The Crusader

stop this arms race.”¹¹⁸ Reagan countered by again telling Gorbachev that he would “never let your country win [an] arms race.”¹¹⁹

These statements were symptomatic of Reagan’s delicate balancing game: He avoided publicly admitting, or acknowledging to the Soviets directly, that he was pursuing an arms race as a form of economic warfare, while he privately pursued that course. By its very nature, this political doublespeak led to situations in which Reagan was not truthful in his statements concerning an arms race or his intent to undercut the USSR. One such instance occurred in a May 8, 1985 speech to the European Parliament in Strasbourg, where Reagan pledged, “The United States does not seek to undermine or change the Soviet system.”¹²⁰ The Soviets did not believe this for a minute. On May 11, a TASS report was published in Pravda under the headline, “What the U.S. President’s Visit to Europe Showed.” The piece stated categorically that the “aim” of Reagan’s speech “was to rally his West European partners in the ‘crusade’ against Communism proclaimed by the head of the present U.S. Administration.” TASS stated that Reagan’s goal was no less than “overturning” the “postwar structure in Europe.” As far as Pravda was concerned, the Reagan statement that the United States was not seeking to change or undermine the Soviet system was ludicrous; and this was one of the few times that Pravda was right.

Indeed, while Reagan admirers have long hailed his conviction and candor, on these issues Ronald Reagan was not forthright. Though the national security implications of the situation clearly influenced his words, the fact remained that he employed a deliberate and precise brand of diction in an attempt to avoid admitting to the world that an arms race was his goal. Sometimes he tried to avoid situations that would force him to twist his language, as he frequently denied or dodged the question, and not always adroitly. The Presidential Documents, which are a compilation of public statements made by Reagan, are replete with denials, dodges, and blanket statements like, “We don’t seek an arms race.”¹²¹ He could usually get away with such a denial because his point seemed to be that he did not want to engage in an endless stockpile of nuclear-weapons manufacture with no intention of cutting the stockpile.

Though his statements on the arms race tended to be vague, on the issue of SDI specifically, the public Reagan was again circumspect. When Morton Kondracke and Richard H. Smith of Newsweek asked him pointedly if he was pursuing the initiative for the dual purpose of bankrupting the USSR, Reagan responded with an “oh” and a “well” and twice escaped into a rambling rejoinder, repeating at length something he said earlier in the interview.¹²² There were other similar denials and dodges on this question. In one press conference only two days after the SDI announcement, he was confronted by reporter Sarah McClendon, who asked that in the spirit of “seeking better human relations” with the USSR, “Why don’t we sell for cash some of the 190,000 tons of butter we’re paying to store daily and daily adding to? The Soviets need butter desperately….We have other surplus commodities.” She pushed: “Why cannot we explore whether better living through sharing of food and consumer goods will make people turn from their warlords and bring about peace?”¹²³

Reagan hemmed and hawed, evading the question with a threeparagraph ambiguous filibuster about disarmament, peace, food, agriculture, and commercial markets, not at all answering her question. McClendon, for her part, didn’t get it, not realizing that Reagan did not want to help the Communist system that held captive ordinary Russians and the peoples of Eastern Europe.

While these two sides of Reagan appear to contradict one another, the reality is that they are easily reconcilable. As Bill Clark notes, “He didn’t want to admit publicly that we were effectively at war [with the Soviets] or that we wanted to defeat them. He would [instead] say things like ‘we will prevail as a free society,’ and that ‘the Soviet system is doomed to fail,’ but he avoided using words like ‘war’ or a ‘race to bankrupt them.’” Clark stressed that Reagan, despite perceptions, was “incredibly careful” about his words.¹²⁴ This “incredible care” was a game at which Clark himself was well-versed. During his time at the NSC, Clark frequently had to make similar public denials in the face of scrutiny from the press, while privately assembling a concerted campaign of economic warfare. When an interviewer from U.S. News & World Report pressed him on the issue, Clark was forced into a denial: “We are not engaging in economic warfare with the Soviets or with anyone else; we’re seeking arrangements by which the Soviets…can shift their resources to peaceful ends. This does not require ‘economic warfare.’”¹²⁵ Of course, Clark’s NSC patented the product.

BUT DESPITE THE ADMINISTRATION’S OFT-REPEATED PUBLIC denials, internally there was no disputing the impact that the arms race was having on the Soviet economy. As 1985 was coming to a close, the Soviet economy was showing unprecedented signs of strain. Not only had the pace of the American military buildup become unmatchable, but the Soviet’s very real fears of SDI were taking their toll as well.

Though they were experiencing great success with their efforts to date, Reagan and his stalwarts always focused on the horizon, ever in search of other more substantial ways to prevent the Soviets from gaining ground. The economic war was one that featured constantly shifting fronts, and Reagan, who now seemed a confirmed expert in the depths of Soviet desperation, sought to alter his efforts and correspond to evolving Soviet vulnerabilities. His was a battleground that produced constant motion; and while much of 1985 had seen him focus on arms, his team was about to turn attention to a resource that was a bit more crude.

17. Conspiracies and Stingers: Late 1985 to 1986

SINCE RONALD REAGAN HAD BEGUN HIS HOMEWORK ON THE pipeline, which he shared in many a lecture to Western Europe, he had been well aware of the role that natural gas and oil played in the Soviet economy. In the face of overwhelming pressure to compete with America in the arms race, these two commodities had come to form the backbone of the Soviet economy, accounting for a remarkable 80 percent of Soviet hard currency earnings.¹ This currency was a life preserver that kept the USSR afloat, and as the world’s largest producer of gas and oil, it was clear that these energy exports represented the centerpiece of Moscow’s annual hard currency structure.²

Through the good work of the Reagan National Security Council, namely Roger Robinson, and Bill Casey’s CIA, this weakness was identified. Bill Clark had left the NSC back in October 1983, but Casey stayed on at the CIA. Clark had shepherded the pipeline decision, which exploited the Soviet dependency on gas exports. Now, it would be up to Casey to carry the torch in regard to oil exports.

But still, a key question remained: How could the administration exploit the oil dependency? While a different CIA director might have merely raised an eyebrow at the Soviet economic inefficiency and moved on, Casey smelled blood. This was not just another Soviet internal contradiction to be recorded in the debit side of the ledger; to Casey, this Soviet vulnerability was an American opportunity. Casey’s boss in the Oval Office agreed.

The answer came in the form of the most fundamental law of economics, supply and demand. After months of internal debate over the best way to take advantage of the situation, the underminers came to a solution: drastically lowering global oil prices and thereby undercutting the Soviet ability to earn vital hard currency. In charging a price for its oil exports, the USSR, like any supplier, was at the mercy of the market. If the world’s major suppliers in the Middle East opted to drastically increase or decrease supply, they could alter prices. An increase in global supply would lead to an overall decrease in world prices and prove detrimental to the fragile Soviet economy.

The plan was perfect, but it contained a major flaw. Unfortunately, the Reagan administration could not quietly ask OPEC to boom supply simply to help Reagan hurt the Kremlin. The politics of the matter were too tenuous and rife with the potential for international backlash. Despite this apparent setback, the administration looked to persevere in its thinking, exploring the possibility that perhaps a certain lone, oil-rich Arab nation could be approached.

It was here that Saudi Arabia came to play a key role in Ronald Reagan’s economic warfare campaign against the USSR. Reagan possessed an excellent rapport with Saudi King Fahd, and in an innovative, gutsy, and generally remarkable covert operation, Reagan and Casey convinced Fahd and his regime to help the