The Central Intelligence Agency typically fights distant enemies, but on May 21st its leaders were preoccupied with a local opponent. A few miles from the agency’s headquarters, which are in Langley, Virginia, former Vice-President Dick Cheney delivered an extraordinary attack on the Obama Administration’s emerging national-security policies. Cheney, speaking at the American Enterprise Institute, accused the new Administration of making “the American people less safe” by banning brutal C.I.A. interrogations of terrorism suspects that had been sanctioned by the Bush Administration. Ruling out such interrogations “is unwise in the extreme,” Cheney charged. “It is recklessness cloaked in righteousness.”

Panetta has no C.I.A. experience, but, an ex-officer says, it’s not “a bad thing to have a powerful guy with access to the President.” Illustration by Steve Brodner

Leon Panetta, the C.I.A.’s new director—and the man who bears much of the responsibility for keeping the country safe—learned the details of Cheney’s speech when he arrived in his office, on the seventh floor of the agency’s headquarters. An hour earlier, he had been standing at the side of President Barack Obama, who was giving a speech at the National Archives, in which he argued that America could “fight terrorism while abiding by the rule of law.” In January, the Obama Administration banned the “enhanced” techniques that the Bush Administration had approved for the agency, including waterboarding and depriving prisoners of sleep for up to eleven days. Panetta, pouring a cup of coffee, responded to Cheney’s speech with surprising candor. “I think he smells some blood in the water on the national-security issue,” he told me. “It’s almost, a little bit, gallows politics. When you read behind it, it’s almost as if he’s wishing that this country would be attacked again, in order to make his point. I think that’s dangerous politics.”

Panetta was also absorbing criticism from the left. The day before, a group of progressive human-rights advocates had been given an off-the-record briefing with Obama, where they discussed his plans for handling terrorism suspects; some of the advocates were enraged at what they saw as a tacit continuation of the Bush approach. According to a participant, Obama warned the group that such comparisons were “not helpful.” Nevertheless, Kenneth Roth, the executive director of Human Rights Watch, who also attended the briefing, went on to denounce the Administration for considering “preventive detention”—incarcerating certain terror suspects indefinitely, without trial. Obama’s position, Roth said, “mimics the Bush Administration’s abusive approach.”

Since January, the C.I.A. has become the focus of almost daily struggle, as Obama attempts to restore the rule of law in America’s fight against terrorism without sacrificing safety or losing the support of conservative Democratic and independent voters. So far, he has insisted on trying to recalibrate the agency’s policies without investigating past mistakes or holding anyone responsible for them. Caught in the middle is Panetta, who is seventy years old and has virtually no experience in the intelligence field. Indeed, his credentials for running the world’s foremost spy agency are so unlikely that when John Podesta, the head of Obama’s transition team, asked him to take the job he responded, “Are you sure?” Podesta assured Panetta that his outsider status was actually an advantage: “He said, ‘You don’t carry the scars of the past eight years. Besides, the President wants somebody who will talk straight to him on these issues.’ ”

Although Panetta served briefly in the military, half a century ago, his reputation has been built almost entirely on his mastery of domestic policy. For sixteen years, he was a Democratic congressman from his home town, Monterey, California. In 1989, he became the chairman of the House Budget Committee, making him a natural choice as President Bill Clinton’s first budget director. In 1994, he became Clinton’s chief of staff.

Panetta, the son of Italian immigrants, grew up washing dishes in his parents’ restaurant. He is disarmingly forthright, with an easy laugh; he is also a stern disciplinarian and a workaholic. Colleagues say that Panetta, who attends Mass regularly, can be principled to the point of rigidity. It was partly Panetta’s rectitude that got him the C.I.A. job. During the Bush years, he decried the country’s loss of moral authority; in a blunt essay for Washington Monthly last year, he declared that Americans had been transformed “from champions of human dignity and individual rights into a nation of armchair torturers.” He concluded, “We either believe in the dignity of the individual, the rule of law, and the prohibition of cruel and unusual punishment, or we don’t. There is no middle ground.”

Panetta’s impassioned essay unexpectedly became an asset during the Obama transition, after John Brennan—the initial candidate for C.I.A.director—was pressured to withdraw. Critics accused Brennan, who had been a top agency official during the Bush years, of complicity with the torture program. (A friend of Brennan’s from his C.I.A. days complained to me, “After a few Cheeto-eating people in the basement working in their underwear who write blogs voiced objections to Brennan, the Obama Administration pulled his name at the first sign of smoke, and then ruled out a whole class of people: anyone who had been at the agency during the past ten years couldn’t pass the blogger test.”)

Panetta had one other strong qualification: he was close to Rahm Emanuel, the new chief of staff. During the Clinton Administration, Emanuel, serving as the White House political director, was suspected by former First Lady Hillary Clinton and others of leaking information, and was very nearly fired. Emanuel entered what he calls his “wilderness period.” When Panetta became chief of staff, however, he reinstated Emanuel as a top aide. “I thought he had a lot of street smarts and good political sense,” Panetta told me.

In 1994, Panetta discovered, to his dismay, that the President had quietly turned to Dick Morris, a political consultant with a dubious ethical reputation. Harold Ickes, a former White House aide, recalls Panetta walking the halls late one night and saying that he needed a shower after attending a meeting with Morris. Later, a tabloid newspaper reported that Morris had been meeting with a prostitute in a nearby Washington hotel. In 1997, Panetta left the White House, by mutual agreement; he and his wife, Sylvia, founded the nonpartisan Panetta Institute for Public Policy, in Northern California. In January, 1998, it was revealed that Clinton had conducted an extramarital affair with Monica Lewinsky—Panetta’s former intern. An associate described Panetta then as “very disappointed in Bill Clinton, because of Monica Lewinsky. He saw him as a man with no personal discipline.”

Eleven years later, Barack Obama called Panetta for advice on who might make a good chief of staff. Panetta recommended Emanuel, telling him that “Rahm knows the Hill, he certainly knows the White House, and he’s got the tough side” necessary for the job. In January, Emanuel recommended Panetta for the C.I.A. post. Emanuel said of Panetta, “Leon has great judgment, a great compass. He’s a great manager, and he’s trusted by both parties.” (Panetta was a Republican until 1971.) Some former C.I.A. officers, such as Tyler Drumheller, who retired in 2005 as the head of clandestine operations in Europe, welcome the choice. “It’s not such a bad thing to have a powerful guy with access to the President,” he told me. Panetta, he predicted, “will restore the integrity of the intelligence process. After what we’ve been through on Iraq and torture allegations, that’s a big deal.”

Michael Waldman, who was President Clinton’s chief speechwriter, and who now runs the Brennan Center for Justice, at the New York University School of Law, describes Panetta as “one of the more honorable, decent, and principled people in government,” but considers it “amazing that he was such an outspoken critic” of the agency. Given Panetta’s reputation for integrity, and the C.I.A.’s central role in the interrogations scandal, Waldman wondered, “can he ride the tiger without being eaten?” He added, “An agency like that can turn on a director. That’s the challenge: he’s got to both lead it and reform it.”

The record of outsiders taking over the C.I.A. is mixed. John McCone, a California shipping magnate who ran the agency in the Kennedy and Johnson years, is often cited as being among the most successful directors; having been trained as a mechanical engineer, he was skilled at assessing threats posed by both conventional and nuclear weapons. But other outsiders have been met with intense hostility. James Schlesinger was named C.I.A. director by President Richard Nixon after heading the Atomic Energy Commission. Given instructions to “get rid of the clowns,” Schlesinger dismissed or forced into retirement more than five hundred analysts and a thousand clandestine officers. He faced death threats, and his tenure lasted six months. In 1995, President Clinton appointed John Deutch, who had previously served at the Pentagon. Deutch tried to improve the oversight of clandestine operatives after evidence surfaced that an agent in Guatemala had covered up two murders. Deutch was reviled by many operatives, and he left the agency after eighteen months. Eventually, he was accused of mishandling classified documents and stripped of his security clearance. “You pick on the C.I.A. at your own peril,” Michael Waldman says.

Nevertheless, many critics believe that the agency must reckon with the legacy of the Bush era. In the past few years, irrefutable evidence has emerged that after 9/11 the agency lost its moral bearings. A confidential Red Cross report has come into public view, along with formerly classified government documents, leaving no doubt that the agency subjected scores of terror suspects to prolonged physical and psychological cruelty. Officers shackled prisoners for weeks in contorted positions; chained them to the ceiling wearing only diapers; exploited their phobias; propelled them head first into walls. At least three prisoners died.

Torture is a felony, and is sometimes treated as a capital crime. The Convention Against Torture, which America ratified in 1994, requires a government to prosecute all acts of torture; failure to do so is considered a breach of international law. The issue of torture assumed symbolic importance during the 2008 campaign, and when Obama took office many of his liberal supporters expected him to hold the perpetrators of abuse accountable. Democratic leaders in Congress pushed particularly hard for action. Senator Carl Levin, the chairman of the Armed Services Committee, had investigated the military’s role in detention and interrogation abuse but was kept by his committee’s limited jurisdiction from investigating the C.I.A.; he urged the new Attorney General, Eric Holder, to open an inquiry, saying, “There needs to be an accounting of torture in this country.” Senator Patrick Leahy, the chairman of the Judiciary Committee, argued for the creation of an independent “truth commission,” which could grant immunity to witnesses—thus helping to insulate the Obama Administration from charges that it was exploiting the torture issue for partisan gain.

The C.I.A.’s role in providing misleading intelligence about the presence of weapons of mass destruction in Iraq has also provoked calls for reform. Senator Dianne Feinstein, the new chairman of the Intelligence Committee, told me, “There’s no vote that I regret more than the vote to authorize war with Iraq”; her vote was based on intelligence that she describes as “flat wrong.” Feinstein went on, “I am absolutely determined to reform the process of gathering and analyzing intelligence.”

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As soon as Obama took office, he overturned most aspects of the Bush Administration’s interrogation policy. He issued an executive order banning inhumane treatment of prisoners by any government officials, and one closing the C.I.A.’s network of secret “black site” prisons, which stretched from Poland to Thailand. He also vowed to close the military prison in Guantánamo Bay, Cuba, where fourteen former C.I.A. prisoners are being held. But Obama’s message has been uncharacteristically muddled on the question of accountability. He has said that Attorney General Holder should be the one to decide whether to take criminal action; he has also said that he would support further congressional investigation, as long as it was done in a bipartisan fashion. At the same time, he has signalled that he has no appetite for “looking backwards,” and in late April, during a private White House meeting with congressional leaders, he rejected the idea of an outside truth commission. In the meantime, Republicans have seized the political initiative, expressing grave concern about the plans to close Guantánamo and transfer the prisoners to U.S. facilities.

Tim Weiner, the author of “Legacy of Ashes,” a recent history of the C.I.A., says that Panetta is facing a series of “unappetizing choices.” Weiner believes that the country is in a period similar to the Watergate era, when a series of disturbing state secrets—such as the existence of the Phoenix Program, a C.I.A.-supported initiative, in which the South Vietnamese were alleged to have tortured civilians—spilled out. Speaking of Panetta, he said, “It can’t be comfortable for a man who said, ‘This is un-American,’ to be put in the position of saying, ‘Well, we hold no one accountable.’ ”

Panetta, whose conversation with me at C.I.A. headquarters was his first lengthy interview on the topic of abusive interrogations, said that when he took over the agency he “wanted to be damn sure” that there was nobody on the payroll who should be prosecuted for torture or related crimes. He asked John Helgerson, then the C.I.A.’s inspector general, to conduct a review. In theory, the inspector general is politically independent, and therefore able to render unbiased judgments. In 2004, Helgerson had written a classified report on the C.I.A.’s secret detention-and-interrogation program, in which he questioned both the legality and the effectiveness of the agency’s brutally coercive techniques. Panetta cited Helgerson’s “credibility” as a reason to trust his assessment. According to Panetta, Helgerson, who is not a lawyer, assured him that no officer still at the agency had engaged in actions that went beyond the legal boundaries as they were understood during the Bush years. Helgerson, who retired from the agency in May, says he told Panetta only that he was not aware of any cases that merited prosecution, though “continuing work was being done.”

Panetta told me, “I’m going to give people the benefit of the doubt. . . . If they do the job that they’re paid to do, I can’t ask for a hell of a lot more.” His words echo those of President Obama, who on April 16th promised immunity from prosecution to any C.I.A. officer who relied on the advice of legal counsel during the Bush years. Jeffrey H. Smith, a former general counsel to the C.I.A., points out that this is a low standard, given that “what the Justice Department approved was outrageous.” For example, for more than a century the U.S. had prosecuted waterboarding as a serious crime, and a ten-year prison sentence was issued as recently as 1983. Indeed, the memos authorizing interrogators to torment prisoners clashed so glaringly with international and U.S. law that some of them were later withdrawn by lawyers in Bush’s own Justice Department.

Smith, who has advised Obama informally on how to handle the C.I.A.’s legacy of abuse, thinks that prosecutions are not politically viable at this point, and would in any case be unfair to officers who thought they were adhering to the law. And many Republicans, from Newt Gingrich to John McCain, have argued that pressing charges against government officials would threaten morale and inhibit risk-taking at a time when the agency faces wars on two fronts and a continuing threat from Al Qaeda. The Harvard law professor Laurence Tribe disagrees. “It’s hard not to do something to those who performed the act,” he says. “It’s not beyond the pale to imagine that even people armed with legal opinions might be held legally responsible for violating the criminal law in the area of torture.”

Panetta told me, “Frankly, I didn’t support these methods that were used, or the legal justification for why they did it. . . . I also believed if I were to take this job it was about dealing with the threats that are out there, and trying to really bring the C.I.A. into a new chapter.” He said that once he felt confident that there was no criminal liability inside the agency he “didn’t want to spend a lot of time dealing with the past and what mistakes were made.”