CHAPTER XIII

Why the DMBs Aid Soviet Ambitions


"One of the reasons that Americans are often confused about the Soviet Union is that Soviet manipulation of diplomats, who senselessly limit their contacts, and Sovietologists, who depend on the Soviet authorities for their visas, has given rise to a conventional wisdom about the 'reasonableness' of the Soviet Union that bears no relationship to reality."

                   — (David Satter, Wall Street Journal,
October 22, 1985)


The deaf mute blindmen have an outstanding quality — an ability to have policy makers listen to and implement an irrational policy based on fantasy and zero evidence, with no relationship to empirical reality.

The public plea of internationlist businessmen is that trade brings peace. This is usually phrased along the following lines. This example is from Maurice Stans, friend of Richard Nixon, former Secretary of Commerce, and Wall Street investment banker: "History has shown that where there is increasing trade between countries... there is a tendency toward increasing understanding."

Unfortunately for Maurice Stans' credibility, no historian or politician has ever produced evidence that trade necessarily and automatically leads to increased understanding. The statement has no empirical justification at all. It sounds good, that's all.

Why not? Because no such evidence exists. While it is true that peace encourages trade, this does not mean that trade encourages peace. In fact, trade has often enabled aggressive countries to go to war —witness the aviation gasoline and steel scrap shipments to Japan and Standard Oil's agreements on hydrogenation patents with I.G. Farben of Germany prior to World War II.

The blunt truth is that trade with the Soviet Union from 1917 to the present has built the Free World an enemy of the first order. Moreover, the technological component of this continuing trade enables the Soviet Union to pursue its programs of world conquest. It costs the American taxpayer $300 billion a year to counter this Soviet threat.

Obviously, claims that increasing trade is accompanied by increasing understanding are false. A more accurate characterization in the Soviet case appears to be that increasing trade is accompanied by increasing conflict (i.e., misunderstanding), because the Kremlin is encouraged to believe that capitalists are behaving as Lenin predicted they would behave. The concept of "peaceful trade" with Communist countries assumes some positive causal link between trade and peace. It is a false assumption.

The overlooked link is the relationship between trade and casualties, and is contained in one word: technology.

From the Soviet viewpoint, the benefit of U.S.-Soviet trade is the acquisition from the United States of the technology required for building and maintaining the Soviet power base. This subsidized technology is the basis of the Soviet military structure, as is proved by the Soviets' own statements. The armaments produced by Russia's American-subsidized military-industrial complex are used to promote Soviet global expansion.

There are four logical steps in this process:41

1. Trade between the United States and the USSR (with its key technological component).

2. Consequent buildup of the Soviet military-industrial complex.

3. Use of the U.S.-subsidized Soviet military-industrial complex to provide inputs for Soviet armaments production.

4. Use of these armanents against the United States and its allies.

This is the "trade-technology-armaments-war" cycle. It suggests that "peaceful trade" promoted by successive administrations should be entitled "war trade."

If any of the links in this cycle can be broken (or shown to be false), the argument collapses. However, no link is demonstrably false. Indeed, there is evidence that the trade-casualties link is stronger than even the most pessimistic have envisaged.

We trade freely with European nations because these nations have no deceitful intent to use the technological component of this trade against the United States. Nor has the United States any hostile intent towards these European countries. Free trade is vital and necessary, and both sides benefit from its advantages. However, gains from free trade utlimately depend on intent. Where countries are potentially hostile and make hostile use of imported technology, the gains from free trade must be modified by the hostile intent of the trading partner. In other words, "peaceful trade" is only peaceful if Soviet intent is peaceful.

Why isn't this information and logic made available to the public? Then at least the DMB would have official opposition to their spurious arguments. For some reason or another the Washington bureaucracy in State and Commerce has by and large, with some exceptions, taken a position inconsistent with its own files.


The Bureaucrats' View of "Peaceful Trade"

The State and Commerce Departments have consistently rejected the argument that "peaceful trade" can assist Soviet military objectives. For example, a 1969 State Department leaflet asserts (under the heading "US exports do not help Hanoi"):

Over two-thirds of our exports to the Soviet Union and East Europe are foodstuffs and raw materials for consumption within their economies. There is no evidence that our exports of such goods to these countries release resources for manufacturing war materials for North Vietnam.42

What is wrong with this statement?

The Soviet Union needs — and receives — U.S. technology, not "foodstuffs and raw materials." The bureaucracy may claim U.S. wheat does not go to Vietnam and Cuba, but it avoids the crucial point that export of our wheat to the Soviets released Soviet wheat for export to Hanoi. No economist will deny that our technical transfers release Soviet domestic resources for armaments production. The State Department assertion is therefore a compound of distortion and ignorance.

These unsubstantiated distortions are given to Congress as verifiable truth. For example, Edwin M. Martin, Assistant Secretary of State for Economic Affairs, made the following statement to Congress in 1961: "I don't think there is convincing evidence that the net advantage to the Soviet Union of the continuation of trade is a major factor — or a particularly significant factor in the rate of their overall economic development in the long term."43 This is an untrue statement.

There is also confusion concerning the Soviet practice of copying. For example, the following exchange took place before a congressional committee in 1961.

Mr. Lipscomb: Does the Department of Commerce feel that Russia has developed a great deal of their agricultural equipment from prototypes obtained both legally and illegally from the United States?

Mr. Behrman: No sir, I don't think that the evidence we have indicates that the equipment that they themselves produce copies — that they produce copies of equipment which we have supplied.44

Again, a wildly untrue statement.

Even well-informed members of Congress have taken positions directly opposed to the evidence. Senator Jacob Javits of New York commented: "Trade with the West as a general matter must necessarily be a marginal factor in the performance and potentialities of the Soviet economy."45

There exist, presumably unknown to Senator Javits and the others quoted above, three volumes of detailed evidence that totally refutes these statements.46

A popular book in the 1930s was You Can't Do Business with Hitler! The moral and national-security arguments in this book apparently apply only to Hitler's brand of totalitarianism. There is extraordinary inconsistency in the treatment of Hitlerian totalitarianism and Soviet totalitarianism. Indeed, there is some direct evidence and a great deal of indirect evidence that the policymakers in Washington do not view the Soviet Union as a totalitarian power at all.

At the end of World War II, the conclusion of an interagency committee on German industry, with members from the State and Commerce Departments, was as follows:

The Committee is unanimously of the opinion that the major force for war represented in a motor vehicle industry is its availability as a major machine shop aggregation, under able management and engineering, which can be turned, by conversion, to production of an extremely wide variety of military products. Its role as a producer of combat and military transport vehicles ranks second in significance.47

Yet today State and Commerce argue that the export of equipment for a motor vehicle industry is "peaceful trade" — even when milltary vehicles produced by previously exported technology are photographed in Vietnam, Cuba, Afghanistan, Angola and Nicaragua. Obviously, no amount of hard evidence can shake these people from their illusions. The policymakers are locked onto a brand of totalitarianism which, to them, is morally and strategically acceptable.

U.S. assistance to the Marxist brand of totalitarianism is not limited to the Soviet Union. In 1971, for example, the State Department attempted to help Allende, the Marxist president of Chile, to purchase aircraft and paratroop equipment in the United States (Indianapolis News, July 1971). Three months later Allende attempted to impose complete Marxist control in Chile. Once again the State Department wants to help a Marxist clique to impose its rule on an unwilling population.

The assertion that we should exchange our technology for Soviet raw materials will not stand penetrating analysis. Soviet raw materials only become competitive to our enormous low-grade domestic reserves if their extraction is subsidized by U.S. loans and guarantees — to the disadvantage of the American taxpayer. From the national security viewpoint, the "exchange" is absurd. Once our technology is passed to the Soviet Union it cannot be reclaimed, it becomes an integral part of their military industrial operations. But Russian raw material supplies, developed with our assistance, can be cut off any time the Soviets wish. In other words, once again our policymakers exchange something for nothing and charge it to the American taxpayer and citizen.


Useless Pinpricks as Policy

In early May 1985, President Reagan embargoed U.S. trade with Nicaragua. This followed what a State Department official described as a "disturbing pattern of behavior" on the part of Nicaragua. But the White House missed a point — and an opportunity.

Nicaragua and its "disturbing behavior" is a mere incident in a vast ever-expanding global game. Moreover, the Nicaraguan embargo has loopholes that make it virtually ineffective. For example, foreign affiliates of U.S. firms are not embargoed. In brief, if the invoice is on foreign subsidiary, that's legal. And don't think American firms won't scramble for the loophole.

The global problem is not pinprick Nicaragua — it is the unholy alliance of the multinationals and the Soviet Union.

Follow these logica: steps:

• The Sandanista revolution only survives because of Marxist suppression and Soviet logistical backing.

• The Soviets survive and have become militarily awesome because the West has a sixty-year-old policy of technical, economic, financial and even political subsidy of the Soviet Union.

• The multinationals are the mainspring for technical and economic subsidy, from Kama River to the latest CDC computers. And they are more than willing to bend the truth to make a buck.

• Our political establishment, as exemplified in the Council on Foreign Relations, is the mainspring behind political subsidy of the Soviet Union, as exemplified in the Yalta agreement, National Security Memorandum No. 68 and so-called "detente."

Under this system the Soviet Union is never held fully accountable for its international acts. For example:

• The Soviets illegally occupy the long independent countries of Latvia, Lithuania and Estonia.

• The Soviet Union has occupied the long independent nation of Afghanistan.

• Soviet troops are based in Poland, Hungary, Rumania and Czechoslovakia.

• Soviet troops are active in Cuba, Angola, and a dozen other hot spots around the world including Nicaragua.

This adds up to global aggression. Yet the political establishment and its Congressional allies told us that peaceful coexistence and detente with the Soviets would bring peace.

The American public has never been told by any Administration the Soviet definition of "peaceful coexistence." That detente in the Soviet interpretation includes the RIGHT to continue so-called wars of liberation and to further encroach upon the Western world. Western governments have persisted in the illusion of detente as peace, knowing full well that the Marxist interpretation of peaceful coexistence is aggression, that peace is indeed war.

It is this official inaction that has encouraged the deaf mute blindmen to further Soviet ambitions for their own personal gain.


Multinational Businessmen and the Politics of Greed

Who benefits from technological transfers to the Soviet Union? Basically two groups: the Soviets themselves and the comparative handful of companies, almost all multinationals, who set up and profit from Soviet contracts.

Soviet business is profitable. Some American companies have been sucking in this profit since the Bolshevik Revolution of 1917. Chase National was involved in illegal exports to the Soviet Union in the early 1920s, while Chase Manhattan was the lead financing bank for the Kama River project. Caterpillar Tractor was involved in the First Five Year Plan in 1930, and still involved in the Siberian pipeline "Russia No. 6" project in the 1980s.

The hundreds of examples cited here are not accidents. Many individual congressmen and persons outside government have attempted to stop the export of military goods to the Soviet Union in the face of business pressures. Samuel Gompers tried in the 1920s. U.S. Navy of-ricers risked court-martial in the 1930s in their effort to stop President Franklin D. Roosevelt from approving the sale of military equipment to the Soviets. The Senate investigated the "machine tools" case in 1945-46 when Commerce officials tried to send tank-gun milling equipment to the Soviet Union. Warnings were raised in the 1950s by Congressman Lipscomb and others about the results of building up Soviet military strength. In the 1960s individual American firms and engineers protested against the export of ball bearings processing equipment which could only be used to process bearings for Soviet missile-guidance systems. In the 1980s Department of Defense has raised a clear warning.

Are we to believe that Mr. Nicholaas Leyds, general manager of Bryant Chucking Grinder Company of Springfield, Vermont, did not know that his grinding machines are used to process the races for ball bearings in missile-guidance systems? When Bryant has sold the same machine to the U.S. government for the same purpose?

Or that the Hammer family does not know the results of its seventy year association with the USSR? In 1919 Dr. Julius Hammer was a member of the Executive Committee of the Communist party of the United States and in 1985 Armand Hammer (his son and early business partner) is described as America's "No. 1 Capitalist."

It is not an accident. The deaf mute blindmen have always known the exact end-uses of the exported equipment. They have been brazen enough to persist in building up the Soviet military-industrial complex while pleading "civilizing the Bolsheviks" (1918) and "peaceful trade" (1985).

Above all there are several disturbing aspects to this whole business of selling our technology to the Soviets. First, multinational banks and business groups have their own people in all administrations pushing for their self-interested profitable projects. Second, the more prominent of these businessmen (Armand Hammer and David Rockefeller come to mind) deal directly with the Soviet Union almost as independent fiefdoms.

The business and personal relationships of Henry Kissinger and the Rockefeller family, for instance, are too close for administrative objectivity. Neither has Henry Kissinger been on the receiving end of a bullet, he doesn't have to pay the price for his policies. Indeed, in most cases policymakers have never undertaken any occupation where the cost of a wrong decision fell upon their own shoulders - and that may be one of the major problems.

The following extract is from the conclusion of Kissinger's book Nuclear Weapons and Foreign Policy (p. 431):

A statesman must act as if his inspirations were already experience, as if his aspirations were truth. He must bridge the gap between society's experience and his vision, between its tradition and its future.

Note the words "act as if." Act "as if" fantasy were reality is the clear implication. Act "as if" objectives (whatever they may be) are always moral.

In other words, anything is real if you wish it to be, and anything is moral if you want it to be. Is it then accidental that Kissinger's devastating detente policy was only beneficial to his proteges? (For example, the Rockefeller controlled Chase Manhattan Bank).

Then the amoral two-facedness of many DMBs has been commented on by several observers:

At times it seemed that the business world preferred to ignore the policy makers in Washington. One prominent member of the council [The U.S.-U.S.S.R. Trade and Economic Council] remembers meeting after Nixon's resignation with four other industrialists, several admirals, and a member of the Joint Chiefs of Staff late in 1974. One admiral bewailed the military disadvantages U.S. forces suffered because of certain technology transfers. The next day, the same industrialist attended a private dinner in New York given by a major investment banking house. The guest of honor was Dzhermen Gvishiani, the Soviet official whose specialty was buying high technology in the West. One after another, the thirty other businessmen at the dinner rose to boast about the last big transaction they had made with Gvishiani. 'The dichotomy between the luncheon in Washington and the dinner in New York was just astounding,' the businessman recalled. 'These guys were bragging as if they had just sold a ton of frankfurters.'48

This atmosphere of "bragging as if they had just sold a ton of frankfurters" has been officially encouraged because until very recently, no official in any Administration has stood up in public and castigated the deaf mute blindmen. In recent years Secretary of Defense Casper Weinberger and Assistant Secretary of Defense Richard Perle have to some extent changed the nature of the public debate — but State and Commerce still drag their feet.

Motivated by the lure of profit and in the absence of official chastisement, the deaf mute blindmen have run the show where trade with the Soviets is concerned.

Through the Export-Import Bank they have received official, less than market loaves, subsidised by the taxpayer, for projects with military potential. Ex-Im provided $153 million for Kama River, $180 million for Occidental's string of chemical plants — at half the prime rate. When this latter venture was approved, William J. Casey was Chairman of Export Import Bank even while publicly today Casey disclaims knowledge of our build-up of the USSR.

Other businessmen have appeared before Congress and made statements inconsistent with the bulk of the evidence. For example, we know that the Soviets have successfully reverse-engineered thousands of U.S. processes. Yet one businessman appeared before Congress and denied the usefulness of the process:

Senator Nunn: You say reversing engineering is very difficult and time consuming even if they have the equipment itself, and all the plans and specifications?

Mr. Bell: To put it in production. That is true. You can get a lot of valuable information off of it. But to put that equipment into production, even if you had what I said, they do not have the components. That is the key to the whole thing. The best system engineer in the world, that is what we do in system engineering, is only as good as the elements he has to work with. They do not have the components in the Soviet Union.49

Again Charles Lecht, former President of Advanced Computer Techniques Corp., tried to advance the line that the only Soviet interest was curiosity rather than technological need:

Primarily I have come to the conclusion that the concept that the Soviets want U.S. technology because they can't make it themselves or they can't buy it themselves is a fallacious one. I have concluded that the Soviet technology establishment — in the country which produces more scientific literature than any other country in the world — is capable of producing what it wants. I have thus concluded that the Soviets have been looking for U.S. technology primarily because they want to find out how our military materiel work, our missiles, our aircraft, our radar, our sonar, and the like.50

In brief, the bottom line is greed and the greed has been allowed to reign supreme because official Washington has openly encouraged technological transfers.

 

Footnotes:

41Steps 1 and 2 have been fully demonstrated in the author's three-volume study, Western Technology and Soviet Economic Development. See Bibliography.

42U.S. Dept. of State, Public Information Series P-310-369 (Washington, DC, 1969).

43Edwin M. Martin, Assistant Secretary of State for Economic Affairs, before the House Select Committee on Export Control, Dec. 8, 1961.

44U.S. House of Representatives, Select Committee on Export Control. Investigation and Study of the Administration, Operation and Enforcement of the Export Control Act of 1949, and Related Acts (H.R. 403), 87th Cong., 1st sess., Oct. 25, 26, and 30, and Dec. 5, 6, 7 and 8, 1961, p. 403.

45Congressional Record, Senate, Vol. 122, pt. 9 (89th Congress, 2nd session), May 24, 1966, p. 11233.

46Antony C. Sutton, Western Technology and Soviet Economic Development (See Bibliography).

47Foreign Economic Administration, Study by Interagency Committee on the Treatment of the German Automotive Industry from the Standpoint o.f International Security (Washington, DC, 1945).

48joseph Finder, op. cit.

49United States Senate, Transfer of United States High Technology to the Soviet Union and Soviet Bloc Nations, Hearings before the Permanent Subcommittee on Investigations, 97th Congress, Second Session, May 1982, Washington, DC, p. 49.

501bid., p. 230.

 

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