NEW YORK, June 9 (UPI) -- As president of the United States, Ronald Reagan initiated a sweeping and unprecedented program of covert action and economic warfare initiatives that acted to greatly weaken the Soviet economy, its support for "wars of liberation," and its hold on its power in Eastern Europe, former top Reagan administration officials said.
The elements of these programs were contained in top-secret national security directives signed by Reagan in 1982 and 1983, these sources told United Press International.
"Any kind of covert action program had to be expressed in a presidential finding," after consultations with attorneys, a former Reagan White House official explained.
He said that one of the most important NSC findings was NSDD 32, which authorized covert U.S. support of the Polish free union, Solidarity, and other anti-Soviet institutions in Poland to weaken and neutralize Soviet influence in that country.
Another finding, NSDD-66, authorized the United States to wage economic and resource war on a "strategic triad" of resources deemed critical to the survival of the Soviet economy, including technology, trade and credits, according to former senior Reagan administration officials.
This especially targeted Soviet imports of advanced Western technology and also Russia's oil industry, upon whose earnings Moscow depended for the bulk of its hard currency, these sources said.
Other measures included covert support for the mujahideen in Afghanistan who were resisting Soviet forces that had occupied the country in 1979. Covert measures included strikes by jihadis on Soviet soil, these former senior sources said.
Another aspect of the Reagan program was the dramatic U.S. defense buildup, which unnerved the Soviets by its pace and degree, according to Yvgenny Novikov, who, in 1982, was the second political officer of the Soviet Embassy in Washington and who defected to the United States in 1990.
Some of these secret programs were first revealed in a little-known 1994 book, "Victory," by Peter Schweizer, a media fellow at the Hoover Institution at Stanford University.
Schweizer confirmed to United Press International that the more secret, hard-line aspects of Reagan's anti-Soviet policies were never discussed with NSC staff members such as John Poindexter, Robert McFarlane, or Richard Pipes, but only with CIA Director William Casey and Bill Clark a longtime Reagan friend.
"It was a small, tight-lipped group," a former White House staffer explained.
In the case of Poland, a current administration official who was a White House official in 1982 said that Casey held key meetings with Israeli intelligence officials, including Maj. Gen. Yitzhak Hoffi, who, in return for increased U.S. financial assistance, allowed U.S. intelligence operatives to use a Mossad "ratline" that ran from Albania to Poland, then east straight into the heart of the Soviet Union.
The "ratline" was used to smuggle information or dissident Jews out of the Soviet Union, several former officials said. The secret 1956 speech by then-Soviet leader Nikita Khrushchev denouncing Stalin was said to have been smuggled out to the West via the "ratline," sources said.
According to a State Department official who, in the early 1980s, was assigned to the Vatican, Casey didn't hesitate to use meetings with Vatican officials to obtain detailed intelligence about anti-Soviet groups in Poland.
But according to some strategically placed sources, Reagan's use of covert action was not confined to the Soviets and its eastern satellites, but was also used against Western allies who were seen to be "soft" on Moscow.
One example was the tension between the hard-line White House group and then-West German Chancellor Helmut Schmidt. According to these sources and reported here for the first time, in 1981 the White House mounted an operation to remove Schmidt, head of the Social Democratic Party, and replace him with Helmut Kohl, leader of the Christian Democratic Union, who was seen to be more anti-Soviet and conservative.
The dispute centered on Schmidt's support for a proposed Soviet-German natural gas deal, called by the Russians Urengoi 6, that would run from Siberia to the Soviet-Czech border. According to former White House officials close to the deal, senior Reagan officials such as Defense Secretary Caspar Weinberger thought such an agreement would result "in a Russian stranglehold over German energy as well as keeping the Soviets swimming in cash" to the tune of $30 billion a year.
In 1981, Schmidt, although pro-American, was seen as drifting towards a neutralist stance, and one former White House official close to the deal, said that hard-line Reagan Cabinet members "sought to destabilize Schmidt" in order to "regain control over German popular forces." The issue split the Cabinet, he said, but the operation to remove Schmidt was successful, and Kohl became West German chancellor.
With the removal of Schmidt, the gas deal was killed, he said.
Another deft tactical coup in covert activity, also reported here for the first time, occurred when Weinberger visited the Swedish Defense Ministry on Oct. 15-19, 1981, the first visit ever by a U.S. Defense secretary to that country.
Top Swedish defense officials showed Weinberger ministry charts and action reports that gave details of earlier penetration by Soviet and Warsaw Pact submarines into restricted Swedish military areas in violation of international law, according to U.S. intelligence sources close to the case at the time.
Then, on Oct. 27, a Soviet Whiskey-class sub suddenly and very publicly ran around on the rocks inside a Swedish military base, using a route that had been used previously by another Soviet intruder, these sources said.
Swedish military planners had been increasingly nervous about a Soviet military build-up in the region on the nearby Kola Peninsula. And politically the Swedes were deeply embroiled in the pros and cons of deploying new Pershing II and ground-based cruise missiles in Western Europe, which had been approved by NATO in a 1979 decision, these sources said. Some Swedes thought this a needless provocation and a threat to East-West détente.
According to former U.S. Air Force intelligence sources, it was decided at the Swedish-Weinberger meetings to trap and detain a Soviet submarine, and the office of then-Vice President George H.W. Bush was kept closely apprised of the plan.
These sources also said U.S. technology was able to manipulate the sub's instruments, causing them to exhibit "false readings" until it was misled and went aground. "We had that sort of technology," one of the former intelligence officials said.
The result was a huge shock to Sweden, a toughening of its political attitudes, and a huge propaganda victory for the Reagan administration.
Although the activities of the Reagan administration in Afghanistan have been well-covered by such recent books as "Charlie Wilson's War" by George Crile, and Stephen Coll's, "Ghost Wars," perhaps the greatest strategic coup of the Reagan covert program of economic warfare involved Saudi Arabia.
Former senior Reagan advisers who spoke with United Press International solely on condition of anonymity told how the Reagan group had ingeniously targeted Soviet hard currency earnings. If Moscow were broke it couldn't develop or buy weapons and couldn't even pay the troops of its overextended military machine, much less finance wars of liberation around the world. It could talk tough, but "it would no longer be tough," as one former Reagan official put it.
The first blow was struck in May 1983, when American pressure forced the International Energy Agency to put a limit on European exports of Soviet natural gas, blocking huge sums of money from reaching Moscow. But natural gas earnings were only a Kremlin sideshow: Russia's top engine of economic wealth was its oil industry, which generated half of its hard currency earnings, these sources said.
By early 1983, the Treasury Department, under the direction of Casey and Weinberger, had completed a voluminous study of U.S. and Soviet energy costs. The study had discovered that the best price required by the United States for a barrel of crude oil was only $20. This was far below the $34 per barrel being charged in 1983. If oil prices came down, it would save the United States almost $72 million a year, or almost one percent of the GNP. What would a fall in the oil price do to the Russians?
Very ugly things, it seemed. The study concluded that while a cut in oil prices would boost U.S. economic welfare, the same cut would have a "devastating effect on the Soviet economy," in the words of one former Reagan adviser. In fact, Reagan national security adviser Bill Clark told Schweizer that "Ronald Reagan was fully aware that energy exports represented the centerpiece of Moscow's hard currency earnings." The energy export industry was working at full capacity. A drop in price, and the Russians were badly lamed.
Soon U.S. officials were huddling in Geneva with the Saudi oil adviser, Sheikh Ahmed Zaki Yamani. Following the meeting, the United States announced it was cutting its oil imports from 220,000 barrels per day to 145,000 barrels. In late February, the Saudi Ambassador Prince Bandar met with senior U.S. officials, including Casey and Weinberger, according to former Reagan officials who were involved.
Abruptly, the Saudis boosted production of oil, resulting in lower world prices. By August 1985, Saudi production jumped from 2 billion barrels a day to 9 billion. Since Saudi Arabia was the swing producer in OPEC that its used production levels to control the market price of crude, the effect was instantaneous. In Russia, the effect was calamitous, former Reagan officials said.
How did the price cuts effect Saudi incomes? Did they lose money on the deal? Hardly. According to former senior CIA officials, CIA currency exchange specialists bounced billions of dollars of Saudi currency reserves from one currency to another: from the Belgian franc to the British pound and back, earning the Saudis "billion of dollars" in the words of one former official.
"Reagan's doctrine was simple -- no quarter for the Soviet Union, no concessions. Instead, stop and counter it any way you could -- whether it was support for free unions or groups resisting its encroachments," said a former White House staffer.