ABSTRACT
This paper looks at the end of the Cold War as the end of a
monumental competition. Until 1981, the United States competed mainly on
its own side of the playing field. It was a good defensive effort called
containment, but it avoided taking the competition into the Soviet side.
The Reagan Administration changed the policy. It would undertake to
"win the cold war" by taking advantage of every Soviet
weakness and every U.S. strength to force a change in the Soviet bloc
system.
After 23 months of effort, President Ronald Reagan received a
report stating that "the combined weight of the burdens being
created will cause the Soviet system to implode in this decade."
On October 14, 1986, Soviet General Secretary Mikhail Gorbachev
speaking on Soviet TV told his people: "The U.S. wants to exhaust
the Soviet Union economically ... to wreck its plans ... of improving
the standard of living ... thus arousing dissatisfaction with their
leadership." That is what the Reagan administration intended. That
is what happened.
INTRODUCTION
In 1980 the Soviet Union and its ruling elite felt their country
was winning the Cold War. The USSR had good hard currency earnings and
high expectations of much more. It was buying and smuggling western
technology; it had taken over Afghanistan and was in a position to press
on in the Middle East. The Soviets had updated their weapons, "...
secretly deploy[ing] SS-20 missiles in Europe unilaterally,"
according to Anatoly Dobrynin, Soviet Ambassador to the United States
from 1962 to 1986, and had support in the West for disarmament and a
nuclear freeze (Dobrynin, 1995, p. 430).
The incoming Reagan Administration had campaigned for changing
this, but it faced many challenges:
* Western Europe was making loans to the USSR at half the normal
interest rate.
* Sweden was buying restricted high technology needed by the
Soviets and reselling the items with all the necessary instructions.
* Many western firms were selling restricted technology to
companies fronting for the USSR.
* The technologies the Soviets could not buy, they were trying to
steal.
* The USSR was earning hard currency by selling oil at three times
its production cost.
* The USSR was earning hard currency by selling weapons to oil rich
countries like Iran, Iraq and Libya.
* Europe was financing two gas pipelines from Siberia. If
completed, West Germany, for instance, would become dependent on Moscow
for 60 percent of its energy and Soviet hard currency earnings would
double to $60 billion per year (Schweizer 1994, p. 42-3).
* The Soviets had effectively taken over Angola and Mozambique, and
the Soviet military was providing aid and advice to many countries in
Africa.
* U.S. military spending had declined from 9.2 percent of Gross
Domestic Product (GDP) under President John Kennedy in 1962 to less than
4.6 percent under President Jimmy Carter in 1979 (Federal Government
Historical Budget, Tables 3.1 and 10.1).
* In Nicaragua, the USSR financed equipment and thousands of
trainers to "... build ... an army of 60,000 regulars backed by an
equal number ... militia" ... armed with heavy weapons." The
plan was to expand to 500,000 under arms (Singlaub, 1991, p.443-4).
* The Soviets were positioning themselves to threaten Western
Europe into less cooperation with the United States.
* The USSR had invaded and was winning in Afghanistan (Cold War
Seminar, 1999).
In August 1999, I had the opportunity to join a group celebrating
the fall of the Berlin Wall. It brought together former leaders from the
Reagan Administration: Secretary of Defense Caspar Weinberger, Secretary
of State Alexander Haig, Ambassador-at-Large Vernon Walters, National
Security Adviser Richard Allen, National Security Adviser William Clark,
Personal Adviser and later Attorney General Ed Meese, and James Buckley,
President of Radio Free Europe and Radio Liberty. It also included
National Review editors and writers: William Buckley, Kate
O'Beirne, Peter Rodman and John Sullivan. During the two-week
Baltic cruise, we spent 21 hours in formal sessions and talked
individually with the speakers. They described in detail how the Reagan
Administration implemented a many-faceted strategy that abandoned the
policies of containment and detente and used our competitive strengths
to take advantage of what they saw as moral, economic and systemic
weaknesses in the Soviet bloc. The policies, now declassified, were
spelled out in many secret National Security Decision Directives (NSDD)
(Cold War Seminar, 1999).
These directives had many specific steps, but the broadest of them
were the following:
* NSDD 32 (1982) -- Goal to" `neutralize efforts of the
USSR' to maintain its hold on Eastern Europe" (Schweizer,
1994, p. 76-7, interview with William Clark).
* NSDD 66 (1982) -- Cut off access to Western technology and reduce
the USSR's hard currency earnings. "NSDD-66 was tantamount to
a secret declaration of economic war on the Soviet Union" (Ibid. p.
126, interview with Roger Robinson, its principle author).
* NSDD 75 (1983) -- "Launch ... economic, military, and
political initiatives which convince the Soviet ruling elite that ...
unless it ... shared ... some of its power with the Soviet people ... it
would lose all of it" (Shattan, 1999, p. 250).
* NSDD 166 (1986) -- The new goal was to win in Afghanistan.
Satellites would now track Soviet movements so that more attacks could
be planned (Schweitzer 1994, p. 213 & 230).
"Reagan entered office in 1981 with a clear strategy in mind
... The objective was to find weak points in the Soviet structure, to
aggravate these weaknesses, and to undermine the system ... He believed
the proper strategy was one of clearly gaining the upper hand, and then
negotiating from a position of strength ... all in order to convince the
Soviets that it would be hopelessly expensive, even impossible, to keep
abreast [of the U.S.]." Only then would the Soviets agree to
negotiate verifiable agreements (Allen, 1996, p. 62).
Reagan's strategy was strongly supported by his closest ally,
Margaret Thatcher, Prime Minister of Great Britain. She wrote in her
memoirs, "... from the first I regarded it as my duty to do
everything I could to reinforce and further President Reagan's bold
strategy to win the Cold War, which the West had been slowly, but surely
losing" (Thatcher, 1993, p.157).
SOVIETS' VIEW IN 1980
The Soviet leaders viewed their position vis-a-vis the West
favorably--except for the USSR's low economic growth, reliance on
foreign sources for critical equipment and technology and its low labor
productivity. The USSR was again expanding its empire. Afghanistan would
soon be under complete control; then the Soviets could exert more
pressure on Iran and Pakistan. Mozambique came under Soviet control
without opposition, except by internal guerillas. The Communist
government of Angola had 12,000 black Cuban troops and thousands of
Soviet Bloc advisers. Neighboring African countries supported the
non-communist guerillas, but since 1976 the American Congress had
prohibited U.S. assistance.
Underway were a gas and oil project with Japan and a dual gas
pipeline from Siberia to Western Europe that would greatly increase
Soviet hard currency earnings. The USSR, because it had three times as
many tanks as the West, felt it could easily overrun Europe in a
non-nuclear war. The new SS-20 missiles could threaten Europe with a
nuclear war separately from the U.S. These would help make Europe
vulnerable to pressure. Soviet agents and advisers were active in many
countries working to extend the Soviet Empire or at least its influence.
The Soviets' ability to buy or steal Western technology was
not only saving billions of dollars, but also providing what the Soviets
were not capable of building themselves. Overall, the Soviet elite felt
that they were winning and they could continue to postpone making good
on their many promises to improve the standard of living of the average
Soviet citizen.
CASEY AND THE CIA
In February 1981, William Casey, the new Director of the Central
Intelligence Agency (CIA) called for two initiatives. The first was:
"to pay attention to worldwide `intangible threats' ... [like]
subversion and ... terrorism with special attention to the degree ...
[they were] supported ... by forces hostile to [the U.S] ..." The
second was: develop "a new intelligence estimate" that would
enable the administration to take advantage of U.S. strengths and the
weaknesses of its adversaries (Gates, 1996, p. 203).
Casey was not an ordinary director of the CIA. He was in the
Cabinet, on every foreign policy decision-making body, and on the
five-member National Security Planning Group (NSPG). He had an office in
the extended White House, met with the President twice a week, often
alone, and was guaranteed open access to him. (Schweizer, 1994, p. 3, 6,
interview with Herb Meyer) "Push. Push. Push. Casey never stopped
coming up with these ideas--or forwarding those of others--for waging
the war against the Soviets more broadly, more aggressively and more
effectively," writes Robert M. Gates (Gates, 1996, p. 256).
Robert Gates, whose CIA career extended from 1966 to being Director
in 1991, wrote, "Casey quickly put his finger on a serious
deficiency in the CIA's collection and analysis [of information] on
the Soviet Union ... while [CIA Operations] collected information on
Soviet covert action and espionage activities around the world ... these
reports were regarded as operational ... and were rarely shared with the
analysts and even more rarely ... outside...." Because of Casey,
"A CIA ability to monitor Soviet covert action in an organized and
thorough manner at last was born--35 years into the Cold War"
(Ibid. p. 202, 207).
SOVIETS SUPPORT TERRORISM
CIA analysts had neglected the seamier side of Soviet activities.
In March, Secretary of State Al Haig asked for a CIA analysis of how the
USSR was sponsoring terrorism around the world. The report that came to
Casey for signature concluded that the USSR did not. The evidence
submitted were public quotes by Soviet leaders condemning terrorist
groups. Casey wrote the head of the analytical section that he was
"greatly disappointed" in its quality since it relied on
Soviet statements. He asked Defense Intelligence Agency (DIA) to conduct
a new study using CIA's historical records that the analysts did
not have or request (Ibid. p. 203-5).
After negotiations on the wording, the report was eventually issued
in May 1981 as a joint report by the CIA and the DIA entitled The Soviet
Role in Revolutionary Violence. It described a worldwide effort to
weaken unfriendly societies, destabilize hostile regimes and advance
Soviet interests. The Soviets had no scruples about using terrorist
tactics. Even many terrorist groups without a political agenda had
individuals who "had been trained by Soviet ... friends and allies
that also provided them with weapons and safe transit." The Soviets
often publicly condemned such groups, which is what the first study was
quoting (Ibid. p. 205).
After the collapse of the Warsaw Pact countries, the CIA learned
that even the second report understated the support to terrorists. These
governments, especially East Germany, supplied not only sanctuary, but
also training, false documents, weapons, and funding to many groups such
as West German Red Army Faction. Gates writes: "It is inconceivable
that the Soviets ... did not know and allow (if not encourage) these
activities ... As it turned out, Casey had been more right than the
others" (Ibid. p. 206).
ECONOMIC COMPETITION
"In 1958, General Secretary Nikita Khrushchev had begun to
proclaim publicly that the Soviet Union would soon `bury' the
United States in an economic competition." In 1961, the party
actually adopted as part of doctrine, that: "In the current
decade-1961-1970--the Soviet Union, while creating a material-technical
base for communism, will surpass in per capita production the most
powerful and richest capitalist country--the United States." The
party program went on to proclaim that in the subsequent decade:
"... an abundance of material and cultural wealth will be ensured
for the entire population ..." (Brzezinski 1989, p. 34, 35).
The CIA estimated the 1965 per capita GDP of the USSR at 37 percent
of that of the U.S., in 1970 at 45 percent, in 1975 at 49 percent and in
1980 at 46 percent. It had estimated 1980 per capita Soviet GNP at
$6,500/year vs. $14,000/year for the U.S. (Ibid. p. 269). The CIA relied
on various sources including published Soviet statistics and estimates
based on photoreconnaissance. We now know both overstated output. The
photos missed the losses resulting from uneconomic designs, inefficiency
and waste. Poor quality and a very short useful life were characteristic
of the Soviet non-military products (Cold War Seminar, 1999).
"Up until [1975], the CIA had estimated that the Soviets spent
6 percent of their GDP on defense, about the same proportion as the
U.S." Then Brezhnev [in a secret speech] "boasted that
military spending was 15 percent of Soviet GDP ... the CIA grudgingly
increased its estimate to 12 percent, but the DIA argued that it was
closer to 30 percent" (Hayward, 2001, p. 423-4).
When a defector whose "specific job was to integrate the
[secret Soviet] military budget with the rest of the Five Year Plan ...
provided information that should have pushed the CIA ... estimate up to
about 25 percent ... the estimate went ... to 14 percent" (Graham,
1995, p. 86-7).
Neither President Reagan nor Casey believed the previous CIA
reports on Soviet GDP or its 12 percent for Soviet military spending.
Instead of looking at Soviet statistics and articles by economists
enamored with the efficiency of a centrally planned economy, Reagan and
Casey asked themselves what the USSR was really like and what GDP level
was consistent with these observations. Casey sent Reagan "every
week raw intelligence--unfiltered--about what is going on ... [and]
studies concerning what we can do, how we can use this to our advantage
... This practice had an enormous effect on Reagan and his views toward
the Soviet Union" (Schweizer 1994, p. 5, 102). Casey hired Herb
Meyer, who had written on the problems of the Soviet economy, as a
Special Assistant. In a report to Casey, Meyer states the USSR was:
"terribly vulnerable economically ... It should be a matter of high
national policy to play to these vulnerabilities" (Ibid. p. 5, p.
21). "As Reagan put it in his autobiography, the Soviet Economy was
in such bad shape `that if the Western countries got together and cut
off credits to it, we could bring it to its knees'" (Shattan
1999, p. 253).
In 1980, except for the elite, most Soviets were inadequately
housed. Not only were apartments small, but only two-thirds had running
water and only a third had hot water. Only 18 households per 1000 owned
a car, and there were few telephones even in rural areas (Roberts, 1990,
p. 40, 49, 52-4). "Every Soviet employee of an international
organization ha[d] to surrender to Moscow two-thirds of his monthly
salary [to the Soviet mission, plus] ... all the money paid into the
pension fund for him ha[d] also to be surrendered ... Despite this
exploitation, Soviets working in Geneva, were far better off than they
had been in the Soviet Union, even members of the elite." All tried
to stay overseas, even in Khartum (Dzhirkvelov 1987, p. 364).
"In 1986 the Soviet Union produced 27.5 tons of paper and
cardboard from 1000 cubic meters of ... timber while Finland got 155
tons and Sweden 144, more than five times as much" (Rowen, 1990,
p.22). This is an example of what caused the CIA to overstate Soviet
GDP.
General Secretary Gorbachev wrote: "We are spending far more
in raw materials, energy, and other resources per unit of output than
other developed countries. Our country's wealth ... has spoiled,
one may even say corrupted us" (Gorbachev, 1987, p. 19). "With
no incentive to compete, to rationalize or to innovate, [the Soviet Bloc
countries] had become monuments to bureaucratic inefficiency and
counter-productive extravagance." Recent data show that
"Soviet-type economies consumed three times the energy per unit of
production as the market based" ones like France or West Germany
(Brzezinski, 1990, p. 36).
The lack of a market economy meant artificial prices, which
resulted in the unavailability of low priced items and no incentive to
make spare parts. A plant manager needed approval to buy supplies, but
the approval was only a "hunting license" and he could not
reject defective material sent from other plants. Often he had to pay
"experts" to find the item needed. In these cases,
"expertise" meant using bribes, connections or buying stolen
materials, parts and equipment (Roberts, 1990, p. 13-5, 17).
The Soviet government subsidized food prices to discourage civil
unrest. "Yet, ... private plots ... were limited to only 4 percent
of arable land even though they were producing ... 25 percent of the
Soviet food...." In 1987, the Soviet health minister said:
"... a large percentage of Soviet hospitals had no hot water, (and)
inadequate sewerage ..." (Brzezinski, 1992, p. 37). "The
distribution system was poor, with crops left rotting in rural areas
while the urban population endured shortages and empty grocery shelves.
Fuel scarcity during the legendary Russian winters meant inadequate heat
for much of the population despite immense oil fields and huge coal
reserves" (Bush and Scowcroft, 1998, p. 14).
Exports into the free market [not barter or trade within the Soviet
bloc] consisted mostly of natural resources and weapons. The hard
currency earnings critical to the Soviets were only $32 billion in 1980
(Schweizer, 1994, p. 42, interview with Yevgenny Novikov, former member
of senior staff of the Communist Party Central Committee). Richard
Pipes, a Harvard historian and the Soviet specialist on the National
Security Council, wrote, "Anyone who spent an hour walking the
streets of Moscow, the Soviet Union's richest city, with open eyes
would have dismissed as preposterous CIA statistics showing the GDP as
well as its living standards to be nearly half of the United States.
Talking to Soviet citizens with an open mind would have revealed that
the appearance of wide spread support for the regime was
fraudulent" (Edwards, 1999, p. 47).
The National Intelligence Council, headed by Henry Rowen and later
with Herb Meyer as Vice Chairman, analyzed the raw data on the Soviet
Union from a different perspective in a series of studies. These
provided new views of the Soviet economy. William Casey and the NSPG
over time concluded, based on all this information (and not writing off
anecdotal material as many "experts" did), that the Soviet
economy was about one-sixth of the U.S. economy, not the nearly half
that the CIA had estimated for 1980 (Vernon Walters at the Cold War
Seminar, 1999). Another source stated: "in truth [the Soviet
economy] was only one-fifth as large [as U.S.]" (Hayward, 2001 p.
423). Actual Soviet military spending for 1980 was about 33 percent of
its economy, not the 12 percent the CIA estimated when the economy is
corrected from 46 percent to 17 percent of the U.S.
Igor Birman, a former USSR economist, (who emigrated to the West in
1974 and is now a noted expert on the Soviet economy) suggests a reason
for the CIA overestimates in the 60's and 70's. "[A]t the
base ... lies a lack of understanding of a simple fact-the share of
Soviet GNP allocated for military purposes is extraordinarily
high." "For the Western observer ... it is almost impossible
to imagine what ... the Soviet rulers set aside for war preparations.
Precisely this enabled them to have tremendous military strength with a
weak economy. This misunderstanding, the root of which is transferring
Western impressions to Soviet reality, is the basis of
[overestimating].... CIA economists believing in a modest share of
military expenditures unavoidably had to believe also in the very big
overall size of the Soviet economy" (Birman 1987, p. 177-8).
ENDING CONTAINMENT AND DETENTE
The Reagan Administration came in believing that the Containment
policy, embraced since Truman, was taking too long and would eventually
work against the United States. Democracies are very effective when
focused, but too many people were so used to the long lasting Soviet
threat that they felt it was overstated. The Europeans, anxious to
improve sales and reduce unemployment, were willing to provide credit
and loans the USSR. Robert Gates wrote: "Reagan, nearly alone,
truly believed in 1981 that the Soviet system was vulnerable, not in
some vague, long range historical sense, but right then. And he was
determined to move the United States and the West from defense to
offense" (Gates, 1996, p. 197).
Reagan's first National Security Adviser, Richard Allen,
wrote: "[Reagan