EAST-WEST POLICY STUDY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000400750009-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 96
• Document Creation Date: December 20, 2016
• Document Release Date: August 14, 2006
• Sequence Number: 9
• Publication Date: July 8, 1981
• Content Type: MEMO

Approved For Release 2007/02/08: CIA-RDP84B00049R004
DEPARTMENT OF STATE
SECRET
WITH SENSITIVE ATTACHMENT
July 8, 1981
SUBJECT: East-Hest Policy Study
zxecuflve R.gSatrj
NFAC A tj:;(
A Senibr Interdepartmental Group meeting on East-West
Policy will be convened on July 13 at 11:00 a.m. in the
Department of State. It will be chaired by Under Secretary
Stoessel.
The Group will review the attached texts which were
revised to reflect the SIG discussion of July 7. The
amendments offered to the SIG by the Department of State
on economic issues remain on the table; those amendments
also are reflected in the two footnoted alternative for-
mulations in the Decision Memorandum.
If the revised papers are approved by the SIG, they
will he forwarded to the White House 'for consideration by
the NSC.
. Paul Bremer, III
xecutive Secretary
Attachments:
1. Decision Memorandum
2. Executive Summary
3. East-West Policy Study
Distribution:
OVP - Ms. Nancy Bearg Dyke
DOD - Mr. Jay Rixse
CIA -
JCS -
LTC
John Pustay
NSC -
Mr.
Allen Lenz
ACDA -
Mr.
Robert Grey-
UNA -
Amb.
Kirkpatrick
State Dept. review completed
SECRET
GDS 7/8/87
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 I, - i,
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET/SENSITIVE
SUBJECT: Decision Memorandum on East-West Relations
At the National Security Council meeting held on July
1981, the President made the following decisions concerning U.S.
policy on East-West relations. Specifically, the overriding
objective of U.S. policy toward the Soviet Union will be to
blunt and contain Soviet imperialism. This goal involves raising
the costs and risks of Soviet expansion and, to the extent feas-
ible, encouraging democratic processes in the USSR. To these
ends, the U.S. will:
1. Restore a satisfactory military balance.
a Nuclear Force rwe must restore the nuclear balance and
"We must redress the current imbalance through a compre-
hensive modernization program designed to strengthen
deterrence. The Soviets must perceive, in all contingencies,
the costs of initiating strategic or theater nuclear attacks
as higher than the potential gains."
conventional force structure by (1) creating ovcL LA.,u freeze
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/&WE A-RDP84B00049R000400750009-2
Beyond China and Japan, we will strengthen security
cooperation with our Korean, Australian, New Zealand and
Philippine allies. We will also want to bolster support for
the ASEAN states to promote their Western orientation and
to strengthen their ability to stand up to Vietnamese
and Soviet expansionism.
E. Refashioning East-West economic-relations so that
the Soviet Union-is helped-neither to-strength-itself
militarily nor to escape the full costs of-its internal
pro ems.
Far from moderating Soviet political-military behavior,
the extensive East-West economic ties of the past decade have
created constituencies among our allies, some of whom
are vulnerable to Soviet pressure. We need to define
the guidelines for permissible East-West trade. Future
Western economic policy must meet three major criteria:
o It must not increase the Soviet capacity to wage
war. US policy will seek significantly improved controls
over the transfer of technolog important to military pro-
duction and to industrial sectors that indirectly support
military capability.
o It must narrow opportunities for Soviet economic
leverage over the-West. While recognizing the greater
stake of our allies in commercial ties with the East, we
must try to cap and ultimately reverse political vulnera-
bilities arising from the growth of East-West economic and
energy interdependence.
o It must not ease Soviet resource constraints or
associated political difficulties by relieving Moscow of
the bur ens of its own economic problems or of responsi-
bility for those of Eastern Europe.
F. Promoting Positive Trends in Eastern Europe.
Eastern Europe probably will have a more volatile
and dynamic character in the 1 posing major political
management choices for Moscow. The current Polish crisis
forms an historic watershed for Soviet imperial policy.
While Moscow doubtless will use force where necessary to
keep its bloc in order, the Polish experiment is testing --
and perhaps stretching--- the limits of Soviet tolerance.
US policy objectives in Eastern Europe are to work
with our allies to support greater internal liberalization,
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/OVA-RDP84B00049ROOO400750009-2
-10-
foreign policy-autonomy and contacts with the West, while
seeking-to-discourage Soviet intervention to-block
indigenous reform movements.
-- In-the-short term, assuming no Soviet intervention
in Poland, we shou con irm our-differentiated approach
to East European-states,-seeking to improve relations and
be forthcoming-with that-are relatively liberal
or -in ependent; while-dealing-with-other East Europeans .
on the basis - ostrict reciprocity.- A Soviet invasion-of
Poland-involving East European-troops obviously would-freeze
relations for-a-2rotracted-ReFl"od and present major strate-
gic questions or our East European policy. Whether-there
is an invasion or not,- we must keep the pressure on Moscow
to bear a large share of the economic burden.
In-the longer-term, we seek to foster liberalization
and autonomy by-intensifying contacts. Endemic East
European debt and economic problems should permit us to
build increased economic ties with appropriate East Euro-
pean countries, thereby enhancing both our influence and
their internal freedom of action. In doing so, we show d
employ established multilateral institutions, such as the
IMF and Western creditor clubs, to avoid perpetuating
chronic economic weaknesses. This strategy must be coor-
dinated with our allies, banks, unions and private groups.
G. Gaining .the ideological initiative by spot-
lighting the deficiencies of the Soviet system.
The long-term weaknesses of the Soviet system can be
encouraged in part simply by telling the truth about the
USSR. The Soviet Union faces nascent problems among its
nationalities (particularly in the Baltic states and among
Muslim groups in Central Asia) and from its own working
class. The United States should provide ICA with increased
resources to step up broadcasting activities, where needed,
to the Soviet Union,'the satellites, Soviet Third World
clients and countries important to US interests, highlighting
the economic and moral failings of Moscow and its allies.
The expansionist international behavior of the Soviet
Union and its repressive, stagnant internal system make it
vulnerable to a moral counter-attack. Yet the US must also
offer a positive vision of the future. By promoting peace-
ful democratic change, US policy wi be able to give sub-
stance to this positive view and prevent the emergence of
Soviet opportunities.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0~E'~ _-RDP84B00049R000400750009-2
H. Maintaining effective communication with-the
Soviet-Union.
A regular-US/Soviet-dialogue is not incompatible-with a
more-competitive?US-East-West?policy.-' Indeed-, effective
communication-is essential- to revent-dan erous-misunder-
stan ings?o -our intentions an ?reso ve, particularly at
moments of high tension. We must ensure that the USSR
neither exaggerates nor underestimates our purpose, and
we should demonstrate our openness to constructive Soviet
approaches.
Visible US/Soviet contacts -- and appropriate nego-
tiations -- can be used in seeking to sustain political
support at-home and in allied-countries or-a competitive
Western policy toward the-USSR. But such contacts must-not
prevent us from vigorously defending our policies in publi
Nor can they be allowed to divert us from necessar tough--
and-costly measures by falsely suggesting that fundamental
differences have been resolved. The Soviets can be expected
to exploit such contacts and seek to convince our allies and
our own public that negotiations should become a substitute
for forceful political, economic and military measures.
Moscow also will make major efforts to divide us from our
allies on these issues. We must firmly resist these Soviet
efforts. -
We need to subject all proposals for negotiations to
rigorous USG and appropriate allied review and ensure that
our participation-and negotiating strategy are consistent
with clearly defined Western interests. Certain negotiating
forums can be useful for either arms control or political
ur oses; we should know the difference. In European arms
control discussions, or example, we can challenge the
Soviets to accept true parity at reduced levels; in other
East-West forums, such as CSCE, we can challenge them to
honor commitments made and to build East-West relations on
the basis of strict reciprocity.
We must recognize that US/Soviet bilateral diplomacy
can sometimes undermine our larger purposes. In Third World
crisis areas, in particular, where we aim to work closely
with our friends in building barriers to Soviet influence,
the Soviet. Union generally will not be helpful. We should
recognize the lim-i-t-a-ti"Uns -- and disadvantages --:-of seeking
to involve Moscow in the peaceful resolution of regional
disputes and should not expand or legitimize the Soviet role.
Instead, the West should exploit its singular capacity to
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0%/pERQ--RDP84B00049R000400750009-2
work with the key parties to such disputes. Finally, if in
the longer term the Soviet Union seeks to deal with its
internal or international liabilities through genuine
cooperation with the West, we should be prepared to conduct
meaningful negotiations, ensuring that our overall interests
are protected.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/?t@PLCIA-RDP84B00049R000400750009-2
EAST-WEST POLICY STUDY
TABLE OF CONTENTS'
I - . Introduction : U. S.' Goals
Interests
Assumptions I-1
Goals I-3
II - The Soviet Challenge
Soviet Assets II-1
Soviet Liabilities 11-3
=II - National Security Policy
Introduction III-1
Nuclear Force Posture 111-2
Conventional Force Posture 111-3
Arms Control 111-4
IV - East-West Economics
Strains in Soviet Economy IV-1
Correlation of. Forces .IV-2
Defense Spending' = IV-2
Allied Economic Objectives IV-3
Strategic Controls IV-4
Foreign Policy Contingency Controls IV-5
Economic Security, IV-6
Economic Competition IV-7
V - Strengthening Cooperation with European Allies
Forging New Allied Consensus V-1
Goals V-2
Policies V-4
VI - Developing the Potential of Our East Asian Allies
and Friends
Soviet Objectives VI-1
Factors in Our Favor VI-1
US Objectives VI-2
Political Relationships VI-2
Longer-Term Challenge and Opportunity VI-8
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
VII - Areas bf Ins.tahility:
Introduction VII-1
U. S. Objectives VII-1
Soviet *Obj ectives and Behavior V1I-2
A New American ' Strategy VII-4
_ Soviet.Empire
Introduction VIII-1
Internal Conditions in the Soviet Union VIII-1
Eastern Europe VIII-4
U.S. Policy VIII-6
Approved For Release 20 T CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
EAST-WEST POLICY STUDY
I. Introduction - U.S. Goals
iaa a.cs, ca ~.J - .~
The Soviet-American relationship'-- and with it.U.S.
East-West policy - is entering a new era. The central
interests of the United States are in cons iaera5le jeopardy
and we are entering a period as perilous as':any since World
War II. Increased Soviet power has thrown into question
U.S. ability to secure those interests that our post-war
policy has tried to promote:
An open and diverse international order, in which
the U.S. and its allies are able to prevent the growth of
Soviet dominion and influence.
-- The protection and enlargement of the free world,
and the promotion of peaceful political change.
-- A stable, open and growing world economy, in which
Western access to vital natural resources -- the precondi-
tion of the political independence and'economic stability
of the industria-.democracies -- is protected.
Assumptions
U.S. East-West policy must protect these broad interests.
Our efforts to do so will be based on the following assump-
tions:
-- First, that the Soviet-American. competition is based
on fundamental and enduring conflicts of interest and out-
look. It is essential that we recognize the USSR for what
it is: an expansionist superpower which sees East-West
relations as a protracted political and military competition
for transforming the global "correlation of forces." The
West should not expect to achieve its broader international
objectives unless it treats the USSR as a tenacious competi-
tor whose performance provides ample evidence of a strong
and increasing readiness to promote its interests by aggres-
sion, intimidation; and subversion.
-- Second, that the American people have expressed a
desire to move beyond the passivity that marked U.S...:
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
foreign policy in the aftermath of the Vietnam 'War. It is
recognized that, to compete success ru "- ......
y, the
U.S. will need to coriaait increased resources 'arid to exec is s'e~~-"
greater international leadership in meeting the goals we
share with other states. To preserve this new consensus,.
the U.S. will have'to avoid both.the overextension:and vacil-
lation that shattered earlier policy. A New erican nter-
nationalism must focus share y on our national interes s an
th i ntPrestc of our allies In this regard capabilities *
and objectives will always have to be matched and resources r'
must be used effectively and wisely; for`now,this match~requaxes
significantly increased capabilities. These are essential
-ingred_ie tsn of an internationalist foreign policy, and global- - - j
stra ch are sustainable through the 1980's.
tr-4yh
-- Third, because many of the trends of the past decade
have been adverse, the United States will be obliged to con-
duct the East-West competition in often unfavorable circum-
tances. It will=have to be especially attentive to using
those instruments of policy that can be made available in
the short-term, and careful to do nothing that further weakens
the Western position. It will have to understand.-the-distinc-
tive assets and liabilities of the Soviet Union, taking the
initiative against exposed Soviet positions. Only by shorten-
ing the response time of U.S. decision-making will we be able
to exploit opportunities as they appear. such an =approach
will require increased Congressional support for the needed
assets (money, military equipment, etc.)
-- Fourth, that the Soviet Union should be expected to
meet a U.S. counteroffensive with strong measures of its own.
The Soviet Union has a strong position to protect and will act
vigorously to do so. This does not mean that we should not
compete more forcefully and vigorously with the USSR to pro-
tect U.S. national interests. The costs of accepting the..
current trends and Moscow's aggressive global behavior are
simply too high. At the Same time, we need to go in with
our eyes open and think about Soviet reactions; their options
for frustrating our objectives; their ability to make our
pursuit of this strategy very costly in political, economic,
and military terms -- recognizing that some Soviet responses
will be designed to demonstrate 'the high costs in order to
forestall \such future actions by us. We need strategies for
dealing with these Soviet actions and countering them.
We also need to identify the risks the Soviets are
willing to run to safeguard their interests and prevent the
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 I-3
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
erosion of favorable military balances and political posi-
tions. How are these risks likely to vary according to
regional area or specific issue? To answer this we will
have to understand what the'Soviets most value and most
fear. We must shape policies that counter the Soviet chal-
lenge without so threatening fundamental Soviet values or
achievements that they see little to lose by*opposing us or
our friends -- and, indeed, a lot to lose by not doing so.
-- Fifth, that while the US-Soviet relationshi-D will be
predominantly competitive for the foreseeable future, t ere
will remain areas where some degree of positive interaction
with Moscow could serve U.S. interests. At the most basic
level this will involve the day-to-day conduct of consular
and other official business, but it can also encompass
joint action in such areas as nuclear nonproliferation, law
of the sea matters, trade in some non-strategic areas, and, under
proper conditions, arms control negotiations. To the extent
a differentiated policy between the USSR and Eastern Europe 25X1
is to have any meaning, moreover, it assumes a broader scope
of cooperative activities with'the latter countries. r
Goals
.The overriding objective of U.S. policy toward the Sovie
Union is to blunt and contain Soviet imperialism. The expansion
of the Soviet Union and its proxies presents a fundamental threat
to the.security of the free world and complicates equitable
solutions of many_of the world's social, economic and ethnic
problems.
Soviet imperialism is the result of two factors: a) tht
illegitimate nature of its communist regime, in which a small
self-perpetuating elite maintains its privileged positions
primarily by generating continuing foreign tensions; and b)
the relatively low cost to Moscow in recent years of foreign
subversion and conquest.
Blunting.and containing Soviet imperialism entails the
following: a) appreciably raising the costs and risk of Soviet
expansionism and Soviet use of military power for purposes of
political coercion; and b) to the extent feasible, encouraging
democratic processes in the USSR which reduce the authority and
privileges of the ruling elite and enhance the participation of
their citizens in political and economic decision-making at
all levels.
Over the next half decade U.S. policy will seek to
attain the following goals:
-- First, to restore international confidence in U.S.
policy and leadership.
The potential strength of the West is sufficient that
reorienting our policies toward a more competitive East-West
Approved For Release 2007,CIA-RDP84B00049R000400750009-2
 stance and Western rearmament will be significant even in
advanc(AppA\4& elf :RtgtM ~$ C4k-R 4 O 6b 6VI'5U 9.2 But
to succeed, US leadership o= such a reorientation must be
convincing. This will require that it be consistent
and realistic in the eyes of our friends and allies. Con-
tinuing demonstrations are needed that a new course will be
sustained and will become permanent. Changes in course or
early failures will squander what confidence and sense of
momentum we are able to inspire by a firmer rhetorical
approach. Nothing could be more damaging than to raise
doubts that an enduring change has taken place.
-- Second, to restore a favorable military balance.
Having achieved a domestic consensus on the need to
arrest and reverse adverse trends in the East-West military
balance, we must design, organize, and deploy our forces
in ways that optimize both their deterrent value and their
combat effectiveness. Because of the scale and pace of
recent Soviet military construction, U.S. forces will have
to be increased at every level; improvements are needed both
to meet new Soviet conventional capabilities and increases
in Soviet power projection, and to provide a wider menu of
nuclear options with which the U.S. cannot only threaten
escalation but dominate an actual escalation process.
Because of its magnitude, this build-up will have to pro-
ceed in accord with strictly defined priorities and as part
of a long-term defense plan.
-- Third, to --'ncrease cooperation with U.S. allies
and other states that share our interests, as part of an
integrated global strategy.
We can neither do everything on our own nor justify
unilateral U.S. responses when other interests are engaged
as much if not more than our own. Key elements.of our
strategy for restoring a more satisfactory military balance
require allied cooperation. Hence, for practica], political
reasons, and for reasons relating to our collective strength,
we must work closely with our allies.
-- U.S. policy will seek to repair and cement relations
in Europe in order to reduce Soviet leverage, to ensure
allied support for key defense programs and to use the
combined resources of the Europeans to contain the Soviets
locally and counter them in areas of critical importance to
the West -- especially the vital Persian Gulf. The U.S.
will work with leaders of the NATO states, where possible to
break the constraints that have hindered fuller contributions
to the common defense.
-- In East Asia, the U.S. will seek to bolster our
allies, especially Japan, and cooperate with China to limit
the expansion of Soviet power in this region. Our strategic
association with China will continue to aim at tying down a
significant portion of the Soviet military establishment,
and at preventing either a direct Soviet attack or a Sino-
Soviet reconciliation. The U.S. will create a stable
regiony~ POW&* F8~'I$L ain0)1 ~~ ~Effi%4NJ641~ es can
be strengthened, and in which apan Qa~ O ~ntri-
bute resources to the defense of Western interests elsewhere.
IL, %M-- -
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
1-5
-- In other areas of instability, particularly the
vital region around the Persian G f, the U.S. will need
to find close partners for the containment of Soviet
expansionism. It will aid states that are capable of con-
tributing to regional stability and especially those that
can take the initiative against client or proxy states of
the Soviet-Union. High priority will also be given to
acquiring the regional military presence for the United
States that can deter Soviet activity and can make other
states willing to undertake cooperative measures with us.
-- U.S. policy will seek to make systematic global use
of these separate relationships, so that they reinforce
each other in countering the USSR. It also should integrate
the political, economic, and military arms of Western power.
These mutually supportive policies can create the resources
and instruments needed for effectively waging East-West
competition.
-- Fourth, to drive up the costs to the Soviet Union
of global competition and-to unde_rrir.e its past gains.
- _ r
U.S. policy will aim to discourage Soviet use of proxies
to expand its influence, to erode past Soviet gains. and to
deter risk-taking.
-- The Soviet Union has been able to limit both the
risks and costs of expansion by use of a network of proxy
states and movements. The U.S. will seek to discourage the
further use and growth of the Soviet proxy network:.: It will identify
and exploit the peculiar vulnerabilities o iindivicuai
Soviet proxies in order to preoccupy them with ei.r wn
problems, without driving!'them further into Moscow's embrace.
It will limit their activities by driving up the costs of
doing the Soviet's work. To the extent possible it will
provide carrots and sticks to encourage them to turn away
from the Soviets. 'It alsb will demonstrate to the Soviet
union tnat wl aened use of prox_es raises the risks: oz
dangerous unproductive confrontations and undermines pro-
spects for cooperative activities in areas of interest to
Moscow.
-- Where past Soviet gains have created new targets
for Western policy, the U.S. will seek to increase both
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
1-6
the military and economic drain on Soviet resources and
attention that they require. In Eastern Europe, a
differentiated U.S..policy will encourage greater foreign
policy autonomy, domestic liberalization and enhanced
Westernization, seeking in particular to exploit endemic
East European economic problems to this end.
-- We will work to ensure a continuing political and
economic cost for the Soviet occupation of Afghanistan in
the aftermath of the partial lifting of the grain embargo.
More broadly,._;we will drive up the cost to the Soviets
through allied cooperation to control technology exchange
and broad trade policy.
-- Fifth, to '_'take the ideological offensive.
The Soviet Union, by virtue of its arthritic system, of
its expansionism and of the activities of and difficulties
confronting the regimes it has created and supported beyond
its borders, is vulnerable to moral and ideological counter-
attack. U.S. policy will exploit this vulnerability.
--'The U.S. will seek to imbue the developing world
with a positive vision of the future, rather
than relying only on a negative view of a world free from
Soviet domination. By promoting peaceful democratic change,
U.S. policy will be able to give substasnce to this porstive
view and prevent the emergence of Soviet opportunities.
-- The U.S. will be more outspoken in support of
institutions and practices that reflect our free way of
life, while being more forthright in confronting those
fundamentally hostile to us. in doing this we will need
to distinguish carefully between those who fundamentally
oppose us and others (e. g. Zimbabwe) with whom we can
work. By continuing attention to the systematic denial
of human rights in.the Soviet Union, U.S. policy will seek
to throw the Soviets on the defensive internationally. in
this way, and by highlighting the historic Soviet unre-
sponsiveness to the true development needs of the Third
World, we can reduce the influence that the Soviet Union
and its proxies have enjoyed among the populace and opinion
leaders in LDCs as well as in international organizations
and the Non-Aligned Movement.
-- Soviet pressures on Poland must be cited to
remind others that Soviet policy aims above all at denial
of the rights of states, imposing a Brezhnev Doctrine-type
"limited sovereignty" on them, and the creation of spheres
of influ4kppmv 1b edflM02 ztQtA~-RDP84B00049R000400750009-2?
 Approved For Release 2007/%2 O A-RDP84B00049R000400750009-2
E U=
1-7
-- Sixth, to maintain effective communications with
the Soviet Union, and to preserve options for some positive'
interaction with the USSR, on the basis of reciprocity and
U.S. national interests. A regular US/Soviet dialogue is not incompatible with
a more competitive US East-West policy. Indeed, effective
communication is essential to prevent dangerous misunder-
standings of our intentions and resolve, particularly at
moments of high tension. We must ensure that the USSR
neither exaggerates nor underestimates our purpose, and
we should demonstrate our openness to constructive Soviet
approaches.
,'The scope of cooperative activities will inevitably be
limited to bare necessities ,in the short term. We need as
a first priority to right the military balance and constrain
Soviet international behavior. Holding up a vision of a
more stable, mutually satisfactory East-West relationship
in the longer-term future also could provide the Soviets with
some additional incentives for restraint and increase prospects
for allied cooperation.
Visible US/Soviet contacts -- and appropriate netrotia-
tions -- can be. used in seeking to sustain political support
at home and in allied countries for a competitive-Western
policy toward the USSR. But such contacts must riot prevent
us from vigorously defending our policies in public.' Nor can
they be allowed to divert us from necessary tough and costly
measures by falsely suggesting that fundamental differences
have been resolved. The Soviets can be expected to exploit
such contacts and seek to convince our allies and our own
public that negotiations should become a substitute for force-
ful political, economic.-and military measures. Moscow also
will make major efforts to divide us from our allies on these
issues. We must firmly resist these Soviet efforts.
We need to subject all proposals for negotiations to
rigorous USG and allied review and ensure that our partici-
pation and negotiating strategy are consistent with clearly
defined Western interests. Certain negotiating forums can
be useful for either arms control or political purposes; we
should know the difference. In European arms control dis-
cussions, for example, we can challenge the Soviets to
accept true parity at reduced levels; in other East-West
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
forums, such as CSCE, we can challenge them to honor com-
mitments made and to build East-West relations on the
basis of strict reciprocity.
We must recognize that US/Soviet bilateral' diplomacy
can sometimes undermine our larger purposes. In Third
World crisis areas, in particular, where we aim to work
closely with our friends in building barriers to Soviet
influence, the Soviet Union generally will not be helpful.
We should recognize the limitations -- and disadvantages --
of seeking to involve Moscow in the peaceful resolution of
regional disputes and should not expand or legitimize the
Soviet role. Instead, the West should exploit its singular
capacity to work with the key parties to such disputes.
Finally, if in the longer term the Soviet Union seeks to
deal with its internal or international liabilities through
genuine cooperation with the West, we should be prepared to
conduct meaningful negotiations, ensuring that our overall
interests are protected.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/Q3Rr4-RDP84B0004'9R000400750009-2
II - The Soviet Challenge
Soviet Assets
In reaching its present position, the Soviets have made
use of a series of diplomatic,' ideological, paramilitary,
military subversive, and to a more limited extent, economic assets.
They have increased their own capabilities but have also
been able to use those of others. While exploiting politi-
cal opportunities in the Third World, they have also under-
stood and capitalized on the opportunities created by divi~n
and irresolution in the West.
The Soviet Union's current advantages in its competition
with the West include: . .
First, a favorable military balance.
Thanks-to its steady military buildup over a period
when the Western powers were largely resting on their laurels
or actually disinvesting in defense, Moscow enjoys significant
and growing military advantages in key regions, accompanied by
a greatly improved nuclear balance, and increasingly will be
able to project greater force to areas distant from the USSR.
It also enjoys geo-strategic advantages from its proximity to
Western Europe, Japan and the vital Persian Gulf area. Despite
current and prospective increases in western defense spending,
the Soviet military edge is likely to widen in the short-term.
-- Second, growing "coercive benefit."
Moscow derives considerable "coercive benefit" from
the fact that its forces have recently been used. Soviet
willingness to use its forces in combat to advance its inter-
ests has probably made the Sovietsat least somewhat more self-
confident militarily and has almost certainly instilled
greater fear in others, thereby increasing the intimidatory value
of Soviet power.
-- Third, residual Western attachment to the'forms of
detente.
Moscow profits-.from the existence of widespread commit-
ment to various manifestations of detente, especially in parts
of Western Europe. This creates a receptive audience for Soviet
peace initiatives and helps Moscow to mobilize pressure against
Western programs that focus on the competitive essence of East-West
relations instead of on cooperation. The Soviets play skill-
fully on such sentiments, counting on them to temper European
reactions to Soviet adventures such as Afghanistan and manipulat-
ing then through "peace offensives" to forestall significant
Western defense initiatives. western programs designed to compete
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/8ZMTIA-RDP84B00049R000400750009-2
actively have to overcome the inertia of a decade, seem
infeasible to many because of long lead times, are perceived
as financially draining, and in any case are seen as
threatening to important economic interests and ties.
-- Fourth, a network of proxies and supporters.
Moscow benefits from well-trained and disciplined
proxy forces whose actions often promote Soviet interests
at relatively low risk. Even when the Soviet Union provides.
not only strategic cover but logistic support for proxy
operations, it faces a minimal risk of direct retaliation and
a greater chance of evading direct responsibility for on-the-
spot failures. The Soviets also derive considerable, if less
dramatic, benefit from communist parties and other organiza-
tions.throughout the world which can be counted on actively
to support the Soviet line on appropriate occasions and to
provide a base. for subversive operations.
-- "if th, ability to exploit instability.
Moscow is well-positioned to profit from recurrent
instability in "Third World" countries and regions in which
the West has important strategic, economic and political
stakes.and interests. It enjoys a basic geostrategic :.d=
vantage over the West vis-a-vis Southwest Asia and the Per-
sian Gulf, is sub-jest to far fewer constraints in the use of
covert action, and is less vulnerable to charges of.-neo-
colonialism. In Muslim areas generally, and Southwest Asia
in particular, it has sizeable cohorts of Soviet
agents and advisors who are co-religionists and ethnic'kins-
men of crucial native target groups and populations;(as they
have found in Afghanistan, however, this can be a mixed blessing).
Soviet advantages are not only geographic. New governments
facing major internal opposition often lean toward the So-
viet Union, which can rapidly deploy its power and resources
either directly or indirectly to help in the forceful consol-
idation of a friendly regime.
-- Sixth, extensive mineral and other resources of
interest - to. the West.
While other sources are available, the US and its
Allies rely on several unstable Third World areas, and to a
lesser extent on the USSR itself, for the supply of important
minerals and raw materials. The US currently imports some
special metals from the Soviet Union. Europe relies on the
Soviets for a wider range of inputs. In the absence of
alternative secure sources of supply, denial of the Soviet
market would produce some significant dislocations in
Western economies. The USSR, on the other hand, is self-
sufficient in almost all strategic minerals.
Approved For Release 20071 ,qMT
jA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007702703 : CIA-RDP84B00049R000400750009-2
11-3
-- Finally, relative freedom from domestic political
constraints.
Moscow can be relatively confident -- especially given
an ethos that emphasizes security above all else -- that it
will not be forced to sacrifice guns for butter by debates
within the elite or by a politically articulate and organized
domestic opposition capable of displacing the incumbent rulers.
In fact, Western defense programs are used routinely to
justify the high level of Soviet arms expenditures.
Each of these assets has increased in value in the
past several years, in part because of their obvious inter-
action. Political instability, for example, will create
...openings for Soviet proxy governments and movements, which
are then able to exploit them against the backdrop -- and
implicit protection -- of Soviet military power. Similarly,
the Soviets may attempt to deflect the West from restoring
a satisfactory military balance not only through blandish-
ments and "appeals to reason'," but also by military intimi-
dation, redundant threats, and by political pressures that
rest on their superior military force.
Soviet Liabilities
The foundations of Soviet power and policy as developed
in the past decade are also flawed by considerable weakness.-
The GNP of the United States, Western Europe and Japan is-
more than four time greater than that of the Soviet Union.
This edge is not merely quantitative but qualitative, and
potentially offers the material foundation of a superior
military establishment. Moreover, the economic vitality of
the West -- even in the doldrums -- creates a magnetic force
drawing other economies -- even those of the other side --
toward its orbit.
The effort to restore a military balance favorable to the
West and to achieve our othei- objectives will be aided by the
emergence and rroi,able intensification of several major Soviet
vulnerabilities. Together with our Allies, we will want to
exploit those vulnerabilities.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/?L/eB@IA-RDP84B00049R000400750009-2
-- First, political discontinuity.
The USSR is on the verge of a wholesale leadership
transition which could impede the systematic exploitation of
its competitive advantages for a considerable period of time
and might even eventuate in.a severe political succession
struggle. The outlines of such a struggle are hard to pre-
dict now, in part due to Brezhnev's reluctance to designate
a successor and make other pertinent preparations. This
could result in a process more chaotic than has been pre-
dicted, with some potential novel political alignments;
(e.g., because of resource scarcities the military and*the
heavy-industrial bureaucracies, traditional allies, could
work against each other). However, these problems do not
precluAe a still more assertive foreign policy by a new Soviet
--leadership team.
Even if Brezhnev leaves and the immediate transition
is marked by continuity, collectivity and institutional . stab-
i ity, a new leader may not establish preeminence for some
time. It seems likely that, following intense jockeying for.
power, the eventual leadership will remain preoccupied with
enhancing their own authority and that of the Party, both in
the USSR and in Eastern Europe; will be sensitive to any per-
ceived probing for weakness from abroad, above all from-the
US; and will place domestic priority on control from above and
security priority on the amassing of military powers The ef-
fects of the succession on foreign policy remain extremely
difficult to predict, and not all of them are benign.--A new
leadership determined to protect itself internally may be pre-
pared to take some risks externally.
Personalities of new leaders will have a significant
role, but we will understand how this works only partially and
in retrospect. Moreover,:initial impressions may well be mis-
leading as contenders take one line to get power and another
to keep it. Whatever their long-range perspectives about the
world correlation of forces, these men will be preoccupied
with short-term opportunities and, more often than not, with
reactive tactics. It?will therefore be a mistake to judge the
broad direction of 'Soviet foreign policy from every new speech
or article by an official ideologue.'
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/Q8b1[2DP84B00049R000400750009-2
-- Second, hostility of other major powers.
All of the major industrial. powers see the USSR as.
the principa threat-to their security. A of the other
nuclear powers target the USSR. China's determination to
rise to the ranks of a great power by the end of the century
and the rapproachment between the West and China, if it con-
tinues, will remain very worrisome for the Soviets. Moscow
could face a broad anti-Soviet political coalition emerging
in the period ahead, with a more active US superpower at the
lead.
r,r Third, internal economic slowdown._
The.USSR is enteringa period of growing economic
stringency which will be marked by very low (1.5-2.5% per an-
num) GNP growth rates. This will make it increasingly dif-
ficult for the regime to continue its lavish defense spend-
ing without mortgaging the industrial foundations of its
long-term military power. Second, although not organized,
it is believed that increasing consumer dissatisfaction
over food and goods shortages _s of growing concern to the
Soviet regime. Third, economic problems are increasing
pressure to intreauc a reform predicated upon a decentraliz-
ation in decisionmaking in the economic sphere -- a -:concept
that is anathema to Soviet leaders. Finally, emerging dom
estic economic difficulties pose a threat to Soviet foreign
policy by increasing the burden of subsidizing the econom-
ies of poorer allies such as Cuba and by tarnishing the
image of the Soviet system as a development model for Third
World countries. However, Moscow will continue to be these
costs as long as such allies continue to provide significant
geopolitical advantages.
Although the economic problems described above are
formidable, we must be careful not to overestimate the op
portunities for the'US to'exploit or profit from these weak-
nesses. Consumer dissatisfaction may continue to be of
secondary concern relative to military and foreign policy
considerations. As a result of past' policy decisions which
keptbilateral economic relations at a low level, the US has
few meaningful handles of economic leverage vis-a-vis Moscow.
In addition, the West European stake in economic relations with
the, USSR and Eastern Europe is significant and important to
the West Europeans. More seriously, economic difficulties
only affect the growth of the Soviet military establishment;
slow or continued but costly growth does not mean that mili-
tary power will not be exercised. Nor are the Soviets
likely in the next decade to be deterred for economic rea-
sons from pursuing fundamental political objectives through
the use ,oOrditi~el~ 4ieiNwAIF7-/02/08: CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
11-6
Nevertheless, given the expected change in leadership
and the prospect that the next generation may be less content
to -have external success substitute for internal progress, the
Soviet leadership of the mid-to-late 1980s could be more preoc-
cupied with internal problems.
-- Fourth, unfavorable'internal trends.
The Soviet Union is composed of dozers of nationali-
ties, many of which resent Russian domination and are poten-
tially susceptible to the attractions of national self-asser-
tiveness and self-determination. Demographic trends are
compouiding the problem, with the birth rates of non-Slavic
minorities far exceeding those in the Slavic Soviet republics.
A particularly serious problem could be posed by Soviet Mus-
lims, who will soon constitute over 20% of the population (30%
of draft age males). While Muslims within the Soviet Union
have as yet shown little evidence of identification with the
Islamic resurgence south of the Soviet border, such a develop-
ment cannot be ruled out. _
A separate problem'is how to deal with the long-term
impact of such modest liberalization as has occurred within
the Soviet Union'since Stalin's death. The Soviet regime has
for the moment managed to clamp a firm lid on exteal mani-
festations of dissent, but it has clearly failed to eliminate
it. And developments in Eastern Europe hold potential for
affecting the situation within the Soviet Union over time.
-- Fifth, unfavorable trends on Soviet borders.
Developments in,Poland have demonstrated the diffi-
culties currently facing Moscow in preserving the post-World
War II buffer zone in Eastern Europe. In varying degrees the
trends so dramatically manifesting themselves in'Poland can
be found throughout Eastern Europe. And short of resort to'
overpowering use of*force; Moscow shows no sign of.knowing
how to get the genie back in the bottle.
In Afghanistan, meanwhile, Soviet use of force has
been unsuccessru in establishing an acceptable and enduring
status quo from Moscow's perspective. The Soviets face a
protracted insurrection which they cannot win without in-
vesting far greater forces -- and thereby risking domestic
repercussions -- and which could become even more effective
with greater foreign support.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
Finally, the US-PRC rapprochement and particularly
the expansion of relations in the security sphere touches
the most deep-seated Soviet fears of encirclement. The con-
tinuing expansion of Soviet military capabilities along its
Chinese borders bears witness to the degree of Soviet concern.
-- Sixth, the international diffusion of power.
The increasing number of states that have greater
power to assert their independence and resist external direc-
tion will, especially as Soviet interests are defined more
globally, pose great problems for the Soviet Union. Moscow
also f4ces the enduring hostility of China directly across
its borders, the growing rejection of Marxism-Leninism as a
model of development for Third. World states, and (in those
states where it has established a position of some sort) the
prospect that political instability will be at Soviet
expense.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
III. National Security Policy
Introduction
Our national security policy must rectify a deteriora-
tion across the spectrum of our defense posture towards
the Soviet Union. The Soviets, through a long-term program
of investment and modernization, have increased the already-
substantial margin of superiority in conventional forces
they possessed in the 1950's. While this shift' is. evident
in many regional theaters, it is particularly acute in the
broad Persian Gulf/Mideast region, where the loss of a key American ally, Iran,
has exposed an 'enormous new Western vulnerability. The
Soviets have at the same time built up a network of proxies
and eiirrogates throughout the Third World to supplement
their own direct force projection capabilities. These
changes have taken place against the background of a con-
tinuing shift in the central strategic and theater nuclear
balances, which has burdened the US option of using esca-
lation as a means of correcting regional force deficiencies.
This problem will continue until at least the mid-1980's,,
and may confer on the Soviets a margin of strategic superi-
ority.
The US defense effort must be accelerated across the
board, in resporise'to the growth in Soviet military capabil-
ities and the international instabilities which increase the
likelihood they will be employed. Particular emphasis must
be placed on the procurement of systems which exploit'US
strengths, and take advantage of Soviet vulnerabilities,
including the vulnerability of Soviet proxies. The task can
be divided into two areas:
-- Nuclear forces? -We must redress the current imbalance
through a comprehensive modernization program designed to
strengthen deterrence. This program must improve our
second strike forces for destroying Soviet military assets
and achieve a deterrent capability (including command and
control systems) for enduring survival. in a nuclear war.
The Soviets must perceive, in all contingencies, the costs
of initiating strategic or theater nuclear attacks as
higher than the potential gains.
a rapid deployment force capable of meeting
,Soviet and regional threats in the Persian
Gulf;
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/011-RDP84B00049R000400750009-2
111-2
the maritime superiority required to put
at risk Soviet naval forces, to project
forces worldwide/ and to protect our economic
`interests.. --_
- creating an arms transfer mechanism to better
assist US allies and friends and counter Soviet
proxies.
Nuclear Force Posture
The cornerstone of our defense posture will continue
to be our nuclear forces. We must rebuild a strategic
and theater nuclear posture which persuades the Soviets
that they would face a strong prospect of defeat if a
nucl14ar conflict occurred. That posture should ensure
that the Soviets perceive no advantage in initiating a
nuclear conflict, launching a preemptive nuclear strike,
nor in embarking on a course of action which runs serious
risks of nuclear escalation. Our theater nuclear forces
must be designed and deployed to make the risks of escala-
tion unmistakable and to strengthen the credibility of our
nuclear guarantee to respond to threats to allied.security.
We must not only modernize our existing theater nuclear'
forces in Europe but also maintain nuclear options for.
other high-stako-s areas.
We need to be sensitive to the very real limits on our
ability to use our nuclear posture as a broad and positive
instrument of policy and to the dangers that we -- or, more
likely, our allies -- will succumb to the temptation to
view nuclear weapons as substitutes for the force improve-
ments needed to achieve strengthened conventional capabil-
ities. We must determine what balance to strike in partic-
ular theaters between our conventional and nuclear force
postures. We also must decide whether, if regional superi-
ority is impossible, existing Soviet advantages must be
balanced by a US superiority in pertinent nuclear forces.
We also need to be careful that our recognition of the
extended requirements which US nuclear forces must satisfy
not be mistaken for any eagerness to provoke a nuclear con-
flict nor to encourage escalation.
_our nuclear force improvements cannot be based on a
false doctrinal dichotomy between deterrence and defense.
The deterrent value of our nuclear forces derives from
their operational capabilities, not from their simple
existence. Their effectiveness in discouraging
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
Soviet adventurism -- whether spawned by opportunism or
desperation -- depends on their ability to defeat a
Soviet attack or otherwise deny the Soviets their objec-
tives, and limit damage to the American homeland.
Our nuclear force improvements should be measured not
simply by static quantitative measures, but by qualitative
advances that have a practical military significance as
well. We need to give special attention to the survivabil-
ity and endurance of the NCA and C3I even as we improve
those qualities of the nuclear systems themselves; to pro-
cure forces and design employment options: that directly
suppgrt political objectives and facilitate.. conflict ter-
mination o'n'- terms favorable to the US and its allies ; to take
strategic defense seriously-land to improve_the_survivability
of our space assets. We also must maintain asurvivable
land-based missile force. Moreover, by_increasing the accuracy
of our missiles, we can exploit an American technological
advantage and render more vulnerable the large Soviet invest-
ment in fixed land-based ICBMs. Finally, consideration of
effective 'anti-ballistic missile systems also should be
considered.
Conventional Fc ce Posture
US conventional forces are presently insufficient
to meet all of our security_ needs..-
Even without the fall of t e n and the present turmoil
in the Persian Gulf, we would have had to take measures to
substantially modernize and expand our capabilities in
regional theaters like Europe and Asia in the face of
Moscow's steady buildup and our loss of a counterbalancing
margin of strategic superiority. Unfortunately, we face
the additional requirement of creating a capability to
intervene in the Gulf to preserve Western access to oil
against Soviet or regionel threats. Our vulnerability in
the Gulf, moreover, musts be corrected with particular
urgency, since the instability that invites Soviet inter-
ference exists now (as in Iran) and could lead to a major
crisis in the immediate future. While we currently have
no alternative but to divert and designate forces normally
assigned to other theaters to cover the Persian Gulf, over
the long run we must expand our force structure to deal
with this specific contingency. We cannot meet this new
threat simply by reshuffling our already-insufficient
forces and exposing even greater vulnerabilities in Europe
and Asia, particularly since the Soviet Union has the power
to pressure us on several fronts simultaneously.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
111-4
Our conventional force requirements are large. In
Europe and Asia, we must be prepared to meet a massive
short-warning attack and to wage, if necessary, a more
protracted conflict. We can partially offset the sheer
weight of Soviet land power by the intelligent exploita-
tion of Soviet weaknesses. For example, the USSR is
geographically large and yet has limited access to warm
waters; SLCM deployments can force the Soviets to invest
in costly air defenses, and will render much of their fleet
vulnerable. Such deployments would, of course, have to be
pursued with due regard for any potential political impact
on the LRTNF decision.. (Other measures are suggested in
Sections IV and V.) In the Gulf, we cannot expect to match
the Russians in the event of an all-out, determined Soviet
invasion, but we can hope to raise the costs and risks
sufficiently so as to deter the Soviets, and. to deal with
less demanding but more likely, regional threats. We must
seek to regain clear-cut maritime superiority, both in
terms of ships and shore-based air power. This is a neces-
sity imposed on us by the fact that we, unlike the Soviets,
are dependent on sea lines of communications to meet our
Alliance commitments as well as our economic and security
needs.
Finally, our Third World policy to counter Soviet
proxies requires improvements in the arms transfer process.
The Soviet Union' presently has a significant advantage over
the US insofar as it can supply its clients with large
quantities of arms rapidly out of present inventories.
While top of the line US weapons are generally more techno-
logically sophisticated than comparable Soviet designs,
Soviet weapons are often better suited to the skill levels
of Third World countries. The US needs to reduce order lead-
times and costs for commonly-used items like tanks, APCs,
and combat aircraft, where: feasible through the establishment
of a funded contingency pool. We also need more flexibility
in the terms we can offer, particularly to financially hard-
pressed states. For some countries, a return to modest grant
aid programs will be the gnly feasible solution. Meanwhile,
our security assistance representatives abroad should be
given greater latitude to engage in planning discussions
with their hosts.
Arms Control
The United States should pursue a realistic arms control
policy, whose purpose is directly to enhance US national security
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 III-5
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
through a strengthened balance of Dower and balanced, veri-
fiable a reements, facilitating our force modernization.
plans. While in some circumstances these goals may be acfiieved
through reduction in overall levels of armaments, we should
not seek disarmament or restrictions-on new technologies
for their own sake in the unrealistic hope that such measures
per se will lead to a more peaceful world. We need to
recognize that many force modernization measures and techno-
logical advances actually could contribute to the goal of
arms control, i.e., stability. Nor should arms control be
pursued for the sake of purely psychological improvements
in relations between the US and the USSR, or In -the vague hope
that an admittedly limited agreement now will set in train a
process that will lead to larger and more substantive agree-
ments later. Indeed, agreements negotiated simply to improve
the atmosphere of super-power relations but which do not
affect the actual course of Soviet weapons development and
deployment can be more harmful than none at all, insofar as
they create the mistaken impression that US'national security
has been enhanced, or that Soviet intentions are as a conse-
quence more benign. .
Instead, we need to set a tougher substantive standard
for what we expect out of arms control agreements, and be
prepared to accept no agreements at all if these standards
are not met. The standards should be premised on:, (1) having
arms control support, rather than drive, U.S. militar:! pro-
grams, and (2) insuring that agreements are genuinely-stabi-
lizing, militari'Iy. significant, equitable and verifiable.
This will inevitably be a long process, and US leaders
should anticipate -- and prepare the American public to
accept -- the need for considerable patience. The US-needs
to establish firmly the primacy of unilateral military pro-
grams as the basis for ensuring national security, and to
impress on the Soviets that we intend to deal with them from
a strong position. Moreover, we will require time both to
conduct a thorough analysis of our security needs and to
determine specifically where arms control might be helpful.
In any event, negotiations are unlikely to result in signifi-
cant progress at least until we are clearly on the road to
redressing current' military imbalances.
We will insist that arms control agreements be equitable
and verifiable. We will require precision in treaty pro-
visions.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/6 /i86CIA-RDP84B00049R000400750009-2
When agreements are in force, we must insist upon strict
Soviet compliance and, if not satisfied with Soviet com-
pliance with agreements, we must be prepared to withdraw
from the agreements. An active approach to compliance
matters would have intrinsic security value.
We will face pressure from our Allies and other countries
ready to resume the arms control process well before we are
prepared to engage in substantive negotiations. Our Allies
recognize that the Administration will need time to formulate-
long-term security policy, but' some face sLa.c ig axis' Zrmtrol can-
stituencies at home and are concerned-t-M-f tfie' necessary politi=cal base for European defense modernization will be undermined !
unless a visible arms control process is resumed fairly promptly.
We need to pursue an arms control strategy that will
meet these Allied concerns while at the same tire preserving
US flexibility for future negotiations. Elements of such
a strategy would be close and'visible consultations with the
Allies-and a.declaratory. policy that makes clear our commit-
ment both to the general goals and to a well-designed process
of arms control. But our strategy should seek to counter
Soviet arms control propaganda, and to make clear the impor-
tance we attach to compliance with existing arms control
agreements. Both in public and in multilatera fork we should
expose the hollowness of the Soviets' arms control initiatives
and put them on the defensive, particularly on key issues such
as their unwillingness to consider adequate verification measures.
Also, we must begin, both in public statements and private 25X1
consultations, to lower expectations -- at home and in
Western Europe -- over what arms control can accomplish.
We will need to reinforce our (declaratory commitment to
an arms control process by participating where appropriate
in negotiations with Moscow. The US decision to start LRTNF
negotiations by the end of: this year is a specific example
of this approach. But we should prevent the December 1979
LRTNF decision -- coupling force modernization with arms
control -- from becoming a model for future arms decisions.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Resg20QVQ&/MeAQW9R000400750009-2
Faced with Soviet determination to continue its -nilitary
builcup and in lig':t of recent Soviet internaticial behavior,
wp, might well question whether the West's trade end economic
policies during th- decade of detente did not ccitribute more
to Soviet power th;n to the long range reetrictixns on its
power that the detente philosophy seemed to promise. In the
present cpntext of U.S.-Soviet competition, we alst refashion
East-West.-economic relations to make them consistent with broad
US political-military objectives.
25X1
Strains in the So\iet Economy
In one sense, our national power is a functio: of the
wealth of resources at US command (military, ec:)no::ic, cultural),
relative to the resources belonging to or utilized by the USSR,--
its allies and prcxies. On the economic side, there is suf-
ficient evidence to permit the observance that the Soviet economy
...faces serious strt ins in the decade ahead. Sut sta: tial decline
in growth will und-:rcut pursuit of Moscow's objectives to
(a) main #ain its r i i aryedge , ? expand a i-n-T, .str!K1 15
and c respon tc consumer expectations tor in aro a ng
- 11V ditions and welfai e .
The major factors tending to slow down the ra?e of growth
in the Soviet ecoi om are: z
-- Th6 dryinc
up of sources of la'3or force qr.,wthr .
-- A slowdown
in the growth of caoital pre due ivi 1
ti
-- An inefficient and undependable agrieu. tur s
-- Energy co: rtraints. The proposition t'.at .he Soviet
Union faces a pot( ntia o l problem is widely ..cce )ted even
the USSR. Among IS experts, there is disagree:,.ent over when the
shortage might oci-ur and how large it will be. Evan if we accept
the CIA's worst c,se scenario for oil produeti-n (?roduction
already peaked anc declining within 1-3.years) the USSR's total
primary energy ou- put will continue to grow t? .oug at only half
the Soviet plannec. rate of 3_4 perc6nt. The slort"all, together
with declining in' cements t'o the is r force a: d s :rained in-
vestment resource, wi. 1 lower overall 3 viet e, one ,ic growth and
inhibit improvemer ts in consumer we a--e, but as n t e y
to cause .a recess_ cn-type slump. In Eastern E~ nor : the effects
may be more sever than in the USSR given the cons_raints on
the different nat_oral capabilities to pay higi:er energy bills.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 IV` - East-West Economics
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
Faced with Soviet determination to.continue its military
buildup and in light of recent Soviet international behavior,
we might well question whether the West's trade and economic
policies during the decade of detente did not contribute more to 25X1
Soviet power than to the long range restrictions on its power
that the detente philosophy seemed to promise. In the present
context of U.S.-Soviet competition, we must refashion East-
West economic relations so that the Soviet Union is not helped
to strengthen itself militarily or to escape the. full costs o
its emergent internal economic crisis
Strains in the Soviet Economy
In one sense, our national power is a function of the
wealth of resources at US command (military, economic, cultural),
relative to the resources belonging to or utilized by the USSR,
its allies and proxies. On the economic side, there is suf-
ficient evidence to permit the observance that the Soviet economy
faces serious strains in the decade ahead. Substantial decline
in growth will undercut pursuit of Moscow's objectives to
(a) maintain its military edge, n ?expan the inaustria ase,
and c respond to consumer exnecta ions for improved iving?con-
ditions and welfare.
The major factors tending to slow down the rate of growth
in the Soviet economy are:
--'The drying up of sources of labor force growth;
-- A slowdown in the growth of capital productivity;
-- An inefficient and undependable agriculture;
-- Energy constraints. The proposition that the Soviet
Union faces a potential oil problem is widely accepted even in
the USSR. Among US experts, there is disagreement over when the
shortage might occur and how large it will be. Even if we accept
the CIA's worst case scenario for oil production (production
already peaked and declining within 1-3.years), the USSR'.s total
primary energy output will continue to grow. though at only half
the Soviet planned rate of ?-4 percdnt. The shortfall, together
with declining increments to the labor force and strained in-
vestment resources will lower overall Soviet economic growth and
inhibit improvements ?in consumer welfare, but is not likely
to cause a recession-type slump. In Eastern Eurote the effects
may be more severe than in the USSR given the constraints on
the different national capabilities to pay higher energy bills.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/O/AB,: QIA-RDP84B00049R000400750009-2
There are dif:,~?rin, opinions of Soviet prospects for
finding r:ore oil, Lut none are too prorising. 1-'ore-aver, the
rnost', avora)ile are" are in Siberia and the Far East, where---
infrastructure is -'acking and where the costs a development
(including transpo: t ) will be much higher. Even if explora-
tion is successful, it is doubtful that new discoveries in
these dxea.Tcould be developed fast enouih to al: er _he pro-
duction ouook over the decade unless the Sovit?ts receive
the substa,tial help they are seeking from the 4:est.
New discoveries would affect the Soviets' perception of
whether they will face a temporary oil problem tYsat can be
overcome or whether they will have to cope with a long and
continuous downward trend. While it is not in tI:e W-stern
security interest to have the Soviets competing for world
energy resources, neither is it in the interest c.f tie West to
facilitate Soviet access to technology which would give them an
independent capability to improve oil and gas output and
infrastructure. We should approve exports of oil ani: gas
end-use equipment after review on a case by case basis.
Correlation of Forces
The Soviets _r ? ;ucntly - --, the term correlation of forces
and it is?iTportanc that we unierstand their vier of the term
as a summation of .'l aspects of relative interne.tio;-al
power--particularly the relationship between Soviet power and
the countervailing forces led by the U.S.
Largely beca s~ of the dramatic shift in th,: Military
balance which took p !ace in the 1970's, the Soviet leadership
seems to act on the relief that a global shift i:; ur3erway in
the correlation of forces and that this shift is or can be made
to favor the Soviet camp.
It is clearly i?_ the interests of the U.S. tc de: onstrate
(a) that the eor.r.el.ition of forces is not In favc r o the USSR,
and (b) that despite imports of technolo l manuf ictt red
products, and grain, continued high levels o defenac spending
will exact rowinq punishment on a Soviet economy whc?se growth
trend -point owi,ward.
Approved For Release 200CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02': RDP84B00049ROO0400750009-2
There are differing opinions of Soviet prospects for
finding more oil, but none are too promising. Moreover, the
most favorable areas are in Siberia and the Far East, where
infrastructure is lacking and where the costs of development
(including transport) will be much higher. Even if explora-
tion is successful, it is doubtful that new discoveries in
these areas could be developed fast enough to alter the pro- 25X1
duction outlook over the decade unless the Soviets receive
the substantial help they are seeking from the West.
While it is not in the Western interest for the Soviets
to use force in competing for world energy resources, neither
is it in the interest of the West to facilitate the rapid
expansion of Soviet energy production, subsidize the Soviet
energy development program or assist the Soviets in developing
export markets for energy products such as oil, refined oil
products, or natural gas.
Correlation, of Forces
In light of the factors regarding growth and dynamism in
the Soviet economy, U.S. and Allied economic policy can likely
influence the rate of growth in key Soviet economic sectors as
well as the USSR's ability to support both specific military
and civilian industrial and technological advances without
incurring additional costs and forcing hard allocations of
resources.
The Soviets frequently use the term correlation of forces
and it is important that we understand their view of the term
as a summation of all aspects of relative international power
particularly their relationship between Soviet power and the
countervailing forces led by the U.S.
Largely because of the dramatic shift in the military
balance which took place in the 1970's, the Soviet leadership
seems to act on the belief that a global shift is underway
in the correlation of forces and that this shift is or can be
made to favor the Soviet camp.
It is clearly in the interests of the U.S. to demonstrate
that the correlation of forces is not in favor of the USSR;
that the Soviet economy has been artifically bouyed up over
the past decade by high levels of imports and technology, manu-
f
factured
products, and grain, and that continued high levels o
defense
spending will exact growing punishment on a Soviet
economy
whose growth trends point downward.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
IV-3
S - ...
-?---- -- -
Defense Spending
Undercurrent circumstances, for the Soviet 3 t( sustain
defense s ending' n the range of 13-15 percent jr r ore of GNP
The milit 3ry is already
a rodu in atta=ns on the econom .
getting a very large share of the GNP pie, and its share is
likely to be maintained despite the projected Econ'mic We
difficulties. Th-, Soviets are ready to pay the pr-ce.
should not make it easy for the Sovieta to expend .heir
military. We enterin a decade in which tl a S-viets are
closer to exploitsble military superiority than they have ever
been and we must ensure that Western exports tc. th--m do not contribute to that trend.
Allied Economic objectives
Soviet mil_i `ac=eater a need and Sovi :t Economic
fficu~ti es -- side ar. -~rt,,n t =or tie H =stt rn fifes to
di mate art
ursuing amore c nor;
b
y p
L i etzves
further tbelr c'~ com etitive ecor.-nic policy toward the Soviet Un on across a
ran a of issues. -
Economic rE lations with the Soviet Union an : Eastern,
European countries should be consise''US and i t1 These
pol tical-secur.t ob ectives of -
objectives are:
-- to strer.gthen defenses in order to dE al '?zith the
reality of Sovi-(:; nary
ess
a
a
- _
-- to dimi,.ish Soviet abilitSot e apW
irectand
and to counter he project on
indirect elsewhi:re in the world;
to re(3uce o ? ortunities for Soviet a :onc mic or
Psychological. 1 - a over the West;
t use carrots and esiii~slimprovemenl.s --?ovietbehavior
relation s w- ith r".oscow to sp
in the Th-1-rcT-v;Q''1'1T,'-
t7d block Soviet efforts to split the allies.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/02108'"CIA-RDP84B00049R000400750009-2
IV-3
Defense Spending
Under current circumstances, for the Soviets to sustain
defense spending-in the range of 13-15 percent or more of GNP
is producing strains on the economy. The military is already.
getting a very large share of the-GNP pie, and its share is
likely to be maintained despite the projected economic
difficulties. The Soviets are ready to pay the price. We
should not make it easy for the Soviets to expand their
military. We are entering a decade in which the Soviets are
closer to exploitable military superiority than they have ever
cted
di
i
re
s
been and much of the imported Western technology
at military industrial weaknesses.
Soviet defense spending exerts strains on the total
-.econom which can be sharpened if the West enforces tough
constraints on trade, credits, And technology (.know how) and
equipment.
Allied Economic Objectives
Soviet militancy creates a need and Soviet economic
difficulties provide an opportunity for the western allies to
further their objectives by pursuing a more coordinated and
competitive economic policy toward the Soviet Union across a
range of issues.
s
Economic relations with the Soviet Union and Eastern
European countries should be consistent with the broad .
political-security objectives of the US and its allies. These
objectives are:
-- to strengthen defenses in order to deal with the
reality of Soviet military power;
-- to diminish Soviet ability to wage a successful war
and to counter the projection of Soviet power both direct and
indirect elsewhere in the world; - -
-- to reduce opportunities for Soviet economic-or
psychological leverage over the West;
-- to use carrots and sticks in linkin Western economic
relations with Moscow to specific improvements in Soviet behavior
in the Third World;
-- to block Soviet efforts to split the allies.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
IV-4
As the Western nations seek to deter aggr;!ssi-7e Soviet
actions &ri Poland and elsewhere in the short-t rm 2nd to
redress the milit pry balance with the Soviet U ior over the
near terp.(3 or 4 years), they must a illicitly recognize the
relationghip betw -en these objectives and the :onc sct of
economic relation. with the Soviet Union and E.ste-n Europe.
These economic re.ations may enhance Soviet mi.its -y capa-
bilities directly. transfer technology not otherwise available
which makes a sig A ficant contribution to military capabilities
indirectly, and c)ntribute more broadly to_Sov.et ibility to-
support military -rograms at levels that Weste-n countries
with different do )estzc constraints find it in :ree singly
difficult to matc*.. Certain economic relation : wi --h the Eant -
may lead to level . of de en ence which increas We ;tern, vulnera)ility to clit ca influence and coerc-on :)y the Soviet
--Union.
Given these _onsiderations, the US and it-, allies must
pursue discipline 1, consistent and where pos ;le :oordinatnd
policies toward economic relations with the Soviet Union an
.
the Eastern Europ ?a-n countries. These police : sr.-3uld take
account of the di.ferent political-security cotdi ions wh c
prevail today anr: o - hich rr. cht influence the fu ure caurse o
Soviet policy in ::urope and around the world.
Assuming tha ---the Soviet-American relatio ishi ? will be
predominontly ccm:-etitive for the foreseeable? utt re,c the
U.S. must, take in.lcpendent action where needed anc strongly
had the allies t.l,ard the following cos ss
-- tighten s _rategic controls, and im rov ! tt 2ir enforce-
ment, consistency, and redicta ity o adm n -stz ration;
-- work to i=,sure that,tightened controls prevent the
transfer of critical military technologies;
-- protect national security interests by appropriately
controlling East-West trade;
-- improve th- CQCOM process by assuring tat views of
defense ministrie3 of participating countries are properly
represented in the COCOM review process;
-- recognize that foreign lic controls ere r. vital
aspect of contiuy..'ncy planning and impose these controls pri-
marily in criz;s, in support of agreed objectives :ith agreed
conditions for lifting them later (otherwise a%oid imposing
such controls); furthermore, to be effective, foreing policy
controls must generally be coordinated and impcaed
multilaterally; --
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/92108. CIA-RDP84B00049R000400750009-2
IV-4
As the Western nations seek to deter aggressive Soviet
actions in Poland and elsewhere in the short-term and to
redress the military balance with the Soviet Union over the
near term (3 or 4 years), they must explicitly recognize the
relationship between these objectives and the conduct of
economic relations with the Soviet Union and.Eastern Europe.
These economic relations may enhance Soviet military capa-
bilities directly, transfer technology not otherwise available
which makes -a significant contribution to military capabilities
indirectly, and contribute more broadly to. Soviet ability to
support military programs at levels that Western countries
with different domestic constraints find it increasingly
difficult to match. Certain economic relations with the East
may lead to levels of dependence which increase Western
vulnerability to political influence and coercion by the Soviet
Union.
Given these considerations, the US and its allies must
pursue disciplined, consistent and where possible coordinated
policies toward economic relations with the Soviet Union and
the Eastern European countries. These policies should take
account of the different political-security conditions which
prevail today and which might influence the future course of
Soviet policy in Europe and around the world.
Assuming that=the Soviet-American relationship will be
predominantly competitive for the foreseeable future,: the
U.S. must take independent action where needed and strongly
lead the allies toward the following goals:
-- tighten strategic controls, and improve their enforce-
ment, consistency, and predictability of administration;
-- work to insure that tightened controls prevent the
transfer of critical military technologies;
-- recognize the national security interests that need
to be protected by controlliig East-West trade;
-- improve the COCOM process by assuring that defense
interests are properly represented in the COCOM review
process;
-- recognize that foreign policy controls are a vital
aspect of contingency planning and impose these controls pri-
marily in crises, in support of agreed objectives with agreed
conditions for lifting them later (otherwise avoid imposing
such controls); furthermore, to be effective, foreign policy
controls must generally be imposed multilaterally;
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/g J ~IA-RDP84B00049R000400750009-2
IV-5
-- to identify specific existing dependencies on Eastern
resources and markets and to take action to eliminate the
vulnerabilities attendant to these dependencies; and to
develop collective measures to guard against any new vulner-
abilities;
-- insure that East-West economic relations are guided
by the basic assumptions of the competitive nature of US-
Soviet relations. We have nothing to gain from a situation
of co-existing policies of political-military competition and
economic detente.
The objective of restructuring East-West economic rela-
tions along these lines can be achieved only with a subtle,
deliberate approach that takes into account allied views,
fears, and vulnerabilities. Our allies have encouraged trade
with the East for both economic'and political reasons, fre-
quently viewing it as a long range means to better East-West
trade relations. The Soviet Union continues to be viewed as
a natural market for their industrial products, especially
capital equipment, and as an important source of energy and
other raw materials. The current economic slow-down affecting
all of Western Europe and pressures on the Japanese o curb
exports to OECD countries enhances the attractiveness of the
Soviet market and feeds domestic pressures to resist any cut-
backs in exports to the USSR. The allies' overwhelming
dependence on imported energy and raw materials generally
cause them to view any diversification as beneficial to their
economic security, even if this means increasing imports-from
the Soviets .(R Finally, the Soviets will try to exploit
differences between the United States and Europe on economic
issues .
We
these potential problems and the need for
recognize
an evolutionary strategy which must be managed in such a way L
as to avoid serious allied discord. But we are convinced
that the nature of the Soviet threat requires improved allied
efforts to reduce Soviet acpess to militarily relevant pro-
ducts and technologies as well as subsidized credits: We
should use the Ottawa Summit to accord a political impulse
to these policies.
Strategic Controls
The Western allies have administered controls on trade
in strategic goods and technology with the Soviet Union and
Eastern Europe for more than 30 years through the Coordinating
Committee (COCOM). Despite its informal nature, COCOM has
slowed the transfer of militarily significant goods and
technology to the East. The West has protected lead-time
over the Communist countries in the development and
Approved For Release 2007/(OgA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/02/08 - CIA-RDP84B00049R000400750009-2
application}-of militarily significant technologies and has
added to the costs of Soviet developments in the military
seLtor..
After-the Soviet invasion of Afghanistan, the COCOM
partners discussed a range of issues involving 3tricter
t to is goods and technology
ra
g
controls on the export of s
ions
to the Soviet Union and have in practice not solght exceptions
in COCOM to sell embargoed goods to the Soviet Union. "no
exce tion" lic should be continued on a pera;3nent bails, at
east during the near term period in which the 'jest seeks to
There is a char
overcome Soviet military advantages.
need to improve our controls over advanced goo(-`?s and technoloay
of military significance as well as enhance ou:. enforcementln
ial es ions e and diversion.
t
d
r
us
capabilities to deter. in
addition, COCOM controls on manufacturin technolo and soft-
.wear arb somewhat ambiguous and there is litt coveracre in
such important defense riorit su oor ndust ies as metal-
lurgv, chemicals, _he vehicular transport and shipbuilding.
The US and its allies should move rapidly to develop realistic
controls in these ar
The question of how to handle East-West trans, technology
otts has at times
b
i
oyc
c
transfers, credit policy, and econom
been divisive bc' 'een the "-; ted States on the one side and
Europe and Japan on" the otnex. Yet apart from Polish
contingency planning, there has been insufficient progress
toward working out agreed Western positions and further high
level attention is needed. Discussions should go forward in
s in meetings of a revitalized Consultative
ha
p
COCOM anc~ per
Group. But the US and its allies may wish to consider whether
the West needs to create a new forum to conduct periodical
high-level policy discussions called for by the dynamic and
complex issues of East-West econmic relations such as:
25X1
~hnical develop n s. Are there end
-- new scientific/te..
uses, especially military applications, which are not immediately
apparant to the. developer;
-- availability. Are comparable technologies available
from more than one source;
ence. Wider and timely sharing of intelligence
intelliq
infoxmat.ion of COCOM regulations and on Soviet technological f
capacities and military needs;
~r-+al espionage. How to restrict Soviet acquisi-
c- e?n-chno l ogy roug other channels;
t
tion of t l
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0/086 CIA-RDP84B00049R000400750009-2
application of militarily significant technologies and has
added to the costs of Soviet developments in the military
sector.
After the Soviet invasion of Afghanistan, the COCOM
partners discussed a range of issues involving stricter
controls on the export of strategic goods and technology
to the Soviet Union and have in practice not sought exceptions
in COCOM to sell embargoed goods to the Soviet Union. The "no
exception" policy should be continued whica ermanWest ents basis, at
least during the near term period
overcome Soviet military advantages. There is a clear
need to improve our controls over advanced goods and technology
of military 5111 nificance as well as enhance our enforcement
capabilities to deter industrial espionage and- diversion. In
addition COCOM controls on manufacturing technolocry and soft-
.wear a:rd somewhat ambiguous and there is little coverage in
such important defense priority industries mtding.
lur chemicals, heavy. vehicular
The US and its allies should move ranidl to develop realistic
controls in these areas.
The question of how to control East-West trade, technology
transfers, credit policy, and economic boycotts has at times
been divisive between the United States on one side:and Europe
and Japan on the other. Yet apart from Polish
seriousedis-
absence
k
i
planning, there has been a stri ng olitical levels. These
cussion of these 'issues at the highest p
discussions should go forward inrCCOCCOM and perhaps i1' ieetings
of a revitalized Consultative _
may wish to consider whether Weest needs todireateiansecalled
forum to conduct eriodical hi
for by the d namic and complex issues of East-West economic
relations such as: .
-- new scientific technical develonmhich?ae Are there endtely
uses, especially military applications,
apparant to the-developer;
-- availability. Are,comparable technologies available
from more than one source.
-- intelligence. Wider and timely sharing of
information of COCOM regulations and on Soviet capacities and military needs;
Soviet acquisi-
-- commercial espionage. How to channels;
tion of technology through other
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/02/O8 1C~A-RDP84B00049RO00400750009-2
-- enforcement practices among the varying national
authorities which control strategic exports.
Foreign Policy Contingency Controls
Foreign licX, trade, and other economic 'controls' have
been less systematically discussed and dealt with among e
Western allies than security controls. Perspectives diverge
on the necessity and effectiveness of such controls, the objec-
tives to be served by such controls, and the timing and nuance
of such controls when used as foreign policy signals to adver-
saries.
The Soviet invasion of Afghanistan and the threatened
intervention in Poland have contributed to a more intensive
discussion of foreign policy controls on exports to the Soviet
Union'. What is clear from past experience is that such con-
trols would be more effective.if they are implemented
collectively and that the Allies have been able to agree on
the need for such controls much more readily in the context
of contingency planning for crisis than in the aftermath of
crisis.
Economic Security
This Administration is not unmindful that East-West
trade is viewed differently on the two sides of the Atlantic
and that the share of Eastern trade as a percentage of GNP
is many times higher in Western Europe than in the United
States. Western Europe has longstanding trade and cultural
links with Eastern Europe. For Europe, this trade is an
important source of domestic-employment and industrial revenues.
These differences cannot be ignored, anymore than the obli-
gation they impose to ensure that there is broad confidence
and clarity among the Allies concerning the levels and terms
of trade in their respective economic relations with the East.
Looking beyond unilateral US actions, the broader Allied
consideration in economic,`relations with
the
East is less
restriction of trade and financial flows
than
actions to
shape and limit the negative consequences
of
such trade.
For example, it is not in the interests of the West for the
Soviet Union and Eastern European countries to acquire a degree
of leverage over Western countries that permits direct
political-influence over the policies of Western countries or
that sharply reduces the options of Western countries in
dealing with Eastern countries. This is a different concern
from that which seeks to deny Western manufactured goods
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 20079IA-RDP84B00049R000400750009-2
IV-8
or technologies to the Soviet Union and Eastern European
countries. The economic security aspect deals with Soviet,
and possibly Eastern European, economic influence over the
West. This influence derives in the first instance from
.the level of dependence of the West on Eastern resources
or markets. In purely economic terms, such dependence can
be reciprocal: A supplier can be beholden to the customer as
much or more than the reverse; But in the current East=West
situation where political - security interests diverge, it
would be unwise to rely on the mutually beneficial economic
consecuences of trade and financial-relations-to preserve
these relations under all circumstances. Parties will be
constantly searching for unilateral advantage. If cutting
off supplies (or markets) should at any time seem likely to
result in greater disadvantage to one party than the other,
some incentive and opportunity to exercise leverage rr 1d
emerge.' _
The potential for influence thus ultimately derives from
vulnerability not dependency. Vulnerability results from
failing to review continuously among the Western Allies the
advantages and disadvantages of various economic relation-
ships and failing to consider protection against efforts by
the other party to manipulate these advantages and dis-
advantages. In the4.r economic relations with the East,
the Western countries will have to worry less about the levels
of trade and fina'cial relations the more they consider means
to protect against the vulnerability which derives from these
levels. An essential means of preserving gains in economic
relations with the East is for the Allies to enter into'
discussions to deal with vulnerability. Unless this is
done, the levels of dependence themselves will become matters
of controversy and act to undermine confidence among the
Western Allies in their respective economic relations in the
East.
The US and its Allies need to adopt a sense of economic
security in their relations with Eastern Europe and the. USSR.
In the current East-West context this would require us to -
prepare for short-term supply disruptions of Eastern resources
and where feasible to develop long-term alternatives. In
addition, economic security implies that the West consider
alternative markets if realities should warrant cutting off
all exports to the Soviet Union or Eastern Europe. It also
implies, incidentally, maintaining open markets within the-
Free World's market system to reduce pressures to expand
trade with the East. Contingency planning is also needed
for-possible disruption of international financial markets
resulting from Eastern debt problems.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
Economic Coth etition
In the context of US-Soviet relations, "competition" should
be read as_a shorthand expression designating a state of
rivalry between the two parties. Economic competition is only
one, albeit a major, element in the larger process of US-Sov et
r valry.
Not everyone will be happy with the idea of the US and
Allied governments taking a more activist role in refashioning
East-West trade to accord with the current state of political
and military competition.
There is a large area of East-West trade-opportunity-
outside the range of strategic export controls where businesses-
should be able to operate with minimal government controls.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
25X1,
 SECRET
Approved For Release 2007/02/08 ETA-RDP84B00049R000400750009-2
IV-9
Economic Competition
In the context of US-Soviet relations, "competition"
should be read as a shorthand expression, a term of art,
a state of rivalry between the two parties.
natin
si
d
g
e
g
Economic competition is only one, albeit amajors element in
the larger Process of US-Soviet rivalry.
Not everyone will be happy with the idea of the US and
Allied governments taking a more activist role in refashioning
liti
f
l
po
ca
East-West trade to accord with the current state o
and military competition. But such are the realities of
litics that government inaction could well have a more
po
chilling effect on the long term trade-outlook because o the
es ani izing effect w icn a further US- oviet
ign y d
tary L=a lance cou a nave on a whole infrastructure of wor d
.
trade
There is a large area of East-West trade opportunity
outside the range of strategic export controls where
businesses should be able to operate with minimal govern-
ment controls apart from the overall concerns about levels
and terms of trade. In these areas the US should take a
"watching brief" with the clear understanding that private
firms will drive hard bargains; maximize the benefits to the
US and minimize the benefits to the USSR.
The private sector must turn to its advantage the
element of US-Soviet rivalry in economic competition. For
those products and areas of now-how where the US has a clear
lead in technical innovation, quality, or avail abilit ;
in our favor
rml
.
y
there snow a no sale eon terms i
the US is the only supplier, our
n inaustrial sectors w ere except
policy should be to trade only w en it serves our interests.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Forging New Allied Political Consensus
As the United States adopts a new approach to East-
West relations, it must attempt to forge a new consensus
within the Atlantic alliance in support of its policies.
This attempt will be made against the background of the
following trends:
-- The growth of Soviet power at all levels in Europe,
increasing the traditional Soviet advantage in conventional
forces, and erasing earlier US advantages in nuclear forces.
-- Allied doubts about the constancy of US leadership
and the reliability of the US security guarantee.
-- Acute and growing allied dependence on the petroleum
of the Middle East and on other strategic resources.
Extensive Western European economic engagement with
the USSR and Eastern Europe, which have supported this trade
by massive borrowing from the West.
-- Fear that post-war economic prosperity is endangered.
-- Political instability, in which the ruling
governments of ten are weak and divided coalitions.
-- increasing pacifist sentiments in some countries.
At their worst, these trends have robbed sores European
countries of their stomach for competition with Moscow,
with a resultant growth of sauve qui peut policies and a
weakening of the Atlantic alliance. More generally, allied
governments regard these trends as imposing major con-
straints on their freedom of action, which can only be
recovered over time.
These constraints will continue to hamper Western
policies even in cases where our allies desire a change
in direction. Recent years have brought a growing (albeit
grudging) European apprcciation that hopes for detente
remain unrealized. Afghanistan was a shock for many but
policy still '.,not yet caught up with reality in most
European capitals. Many allied officials continue to
feel that they must pursue a "divisible detente," thereby
seeking to decouple European security from Soviet activities
outside.the NATO treaty area. We are not dealing with
"Finlandization" and Western Europe is not slipping toward
the Soviet orbit. Rather, Europeans are exhibiting
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 200HE/ CIA-RDP84B00049R000400750009-2
V-2
a tendency to track with prevailing winds. For the fore-
seeable future those winds may retain a stronger influence
on European than American policy.
"We must recognize that it often
will be difficult to generate adequate support from our
allies and friends, in Europe and Asia, for our policies
toward the Soviet Union. This will require some adjust-
ment in US positions and an occast?onal need for unilateral
US action in pursuit of particularly important interests.
A Standing Interagency Group is hereby established to en-
sure proper implementation of the decisions flowing from
the East-West study. In addition, an Interagency Group is
established and commissioned to conduct a study on major
alliance relationships. This study should develop a de
tailed strategy and tactics for dealing with our allies and
friends in the pursuit of major US political, economic and
military objectives."
While taking account U.L
leaders, we should convey clearly that we expect them to
move toward reducing the political constraints on their
defense actions and to join us in the measures necessary to
counter the Soviet challenge. Our success will in J.rge
measure. be a functica of how effectively we can convey to
them and to their publics the impression that we know where
we are going, that we know how to get there, and that our
policies take into account and serve their interests'. If we
lay the groundwork properly, and persist in leading the
allies toward a firmer posture toward Moscow, there is clear
potential for reinvigorating allied resolve and solidarity.
US policy will pursue both short and long-term goals.
In the short-term, we need to do some important damage-
limiting; several goals are so pressing as to permit no
delays. The U.S. must seek to prevent short-term adverse
political effects arising from the military imbalance in
Europe, from the dependence of our allies on Middle Eastern
oil and other natural resources, and from the significant
Western European stake in $ast-West economic relations. The
alliance's commitment-of resources to a military effort
probably will not be increased as rapidly as we desire or
as much as that of the United States; but we must begin to
turn the process around. Similarly, precisely because the
scale of East-West economic contacts cannot quickly be
reduced, U.S. policy will place a high premium on coordina-
tion among Western governments to avoid major new dependence
and to limit the potential damage to be done by disruptions
of those contacts.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
V-3
There already has been an initial positive response in
some European countries to new Administration leadership and
some mo' ment toward a more realistic view of the Soviet
Union. oreover, Soviet intervention in Poland probably
would - w at least initially -- tend to unite the allies
politically against Moscow. These are only tentative
moves, however, and much remains to be done to reshape
European public attitudes and government policies.
While U.S. policy may be able to limit the potential
damage of military inadequacy and economic dependence in
the short-term, there is no satisfactory long-term alter-
native to reversing each of these trends. Therefore, t e
US will pursue the following longer-term goals.
First, to increase the commitment of resources by our
allies to the common defense. The military efforts of our
NATO allies already represent the most significant contri-
bution to U.S. security of any American alliance relation-
ship, and it must be a major objective of U.S. policy to
assure that the benefits derived from this strategic cooper-
ation are in ru way reduced. In light of the urgency of
meeting the Soviet :ha) , West-West differences must not be
allowed tb underc-rt Allied c.op'raticri * on East-West issues.
Indeed, it there are hard times ahead with Moscow they must
benefit, not har rt, 'the Alliance.
Second, to take collective action to prevent West European
economic dependence on tYie -Soviet bloc and to reinforce Western
ties. Particular sectors of strategic importance deserve
special attention. Meanwhile, Western European countries have
a substantial interest in East European markets and this can be
exploited to enhance East European autonomy and domestic
liberalization.
Third, to increase energy security. Since 1973 Western
European governrents have pursuepolicies of reinsurance
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
25X1
 Approved For Release 2007/2&IA-RDP84B00049R000400750009-2
There already has been an initial, positive response in
some European countries to new Administration leadership and
some movement toward a more realistic view of the Soviet
Union. Moreover, Soviet intervention in Poland probably
would -- at least initially -- tend to unite the allies
politically-against Moscow. These are only tentative
moves, however, and much remains to be done to reshape
European public attitudes and government policies.
While U.S. policy may be able to limit the potential
damage of military inadequacy and economic dependence in
the short-term, there is no satisfactory long-term alter-
native to reversing each of these trends. Therefore, the
US will pursue the following longer-term goals.
First, to increase the commitment of resources by our
allies to the-common defense. The military efforts of our
NATO allies already represent the most significant contri-
bution to U.S. security of any American alliance relation-
ship, and it must be a major objective of U.S. policy to
assure that the benefits derived from this strategic cooper-
ation are in no way reduced. In light of the urgency of
meeting the Soviet challenge, West-West differences must not be
allowed to undercut Allied' cooperation * on East-West issues.
Indeed, if there are hard tunes ahead with Moscow they must
benefit, not harm,'the Alliance.
Second, to arrest growing West European economic depend-
ence on the Soviet bloc, to take collective action to prevent
the emergence of future vulnerabilities and. to reinforce
Western ties. Like the defense programs of NATO, the com-
mercial patterns built up over the last decade will change
only slowly. Moreover, Western European countries have a
substantial interest in East European markets and this can
be exploited to enhance East European autonomy and domestic
liberalization. The U.S. understands this and will not
seek a wholesale cutback of existing East-West economic
relations. Yet the currept level of Western vulnerability
already is too high in some key sectors and it is not enough
to slow or even stop the growth of such dependence. U.S.
policy must seek as a long-term goal real reductions in the
vulnerabilities of the Western economies to the East.
Particular sectors are of strategic importance and deserve
special attention.
Third, to increase energy security. Since 1973 Western
European governments have pursued policies of reinsurance
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/087-41A-RDP84B00049R000400750009-2
with the Arabs and other non-aligned countries to protect
the resources base of their resource-vulnerable economies.
Given the political instability of many oil-producing
states; this policy can never be a secure basis for assur-
ing energy supplies. Still less is increased energy
dependence on the Soviet Union an adequate response. Rather,
it must be made clear that the key to reducing this vulner-
ability lies in coordinated Western defense and energy
policies, including the increase of reserve stocks.
Policies
The following. lines of policy will give substance to
the goals outlined above.
a - Defense
.'r
In restoring a military balance, we need to convince
the Europeans, fearful of a new cold war and beset by
economic pressures, that security and stability require
stronger Alliance defense.
-- NATO's broad aim must be a posture which can credibly
prevent the Soviet occupation of Europe in the event of war.
This requires a single, balanced, linked contindum of 'con
ventional, theatre-nuclear and strategic forces that-will
ensure stable deterrence and maintain allied confidence in
the commitment of U.S. nuclear forces. We should indicate
what we intend to do toward that end and explain-what we
expect from them.
-- We must recognize that only the U.S. can provide
leadership and nuclear sinew for such an alliance defense.
Proposals for "devolution" to a new European defense com-
munity and for European nuclear cooperation are both
illusory. Europe lacks the political will and cohesion
to organize itself for an independent conventional defense,
or to undertake serious nuclear cooperation. At the same
time the U.S. must, by appropriate technology transfers,-
help maintain independent allied nuclear forces at cost
levels. That will permit increased efforts in other areas.
-- We must implement NATO's decision of December 1979
to deploy 572 GLCMs and Pershing II-XRs, as part of the LRTNF
modernization/arms control package, while recognizing that
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0JI.OO : CIA-RDP84B00049R000400750009-2
this program will not by itself restore an..!acceptable
balance. In time we may wish to enrich our modernization
plans in order to respond to Soviet theater nuclear de-
ployments, as well as Soviet battlefield nuclear programs.-
Premature initiatives in this area, however, could under-
mine the basis for the current deployment program.
-- The U.S. should pursue, for our own needs, a
separate SLCM program and consider ALCM employment in a
theater role. We would make clear to our NATO allies
that these are in no way meant as substitutes for GLCM
and PII deployments in Europe.
-- We must bolster conventional forces by sustaining
NATO.'s Long-Term Defense Program now in its second phase,
and by promoting more ambitious alliance force goals.- 'In
such an effort, the LTDP's 3% real budgetary growth must
be treated as a minimum commitment; a restored balance
will be made possible in this decade only by a faster pace
that comes closer to matching the U.S. example. The
alliance must assign high priority to improving the armor
balance of the Central Front, C3, airlift/sealift; to
exploiting advanced conventional munitions for lucrative
strike roles; to acquiring the ability to conduct chemical
warfare in response to Soviet initiation; and to readiness,
reenforcement, reserve mobilization,air defense ana?logistics.
For our party following up the dedication of new U.S. force
commitments under Allied Command Europe, the U.S. will
strengthen further its defense capabilities in Europe. This
will be useful for NATO reenforcement and other contingency
purposes.
-- Because NATO must sustain force levels that allow
continued operation in wartime in the Eastern Mediterranean,
the strengthening of the alliance's southern flank is an
urgent matter.
-- More generally, we will have to seek a redefinition
of the "division of labor" concept, so that our Allies not
only pick up any slack in defense in Europe resulting
from U.S. efforts in Southwest Asia, but also contribute
as appropriate to defense in Southwest Asia by providing
economic and military assistance, enroute access for forces
deploying to SWA, and -- as feasible -- forces for South-
west Asian defense.- The U.S. will discuss coordinated
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
b-- Arms Control
There is little prospect for a reements that serve
our interests in MBFR or on TNF. Barring the shockshock a ect
of Soviet intervention in Poland, however a visible arms
control process is a recondition for allied operas on
3n the NATO LTDP and on LRTNF mo ern zat on. s ou lw- use
tw- We
should use that process to seek agreements based o
n parity,
rms reduction and balanced verifiable arms control, while
lacing the burden on the Soviet Union for resisting effec-
tive arms control."
vLnarwinv, ..`.
and ne otiation, while bringing e a llies to understand
that their need for an arms control process must not inter-
fere with our common need for NATO rearmament and for effec-
tive actions on the East-W
t
d
V-6
? planninq'and operations in this area with appropriate
allies once our internal thinking is sufficiently
developed.
es
agen
a.
-- For as long as we continue to participate in the
MBFR process, we must (.,sure that our bargaining: positions
no longer reflect the more pessimistic and defensive
expectation for the European balance of the last Administra-
tion. we must not seek compromise solutions with Moscow at
Allied expense. Genuine parity, collectivity and verifi-
ability mu!t be the essential criteria for the US and
Westerrf positions.
If the Soviets accept the Western criteria for CDE,
we should be prepared to engage in such a process, perhaps
starting next spring. CDE should deal exclusively with
CBMs in an all-European::context.
Continue a deliberate track on LRTNF arms control,
while keeping allied feet to the fire on modernization and
deployment The U.S. must make clear that a success
outcome w it not necessarily be achievable before military
programs to restore a European balance begin to take effect.
c - Economic
In developing a common policy with our allies toward
East-West economic issues, the U.S. will formulate approaches
that limit Western vulnerablity.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
planning and operations in this area with appropriate
allies once our internal thinking is sufficiently
developed.
b - Arms Control
There is little prospect for agreements that serve
our interests in MBFR or on TNF. Barring the shock effect
of Soviet intervention in Poland, however, a visible arms
control process is a precondition for allied cooperation
in the NATO LTDP and on LRTNF modernization. We should use
that process to demonstrate Soviet opposition to parity,
arms reduction and effective verifiable arms control.
Should the Soviets invade Poland, we should suspend
indefinitely MBFR, CSCE and LRTNF, and oppose any CDE.
Otherwise, we should accept the alliance posture of defense
and negotiation, while bringing the allies to understand
that their need for an arms control process must not inter-
fere with our common need for NATO rearmament and for effec-
tive actions on the East-West agenda.
-- For as long as we continue to participate in the
MBFR process, we must ensure that our bargaining: positions
no longer reflect the more pessimistic and defensive
expectation for the European balance of the last Administra-
tion. We must_- not seek compromise solutions with Moscow at
Allied expense. Genuine parity, collectivity and verifi-
ability must be the essential criteria for the US and,
Western positions.
-- If the Soviets accept the Western criteria for CDE,
we should be prepared to engage in such a process, perhaps
starting next spring. CDE should deal exclusively with
CBMs in an all-European..context.
-- Continue a deliberate track on LRTNF arms control,
while keeping allied feet to the fire on modernization and
deployment. The U.S. moist make clear that a successful
outcome will not necessarily be achievable before military
programs to restore?a European balance begin to take effect.
c - Economic
in-developing a common policy with our allies toward
East-West economic issues, the U.S. will formulate
approaches that both can Western vulnerability at current
levels and create a basis for reducing it in future.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 CIA-RDP84B00049R000400750009-2
SECRET
-- It Is not in the interest of the West to facilitate
Soviet acggss to technology which would give then an
independe{-t capability to improve oil and gas output and
infrastructure, although we should approve exports of oil and
gas end-use equipment after review on a case by case basis.
The proposed European-Soviet gas pipeline is not in our
interest and must be handled to prevent Western vulnerability.
We must put major pressure on the Europeans to minimize its
strategic implications. Successful U.S. insistence that the
construction of the pipeline be financed at non-concessionary
rates could by itself produce a cutback in construction plans.
The still high dependence that would be created can be met by
agreement to the establishment of adequate alternative supplies
and storage facilities.. In pursuing these goals, we should
avoid confrontational tactics, which could create a major
political row akin to the Carter-Schmidt battle over the
Brazilian nuclear deal.
-- The U.S. must seek to limit the subsidizing effects of
Western competition for Eastern contracts, primarily by
pursuing common export credit policies.
-- To demonstrate that economic relations cannot be
unconditional, we must seek to preserve sanctions following the-
lifting of the partial grain embargo. To demonstrate that
trade cannot be the means for the transfer of high technology,
we must expand the covers a and effectiveness of COCOM rules,-
and secure?f rm member government commitments to police
violations.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
a .
%*
 SECRET
Approved For Release 2007102/68CIA-RDP84B000f9R000400750009-2
-- The :issues before us are difficult and symptomatic of
the already great exposure to the East. The proposed European-
Soviet gas pipeline is not in our interest and should be handled
to prevent the emergence;'of further European vulnerability. If
we decide we cannot block it altogether, we should try to
delay it as long as possible, and seek to reduce the scale of
the project and thereby of the dependence-to be created.
Successful U.S. insistence that the construction of the pipeline
be financed at non-concessionary rates would by itself produce
a cutback in construction plans. The still high dependence
that would be created can be met by agreement to the establish-
ment of adequate alternative supplies and storage facilities.
In pursuing these goals, we should avoid confrontational
tactics, which could create a major political row akin to
the Carter-Schmidt battle over the Brazilian nuclear deal.
-- The U.S. must seek to limit the demaging effects
of Western competition for Eastern contracts. We must
pursue OECD agreement on common export credit policies,
based on a commitment that the provision of credit for
all non-food stuff exports be at prevailing international
rates, and on prevailing market terms and conditions. If
the economic crisis of the Soviet Union does in fact
increase dependence on the West in the years ahead, it is
essential that Eagt-West economic relations be negotiated
on a basis that reflects the true extent of Soviet need
and does not merely free Soviet resources for use against
the West.
-- Where we cannot reduce the scale of East-West
economic contacts, we must assert and increase governmental
control where needed. To demonstrate that economic rela-
tions cannot be unconditional, we must seek to preserve
sanctions following the partial lifting of the grain embargo.
To demonstrate that trade cannot be the means for the trans-
fer of high technology, we must expand the coverage and
effectiveness of COCOM rules, and secure firm member govern-
ment commitments to.policq'violations.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02108 ::8CIA-RDP84B00049R000400750009-2
d - Political Consultations
-- We need to do better with both our larger allies
who want more recognition and our smaller allies whose
efforts will flag if they are taken for granted. Besides
the principal NATO consultative forum, we should:
(1) pursue de facto quadripartite consultations with
Bonn, London and Paris.(depending on developments in
Mitterand's France) but deflect any proposals for a de
'ure directorate; (2) consult regularly through the
EC-10 presidency; and (3)', intensify bilateral consul-
tations with smaller allies to ensure their commitment
to the Alliance.
-- Our most important task is to improve political
consultations involving third areas beyond the European
theater. To this end we should intensify political ex-
chancres amona the "Summit 7" and their representatives
between summits, and invite',directly concerned "swing"
participants. In addition we should consider the use
of ad hoc consultative committees on special areas, such
as the Persian Gulf, along the lines of the report of the
four Atlantic foreign policy associations. Finally, we
might aim at a special NATO summit next spring in
California.-- the 35th anniversary of the Marshail Plan
speech, to review progress in efforts to revitalize the
Alliance.
e - Global Strategy =
Western Europe should play a crucial role in our broader
global strategy, which should center on a coalition of
differentiated but interlocking diplomatic arrangements
with Europe, Japan and China, and a number of multiple-
bilateral partnerships with key "Third World" countries.
In tandem with a strong US politico-military posture,
this essential core of associates would provide the
basis for countering the Soviet challenge in the Third
World. It should includecoop.eration in the Pecs;an_Gulf
and other crisis areas, in-elligence sharing, at least
rough coordination on aid and security assistance programs,
and planning to counter Soviet proxies and to undercut
vulnerable Soviet allies and surrogates, Our approach
should be a pragmatic one, with a."multiple-bilateral"
focus.
opiiion. This is necessary both to counter Soviet efforts
f - Political Ideology
-- We must strengthen our efforts to sell US political
,., , -4 e~ 4-.. - _ ---Marv
ao,ET
Approved For Release 2007/
A-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
V-9.
to use a "peace-offensive" tactic to divide the West and
to generate sustained support for Alliance programs.
Particular efforts are needed in Germany, the Low Coun-
tries, Scandinavia, Italy and the UK. Special attention
should be accorded to press backgrounders and to cultivation
of'key organizations, including church,.labor, business and
youth groups. We should'work hard in explaining US/Allied
policies concerning both East-West relations in Europe,
such as LRTNF, and important areas of instability -- most
notably the Persian Gulf and Middle East. We also must
engage support for--our policies strengthening Western
positions and countering Soviet subversion in the developing
world.
-- More broadly, we should institute programs to foster
support for and pride in the Western values of freedom
and the Alliance of Democracies in a largely authoritarian
world. This effort should include exchange programs that
reach out to key cultural, educational, labor and
business groups and build longer-term support. Partic,i r
focus should be on the "successor generation," which in-
creasingly is occupying influential positions in public
and private life. US programs to these ends should draw
on both public officials and representatives front the
private sector.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007102108"IA-RDP84B00049R000400750009-2
VI. DEVELOPING..THE POTENTIAL OF OUR
EAST ASIAN ALLIES AND FRIENDS
The-US will face major challenges and opportunities in
the Asia of the 1980s. Although these will have their own
regional and sub-regional character, they will most parti-
cularly be influenced by our global competition with the
Soviet Union. Moscow's posture and strategy in Asia must
be seen in the context of Soviet global operations and
objectives.
Soviet Objectives
Within East Asia, Moscow has multiple objectives:
1) to gain secure air and sea routes between the Soviet
Far East and the Indian Ocean region, linking together
Soviet..-owned or operated facilities and friendly ports and
air fields, from Vladivostok to Southwest Asia and Africa,
so as to enable the USSR to project its power throughout the
Asia region and deny such a capability to the US; 2) to
maintain superior forces vis-a-vis China; limit Beijing's
influence; inhibit China's modernization, particularly
military; and settle Sino-Soviet differences on Soviet
terms, without significant compromises and in a way which
neutralizes China in the East-West context; 3) to- distance
Japan from both the US and China without relinquishing
control of Janan's Northern Territories; encourage ma-ior
Japanese investment--in Siberia, and persuade Tokyo that
good Soviet-Japanese relations would benefit-Japan con--
omically and obviate the need for Javanese re-armament or
cooperation with the US in anti-Soviet efforts; 4) to.
deepen Soviet penetration of Indochina, expand the Soviet
military presence there, and use that foothold to project
power throughout the region and beyond; 5) to neutralize
non-Communist Southeast Asia as a political force and erode
US influence by seeking to.:demonstrate.Soviet power and US
weakness; 6) to support the North Koreans in an effort
to displace Chinese influence in Pyongyang; and 7) to
expand the Soviet presence and involvement in the South-
west Pacific, at the expense of the US and its allies.
Factors In Our Favor
In confronting the Soviet challenge in Asia-the US
must channel a heightened Asian awareness of the Soviet
threat into specific and mutually supportive policies-and
actions which benefit US interests as well as the interests
of our Asian friends and allies. Moscow's stepped-up
military development, and its strong backing for proxy
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/OW482: CIA-RDP84B00049R000400750009-2
Vietnamese aggression has aroused anti-Soviet fears.in states
outside o Indochina. Indeed a invasion of Afghanistan is
viewed with far .greater alarm in Asia.than in Europe, for it
manifests clear cut imperialist expansionism and an aggressive
Soviet willingness to strike at East Asia's vital source of
oil and the lifeline along which that oil travels. The
adverse national reactions to this growing Soviet threat-is
visible t1aroughout- East -Asia; for example in national efforts
strengthen military prepare
e.g., Malaysia's decision
to double the size or its army)
Wid- the willingness 0
much greater cohesiveness
apan to direct its military
e rot s, overseas Development Assistance
and politico-economic
sanctions in support or the US -effort to punish and turn bac
Soviet imperialism.
US Objectives
In the specific context of East-West competition, US objec-
tives in East Asia are to continue the orderly expa_ns ion of
political, economic and- military ties, to protect our assets
and counter the Soviet threat. We must work to minimize w ere
we cannot deny the Soviets use of non-USSR territorial bases of
operation for political destabilization or military support.
To accomplish this denial, the United States must.:
-- Ensure that it has a strong and visible military,
political and economic presence in the region which can be
sustained y rougrhout the 1980s and on to the end of-the
century.
-- Reconfirm the American commitment to the political
independence and economic grow of East Asia as vitally
important to our own security. Acting independently and
working through key allies and regional friends -- ASEAN,
and the PRC -- rebuild confidence in our diplomatic
reliability.
-- Promote and assist the development of individual
national and -- in appropriate instances -- joint military
forces trough improved consultations, exchanges of
personnel, joint exercises, and aid programs.
Political Relationships
To achieve these objectives, the US must carefully
manage various relationships with East Asian nations and
build connections which will allow these relationships to
reinforce one another.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/024ctA-RDP84B00049R000400750009-2
1. The Major Allies: Japan, Korea, Australia,
New Z
ea Emu, the Philippines
-- Grant full recognition to the pre-eminence of Japan
as a nation in the forefront of the US lobal' alliance
structure which must at al .times receive treatment fttli
equivalent to that accorded our key NATO allies. Set as a
goal the creation o a US-Japan relationship =Asia. which
is akin to that of the US and UK in the European context.
-- Provide full and close consultation with our ANZUS
allies, on a basis similar to that accorded NATO, recog-
nizing not only eir contribution of installations vital
to US defense and foreign policy interests but also their
ability and willingness to join in efforts outside the region
(i.e., the Indian Ocean) to counter the Soviet threat.
Reass'iire them that US policies will take their national
interests into account. ?
-- Promote increasing cons ultatjp s and cool inat g,,
among our major allies on issues of common strategic concern.
-- Incorporate in our diplomacy a respect for regio n
sensitivities such as Japanese apprehensions about~.Soviet
pressure; mutual Japanese/Korean wariness; fears of a
Japanese military resurgence; and Korea's latecomer role
among out allies:
-- Encourage greater Japanese alliance role in the
form of supportive diplomatic activity and economic
assistance to strategically important countries;
-- Promote acquisition of a Japanese military capabil-
ity to provide for Japan's: defense. within , s constit?t;o?Pi
restraints, in such critical areas as air defense, anti-
submarine warfare and protection of vital sea lifelines.
Support improvements in US-Japanese ground forces cooperation
and coordination starting perhaps with expanded combined
training activities- Stimulate increased Japanese financial
support of the global US security role through greater regional
responsibilities for Japan and greater contributions to
maintenance of US forces and US support activities located in
Japan.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
-- Concentrate on developing specific US-Japan diplomatic
cooperation to frustrate Soviet efforts to build stratecic
links between their positions in East Asia and in Southwest
Asia, the Indian Ocean and the Persian Gulf; resist extension
of the Soviet proxy system; and, ultimately, turn the USSR out.
of its foothold on-the Indochinese peninsula.
-- Tan the tremendous Pcnnnmi c powe- of Japan. Further
encourage its growing recognition that Japanese overseas
development assistance (ODA) can play a major role in pre-
serving the economic prosperity and political institutions
of poorer states in East and Southwest Asia.
Korea
-- Focus attention on the continuing danger of military
conflict on the Korean peninsula. Continue to make clear
that tie US will maintain its ground presence there and take
measures, through increased FMS credits, to support the
modernization of the ROK's armed forces so as to rectify the
current unfavorable imbalance in the military capabilities
of the North and South. Ensure-close consultations with
the ROK on major allied decisions to counter Soviet aggression,
such as adoption of economic sanctions or redeployment of US
military resources from the Western Pacific to the Indian --
Ocean.
Australia/New Zealand
Enhance defense cooperation with Australia and:-
New-Zealand in a way that provides significant support for naval
and ASW coverage in their geographic areas, and raises their
contributions to East Asian military training and intellicence
support, particularly under the Five Power Defense Arrange-
ment. Reaffirm the historic importance of US-Australia ties.
Seek to stimulate more widespread popular support in Australia/
New Zealand, through ICA programs, for following the US lead
in strengthening collective Asian defenses against the Soviet
Union and for upgrading the Western defense posture in the
Indian Ocean. In view of New Zealand's small size, sluggish
economy and dependence on ,imports for modern armaments, seek
ways to make it easier for New Zealand to acquire expensive
weapons systems (e.g.; a new frigate to retain blue water
naval capability.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007 02/ : CIA-RDP84B00049R000400750009-2
ECRIET
2. China
--*Solidify China's strategic' alignment with the West
and prevent a turn toward neutrality in the East.- es context.
-- Maintain present ? f its - to h TS nd-'t" ;41 1' Ac_
of China s ants-Soviet posture : i . e. , the twig d.-?47 of
maior Soviet forces which could otherwise be deployed else-
where; Chinese pressure against Vietnam intended to prevent
consolidation of Hanoi's control over Indochina; PRC support
for Thailand and Pakistan and opposition to Soviet occupa-
tion of Afghanistan; Beijing's displacement of Moscow as an
arms supplier with a number of Third World countries; and
its strong opposition to Soviet positions in the Third World
and in;multilateral forums.
-- Seek to consolidate the security mpor nt of-thZ
US China relationship by considering granting China expanded
access to US defense ecuipment, arms and technology, and by
deepening our strategic dialogue,. all in ways that do-not
alarm our Asian allies.
Support China's efforts to become a secure and
prosperous member of the Asian community and to promote
recional understandina of the constructive role China can
clay in that community.
-- Recognize that the degree of closeness in US-PRC
cooperation in the East-West context will continue to be
influenced by China's weakness and its strong sense of
nationalism. Both sides must avoid generating expectations
which cannot be fulfilled. The US should be sensitive to
acts and statements which could suggest PRC subordination
to the US or an implication that China was being'manipulated
to serve our interests.
-- Prevent identification with Chinese interests in
Asia, never allowing strategic cooperation to become tacit
recognition of a Chinese sphere of influence encompassing
other Asian friends.
Taiwan
-- Conduct our unofficial relations with Taiwan in a
positive manner making clear the abiding US concern for the
well being of Taiwan's people and the health of Taiwan's
economy.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 20%t.ffi@t. CIA-RDP84B00049R000400750009-2
VI- 6
-- Continue the US policy of carefully selected
defensive-arms transfers to Taiwan in 6r der to meet Taiwan's
legitimate defense nee s without undermining our long-
standing interest in a peacefu settlement o the Taiwan
problem.
-- Seek to prevent Taiwan overtures for security
support from USSR; toward formal independence; or toward
developing operational nuclear, capability: any of which
could have serious negative consequences for Taiwan-PRC
relations as well as for the US-PRC cooperation.
-- Recognize the geographic position of Taiwan along
the vital sealanes from Korea Japan to Southeast Asia and
the Malacca Straits. In a crisis or emergency, the Taiwan
navy anti air force might play a modest supportive role _in_
countering the expanding Soviet, maritime influence in. the .
adjacent China ?Sea.
3. ASEAN
Strengthen US and allied economic and political
sport for the ASEAN nations to promote a Western orienta-
tion. .
-- Provide improved security assistance to the ASEAN
countries, especially Thailand, in order to-discourage
Soviet and Vietnamese attempts to intimidate or neutralize
them.
-- Recognize that ASEAN is not a military alliance but
rather an ostensibly economic body which has provided an
increasingly useful vehicle for political consultation and
coordination both among the ASEAN states and between ASEAN
and outsiders such as the US, Australia/New Zealand, and
Japan. In the absence of any internal ASEAN movement to
militarize the association, refrain from pushing it in that.
direction and instead pursue security cooperation with
member states through bilateral channels.
-- Remain sensitive to intra-ASEAN: disputes and
differences as well as to the member states' varying inter-
pretations of the Soviet and Vietnamese threats and the
appropriate Chinese role in the region.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 200 CIA-RDP84B00049R000400750009-2
V1_ I
-- Continue to coordinate Indochinese soli closely
with ASEAN, w i e working to buttress the already heightened
ASEAN recognition of the larger danger of Soviet regional
penetration.
-- Increase aid to Thailand as ASEAN.'s.front-line
state resisting Soviet-backed Vietnamese.aagression; pre-
serve close relations with hP Phil rin Pg to protect
US bases there which serve a vital regional and Southwest
Asia power projection role; and improve relations with
Indonesia, which faltered under the previous Administration,
so as to continue to block any improvement in relations
between Indonesia and Vietnam or the USSR and to forestall
any problems in maintaining US straits access through the
archipelago.
-- Promote increased consultations between ASEAN and
our major Asian allies, and contacts between ASEAN and our
European allies.
4. Indochina
-- Work in concert with all allied and friendly states
to increase economic and diplomatic pressure on the: Viet-:
namese to withdraw from Kampuchea.
-- At the same.time-, use every chance to demonstrate
to Hanoi the penalties attached to being a Soviet p=xy and
the benefits available through accommodating the West.
-- Avoid treating Laos, or even Kampuchea, as simply
extensions of Vietnam and thus retain the ability to drive
a wedge between these smaller states.and their Vietnamese
patrons and the chance to play the Soviets/Vietnamese/
Laotians/Kampucheans against one another to our advantage.
-- While working tactically with the Chinese to create
pressures on Vietnamese, avoid suggesting that U.S. objec-
tives and interests are identical to Beijing's and that Viet-
nam could not accommodate us without emboldening China.
5. India
-- Make clear to New Delhi that the loss of Pakistan would
bring the Soviets to India's border. Undoubtedly the
pivotal country in South Asia, India's great political,
military and economic potential is critical to arresting
Soviet expansion beyond Afghanistan.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
VI-8
-- Encourage reconciliation of India and China as-two
states with a major stake in the containment of Soviet
power in South Asia, without forcing our views.
-- Step-up ICA efforts to expose the extent to which
India's interests have been mortgaged to the USSR.
6. Micronesia/Pacific Island Nations
-- Reserve the right to "-strategic denial" and pre-
serve our preponderant influence in what- are now the Trust
Territories after termination of the Trusteeship.
-- Work with our Asian allies to ensure the future
Western, orientation of the small nation-states of the
Pacific and deny the Soviets any opportunity-for penetration
of the region.. ?
Longer-Term Challenge and Opportunity
Our East Asian allies and friends -- most notably
Japan and China -- possess an enormous potential which we
will want to bring to bear in the ?cortcetiti on with the
USSR in the Eiahties. In the longer-term, this will
require us to construct an imaginative US policy that draws
maximum support fta"r.US objectives from the Sino-US and Sino-
Japanese-US relationships. It also will require us_to tap
the economic and political-military potential of great Asian
powers, including India, in a framework that promotes sgnif-
icant US influence on their developing global policies.
Managing this set of challenges will be a major priority
for US foreign policy in the 80s and is an essential pre-
requisite of a sound US global strategy.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 SECRET
Approved For Release 2007/02/08 -RDP84B00049R000400750009-2
VII. Areas of Instability
Introduction
Soviet expansionism is nowhere more evident than in
its activities in the Third World. Angola, Ethiopia,
Kampuchea, Afghanistan and El Salvador all have been objects
of Soviet and Soviet proxy military activity in recent years.
The Soviet Union poses a serious threat to the Persian Gulf's
oil producing regions, whose output is vital to the West.
The United States must undertake a:counteroffensive strategy
and seize the initiative back from the USSR, by driving up
the cost to Moscow of its foreign involvements and rebuild-
ing our own political/military position.
US Objectives
Long-term US objectives in the developing world are:
I
-- to assure an open and diverse international order
free of Soviet domination;
-- to protect and enlarge the sphere of free institu-
tions and practices, through the promotion of peaceful
political change;
-- to encourag.e economic development through a stable
and open international economic order;
-- to ensure continued access for the US and its Western
allies to the resources, particularly oil, that'are
the preconditions for the political independence and
economic stability of the industrial democracies.
In the long run, we have reason to be confident that
the economic and technological advantages which the develop-
ing countries can obtain from the West outweigh any political
and economic advantages which LDC elites can obtain through
cooperation with the USSR. Marxism-Leninism is an ossified
cult which finds declining acceptance in the Third World,
whereas there is a growing (if reluctant) recognition that
participation in the Western economic system is the most
effective motor of development. The problem for American
policy is to translate these theoretical advantages into
concrete gains, taking account of the powerful forces of
nationalism in pursuing our own policies and in reinforcing
local opposition to Soviet influence.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0@+&A-RDP84B00049R000400750009-2
Corrtrary to the beliefs of the past Administration,
the US will not be able to effect such a translation with-
out both creating and using power. To be effective US
power must be harnessed to a skillful diplomacy that takes
account of our-comparative advantages, Soviet liabilities
and local factors. Developing countries need economic help,
but their leaderships are more immediately concerned with
the problem of political survival. The Soviet Union, with
its military.capabilities- and other assets, network of bases
and proxies and remains fully competitive in the game of
providing security or threating insecurity.
Soviet Objectives and Behavior,
1: us strategy for meeting the.Soviet challenge in areas
of instability must be based,-on an understanding of Soviet
objectives and operational behavior. Based on the experience
of the last quarter century, these can be si.?-lmarized as
follows:
-- The Soviets do not have a "master plan" for expansion
in the Third World; on the other hand, they do have the;
long-term objective of maximizing their influence wherever
possible.
-- The Soviets are "aggressively opportunistic": they
have expanded their influence by seizing upon conflicts
and rivalries of predominantly local origin and using them
to further their own interests.
-- Moscow has sought to maximize the quantity of its
influence in the developing world by aligning itself with
virtually any state, national liberation or ethnic group
hostile to the United States, often with extraordinary
tactical flexibility.
-- Besides hoping to maximize the quantity of influence,
the Soviets have in receA years sought to increase its
quality as well, urging Marxist-Leninist ideology and Soviet-
style internal political structures on their clients. Moscow
no less than the US has had to deal' with the diffusion of
power to seemingly intractable nationalist states in the
Third World which are not easily subject to superpower
control. ? ?
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
-- As a general rule, the Soviets move cautiously,
hedging their risks by using where possible arms transfers
and proxies rather than their own forces, and expanding
their operations gradually so as to allow room for
disengagement.
-- Soviet willingness to-run risks and commit resources
in the Third World depends heavily on local conditions and
the US response.
-- Where the US has been willing and able to confront
the Soviet Union and present it with added risks or when
local ,conditions have made success questionable, the Soviets
have'exercised caution. -?
-- On the other hand,?theSoyiets can move rapidly to
exploit situations where they expect to face little opposi-
tion from the US, where they believe the US lacks the
capability or-will to. resist their advances or where local
conditions favor the USSR over the US.
While the Soviets generally regard operations-In the,',
Third World as low-risk, low-stakes ventures, a sharp
distinction must-be-drawn between the Persian Gulf and the
rest of the developing world. Soviet control over-Persian
Gulf oil production, besides constituting an enormous
transfer of wealth, would confer on Moscow an automatic
veto on growth in the Western economies. Such control could
be used politically to split Europe and Japan from the United
States, and would constitute a powerful pressure point in an
East-West crisis anywhere around the globe. The shadow of
Soviet power has already begun to limit US diplomacy in the
region and affect European attitudes.-* With the fall of the
Shah, the Persian Gulf is at the same time an area where
the Soviets hold a substantial military edge over the United
States. These factors make the Gulf a stake of enormous
importance to the Soviets and out it on a par with Europe
and Northeast Asia. Indeed, it is an excellent field for
the application of" the indirect approach: the Soviets may
see the Gulf as the back door to Europe, one which can be
opened at much lower cost and risk to themselves. In view
of the stakes involved the US must be prepared for the possi-
bility that Moscow will abandon its usual gradualism and
caution and intervene directly to seize control of the
Persian Gulf oil.
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02&-RLX-RDP84B00049RO00400750009-2
VII-4
Our new emphases on the Persian Gulf should not
obscure our considerable interest in other parts of the
developing world, including our neighbors in the Wes ern
hemisphere and the currently volatile Central America;
the ASEAN states in southeast Asia; and the geopoliti-
cally important and mineral rich region of southern Africa.
All of these areas will require greater US attention,
resolve and resources if we are to protect our interests
and avoid discord with our allies.
A New American Strategy
This Administration must act now to engage support for
a more activist foreign policy and to move beyond the
passivity of the host-Vietnam period, However,-residual limits on
US military involvement still remain, both politically and
legally. This will require a sharp focus on US national
interests and those of our allies, and a global strategy
which makes sense in terms of resource allocations and
Alliance politics.
The United States therefore must endeavor to use its
existing resources more efficiently by adopting a.counter-
offensive strategy in the Third World. Such a strategy
has both a moral and a strategic component. The US should
put the sootlicit on the shortcomings of Soviet proxies and
the Soviet system itself, and keep them on- the defensive,
while making clear our hope not simply to maintain the.
status quo but to move forward to a world reflecting our
own beliefs in freedom and democratic values. On a
strategic level, we must wrest the initiative away from the
Soviets and face them at times and places of our own cho-os-
as to take advantage of our strengths and their
weaknesses. This counter-offensive strategy must be carefully
tailored in light of regional political and cultural realities.
The United States must be prepared to take the initia-
tive in exploiting the vuanerabilities of Soviet proxies.
Countries or groups allied with the Soviet Union must be
made aware that the benefits of these ties also will entail
costs, especially if they resort to force or subversion to
advance their interests or those of Moscow. Over the longer
term we will work to weaken their Soviet connection through
appropriate use of incentives and disincentives.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/ SE&lR A-RDP84B00049R000400750009-2
One area where such a new strategy may be applied
is Afghanistan, where the Soviets face a debilitating
guerilla war and have put themselves in an indefensible
moral position. We can maintain the pressure on Moscow
by continuing to call for a total Soviet withdrawal, by
encouraging political initiatives to keep world opinion
focused on Afghanistan, by providing appropriate encourage-
ment to the Afghan freedom fighters and by working to
strengthen Pakistan's security.
The United States must recognize and 'exploit the
multifaceted instruments of leverage it possesses vis-a-
vis. Soviet Allies. As the Soviet empire has grown, so
have its vulnerabilities. It used to be-the case that
instability anywhere in the Third World provided the
Soviet Union with an opportunity for increasing its
influence at the expense of the United States. While
this remains generally true, it.is not exclusively so.
The Soviet Union has become a status quo power with
respect to regional conflicts such as those :in AJEghanistan,
Angola, and the Horn of Africa. Moscow's Cuban 'proxy, as
well as regimes like those' ruling Syria," Iraq and Ethiopia,
are narrowly based and face severe ethnic, 'social, racial,
religious, alld economic problems. Their internal character,
moreover, is at least as morally suspect as those US allies
who are traditionally the targets of attack. The United
States is entering an unfamiliar period of competition in
which the characteristics of the early Cold War are
reversed: unrest and national liberation movements at
times may create opportunities for furthering American
interests, while the US will have to worry about being
deterred from upsetting the status quo by Soviet strategic
power. Where warranted by US interests, we will have to
be ready to raise the ante to counter Soviet power in these
situations.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0 IA-RDP84B00049ROO0400750009-2
V11-6
A counter-offensive strategy would attempt to preemvt
the Soviets not only confronting Soviet roxies,,but by
taking timely political action as well. I'nsofar as regional
conflict and tension promotes Soviet influence and expansion-
ism, a farsighted and cost-effective American policy would
seek to settle those conflicts in advance to foreclose the
chance of Soviet meddling, as in the case of the British
settlement of the Zimbabwe problem. In some cases this
will-involve the recognition that it is often the actions
and policies of US allies or would-be clients that are
responsible for instability and discontent. Support forallies must be construed in a broad sense that includes-the
creation of durable institutions reflecting our own values.
Political and economic reforms often are essential in this
respect.
In view of our resource constraints, US policy must.
better distinguish between primary and secondary interests
in the Third World.. The Persian Gulf is clearly a vital
interest and wi11'have priority over other areas. Central
America has substantial untapped oil resources and-will
become increasingly important in the next decade. Here
certain traditional elements of containment must be retained.
The US must create and be ready to use a credible -- and if
necessary, unilateral -- intervention capability sufficient
to preserve Western access to oil.in the face of Soviet an
local threats. We can, and must, solicit the support of our
European, Japanese, and regional allies for this task. But
our experience in Iran should also indicate the danger of
relying too heavily on others to do our work for us. The
Nixon Doctrine was an attractive, but ultimately
insufficient means of pr9tecting vital US interests. Simi-
larly, horizontal escalation may be useful as a stop-gap
measure reflecting our current vulnerability in the Gulf,
but cannot itself be counted on to- deal with the threat.
Since the Soviets have their own nora.zonta al tiun
options, the net results need to be thought out with some
care in each case before pursuing specific linkages. The
alternative of direct power projection is both costly and
difficult, but necessary. The Administration will have to
make a major effort to persuade the American public of the
absolute urgency of doing so.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
SECRET
VII-7
Apart from the Persian Gulf and the Caribbean basin,
however, the US will not always have the ability or
willingness to intervene directly and we o ten wM he
forced to rely on a variety of alternative instruments.
An imaginative 'policy will make use of any number of
options singly- or in combination.
First, America's major European and Japanese allies
have special strengths and areas of competence outside the
immediate NATO-Northeast Asia theaters, such as Japanese
economic strength in the Middle East or the French presence
in Africa- and the Indian Ocean. These roles can be encour-
aged and considerably expanded. When allies are not pre-
pared. o ..act, ? they must be persuaded not only to
tolerate but to support unilateral American actions
on behalf of the Alliance as a whole. With good planning
and coordination, we often can and should produce such
results.
Second, regional allies can be used not only to support
direct US power projection, but as out-of-country partners
as well. Such use of regional allies reduces the risk or
direct US-Soviet confrontation and takes advantage of the
regional powers' greater awareness of the local context.
Regional partners- can provide many types of direct and in-
direct support for mutual security objectives, and=can be
surprisingly effective when pitted against local forces..
The US can often achieve a large return on a relatively small
investment of forces, such as the deployment of transport
aircraft.
Third, US economic power is a major superiority over
the Soviet Union and should be brought to bear directly in
addressing the development needs of Third World countries.
The United States should be able to facilitate private
investment and to offer substantial foreign aid where neces-
sary. This, of course, will require the commitment of
substantial additional resources in a time of general
austerity. Foreign aid ought to be considered as a type
of security expenditure, to be increased in step with the
general level of defense spending in the pursuit of our
national security interests.
Fourth, intelligence operations in the Third World can
be substantially improved. It is necessary to revive a
capability for covert political action, so as to be able
to meet indirect Soviet threats on their own level. The
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/08 : CIA-RDP84B00Q49R000400750009-2
SECRET
VII-8
time to have prevented the Soviet occupation of Afghanistan
was April 1978, not December 1979. Furthermore, any sound
regional strategy for countering the Soviets must be based
on better and more timely intelligence that takes into
account the full complexity of the'local social and historical
setting; satellite photography can never-wholly replace_HUMINT.
Soviet caution and gradualism can be exploited only
insofar as the United States is willing to take on certain
risks of confrontation vis-a-vis the Soviets. The US should
not relieve the Soviets of these risks or encourage them to
believe they have a free hand. In crises affecting vital
interests, the US must draw the line quickly and firmly.
It is ultimately impossible to devise formulas or policy
guidelines that will have universal applicability throughout
the Third World. Indeed, that term itself obscures a wide
diversity of political, economic and military organizations
in and the growing diffusion of power to developing countries.
These states now exercise unprecedented power in the inter-
national system, complicating the rules of global politics
for the US and other major powers. Thus, the problem that
the US confronts cannot be characterized in terms of simple
juxtapositions like military/economic or Soviet/local; it is
all of these simultaneously. Accordingly, an adequate
counter-offensive strategy will have to approach each region
and issue with nuance and insight, and fashion a creative
response that answers each dimension of the problem with the
policy instruments appropriate to it.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 ? IT+nrr7i&ANs~?, AT it s
Approved For Rel 000498000400750009-2
Introduction
The. current Polish experiment represents an historic
watershed for both Soviet imperial policy in general and
for Eastern Europe in particular. The Poles are demanding
a much more democratic system, one which is much more
responsive to their needs and traditions. This experiment
is being monitored closely by all parts of the Soviet empire
and has enormous implications for change, particularly in
Eastern Europe but potentially also within the USSR.
It also will have a major impact in Western Europe --
it is well to remember that the 1939 German/Soviet invasion
of Poland triggered WWII and that Stalin's takeover of
Poland after Hitler's defeat contributed to the onset of the
Cold War.
For all these reasons the Soviets are faced with a pain-
ful choice between crushing Poland -- through political-
economic measures if possible and by*military means if
necessary -- and permitting the further unfolding of the
Polish drama. Either alternative entails profound and
incalculable choices for Moscow and generally for East-West
and wider international relations. Moreover, the-last six
months can afford Moscow little encouragement that-half-way
measures can cope with the magnitude of this historical:
We will want to be sure that US policy?remainszsupportive
of the Polish experiment, politically and economically, while
protecting American interests. The profound importance. and
continuing uncertainty of the Polish crisis will require us
to review.the recommendations that follow in light of future
events.
Internal Conditions in the...-Soviet Union-
The Communist system faces virtually no direct opposition
within the USSR, but neither does it enjoy much enthusiastic
support. The victory in tae Second World War created what
remains the most, and perhaps the only, secure source of the
regime's popularity. -.The dissident movement, despite the
rallying point created by the Helsinki Accords, is weaker than
it has been in some time -- and at no,time found genuine
resonance among the Soviet people. Moscow commands an over-
whelming coercive force and shows no sign of lacking the will
to use that force to isolate and eliminate direct challenges --
whether centered on political, civil, national or economic
grievances.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 20(1 081 CRA-RDP84B00049ROO0400750009-2
The two issues which could spawn social instability, and
impinge on Soviet external behavior, are unsatisfied consumer
? demands and unrest among the non-Russian. nationalities of
e
-- With defense claiming a larger share of GNP and with
investment skewed more heavily to 'heavy industry, little real
growth in consumption is likely to occur. The food situation
is unlikely to improve as the supply of meat and dairy products
fails to keep up with rising incomes. As a result, consumer
preceptions of stagnation in living standards will be rein-
forced. Consumer patience is likely to shrink along with food
supplies. The Soviet-population is more preoccupied with food
shortages than with any other domestic problem. Moscow is
relying on increases in efficiency and productivity throughout
the economy ultimately to raise consumer welfare. This strategy
will not work, however, without a better motivated work force.
Unless the leadership provides large increases in quality
foods and goods now for a populace less willing to defer
material satisfactions to the future, hoped-for improvements
in productivity will be hard to realize.
-- As the proportion of ethnic Russians in the total
Soviet population has declined to approximately 50 percent,
maintenance of ethnic integration in the Soviet multinational
empire has emerged as a problem facing the Soviet leadership.
The Soviets are yea.-by their ideology to believe that economic
and social modernization will overcome existing ethnic
tensions; but the real effect of modernization may well be to
exacerbate such conflicts. A particular problem is posed by
the higher growth of the population in the Muslim regions of
the USSR. Greater self-assertiveness of these peoples,
combined with possible spillover effects of resurgent Islamic
fundamentalism in Iran and elsewhere in the Middle East,
present the Soviet regime with a potential challenge. In
attempting to cope with the nationality issue -- which is not
so much an immediate threat to the system as a long-term
problem -- the Soviet leadership will probably fall back on
instilling Soviet patriotism of a chauvinistic sort.
Against this background, U.S. policy should be based on
the following guidelines: -
-- We should use the sensitivity. of Soviet leaders-over
their dismal domestic record to keep the USSR on the defensive.
Although the internal impact may remain marginal, the inter-
national benefits to the West are suite real.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/0 I CtA- DP84B00049R000400750009-2
-- Multilateral forums remain important. Despite the
weakness of the Helsinki monitoring groups, CSCE deserves
real prominence: it sustains West European interest in -Human
rights (which is otherwise quite cautious and tentative); it
provides-an opportunity to apply differing pressures on the -
Western European states and to encourage their internal
liberalization and external independence. Above all, CSCE
offers a recognized legal basis for holding the Soviet Union
to standards of human rights.
-- The U.S. should continue to give the cause of human
rights in the USSR prominence, both in bilateral contacts and
in multilateral forums. Our aim should be to advance that
cause, while focusing international attention on the sad
realities of official.Soviet behavior in this field.
-- The target grows of Western attention, especially for
propaganda purposes, should include especially the Baltic
state, all religious groups (especially Muslims), Russian as
well as non-Russian nationalities, and growing economic
discontent.
-- There should be a sharp increase in resources allocated
for broadcasting into the Soviet bloc, so as to permit both
needed technical modernization of existing RFE/RL facilities
and the expansion of RL in areas optimal for broadcast tp
Soviet Central Asia, Siberia and the Far East. Negotiation
of agreements with other nations concerning leasing of avail-
able air time or -the construction of new RL facilities should
be accorded high priority.
-- There should be a systematic review of our programming
policy in the broadcasting area in order to ensure that we
have an adequate understanding of audience characteristics
and of the objectives we want to achieve. ICA, together with
State and other concerned agencies, would prepare a set of
public affairs strategies to support the key policy decisions
that result from this study. ICA activities should be
reviewed in light of the Administration's interest to do more,
do it smarter, to hit harder at Soviet vulnerabilities. The
U.S. should not be drawn into strident attacks on the party,
its leaders, or any foreigt policy issue likely to evoke
Soviet pride or patriotism.
- make a worldwide effort to play on Soviet
authoritarian oppression, shortages and costly
military adventures.
- exploit weaknesses in Soviet civic morale by
directing attention at the corrupt and demoralized
state of Soviet society; virtual disappearance of
commitment to Marxism-Leninism; industrial mis-
management and absenteeism; and emphasis on
failure of the system to provide not a decent but
just a tolerable standard of living.
Approved For Release 2007/02/08 : CIA-RDP84B000049R000400750009-2
SECRET
 Approved For Release 2007/0/08 CIA-RDP84B00049R000400750009-2
In general, our competitive objective should be to
nourish internal Soviet pessimism in order to further degrade
productivity and impede innovation across the whole spectrum
of the society.
The Seventies opened up the USSR to an increased knowledge
of conditions in other countries and this has helped to
.decrease the common citizen's willingness to accept shortages
and institutionalized poverty. Contact with the West has to
a considerable degree lowered Soviet morale and raised expec-
tations. The US has a competitive edge if we have the will to
exploit it.
Eastern Europe
The Soviets regard Eastern Europe as essential to their
security and seek to maintain it as a military, political
and idefological buffer zone as well as a potential launching
pad against the West. Throughqut the post-war era, Moscow has
sought to achieve the maximum possible degree of hegemony
over Eastern Europe, using the Warsaw Pact, CEMA and the
doctrine of proletarian internationalism as its principal
policy instruments.
The Soviets also have an important stake in Eastern Europe's
political stability and economic viability. This has bean'
one factor reconciling them, however grudgingly, to some diver-
sity in the area.- The Solidarity movement in Poland is the most
immediate factor working to promote increased divers. ty in the
area. Economic and other factors are also working to reinforce
the trend toward diversity in Eastern Europe.
The Soviets are well aware of the ultimate contradiction
between East European nationalism and Russian control. Moscow
therefore has shown limited tolerance for either "destalin-
ization" or "desatellization". To counter increased East-West
contacts, the Soviets have tightened up internal discipline
at home and in Eastern Europe and are pressing for tighter
economic integration in Comecon and military integration in
the Warsaw Pact. Nonetheless, the actual exercise of control
has not proven to be easy.
Beyond the immediate crisis in Poland, several basic forces
are at work eroding Soviet control:
-- Economic Factor. Eastern Europeans are straining to
pay for higher-priced oil and other imports from the USSR as
well as Western advanced technology, raw materials, and
manufactures necessary to modernize and expand their industries.
Thus far, the very large growth in imports from the West has
been financed by massive hard currency borrowing. Eastern
European hard currency indebtedness has risen sharply, and
Approved For Release 2002F&W CIA-RDP84B00049R000400750009-2
 Approved For Release 2007/02/9CDP84BOOQ49R000400750009-2
VIII - 5
the debt service ratios of several countries are being
watched closely by creditors. The post-1973 Western infla-
tion/recession has contributed further to the surge in
Eastern European hard currency trade deficits. Unless
Eastern European exports can be eatl -- unlikely prospect -- . trade will stagnate - anndeit will be
difficult for these countries to satisfy expectations. This could rising consumer
in some Eastern European regimes which h veotriedatolgai pity
popular support through the satisfaction of consumer demand.
This is occurring at?a time when chronic domestic economic
problems make it increasingly difficult for the Soviets-to
prop up Eastern European economies.
7- East-West Factor. The CSCE Final Act provisions on
humaTj contacts have had a considerable psychological impact
in Eastern Europe, stirring Soviet and Eastern European
leadership concerns. East-West contacts and tourism also
have lifted the hopes of many Eastern Europeans for greater
intercourse with the West. Walesa's Solidarity movement has
borrowed heavily from Western political and trade union
tactics, developing a potentially magnetic model for other
Eastern Europeans.
-- Ideological Factor. While highly objectionable -to us,
the stands of tha.Italian, Spanish and even the French
Communists have had a marked liberalizing effect dh intellec-
tuals in Eastern Europe and the USSR. Romania's independent
stance on key foreign policy issues and insistence on each
Party's right to pursue its own independent course have also
caused problems for Moscow. These developments, together
with the bankruptcy of Marxism-Leninism, both morally and as
a guide to governing modern societies, are likely to be an
important source of continuing ferment in the Soviet Union
and the Eastern European states.
-- China Factor. The enhanced international role of
China and Beijings independent stand in the communist world
continue to concern Moscow. Deepening Chinese relations with
the U.S., Western Europe and Japan have generated Soviet con-
cern and opposition to political innovation in Eastern Europe.
-- The Nationalism Factor. This is most evident in the
Polish crisis, but each of the Warsaw Pact states of Eastern
Europe has. its own national traditions and aspirations and,
except perhaps for Bulgaria, each nationalism has an anti-
Soviet aspect.
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 ? SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
VIII - 6
These factors of economic decline and frustrated political
ssibTIt-Ne ave enhanced the sense of popular aissatisraction
wi Eastern Euro can regimes -- ar s Hungary appears to
be a partial exception -- an increased the. prospect of Polish-
style social and political tensipns. These occasionally may
take the form of civil. disturbances and violent eruptions.
The likely pattern will be one of increased pressure on the
Party leaderships by groups, both within ? and outside the Party,
to permit some devolution of power to the more "modern" ele-
ments in society. in short, events in Eastern Europe may have
a volatile and dynamic c aracter in the s posing major
choices for Moscow s management of Eastern Europe, an pre-
senting both dangers and opportunities for the west
The Soviet response has been a Pragmatic combination of
holding to a firm line where possible e.g., East Germany,
Czechoslovakia, and Bulgaria) and grudging a'ceptance of
gradual reform or autonomy where necessary, e.g.,Po an ,
? Romania and Hungary).
From a Soviet standpoint, this 'policy suffers from two basic
defects. First, gradual satisfaction of demands -- on economic
issues, liberalization or foreign policy. autonomy -- inevitably
feeds rather than satiatesEast European appetites; Secondly,
given its own major economic and prospective energy problems,
it is a calculated act of political will for the USSR to divert
scarce economic resources from internal Soviet requirements to
the needs of more developed East European economies:. The price
of holding the Eastern European states in their satellite status
will continue to rise. This is quite clear in the Polish case,
and in the example of trade and oil guarantees recently given to
the GDR.
US Policy
We face both short-term and long-term policy decisions
regarding Eastern Europe. In-both cases our objectives are
to promote internal liberalization, foreign policy au onomy
and greater political ands ersonal?contacts between as and
West. We want in. this way to enhance the degree o= persona
freedom, to further the gradual reemergence of a Westernbias
within these societies and to highlight the incompatibility
of their post-war national development with their current sat-
ellite status. We also want over time to encourage them to
pursue foreign policies which are more grounded in their own
national interests and in more broadly based international
cooperation. In a prolonged crisis, these factors might also
serve, to some degree, to complicate the East European contri-
bution to Soviet/Warsaw Pact military capabilities and actions
concerning Western Europe.
Approved For Release 20 CIA-RDP84B00049R000400750009-2
 VIII - 7
rovthfFolSIRdMeRipq2/@85s 8h4ROW1R8'C4i117ieriTeAtiOli in
Poland, we should confirm our differentiated approach to
East European states, seeking to improve relations and be
forthcoming with countries that are relatively liberal(Poland
and Hungary) or relatively independent?(Romanza), while
dealing with the other East Europeans (Bulgaria, Czechoslovakia
and East Germany) on the basis of strict reciprocity. High-
level visits,* MFN and the character of economic relations, and
the other?s9+mbolic manifestations of diplomacy, would be
-calibrated to reflect accurately the nature. of our differ-
entiated relations with particular countries and to avoid
conferring legitimation on the more rigid regimes.
Yugoslavia should continue to be accorded special treat-
ment and Yugoslav independence should remain a matter of oiii-
national interest. Albania has long ago quit the Warsaw Pact
and is a maverick East European state. There presently seems
to be little prospect of resuming relations with Albania although
contacts should be explored:
In-the-longer term through the 1980s, we need a Western
strategy to foster steady liberalization and growing autonomy
of Eastern Europe without the major political convulsions that
could attract Soviet intervention. This strategy would in-
volve a variety of political, ' ewn~mi c arr3 cult=al. exchanges designed
to intensify contact between the West and Eastern Europe It
would turn on endemic East European debt and economic roblems,
which are expecfed?to deepen in the 80's when Moscow will e
less able to help. By offering economic-cooperation, subject
to conditions set by the III' and private Western creditors,
we would be seeking over time to enhance our influence and
their internal freedom of action.
We should not have. extravagant expectations for early or
sweeping change, and a Soviet invasion of Poland would under-
mine this approach for the mid-term. But this approach seems
most relevant to the opportunities for steady and positive
East European political evolution in the 80's. To be effective
this strategy must be managed in coordination with our allies,
banks, labor unions and Qther relevant private groups,, to
ensure that we increase Ehst-European political-economic
dependence on the-West -- and thereby expand our influence and
leverage -- rather than creating a crippling economic western
dependence. The West European and Economic sections o is
study (IV and VII) elaborate on the need to integrate this
approach with our broader East-West economic policies.
The Soviets will resist this approach and doubtless are
prepared to use military force if they perceive a threat to
their vital interests. If our analysis of endemic East European
SECRET
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2
 ? Approved For ReleaS?8M2/48 : CIA-RDP84B00049R000400750009-2
VIII - 8
and Soviet energy weakness is correct, however, a path of
rigid Soviet opposition to East European change could have
highly counterproductive sequences for Moscow, forcing
te USSR to contemplate a series of rolling crises and
internal disruptions within Eastern Europe-and the possible
need for their repeated use of military force.
If the Soviets adopt a more rigid long-term posture and
reject change, we may want to consider a set of policies de-
signed to heighten the costs of this course for Moscow.. This
would be particularly applicable in the mid-term following a
Soviet invasion of Poland.. For the longer term, however,
this would be a more high-risk and speculative US approach,
which would render the East Europeans hostage to great power
confrontation tactics. In addition it would be very diffi-
cult to gain allied support for such a policy.- ,._
The Polish crisis illuminates and encompasses all-of the
factors described above, as well as the significant constraints
on US influence in Eastern Europe. 'Future US policy toward
the region will be heavily influenced by the outcome of the
Polish experiment. . An invasion involving East European troops
will freeze contacts for a protracted period and present us
with major strategic questions regarding our East European
Policy.
If the Poles muddle through, retaining and perhaps'build-
ing on the remarkable political and economic reforms already
achieved, the Soviets can anticipate further demands for
change in other parts of Eastern Europe. In this sense,
the present Polish crisis constitutes a major effort to test--
and stretch--the limits of Soviet tolerance of political di-
versity in Eastern Europe. The Soviet response will carry
potentially enormous implications for East-West relations,
whether Moscow intervenes..or permits the Polish experiment to
Approved For Release 2007/02/08 : CIA-RDP84B00049R000400750009-2