253. Memorandum From the Under Secretary of Defense for Policy (Komer) to Secretary of Defense Brown and the Deputy Secretary of Defense (Claytor)1
Developing a strategy and capability to cope with the growing energy crunch should rank as high on our list of security objectives as coping with the Soviet threat. Indeed, at the moment the energy crunch is undermining the security of the West far more rapidly than the Soviet military buildup. CIA now estimates that already announced oil price increases will slow real economic growth in the developed countries to about half of one percent next year, and push their average in [Page 793] flation rate into double digits. Moreover, OPEC can: (1) keep raising prices; (2) cut back production if prices soften; or (3) do both.
The economic impact of the above will play hob with defense resource availability. Higher direct fuel costs (already painful) will be minor compared to indirect effects from inflation and recession. This will be even more the case with our chief Allies, owing to their even greater dependence on OPEC oil. And the bleeding of Western economies could continue indefinitely. Ergo, how can we finance the needed Western defense buildup, when more and more real resources are siphoned off to pay for oil, and when meeting recession and inflation competes with defense spending? As only one example, FRG abandonment of 3% real defense growth was primarily an anti-inflation move.
Thus the West desperately needs an energy strategy which will get us out of this bind, or at the least reduce its impact. This much is painfully obvious; the hard part is “what strategy”? I have few ideas beyond those already being widely discussed, but I will make it one of our highest priority planning tasks to try and come up with more. In the meantime how do you react to the following preliminary thoughts?
1. A crucial precursor task is to do a better job of sensitizing the country—and the free world—to the sheer national security impact of the energy crunch. It is in effect “the moral equivalent of war” (the only trouble here was that the President declared war three years too early and then wasn’t politically able to follow through). I see “national security” as the only compelling argument around which to rally the Congress (by appealing to the patriotism of oil state senators). Otherwise we and others will continue fumbling around (like the US Congress) without facing up to the need. DOD can play a major contributory role: (a) in cabinet you should press hard for vigorous measures; (b) your Posture Statement should highlight this problem—not just in terms of RDF (which frightens mostly our friends) but of impact on our defense strength; (c) we should play up this theme in speeches as well, the objective being to influence Congress and the Administration to adopt stronger conservation measures.
2. Next, we must explain to friendly OPEC countries that they are undermining the very national security umbrella which they count on the US holding over them. For example, have we gotten across adequately to the Saudis and Kuwaitis that our ability to defend them is being gradually hamstrung? They look at how our defense budget is going up, plus all the stress on RDF and probably conclude the exact opposite.
3. Our overall security objective must be to retain acceptable access to minimum essential ME oil. In practical terms this means ensuring that at least the lower Gulf states (Saudi Arabia, the sheikdoms, Oman, maybe Kuwait) remain in friendly hands, and firmly under our security um [Page 794] brella (which means that we must have a visible will and ability to defend them). This is not to say that we should “abandon” Iran and Iraq as outside our “security perimeter,” but that in classified strategic terms we treat them as a buffer area—which we want to hold too if at all possible.
4. We should examine the pros and cons of an overt declaratory policy that ME oil is vital to our security and we will do whatever is necessary to retain access to it. This is tricky but may be essential. If possible, we should try to get our Allies (including Japan) to join us in an acceptable formulation. I have in mind a formulation aimed at deterring external intervention, rather than one aimed at indigeneous states.
5. Since Saudi Arabia is the key to security of the lower Gulf, we must seek a new security relationship with Riyadh along lines which we are already exploring (non-US presence but Saudi development of a base structure we can use). In return for our security “guarantees,” the Saudis should help pay for security assistance to other friendly countries, which is vitally needed to rent base and access rights to enable us to come to Riyadh’s assistance. We also need Saudi aid in denying the USSR access to similar base and access rights (for example, maybe instead of defending N. Yemen against PDRY, we should look at whether N. Yemen could take over PDRY—this would require a lot of Saudi rethinking).
6. Strategically speaking, Egypt looks like by far the best main base for projecting any sizable ground/air response into the Gulf. Despite all the problems, it is politically and militarily the best bet. Since this in turn dictates a Saudi/Egyptian rapprochement, it should be a major objective of our policy. It also dictates convincing the Israelis not to upset the applecart.
7. Oman looks like the best bet for a peacetime forward base. Besides the ships offshore, we need some visible US onshore presence in the PG area itself. We must convince the Saudis that if they don’t want US forces on their soil, they should agree to having them nearby.
8. In the Saudi, Omani, Egyptian and other cases we must actively buttress internal stability via economic and internal security aid and advice. While the price will be high in the Egyptian case, it is imperative that Sadat be able to show early visible payoff from a pro-US policy. If this requires buying off Israel, that too is cheap at the price—compared to the stakes for which we are playing.
9. Our Iran policy must be geared to this overall strategic design. My own sense is that preserving Iran as a unitary buffer state, however radical, is more in our interest than a fragmentation that invites partition. The last should be a worst case fallback, in event Iran nevertheless breaks apart or Tehran comes under Soviet influence.
[Page 795]10. We must also hedge our bets by cementing relations with non-PG oil states. It amazes me that (1) we are on the verge of cutting real aid level to Indonesia; (2) we are not exploiting Nigeria’s interest in F–4s; (3) we are not encouraging in every way Venezuela’s exploitation of Orinoco heavy oil; and (4) we are not more actively seeking long term modus vivendis with Canada and Mexico. All this will take billions in aid and investment, but this price is modest indeed compared to what oil is even now costing us—with more increases yet to come.
11. Last but not least, we must press harder for major user country conservation measures, using our economic clout with Europe and Japan to reinforce our security arguments.
The above is the merest outline of a strategy; it leaves out most of the all-important obstacles, costs, and details. But I hope it can serve as a strawman for active discussion and debate, first in this building and then in interagency fora. I’d value your personal reactions.