Kissinger’s Shadow (31 page)

Authors: Greg Grandin

BOOK: Kissinger’s Shadow

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28
.ââ
The Wall Street Journal
(July 25, 1974) reported Hanover Trust was estimating that “about $1 billion to $1.5 billion of new âpetrodollar' funds is available for investment each week,” a “major portion likely would be sopped up by various governmental actions, including the direct investment of funds into special U.S. Treasury securities.” “Wouldn't the federal Reserve love it,” as one economist put it, “if they got all the credit from Congress for a drop in interest rates when it was really the Arabs” who did it by pumping the money they took from US consumers back into the economy. By the mid-1970s, “as much as $50 to $60 million [of Iranian deposits] a day passed through Chase,” which in turn loaned the money back to Iran to fund “big industrial projects,” which in turn paid interest back to Chase. The new petrodollar interface also reflected a changing relationship between Washington and the developing world. As the historian Christopher Dietrich argues, Kissinger used the energy crisis to respond to third-world economic nationalism in a way that prioritized a “free-market vision of globalization, one that undercut broader visions of international economic justice.” Where nationalists from energy importing countries demanded that petrodollars be distributed through a public institution, like the International Monetary Fund, as a kind of third-world Marshall Plan to capitalize industrial production, Kissinger successfully insisted on recycling oil wealth through private capital markets and private investment banks. Kissinger argued that “to play politics with the international economy was irrational and dangerous.” There's an irony here, for it was exactly Kissinger's “free-market vision” that gave rise to the “irrational and dangerous” forces that would lead the assault on dÃ©tente. In the U.S., the rapid increase of energy costs and influx of petrodollars empowered “independent” resource extractors that would become a key economic constituency of the fast-growing New Right (such as the Texas Hunt brothers or today's more well-known Koch brothers). They were “independent” in the sense that they weren't part of the corporate oil titansâStandard, Gulf, Texaco, and so onâthat dominated energy production and that had largely resigned themselves to the fact of nationalization of oil production in countries like Libya and Venezuela. “The companies are dumb enough for socialism,” Kissinger said in 1975, of the corporate establishment's willingness to work with OPEC. But those corporations might have provided the ballast for Kissinger's broader vision of global political stability. The “independents,” on the other hand, would unite with other sectors of the New Right behind Ronald Reagan to tear down DÃ©tente and drive back into the third world. For the Kissinger's “dumb enough” quote, see National Archives, RG 59, Records of Henry Kissinger, Box 10, Classified External Memoranda of Conversations, JanuaryâApril 1975, available at:
http://history.state.gov/historicaldocuments/frus1969-76v37/d39#fn1)
. Dietrich, “Oil Power and Economic Theology: The United States and the Third World in the Wake of the Energy Crisis,”
Diplomatic History
, forthcoming (quotation from personal correspondence with author). For the quotations and discussion in the footnote, see Cooper,
The Oil Kings
, pp. 107; 127â34; 137; 139; 183; for Iran paying for US military R and D, see Cooper,
The Oil Kings
, p. 147, who interviewed former Secretary of Defense James Schlesinger. Daniel Sargent,
A Superpower Transformed: The Remaking of American Foreign Relations in the 1970s
(2015), pp. 138â40; 183â86; “In Oil Riches for Arabs, a Silver Lining,”
New York Times
, March 10, 1974; Stephen Walt,
The Origins of Alliance
[2013], p. 127. For the “oil price floor” plan, see “Compromise Seen on Kissinger Oil Floor Price Plan Cook,”
Los Angeles Times
, February 7, 1975; “Kissinger Presents Oil Plan to Faisal,”
Baltimore Sun
, February 16, 1975; Cooper,
The Oil Kings
, p. 225, and Steven Schneider,
The Oil Price Revolution
(1983). For the role of the “independent” energy sector in funding the domestic “Sagebrush Rebellion” and pushing Reagan to reopen the third world, making possible the eventual take-back of nationalized industries, see Ferguson and Rogers,
Right Turn
, pp. 89â96.

37
.ââSome writers, like Steve Coll in
Ghost Wars
(2005), downplay the CIA role in supporting the Islamist groups that eventually coalesced around Osama bin Laden as Al Qaeda, saying that “CIA archives contain no record of any direct contact between a CIA officer and bin Laden during the 1980s.” Assuming that Coll had complete access to the CIA's archives, and assuming that those archives contain a complete record of all the CIA's covert activities, focusing on establishing responsibility for the action of one individual misses the larger context: the networks built, the arms supplied, the turbocharging of the ISI. According to the journalists Donald L. Barlett and James B. Steele (“The Oily Americans,
Time
, May 13, 2003), the CIA in Afghanistan ran “one of its longest and most expensive covert operations, supplying billions of dollars in arms to a collection of Afghan guerrillas fighting the Soviets.”

7: SECRECY AND SPECTACLE

19
.ââI have found no secondary accounts of the Cienfuegos “crisis” supporting the assertion that the Soviets were building a major military installation that didn't rely on Kissinger's account of the crisis, either the memos he produced at the time or his subsequent writing. Hersh's
The Price of Power
deals with the affair, basing its conclusions on testimony to Congress: “Intelligence experts in the State Department, the CIA, and even the Pentagon saw no tangible evidence of a major installation. In their opinion, Cienfuegos was meant to be a rest-and-recreation facility for Soviet submarines that would permit the Soviet navy to lengthen its normal overseas tours.” Colonel John Bridge, identified by Hersh as the chief of the Soviet area office of the Defense Intelligence Agency, “testified that âthey [the Soviets] have establishedâwe say it is a facility, at Cienfuegos, which might support naval operations, including those of submarines. It is by no means to be construed, I think, as a formal full-scale base. It is a support facility, a possible support facility.' As for the barracks, he testified, they were built of wood, obviously temporary facilities for crew stopovers. The concrete buoys which so alarmed Kissinger had been in place since 1968, well before the arrival of the Russians.â¦ Similarly, the new dock Kissinger had noticed enclosed âa small area, perhapsÂ â¦ a swimming area, or something like that.' The water was far too shallow for any other use, one officer said.” In the
New York Times
, Tad Szulc (“White House Charge on Cuba Puzzles U.S. Officials,” September 30, 1970) wrote: “American officials said today that the United States had only dubious and dated information to indicate that the Soviet Union might be planning to build a strategic submarine base in Cuba. For this reason, these officials, who include members of the intelligence community, said they were at a loss to explain why the White House chose last week to warn Moscow against the establishment of such a base.” Also from Szulc: “Officials said there was still no evidence of suspicious construction activities, despite flights by U-2 surveillance planes.” See also “Soviet Naval Activities,”
CQ Almanac 1971
, which described hearings on the matter held by the House Foreign Affairs Subcommittee on Inter-American Affairs. Colonel Bridge is quoted here as saying: “I must make it very clear that we have absolutely no indication that any submarine ever entered Cienfuegos harbor.” Bridge also makes clear that the main piece of intelligence was the guesswork related to what sport Cubans played: “Our people place some significance on the fact that a soccer field was built thereâand it quite obviously by all description is a soccer fieldâbecause soccer is not a sport that is common to Cuba. A baseball diamond, we would have said, you would expect to find baseball diamonds.” See also Dallek's account,
Nixon and Kissinger
, pp. 230â31.

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