Paul  Kengor

In his pursuit of Cold War victory over Soviet communism, Ronald Reagan enlisted several fascinating covert efforts as part of a bold campaign of economic warfare, an assault so sensitive and so damaging that Reagan advisers denied it publicly, only acknowledging it decades later. “Certainly it was economic warfare,” said Reagan defense official Richard Perle, “although we had to deny it at the time.” Secretary of Defense Caspar Weinberger explained that the effort had to be “a silent campaign.”

Reagan himself was forced into denials or dodges when asked if he was pursuing an economic war against Moscow. His closest aide, National Security Adviser Bill Clark, later explained Reagan’s reluctance to me in a series of interviews: “Look, he didn’t want to admit publicly that we were effectively at war [with the Soviets] or that we wanted to defeat them.” Clark said that Reagan carefully avoided using words like “economic war.”

In one of the most stunning examples from this campaign, there is a potential weapon for the Bush team in its war against terrorism, especially as it relates to the role of Iran vis-?-vis the war in Iraq—one that the Bush team may have already considered:

In 1985-86, the Reagan team enlisted the secret support of King Fahd of Saudi Arabia to help destroy the Soviet economy by drastically reducing Soviet income from oil exports—a commodity that provided the Kremlin with the vast majority of its hard currency revenues. Reagan officials privately worked with the Saudis to manipulate the world’s oil market, encouraging them to increase production, thereby lowering the global price of oil. In the six months that followed, the price of oil dropped from $30 a barrel to $10 a barrel, sending catastrophic shock waves through the Soviet economy.

In 1994, details of this effort made their way into Peter Schweizer’s groundbreaking work, Victory. I have added new details in my book. What we both found is that former Soviet officials to this day shudder when they speak of the U.S.-Saudi action. Yevgenny Novikov, who served on the senior staff of the Soviet Central Committee, recalls the crippling effect: “The drop in oil prices was devastating, just devastating. It was a catastrophic event. Tens of billions were wiped away.” These revenues—which, in the 1970s, had saved the Soviet economy—were blocked from the Soviet treasury in the mid-1980s, when the Kremlin needed them most.