OIL PRICE DECLINES AND US LEVERAGE

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 05208865
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 3
• Document Creation Date: March 8, 2023
• Document Release Date: March 25, 2019
• Case Number: F-2018-02433
• Publication Date: July 3, 1983

Approved for Release: 2019/03/13 C05208865
The Director of tral Intelligence
INdstunglon.D C 20505
25 March 1983
MEMORANDUM FOR: Secretary of State
Secretary of Defense
Secretary of the Treasury
Secretary of Commerce
Assistant to the President for
National Security Affairs
I asked for the attached memorandum on how the
decline in oil prices could create an opportunity
for greater US leverage and influence around the
world.
William J. Casey
Attachment:
"An Oil Price Drop and US Leverage"
Approved for Release: 2019/03/13 C05208865
Approved for Release: 2019/03/13 C05208865
S.Ere-fit
(b)(3)
AN OIL PRICE DROP AND US LEVERAGE
Overview
A sharp drop in oil prices would create an environment that, in general, would work
to US favor. How this translates into specific lines of influence or leverage is difficult
to measure. Many of these opportunities would arise because of the adverse impact of
lower oil prices on the USSR.
o Soviet hard currency earnings would drop sharply�by as much as $7 billion
with $20 oil�forcing Moscow to cut military and economic aid to client and
would-be client states.
From a regional perspective, the primary opportunities created by lower ail prices
are in sub-Saharan Africa.
o In West Africa, Moscow may be even less able to maintain its position in
Guinea and would have trouble exploiting the situation in Ghana.
o In southern Africa, the Soviets would have to toughen terms on military
assistance, and the Cubans cannot take up the slack.
o Moscow is already doing this in Tanzania and Zambia. With Tanzania's
economy in a tai7spin, the United States may have an opportunity to
sour the Tanzanians on the socialist model.
o Angola would suffer a major loss in revenues from oil, which is already
providing an opening for Western assistance.
o There may be a simi7ar opening in Mozambique.
o In the Horn, we see no prospect for oil-related changes affecting the status
of Ethiopia or Somalia as long as the USSR continues to give some aid to
the former.
In natin A m p.rie^.1, we see only limited opportunities to enhance US influence.
o The United States is already helping finance the Mexican and Brazilian
economies. We doubt that even another $5 billion would buy much more
leverage than now exists.
o Venezuela may offer more opportunities because of its connections in
Central America and the Caribbean. As Venezuelan funds dry up, the
United States could use Caracas to funnel aid to El Salvador and others.
o In Suriname, the Cuban hold is far from firm. Castro reportedly does not
want to commit much money because of his own economic problems and his
concern that Bouterse's revolution may be reversed.
-SE-C�R-ErT
-1-
Approved for Release: 2019/03/13 C05208865
Approved for Release: 2019/03/13 C05208865
SECRET
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
FROM
SUBJECT
: Robert M. Gates
Deputy Director for Intelligence
: Oil Price Declines and US Leverage
1. Action: None; for information only.
2. Background: The attached report was prepared in response to
your question earlier this week on what an oil price decline might mean
for US leverage/influence. As the paper indicates, it could open up a
number of opportunities for us, especially because of the financial
constraints an oil price decline will impose on the Soviet Union.
12
RoberL N. Gates
Attachment:
As Stated
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frci , 2 6
Approved for Release: 2019/03/13 C05208865