Decades of skullduggery on both sides at U.S. embassy in Cuba

HAVANA (Reuters) - The seven-story building on Havana's famed "Malecon" seafront has for decades been a flashpoint in the Cold War's most enduring rivalry.

Spy games and dirty tricks have been directed by and against the U.S. officials working inside the beige structure, which is nondescript architecturally but among the most famous in Havana.

Cuba's Communist government regularly organized protests outside and once tried to seize the building to turn it into the fishing ministry.

Now the U.S. embassy is a symbol of the new, friendlier relationship between Washington and Havana.

Secretary of State John Kerry will walk inside its iron fence on Friday and raise a U.S. flag to mark the restoration of diplomatic ties after five decades of Cold War hostility.

Built in 1953, the embassy worked closely with Cuban strongman Fulgencio Batista until he was ousted by Fidel Castro's revolutionaries in 1959.

It is unknown how many of the U.S.-backed assassination attempts on Castro - Cuba says there were more than 600 - may have been plotted there.

Washington severed diplomatic ties with Castro's government in 1961, three months before the failed Bay of Pigs invasion by U.S.-armed Cuban exiles, and the building was largely unoccupied until 1977, when it reopened as a U.S. Interests Section.

The Cold War skullduggery quickly resumed.

"Everything in Cuba is bugged, even the coconut trees," said James Cason, chief of the U.S. mission from 2002 to 2005.

Cason, now mayor of the Miami suburb Coral Gables, said U.S. Marines inside provided an effective physical barrier so the Cubans tried sex appeal to get at the mission's secrets.

"We had a cipher code clerk go to a bar and be approached by a good looking person," Cason said. "When the wife of the (head of Marine detachment) went on vacation, two blondes knocked on the door and asked if he wanted company."

The Americans had their own spooks inside, of course.

"We were not a nest of spies by any means, but there were some people there who were working on intelligence," said Wayne Smith, a former U.S. diplomat who worked at the embassy from 1958 until 1961, and then returned in 1977.

To one side, built on the site of the former Fourth of July Park, is the Anti-Imperialist Tribune, put up by Cuba in 2000 to organize anti-American rallies.

During the presidency of George W. Bush, the Americans delivered political messages with a Times Square-style ticker directed toward the protest site.

The Cubans responded by suspending nearly all bilateral contacts and erecting a forest of flag poles with banners blocking the messages.

Since the historic rapprochement between U.S. President Barack Obama and Cuban President Raul Castro late last year, the Cold War-era tensions have been significantly lowered and the old building on the Malecon formally became an embassy again on July 20 as the two sides re-established diplomatic relations.

Restored ties mean U.S. diplomats will be able to travel more freely in Cuba and increase embassy staff from about 50 to 75. Cuba has also greatly reduced the number of security guards posted outside to keep on eye on Cubans going in and out.

SPY GEAR, SECRET TUNNELS

To the Americans, the building long represented the one place where Cubans under the thumb of communism could come to learn about the outside world.

From revolutionary Cuba's point of view, the embassy of the 1950s was where "Yankee imperialists" collaborated with Batista in plundering the island and turning it into a Mafia-controlled playground of casinos and brothels.

Later, the Cubans saw the U.S. interests section as a forward base of operations where the Americans would train, fund and direct Cuba's dissidents.

Cuba spied back. The extent of its success was revealed in 1987 after a high-ranking counterintelligence agent defected and told a stunned CIA that dozens of its assets in Havana were actually double-agents working for the Cuban government.

With his double-agents now exposed, Fidel Castro chose to embarrass the Americans with a series of programs on state television that showed numerous CIA operatives filmed surreptitiously while retrieving packages from dead drops.

In his 2012 book "Castro's Secrets," former CIA officer Brian Latell examined all the possible ways the Americans had been duped, pointing to the 16 years when the former embassy was unoccupied with only a minimal Swiss security detail.

"The logical but repellent conclusion is that, when it opened, the U.S. interests section was peppered with the most sophisticated and miniaturized audio and visual surveillance devices available at the time, honeycombed with tunnels and underground entrances connected to Cuban government buildings nearby," he wrote. "After all, Fidel's men had more than a decade and a half to make the old embassy structure virtually their own."

(Reporting by Daniel Trotta; Additional reporting by David Adams; Editing by Kieran Murray)