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In October 1973, Control, head of British intelligence ("the Circus"), sends Jim Prideaux to Budapest to meet a Hungarian general (Operation Testify). Prideaux is shot and captured. Amid the international incident that follows, Control and his right-hand man George Smiley are forced into retirement.
Sir Percy Alleline becomes the new Chief, with Bill Haydon as his deputy, and Roy Bland and Toby Esterhase as key lieutenants. Despite Control and Smiley's misgivings, their successors had already begun a secret operation—"Witchcraft"—to obtain Soviet intelligence, which is being exchanged with the CIA for US intelligence.
Smiley is brought out of retirement by Oliver Lacon, the civil servant in charge of intelligence, to investigate a claim by Ricki Tarr, a British spy thought to have defected, that there has been a long-term mole in a senior role in the Circus. Control had suspected this, as well. Smiley chooses Peter Guillam and retired Special Branch officer Mendel to help him. He interviews Connie Sachs, who was sacked by Alleline after deducing that Alexei Polyakov, a Soviet cultural attaché in London, was a spy.
Tarr tells Smiley that, on a mission to Istanbul, he had had an affair with Irina, a Soviet agent. She wanted to reveal the name of a mole in the top ranks of the Circus, but when Tarr reported this to London, they ignored him, whereas Moscow immediately kidnapped Irina. Tarr concluded that the mole had intercepted his message, and went into hiding. Smiley sends Guillam to steal the Circus logbook for the night Tarr called: he finds the pages for that night are cut out, suggesting that Tarr's story is true.
Smiley interviews Prideaux, who after brutal interrogation was exchanged by the Soviets but sacked from the service. Prideaux says the purpose of the mission to Hungary was to get the name of the mole. Control had codenamed the suspects "Tinker" (Alleline), "Tailor" (Haydon), "Soldier" (Bland), "Poorman" (Esterhase), and "Beggarman" (Smiley himself). "Sailor" was omitted from the nursery rhyme canon as it sounded too much like Tailor, should a poor communications link be used to return the information.
Smiley learns that Alleline, Haydon, Bland, and Esterhase have been meeting Polyakov — the "Witchcraft" source — at a safe house, where Polyakov gives them supposedly high-grade Soviet intelligence in exchange for low-grade British material, to help him maintain his cover with the Soviets. However, the mole is passing substantive material, including US intelligence, to Polyakov, his handler, whilst Polyakov's material has just enough substance to persuade the CIA to share information with the British.
Smiley tries to ascertain the location of the meetings between the British agents and Polyakov, but cannot persuade the government minister to reveal this information, as Witchcraft is buying the British too much favour with the USA. He therefore blackmails the information out of Esterhase, whose exile status makes him vulnerable to deportation. Smiley then has Tarr appear at the Paris office, implying he knows who the mole is. The mole meets Polyakov at the safe house, where Smiley arrests him. The mole is Haydon. The Circus plans to exchange Haydon with the Soviets, but he is killed by Prideaux, who was implicitly Haydon's former lover, and who had been betrayed by Haydon in Operation Testify. Smiley returns to the Circus as its chief.