151. Information Memorandum From the Chairman of the Policy Planning Council (Bosworth) to Secretary of State Shultz1
SUBJECT
- Regional Crises and Tensions—Interrelationships, Opportunities, and Risks
Objective
To examine the recent increase in regional instability, violence, and terrorism, in order to assess (1) whether there is any pattern or relationship which helps to explain these developments, and (2) what are the implications for U.S. policy.
I. Analysis of the Problem
The current period, on the face of it, would seem to be one of exceptional tension and stress in the world. Recent events—such as the KAL shootdown, the Rangoon murders, the assaults on the U.S. Marines and French forces in Beirut, the Iran-Iraq war, the Syrian assault on the PLO, the Grenada crisis, the continuing conflict in Central America, etc.—would seem to suggest a world of heightened danger and instability. Some of these events are examined in detail in the Annex at Tab A.2 But [Page 390] a broader analysis would have to look at three basic forces at work: a long-term structural weakening of the international system; the most severe global economic crisis in forty years; and the deliberate efforts of the Soviet Union and its proxies to destabilize the international order.
A. In historical perspective, the mounting problems of recent years reflect, first of all, a long-term structural fragmentation of the world political order. We are still living with the structural consequences of World War I and II and the breakup of several great colonial empires into scores of new and often unstable nation states. Just as the world wars resulted in part from the weakening or collapse of the European political order, so today the Middle East crisis, for example, represents the absence of a new system of order in an area formerly governed by the Turks, British, and French.
Major powers, including the two superpowers, are less and less able to control the behavior of regional states, even those with which they have so-called client relationships. Neither we nor the Soviets are able, for example, to exercise any effective constraints on either Iran or Iraq—and Syrian behavior is clearly determined by Syria’s desires as much as if not more so than by Soviet ambitions. The oil crisis of the 1970s created new centers of economic power, including some (Libya and Iran) which have devoted their new-found resources to the explicit goal of destabilizing the existing order.
This erosion of structural restraints allows all centrifugal forces to operate more freely—whether racial hatreds, national rivalries, religious differences, or ideological assaults. Instant communications and mass media make it much harder to dampen, settle, or isolate local quarrels.
In a world which UN Secretary-General Perez de Cuellar last year characterized as one of growing anarchy, the threshold at which states resort to violence and conflict declines. While terrorism in some quarters is brought under control (Italy, Turkey, Argentina), we are beginning to see its even more blatant use as an instrument of policy, by dissident groups and, even more alarmingly, by national regimes. Beyond this erosion of the code of international conduct and diffusion of power lies the spectre of nuclear proliferation.
All this provides fertile ground for a major power—the Soviet Union—that is driven by revolutionary ideology and national ambition to foment instability in order to weaken the western world. At the same time, we should recognize that even if we are able to change Soviet behavior, we would still face a turbulent, dangerous world and would still have to contend with violence, conflict, and acute threats to our interests.
[Page 391]B. Compounding this structural weakness of the international system is the most severe world economic crisis of at least the past forty years. World trade—the primary engine of world economic growth since World War II—has declined in real terms in each of the past two years. And, while our own economic expansion is strong, a renewal of growth in the rest of the world still remains more a forecast than a reality. Overlaying the immediate crisis is a slow, but probably inexorable, shift in the balance of global economic power with Western Europe in descendancy and the relative role of Japan and much of Asia on the rise.
The economic crisis is not a primary cause of most of the events which currently concern us, although it is a major contributing factor to regional turmoil in many places such as in Central America. But the economic crisis does make it much more difficult to control the repercussions of destabilizing events such as, for example, the assassination of Aquino. Moreover, as we look ahead, continued economic decline would almost certainly bring more political instability and tempting targets of opportunity for the Soviets in the Third World.
The immediate economic situation in most of the Third World is grave. Many LDCs, particularly the large middle income countries burdened by heavy debt, are now experiencing negative economic growth for the first time since the great depression. The social and political pressure of rising expectations in these societies has been replaced by the trauma of abruptly frustrated expectations. In the newly independent countries of Africa and Asia, this economic crisis has further weakened fragile national institutions. In some countries nationhood may actually be at risk. In other countries (e.g., the Philippines, Brazil), the so-called debt/growth dilemma so weakens political authority that it gravely jeopardizes any efforts to move peacefully to more broadly based rule and poses a risk of serious political instability.
Economic crisis can also bring ethnic tension, religious ferment and other societal problems to a flashpoint. Economic deterioration broadens the appeal of Islamic Fundamentalists and others who attack modernization and call for a return to traditional—and allegedly more comfortable—values.
Notwithstanding the seriousness of the current situation, mid-term economic prospects for most of the world are considerably better now than a year ago. The decline in oil prices over the past year has been a boon to stable growth, and further price declines seem possible in 1984—barring a disruption of Persian Gulf oil supplies.
Also, notwithstanding the immediate economic crisis of the larger developing countries, we need to remember that it is to these countries that we will look to provide a major share of global economic growth [Page 392] in the second-half of the 1980s and the 1990s. These countries, in contrast to the mature industrialized economies, have potential for the sort of productivity increases which are key to rapid growth. This gives a longer-term importance to our efforts to help them overcome their current problems.
[Omitted here is analysis of the Soviet Union and other issues.]
C. Response to Third World Economic Crisis
Action here falls in the category of preventing future instabilities as much as coping with those already underway. We see no need for a radically different approach—nor is a radically different approach likely to be available in any event. But some modification and strengthening of key elements in our current policy are needed, as well as some contingency planning:
1. LDC Debt/Growth Crisis—More financing from official sources and softer terms for adjustment programs are needed to lower the risk that political instability will overwhelm some key LDCs. The Philippines and Brazil are two immediate cases, but others are likely to follow (Venezuela, Peru, Costa Rica, Indonesia) before global economic recovery pulls the LDCs out of danger. Most immediately, the President could draw on this background of precarious Third-World stability to make a strong national security case for passage of the IMF quota increase. Given the heavy demand on IMF resources from countries of significant security interest to us, the President can also argue that the alternative to multilateral sharing of the burden through the IMF is likely to be more U.S. bail-outs, at higher cost to us.
With new resources, the IMF could address the exceptionally difficult cases (Brazil in particular) with a longer-term adjustment strategy, that might reduce the exceptional political strains in the next 12–18 months. A longer-term IMF program could be used to bring commercial banks into a multi-year rescheduling which would provide a more stable framework for Brazil’s recovery.
[Omitted here is analysis of the oil market and other issues.]
- Source: Department of State, Executive Secretariat, S/P Records, Memoranda/Correspondence From the Director of the Policy Planning Staff to the Secretary and Other Seventh Floor Principals, Lot 89D149: Nov.’83 Global Project. Secret; Sensitive. Sent under a November 14 covering memorandum from Bosworth to Hill.↩
- Tab A, an undated “Review of Selected 1983 Incidents,” is attached but not printed.↩