Real War (31 page)

To meet the requirements for restoration of a balance of power adequate to deter war and avoid defeat without war will require an increase in our defense budget of at least $30 billion—in 1980 dollars—annually for five years. This means a real increase of more than 20 percent over present levels. This is a substantial sum, but it would amount to barely more than 1 percent of our GNP. It is necessary life insurance—for our life as a nation and for the lives and freedom of the more than 2 billion people living in the noncommunist world. This is the most important social service we can provide.

Our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.

—
George C. Marshall, 1947

And what do Soviet people say about “rotting capitalism”? “It may be rotting, but what a lovely smell!”—and they inhale voluptuously.

—Vladimir Bukovsky, 1978

Just as military power provides the muscle, economic power provides the lifeblood for a successful strategy for victory in World War III. Economic power not only enables us to maintain the levels of military power we need; by itself it is a powerful weapon that, used skillfully, can advance our interests. It brings prosperity, not destruction. We should stop being apologetic about having it and reticent about using it.

The plain truth, evident to anyone willing to see it, is that the West in general and the United States in particular have created the greatest economic machine known to man. Communism, the system that promises wealth for all, has in practice turned plenty into scarcity, surplus into shortage, and wealth into poverty.

Tsarist Russia used to be a major grain exporter, and was known as the breadbasket of Europe; now its agriculture is a basket case. Although over 30 percent of its labor force is employed on farms as compared with 3 percent in the United States, it must import tens of millions of tons of grain in order to feed its people. China's “economic miracle,” which naïve reporters in the West extolled for years, has now been revealed to have been a paste-on job. The Peking
People's Daily
has admitted that it published many false and misleading reports in the past in order to make things seem better than they were. China now acknowledges that its people are getting less grain than they were twenty years ago. In Cambodia, the Khmer Rouge's “purification” campaign led to the destruction of virtually all forms of modern civilization, a literal return to barbarism. The numbers of Cambodians sacrificed on the altar of ideology ran into the millions, even before Vietnam's latest invasion of that tragic country.

Wherever there is a divided country, the free side prospers. West Germans are twice as rich as East Germans. Free Chinese are three times as rich as communist Chinese.

The United States produces twice as much as the Soviet Union. Overall, the West produces four times as much as the Soviet bloc. The Soviet Union's neighbor, Japan, with less than half its population, one-sixtieth its territory, and hardly any natural resources, is well on its way to surpassing the Soviet Union in production.

The economic bankruptcy of communism has forced it to turn to the West for assistance. Though the Soviets have long boasted of their economic achievements, the U.S.S.R. has been economically dependent on the West since the 1920s. Confronted with postrevolutionary economic chaos, Lenin himself invited Western firms to set up industrial concessions—a move hailed as “peaceful coexistence” in the West, but explained differently by Lenin himself, who told a Communist Party meeting, “Concessions—these do not mean peace with capitalism, but war on a new plane.”

Western firms took the bait, flocking eagerly to exploit what they saw as a rich new market. More than 300 “concessions” were granted, and by 1930, according to one exhaustive analysis, every major industrial process in the
Soviet Union had
derived from Western technology. But as soon as the Soviets had extracted the capital and technology they needed, they forced Western firms out of the country; by 1933 there were no foreign manufacturing concessions in the Soviet Union. Yet in that short period of economic “coexistence” America's contribution to Soviet industrialization was so large that in 1944 Stalin himself commented that two-thirds of the large industrial projects in the Soviet Union had been built with American assistance.

American assistance continued during World War II when the United States sent $11 billion worth of Lend-Lease aid to Russia.

After World War II reconstruction of the U.S.S.R. was accomplished in large measure by looting defeated Germany. Industrial plants worth $10 billion were disassembled, carted off to Russia, and reassembled there. Included were such plums as the Karl Zeiss factory (precision optical instruments), the Opel auto works and the V-2 rocket plant at Nordhausen, which provided the basis for the Soviet Sputnik programs. All told, Stalin carried off more than 40 percent of Germany's 1943 industrial capacity. The Soviets took Germany's creative talent as well—6,000 scientists, engineers, and their families, 26,000 people in all, were spirited away on a single night.

But when it must stand on its own, the Soviet Union is an economist's nightmare. In 1969 Brezhnev sent a confidential letter to the Central Committee detailing the desperate situation of Soviet industry. Oil, which provides almost half of its foreign exchange, is drying up; Siberia, potentially rich in resources, remains inaccessible and forbidding. The rate of growth of the Soviet labor pool is shrinking, and many of those now coming of age are less educated Moslems from Soviet Central Asia. Signs point toward a slower rate of economic growth in the future.

The highly centralized communist economic system, with its limited incentives, is incapable of generating creative new technologies at the rate the West does.

The Soviets treat economic transactions as matters of state. They apply the same discipline and tactics to them that they would to an exercise on the battlefield. Not only do they use trade to try to skim the cream of Western technology for themselves; they also seek to weaken the West by means of economic warfare, one of their most effective weapons in World War III.

As analyst
Richard T. McCormack has pointed out:

the Soviets appear to have discovered various ways to harass and damage the economic and political systems of the West. They do this by such instrumentalities as Western communist parties which they subsidize on a fairly large scale, by fomenting terrorism, encouraging conflict and war outside the East Bloc, and launching skillful propaganda efforts aimed at Western multinational companies, among others.

Nothing is more chilling to those who make decisions about long-term investment in other countries than reports of terrorist activities there, or kidnappings or murders of businessmen. In a less dramatic but equally effective way communist-led unions can also create an unfavorable climate for investment.

In Italy the postwar economic boom was halted in the late 1960s by massive communist-led strikes that resulted in crippling wage increases of up to 50 percent. According to Dr. McCormack, “Economists have calculated that these wage increases actually damaged the Italian economy more than the subsequent OPEC oil price increase by weakening her international competitiveness and by sapping needed money from the investment pool.” Since terrorism by the Red Brigades has been added to the witch's brew, private investment in Italy has virtually dried up. Without new investments, living standards are sure to decline, creating further discontent, which the communists will be able to turn to their purposes.

Local Communist parties, by leading strikes, by demanding excessive wage increases, by calling for nationalization of industries, and by sponsoring terrorism against businessmen, can damage the investment climate in a country so badly that
money will stop flowing into it. This, by itself, can have a major impact on whether a country remains free or not.

In tiny El Salvador leftist guerrillas have mounted a crushing offensive against the country's economy. The leader of the largest leftist group, Rafael Calente, has declared, “If we can stop the crop collection, we can vanquish the capitalist enemy more thoroughly than with a hundred bombs.” Coffee accounts for nearly 70 percent of El Salvador's income. Calente's followers recently occupied seven of the largest coffee plants and forced the mill owners to agree to a crippling 100 percent wage increase, throwing the economy into a tailspin. “The idea isn't to bargain and concede,” Calente says. “The idea is to upset and destroy.” The guerrillas have also been kidnapping business executives; by late 1979 they had collected nearly $50 million in ransom payments. As a result, most American companies have evacuated their non-Salvadorean managers. Tourism, construction, and industry have all been crippled by the guerrillas, who have been placing themselves in a position to take over if the economy breaks down.

The communists have now hit on the oil weapon as a means of striking at the vital economic underpinnings of Western society. Communist-led strikes in the European coal industry in the aftermath of World War II led to an increased dependence on oil from the Middle East. Then, as early as the 1950s, the Soviets quite deliberately set out to make it difficult for the West to import oil from the Middle East. Recently, Premier Kosygin himself spearheaded the Soviet pressure on the Arabs to use the oil weapon against the West. The Soviets' forays into Africa are motivated in large measure by the enormous economic stakes involved.

During World War II the United States recognized the importance of the economic battlefront by setting up a powerful Board of Economic Warfare. Since then several attempts to coordinate international economic policy, including one in my own administration, have foundered because of bureaucratic infighting among the government departments involved. Now time is running out. A modern-day equivalent of the Board of Economic Warfare is needed to fight the economic battles of World War III, and it should be established under the direct control of the President. Policies on trade, foreign aid, loans,
and support of international lending agencies must be coordinated to serve U.S. foreign policy interests. Only strong presidential leadership and direction can accomplish this result.

An area that urgently needs new direction and heightened attention is trade with the Soviet Union. The Soviets are using every possible weapon to cut the economic lifelines of the West in Africa, the Mideast, and other critical areas; we should not throw them a lifeline to rescue them from their sinking economy—except for a price.

In 1922 British Prime Minister David Lloyd George said of Russia, “I believe we can save her by trade. Commerce has a sobering influence. . . . Trade, in my opinion, will bring an end to the ferocity, the rapine, and the crudity of Bolshevism surer than any other method.” Such ideas may have been excusable fifty years ago, when Soviet communism was an unknown quantity. But there is no excuse for such wishful thinking now. The fashionable theory that a fat communist is less dangerous than a lean one is nonsense. Khrushchev was certainly well fed.

Whether directly or indirectly, trade with the Soviets strengthens them militarily. Even trade in nonstrategic items frees resources for them to use in other ways. We must never forget that doing business with the Soviets includes these costs; it is only justified when the benefits outweigh the costs. Trade with the Russians must be used as a weapon, not as a gift.

In 1972 the United States signed a number of commercial agreements with the Soviet Union as part of a larger whole, in an exercise of linkage. In 1972 we wanted Soviet help in extricating ourselves from Vietnam; we were negotiating an arms control pact; we were expanding people-to-people contacts and trying to establish a pattern of mutual restraint in which both superpowers would resolve conflicts by negotiation instead of confrontation. Trade was one of the principal things we had to offer in return for political and diplomatic concessions. We were also quite deliberately creating a network of interdependencies that would give us more leverage in future crises. We
wanted the Soviets to think twice about the potential economic costs of provoking us by troublemaking adventurism.

In my television address to the Soviet people during the 1974 Moscow summit, I compared the reaching of our various trade, arms, and other agreements to the weaving of a cloth: “Just as a cloth is stronger than the threads from which it is made, so the network of agreements we have been weaving is greater than the sum of its parts. . . . Thus each new agreement is important not only for itself but also for the added strength and stability it brings to our relations overall.”

Since then, however, the deterioration of America's military posture and the crippling effect of congressional restrictions on providing support for anti-Soviet forces in Southeast Asia, Africa, and other trouble spots have placed on trade more of a burden than it can bear. Trade must be the carrot and military power the stick. Without the stick, the Soviets simply pack the carrot in their picnic basket while they continue to forage in Angola, Ethiopia, or Afghanistan. As long as the Soviets continue on their present aggressive course—and they will do so until we present them with unacceptable costs—we should remember that trade is something they want which we can give or deny, depending on their behavior.

We should be especially careful about high-technology transfers that directly strengthen the Soviet military. The latest computer technology is absolutely vital to many modern weapons systems. We should not be so naïve as to suppose that high-technology items the Soviets request for their consumer sector are necessarily destined for that sector. Silicon chips with integrated circuits etched on them can be used for pocket calculators—or for the guidance systems of intercontinental ballistic missiles. Under no circumstances should a technology transfer that directly affects our national security be permitted.