Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

205. Memorandum From Donald Fortier, Stephen Rosen, and Stephen Sestanovich of the National Security Council Staff to the President’s Assistant for National Security Affairs (McFarlane)¹

Washington, September 21, 1984

SUBJECT

• Planning Update

We are now nearing the completion of the first phase of the planning project. The products we have received are uneven in their specific programmatic recommendations, but almost invariably interesting and useful. Some contain ideas that truly are exciting, though in need of further refinement. I feel we were correct in first casting our net for fresh ideas from the outside. In relying on such busy private citizens, however, we have run into occasional delays that have essentially put us about two and a half weeks behind schedule.

I want to begin to draw in a very few additional members of the staff at this point, though for the most part on specific issues like the NATO and Soviet papers. I have already had a couple of useful talks with Ron, and Jack Matlock is prepared to begin to give us his thoughts on the Soviet papers.

Our objective for the first phase is not to have fully polished action plans for all regions and functional problems. Rather, it is to generate analysis that can help to illuminate the fundamental choices the President will face: to ascertain where his capital will most be needed; where events seem to be coalescing in ways that create new opportunities; where the momentum of the first year of a second term would appear to provide a natural boost to initiatives that otherwise would have very little chance of succeeding; and where he can hope to put policies in place that will be a lasting legacy. We have also paid special attention to initiatives that are not specific to any one region or problem, but which rather have the aim of enlarging our capacity to affect a broad range of events. This is most apparent in the work we are doing on foreign assistance and in the Marshall-Roche paper on Cost-Imposing Strategies—both of which are highlighted below.

The purpose of the attached paper is simply to provide a status report and to give you a few of the substantive highlights of the work we have received and our evaluation of it. The difficult next step, to paraphrase Churchill, is to give the pudding a theme. By that we mean distilling from this mass of analysis and recommendations some core judgments on Presidential priorities. To do that we will convene our sub rosa evaluation group next week to start doing more of the necessary integration work. The package that we provide for your October meeting with the Secretary will be interim in nature but will begin to reflect the broader conclusions we are moving toward. The highlights that follow don’t do real justice to the papers, but should help you to sense the general drift of our contributors’ thinking and what it may mean for us.

Tab A

Paper Prepared in the National Security Council²

Washington, undated

REGIONAL ISSUES

—If we are to have any hope of regaining the initiative in certain areas, we simply must restore more adequate aggregate levels of Security and Foreign Assistance. This will affect everything else we do. It could be a major policy legacy. Nearly everyone we have spoken to believes our idea of a dramatic gesture by the President to sacrifice some conventional weapons system (preferably one we want to sacrifice anyway) or to ask for some specific reduction in defense spending to rebuild the security assistance account is worth doing and probably the only way to rebuild American competitiveness in this area. This might be packaged as part of a larger doctrinal announcement on promoting stability in strategic areas of the world. We are working out specific options for implementing this idea and are also looking at a lesser variant in the form of a large increase in IMET which could also achieve a great deal in political results but be less costly in absolute terms.

The foreign assistance case provides an interesting example of how ideas about specific initiatives tend to progressively mature. The beginning thought was simply to recognize that with deficit constraints the President would face an impossible task in arguing for a reinvigorated program of American security assistance—crucial tool or not. He faces an ineluctable choice in trying to shape our global security environment: trades between U.S. defense programs and security assistance. Increasingly, though, it seemed that we needed to be able to make a tighter logical connection between the increases we sought and the reductions we were prepared to incur. Trying to do simple percentage trades would probably look like “hocus pocus” and be difficult to enforce. This problem led us in turn to look at reductions in some specific accounts like airlift, and light infantry divisions, where there was a kind of natural substitution effect. This in turn seemed to have some political appeal, since liberals would be able to understand more clearly that security assistance can be a prudent means of lowering—though not eliminating—the prospect of U.S. intervention. (Kondracke and others are beginning to increasingly surface this theme.)

It has also become apparant that if we could succeed in suddenly enlarging the total pie of available resources, we could increase our leverage in a more general sense by changing the context in which negotiations with regional security partners occur. No longer would we be haggling over modest, insufficient increases, but rather an important new pool would be opened up for which real competition among our friends would be sure to occur. Moreover by being able to explicitly demonstrate that the new funds in question come directly out of U.S. defense “hide,” we would be in a stronger position to influence how this new aid should be spent so as to truly enhance mutual needs. Congress had traditionally resisted contingency funds and the like; but if we shift the argument in favor of a larger pie in a way that suggests we want to be shrewder bargainers, it should be possible to erode some of that reflexive criticism.

More work needs to be done on this, looking at the impact on committee jurisdictions, ways of ensuring that the trade is seen as a temporary expedient, keeping high the fear of direct U.S. power, and so forth. But in looking at the tool for best improving our position in the low-intensity struggle, this will be key. Bureaucratically, we would want to bring the Chiefs on in concept before talking specifics.

—In the Middle East, our work is driven by two central facts: 1) that the time is not ripe for a major new initiative, but 2) that the political pressures for movement (in the region and at home) will increase at the beginning of the second term. Accordingly, Dennis Ross is doing work for us on a package of initiatives which—while they fall short of a full-blown initiative—do: respond to the political requirements for increased U.S. interest; help to diffuse a number of existing tensions; and begin to create a canvas against which broader moves can later be undertaken. We cannot do justice to the entire package here but some of the possibilities include:

— capitalizing on Peres’s interest in Taba in a way that sets the stage for a limited but important package deal;

— using the Aqaba pipeline as a mechanism for developing a set of understandings among the Israelis, Jordanians, and Saudis on environmental and other issues—understandings that could form a prototype for other arrangements later on;

— working to establish a new set of red lines between Israel and Syria, and using such a process to increase Jordanian anxieties about possibly once again being left out; and

— trying to transform actions Peres will need to take for economic reasons into steps that increase the pressures on Hussein.

In a number of areas our proposals spring from the recognition that—notwithstanding current political constraints—there are certain things that Likud would be able to acquiesce in as part of a national unity front that it could never afford to accept on its own. We feel we have some hard and useful ideas to recommend. What we want to do now is meld these together in a way that helps us portray the strands as part of a coherent approach, rather than a series of fitful moves.

—The Soviet-American relations papers provide very acute analyses of the Soviet leadership’s outlook and anxieties—Ulam focusing on their long-term China problem; Billington, on the Soviets’ continuing lack of domestic legitimacy. Their discussion of U.S. policy, however, is weaker, despite an interesting disagreement between the two on how to negotiate with Moscow. Ulam returns often to the importance of preserving maximum bargaining leverage, while Billington seems attracted to some bold unilateral gesture that could affect the “atmosphere” of the relationship. Billington looks at ways in which we can better tap the leverage point of an increasingly better educated and informed Soviet population. This leads him to interesting observations about the need for a more differentiated dialogue: tough and specific with the older, central forces of power, but broad, more exploratory, and even tactically generous with younger forces for innovation and change. We will now turn, as originally planned, to Fritz Ermarth to work with us and Jack Matlock in producing a more operationally oriented product that draws on this work. The events of the next few weeks will of course importantly affect our ultimate starting assumptions, a point to which we are sensitive.

—In the Persian Gulf, we asked Harry Rowen to—among other things—evaluate the hypothesis that energy trends and market conditions argue for some downgrading of the priority we attach to this region. Harry’s paper provides a convincing analytical refutation of this proposition, making the point that—despite improved trends—the Gulf will continue to possess the world’s largest quantity of low cost energy. Many forget that while other alternatives exist, Gulf oil costs around $1.00 per barrel to produce while other sources average $15.00 or higher.

This has political implications as well as economic ones, since it suggests that a hostile power in control of Gulf oil could discount it substantially for purposes of political manipulation without suffering undue commercial harm. Harry also puts forward an interesting case on behalf of a surcharge on oil imports. The purpose of this of course is to internalize the external costs represented by dangers inherent in oil use. We have asked for a closer look at this idea because of its attractiveness next year from both a domestic (i.e., a tax increase that really isn’t a tax increase) and national security standpoint.

A number of the security recommendations made in the Rowen paper are roughly congruent with the thrust of NSDD–99.³ We’re not happy with this part of the work now and plan to ask Harry and possibly one other contributor to do some additional thinking. Part of what we need is a reassessment of our whole strategy toward the Saudis in particular, a retrospective look at the way in which we have done business, what’s worked and what hasn’t. We are at least intrigued by the idea of possible hints of a “reassessment,” coupled possibly to additional procurement of sea-based stockpiles to make the point we have other options and diminish the Saudis’ perception that they can continue indefinitely to pressure us into more expansive forms of security assistance on the mere hope of eventual access.

—The Horn has always been more important than most realize, and the recent Suez mining flap—which may foretell more serious activity in the future—is a reminder that we cannot concentrate on Hormuz alone to protect access and resources in this critical area. Moreover, without new initiatives we could face a block-busting erosion of our position by twin reverses in Sudan and Somalia. Charles Fairbanks has produced an excellent first draft on how to refortify our posture in The Horn, increase pressure on Ethiopia, and make better use of other opportunities that may exist. His paper is a model of what we were looking for—assessment of opportunities, discussion of assets, and program of action. He points to how much Somalia can do to bolster our Persian Gulf and Red Sea options: it is the only state in the area whose openness to the U.S. is restricted neither by sensitivities related to the Arab-Israeli dispute nor by the NATO problem (e.g., Turkey) nor by past traditions. Somalia is almost the only ethnically homogeneous state in Africa. Despite Siad’s current troubles, its nationalism and irredentism make Somalia a solid source of support for our policy in the region. Despite the fact that we have largely overcome Congressional resistance to working with Somalia, resource constraints have kept us from helping to stabilize Siad and exploit new opportunities brought on by a deteriorating situation in Ethiopia.

Charles has also analyzed the Soviet position in Ethiopia. In looking at the costs and benefits of stimulating various insurgencies, he observes that geography makes the Soviet position in Ethiopia inherently vulnerable: the insurgencies we have the power to affect could cut off key Soviet bases (Dahlak Islands, Massawa, Asmara, and Assab) from the Ethiopian core. In a second draft, due this week, we have asked Charles to look at how—through a combination of incentives and disincentives—to bring about a change in Ethiopia’s alignment. The Ethiopian population does not appear to be anti-American, but the leadership takes revolutionary ideology seriously. Here we see a possible Chinese connection to the strategy we are examining.

—The Central America study promised by Kristol is not yet ready. For this reason we met today with Elliott Abrams and Gary Schmitt to prepare a paper on the basic choices before us. This was a highly useful session (helped by a briefing from Ollie) and we expect a very good analysis. Their starting point, of course, is to assess where present policy is taking us, and the degree of effort—particularly Presidential effort—that will be needed to sustain it (e.g. the prospects for getting multiyear funding for the Jackson Plan). Elliott believes that after the election we may have an important opportunity to reconstitute our domestic support on this issue, especially through more vigorous efforts with churchmen and the AFL–CIO. One objective they have in mind is to reduce the drain on leadership attention and Presidential political capital that this region now imposes. We have asked them to define the serious policy alternatives to existing policy, including the diplomatic, political and military preconditions of each, the likely countermeasures by our adversaries, and the risks and costs of failure. This analysis should enable the President to consider both a “high option” involving more intensive and effective measures in the region, as well as a “low option” that tries to preserve our gains in Salvador, Guatemala, and Honduras at a more sustainable cost. We understand the extreme sensitivity of all these questions and are keeping the work highly compartmented.

—With regard to East Asia, we tasked both Paul Wolfowitz and Dick Solomon for papers on Japan and China but have yet to receive them. Although Paul has several ideas that he is very eager to have considered, and which we find extremely interesting, we can probably afford to get them later. As in Southern Africa, current policy in this area seems basically on track: it offers few opportunities for new departures but few risks of real setbacks. (The Philippines is perhaps the only exception.)

—Phil has done a very constructive paper on how we might improve our Crisis Management capabilities, and we are working together with Sey Weiss to factor in his thoughts. This is one of our most sensitive topics.

In addition to the above, I plan to use the high tech seminar we are planning with chief scientists and marketing people on October 29 (you have a package and agenda with you now for approval) as a basis for fashioning technology transfer choices. Similarly, for our Southwest Asian planning, I will draw upon the Iran work that John, Geoff and I are engaged in to develop ideas for the broader planning review. Beyond this, I have a very provocative paper from John Pappageorge on a possible Aegean initiative. John modeled the mechanics of the initiative along the lines of the very successful work he did for General Rogers on the NATO reintegration issue. John is sensitive to the high probability of failure of any such initiative and has shaped an approach that enables us to get started with a fact-finding approach that is in reality a kind of disguised negotiation. John shares my view that any successful diplomacy in this area must be premised on a package deal in which various claims can in effect be traded off against one another simultaneously. Finally, I plan to start some work early next week with Paul Henze on a modified (or updated) Northern Tier approach.

DEFENSE AND ARMS CONTROL

Three of the papers we commissioned in defense-related areas have produced analyses and proposals that support each other. In the strategic modernization, NATO, and defense procurement papers the authors tried to develop strategies that would help the U.S. reduce its dependence on nuclear weapons within the context of defense budgets that were limited to slower rates of growth than we obtained in the first term.

—Albert Wohlstetter’s paper on strategic modernization argues forcefully that we are now able to unilaterally move to a strategic posture that relies less on nuclear brute force and more on advanced technology. This is in keeping with the President’s stated desire to reduce the threat of nuclear weapons to innocent bystanders. By means of high accuracy weapons, anti-missile defenses that are compatible with the ABM treaty as it now stands, and by utilizing stealth technology, we can enhance deterrence and reduce potential civilian casualties. Albert suggests ways to obtain money for these programs by reducing our procurement of the larger, more destructive weapons we are now buying. Albert is now detailing specific program changes, but his proposals are sensitive to political reality: his approach is an incremental one that allows us to move gradually toward our preferred posture.

—Albert’s paper on arms control is less useful. It details the fallacies of arms control, but does not really say how we can constructively respond to the desire for arms control. We believe our suggested unilateral megaton cap (when coupled with a broader agenda) does this, and dovetails with Albert’s weapons recommendations. Albert agrees with this. Albert does have some interesting ideas on keep out zones for space satellites and self-enforcing agreements on ASAT. Ron and I will be looking at Albert’s paper and thinking about how to apply his thoughts to our current strategy.

—Sam Huntington’s NATO paper shows that if business as usual continues, NATO will rely more and more on nuclear weapons for deterrence. He then offers a choice. If we are not able to change business as usual, there are ways we can adjust to this nuclear-dominant military balance in Europe. If this is not a satisfactory option, more money will be needed for conventional forces. However, it is extremely unlikely that the governments of West Europe will significantly increase their military spending if their economies continue to stagnate. Something would have to be done to help the West European economies grow more quickly. Huntington suggests that we encourage the Europeans to consider increased military spending as a way of stimulating their economies.

The connection between West European economic problems and defense problems is one we flagged for you back in May. We believe Huntington’s proposed solution would face political difficulties. Huntington will have little time this fall to revisit this part of the problem, but we have been working on this problem on our own. Based on work done by Professor Bruce Scott of the Harvard Business School, we believe we see the outlines of a graduated U.S. initiative (beginning first with exploratory soundings by private U.S. industrial leaders) for helping the governments of West Europe to make those changes that will revive their economies. Scott is recognized as the foremost expert in the country on this problem and has been working on his analysis with key European economists for some time. His basic strategy is to show the Europeans that their economic problems flow from an environment that throws up obstacles to entrepreneurial activity. For example, rather than trying to stimulate job growth by affecting aggregate demand and major industries, one would want to concentrate in a more sophisticated way on stimulating growth in new and specialized service industries, much as we have done. Although this may sound at first blush broadly obvious, a number of interesting and pragmatic conclusions fall out for ways in which the Europeans—with certain technical, legal and policy assistance from us—might being a process of structural reform that could reignite the economies of Europe.

This would be a major legacy for the President to leave and one that would extend the reforms he has supported in the U.S. to other parts of the Western world. It would be as profound ultimately as the Marshall Plan, though based more on new forms of mutual coordination rather than largess. If successful, it would be a natural complement to the existing efforts to improve NATO conventional defenses. And, indeed it could well be, as Ron and I agree, an explicit prelude. We plan to meet with Andy Marshall this week to rough out a more specific list of prescriptive possibilities, and will then be in touch with Scott about this. We will be considering some small initial measures the President can take on his own to get things moving in this area. With regard to the security proposals per se, Ron and I will be looking at Huntington’s work (and other supporting papers we commissioned on barrier defenses, reducing reinforcement vulnerabilities, etc.) to ensure some coordination with the direction taken by the NATO IG.

In addition, the obvious anti-Soviet sentiment in East Europe offers us a valuable opportunity to reduce Soviet confidence in the reliability of Warsaw Pact forces after conflict begins. We have done work on this, and spoken to Albert and Harry Rowen about it as well. It is extremely sensitive, of course, and we will pursue this very quietly on our own. We are working on two basic approaches. First, the U.S. could declare in a crisis (and begin to quietly hint in peacetime) that if war broke out, it would act in ways such that East European governments would have an incentive to go neutral. Rowen has already done some thinking with the JCS about operational implications: e.g., no use of nuclear weapons against countries that did not attack us. Second, if war did begin, we would want to more systematically exploit prepositioned contacts on the other side, for selective targeting and to induce mutinies among the civilian reservists who would be mobilized in Warsaw Pact armies.

—Andrew Marshall and Jim Roche have outlined an extremely imaginative strategy that uses American strengths and Soviet vulnerabilities to force the Soviet Union to change Soviet military procurement and operational practice so as to enhance deterrence and reduce the threat we face. In many respects we believe their study is the most compelling of all that we have seen. In particular, they have come up with a list of actions that the President can do on his own to get our own military re-oriented and behind this strategy. Their emphasis is on better use of U.S. non-nuclear technologies and intelligence about the Soviet military as a way of competing more effectively with the Soviets without having to keep up with their military spending. They have worked out, for example, innovative ways of using Stealth technologies to counter Soviet overseas activities. This has profound importance when one considers that the principal card the Soviets have to play with key clients like Syria is air defense. There are a wealth of other ideas, many of which relate to thoughts we have been developing. All argue, among other things, for far better policy level review of black programs. Frequently the regional implications are the first things missed by current review processes. Andy and Jim have also developed a strategy for keeping Soviet military R&D off-balance, as well as a new category of weapons, “surprise” weapons, designed to reduce Soviet confidence in their own weapons in a crisis. Needless to say, this paper is highly sensitive.

1. Source: Reagan Library, Reagan Library, Donald Fortier Files, Subject File, Policy Planning (Second Term) I: [09/14/1984–09/25/1984]. Secret. Not for any system. Sent for information.
2. Secret. No drafting information appears on the paper.
3. See footnote 3, Document 165.