THE NEW CHALLENGES TO NATIONAL SECURITY: ONE SOLDIER'S VIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01554R003600260005-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 60
• Document Creation Date: December 9, 2016
• Document Release Date: August 8, 2001
• Sequence Number: 5
• Content Type: PAPER

Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
*Army Declass/Release Instructions on File*
Declassification/Release Instructions on File
by
COLONEL ROBERT LEIDER, USA
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
The Characteristics of the Emerging International
Environment
The new international environment differs in three important ways
from the operating theories which drive this and other nations' security
and foreign policy machineries.
The Distortion of the Nation State. The first difference is that
countries have ceased to be definable, physical entities, colored spots
on the map, surrounded by inviolable borders, vulnerable, in the main, to
physical damage and territorial invasion. The outward thrust in search
of resources, goods, services, and markets to sustain inner growth and
prosperity has put an end to this developmental phase, even though it
survives in a false self-image. The fact is that nations are evolving
into multinational entities in the literal sense of the term. They exist
wherever their capital, industrial processes, technical skills, raw
materials, and trading areas contribute to the domestic well-being and
citizen aspirations. It is altogether possible today that the loss of
a foreign source of earnings or supplies could prove more damaging to
national Integrity than the loss of a province.
Security measures have not kept pace with the increase in extra-
territorial vulnerabilities. Put in insurance language, national defense
efforts offer but one kind of coverage: homeowner's protection. The
risks encountered away from home which any prudent family includes in a
policy -- the national equivalent of automobile accidents, job loss,
catastrophic illness, or getting mugged in the-street -- must still be
written.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4 2
A Foreign Policy Shaped By Needs, Not Choice. The second difference
is that the foreign relations of these distorted, growth-dependent nations
are dominated by the need to identify willing suppliers and markets. Where
to buy, where to sell, and for some, where to borrow emerge as the prin-
cipal external goals of the state. Planners who still believe that
cultural kinship, shared ideologies, missionary reform, or regional
arrangements are the cornerstones of policy will find their recommendations
preempted by the turbulent directions of unanticipated and unpredicted
marketing factors.
Thus, Jew and Christian must bow to Mecca if a subservient gesture
keeps the oil flowing. A seemingly strong belief like apartheid can be
readily set aside, lest it becomes a stumbling block for a business deal.
Lack of political recognition will not be allowed to come between a major
commodity transaction. Ideological alliances, even blocs, are left to
crumble if the cement that holds them together can be sold elsewhere, for
a harder currency. Grand designs drift away on a floating valuta. And
should the state still exhibit a measure of reticence about where and
with whom to deal, the multinational corporations quickly step into the
breech, thereby voiding the need for a hard decision.
In a further deviation from the past, common producers of raw
materials like petroleum unite to form tough, globe-straddling bargaining
fronts which make a shambles of all geography-based methods for slicing
up the world. Environmental pressures add their weight and momentum to
the new direction of nations. Countries which share a badly polluted
physical feature like a major river, an inland sea, a tidal current, or
a wind pattern have little choice but to join hands in a clean-up.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
One victim of the new directions is the traditional conduct of
foreign affairs, elitist, and bound by esoteric rules and concepts which
had evolved over the years to compensate for an absence of shared or
disputed real interests between nations. Only the men in foreign offices
understood the ritualized interpretation of events which dictated when to
lunge, thrust, or parry. The common man's support for these moves had to
be won with noble language or the evocation of lofty sentiments. It was
the only way to involve him; for the shifts in alliances, axes, blocs,
ententes, power balances, and spheres of influence seldom affected his
pocketbook or way of life.
Now, however, the esoteric must yield to the exoteric; the elitist
to the popular. If traditional policies had focused on keeping nations
apart, the prevailing pressures operate to bring them together for
compensating needs. If traditional national interests had been based
on theory and sentiment, their modern successors are anchored in the
hard realities of comfort, convenience, jobs, money, and future earnings.
Of what use is a power balance when today's man in the street, faced with
an energy shortage, deems access to power--for cooking, heating, and
operating an automobile--far more important than any need to balance it,
and expects his government to act in accord with these priorities.
The hardest hit by these shifting patterns are military efforts to
safeguard the nation's physical survival. Strategic plans, by necessity,
segregate countries into friend or foe. Those assisting our forces by
extending basing or overflight rights are placed in one category; those
with the potential to destroy us in the other. But this time-honored
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
classification has sprung major cracks in the modern atmosphere. The new
economic interests propel this nation and others along paths which diverge
sharply from the direction of traditional security interests. It is
entirely possible today that the reliable partner in defense stands exposed
as a dangerous rival for a scarce raw material, while the traditional oppo-
nent has become the major supplier of a critical need. Confronted with
this quandary, statesmen tend to assume an ambivalent posture which permits
them to straddle the two interests. But their legs will not extend that far;
and the schizophrenic, Alice-in-Wonderland pattern in which allies for
strategic survival emerge as threats to the conduct of every day, way-of-
life business, and vice versa, remains unresolved.
Multiple Power Channels. The third difference between reality and
prevalent foreign affairs theories is the proliferation in the channels
and methods for projecting power.
Historically,. military force had a monopoly on power. It was the
sinew added to foreign policies, the sole means for extending one's
influence or resisting aggression. A strong army was an asset; a thinly
guarded gap in a mountain chain, through which another's army might
descend, a liability. The mere possession of military power could become
an invitation to its use; and a presumption of superior strength frequently
led to action. Alternative forms of power - Arabian oil, Canadian wheat,
Western timber, and hoards of hard currency - were still waiting in the
wings for the time when economic or environmental dependencies or inter-
dependencies would be elevated to the rank of vital interests.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
Today, the military has lost its monopoly. The modern, distorted
state's vulnerabilities extend beyond strong armies and weak frontiers.
Many of its vital organs have been located outside the territorial shell;
and many of its internal processes are within the range of external forces
which need not violate borders or air space, in the physical sense, to
reach their objectives.
This modern state, in make-up, peculiarities, and vulnerabilities,
bears no resemblance to its predecessors. It is no longer a self-contained,
homogeneous aggregate of family units which grow their own food, fiber,
and fuel. Rather, it has become a complex machine assembled from specialized
components which contribute a distinct function to the operation of the
whole. One doesn't have to discipline it with a bomb. It can be made to
respond to a wide range of threats and promises, applied from without or
within, that have no connection with military force.
Consider but one vulnerability of the new state: the linking of its
way-of-life, strength, prosperity, and prospects to fuel sources located
nearly half way across the globe. Overt hostilities are not needed to
harass this state's workings; it can be disrupted in dozens of ways through
nonmilitary techniques. One can, for instance, complicate the issuance of
tanker insurance; advocate ecological restrictions on tanker design, tanker
routes, and port operations; incite dock strikes; or launch terrorist
activities, seemingly criminal In motivation, against officials or equip-
ment employed in fuel movements.
If hostilities must be escalated, a more severe set of tactics can
be brought to bear. The target country's currency can be weakened to limit
its purchasing power. Its foreign assets can be frozen. International
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
merchant marine unions (in imitation of a threat from the airline pilots)
can be fired up into striking against the world. One can precipitate a
major shortage in ship bottoms, or pressure the supplier into limiting
production or restricting sales to the target country.
Interference with fuel supplies is but one channel that parallels
military action. There are others; and their number increases as quickly
as new vital linkages are being formed. In the international power game,
there are now opportunities for withholding the sale or purchase of agri-
cultural products; diverting water; modifying the weather; delaying loans
and capital assistance; erecting selective traffic barriers; or refusing
to share a beneficial technological process. Each of these channels, by
itself or in combination, can rival saturation bombing in halting produc-
tion lines. If there is a difference, it is in form. The nonmilitary
methods rely on slow strangulation; the military on direct, explosive
thrusts. The results, however, are the same.
The new channels have many uses. In the most obvious, they become
a substitute for the application of military power. In another context,
however, they can reinforce the military by presenting strategists and
tacticians with an almost infinite number of locations for cutting,
snipping, or disrupting today's arterial linkages with decisive conse-
quences. In this application, the tank army is on the left, the oil
embargo on the right, and the currency assault goes through the middle.
In still a third way, two nations can be locked into a contemporary
conflict each employing the newly available, nonviolent means to erode the
other's power base; yet.profms
,at the same time, to be staunch military
allies, willing to join forces in the common defense.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
Not all nations can make use of the new channels; nor are all nations
vulnerable to the forces which they convey. The test is in the linkages:
how extensively are nations tied into the new network? How deeply have
they become dependent on external inputs? Primitive nations still operate
outside the context of these interlocking systems. Hence, any serious
dispute to which they become party must still be settled in the style of
Frederick's Prussia or Napoleon's France--by organized, armed forces.
But where the channels exist, one should expect them to be used, if
only because they are there. Room must be made for them on the scale of
force; and serious thought must be given to their potential for displacing
from the scale the lower forms of war which, according to current doctrine,
would precede resort to nuclear weapons.
The Two-Phase Future
The conjectured direction of international relations embodies two
distinct phases. In Phase One, domestic scarcities promote the extra-
territorial search for economic growth. It is in this phase that the
political landscape becomes transformed by the distortion of nations, the
rise of the way-of-life interest as the driving force behind foreign
policies, and the appearance of multiple power channels. In Phase Two,
it is no longer possible to compensate for local limits by going abroad.
There is no place left to shop. The entire globe faces a shortage situa-
tion.
1
Phase One, I noted in a recent essay in the Proceedings of the Naval
Institute, though marked by recurring monetary and trade crises, should be
1Robert Leider, "A Different World," Proceedings of the Naval
Institute, April 1973.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4 8
a peaceful period; for the supply of raw materials, fresh water, clean
air, fertile soil, and marine resources, if not evenly distributed, still
exceeds demands. The dominant interest in the United States, during this
phase, is commercially inspired. Nations vie for the right to tap our
riches or cater to our wants. We are regarded as a source of aid, loans,
capital, and technology, and as a market for finished goods and raw
materials. For our part, a relatively high level of self-sufficiency
continues to blind us to the demands of the way-of-life interest. The
neglect is costly. One penalty is a growing isolation from friends who,
out of necessity, can no longer share a world view that is dominated by
the concern over physical threats to survival. The second penalty is the
widening strategic gap in the development of safeguards for the way-of-
life. Others have taken the front position in this race and continue to
widen their lead.
in Phase Two, perceptions--here and elsewhere--change as the limits
of the universe close in. Our wealth and appetite continue to be of major
interest, but for different reasons. No longer a sales target, we emerge
as a threatening competitor. Other industrial powers fear that we will
not hesitate to evict them, with superior economic and military strength,
from markets and raw material supplies which they had come to consider
their own.
Tensions mount and spread to the developing world. The gap between
rich and poor remains as wide as ever; but, worse, it has grown intoler-
able with the loss of hope that 10 or 20 years hence the poor will be,
indeed, where we are today. There are no unlimited horizons left, no
El Dorados at the end of the next day's march. There is only so much;
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
and most of it is already in the hands of the rich who own it, use, con-
sume it, quarrel over it, and show no intention of abandoning their
first-class passenger status on what has been called Spaceship Earth.
From the perspective of the poor, the choice seems clear: if confinement
to steerage is not to be a permanent condition, the developing world must
force a roll-back in Western consumption, of which the United States
serves as a symbol, and begin mining the wealth accumulated by the rich.
The means for this endeavor are constrained by the resources at hand.
The assembled military power of the poor would be quickly crushed. But
there are alternatives: expropriations; a heating up economic nationalism;
a share in the ownership of the transport, processing, or marketing of raw
materials; the neutralization of strategic areas such as straits and gulfs;
enlarged territorial seas; and a sprinkling of multinational terrorism
could be the instruments--the sharp knives--for carving out a larger slice
of the pie.
Phase Two is not peaceful. The stage is set for conflicts, but con-
flicts of a different type than we know today. The transition to distorted
nation status, to interests based on economic needs, and to multiple power
channels has been completed; and any disagreements, thereafter, can be
expected to take full advantage of the opportunities and vulnerabilities
offered by the new arrangements. Tomorrow's wars, in other words, will
bear little resemblance to past conflicts. They will be triggered by
entirely new causes, fought for new reasons and new gains, in new ways,
and under new definitions.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
The Challenges to Security
It is a giant leap forward and outward, from safeguarding strategic
survival through methods perfected by operations research and systems
analysis, in such places as the Harvard Business School, Rand, and the
Radiation Laboratories, to protecting the way-of-life amidst the shrill
clamor of hunger and rising pollution, trade deficits and currency
devaluations, a population explosion and energy crisis, expropriations
and economic nationalism, an Oklahoma land-rush for the seabed and marine
riches, rampant nationalism and advanced politicization, resource asym-
metries, and the tensions among the rich and between the rich and the poor.
But this new task, so different in purpose and method of execution,
should not be thought of as a replacement for current security concerns.
Deterrence planning must continue so long as just one foreign power
possesses the strength and wickedness to destroy us. Rather, it becomes
what the military call an "additional duty," though one that may consume
more time, attention, resources, and ingenuity than survival insurance,
with at least as much at stake.
Hence, the general challenge to national security is not the substi-
tution of one system for another, but the enlargement of current concepts.
They must be made responsive not only to the dangers facing the way-of-
life interest, but also to the peculiarities of the new environment in
which both way-of-life and survival are to be protected.
The First Challenge: The Irrational Way-of-Life. The strategic
threat to survival stems from the confrontation of instruments, not
interests. Any increase in capabilities, by one side or the other,
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
triggers an offsetting response. Usually, numbers can be attached to the
force add-on. Hence, managers are in greater demand than strategists for
commanding the security effort.
On occasion, there is debate over the extent of the danger, the
amount of money that can or should be spent on defense, and the choice of
weapons systems. But opponents in the dispute, though they might never
concede it, are really on the same side of the fence. There is unanimity,
unruffled by any doubt, over the identity of the threat and the need for
a deterring force; and universal silence about the possibility that other
threats or different responses might exist.
The exposed way-of-life now confronts this orderly business world
of security planning with scenarios that turn habitual procedures and
career-long styles of thinking upside down.
--The clash of capabilities gives way to the collision of opposing
interests. "Respect my fishing zone, my source of oil, my currency, my
right to trade, my right to imports, and my needs for water to cool power
plants and irrigate crops," become new challenges to stability which
cannot be checked through power balances.
--The accustomed technological-military methods for gaining or
defending an objective are replaced by other force instruments. Since
the new conflicts pit nations of unequal strength, the capacity to
stand-up under pain assumes greater importance than the capability to
inflict it; and the skillful probing for vulnerabilities becomes a more
effective tool than the blind release of overwhelming power. In this
environment, the sophisticated opponent presses his demands by any
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
means--social, political, or psychological. Their one requirement: they
must exert painful pressure on any component of the urbanized, politically
conscious, and technologically and economically interdependent modern
states.
--The threats, previously so easy to locate in one capital, pro-
liferate. Any number of nations, singly or in constantly changing
combinations, and in reversible roles as buyers, sellers, owners or rivals
for markets and raw materials, can endanger the way-of-life interest to
varying degrees.
--Finally, the vast, computerized force planning machinery is
faced with inputs that refuse to be translated into wings and division
on a mirror-matching basis. Is there a wing equivalent that will deter
multinational terrorism? A division equivalent that will solve an energy
crisis? How much force is required to dissuade a nation from committing
an ecological folly, like altering its weather, which could turn into a
wider disaster? Can the fleet that keeps the sealanes open compel other
nations to sell us the goods that will move over these channels?
The Second Challenge: The Altered Environment. The next round of
conflicts, when it occurs, will take place In a drastically changed world
of distorted nation states, foreign policies that follow the beacon of
economic needs, and multiple power channels which efface all distinctions
between war and peace. These developments, no less than the peculiarities
of the way-of-life interest, demand responses which run counter to all
accustomed ways of thinking about security or planning for defense.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
The Distorted Nation
Consider the distorted nation. Clausewitz wrote at length about
"centers of gravity" which he defined as the fulcrums of a nation's
strength. He located them in capitals, strong generals, and weak allies.
Seize the first, capture the second, or smash the third--and the enemy's
cohesion melts. His resistance crumbles and surrender follows. But
where is the center of gravity of the distorted nation? Is it a domestic
element, an extraterritorial component, or the transnational arterial
system linking the two?
If the latter two qualify as centers of gravity, as surely they must,
the distorted nation is easier to attack than to defend. Its far flung
dependencies open it to the risk of being defeated by decisive moves
aimed against territories and systems beyond its sovereign control: cut
off the oil, for example. It can go under without the victor ever having
set foot on its heavily guarded territory, sunk any of its ships or air-
planes, or physically harmed any of its citizens.
The defense strategies for this contingency are costly, but necessary.
All extraterritorial risks must be elevated to the status of vital inter-
ests. The security perimeter must be enlarged to encompass the newly
declared interests. And no doubt can be left in anyone's mind that,
henceforth, an attack on A or B (nations which, conceivably, might not be
of a type one brings home to dinner) will elicit the same response as an
attack on the homeland itself.
New Direction In Foreign Affairs
Or consider the new directions In foreign affairs. In this chess
game, the squares become more important than the figures, especially if
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
there is oil beneath them. Their economic worth overrides any traditional
values they might have had as friendly or politically acceptable regimes
or as strategic airfields. Even more important, one must keep an open
mind about all squares and not take any action that might foreclose future
access. An earth satellite could discover that they harbor enormous
deposits of previously unsuspected mineral wealth.
Not only oil and raw materials, but also pools of cheap labor, mar-
kets that pay in hard currency, and sources of developmental capital mark
today's choice neighborhoods, the desirable places to live, shop, trade,
or set up a branch store in. Concurrently, locations which offer no gain,
or locations which seem headed for ecological disaster, as populations
explode while soils deplete, are places to be avoided at all costs, even
if they command a major strait or make a splendid site for a strategically
advantageous missile installation. The resource drain that might result
from these concessions is more than anyone can afford to pay.
To assess this environment from the perspective of strategic survival
can only lead to grief and disappointments. The universe no longer revolves
around national security; and alliances formed exclusively for the purpose
of balancing military power omit a large part of reality from their design.
One should expect them to quickly lose their shape, and be remolded and
retwisted by the far stronger pressures of market place, natural wealth,
and ecological concern which tend to form their own arrangements. But then,
consider who today can still afford to waste a stretch of white sand beach
for dragon's teeth and underwater obstacles, when high rise condominiums are
waiting in the wings?
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
But no matter what the difficulties, the requirements of security
cannot be dismissed. New strategies must be designed that take the
shifting patterns into account. First, and most important, there is
the need to unbundle security matters from all other concerns. It is
too risky to lean on partners who are under unique pressures to develop
new or even opposing interests or to entrust one's plans to such uncon-
trollable factors as the balance of trade and the health of the dollar,
or the constraints imposed by an unforeseen and unexpected economic
dependency. Second, in viewing the globe one must adopt a real estate
mentality which judges properties in light of their present and potential
worth, and buy and sell in accord with these perceptions.
Multiple Power Channels
Finally, how does one respond to the third characteristic of the
new environment = the proliferation in international linkages, networks,
and dependencies through which power can be conveyed by nonmilitary means?
Many still regard the ruthless use of the new channels as a legitimate
activity, a friendly competition between nations. In fact, it should be
viewed as an exercise in force, co-equal with the application of military
power. We may have entered the most recent phase in the evolution of warfare:
the discovery of non-explosive munitions for weakening an opponent and
forcing him to his knees.
The new power channels pose a unique problem for defense and deter-
rence. They can reach deeply into a nation, disturb the everyday life of
its citizens, Iet remain screened from any association with war by their
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
resemblance to trade and business transactions. In consequence, although
the victim is threatened, pummeled, constrained, and hurt in every sense,
he may be loath to reach for martial remedies.
The offensive use of the new power channels encounters stumbling
blocks of its own, especially in the United States. The responsibility
for activities that might qualify as instruments of nonmilitary force is
fragmented among numerous agencies, many lacking any notion of the uses
to which their functions could be put. "Bringing it all together," how-
ever, would not hasten the forging of the new weapon. Regardless of the
organizational arrangements, the forces would remain in the custody of
men who are not accustomed to think in terms of vulnerabilities, disrup-
tion, and destruction, and who might balk at seeing their discipline or
specialty employed for such ends. An agricultural expert, after all,
gains professional satisfaction from increasing yields; not from soy-
bean leverages or food for crude quid pro quos.
Not even the unprecedented vulnerability of modern systems to old-
fashioned physical disruption is fully recognized or understood. The
military has yet to develop the larger view which visualizes the enemy
society as an intricate machine with interacting components, one that
can be halted by the relatively simple act of finding the right wire and
jerking it out. The concept of the enemy which continues to dominate is
the image of a map with objectives, opposing divisions, and weapons
installations; and much thought is devoted to the doctrines, tactics,
and equipment that will seize the high ground, while suppressing enemy
fires that could interfere with the accomplishment of "the mission."
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
What strategies must be invoked now, if we are not to be deprived
of a powerful weapon that others are learning to employ with increasing
effectiveness?
The first task is semantic. There is a need to redefine "war," to
endow the concept with a larger meaning than the customary association
with physical violence, death, and destruction. In a world where oppor-
tunities for its use have come into being, force of any kind, violent or
nonviolent, "is the continuation of political intercourse by other means."
Second, we must learn to master all methods that can be used to
defend or secure a vital interest. We have moved already to combine the
separate ways of blocking or reaching an enemy, by land, sea or air,
into an integrated strategy. Now we must go one step beyond and incor-
porate into the defense structure the fourth, other-force capability.
Lastly, we must gain a far better understanding of the operations of
large systems than we now possess. We must be able to identify their most
sensitive components. And we must develop expertise in predicting the
effects of removing a stage or injecting an irritant that the system's own
circulation will distribute to all its parts.
In Conclusion
Will there be a generation of peace? The strategic threat to survival
seems to have receded for the time; and one can point to developments which
may lessen the risks to the way-of-life.
--Dependencies Intertwine. Hurt one nation, and all others will
feel the pain.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
--Problems reach transnational proportions. Nations cannot solve
them by unilateral means. They must join hands in concerted action.
--Multinational groupings, in business, labor, and the sciences
increase in numbers and power. They string nations, like beads, on a common
thread of Interests.
--National contacts on trade, ecological, and regulatory matters
multiply. They offer disputants a wide choice of overlapping, give-and-
take bargaining points.
--A younger generation could yet develop second thoughts about the
wisdom of unbridled consumption and wasteful resource expenditures.
--Finally, there is the beginning of a faint dissent from the
belief that economic growth is the path to happiness.
These are hopeful trends. However, one can point with equal facility
to a like number of developments which do not bode well at all for peace
and tranquility.
Hence, today as at every other point in our history, we are committed
to hoping for the best while preparing for the worst. There is one
difference, though. This time, our perceptions are challenged more than
our muscles. The planning mechanisms, strategies, and force structures
which brought us safely through the Cold War are not designed for
tomorrow's threat. Unless we enlarge our thinking and adapt our power to
the new sources of danger, we will find ourselves--modern, fierce-faced
Horatios--guarding the bridge against an enemy of swimmers.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
RESOURCE AVAILABILITY AND NATIONAL SECURITY POLICY
Daniel W. Christman
I. THE BACKGROUND
National security and US energy policy have become increas-
ingly intertwined as a consequence of recent, spectacular develop-
ments in the Middle East. On the eve of these developments,
President Nixon emphasized:
"One major problem that will face us during the next
two decades will be ensuring an adequate supply of energy
from secure sources at reasonable prices...The energy
problem will have a major impact on our national security
and foreign policy planning."1
The Arab boycott has focused attention, long dormant, on the
security of natural resources. In spite of official announce-
ments to the contrary, US foreign policy is being shaped daily
on the basis of securing natural resource supplies, particularly
petroleum.
.However, the national security justification for resource
availability has never been carefully articulated. Early legis-
lative attempts to deal with the petroleum facet of resource
supplies produced vague criteria for problem identification.
The Trade Agreements Extension Act of 1955, for example, authorized
increased restrictions "on imports threatening to impair national
security."2 The security dimension was not clarified until 1958.
The Extension Act of that year identified two security areas in
which the impact of imports might endanger national security:
(1) domestic nroduction needed for projected national defense
requirements and (2) domestic industries whose contribution to our
internal economy was considered vital to sustain economic growth.3
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
Because of the obvious ambiguity inherent in the 1958 legislative
criteria, the President's Cabinet Task Force on Oil Import Control
eleven years later attempted to specify more narrowly the
Security Criteria. They met with little success. Their 1970
report recognized that the main security objectives were (1) the
protecting of "military and essential civilian dem7nd"4 against
foreign supply interruptions, and (2) the preventing of a decline
in the petroleum sector of US industry that would severely weaken
the national economy.5 Such objectives were little different from
the 1958 legislation. Thus, while recognizing the need to identify
security criteria. useful for policy enactment, successive policy
advisors have not improved upon the vague standards promulgated
more than 15 years ago by a concerned Congress.
To understand the impact of the "energy crisis" on the
current management of national security, one must begin by re-
evaluating the nature of the threats to national security posed
by resource shortfalls. Ideally, such threats would be accom-
panied by precise criteria to guide the enactment of policy. It
is the purpose of this paper to reexamine the threats, and to
suggest testable criteria. Policy recommendations, when appro-
priate from the defense standpoint, will be then offered as one
approach to possible crisis resolution.
II. THE HISTORY OF RESOURCE SECURITY
Perhaps the first American to identify, and articulate,
the relationship between secure resources and national power was
Alfred Thayer Mahan. His thesis that national prosperity is
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
strongly influenced by trade and shipping, protected by a power-
ful havy6, still receives great attention by world leaders. As
national economies grew more complex and interdependent, however,
policymakers became increasingly concerned that, during armed
conflict, their navies would be incapable of ensuring a needed
flow of critical materials to sustain the production base that had
contributed so sharply, in Mahan's model, to their nation's
oreemi_nence. This concern nromnted measures, following WTt I,
_o pratect vit.7l resources needed in wartime from likely interruptions
cause! by war. The protection included either the stimulation of
domestic production of vital resources through import restrictions,
such as tariffs, or the stockpiling of needed materials by pur-
chasing, ideally overseas, those critical raw materials deemed
indispensable for wartime production. In truth, the United States
pursued much more aggressively the former policy, following
recommendations by its War Industries Board in 1922 to institute
high tariffs for domestic industrial protection.? It was not until
1937 that stockpiling was considered in earnest. However, appro-
priations were generally insufficient to create meaningful stock-
pile levels, with but $100 million authorized by the Strategic
Materials Act of 1939 for the fiscal years 1939-1943 inclusive.8
Such an authorization stands in sharp contrast to the approximately
812, billion dollars spent by 1963 on the Strategic Stockpile urogram.9
The stockpile appropriations, together with the Mandatory Oil
Import Quota Program initiated in 1959 on resource security
grounds, reflected the general approach the US pursued following
Approved For Release 2001/09/0 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
WW II to provide secure resources that were considered vital to
the nation's defense. In this paper, such an approach to resource
security, which stresses trade interference and material stock-
piles, will be termed a "post-Mahan" model.
Not all observers of the resource security issue have
agreed with the theory implied by the above policies. A contrast-
ing view gained popularity following the Second World War. It
reflected the belief that the nuclear era rendered a World War II-
.type of war extremely unlikely. Emphasis was consequently placed
on forces in being. Concomitantly, traditional economic war
potential that would be fully mobilized for war production follow-
ing the outbreak of hostilities was deemphasized. Hitch and
McKean articulated this view in 1961, concluding that, in both
thermonuclear and limited war scenarios, the economic war potential
of the US is important only to the extent that it has been
effectively diverted to security purposes before war starts.'"10
Such a conclusion did not stress raw materials stockpiles or
import controls, but rather, recognizing resource constraints,
emphasized greater economic strength through research and develop-
ment, industrial efficiency, and managerial expertise. "We are
in an era," stated Hitch, "in which a single technological mutation
can far outweigh in military importance our substantial resource
advantage."11
In a less publicized work, Mancur Olsen Jr. in Orbis
reemphasized Hitch's view on the declining importance of raw
material resources. Contrasting the abilities of Japan and
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
Germany in responding to raw materials shortages during VAT IT,
Olsen observed that, since Japan was relatively later to industrial-
ize, its lack of administrative and scientific skill placed it at
a great disadvantage when confronting strategic materials shortages.
Germany, on the other hand, with no large resource stocks and with
critical shortages of copper, tin, and molybdenum, increased its
war production 4007, from 1939-1944. Such developments were the
result, concluded Olsen, of Germany's desire not to protect in-
efficient industries with tariffs (as she had done before WW T),
and to invest in the development of education, administration,
science, and industrial capital. In short, to cope with shortages
of food and raw materials, a nation needed resourcefulness as well
as resources.12 This second approach to resource security will
be termed the "Hitch" model.
Nhile it is difficult to point to policy actions that
reflected the "Hitch" security model, specific measures were
instituted in the 1960's based on Hitch's theory. Strong govern-
ment support of research and development outlays, the declining
Congressional and executive interest in maintaining the strategic
material stockpile, and the general US support of the trend toward
free trade expressed in the Kennedy round of tariff negotiations,
manifested a recognition of the need to reshape the nation's
resource security policy in the nuclear era.
Not until the oil embargo by the OPEC States has interest
been rekindled, particularly by the United States, in reemphasiz-
ing a resource security system based upon the post-Mahan model.
5
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
President Nixon's "Project Independence", for example, which would
undoubtedly require heavy governmental subsidies should the world
market prices of crude decline from its current inflated levels,
and the renewed calls for strategic petroleum stockniles as a
security hedge against future supply interruptions, suggest an
autarkic, restrictive trade approach reminiscent of the recommenda-
tions by the War Industries Board in 1919. However, the President's
concern for research and technological investment in energy and
resource alternatives, reflected in his FY 75 budget, demonstrates
a continuing awareness of the importance of the "Hitch" model in
guiding the nation's resource security policy during the decades
of the 70's and 80's. Perhaps the best statement that synthesizes
the "host-Mahan" and "Hitch" models in explaining the current
administration's resource policy was offered by Oscar Morgenstern
in a report sponsored by the Office of Naval Research. He stated:
"While natural resources have become generally over-
shadowed by technology as a constituent of military potential,
they have not ceased to be significant, and the significance
tends to rise as vital non-renewable resources become globally
scarce."13
In light of the administration's energy proposals, then,
two questions seem especially relevant in analyzing the future of
resource security. First, should energy resources, and petroleum
in particular, be treated differently from other "primary" products
(raw materials and food) which have received security policy
attention? And second, do the "nost-Mahan" and "Hitch" models
adequately guide present resource security missions in light of
developments following the recent Arab petroleum boycott? It is
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
a thesis of this paper, that (1) energy resources, to include
petroleum, can, and should be, subject to the same analytical
criteria for security policy as other primary products; and (2)
a new security model is required to supplant both the "post-Mahan"
and "Hitch" treatments of resource security to direct security
planning in the coming decades.
At first glance, the importance of oil would seem to argue
for separate treatment of this vital resource. Indeed, Wassily
Leontief has articulated a by now familiar theme that, without oil,
a nation will not only have to abandon its automobile, but that
the entire economic system may be stopped for lack of energy
and transportation.14 Such concern has of course led to agencies
specifically designed to deal with petroleum security requirements,
but which at the same time have siphoned authority from broader
organizations established to administer war production or resource
policy.15 However, the experience of the two world wars, and of
oil boycotts during the 60's and 70's, have revealed not only a
remarkable propensity for substitution between different energy
sources, but as well the unremarkable ability to conserve on what
to this point has been a profligate use of energy of all forms
by advanced industrial nations. While petroleum and energy shortages
could well cause distortions in the pattern of international
trade and relations, and lead to internal'political problems
attending reallocation decisions, such an outcome, it is being
increasingly appreciated, is not confined to energy resources alone.
The possibility of resource-scarce developed countries facing
7
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
cartel pressure from resource producing states has reaffirmed the
need to consider energy and raw materials as part of an overall
reexamination of resource security. It has also revealed the
difficulties of proceeding with "post-Mahan" and "Hitch" models,
since neither dealt explicitly with the foreign policy implications
of resource availability. Indeed, the complete identification of
security threats nosed by the problems of resource availability
is an important task to which we now turn our attention.
III. CONTEMPORARY RESOURCE SECURITY THREATS
Three divisible areas for contemporary resource security
study seem evident from the unfolding of raw materials policy in
this decade. Not surprisingly, the first involves traditional
milit;iry readiness and preparedness. I have chosen to include
within the rubric of "military preparedness" the providing of
essen=ial non-defense resource demand deemed indispensable to
susta'n an economy during total war. While the problem of deciding
how much raw materials to allocate to essential non-defense
production has proven particularly vexing, it has been recognized
for years that the inability to provide essential civilian goods
and services would impair the mobilization itself, and henc:2
endanger the purely military tasks required of a nation prenaring
for war.16 Second, internal economic dislocations caused by a
sudden loss of a critical resource, either because of general war
or in the absence of general conflict, can produce serious dis-
tortions in employment and output. The consequences of such
dislocations on a nation's economic potential have been quantitatively
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
assessed through recent advances in input-output analysis.17
Qualitatively, the economic vulnerability represented by threatened
cut-offs of the vital resource, petroleum, has :already reduced the
political autonomy of Western Europe and Japan. Such an outcome,
reveals the third security area now widely recognized as a separate
component of resource planning, the foreign policy, or international
political, dimension. While this area is the newest to be
explicitly identified, international politics threatens to be the
most troublesome of the three security areas to analyze. For
example, Morgenstern, in his study cited earlier, has categorically
stated:
"If a severe world energy squeeze unfolds, the countries
depending on fuel imports will lose international bargaining
power vis-a-vis the fuel exporting states."18
Yet an obvious result of the most recent resource embargo is the
factionalism surfacing between the OECD petroleum importing
states. Potential superpower implications are involved as well
should the race for secure supplies lead to territorial ambitions
in the latter stages of a successful resource embargo. To
complicate additionally the third security area, significant changes
are taking place with respect to international currency flows, and
in the terms-of-trade between the less developed and the industrial-
ized nations, that have portentatious implications for the inter-
national relations of all nations, irrespective of their direct
involvement in the availability of a particular resource.
Succinctly, therefore, the current resource security
threats facing the United States are primarily military, domestic
9
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
economic, and international political in nature. These security
threats differ in two principal respects from earlier, govern-
mental identifications. First, the international political
dimension is recognized manifestly as an object of policy attention.
Earlier policy interest treated international implications of
resource security as an adjunct to likely developments following
an erosion of security on military or economic grounds. It has
become clear within the last six months, however, that even without
a deterioration of military or economic security through resource
cutbacks, the international bargaining position of resource import-
ing states has been severely constrained by resource exporters.
Second, the concert of "essential civilian demand", while always
recognized as a vital component of national security from a re-
source availability perspective, has never received attention as
a guide to security policy. The vagueness of the concept has
contributed in part to this shortcoming. However, the sudden con-
cern over energy aesource availability has revealed the importance
of determining which economic sectors should be insulated from
possible adverse effects of resource constraints in order to
provide a continuing production base for sustaining military
preparedness. I have chosen to distinguish the security implica-
tions of providing such "essential civilian demand" from the
broader issue of domestic economic dislocations caused by the sudden
cutb'ck of a vital resource. The former is critical since attention
is directed primarily at maintaining available supplies to continue
defense operations on a scale sufficient to meet the military threat.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
The latter emphasizes shifts in the use--of the vital resource,
either to alternative resources or to more efficient resource
usage, to minimize dislocations encountered by the resource short-
fall. While the security implications in this area are less obvious
than those involving military and essential civilian demand, it is
apparent, for example, that internal social unrest caused by
consumer disagreements over resource redistribution policies can
pose serious internal security problems. Although attention his-
torically has centered on external security implications, experi-
ence with the recent truckers' strike suggests the need to establish
a resource security policy that is responsive to both internal
and external security demands. Such policy should be developed
from an appropriate security criterion.
IV. A REVISED RESOURCE SECURITY CRITERION
Difficulties in interpreting earlier resource criteria as
a guide to security policy have resulted not only from the vague-
ness of the criteria themselves, but from the fact that policy in
many cases was formulated based upon probable effects of resource
shortfalls, and not upon causes. For example, one of the main
objectives of the 1970 study by the Cabinet Task Force on Oil Import
Control was the formulation of resource policy to "protect essential
demand against foreign supply interruptions".19 But the cause of
the threat in this case was the inability to respond to an
interruption of foreign oil, a problem not completely resolved
through the oil tariff policy recommended. While the tariff would
have stimulated domestic production and fulfilled the need to protect
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
essential demand on a short-term basis, the policy overlooked the
longer-term consequences implicit in natural resource characteristics.
Accelerated domestic production hastens the exhaustion of our own
resource stock, a lesson learned painfully during the second world
war. Thus, restrictive tariffs, by themselves, would be counter-
productive in the long-run to the Task Force objective of protecting
essential demand. Treating symptoms, or effects, invariably biases
policy in favor of short-term remedies.
To resolve contemporary resource threats, a new security
criterion model is suggested. As outlined above, national security
from the resource perspective should be couched in terms of our
ability to withstand in interruption of resource supplies. There
are two subissues. The first refers to the stock of resources
domestically available to provide future, or long-range, national
security. The second involves an increases flow of production from
the stock to provide present, or short-range, security in the event
of foreign supply interruptions. Thus, by this model, any resource
policy which increases our ability to respond to a supply interrup-
tion, (through stockpiling, stand-by production, etc.) and whic.i
simultaneously reduces the flow of resources from our given natural
resource stock unambiguously improves both short and long-range
resource security. However, policies which call only for rec_c_ng
resource imports to zero and intensifying domestic production
provide just short-range security. Long-range security is reduced,
since the available stock of domestic resources would be exhausted
at a more rapid rare. Alternatively, an unrestricted import program,
12
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
in which the US was almost totally reliant on foreign resources,
would grievously impair short-range security if there were not
simultaneously provided means to replace the resource in an emergency.
But this program would improve long-range security by minimizing
the depletion of the domestic resource stock.
This "stock-flow" model places the earlier "post-Mahan"
and "Hitch" models in a broader context, and clarifies the current
administration energy policy in light of the "stock-flow" resource
criterion. First, the "post-Mahan" model emphasizes short-range
resource security. Considering the state of domestic resource
exhaustion by the end of World War I, such an emphasis is not
surprising. Genuine concern had not yet been expressed about
imminent depletion of vital domestic resources, and even the stock-
piling programs instituted in the 30's stressed obtaining needed
storage levels from domestic sources. On the other hand, the
"Hitch" model reflects long-range resource security policy by
emphasizing additions to effective domestic stocks through technolog-
ical development of resource substitutes, or by minimizing resource
exhaustion through development of more efficient resource utiliza-
tion.
The Nixon proposal for energy security, "Project Independ-
ence", is a blend of long and short-range security considerations.
The administration has planned, for the decade of the 80's, an
increase in the domestic flow of energy resources to improve the
nation's ability to respond to overseas interruptions. Simultaneously,
the President has proposed investment outlays and R & D expenditures
13
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
to increase the effective stock of energy resources, hence improving
long-range resource security. The President's program, analyzed
with a "stock-flow" model, represents a rational, though not
necessarily optimal, approach to national security policy. While
serious questions remain about the costs of "Project Independence"
in light of alternative security programs, it remains a singular
proposal because of its explicit treatment of both long and short-
range resource security.
Thus, the revised security model suggested here should
improve the ability to analyze resource security. By emphasizing
causes of resource threats and not effects, and by distinguishing
long-term and short-term resource security, the "stock-flow"
model should guide more effectively the policy options available
to national security decisionmakers. The analysis of such options
in light of the threats posed by the shortfall of energy resources
is a critical next step.
V. NATIONAL ENERGY RESOURCE POLICY
"Project Independence", while a balanced resource security
system as analyzed by the "stock-flow" model, raises serious ques-
tions of program efficiency, if successful in the 1980's, it
would satisfactorily meet the military preparedness and int,rn-'
econo-.iic resource security threats, and should as well arev=_L_ n
erosion of our international political power by lessening our
dependence on insecure energy sources.
But alternative security systems are available which can
accomplish these same objectives, at different levels of risk, and
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
at different total costs. The "stock-flow" criterion model suggests
another program that emphasizes continued importation of crude,
backed by replacement measures to cover insecure crude supplies
in the event of a crisis. Such a program would as a consequence
conserve domestic reserves and hence improve long-range resource
security. In comparison with "Project Independence", this resource
security system does not stress increased domestic output from a
broad spectrum of new petroleum energy sources, but rather relies
upon proven technology and the avoidance of costly new investments
in synthetic crude that could easily prove unnecessary by the end
of the next decade.
"Project Independence" seems worrisome from a national
security standpoint for two reasons. First, it is clear that the
comparative advantage in producing oil does not belong to the United
States. The marginal cost of extracting oil from the well head in
the Middle East is less than 20 cents a barrel,20 about one tenth
of the cost in the US. As Herman Kahn and others have emphasized,
the dilemma facing the United States in providing petroleum
resource security is that, after extensive private and public
investments have been made in such projects as shale oil, the
world market price could easily decline, requiring government
subsidies on a continuing basis to ensure profitability.21 Second,
the scale of investments required to ensure complete energy independ-
ence (if that is in fact the President's goal) is astounding.
The requirements to raise sufficient capital for expanding coal
production, offshore drilling, oil shale, coal gasification and
15
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
liquefaction to name just a few, could easily approach one third of
a trillion dollars.22 Such an investment total excludes the
exotic energy potentials, (solar, hydrogen fusion, etc.) that hold
the promise for secure, long-term energy supplies. Indeed, the
investments implied by "Project Independence" could preempt not
only the capital needed for developing the ultimate energy sources,
but could as well be provided at the expense of developing those
scientific products and services in which we have traditionally
had a comparative advantage, and which have provided much of our
national security in the age of rockets and computers.
Thus, a complete reliance on domestic energy sources, while
providing resource security, hardly seems the most efficient
means of providing that security. I would suggest that a program of
continuing energy imports could prove less costly, yet provide the
same level of security, as a plan of total energy self-sufficiency.
Such a national plan would distinguish between secure and insecure
oil imports, and require that imports obtained from insecure
sources be covered by replacement measures such as storage, shut-
in production, or spare production capacity. If the world oil
price dropped below the domestic price, import tickets could be
issued to oil companies to permit them to import the insecure crude,
but only if they could demonstrate that they had provided sufficient
stored oil or spare production capacity to replace each barrel
imported with a 6 month domestic supply. Should the price
differential between domestic and foreign crude be insufficiently
large to make such a "ticket program" profitable for the companies,
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
the government would provide the strategic reserve as a precondition
for allowing companies to import insecure crude.
Such a strategic reserve, provides a means to carry the
nation through a transitional period, stretching into the next
decade, where security would be endangered by unexpected foreign
supply interruptions. It also avoids an immediate and costly
commitment to an oil shale program until it can be determined
what supply and demand responses will be forthcoming as a consequence
of the President's decision to let domestic petroleum prices rise.
Assuming boycotted crude sources are reopened and Middle Eastern
production totals are eventually raised, the US will undoubtedly
rush to acquire whatever Middle Eastern supplies are available.
However, a lesson from the most recent OPEC conduct should be that
we must never again treat oil from these insecure sources as any-
thing but a most risky and vulnerable supply. "Project Independence"
would reduce our vulnerability from these sources, but not until
the 1980's. A strategic reserve can be adopted immediately, with
benefits enjoyed within 12 months.
The costs of such a reserve are speculative. However,
private and public study groups have shown that crude oil can be
stored in salt domes, (naturally occurring salt cavities in the on-
shore Gulf Coast area with a capacity of about 700 million barrels)
at a 20 year total cost of approximately 75 cents per barrel, and
in steel tanks for about twice that cost.23 Given the extent of
the current boycott, and import projections to 1980, the need to
replace 5 million barrels per day for 180 days seems appropriate
17
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
as a first approximation. Such a need would cost approximately
800 million dollars per year if salt domes were used to capacity.
The advantage of such a storage proposal is that it not
only provides short-term security far earlier than "Project
Independence", but that it delays a decision on costly investment
projects such as shale oil until the need for such an investment is
demonstrable. It seems premature to commit the nation to a program
requiring the development of crude from new technology sources
when conventional technology and rational pricing policies
applied to such energy sources as coal and off-shore oil could
significantly improve the nation's short-term energy resource
requirements. The investment requirements for additional coal
production and off-shore drilling alone will strain the nation's
capital markets. We should develop extensively industries with
an established production base, and concentrate remaining government
and private dollars on developing ultimate energy sources, rather
than move swiftly into a new area like oil shale where environmental
and economic factors raise serious questions about program efficiency.
The modification to "Project Independence" guarantees only
short-term security as guided by the stock-flow criterion model.
An additional element is required to provide long-range security.
Such an element might consist of a conditional leasing program,
which linked full development rights on government land to the
cost of oil imports and the amount of proven reserves.
Such a leasing program would encourage an expansion of
exploratory drilling for oil offshore and on the North Slope, and
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
for geothermal production sites in the "Lower 46". Companies would
be entitled to production fromthe exploratory wells, but leases
for the full development would depend on the price of foreign
crude, and the proven reserves substantiated by the exploratory
drilling. If the price of foreign crude increased, full development
leases would be granted, with the size of the lease a function of
the amount of proven reserves at the time of the price hike. The
larger the amount of proven reserves when the cost of oil imports
increased, the greater the increase in reserves made available for
domestic production. Such a policy, with a strategic reserve
program, would allow continued imports without sacrificing national
security. It should as well create a disincentive for Middle
Eastern countries to increase the price of oil, and would emphasize
conserving natural resources, rather than depleting them through
immediate leasing and production.
"Project Independence", therefore, while providing a rational
resource security system as guided by the "stock-flow" model, fails
to give explicit recognition of the distinction between secure
and insecure imports. It commits the nation to a costly investment
in fossil fuel supplies to cover not only reasonably secure
imports, but as well, fuel imports in which US production is com-
paratively disadvantageous. Canadian production, perhaps the securest
of our foreign sources, should remain a strong energy contributor
for years. Dr. Seastone of the University of Calgary recently
commented:
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
"discoveries and developments in oil and gas fields
of Canada have so rearranged the energy resources of the
North American continent that the US can look to Canada
as a continuing, stable source of energy supply..."24
South American production and discoveries have similarly diversified
potential secure supply sources, and when combined with likely
accretions to US offshore and "lower 48" production following the
freeing of domestic oil prices, makes the marginal investment to
cover the totality of imports a very questionable undertaking.
The proposed alternative to "Independence" would provide a resource
security hedge only against insecure petroleum sources, and through
a controlled leasing program linked to foreign prices, would seek
to control the spiral in petroleum prices by increasing the elasticity
of demand for Middle Eastern energy resources. It would provide
short-term security more quickly than the President's proposal
by emphasizing a badly needed but seldom provided element in an
energy security system, a strategic reserve of standby production
or petroleum stockpiles. Finally, reflecting "Project Independence",
the alternative would continue to stress R & D outlays toward
achieving an ultimate energy source and would hasten administration
efforts to free energy prices from constraints which have for
years artificially depressed the cost of fuel to users. The prof-
ligate use of energy caused by such pricing policies has contributed
to a steady erosion of resource security as, in the absence of
replacement measures, readily available domestic supply stocks
have been gradually depleted. Policies outlined above would stress
appropriate short ,end long-term replacement measures, and seek to
control increases in energy use by pricing actions in the marketplace.
20
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
Such measures represent unambiguous improvements in energy
resource security.
VI. ENERGY POLICY AND RESOURCE THREATS
In light of the two energy security systems outlined and
compared above on an efficiency basis, comparisons on ability
to meet the three categories of.resource security remain to be
examined. Such a comparison will be followed by particular
recommendations for the Department of Defense as an institutional
guide in the management of national security resource policy.
The resource threat dimensions examined earlier were military,
domestic economic, and international political. Using the
"stock-flow" security criterion model, I suggest that the military
security threat involves principally short-term resource security,
the international political threat reflects primarily long-term
resource security, while the domestic economic threat should be
approached through policies that address both short and long-term
resource security.
Of the industrialized, oil importing nations, the United
States is clearly least susceptible to an erosion of resource
security from a military dimension. With a current domestic
crude production of 11.5 million barrels per day, purely military
needs in a general war have been estimated by the Joint Chiefs
of Staff to approximate 1.8 mb/d, more than double the present
military usage rate of 800,000 b/d but only 16% of US production.25
By contrast, during the peak of the second world war, military demand
of 1.6 mb/d comprised 32% of total US production.26 However, the
21
Approved For Release 2001/09/05 CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
military dimension of resource security also has been assumed, in
this paper, to include sustaining essential civilian demand in-
dispensable for economic mobilization. Although a quantification of
such demand has Never been rigorously performed, if both military
and essential civilian demand were to be provided entirely from
domestic sources, essential civilian demand would be limited to
approximately 9.7 mb/d. In all likelihood, military and essential
civilian demand would total less than 11.5 mb/d,27 leaving other
economic requirements to be met from remaining domestic production,
and from imports that could be sustained during a war or political
boycott. Because of the size of continued US petroleum production,
then, a resource security threat from a purely military perspective
is not significant. An improvement in short-term resource security
will provide little increased security gain. Long-term security
is likewise of little importance, since priority will always be
given to defense production in wartime irrespective of the size of
the resource stock. Hence, from the US military perspective,
there is no clear basis for choosing between alternative resource
security systems.
Western Europe is regrettably not as fortunate from a short-
term perspective. Over 909. of this vital region's petroleum needs
is imported, and over 70% is obtained from OPEC countries participating
in current embargo activites. Thus, during a crisis, the flow
of energy supplies to provide military and essential civilian
demand affects national security significantly. Any program which
accelerates the providing of short-term security is to be preferred.
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
In Western Europe's case, the need for strategic reserves of energy
is even more pronounced, since the alternative to providing such
short-term security, an "independence? scheme of the type proposed
for the US, is obviously years away. (Great Britain and Norway,
with their discoveries in the North Sea, are NATO partners perhaps
the closest to achieving short-term security through an "independence"
approach.) Again, however, concern over resource stocks, an object
of long'term security attention, would be subordinated in a general
or limited conflict to the need to ensure priority flows of avail-
able energy to satisfy military requirements. Thus, in political
regions where domestic resource production is a small fraction of
resource needs, programs hastening the provision of short-term
resource security to meet military requirements have strong advantages
over alternative systems that delay such provision through gradual
development of domestic resource supplies.
The United States and Western Europe have very similar
problems, however, in choosing between programs to provide resource
security from a domestic economic perspective. This resource
security dimension encompasses problems the solutions to which are
both short and long-term. For example, after military and essential
civilian needs have been preempted on a priority basis from avail-
able energy supplies, the remaining energy flows would be allocated
to lower priority-civilian requirements. In effect, such remaining
civilian needs would be treated on a "residual" basis, with alloca-
tion and rationing programs designed to minimize economic disloca-
tions associated with remaining residual supplies. Consequently, a
23
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
key to minimizing allocation difficulties is a short-term resource
security system that can maintain sufficiently large flows of energy
resources to non-critical civilian needs until state administrative
machinery can institute a program to apportion supplies to competing,
non-essential users. Again, an "independence" scheme is less ef-
fective in ensuring an adequate administrative response than is a
program providing strategic reserves through storage or spare
production capacity. The delays (probably 10 years as a minimum)
in adjusting to an independence program would render economies
extremely vulnerable, during the adjustment, to internal political
unrest that would in all likelihood attend bureaucratic responses to
a sudden cessation of resource supplies. Of course, as true inde-
pendence is eventually achieved, the domestic economic threat to
short-term resource security disappears. The choice between an
independence or strategic reserve program, then, must rest on the
rapidity in providing short-term security, given the domestic
economic vulnerability implied by the size of resource imports.
Similarly, the domestic economic threat is very sensitive
to long-term resource security as implied by the "stock-flow"
criterion model. Since non-essential civilian demand has been treated
as a residual, the stock of energy resources available to support
these needs has been, effectively, drastically reduced. Hence, pro-
grams to increase this effective stock, which I have termed long-
term resource security actions, will diminish the domestic economic
threat more drastically than it will diminish the military threat,
since priority will already have been placed on meeting military and
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
essential civilian needs. In this regard, no significant policy
advantage can be seen by comparing the "independence" and "strategic
reserve" programs outlined here. Both programs place strong em-
phasis on R & D outlays and investment expenditures to increase
effective resource stocks. The programs differ only in their
emphasis on conventional technology petroleum production. Competing
evidence unfortunately makes a judgement on the effectiveness of
such emphasis in adding to available resource reserves very spec-
ulative.
For the United States, given the current usage and pro-
duction pattern of energy resources, the domestic economic resource
threat may well have been overemphasized in an environment short
of general conflict. While the economic dislocations in specific
sectors during the most recent OPEC boycott have been noticeable,
I would argue that future energy consequences in sectors receiving
media attention, such as autos and airlines, will be very slight.
For example, the layoffs in the ~+irline industry have been
attributed totally to energy shortfalls. Between December and
January, 1974, 15,000 employees have been reportedly furloughed.
However, the airline industry has been plagued with chronic over-
capacity for three years, and it is one of the most cyclical in-
dustries in our economy. Between June and July, 1962, over 15,000
airline employees were released, even though no general economic
downturn was evident.28 But during recessions, which many economists
were already predicting for the first 6 months of 1974, monthly airline
employment drops have been much larger than the total reported to
Approved For Release 2001/09/d g: CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
date as an alleged consequence of constrained fuel supplies.29
In the auto sector, layoffs have been four or five times the total
for the airline industry, and the demise of this vital economic
contributor have been widely predicted. Yet Ford has been able
to completely retool an assembly plant from large to compact car
production in less than 100 days, and with auto transportation so
deeply ingrained in the American ethic, consumer outlays for small
cars should, after a retooling delay, restore automobile profits
to acceptable levels. Energy constraints will undeniably impose
changes in consumer tastes which will affect durable goods pro-
ducers, because of capital intensity, more severely than non-
durable or service sectors. But the responsiveness of American
industry in adapting to changing consumer tastes has been,
historically, a h,llmark of our post-industrial economy. Indeed,
the steel industry itself has found demand for heavy plates and
tubes to be used in energy related production already offsetting
the decline in steel sheet used for consumer durables.30 When
such shifts in production activity are combined, as they have been,
with steps to improve our unnecessarily high ratio of energy input
to unit of output, the threat to domestic economic security posed
by the current scale of energy shortfalls becomes less a problem of
sustaining resource flows than a problem of social and political
willingness to adapt to a higher cost energy environment.
While I have minimized resource security threats, particularly
for the United States, in the military and domestic economic areas,
current, significant threats are evident in the international
26
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
political sector the importance of which cannot be minimized.
Japan and Western Europe, for example, have no obviously satis-
factory remedies to avoid painful losses in international bargain-
ing power vis-a-vis energy exporting states. While it is possible
that a growing world energy squeeze, accompanied by political
blackmail, could incite Japan and Western Europe to provide them-
selves with military means to operate overseas in sufficient
strength, it is much more likely that they will adopt foreign
policies designed to accommodate and placate the oil-exporting
states consistently.31 Such a loss in international power and
influence is not necessarily predestined for the United States,
which has interesting options both to reduce its own political
vulnerability, and to assist its allies in managing, but not
resolving, the political dimension of their energy supply dilemma.
Perhaps the source of most immediate concern driving inter-
national relations between all nations is the phenomenal increase
in foreign exchange costs for imported energy. Most estimates for
OPEC foreign exchange earnings for 1974 exceed $80 billion, with
but $30-$35 billion being absorbed by Middle Eastern internal
development.32 Such a flow of "petrodollars" is worrisome not
only for its potential impacts on currency speculation, but for the
concomitantly heavy drain on Western European and Japanese currency
reserves. Possible consequences involve not only an unravelling
of traditional alliances and organizations in a scramble for
bilateral energy contracts at secure prices, but, even more in-
juriously, a series of competitive devaluations in attempts uni-
27
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
laterally to fortify weakened currencies. In spite of the dangers,
the potential for US political leadership is very great, particularly
since the United States, of all oil importers, stands to lose the
least in forthcoming currency scrambles. Such leadership might
begin by the US acting as financial intermediary in accumulating
European and Japanese currency presently undesired by the Arabs.33
But actions could logically be extended to broader economic and
political assistance if initial US overtures were accepted in good
faith, and were successful.
Short-term resource security actions can, unfortunately, do
little to resolve threats in the international political arena.
Both the "Project Independence" and "strategic reserve" security
systems fail to provide energy replacements either in sufficient
time, or in sufficient quantity, to alleviate currency reserve
drains and to contribute to resource price stability. Long-term
resource security actions can prove extremely helpful both in
diversifying production sources, the goal of "Independence", or in
contributing to resource price stability, an explicit objective
of the conditional leasing program. However, the risk in relying
on such long-term security options was reflected in J. M. Keynes
preference for dealing always in the short-term, since, he added,
in the long-term, all will be dead. Nevertheless, I suspect t_.at
the death of the monetary system can be indefinitely postponed by
not moving towards a national commitment of complete energy in-
dependence. Economists have increasingly realized that, while
balance of trade statistics for oil importers will undoubtedly
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
turn strongly negative, balance of payments figures could l'e
cushioned by a reverse flow of investment dollars from the excess
reserve holdings of the oil exporting states. In effect, the in-
dustrialized nations, for years mature creditors in international
markets, could become debtor nations as resource-rich exporting
states sought attractive returns either "downstream" in petroleum
marketing, or in other investment outlets agreed upon by recipient
nations. But, it is unlikely that Middle Eastern states will
contribute investment dollars to capitalize US or European energy
self-sufficiency programs. It is much more likely that reverse
investment would be encouraged in an environment of continued
trade in international commodities unencumbered by calls f.)r
autarkic programs of the type symbolized by "Project Indep ndence".
To this point, national resource security policy h.-,s been
analyzed by a "stock-flow" model not only in terms of efficiency
in providing given levels of resource security, but also i-i terms
of ability to resolve contemporary resource security three-s. In
comparison with a program of energy self-sufficiency, a system
involving strategic reserves of petroleum resources possesses
significant cost advantages in providing short-term security. It
also improves the nation's ability to meet a domestic econimic
resource threat by providing, more rapidly, needed energy supplies.
Additionally, it can contribute to an improvement in the inter-
national political threat by encouraging resource producer investment
in energy consuming nations, thereby relieving a serious s rani on
the international payments mechanism.
Approved For Release 2001/09/05 :2 CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
VII. A DEFENSE DEPARTMENT RESPONSE
Policy recommendations by the Department if Defense will
undoubtedly play an extremely important role in the formulation of
national security policy for the remainder of this decade.
Consequently, policy guidelines that follow from earlier discussions
of resource security will be offered as a first approximation to
crisis resolution from the defense perspective.
Perhaps the most vital recommendation concerns the actual
employment of US armed forces. Succinctly, military power cannot
resolve the energy crisis. US policy must not be directed, even
in subtle form, toward intimidation through military force of Arab
leaders. Such force might only very briefly improve short-term
resource security 'py increasing the flow of petroleum resources.
It could provide no long-term security since attempts at permanent
acquisition of territory or drilling rights would be rebuffed by
an intensely hostile regional environment. Even if military forces
were initially successful in seizing and securing oil facilities
in a Mid-East country, the capability to extract and transport the
petroleum is very doubtful. Oil workers are chiefly producer
country citizens whose loyalty and support are not libialy, and even
oil companies themselves, sensing vulnerability of assets in other
areas, would be reluctant to support such a move. As well, the
possibility of superpower confrontations is very great, whether
the military actions are conducted by the United States or by proxy
military forces. Most importantly, the rapidly evolving nature of
petroleum resources suggests constant reappraisal of the significance
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
of the resource to economic security. There would be no point
in risking general war over a resource whose importance a decade
hence might have significantly decreased.34
However, the constraints implied above on military actions
in the Middle East should not be cause for concluding that all
forces should be withdrawn. The possibilities of conflict based
upon access to resource stockpiles, an intervention typology
perhaps manifested most recently by Chinese-Vietnamese conduct over
the Paracel Islands, suggest the need to reconsider limited war
doctrine for American ground forces. CPT Sinnreich of the US
Military Academy has proposed a "conflict control" doctrine to
guide US military action in a scenario of inadvertent conflict
between superpowers.35 "Inadvertent" has been defined by CPT
Sinnreich to encompass superpower confrontations neither anticipated
nor desired by either contestant. Such a confrontation might arise,
for our purposes, either in an area where both powers sense vital
interests are at stake but where stability cannot be guaranteed by
either side, or in an area where one superpower's interests are
ambiguous, leading the other into a mistaken assessment of
opportunity. The recent Soviet and US actions in the Middle i'sst
demonstrate unambiguously that both superpowers perceive vital
political and economic interests are involved in a region where
instability is endemic. As well, the redeployment of US forces
from the western Pacific, a potentially rich energy resource
region, leaves an assessment of US goals in the area extremely
speculative, not just for the Soviets, but for the PRC. In
Approved For Release 2001/09/05: qIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
addition, given the political climate of detente and rapprochement
existing between the superpowers, the likelihood of contingencies
which had provided much of the rationale for US strategy has dimin-
ished. Thus, the need for a reevaluation of ground force doctrine
seems manifest. Indeed, in considering the fluidity of the current
international order, CPT Sinnreich has concluded, "...it would be
surprising if inadvertent conflict failed to occur."36
"Conflict control" seeks to make the progression from
failure of deterrence to full-scale commitment an event which is not
necessarily automatic. In a conflict-control scenario, inadvertent
conflict might arise as a consequence of Persian Gulf border in-
stabi_lit_y as competing resource claims exacerbate historic border
tensions. Iran and Iraq are likely candidates, since each receives
superpower largesse to an almost equal degree. Should a serious
Gulf conflict erupt, it might easily embroil the superpowers, who
sense the geographical and economic criticality of the region.
Conflict control would seek to insulate the unstable conflict
conditions in order to re-establish local. order at the earliest
possible time. Military forces would seek to impose a local stale-
mate, not a local advantage, and would encourage an immediate shift
to superpower negotiation by making local military success subservient
to the goal of successful early diplomacy.
A conflict-control p sture demands a quick-reaction force,
relying on highly trained forces-in-being, deployed forward in areas
where the risk of inadvertent. conflict is high. Equipment issued
would stress a forward posit'-on defense employing mines and barrier-
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
producing conventional munitions, anti-tank weapons, and inten?~e
local air defense capabilities. It would likewise stress redundant,
highly reliable command-and-control systems, since tactical coimand-
ers down to battalion level could expect direct political control
of tactical operations. An even more difficult change for a
military officer to accept however will be the requirement to
remain on the tactical defensive. But, given the political
character of an inadvertent conflict, any offensive action (such as
a deployment of armor o'r a "fly-back" of troops to pre-positioned
war stocks) having even minor tactical significance can convey a
message with perhaps disastrous strategic consequences.37
It should be noted that conflict control is not aimed t
resolving purely regional conflicts. The United States has no
stated ambition to replace the departed British as a Persian Gulf
protector, and there is some doubt, given the rapid arms build-up
in the region, and the increased scale of Soviet activities,
whether such a "policeman's" role, even if desired, could be
effective. The adoption of a. conflict-control posture indeed could
provide a deterrent influence on superpower and regional forces
alike. But conflict-control doctrine is intended manifestly to
freeze a local engagement involving another nuclear power, an
engagement made more likely by concerns over security of resou-ce
supnlies in regions where instability is heightened by inflates'
resource values. Should conflict-control fail, eventual escalation,
conventional or nuclear, would likely follow. But, given the un-
certainty of the world order displayed by Soviet-US countermoves
33
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
during the Yom Kippur War, conflict control "reduces the likelihood
that an uncalculated act must necessarily lead to a general war,
unwanted or perhaps catastrophic."38
The employment and disposition of combat forces in response
to threats to resource security are of course policy recommendations
that can be made irrespective of the choice of national resource
security systems. An "independence" or "strategic reserve" program
would not fundamentally change the response required of the US
military in meeting challenges to the world order for the remainder
of this century.
On a less cosmic level, and again irrespective of specific
security systems, particular institutional objectives seem obvious.
First, the Defense Department should move as rapidly as possible
toward procurement and operations programs that reflect the in-
creasingly costly nature of petroleum supplies. The recent
acquisition by the Army of the "Gamma Goat" as a one-for-one re-
placement in tactical units for the standard 3/4 ton truck illustrates
the procurement dilemma. Designed and procured during the "cheap
energy" era, the "Gamma Goat", while a quality vehicle in task
performance, is an inordinate consumer of expendables. Its fuel
mileage is less than half that of the vehicle it replaced,39 and
with a virtual doubling of unit fuel costs in the last 18 months,
operating expenses for tactical units in achieving a given level of
combat proficiency will rise precipitously.
Second, too little attention has been paid to the link
between available fuel supplies and specific levels of operational
34
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
readiness. Operations have been constrained, in some instances
severely, by fuel allocations that have reduced steaming, flying
and training hours. The energy availability-operational readiness
link must be established, and then argued persuasively for in
budgetary hearings. To be persuasive, such bargaining will require
substantial, continued contributions in energy conservation, since
the political, if not economic, cost of any other action is simply
too high. But until the armed forces can adapt to constraints
which scarce energy supplies have imposed on operations, training,
and procurements, they must avoid actions which reach into standard
of readiness, and they must have the courage to defend mission-
essential requests before a skeptical Congress and public.
In comparison with "Project Independence", however, a
""strategic reserve" program would undoubtedly require an increased
DOD role if significant petroleum storage or standby production
facilities were purchased. While the US has never maintained a
large strategic petroleum stockpile, the physical security of such
a system, if deemed appropriate during a national emergency, would
undoubtedly fall on land and air forces. And since 1912, the Navy
has had the responsibility for the only existing strategic reserve
of spare petroleum production capacity, the Naval Oil Reserves.
Under a strengthened national program of strategic reserves, and
considering tri-service petroleum needs in which the Navy is no
longer the primary consumer of petroleum, an oil production reserve,
if adopted, should probably be managed at DOD rather than Secretary
of Navy level. Political difficulties would almost certainly
35
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
attend, as they have to date, the administration and the tapping
of the production reserve for defense use during an energy
emergency. But the consequences of having no standby production
or storage program, during a period when vulnerability to import
interruptions continues to be high, risks a potentially serious
erosion of military preparedness and national security.
VIII. CONCLUSION
The examination of resource security in general, and US
energy security in particular, has revealed three resource threats
which a comprehensive security policy should address. The military
security implications of current energy shortfalls have not proven
significant, and the domestic economic implications, while
portentous, are manageable at present production and import levels.
The international political dimension is currently of greatest im-
portance, but the most worrisome facet of this security dimension
is the trend toward massive payments inbalances which proposed
resource security programs are incapable of controlling in the
short-run.
As the present boycott draws to a close, first priority
should be given to restoring price stability to world resource
markets. The era of cheap energy is indeed over, but it does not
follow that the era of irrationally priced energy is upon us. Price
stability goals reflect the serious international political di-
mensions of the resource threat, and are a necessary first step to
effective resource security for any security system. During this
present crisis, the real test for the United States could well be
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
whether we have the domestic pnt.iencc, and international I0-fder-
ship, to await the development of economic trends that lie at tile
heart of resol-ing an intrinsically economic problem. The temp-
tation to employ costly short-term solutions will only delay eco-
nomic and political adju:.tments which can carry the US through
troublesome, but not unresolvable, resource pinch.
Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
FOOTNOTES
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80BO1554R003600260005-4
1Richard M. Nixon, US Foreign Policy for the 1970's,
A Report to Congress, 3 May 1973 (Washington: Government
Printing Office, 1973), pp. 225-227.
2U.S. Cabinet Task Force on Oil Import Control, The
Oil Import Question, (Washington: Government Printing Office,
1970), p. 3.
3Ibid., p. 6.
4lbid., p. 8.
5Ibid.
6CPT Jack E. Godfrey, "Mahan: The Man, His Writings
and Philosophy," Naval War College Review, June, 1966, p. 65.
7COL Herman Beukema, Raw Materials in War and Peace
(West Point: United States Military Academy Printing Office,
1947), p. 88.
8Ibid., p. 89.
9Mancur Olson Jr., "American Materials Policy and the
'Physiocratic Fallacy'," Orbis, Winter, 1963, p. 670.
1?C. J. Hitch and R. McKean, Economics of Defense in the
Nuclear Age, (Boston: Harvard University Press, 1960), p. 15.
11Ibid., p. 18.
1201son, op. cit., p. 688.
13Klaus P. Heiss, Klaus Knorr, and Oskar Morgenstern,
Long Term Projections of Political and Military Power
(Princeton: Mathematica, Inc., 1973), p. 120.
14Beukema, op. cit.
15See, e.g., Harry B. Yoshpe (ed.), Requirements:
Matching Needs With Resources (Washington: Industrial
College of the Armed Forces, 1964), p. 32.
161bid., p. 31.
Approved For Release 2001/09/053:CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
17See, e. g. Economics, "Input-output: Sizing Up the
Squeeze on Energy," Business Week, January 19, 1974, p. 62.
18Weiss, op. cit., p. 176.
U.S. Cabinet Task Force on Oil Import Control, op. cit.,
p. 8.
20Jahangir Amuzegar, "The Oil Story: Facts, Fiction, and
Fair Play," Foreign Affairs, July 1973, pp. 678-679.
21Lecture interview taped and delivered to Students,
U.S. Army Command and General Staff College, 28 Jan 1974.
22A range of estimates for the period to 1985 has been
provided in National Petroleum Council, U.S Energy Outlook,
December, 1972, p. 296.
23Computations performed initially by the petroleum
industry for Cabinet Task Force on Oil Import Control. Updated
and revised estimates performed by Office of Assistant Secretary
of Defense (Systems Analysis), August 1972.
24The Kansas City Star, February 10, 1974, Section D, p. 1.
25Wesley K. Clark, "The Defense Department and the Energy
'Crisis' " (unpublished manuscript, United States Military
Academy, 1973), p. 8.
26lbid.
27Interview with Joint Chiefs of Staff, J-4 (Petroleum
Branch), October, 1973. Estimate provided indicated "essential
civilian" demand as defined here might be as small as 4.0 mb/d.
28U.S. Bureau of Labor Statistics, Employment and Earnings
Statistics in the U.S., 1909-64 (Washington: Government Printing
Office, 1964), p. 527.
See, e. g., U.S. Department of Labor, Manpower Report
of the President (Washington: Government Printing Office, 1972),
Table A-18, p. 180/
30The Kansas City Star, February 11, 1974, p. 12.
31Heiss, op. cit., p. 178.
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
 Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4
32John Cunniff, "New Petrodollar Cast in Jekyll-Hyde
Role," The Kansas City Star, February 15, 1974, p. 14.
33See, e. g., William C. Cates, "Arab Oil and the Currency
Crisis," The Wall Street Journal. February 11, 1974, p. 10.
34Bernard Gordon, Toward Disengagement in Asia
(Englewood Cliffs: Prentice Hall, Inc., 1969), reprinted in
"Strategic Studies Handbook," RB 100-1, Vol. 1, p. App-276,
USACGSC.
35CPT Richard H. Sinnreich, "Limited War and American
Ground Forces: Toward New Doctrine" (unpublished manuscript,
United States Military Academy, 1973).
36Ibid. , p. 10.
37jbid., p. 20.
38Ibid., p. 26.
39Statement by MAJ Becking, Mobility Training Dept.,
Aberdeen Proving Ground, personal interview, February 11, 1974.
Approved For Release 2001/09/05 : CIA-RDP80B01554R003600260005-4