphy: In order to ensure that you were practicing reasonably good security in the time I was there, one had to be sure that one watched one's telephone conversations -- since we assumed if we could do it to the East, they could do it to us. You had to be careful to vet any local German employees and, as far as surveillance was concerned, all the usual practices were employed, which was to be alert to foot and vehicular [traffic]. We would change our license plates, military to military or military to civilian, but on the other hand, we knew from reports we had from Stasi operations that they were extremely efficient at surveillance in West Berlin, and from time to time it was necessary to remind our people that these measures were absolutely essential.

Chat Participant: How often did you meet/communicate with your counterparts on the Soviet side? Any stories you'd like to relate?

David Murphy: We never had any direct contact with the people in the KGB operation in East Berlin. It was a divided city. There were no diplomatic occasions which would permit us to meet our opposite numbers, which is so often the case in other capital cities. There wasn't any direct contact. Most of the information we received about our adversaries on the other side came from our own sources. And also, a great deal came from the two years of operation of the Berlin tunnel. We got to know them pretty well. In that connection, I might add that when I was working on the book "Battleground Berlin" with my KGB counterpart, General Kondrachev, he was asked at a press conference what it was that surprised him most about his work with David Murphy. To my own surprise, he said that he was amazed at how much Murphy knew about the KGB in East Berlin.

Chat Participant: What was it like writing with your former opponent?

David Murphy: Well, it was difficult, because we were both from totally different backgrounds. Our life experiences would be different. At some point, it appeared that we would be refighting the Cold War. For example, we would -- in expressing the ways in which the Soviet Union imposed its own system on East Germany in the period 1945 through 1949 and beyond -- we used the expression 'Sovietization.' General Kondrachev objected and called it 'socialization.' Since there could be many different viewpoints on this, we compromised by saying 'socialization on the Soviet model.'

Chat Participant: Sir, what was the role and/or level of cooperation between your station and the recently created Mossad in that time?

David Murphy: There was none. We had no involvement whatsoever during the time I was there in Berlin.

Chat Participant: Were you aware of the Mossad at that time?

David Murphy: Generally, yes, I was aware, but we had no specifics.

Chat Participant: How did CIA support democratic movements in the East?

David Murphy: The ability of CIA to engage in covert political action in East Germany in the early years 1948-50 became almost non-existent. Let me say that in 1961, when the threat of the closing of access to West Berlin and the possibility of armed conflict over that -- as result of the Khrushchev ultimatum -- the Kennedy administration pushed us very hard to persuade us to devise plans for covert paramilitary action and the fomenting of dissidence. I was back in Washington in March 1961 when this issue was first raised. We made it clear that support of insurrection in East Germany was not possible. It was all we could do to maintain contact with, and develop, new intelligence sources. Yet again, in June 1961 this issue was raised again, despite the failure of the Bay of Pigs operation. And here again, we made it clear that covert or paramilitary operations in East Germany were out of the question. As late as 1962, the formal plans devised by the administration for responding to blockade of access to West Berlin still spoke of covert paramilitary actions in East Germany, even though CIA's Berlin operations base and the East European division made it clear that these ideas would not work.

Chat Participant: Did the U.S. involvement in Cuba have anything to do with what happened in Berlin?

David Murphy: I don't think so. The only caveat I would raise there is that it has been thought that the failure of the Bay of Pigs operations emboldened Khrushchev to take a tough line with President Kennedy during their Vienna meeting in June of 1961.

Chat Participant: Would you consider yourself a historian?

David Murphy: In 1946, I was an incipient historian, studying Russian studies at Berkeley. I had already spent six months in Germany in liaison with the Red Army. My faculty adviser urged me to accept a position in Korea with the Joint U.S.-U.S.S.R. Commission so I could become familiar with Soviet occupation practices in both parts of the world. Fortunately or unfortunately, the Joint Commission never got going and I joined the forerunner of CIA, the Central Intelligence Group.

Chat Participant: Did you feel that the Soviets needed Berlin and that if they lost it they would lose all?

David Murphy: The Soviets looked upon Berlin, their sector of Berlin, as the basis not only for being able to eliminate our presence from West Berlin, but then as a stepping stone for the military conquest of West Germany. It was indeed the Western presence in West Berlin which continued to make it difficult for them, not only to achieve those goals but to consolidate their position in East Germany.

Chat Participant: Do you remember your personal reaction when you first heard the news that the Wall was going up in Berlin?

David Murphy: I heard about the closing of the sector border, and the stringing of barbed wire along the sector line, when I was on home leave in San Francisco. It was not unexpected, as far as I was concerned, because we had been watching the number of refugees from the East increase day by day. Also, we had predicted that this would happen, although not the exact hour and day. But we had predicted it as early as May 1960 and then again, in a very long message to Washington in September of 1960.

Chat Participant: Sir, did you ever expect the Wall to come down as it did? And what was your reaction when it happened?

David Murphy: It's very interesting. When I left Berlin in 1961, it was the flow of refugees that seemed about to cause the collapse of the German Democratic Republic. Then in summer of 1989, the same drama was being played out again, when East Germans were able to visit Hungary, and the Hungarians opened the border with Austria to let them into the West. Later, thousands of East Germans visited Czechoslovakia and camped on the grounds of the West German Embassy. These people too were allowed to leave and were sent by train to West Germany. These actions on the part of other Soviet satellite states signaled the beginning of the end, and by November the rigid controls on movement through the Wall collapsed.

Chat Participant: Sir, at that time, what was the major concern in the intelligence community, especially in the West, as far as Soviet communist expansion in other parts of the world, especially Latin America?

David Murphy: That's a very broad question. ... During the Cold War, each position throughout the world, in which the political orientation of a country was being contested, made that country an important point of contention. We poured funds and personnel into actions in these countries which later, at the end of the Cold War, were of very little interest to the U.S. in terms of our national security. But because of the Cold War, there were CIA stations in countries throughout the world because of this confrontation over individual countries brought about by the Cold War.

CNN Moderator: Do you have any final comments?

David Murphy: The one thing that I would like to go back to is the initial question which was posed in terms of the chat this evening -- and that had to do with whether or not the rearmament of West Germany was a provocation or a necessity. In my view, the way that question is framed ignores the reasons for West German participation in the defense of Europe. Not only did you have the Sovietization of East Germany, 1945-49, the Prague coup in February '48, the Berlin blockade in '49, but then in June 1950 North Korea invaded South Korea -- which was the first time anyone tried to change World War II agreements by force of arms. It was the possible repeat of this that caused the concern that resulted not only in the creation of NATO but the eventual inclusion of West Germany in European defenses.

CNN Moderator: Thank you for joining us for this COLD WAR chat. Please join us next Sunday for another live COLD WAR chat at 9:30 p.m. ET. And visit our comprehensive Web site at CNN.com/ColdWar for more COLD WAR stories, including transcripts of past chats.