The Reagan Administration, Economic Warfare, and Starting to Close Down the Cold

War
Author(s): ALAN P. DOBSON
Source: Diplomatic History , June 2005, Vol. 29, No. 3, Diplomatic History Roundtable:
The Bush Administration's Foreign Policy in Historical Perspective (June 2005), pp. 531-
556
Published by: Oxford University Press

Stable URL: https://www.jstor.org/stable/24915133

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 ALAN P. DOBSON

The Reagan Administration, Eco

Starting to Close Down the C

President Reagan's strategy to accelerate the de

sisted of five pillars: economic, political, milita
William P. Clark, President Reagan's nat

The first Reagan administration adopted,

implemented an integrated set of policies, stra
directed toward the eventual destruction (with
and the successful ending of the Cold War wit
Norman A. Bailey, NSC staff member, firs

[NSDD 75] ... is for the longhaul... the U.S.

that its policy is not a blueprint for an open-end
Moscow, but a serious search for a stable and
for U.S.-Soviet relations.3

In order to implement [containment and roll-back; promotion of internal

change within the Soviet empire; and negotiations in US interests on the
basis of strict reciprocity], the U.S. must convey clearly to Moscow that unac
ceptable behavior will incur costs that would outweigh any gains. At the same
time, the U.S. must make clear to the Soviets that genuine restraint in their
behavior would create the possibility of an East-West relationship that might
bring important benefits for the Soviet Union.4

Exactly what did the Reagan administration intend to do with economic

defense policies? Were they designed to defeat or draw the Soviets into nego
tiation? Men such as Bailey and Clark believe that Reagan intended and sue

'The author would like to acknowledge his gratitude to the Ronald Reagan Presidential
Library for supplying photographs to illustrate this article.
1. Norman A. Bailey, The Strategic Plan that Won the Cold War: National Decision Directive
75 (MacLean, VA, 1999), "Forward."
2. Ibid., 8.
3. National Security Decision Directive 75 (NSDD 75), "US Relations with the USSR,"
17 January 1983.
4. Ibid.

Diplomatic History, Vol. 29, No. 3 (June 2005). © 2005 The Society for Historians of
American Foreign Relations (SHAFR). Published by Blackwell Publishing, Inc., 350 Main
Street, Maiden, MA, 02148, USA and 9600 Garsington Road, Oxford OX4 2DQ, UK.

531

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532 : DIPLOMATIC HISTORY

Figure i: President Reagan and his staff in the early hard-lin

administration.

ceeded in bringing down the Soviet empire through a cleverly integrated and
effectively delivered strategy, including economic squeeze, denial, and challenge
policies. However, while the key policy document dealing with U.S.-Soviet rela
tions, NSDD 75, clearly aimed at changing the Soviet Union, it articulated little
that was different from the position of previous administrations. More impor
tantly, in contrast with the views of Clark and Bailey, it spoke of establishing
better long-term relations and of carrots and sticks to modify Soviet policy in
a way that echoed the linkage policy of Nixon and Kissinger from the much
reviled years of détente. NSDD 75 does not seem to meet even the criteria for
prevailing over, never mind defeating, the Soviets.5
The Reagan administration's Cold War strategy is fraught with difficulties
of interpretation. Some see Reagan in terms of symbolism or as an agent in the
politics of decline. Others see him as incompetent, wayward, and overly influ
enced by Nancy Reagan. There are those who celebrate his revival of Ameri
can values and strength, and those who revile his politics as chauvinism and his
economics as exploitative capitalism. Some see him as an effective statesman
because of his pragmatism, others because of an aggressive agenda dictated by
his right-wing ideology.6 The latter has been a popular and powerfully presented

5- "That's always the expression. How we prevail." Interview by the author with Gus W.
Weiss, 28 April 2003, Washington DC.
6. Robert Dallek, Ronald Reagan: The Politics of Symbolism (Cambridge, MA, 1984); Joel
Krieger, Reagan, Thatcher and the Politics of Decline (Cambridge, UK, 1986); Geoffrey Smith,

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 The Reagan Administration, Economic Warfare : 533

view by those who saw Reagan's militarily buildup, the momentum he created
for Western renewal, and the Strategic Defense Initiative (SDI), or Star Wars
program, as part and parcel of a strategy aimed at, and which in their view
achieved, victory over the Soviet Union.7
From yet another perspective, while U.S. policies were "hard-headed" and
disruptive for the Soviets, radical change appears to erupt not primarily because
of anything that Reagan did, but because of the long-standing structural flaws
in the Soviet economy and the corrosive influence of Western ideas in an ever
more interdependent world with permeable state borders. Seductive Western
ideas began to take hold because of enhanced communications, the aggressive
propaganda of the Roman Catholic Church, and the fora established by the
Helsinki Accords for economic, political, and human rights reforms.8 Some even
see the military strength Reagan developed as just another symptom of termi
nal superpower overstretch. Reagan's time in office gave new impetus to the
debate about U.S. decline, fostered mainly by Paul Kennedy's The Rise and Fall
of the Great Powers.9 Ironically, the most influential voice in rejecting that thesis,
Joseph S. Nye's, still blamed Reagan for temporarily weakening the United

Reagan and Thatcher (London, 1990); Lou Cannon, President Reagan: The Role of a Lifetime (New
York, 1991); "President Reagan, who may have had cynical advisers was not cynical himself.
... took the principle of 'negotiation from strength' literally: once one had built strength, one
negotiated." John L. Gaddis, The United States and the End of the Cold War: Implications, Recon
siderations, Provocations (New York, 1992), 125.
7. Peter Schweizer, Reagan 's War: The Epic Story of His Forty-Year Struggle and Final Triumph
over Communism (New York, 2002); Derek Leebaert, The Fifty-Year Wound: The True Price of
America's Cold War Victory (Boston, 2002). Members of the Reagan administration who have
written in a similar vein include Caspar Weinberger, Fighting for Peace: Seven Critical Years
in the Pentagon (New York, 1990); Robert Gates, From the Shadows: The Ultimate Inside Story
of Five Presidents and How They Won the Cold War (New York, 1996); Richard Pipes, "Misin
terpreting the Cold War," Foreign Affairs 74 (January/February 1995): 154-61; Gus W. Weiss,
The Farewell Dossier: Strategic Deception and Economic Warfare in the Cold War—An Insider's
Untold Story (http://www.cia.gov.csi/studies/96unclass/farewell.htm and hardcopy supplied by
Weiss to the author); and Bailey, The Strategic Plan that Won the Cold War. The idea that the
U.S. military buildup was a major factor that led to the demise of the Cold War and Western
"victory" is rejected by Russian insider experts such as Georgi Arbatov, The Soviet System: An
Insider's Life in Soviet Politics (New York, 1992) and by scholars such as Frederich Kratchowil,
in his scathing attack on neorealism, "The Embarrassment of Changes: Neo-realism as the
Science of Realpolitik without Politics," Review of International Studies 19, no. 2 (1993): 63-80.
Beth A. Fisher, The Reagan Reversal: Foreign Policy and the End of the Cold War (Columbia, MO,
2000), raises substantial doubts about cause and effect from both the U.S. arms buildup and
the early Reagan administration hard line by close scrutiny of the chronology of Soviet policy
developments.
8. R. Davy, ed., European Détente: A Reappraisal (London, 1992); K. Dawisha, Eastern
Europe, Gorbachev and Reform (Cambridge, UK, 1990); David Ryall, "The Cross and the Bear:
The Vatican's Cold War Diplomacy in East Central Europe" and Robert Bideleux, "Soviet and
Russian Perspectives on the Cold War," in Deconstructing and Reconstructing the Cold War, ed.
Alan P. Dobson with S. Malik and G. Evans, assoc. eds. (Andover, UK, 1999). A closely asso
ciated approach emphasizes the importance of the beliefs of Gorbachev and his associates: Don
Oberdorfer, The Turn from Cold War to a New Era (New York, 1991) and McGeorge Bundy,
"From Cold War to Trusting Peace," Foreign Affairs 69, no. 1 (1990): 197-212.
9. Paul Kennedy, The Rise and Fall of the Great Powers (London,

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534 : D 1 p L 0 M AT 1 C HISTORY

States through profligate defense spending and thus adding to the national
debt.10 The hindsight of many in the "Reagan Cold War victory school" seem
to have overlooked that there were deep concerns in the early 1980s of a U.S
economic collapse and its descent into isolation and a diminished status in worl
affairs. In fact, fears such as these were far more vocal than any debate abo
a Soviet collapse from whatever cause. Finally, some historians place mor
emphasis on a broad range of factors that influenced the dramatic events of th
late 1980s and early 1990s, and some conclude that "we all lost the Cold War,
while others emphasize Reagan's willingness to negotiate once he had achieved
a position of strength and claim that those negotiations closed down the Cold
War well before the collapse of the Soviet Union."
Within this fraught context, the difficulty of interpreting economic defens
policy is compounded by the impossibility of disentangling the strategic from
the tactical. Further problems lie in the frequent disjunction between Reagan's
rhetoric and actions, in the different motives that people held for pursuing th
same policies, and in the tendency to identify the administration with a highl
ideological group committed to aggressive strategies. In order to unravel this
tangle one must judge the balance between the doctrinaire and the pragmatic
in Reagan; distinguish between those who had different reasons for supporting
the same actions to see what this tells us about the actual meaning of policies
and measure the extent to which the hard-line ideologues managed to deter
mine policy. Two further questions of interpretation arise from this. First, to
what extent was policy intended to be all-out cold economic warfare during
1981-1985? Terminology here requires a little elucidation. As with the terms
"Cold War" and "war," it seems that there are benefits to be derived from usin
"cold economic warfare" and "economic warfare" to distinguish between activ
ities possible during war conditions and those possible under conditions of a
hostile peace. Furthermore, while cold economic warfare might be construed
as the application of economic instruments of statecraft to pursue noncom
mercial objectives short of defeating an adversary, all-out economic warfare is
clearly directed at the collapse of, or regime change in, an adversary. While
these stipulations may seem arbitrary at the moment, what follows should
provide justification.12 The second question is, even if there were such a dor

10. J. S. Nye, Jr. Bound to Lead: The Changing Nature of American Power (New York, 1990
11. Michael R. Beschloss and Strobe Talbot, At the Highest Levels: The Inside Story of the
End of the Cold War (Boston, 1993); Richard Ned Lebow and Janice Gross Stein, We All Lo
the Cold War (Princeton, NJ, 1995). A highly persuasive argument against the Reagan Col
War victory thesis is presented by Beth A. Fisher in a paper for the Norwegian Nobel Institut
"Reagan's Triumph? The U.S. and the Ending of the Cold War," 16 May 2002; see also he
The Reagan Reversal. An interesting overview of the rather narrow "causal" accounts of the en
of the Cold War is in Charles W. Kegley, "How Did the Cold War Die? Principles for a
Autopsy," Mershon International Studies Review 38, no. 1 (1994): 11-41.
12. For a more elaborate discussion of these matters see Alan P. Dobson, US Economic
Statecraft for Survival 1933-1991: Of Sanctions, Embargoes, and Economic Warfare (London,
2002), chap. 11.

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 The Reagan Administration, Economie Warfare : 535

inant desire to destroy the Soviet Union and/or force a regime change through
all-out economic warfare, was it consummated?

SIGNPOSTS TO REAGAN S VIEWS

Reagan thought that the Soviets had serious econo

their grip on empire, particularly on Poland, was sl
with Pope John Paul II on 7 June 1982, further exc
thereafter, and the text of his 8 March 1983 "evil em
cate those convictions.13 But victory over communis
Soviet Union were something else. There is no hint
radical change in Soviet policies, nor of Soviet collap
is little doubt that Reagan intended to renew Americ
alliance, and challenge the Soviets more effectively.
with what economic tactics is less easy to establish.
campaign he commented:

The Soviets have been racing but with no competiti

And so I think that we'd get a lot farther at the ta
they continue, they're faced with our industrial ca
do.14

Reagan wanted to compete in the Cold War more vigorously, but he took it for
granted that "the Russians,... considered it unthinkable that the United States
would launch a first strike against them.'"5 This conviction created room for
aggressive maneuvering, which involved combative rhetoric to arouse U.S.
public opinion, more assertive leadership of the West, a cutback in the tech
nology flow to the East, and increased defense spending and technological inno
vations such as SDI, which were intended to challenge the Soviets to respond
and thus place further pressure on their stretched economy. At the same time
covert and counterintelligence activities were to be increased. In November
1980, Reagan's transition team had concluded: "Decisive action at the CIA is
the keystone to achieving a reversal of the unwise policies of the past decade.'"6

13. See Christopher Andrew, For the President's Eyes Only: Secret Intelligence and the Amer
ican Presidency from Washington to Bush (New York, 1996), chap. 12. In fact the Reagan record,
both before and during his presidency, is replete with references to the unsustainability of the
Soviet economic system in the long term, but one should not deduce from this that Reagan
was bent on destroying the Soviet Union during his terms of office or that he expected his
policies would cause its swift collapse.
14. Hedrick Smith et al., Reagan the Man, the President (Oxford, 1980), 120-21, citing
sources International Associated Press interview, 1 October 1980.
15. Ronald Reagan, An American Life (New York, 1992), 588; Garthoff's judgment echoes
this and even includes Reagan's more extreme colleagues: "Reagan was not disposed to take
confrontational courses of action that risked a direct clash with the Soviet Union, nor were
any of his principal advisers. . . ." R. Garthoff, Détente and Confrontation: American-Soviet
Relations from Nixon to Reagan (Washington, DC, 1985, revised 1994), 1013.
16. Quoted from Rhodri Jeffreys-Jones, The CL4 and American Democracy (New Haven,
CT, 1989), 227-28.

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536 DIPLOMATIC HISTORY

And soon Reagan unleashed the ex-OSS (Ove

William Casey as director of the CIA and
dented position of cabinet member. Part of
action was the widespread concern about th
Western technology would have on the strat
to new levels of paranoia among many of t
administration with the revelations of the
to steal Western technology. Even before he
to cut down on the technology flow to the E
as his more ideologically committed colleag
the unity of the Western alliance and hi
productive negotiations. This looks remarka
Truman administration's convictions about t
of only negotiating from a position of stren
aims sometimes caused apparent contradicti

Reagan lifted the grain embargo against t

administration in retaliation for the Soviet
without denying the principle of economi
the case of Poland less than nine months l
but in less than a year his administration
denounced SALT 2 as fatally flawed but li
years. He attacked the Helsinki conference
in the follow-on meetings at Madrid, Stoc

Whether or not Reagan opposed East-West

strategic grounds" is debatable given his lif
1981 and other measures which he later
appointed people to low-, middle-, and high
views. These included Gus W. Weiss and N
Security Council (NSC) staff, Richard Perle a
international security policy, Richard Pipes
NSC, Lawrence Brady, assistant secretary o
tion, William P. Clark, national security ad
the CIA, and Caspar Weinberger, secretary
presidency, the use of economic sanctions w
Weinberger thought that the United States

17 • G. Hyland, Mortal Rivals: Superpower Relations

232.
18. Steven Elliott, "The Distribution of Power an
Trade Controls," in Controlling East- West Trade and Tec
ed. G. K. Bertsch (Durham, NC, and London, 1988)
administration for publicly criticizing lax implem
pointed him at a higher level. B. W. Jentleson, Pipeli
of East-West Trade (Ithaca, NY, 1986), 175.

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 The Reagan Administration, Economic Warfare : «7

messages if they relied solely on U.S. military capabilities.19 Reagan attributed

potency to economic measures and believed that they could bring the Soviets
to the negotiating table. In 1982 he thought curtailing Western credits would
confront the Soviets with a stark choice of currying favor with the West or starv
ing. This message was also broadcast by his national security adviser William
Clark, who told an audience at Georgetown University in May 1982: "We
must force our principal adversary, the Soviet Union, to bear the brunt of its
economic shortcomings."20 In 1983 Reagan told Prime Minister Margaret
Thatcher of Britain that "the task was to convince Moscow that the only way
it could remain equal was by negotiations because they could not afford to
compete in weaponry for very much longer." And after Mikhail Gorbachev
became general secretary in April 1985, Reagan became convinced that if he
waited long enough the Soviets would accept deep arms cuts because of the
parlous state of the Soviet economy, even though the United States would
proceed with SDI.21
Several scholars have talked of a strategy of all-out cold economic warfare
and of its deployment during 1981-1985.22 Key figures, including Weinberger,
Casey, Perle, Pipes, and Brady, all had the intention of waging all-out cold eco
nomic warfare, with the objective of causing the collapse of, or regime change
in. the Soviet Union. However, this is incomnatible with earlv siennosts to

Reagan's thinking, with his accommodating line after 1984, with the actual text
of NSDD 75, and with his willingness to negotiate from a position of economic
and military strength.

EARLY DAYS AND RISING PARANOIA AMONG

THE HARD-LINE IDEOLOGUES

For all its bold rhetoric, the Reagan administratio

its way ahead. The most immediate issue was th
of State Alexander Haig, true to his mentors P
Kissinger, urged the president not to lift the emba

19- The issue here is more complex than a straightforwa

power. As Hyland argues, both U.S. weakness in 1981 and s
gerated, but by 1985 Reagan had managed to change percept
far as Soviet assessments were concerned, he had set in train
Hyland, Mortal Rivals, 232.
20. Quoted from Louis J. Walinsky, "Coherent Defense Str
Denial," Foreign Affairs 61 (Winter 1982/83): 471.
21. Andrew, For the President's Eyes Only, 468, citing Reag
Diary, 26 March 1982; Margaret Thatcher, The Downing Stre
on the wisdom of Reagan holding out at Reykjavik, 471; Reag
Donald T. Regan, For the Record: From Wall Street to Washi
22. Most notably the leading scholars in this field, M. Mast
COCOM and the Politics of East-West Trade (Ithaca, NY, 19
various publications; Philip Hanson, "Soviet Responses to W
West Trade and the Atlantic Alliance, eds. David A. Baldwin an
50; Jentleson, Pipeline Politics, 175.

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538 DIPLOMATIC HISTORY

Figure 2: State of the Union Address 25 Januar

a more conciliatory line with the Soviets.

rocated with concessions. He argued, in p

ment of the embargo would send the So
were poised to intervene to restore their
attack from the Solidarity trade union r
At Reagan's first cabinet meeting, Secreta
strongly for lifting the embargo, but R
domestic pressures mounted, Block and
vailed and Reagan lifted the embargo o
the administration in the economic defe
Carter's policy despite the opposition, no
the hard-liners such as Jeanne Kirkpa
Nations, Weinberger, and National Secur
Over the following weeks, the hard-lin
by the State Department struggled for in
7 July NSC meeting "a consensus emerg
tant to Soviet economic development and
gic material should be curtailed."24 But t
wisdom in the Carter administration.25

23. Alexander Haig, Caveat (New York, 1984),

24. P. J. Fungiello, American-Soviet Trade in th
25. Carter, an engineer by profession, was p
technology transfers such as computers really se

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 The Reagan Administration, Economic Warfare : 539

cance was placed on restricting high-technology flows, partly because SDI

emphasized the importance of technology applications for defense, partly
because of the ceaseless pressures from Weinberger, Perle, et al., and partly
because of yet more reports confirming the importance of restricting weapons
technology transfers.26 Nevertheless, this was not a dramatic development and
at the Ottawa Western Economic Summit in July, although Reagan raised the
issue of technology transfer, he made little impact on his allies and in the con
ference final communiqué was grateful for some anodyne phrases of compro
mise from Thatcher. "We concluded that consultations and, where appropriate,
coordination are necessary to ensure that, in the field of East-West relations,
our economic policies continue to be compatible witb our political and secu
rity objectives."27 This was not a good augury for the ideological hard-liners
who wanted to stiffen the backbone of their allies and strengthen the Western
COCOM multilateral embargo.28 All Ottawa produced was an agreement to
talk at a COCOM meeting in January 1982. However, as luck would have it
for the ideological hard-liners, revelations of the Line X Operation, along
with Soviet pressure on Poland and the declaration of martial law that came in
December 1981, provided fuel for their arguments, and new opportunities for
pursuing their objectives.
The intentions of Richard Perle were abundantly clear before the Polish
crisis erupted. In November he stated that "the assessment of the Department
of Defense and of the Reagan Administration is that this highly coordinated
Soviet effort [to match Western technology] is being carried out at the expense
of the free world by a raid on our technology ... from precision tools to process
know-how technology." In May 1982 Weinberger went even further: "Selling
them our valuable technology upon which we have historically based much of
our security is short-sightedness raised to the level of a crime."29 Behind these
statements lay the knowledge of a well-organized Soviet conspiracy.
One of the more curious incidents of the extraordinary Cold War years was
the revelation of the Soviet Line X Operation and the U.S. response through
"Farewell." In early summer of 1981 Marcel Chalet, head of the Direction de
la Surveillance du Térritoire, told Vice President George H. W. Bush about a

26. United States Government, Soviet Acquisition of Western Technology (Washington, DC,
1982); United States Government, Soviet Acquisition of Military Significant Western Technology:
An Update (Washington, DC, 1985).
27. Quoted from Smith, Reagan and Thatcher, 53. Smith comments: "At Ottawa her
[Thatcher's] interest was to save him from political embarrassment without endorsing his entire
position on East-West trade."
28. The coordinating committee, or COCOM, was established in 1949. It was made up
of NATO members except for Iceland and included Japan from 1952. It met periodically in
Paris to establish lists of prohibited and restricted goods for export to the Soviet bloc and
Communist China.
29. Both are quoted from Bertsch, Pipeline Politics, 17, 21, citing as sources Perle testimony
before House Committee on Foreign Affairs, Sub-Committee on International Economic
Policy and Trade, 12 November 1981, and Weinberger speech, Foreign Policy Association,
New York, 21 May 1982.

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 540 : DIPLOMATIC HISTORY

new informant, Vladimir Vetrov, codenamed Farewell,

KGB's scientific and technological division. Later at the Ott
ident Mitterand passed to Reagan and Haig information
Line X, which had been running since 1970 out of over ten
Europe, the United States, and Japan. During 1980 "a to
tion tasks' had been under way, of which, 1,085 had been suc
in the course of the year, producing over four thousand 'sam
twenty-five thousand technical documents. The main S
nology] target, as in the case of political and military intellig
been the United States." According to Mitterand, Reagan
that "the Vetrov revelations were 'the biggest affair of its k
World War.' "3° Why this caused such a fuss is slightly puzz
known for decades about Soviet technology thefts. Neverth
viewed, Gus W. Weiss was emphatic: "No! No! No! No! They
details and the scope."31
Once the Americans had the information from Vetrov the
of a problem. "No-one could work out a way to make
this stuff until I [Weiss] read it and it seemed obvious to m
we'll give it to them but we're going to do a little sabotage
William Casey with his idea of feeding the Soviets technolo
tion and defective hardware.33 Casey liked it so much he pr
without apparendy acknowledging Weiss's input. The re
Farewell.
Just how effective the program was,34 is difficult to determine as no assess
ment of the damage done is available. The head of French counterintelligence
Yves Bonnet expelled forty-seven Soviet representatives in 1983, and one might
plausibly surmise that this was at least partially linked with Farewell, but even
though the British and other NATO allies were briefed on Line X operations
nothing happened until September 1985 when Britain expelled thirty-one
Soviet officials.35 Mass expulsions from the United States, the main target of

30. Quoted from Andrew, For the President's Eyes Only, 465, citing sources C. Andrew and
O. Gordievsky, KGB: The Inside Story of Its Operations from Lenin to Gorbachev (New York, 1991),
621-23; Philip Hanson, Soviet Industrial Espionage: Some New Information (London, 1987); and
Pierre Favier and Michel Martin-Roland, La décennie Mitterand (Paris, 1990), 1:95.
31. Weiss interview. Undoubtedly some highly sensitive materials were pirated, but just
what their overall impact was on the military and strategic balance is currently impossible to
say.
32. Weiss interview.
33. Gus W. Weiss, The Farewell Dossier, http://www.cia.gov/csi/studies/96unclass/farewell.
htm; see also Weiss, Farewell Dossier.
34. Or indeed is, as Weiss claims that it is still in operation. When asked targeted against
whom, his reply was, "Whoever tries to steal it."
3 5. Geoffrey Howe, Conflict of Loyalty (London, 1995), 440; Thatcher, Downing Street Years,
470. It could be argued, of course, that expulsions were not made because the United States
wanted to continue to feed the Soviets defective information, but there has been no sugges
tion that the British were also involved in that, so why they waited so long to expel Soviet
agents is a little puzzling.

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 The Reagan Administration, Economic Warfare : 541

Line X operations, did not occur until even later in a tit-for-tat series of expul
sions by the United States and the Soviet Union in 1986, involving approxi
mately eighty Soviet representatives. Furthermore, it should be noted that the
British and U.S. expulsions might have had more to do with the British Soviet
informer Oleg Gordievsky, a KGB officer at the Soviet embassy in London,
than with Vetrov. Just how significant all this was is difficult to assess. The most
important thefts appear to have been to do with airborne surveillance and
warning systems and nuclear detonators. Weiss believes that Line X revelations
impacted on NSDD 75 and strengthened the determination to cut back on the
technology flow to the Soviets. According to the U.S. intelligence community,
the technological time lag between the Soviet Union and the United States had
shrunk from fifteen to three to four years from 1970 to 1980 and the implica
tion is that this was partly to do with Line X. However, once again things
become opaque. In what areas did the time lag apply? Presumably not to mil
itary aircraft, where on American intelligence's own admissions Soviet planes
VYL1C aUjJLIlUI Lv_l UllV^ll V-V..J Ul 1 l_V^i pdl to. VVlldL Wt 1,4.11 Ut dUlt Uli 13 LilclL U.1C

Line X revelations fueled the ideological hard-liners' passion to wage all-out

cold economic warfare as vigorously as possible to try to defeat the Soviet
Union. They did not see the use of economic statecraft primarily as a means of
articulating moral condemnation of the Soviets, or as a means of communicat
ing resolve and deterrent messages, or as a means to pressurize the Soviets into
constructive dialogue. For this group of advisers there were two fundamental
justifications for all-out cold economic warfare: the denial of high technology,36
and to increase stress within the Soviet system to the point where it would snap.
With the Polish crisis they thought their opportunity to increase such pressures
had arrived.

POLAND

Of Poland, Weinberger wrote in his memoirs: "The Presi

sensed that this was to be his first test and that a great d
at least the next four years, on how he, and the nation, r
sure on Poland."37 The key issue from the start was how c
send clear and convincing messages to deter the Soviets f
sive acts that might spiral out of control into a direct Eas
frontation?38 As Haig put it, "Our signal to the Soviets had
that their time of unrestricted adventuring ... was over."3
ral, Reagan met with his security team at Blair House to
agreed that if the Soviets moved militarily to shore up th
in Poland, the United States could not sit idly by, but th

36. Weiss interview.

37. Weinberger, Fighting for Peace, 25.
38. See Dobson, US Economic Statecraft for Survival, 249-62.
39. Haig, Caveat, 96.

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542 : DIPLOMATIC HISTORY

aware of making threats that could not be carried out and th

for future credibility if bluffs were successfully called.40 "A te
Ryszard Kuklinski, the CIAs longtime source inside the Polish
reported in early December 1980 that [General] Jaruzelski [th
had ordered his Defense Ministry to approve Kremlin-sponsor
18 divisions of Soviet, Czechoslovak and East German troo
country... ."4I However, for some time after Reagan entered t
developments in Poland seemed to be on hold, but intelligence
still deeply ominous. In the spring, CIA intelligence from Polan
a Soviet military entry into Poland was imminent. Reagan sen
to Brezhnev, warning him to expect "the harshest possible eco
from the United States if they launched an invasion."42 Reagan
saw Poland as the weak link in the Soviet ring of satellites
Moscow.43

Things took a dramatic turn on 13 December 1981, when the Polish gov
ernment declared martial law. It took Washington by surprise, and it was several
days before Reagan responded. Part of the problem was that there was no overt
Soviet intervention. The United States and its allies had not prepared a collec
tive response for this eventuality.44 However, intelligence reports placed beyond
doubt, in the collective mind of the Reagan administration, Soviet involvement
and responsibility tor martial law.1'1 Keagan wrote to 1 hatcher ot his outrage at
the Soviet role in Poland.46 On 29 December he announced a range of trade
sanctions. His declared intention was "to convey to those regimes, how strongly
we feel about their joint attempts to extinguish liberty in Poland."47 Notwith
standing the clampdown by the Polish authorities, there was still a possibility
of direct Soviet military intervention. Recent evidence has cast new light on the
role of Jaruzelski and the Soviets and while controversy abides, it would appear
that Jaruzelski wanted direct Soviet intervention, but the Kremlin refused,
fearing that it would be too provocative for the West.48 Nevertheless, so far as
the Americans were concerned, they knew that the Soviet Union had been a
key mover of events, and they thought that a direct military intervention by the
Soviets was still highly probable even after the declaration of martial law. These

40. Ibid.
41. Malcolm Byrne, "New Evidence on the Polish Crisis 1980-81," Cold War International
History Project (CW1HP) Bulletin 11 (Winter 1998): 3.
42. Reagan, An American Life, 302; and Andrew, For the President's Eyes Only, 462.
43. Ibid., 468.
44. Smith, Reagan and Thatcher, 73.
43. Andrew, For the President's Eyes Only, 466, citing Reagan, An American Life, 303.
46. Thatcher, Downing Street Years, 253, the letter arrived 19 December 1981.
47. Public Papers of the President: Ronald Reagan 1981 (Washington, DC, 1981), 1202
48. Mark Kramer, "Jaruzelski, the Soviet Union and the Imposition of Martial Law in
Poland: New Light on the Mystery of December 1981," CW1HP Bulletin 11 (1998) and Jaruzel
ski 's reply, 32-40.

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 The Reagan Administration, Economic Warfare : 543

considerations are important because they have a bearing on establishing the

motives and intentions behind U.S. sanctions.

Reagan's reasons for imposing sanctions on Poland overlapped with those of

his hard-line Defense Department and NSC team, but it is possible to see other
reasons at play as well to which he gave more emphasis than they. Reagan was
determined to send a strong message of condemnation in order to redeem the
threats he had uttered to try to deter Soviet involvement in the repression of
the Polish reform movement and to try to deter them from further aggressive
moves. There would also have been little chance of gaining Allied support for
a more combative stance against communism if he had not taken punitive action.
U.S. Eximbank credit guarantees were stopped, Polish fishing and airline rights
in areas of U.S. jurisdiction were suspended, and the president requested the
Allies to restrict high-technology exports. On 29 December similar sanctions
were imposed on the Soviet Union, most notably including the suspension of
talks for a new long-term grain agreement and an embargo on equipment for
the Urengoi oil pipeline. However, these measures did not meet with the full
approval of either the ideological hard-liners in the administration, who wanted
and continued to push for more punitive measures, or the Allies, who would
only muster feeble retaliatory measures against the Soviets and verbal condem
nation at the NATO Council on 11 January. The polarization of views is
wtii-iiiu;>u.<iLcu uy vvcmucigci a ucunc lu ucudic iruidiiu in uciauii un ilî> ucui

repayments and the expression of horror at such a prospect by Prim

Thatcher, who, by no one's account, could be considered to be s
munism.49 It became obvious on 23 January that there would be a r
between the United States and its allies when the French signed a ma
contract with the Soviets: others soon followed.
Both Mastanduno and Jentleson argue that the Polish sanctions issue was
hijacked by the hard-liners in Washington. Martial law in Poland may have been
the "proximate," but it was neither the only nor the "most significant cause" for
the sanctions against the pipeline. It all became part of "the broader attempt to
retard the Soviet economy over the long run."s° Indeed, the principal "archi
tect of the pipeline sanctions was Richard Perle, who obtained the full backing
of Weinberger. It was a characteristic Perle move, an example of swift lateral
thinking that took his adversaries by surprise."51 His statement "indicated that
American coercive objectives ran much deeper than the symbolic and compel
lance objectives associated with the issue of martial law in Poland." It was,
Jentleson suggests, part of an "overarching strategy" to return to the economic

49- Mastanduno, "The Management of Alliance Export Control Policy," in East-West

Trade, ed. Bertsch, 302-3; Thatcher, Downing Street Years, 354-55; Haig, Caveat, 255.
50. Bruce W. Jentleson, "The Western Alliance and East-West Energy Trade," in Con
trolling East-West Trade, ed. Bertsch, 331; Mastanduno, Economic Containment, 246.
51. Smith, Reagan and Thatcher, 73.

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544 : diplomatic history

coercion of the 1950s.52 Perle and his allies seized the

in the Polish crisis as an opportunity to push their ag
economic warfare against the Soviets. The hard-li
Director Casey, who by late 1981 was Reagan's key ad
input into the decision to sanction Poland and the
cials had no faith in linkage. They believed that the
the Soviets into submission by forging ahead with hi
U.S. armaments, by economically and psychologic
with a comprehensive and multilaterally applied emba
strating that they could not economically meet the c
military buildup. According to Haig, the ideological
to the extent of overreaching their authority: "When
was applied by the Department of Commerce, one of
the letter of intent of the President's policy, interpre
"I doubt that this was the President's intent..., certa
support in discussion around the NSC table." "Inexpl
accepted this bureaucratic fiat."53 What this meant
would be required to break contracts already conclud
U.S. subsidiaries in Europe and European companie
nology would be subject to U.S. sanctions if they did
East-West export restrictions. All Haig could do,
Regan, Secretary of Commerce Malcolm Baldridge
tative William Brock, was to delay implementation w
State James Buckley went to canvass European opini
risk Allied "estrangement" over sanctions, but the ex
them away eventually inclined him to compromise:
hard-liners.54

PROBLEMS WITH ALLIES

In the meantime, the high-level COCOM meetin

convened and decided to strengthen its enforcemen
embargo lists, and extend the export no-exceptions
at least 1983. The Americans, Brady in particular, ma
States wanted to go far beyond these modest initiat
technology, process know-how, and equipment that
military use. The Europeans firmly rejected this. W
its allies reviewed progress at the Williamsburg Econ
Americans were disappointed to say the least at the
been made. The Europeans had insisted on keeping t
"direct military value," and while fungibility made t

52. Jentleson, Pipeline Politics, 173.

53. Haig, Caveat, 254.
54. Reagan, An American Life, 303.

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 The Reagan Administration, Economic Warfare : 545

interpretation, only two categories were moved from foreign policy to national
security criteria.55 During ^82-1984 in the overall review of the COCOM con
trols, 58 out of 100 specific proposals from the United States were accepted and
there was further compromise in which controls over computers were liberal
ized in return for a tightening of controls on computer software and digital
switching systems.56 "The new items on the control list were certain types of
machine tools, dry docks, semi-conductors, manufacturing equipment, robot
ics, super-alloy technology and software."57 Significantly, however, as Jentleson
rightly observes, these improvements were due to "the shared assessment that
much high-technology trade, legal and illegal, posed a serious security threat."5®
The Europeans were willing to strengthen the strategic embargo: they were not
willing to adopt a strategy of all-out cold economic warfare directed toward
causing an implosion of the Soviet Union.
Although changes in COCOM began to gather pace, the hard-liners in
Washington were not satisfied and still looked to impose pipeline sanctions, uni
laterally if necessary. Buckley's trip to Europe did not resolve things and in May,
on the urgings of Secretary Haig, George Shultz was sent to explore the pos
sibilities of a compromise. One idea that had gained favor was to control credits
to the Soviets. In February at the Allied conference in Madrid, the Europeans
had told Haig that this was a real possibility. On 8 March, Thatcher, deeply
worried about the prospects of a serious rift in the Western alliance, wrote to
Reagan expressing the hope that new credit controls might provide the basis of
a compromise and avert the imposition of U.S. retroactive extraterritorial sanc
tions against the Allies.59 Shultz's visit to Europe confirmed Allied willingness
to move on this: he reported that no one wanted to subsidize the Soviet Union.60
Haig now used this as the basis for an agreement at the Versailles Summit.61 A
compromise was struck on the basis of an implicit understanding that "the
United States would not apply retroactive, extraterritorial pipeline sanctions"
in return for action on credits for the Soviets. The most recalcitrant of the
Allies, France, was given the additional incentive of an offer of U.S. dollar
support for the ailing franc. Unfortunately, Treasury Secretary Regan was not
privy to the making of this arrangement and when he was apprised of things
he rejected the deal. The U.S.-Allied compromise came apart and the United

55- Mastanduno, Economic Containment, 260.

56. Mastanduno, "COCOM and American Export Control Policy: The Experience of the
Reagan Administration," in East-West Trade and the Atlantic Alliance, eds. D. Baldwin and H.
V. Milner (London, 1990), 195.
57. S. Alam, "Russia and Western Technology Controls," International Relations 11, no. 5
(1993): 469-91, and 477, citing source, National Academy of Sciences, Balancing the National Inter
est: US National Security Export Controls and Global Economic Competitiveness (Washington, DC,
1987)
58. Jentleson, Pipeline Politics, 180.
59. Thatcher, Downing Street Years, 255.
60. Shultz, Turmoil and Triumph: My Years as Secretary of State (New York, 1993), 137.
61. Haig, Caveat, 305.

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546 DIPLOMATIC HISTORY

Figure 3: Cabinet, 20 January 1984, with Georg

States and its allies fell into deeper dis

Washington now moved in for what the
vering so that Haig was out of Washingt
Clark scheduled an NSC meeting to cons
issue. Lawrence Eagleburger represented S
Clark, Casey, and Weinberger, pushed th
retroactive sanctions to stop the export
apply them extraterritorially against U.
manufacturing such goods under licen
option paper before Reagan, who unchar
There had been little discussion of the is
the president himself."62 This was a Pyrr
was one of indignant fury. Even Thatch
along with other countries and the Europ
as illegal and took steps to require their n
binding contractual obligations. This cre
Thatcher) had so dreaded, particularly as

62. Ibid., 312.

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 The Reagan Administration, Economic Warfare : 547

pean deployment was only months away. Not only did the European reaction
create a serious divide in the Western camp at a time when that could be very
costly, but more specifically for the focus of attention here, it weakened and
ultimately negated the thrust of the U.S. sanctions campaign.

CONFLICTING MOTIVES

The tactical victories of the ideological hard-liners we

Haig resigned on 25 June, he was replaced by George Sh
more effective operator and someone who was on record
called "light-switch diplomacy," or turning on and off
made it a priority to end sanctions. Reagan also had a rat
to Weinberger, Perle, et al. He had threatened the So
1981 with dire economic consequences if they were to e
and had confided to Weinberger his fears about not being
enough messages to the Soviets to act as deterrents. Mo
those considerations motivated Reagan to impose sanctio
ness of sending messages. If high-technology denials slo
military programs or hurt them economically then t
desirable. He wanted to use economic measures to pre
his goal was negotiation, not the collapse of, or uncontro
Soviet Union. It was on these objectives that he parted co
liners in his entourage. In short, different factions in t
different reasons for wanting to see sanctions impo
them as a further step along the road to all-out cold eco
others, including the president, did not. And even if the
had an overarching strategy to implement all-out cold e
present argument rejects this), one must agree with the
was in the end reduced to "verbal denunciation and the most limited and
ineffective economic sanctions."64 The overall conclusion here is that there was
no overarching strategy because key people in the administration did not favor
all-out cold economic warfare. And, as a strategy pursued by the ideological
hard-liners, it amounted, in the end, to wishful thinking because they could not
carry either key figures within the Reagan administration with them, nor the
Allies.

Weinberger, Perle, Clark, Casey, and Brady now discovered that the Euro
peans were no easier to coerce than the Soviets, and that Shultz was just as able
to outmaneuver them as they had Haig.
Shultz and Baldridge moderated the impact of the sanctions by restricting
their scope. There were also moves on the credit issue in the Organisation for
Economic Co-operation and Development (OECD) in July, which went some

63. Haig, Caveat, 240; Shultz, Turmoil and Triumph, 137.

64. Stephen E. Ambrose, Rise to Globalism: American Foreign Policy since 1938 (Har
mondsworth, 1988), 316.

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548 DIPLOMATIC HISTORY

way toward appeasing the Americans. Th

recategorized as "relatively rich," which m
10.5 to over 12 percent. However, still m
rift between the United States and its a
berger remained robustly militant: "'I d
snapped, and 'was against the very idea
dispute.'"65 But Weinberger was no long
day Shultz went to work on the president
to accommodate the Allies.
Shultz began a dialogue, using the good offices of Francis Pym, British
foreign secretary, in order to get things moving. At the October NATO
Foreign Ministers' Conference in Canada, he negotiated a general strategy on
East-West economic relations that would save face for the United States and
allow Reagan to lift the sanctions on U.S. allies. At the NSC meeting on 15
October Weinberger tried to hold out for more, but Shultz effectively would
have none of that. He got his way.66 The United States tried to represent the
deal as one that would create a "tougher general trade policy toward the Soviet
Union," but it was largely a face saver and one can really only have minor dif
ferences with the claim that it "was not" a tougher policy in substance.67 On 13
November, the president lifted the sanctions on oil and gas equipment and
announced that a substantial accord had been achieved among the Allies. They
had agreed:

Not to engage in trade agreements that "contribute to the military or strate

gic advantage of the USSR," particularly high tech goods and oil, gas equip
ment; not to give preferential aid; not to sign new gas agreements pending
completion of energy alternative study by allies; to strengthen COCOM
controls; to monitor financial relations with view to harmonizing credit
policies.68

There were farther, if rather minor, developments in COCOM over the fol
lowing six years, but the pipeline crisis was at an end and it turned out to be
the high water mark for those pushing for all-out cold economic warfare. It
soon became clearer than ever that the primary intent of the administration was
negotiation, not outright victory, through exhausting the Soviet Union into col

65. Shultz, Turmoil and Triumph, 138. However, on 9 October 1982, U.S. disregard for
legalities was demonstrated when it withdrew MFN status from Poland, contrary to the rules
of GATT; see James Mayall, "The Western Alliance, GATT and East-West Trade," in Baldwin
and Milner, East-West Trade, 28.
66. Ibid., 141.
67. Garthoff, Détente and Confrontation, 1035.
68. G. C. Hufbauer and J. S. Schott, Economic Sanctions Reconsidered: History and Cmrent
Policy (Washington, DC, 1985; 2nd ed. with Ann Elliott, 1990), 699-700, citing sources, Con
gressional Quarterly, 20 November 1982, p. 2883; Department of State Bulletin, January 1983, p.

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 The Reagan Administration, Economic Warfare : 549

lapse. By March 1983 Shultz was gaining ascendancy in the administration

and pushed through new initiatives for talks with the Soviets. In September,
though not without difficulty, he headed off attempts to mount a new sanctions
campaign in retaliation for the shooting down by the Soviets of the Korean
civilian airliner KAL-007. At the end of 1983 the president shifted decisively
toward negotiation and relations thereafter steadily improved. All-out cold
economic warfare was now definitely out, and soon economic help was to
come in.

Even during the period 1981 to the end of 1983, on both counts of alleged
administration intent to wage all-out economic warfare and having the actual
means to consummate such intent, matters fell far short of the mark. Bureau
cratic infighting, the impact of Allied policies, and Reagan himself prevented
either the firm establishment of a clear intent on the part of the U.S. adminis
tration, or the implementation of an effective strategy of all-out cold economic
warfare, though policy for a time moved further along the continuum away
rrom a strategic einuargo to engage witn tne intention 01 aamaging tne
Soviet economy for the reasons above and beyond considerations of strateg
defense.
The bureaucratic infighting was notorious and a cause of serious emb
rassment at home and at international gatherings. "At worst, what Richard Pe
called Reagan's extreme 'intellectual delegation of authority' invited eit
bureaucratic chaos, or the pushing of policy far into the regions of unaccoun
ability."6' On at least two occasions this chaos favored the hard-line ideologu
who sought to push policy further into the realms of all-out cold economi
warfare with the Soviets, but as Shultz observed, "No decision could ever b
regarded as final or implemented with confidence as policy."70 In the end,
opportunism, afforded by temporary advantage gained in the Washing
bureaucratic struggle, did not produce a coherent policy. The squeeze policy
was never clearly established, among other reasons because Reagan did
consistently apply it.71 Somewhat ironically, Mastanduno, after arguing that
United States did develop an economic warfare strategy (and more ambivalen
claims that it was deployed), itemizes attributes of U.S. policy toward COCO
which appear to belie that claim. He observes that U.S. policy was a "br
denial strategy of economic warfare," which used linkage, but had a lack of c
sensus, except over agricultural exports, involved a high level of bureaucra

6ç. John Dumbrell, American Foreign Policy from Carter to Clinton (Basingstoke, 1997),
The disagreements and feuds were not just between departments and agencies, but within th
as well; for example, Michael Pillsbury, acting director of the Arms Control Agency in th
Department of State, see Strobe Talbot, Deadly Gambits: The Reagan Ad?ninistration and t
Deadlock in Nuclear Arms Control (New York, 1984), 45.
70. Shultz, Turmoil and Triumph, 690.
71. Dumbrell, Carter to Clinton, 117; Peter Boyle, American-Soviet Relations: From t
Russian Revolution to the Fall of Communism (London, 1993), 207.

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550 .'DIPLOMATIC HISTORY

infighting, and was inconsistent.72 Mastanduno's intention wa

discrepancy between aims and results in COCOM, but can one
a strategy of cold economic warfare when there was a lack of c
to control, inconsistency in policy, and a high level of bureauc
This was bad enough for the hard-line ideologues whose am
wage all-out cold economic warfare, but there were also prob
U.S. capabilities and allies.73
A long-standing critique leveled against proposals that t
should conduct economic warfare against the USSR was that
were instituted the impact would be negligible. Even before Ca
for the invasion of Afghanistan, the total of U.S.-USSR trade
tion to each country's GDR By 1981, U.S. exports had droppe
billion, and most of that was in foodstuffs. The argument tha
technology quality of U.S. exports and their potential to open
tion bottlenecks carried some, but by no means decisive, force
FFV a ""2 ""'6* F1

Bucy Report in 1976 had emphas

it, and Bucy's subsequent journa
unless one wants to define that c
over the Soviets.74 Thus, if stopp
on the Soviets, then the next log
significant impact if it were to
question, however, was a moot po
that they were not willing to de
warfare. Even Reagan's closest
calls for extending the Wester
martial law in Poland. When Hai
Thatcher also ridiculed the id
chaos that would cause to Wester
burdens when the United States

72. Mastanduno, "COCOM and Amer

Reagan Administration," in East-West
73. To be fair to Mastanduno, whose w
to be arguing that the intent of the Re
of economic warfare, rather than act
233-36, 263-64. But at other points he
practiced; see ibid., 13, where he iden
nomic warfare and defines it: "Econom
of a target state by weakening the st
policy never approached the scope, effe
On this latter point, the area of diff
hinge on different understandings of e
74. Defense Science Task Force on Expo
of US Technology—A Department of De
Bucy, "On Strategic Technology Transf
East-West Trade: A Reappraisal," Intern

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 The Reagan Administration, Economic Warfare : 551

should shoulder an oil and gas industry equipment embargo, while there was
no talk of a U.S. grain embargo. And finally, she bluntly told Haig, and subse
quently Reagan by letter, that there was no possibility of West Germany or
France (and by implication, Britain) giving up their pipeline contracts with the
Soviets.75 Six months later in June 1982, Thatcher, on one of her numerous
visits to Washington, continuously harangued the president and his advisers
about the extraterritorial application of U.S. sanctions against recalcitrant allies
in the pipeline crisis.76 As the Europeans were refusing to cooperate with such
determination, it became clear to most rational people that a policy of effective
Western cold economic warfare was simply not going to happen in reality,
though that did not stop the ideologically committed from advocating and
trying to develop such a policy. Shultz's comments about William Casey are apt
here: "But his views were so strong and so ideological that they inevitably
colored his selection and assessment of materials."77 The lack of cooperation by
the Allies is fully documented in the works of Mastanduno, Jentleson, Hanson,
and others, but its implication for the claims about economic defense strategy
and its application are not always clearly drawn, even when it is acknowledged
that the Europeans did not allow COCOM "to be an instrument of America's
broader economic warfare strategy."78

THE PRESIDENT

Where did Reagan stand on all this? What were his

hard-line was he? While Reagan's language was ofte
his actions toward the Soviets were consistently mor
was because of his own agenda, sometimes because of
nnnn him frnm sHviçpr«; nr sllipç At fhp Anril to8t "\TSC~! mpptincr fhp firsf

since Reagan had been gunned down by a would-be assassin in March, H

managed to get the president to approve arms talks with the Soviets before
end of the year, in part to appease restless allies. Thus talks came, albeit afte
some delay, hut one should not read too much into that for, as one scholar
has put it, "by far the most important reason for the delay was intra-mur
bureaucratic warfare, not "international" reasons.79 Later, the United State
significantly allowed neither the Polish nor the KAL-007 crisis seriously to
compromise those talks once they had begun. When NSDD 75 codified U
strategy and, advocating Weinberger's line, called "for an explicit objective
the United States, the use of economic pressure to influence the internal p
tics of the Soviet Union," it also stipulated that the United States should ne
tiate agreements with the Soviets that were in U.S. interests. In short t

75- Thatcher, Downing Street Years, 255; Haig, Caveat, 255-56.

76. Smith, Reagan and Thatcher, 100-102.
77. Shultz, Turmoil and Triumph, 691.
78. Mastanduno, COCOM and American Export Control Policy, 195.
79. Talbot, Deadly Gatnhits, 49, 233.

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 552 : DIPLOMATIC HISTORY

"directive's main thrust was ... pragmatic."80 Furthermore

not after, the change to the more accommodating stance of
which became evident in 1984.
"Some advisers, like Weinberger, Perle, and Pipes, saw th
early 1980s] as a historic opportunity to exhaust the Soviet
appears to have had a rather different agenda. In April 1981
embargo and the balance in the administration between the
ideological hard-liners soon shifted. Pipes left after only t
successor, George Shultz, gradually outmaneuvered the
logical hard-liners. Finally, the bare facts tell a pragmatic r
tent doctrinaire story. The United States imposed sanction
USSR in December 1981, and extended them extraterritoria
in the summer of 1982. It also, however, granted exception
tract for pipe layers for the Caterpillar Company in July
lifted the extraterritorial sanctions in November 1982. In A
une cinudigu un pipe laycià, anu wiicn uiauy, v^iaiK, aiiu vvcmucigci àuugiiL lu

introduce another round of sanctions in response to the KAL-007 ou

caused a real furor, with William Root of the State Department res
protest. Shultz successfully headed off this new drive for more int
economic warfare.82 Successively in January and August 1984, Washin
most of the sanctions on Poland, and at the beginning of 1985 the
trade mission since 1978 went to Moscow.83 Needless to say by this t
was out of the Commerce Department. Even without considering th
behind and the aims of these actions, the picture that is forming do
consistent with a vigorously prosecuted campaign of all-out cold
Tirnrfnrfi

In addition to the evidence of Reagan's motives in imposing sanctions is the

fact that he began to change his public attitude and posture toward the Soviets
during 1983 in order to engage them in constructive talks.
1983 was a crucible for change. However, given the hard-line of the Reagan
administration and the disasters that blighted U.S.-Soviet relations during the
course of the year, prima facie it seems strange that the change was to more
temperate moderation. On 8 March, Reagan made his most notorious speech
on the Soviet Union in front of the National Association of Evangelicals in
Florida. He was widely reported as having condemned the Soviet Union as an

80. Andrew, For the President's Eyes Only, 468; Mastanduno, Economic Containment, 238;
Garthoff, Détente and Confrontation, 1012.
81. Gaddis, The United States and the End of the Cold War, 125.
82. Jentleson, Pipeline Politics, 210; P. Hanson, Western Economic Statecraft in East-West
Relations: Embargoes, Sanctions, Linkage, Econotnic Warfare and Détente (London, 1988), 43,
quoting Shultz from the New York Times, 14 September 1983, "Trade sanctions, particularly
agriculture, would not be invoked unless we got Canada, Australia, and Argentina to go along
with us."
83. Hufbauer and Schott, Economic Sanctions, 683-711.

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 The Reagan Administration, Economic Warfare : 553

"evil empire."84 Later that month, he announced the SDI program. The tone
was harsh at the outset of the year and in the autumn a series of events cast
an even deeper pall over U.S.-Soviet relations. On i September there was the
KAL-007 incident. On 6 October, much to Soviet embarrassment, Lek Walensa
was awarded the Nobel Peace prize. That same month the United States
suffered heavy casualties in its peacekeeping force in Lebanon when a terrorist
truck bomb exploded in the Marine barracks, and in the Caribbean a U.S. force
invaded Grenada to restore order, protect U.S. lives, and overthrow the Com
munist regime there. In early November the NATO exercise Able Archer was
seen temporarily by the Soviets as being potentially the real thing, that is, a pre
emptive Western strike against the Soviet Union. And finally, in November, the
United States started to deploy Pershing II and Cruise missiles in Europe: the
Soviets walked out of the arms talks in Geneva. It was against this backdrop of
rising tensions that Reagan began to shift his stance and look for negotiation
rather than confrontation.
Exactly when this shift took place is not easy to determine. However, there
were signs evident throughout the year that the U.S. position was not thor
oughly hostile and uncompromising. On 15 February Reagan had his first
formal discussion with a senior Soviet official when he met with Ambassador
Dobrynin. Economic sanctions were eased and the United States did not
embark upon new sanctions after KAL-007, nor did it walk out of the Geneva
talks in protest. At the height of U.S.-Soviet tensions on 10 November, the
ailing Brezhnev finally died. When Reagan visited the Soviet embassy to pay
his respects he projected a friendlier image. Dobrynin even notes in his
memoirs, "There are some who say that the historic turn in our relations began
with this visit... ."8s Crockatt identifies change in the presidential election year
of 1984, whereas Garthoff identifies a range of reasons, but without judging
which were the most important: the election year; more united allies; the fait
accompli of U.S. Pershing II and Cruise missile deployment; and the renewal
of U.S. strength. Gaddis opts for spring and summer 1983 after the savage cnt
icisms of Reagan's evil empire speech.86 The president's language was certainly
more restrained after March 1983 and less than a year later Dobrynin noted the
moderation and more friendly tone in a major speech about U.S.-Soviet rela

84. In actual fact, the tone of the speech was much more moderate than one might think
from the reports. Most of the speech was not about the Soviets. Ironically, Reagan used the
phrase "evil empire" in the midst of a plea for toleration for the opening of negotiations with
the Soviets. Source: The Greatest Speeches of All Time [this speech certainly does not merit such
an accolade], Jerden Records, 1996, Ronald Reagan, "Evil Empire" extract.
85. A. Dobrynin, In Confidence: Moscow's Ambassador to America's Six Cold War Presidents
1962-1986 (New York, 1995), 511-12.
86. R. Crockatt, The Fifty Years War: The United States and the Soviet Union in World Poli
tics 1941-1991 (London, 1995), 317; Garthoff, Détente and Confrontation, 1013; Gaddis, The
United States and the End of the Cold War, 125.

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554 : diplomatic history

tions that Reagan gave on 16 January 1984. 7 By Sep

forthright in his call for talks. "America has repaire
ready for constructive negotiations with the Soviet U
ing U.S. strength, or, perhaps more importantly, per
was very important for Reagan, there were other f
toward November 1983 as the crucial turning point
the Soviets.
In 1983, both London and Washington were influe
information given by Gordievski, the KGB number
in London, to British intelligence. The British foreig
Geoffrey Howe, records: "It played an important part
In particular, reports on Soviet suspicions that the CI
KAL-007 episode and that they feared that Able Arch
persuaded him just how paranoid they actually were.
into what he termed "Howe's Ostpolitik," involving
visit to Hungary in renruary T904. twicience suggests tnat Keagan was simi
larly moved.
Robert McFarlane, national security adviser 1983-1985, has testified that
Reagan was told about the Soviet fears of Able Archer and that it had impact
on him.91 He realized that the Soviets really were scared about a Western
nuclear first strike. This changed his perceptions about the room to maneuver
aggressively. For all his combative rhetoric, Reagan's abhorrence at the prospect
of a nuclear war is well-authenticated. There was no more talk of the evil
empire. Shultz soon became the key policymaker for U.S. relations with the
Soviets, and Reagan gave him the task of exploring new avenues of communi
cation.92 In December 1984, Margaret Thatcher met Mikhail Gorbachev, at
Chequers, her official country residence. She pronounced him to be "a man
with whom I could do business."93 Shortly after, in March 1985, Gorbachev
became leader of the Soviet Union and the world discovered that Reagan also
could do business with him.

87. Dobrynin, In Confidence, 545; Public Papers of the Presidents of the United States: Ronald
Reagan 1984 (Washington, DC, 1986), 40-44.
88. Quoted from Garthoff, Détente and Confrontation, Reagan's speech to the UN General
Assembly, citing Presidential Documents ft October 1984), 20:1356.
89. Geoffrey Howe, Conflict of Loyalty (London, 1995), 350.
90. Ibid.; and Thatcher, Downing Street Years, 454-58.
91. Smith, Reagan and Thatcher, 123. For details of Soviet fears, their reactions to percep
tions of Western aggression, and Western analyses of all this, see the work of Ben F. Fischer
and especially his A Cold War Conundrum: The 1984 Soviet War Scare (Washington, DC, 1997)
and "More Dangerous Than We Thought? New Evidence on the Soviet War Scare," paper
to the Norwegian Nobel Institute, 1 May 2002.
92. Andrew, For the President's Eyes Only, 476-77; Reagan, An American Life, 588-89.
93. Thatcher, Downing Street Years, 463.

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 The Reagan Administration, Economic Warfare : 555

CONCLUSION

The United States was rarely a unitary decision mak

utive force did not propel the government. Actors chan
time, key personnel came and went, and circumstance
and the way the president interacted with—what may
two factions within his administration—the ideologica
more pragmatic Cold War warriors determined p
ideological colleagues, Reagan never intended or expecte
Union. Instead he strove to draw it into constructive
the violent criticisms of détente, in the end, Reagan pra
himself. At Geneva in November 1985 Reagan and Gor
U.S.-Soviet summit for six years. Dobrynin later descr
terms as "the beginning of the end of the Cold War."
years the two leaders made substantial progress on dis
ally improving East-West relations. At the time no on
nuw îduitdi Liic unaiigca wcic lu piuvc. x ncy cnucu wiidL was ancauy uy tuen

a very low key Cold War, and soon after, the Soviet Union collapsed.
by 1989 establishment conservatism in the form of George H. W. Bu
that Reagan had moved too far too quickly with Gorbachev, in rathe
way that the radical right in the 1970s thought that Nixon and Kis
moved too far and too fast with Brezhnev.95
Reagan was a great communicator and he used economic sanctions
COCOM embargo primarily as forms of communication to bring th
to the negotiating table. At times his wish for more aggressive econ
craft coincided with the wishes of the ideological hard-liners, but th
behind the wishes were different. Reagan believed that the Soviet Un
indeed expire under the weight of its contradictions, its inhumanity
citizens, its corruption, and its economic inefficiency. But there is l
evidence to suggest that he expected its demise to be imminent or
thought that U.S. economic actions would greatly hasten things. Ev
1981-1983, when the rhetoric resonated with the clamor of strateg
nomic aggression, and the ideological hard-liners were at their mos
and presented with rich opportunities, a state of all-out cold econom
was never achieved nor even prevailed as a policy objective within t
administration. Four main reasons have emerged for these conclusi
first was the limited capacity of the United States to inflict damag
cally because of the small amount of trade it conducted with the Sov
The second reason was the lack of compliance with U.S. policy by it
which preempted the possibility of an effective multilateral embargo
reason was to do with bureaucratic differences and conflict within t

94- Dobrynin, In Confidence, 564.

95. Beschloss and Talbot, At the Highest Level, chaps. 1-3.

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55<$ DIPLOMATIC HISTORY

istration and the fact that the ideologic

achieve short-term tactical advantage. An
Reagan intended to negotiate with the S
expected his overall strategy, including t
to bring the Soviets to constructive agr
and their system. He neither intended n
Soviet Union to be a direct consequence

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