By Richard Sale, author of Clinton’s Secret Wars
For those of us who are victims of sentimentality and national conceit and who like to think of America as cuddly and warm-hearted, it does us good to remember that there are always cold, implacable ulterior motives that lie hidden in even the most generous foreign policy gesture.
In a recent post, I related how the United States had crippled the British Empire soon after the close of World War II. The United Kingdom controlled a huge area with a population of 540 million and from which the use of the U.S. dollar had been shut out. By the time the crisis ended, the exclusion of the dollar had ended, opening vast markets for U.S. goods, but at a cost of further laming a key wartime ally.
There is a another example. We endlessly laud the Marshall Plan as having saved Europe from starvation after World War II, forgetting that U.S. intelligence operatives had a great role in formulation the plan and that the price for European participants was high, including having to impart extremely secret proprietary data about their economies – such as their surge capability and the like.
This is not to say we are not good hearted: we are. But we are also a very cunning and ruthless player in the game of nations, and there are opponents that must be matched in heartlesness if we are to survive, shelter and prosper.
I was recently reminded of just how dangerous we are to taunt and defy when discovering some old files on the Reagan administration’s secret war on the Soviet Union. Some of the incidents are colorful, such as the U.S.-Swedish plot to lure a Soviet nuclear submarine on the rocks in Swedish military waters. The activities of the Reagan group’s secret support of the Afghan rebels in bleeding to death the invading Soviet forces there have been superbly rendered by such books as Steven Coll’s Ghost Wars or Charlie Crile’s Charlie Wilson’s War among others.
But an equally important but almost obscure scheme involved the Reagan group’s resolve to target Soviet hard currency earnings, reasoning that if Moscow were broke, its development of new nuclear weapons would slow, and it couldn’t pay the troops of its overextended military machine much less finance wars of liberation around the world. It could talk tough, “but it would no longer be tough,” as a former Reagan official told me.
The first blow was struck on May 1983 when American pressure forced the International Energy Agency to put a limit on European exports of natural gas, blacking huge sums of money from reaching Moscow. But Soviet natural gas earnings were only a Kremlin sideshow compared to its top engine of economic wealth -- its oil industry, which generated half of its hard-currency earnings, former officials said.
Under the direction of CIA chief William Casey and Defense Secretary Caspar Weinberger, the Treasury Department in early 1983 had completed a voluminous study of U.S. and Soviet energy costs. The study discovered that the optimum price for a US purchase of a barrel of oil was $20, far below the $34 per barrel being charged in that year. If oil prices came down, the U.S. would save almost $72 million a year or almost one percent of the GNP. The question was what would a fall in oil prices do to the Russians?
Very ugly things, apparently. The study concluded that while a cut in oil prices would boost U.S economic welfare, that same cut “would have a devastating effect on the Soviet economy, “ in the words of a source. In fact, then National Security Advisor Bill Clark told a friend of mine, Peter Schweizer, that Reagan was fully aware that energy exports were the “centerpiece of Moscow’s hard currency earnings,” and that a sharp drop in price would help hobble the strength of the Russian economy and stall its military buildup.
Soon U.S. officials were huddling in Geneva with the key Saudi oil advisor Sheikh Ahmed Zaki Yamani. Not long after the meeting, the United States announced it was cutting its oil imports from 220,000 barrels a day to 145,000 barrels, and abruptly the Saudis boosted its production of oil, lowering world market prices. By August of 1985, Saudi production jumped from 2 billion barrels a day to 9 billion. Since Saudi Arabia was the swing producer of OPEC, which used its production levels to control the market price for crude, the effect on Russia, was “calamitous,” said a former official.
But how did the price cuts affect Saudi Arabia’s incomes? Did it lose much money on the deal. Hardly any. According to former senior CIA officials, in what appears to be an early form of High Frequency trading, the agency’s foreign currency specialists bounced billions of dollars of Saudi currency reserves from one foreign currency to another – from the Belgian franc to the British pound to the Deutschmark and back. The Sands earned “billions’ one former official said.
Said a former White House staffer “Regan’s doctrine was simple – no quarter for the Soviet Union, no concessions. Instead, counter it any way you could whether undermining its economy, supporting free unions or supporting groups resisting its encroachments.”
Viewing such events may fill us with a certain moral uneasiness but the cost is small and the effect is great compared with a mistaken, fatal wasteful war like the one in Afghanistan.
A Brief Personal Note
I mistakenly sent Pat a rough draft in my reply to readers regarding the Liberty matter. The text was in disgraceful condition and I apologize.
I also wanted to express my appreciation for all who made comments and I regret saying of one’s reader’s remarks that they were “truculent” and adding that there were “errors of tone” as well as fact, thus committing one myself.